WCI STEEL, INC.
10% Senior Secured Notes due 2004
PURCHASE AGREEMENT
November 22, 1996
XXXXXXXXX, XXXXXX & XXXXXXXX
SECURITIES CORPORATION
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Ladies & Gentlemen:
WCI Steel, Inc., an Ohio corporation ("Company"), agrees with you as
follows:
1. Issuance of Securities. The Company proposes to issue and sell to
Xxxxxxxxx, Xxxxxx & Xxxxxxxx Securities Corporation ("Purchaser"), an aggregate
of $300,000,000 principal amount of 10% Senior Secured Notes due 2004, Series A
(the "Series A Notes"). The Series A Notes are to be issued pursuant to an
indenture (the "Note Indenture") to be dated as of November 27, 1996 by and
between the Company and Fleet National Bank, as trustee (the "Trustee").
Capitalized terms used but not defined herein shall have the meanings
given to such terms in the Note Indenture.
The Series A Notes will be offered and sold to you pursuant to an
exemption from the registration requirements under the Securities Act of 1933,
as amended (the "Act"). The Company has prepared a preliminary offering
memorandum, dated November 6, 1996 (the "Preliminary Offering Memorandum"), and
a final offering memorandum, dated November 22, 1996 (the "Offering
Memorandum"), relating to the Company and the Series A Notes.
Upon original issuance thereof, and until such time as the same is no
longer required under the applicable requirements of the Act, the Series A Notes
(and all securities issued in exchange therefor or in substitution thereof)
shall bear the following legend:
"THE NOTE (OR ITS PREDECESSOR) EVIDENCED HEREBY WAS ORIGINALLY ISSUED IN A
TRANSACTION EXEMPT FROM REGISTRATION UNDER SECTION 5 OF THE UNITED STATES
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND THE NOTE
EVIDENCED HEREBY MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE
ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM. EACH
PURCHASER OF THE NOTE EVIDENCED HEREBY IS HEREBY NOTIFIED THAT THE SELLER
MAY BE RELYING ON THE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER. THE HOLDER OF THE NOTE
EVIDENCED HEREBY AGREES FOR THE BENEFIT OF THE COMPANY THAT (A) SUCH NOTE
MAY BE RESOLD, PLEDGED OR OTHERWISE TRANSFERRED ONLY (1)(a) INSIDE THE
UNITED STATES TO A PERSON WHO THE SELLER REASONABLY BELIEVES IS A
QUALIFIED INSTITUTIONAL BUYER (AS DEFINED IN RULE 144A UNDER THE
SECURITIES ACT) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A
UNDER THE SECURITIES ACT, (b) IN A TRANSACTION MEETING THE REQUIREMENTS OF
RULE 144 UNDER THE SECURITIES ACT, (c) OUTSIDE THE UNITED STATES TO A
FOREIGN PURCHASER IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 904
UNDER THE SECURITIES ACT OR (d) IN ACCORDANCE WITH ANOTHER EXEMPTION FROM
THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT (AND, IN THE CASE OF
CLAUSE (b), (c) OR (d), BASED UPON AN OPINION OF COUNSEL IF THE COMPANY SO
REQUESTS), (2) TO THE COMPANY OR (3) PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE SECURITIES ACT AND, IN EACH CASE, IN ACCORDANCE WITH
ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR ANY
OTHER APPLICABLE JURISDICTION AND (B) THE HOLDER WILL, AND EACH SUBSEQUENT
HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER FROM IT OF THE NOTE EVIDENCED
HEREBY OR ANY NOTE ISSUED IN EXCHANGE FOR OR IN SUBSTITUTION HEREOF OF THE
RESALE RESTRICTIONS SET FORTH IN (A) ABOVE."
You have advised the Company that you will make offers (the "Exempt
Resales") of the Series A Notes purchased hereunder on the terms set forth in
the Offering Memorandum, as amended or supplemented, solely to persons whom you
reasonably believe to be "qualified institutional buyers," as defined in Rule
144A under the Act ("QIBs"), to a limited number of institutional "Accredited
Investors" referred to in Rule 501(a)(1), (2), (3) or (7) under the Act (each,
an "Accredited Investor") and outside the United States in compliance with
Regulation S under the Act to foreign purchasers ("Regulation S Purchasers") who
are not U.S. persons (as such term is defined in Regulation S under the Act).
The QIBs, the Accredited Investors and the Regulation S Purchasers are
collectively referred to herein as the "Eligible Purchasers." You will offer the
Series A Notes to such Eligible Purchasers initially at a price equal to 100% of
the principal amount thereof. Such price may be changed at any time without
notice.
Holders (including subsequent transferees) of the Series A Notes will have
the registration rights set forth in the registration rights agreement relating
thereto (the "Registration Rights Agreement"), to be dated the Closing Date, for
so long as such Series A Notes constitute "Transfer Restricted Securities" (as
defined in the Registration Rights Agreement). Pursuant to the Registration
Rights Agreement, the Company will agree to file with the Securities and
Exchange Commission (the "Commission"), under the circumstances set forth
therein, (i) a
-2-
registration statement under the Act (the "Exchange Offer Registration
Statement") relating to the 10% Senior Secured Notes due 2004, Series B (the
"Series B Notes") to be offered in exchange for the Series A Notes (the
"Exchange Offer"), and/or (ii) if required under the Registration Rights
Agreement, a shelf registration statement pursuant to Rule 415 under the Act
(the "Shelf Registration Statement") relating to the resale by certain holders
of the Series A Notes, and to use reasonable efforts to cause such Registration
Statements to be declared effective. The Series A Notes and the Series B Notes
are collectively referred to herein as the "Securities." This Purchase Agreement
(this "Agreement"), the Securities, the Note Indenture, the Supplemental
Indenture (as defined), each of the Collateral Documents and the Registration
Rights Agreement are hereinafter sometimes referred to collectively as the
"Operative Documents."
On October 23, 1996, an offer (the "Offer") was commenced by the Company
to purchase for cash up to all (but not less than a majority in principal amount
outstanding) of the Company's outstanding 10 1/2% Senior Notes Due 2002 (the
"Existing Notes") and a related solicitation (the "Consent Solicitation") of
consents to delete and modify certain terms of the indenture, as amended,
governing the Existing Notes (the "Existing Notes Indenture"). Upon receipt of
the Requisite Consents (as such term is defined in the Offer to Purchase and
Consent Solicitation Statement, dated October 23, 1996 (as supplemented, the
"Statement")), the Company and Fleet National Bank, as trustee, will execute a
supplemental indenture (the "Supplemental Indenture"), giving effect to the
proposed amendments to the Existing Notes Indenture. Fleet National Bank acted
as depositary (the "Depositary") in connection with the Offer and the Consent
Solicitation.
On October 28, 1996, an offer (the "Equity Offer") was commenced by WCI
Steel Holdings, Inc., a Delaware corporation ("Holdings"), to purchase for cash
all of the outstanding shares of common stock, no par value, $.01 stated value
(the "Common Stock"), of the Company. The Equity Offer is conditioned upon,
among other things, the Public Acceptance Condition (as defined in the Offer to
Purchase for Cash, dated October 28, 1996 (as supplemented, the "Equity
Statement"). American Stock Transfer & Trust Company acted as depositary (the
"Equity Depositary") in connection with the Equity Offer.
2. Agreements to Sell and Purchase. On the basis of the representations
and warranties contained in this Agreement, and subject to its terms and
conditions, the Company agrees to issue and sell to you, and the Purchaser
agrees to purchase from the Company, $300,000,000 aggregate principal amount of
the Series A Notes. The purchase price for the Series A Notes shall be 97.12% of
their principal amount.
3. Delivery and Payment. Delivery to the Purchaser of, and payment for,
the Series A Notes shall be made at 9:00 a.m., New York City time, on November
27, 1996 (the "Closing Date") at the offices of Xxxxxx Xxxxxx & Xxxxxxx, 00 Xxxx
Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, or such other time or place as you and the
Company shall designate.
-3-
One or more of the Series A Notes in definitive form, registered in the
name of Cede & Co., as nominee of The Depository Trust Company ("DTC"), having
an aggregate principal amount corresponding to the aggregate principal amount of
the Series A Notes sold pursuant to Exempt Resales to QIBs and Accredited
Investors (collectively, the "Master Note") and one or more Series A Notes in
definitive form registered in the names of the nominees of the Euroclear System
("Euroclear") and Cedel, S.A. ("Cedel") (collectively, the "Regulation S Note"),
having an aggregate principal amount corresponding to the aggregate principal
amount of the Series A Notes sold pursuant to Exempt Resales to Regulation S
Purchasers, shall be delivered by the Company to you (or as you direct), against
payment by you of the purchase price therefor by wire transfer of immediately
available (Federal) funds. The Master Note and the Regulation S Note shall be
made available to you for inspection not later than 9:30 a.m. on the business
day immediately preceding the Closing Date.
4. Agreements of the Company. The Company agrees with you as follows:
(a) To advise you promptly and, if requested by the Purchaser,
confirm such advice in writing, (i) of the issuance by any state
securities commission of any stop order suspending the qualification or
exemption from qualification of any of the Series A Notes for offering or
sale in any jurisdiction, or the initiation of any proceeding for such
purpose by any state securities commission or other regulatory authority,
and (ii) of the happening of any event that makes any statement of a
material fact made in the Offering Memorandum untrue or that requires the
making of any additions to or changes in the Offering Memorandum in order
to make the statements therein, in the light of the circumstances under
which they are made, not misleading. The Company shall use its best
efforts to prevent the issuance of any stop order or order suspending the
qualification or exemption of any of the Series A Notes under any state
securities or Blue Sky laws, and if at any time any state securities
commission or other regulatory authority shall issue an order suspending
the qualification or exemption of any of the Series A Notes under any
state securities or Blue Sky laws, the Company shall use its best efforts
to obtain the withdrawal or lifting of such order at the earliest possible
time.
(b) To furnish you, without charge, as many copies of the
Preliminary Offering Memorandum and the Offering Memorandum, and any
amendments or supplements thereto, as you may reasonably request. The
Company consents to the lawful use of the Preliminary Offering Memorandum
and the Offering Memorandum, and any amendments and supplements thereto,
by you in connection with Exempt Resales.
(c) Not to amend or supplement the Preliminary Offering Memorandum
or the Offering Memorandum prior to the Closing Date unless you shall
previously have been advised thereof and shall not have objected thereto
after being furnished a copy thereof. The Company shall promptly prepare,
upon your request, any amendment or supplement to the Preliminary Offering
Memorandum or the Offering Memorandum that may be reasonably necessary or
advisable in connection with Exempt Resales.
-4-
(d) If, after the date hereof and prior to consummation of any
Exempt Resales, any event shall occur as a result of which, in the
judgment of the Company or in the reasonable opinion of your counsel, it
becomes necessary to amend or supplement the Offering Memorandum in order
to made the statements therein, in the light of the circumstances when the
Offering Memorandum is delivered to an Eligible Purchaser which is a
prospective purchaser, not misleading, or if it is necessary to amend or
supplement the Offering Memorandum to comply with applicable law,
forthwith to prepare an appropriate amendment or supplement to the
Offering Memorandum so that statements therein as so amended or
supplemented will not, in the light of the circumstances when it is so
delivered, be misleading, or so that the Offering Memorandum will comply
with applicable law.
(e) To cooperate with you and your counsel in connection with the
qualification of the Series A Notes under the securities or Blue Sky laws
of such jurisdictions as you may request and to continue such
qualification in effect so long as required for the Exempt Resales;
provided, however, that the Company shall not be required in connection
therewith to register or qualify as a foreign corporation where it is not
now so qualified or to take any action that would subject it to the
service of process in suits or taxation, other than as to matters and
transactions relating to the Exempt Resales, in any jurisdiction where it
is not now so subject.
(f) Whether or not the transactions contemplated by this Agreement
are consummated or this Agreement becomes effective or is terminated, to
pay all costs, expenses, fees and taxes incident to and in connection
with: (i) the preparation, printing, filing and distribution of the
Preliminary Offering Memorandum and the Offering Memorandum (including,
without limitation, financial statements and exhibits) and all amendments
and supplements thereto, (ii) the preparation (including, without
limitation, word processing and duplication costs) and delivery of this
Agreement and the other Operative Documents and all preliminary and final
Blue Sky memoranda and all other agreements, memoranda, correspondence and
other documents prepared and delivered in connection herewith and with the
Exempt Resales, (iii) the issuance and delivery by the Company of the
Securities, (iv) the qualification of the Securities for offer and sale
under the securities or Blue Sky laws of the several states (including,
without limitation, the reasonable fees and disbursements of your counsel
relating to such registration or qualification), (v) furnishing such
copies of the Preliminary Offering Memorandum and the Offering Memorandum,
and all amendments and supplements thereto, as may be reasonably requested
for use in connection with Exempt Resales, (vi) the preparation of
certificates for the Securities (including, without limitation, printing
and engraving thereof), (vii) the fees, disbursements and expenses of the
Company's counsel and accountants, (viii) all expenses and listing fees in
connection with the application for quotation of the Series A Notes in the
National Association of Securities Dealers, Inc. ("NASD") Automated
Quotation System - PORTAL ("PORTAL"), (ix) all fees and expenses
(including fees and expenses of counsel) of the Company in connection with
approval of the Securities by DTC, Euroclear or Cedel for "book-entry"
transfer and (x)
-5-
the performance by the Company of its other obligations under this
Agreement and the other Operative Documents.
(g) To use the proceeds from the sale of the Series A Notes in the
manner described in the Offering Memorandum under the caption "Use of
Proceeds."
(h) Not to voluntarily claim, and to resist actively any attempts to
claim, the benefit of any usury laws against the holders of any
Securities.
(i) To do and perform all things required to be done and performed
under this Agreement by it prior to or after the Closing Date and to
satisfy all conditions precedent on its part to the delivery of the Series
A Notes.
(j) Not to sell, offer for sale or solicit offers to buy or
otherwise negotiate in respect of any security (as defined in the Act)
that would be integrated with the sale of the Series A Notes in a manner
that would require the registration under the Act of the sale to you or
Eligible Purchasers of the Series A Notes.
(k) For so long as any of the Securities remain outstanding and
during any period in which the Company is not subject to Section 13 or
15(d) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), to make available to any QIB or beneficial owner of Series A Notes
in connection with any sale thereof and any prospective purchaser of such
Series A Notes from such QIB or beneficial owner, the information required
by Rule 144A(d)(4) under the Act.
(l) To cause the Exchange Offer to be made in the appropriate form
to permit registration of the Series B Notes to be offered in exchange for
the Series A Notes and to comply in all material respects with all
applicable federal and state securities laws in connection with the
Exchange Offer.
(m) To comply in all material respects with all of its agreements
set forth in the Registration Rights Agreement, and all agreements set
forth in the representation letter of the Company to DTC relating to the
approval of the Securities by DTC for "book-entry" transfer and any
similar such letter, if any, with Euroclear or Cedel.
(n) To use reasonable efforts to effect the inclusion of the Series
A Notes in PORTAL.
(o) During a period of five years following the date of this
Agreement, to deliver to you promptly upon their becoming available,
copies of all current, regular and periodic reports filed by the Company
with the Commission or any securities exchange or with any governmental
authority succeeding to any of the Commission's functions.
-6-
(p) The Company agrees to do or cause to be done such further acts
and things and deliver or cause to be delivered to the Trustee, and file
or cause to be filed, such additional instruments, documents, forms
(including, without limitation, Uniform Commercial Code ("UCC") forms) and
assurances as the Purchaser or the Trustee may reasonably require or deem
advisable to give the Trustee a valid and perfected lien on the Collateral
with the priority contemplated in Section 10.01(a) of the Indenture.
(q) The Company and Holdings shall effect the Merger on, or within
two business days after, the Issue Date.
5. Representations and Warranties. (a) The Company represents and
warrants to you that:
(i) The Preliminary Offering Memorandum and the Offering Memorandum
have been prepared in connection with the Exempt Resales. The Preliminary
Offering Memorandum as of its date did not, and the Offering Memorandum
does not, and any supplement or amendment to them will not, contain any
untrue statement of a material fact or omit to state any material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading, except that the
representations and warranties contained in this paragraph (i) shall not
apply to statements in or omissions from the Preliminary Offering
Memorandum and the Offering Memorandum (or any supplement or amendment
thereto) made in reliance upon and in conformity with information relating
to you furnished to the Company in writing by you expressly for use
therein. No stop order preventing the use of the Preliminary Offering
Memorandum or the Offering Memorandum, or any amendment or supplement
thereto, or any order asserting that any of the transactions contemplated
by this Agreement are subject to the registration requirements of the Act,
has been issued. Each of the Preliminary Offering Memorandum and the
Offering Memorandum, as of its date, contains all the information
specified in, and meeting the requirements of, Rule 144A(d)(4) under the
Act.
(ii) When the Series A Notes are issued and delivered pursuant to
this Agreement, none of the Series A Notes will be of the same class
(within the meaning of Rule 144A under the Act) as securities of the
Company that are listed on a national securities exchange registered under
Section 6 of the Exchange Act or that are quoted in a United States
automated inter-dealer quotation system.
(iii) The Company and each of its subsidiaries has been duly
organized, is validly existing as a corporation in good standing under the
laws of its respective jurisdiction of incorporation, has all requisite
corporate power and authority to carry on its business as it is currently
being conducted and as described in the Offering Memorandum and to own,
lease and operate its properties, and is duly qualified and in good
standing as a foreign corporation authorized to do business in each
jurisdiction in
-7-
which the nature of its business or its ownership or leasing of property
requires such qualification.
(iv) The entities listed on Schedule I hereto are the only
subsidiaries, direct or indirect, of the Company. The Company owns,
directly or indirectly through other subsidiaries, 100% of the outstanding
capital stock or other securities evidencing equity ownership of such
subsidiaries, free and clear of any security interest, claim, lien,
limitation on voting rights or encumbrance; and all of such securities
have been duly authorized, validly issued, are fully paid and
nonassessable and were not issued in violation of any preemptive or
similar rights. There are no outstanding subscriptions, rights, warrants,
calls, commitments of sale or options to acquire, or instruments
convertible into or exchangeable for, any such shares of capital stock or
other equity interest of such subsidiaries.
(v) The Company has all requisite corporate power and authority to
execute, deliver and perform its obligations under this Agreement, the
Note Indenture, the Supplemental Indenture, each of the Collateral
Documents, the Registration Rights Agreement and the other Operative
Documents to which it is a party and to consummate the transactions
contemplated hereby and thereby, including, without limitation, with
respect to the Company, the corporate power and authority to issue, sell
and deliver the Securities as provided herein and therein.
(vi) This Agreement has been duly and validly authorized, executed
and delivered by the Company and is the legally valid and binding
agreement of the Company, enforceable against the Company in accordance
with its terms.
(vii) The Note Indenture has been duly and validly authorized by the
Company and, when duly executed and delivered by the Company, will be the
legally valid and binding obligation of the Company, enforceable against
the Company in accordance with its terms. The Note Indenture, when
executed and delivered, will conform to the description thereof in the
Offering Memorandum. The Depositary has received validly tendered and not
validly withdrawn consents from holders of at least a majority of the
aggregate principal amount of Existing Notes outstanding pursuant to the
Consent Solicitation. The Company has all requisite corporate power and
authority to execute, deliver and perform its obligations under the
Supplemental Indenture. The Supplemental Indenture has been duly and
validly authorized by the Company and, when duly executed and delivered by
the Company, will be the valid and binding obligation of the Company,
enforceable against the Company in accordance with its terms. Upon the
effectiveness of the Supplemental Indenture, the Existing Notes Indenture,
as supplemented by the Supplemental Indenture, will comply with the Trust
Indenture Act of 1939, as amended (the "Trust Indenture Act"). The
Supplemental Indenture conforms to the description thereof in the
Statement.
-8-
(viii) The Series A Notes have been duly and validly authorized for
issuance and sale to you by the Company pursuant to this Agreement and,
when issued and authenticated in accordance with the terms of the Note
Indenture and delivered against payment therefor in accordance with the
terms hereof, will be the legally valid and binding obligations of the
Company, enforceable against the Company in accordance with their terms
and entitled to the benefits of the Note Indenture. The Series A Notes,
when issued, authenticated and delivered, will conform to the description
thereof in the Offering Memorandum.
(ix) The Series B Notes have been duly and validly authorized for
issuance by the Company, and when issued and authenticated in accordance
with the terms of the Note Indenture, the Registration Rights Agreement
and the Exchange Offer, will be the legally valid and binding obligations
of the Company, enforceable against the Company in accordance with their
terms and entitled to the benefits of the Note Indenture.
(x) The Registration Rights Agreement has been duly and validly
authorized by the Company and, when duly executed and delivered by the
Company, will be the legally valid and binding obligation of the Company,
enforceable against the Company in accordance with its terms. The
Registration Rights Agreement, when executed and delivered, will conform
to the description thereof in the Offering Memorandum.
(xi) Each of the Collateral Documents has been duly and validly
authorized by the Company and, when duly executed and delivered by the
Company, will be the legally valid and binding obligation of the Company,
enforceable against the Company in accordance with its terms. Upon
execution of the Indenture and each of the Collateral Documents, and, with
respect to Collateral (as defined in the Indenture), filings under the UCC
in all required jurisdictions and recording of the Mortgage in the
appropriate recording office, the holders of the Securities will have a
valid and perfected lien on the Collateral with the priority contemplated
in Section 10.01(a) of the Indenture subject to no other lien, charge,
encumbrance or interest (other than as permitted by each Collateral
Document).
(xii) Neither the Company nor any of its subsidiaries is in
violation of its respective charter or bylaws or is in default in the
performance of any bond, debenture, note, indenture, mortgage, deed of
trust or other agreement or instrument to which it is a party or by which
it is bound or to which any of its properties is subject, or is in
violation of any law, statute, rule, regulation, judgment or court decree
applicable to the Company, any of its subsidiaries or their assets or
properties. There exists no condition that, with notice, the passage of
time or otherwise, would constitute a default under any such document or
instrument.
(xiii) Except for the amendment (the "Amendment") to the WCI
Revolving Credit Facility contemplated in connection with the transactions
referred to in the Offering Memorandum and intended to be entered into on
or prior to the Closing Date,
-9-
the execution, delivery and performance by the Company of this Agreement
and the other Operative Documents to which it is a party, the issuance and
sale of the Securities, and the consummation of the transactions
contemplated hereby and thereby will not violate, conflict with or
constitute a breach of any of the terms or provisions of, or a default
under (or an event that with notice or the lapse of time, or both, would
constitute a default), or require consent under, or result in the
imposition of a lien or encumbrance on any properties of the Company or
any of its subsidiaries, or an acceleration of indebtedness pursuant to,
(i) the charter or bylaws of the Company or any of its subsidiaries, (ii)
any bond, debenture, note, indenture, mortgage, deed of trust or other
agreement or instrument to which the Company or any of its subsidiaries is
a party or by which any of them or their property is or may be bound,
(iii) any statute, rule or regulation applicable to the Company, any of
its subsidiaries or any of their assets or properties, or (iv) any
judgment, order or decree of any court or governmental agency or authority
having jurisdiction over the Company, any of its subsidiaries or their
assets or properties. No consent, approval, authorization or order of, or
filing, registration, qualification, license or permit of or with, any
court or governmental agency, body or administrative agency is required
for the execution, delivery and performance of this Agreement and the
other Operative Documents and the consummation of the transactions
contemplated hereby and thereby, except such as have been obtained and
made (or, in the case of the Registration Rights Agreement, will be
obtained and made) under the Act, the Trust Indenture Act, and state
securities or Blue Sky laws and regulations or such as may be required by
the NASD. No consents or waivers from any other person are required for
the execution, delivery and performance of this Agreement and the other
Operative Documents and the consummation of the transactions contemplated
hereby and thereby, other than such consents and waivers as have been
obtained (or, in the case of the Registration Rights Agreement, will be
obtained).
(xiv) There is (i) other than matters set forth in the letters from
the law firm of Wechsler Xxxxxxx Xxxxxxxx & Xxxxxx LLP, no action, suit or
proceeding before or by any court, arbitrator or governmental agency, body
or official, domestic or foreign, now pending or threatened or
contemplated to which the Company or any of its subsidiaries is or may be
a party or to which the business or property of the Company or any of its
subsidiaries is or may be subject, (ii) no statute, rule, regulation, or
order that has been enacted, adopted or issued by any governmental agency
or that has been proposed by any governmental body, (iii) no injunction,
restraining order or order of any nature by a federal or state court or
foreign court of competent jurisdiction to which the Company or any of its
subsidiaries is or may be subject issued that, in the case of clauses (i),
(ii) and (iii) above, (x) might, singly or in the aggregate, result in a
material adverse effect on the properties, business, results of
operations, condition (financial or otherwise), affairs or prospects of
the Company and its subsidiaries, taken as a whole (a "Material Adverse
Effect"), (y) would interfere with or adversely affect the issuance of the
Securities or (z) in any manner draw into question the validity of this
Agreement, the Note Indenture, the Supplemental Indenture, the
Registration Rights Agreement, any of the Collateral Documents or any
other Operative Document.
-10-
(xv) No action has been taken and no statute, rule or regulation or
order has been enacted, adopted or issued by any governmental agency that
prevents the issuance of the Securities; no injunction, restraining order
or order of any nature by a federal or state court of competent
jurisdiction has been issued that prevents the issuance of the Securities
or suspends the sale of the Securities in any jurisdiction referred to in
Section 4(e) hereof; and other than matters set forth in the letters from
the law firm of Wechsler Xxxxxxx Xxxxxxxx & Xxxxxx LLP, no action, suit or
proceeding is pending against or affecting or, to the best knowledge of
the Company and any of its subsidiaries, threatened against, the Company
or any of its subsidiaries before any court or arbitrator or any
governmental body, agency or official which, if adversely determined,
would prohibit, interfere with or adversely affect the issuance or
marketability of the Securities or in any manner draw into question the
validity of any Operative Document; and every request of any securities
authority or agency of any jurisdiction for additional information has
been complied with in all material respects.
(xvi) There is (i) no significant unfair labor practice complaint
pending against the Company or any of its subsidiaries nor, to the best
knowledge of the Company and its subsidiaries, threatened against any of
them, before the National Labor Relations Board, any state or local labor
relations board or any foreign labor relations board, and no significant
grievance or significant arbitration proceeding arising out of or under
any collective bargaining agreement is so pending against the Company or
any or its subsidiaries or, to the best knowledge of the Company and its
subsidiaries, threatened against any of them, (ii) no significant strike,
labor dispute slowdown or stoppage pending against the Company or any of
its subsidiaries nor, to the best knowledge of the Company and its
subsidiaries, threatened against the Company or any of its subsidiaries
and (iii) to the best knowledge of the Company and its subsidiaries, no
union representation question existing with respect to the employees of
the Company and its subsidiaries and, to the best knowledge of the Company
and its subsidiaries, no union organizing activities are taking place.
Neither the Company nor any of its subsidiaries has violated any federal,
state or local law or foreign law relating to discrimination in hiring,
promotion or pay of employees, nor any applicable wage or hour laws, nor
any provision of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), or the rules and regulations thereunder, which might
result in a Material Adverse Effect.
(xvii) In the ordinary course of its business, each of the Company
and its subsidiaries conducts periodic reviews of the effect of
Environmental Laws (as defined herein) and the handling, storage,
transport, treatment and disposal of Hazardous Materials (as defined
herein) on the business, operations and properties of the Company and its
subsidiaries, in the course of which it identifies and evaluates
associated costs and liabilities (including, without limitation, all
capital and operating expenditures required for response and corrective
actions, closure of properties and compliance with Environmental Laws, all
permits, licenses and approvals, all related constraints on operating
activities and all potential liabilities to third parties). On the basis
of such
-11-
reviews, the Company has reasonably concluded that such associated costs
and liabilities would not have a Material Adverse Effect other than as
disclosed in the Offering Memorandum. Neither the Company nor any of its
subsidiaries has violated any Environmental Law applicable to it or its
business or property, or is subject to any liability under any
Environmental Law, lacks any permit, license or other approval required of
them under applicable Environmental Laws or is violating any Environmental
Law or term or condition of such permit, license or approval which might
have a Material Adverse Effect, in each case, other than as disclosed in
the Offering Memorandum. For the purposes of this Agreement,
"Environmental Laws" shall mean any Federal, state and local laws, rules
or regulations, any orders, decrees, judgments or injunctions and the
common law relating to pollution or protection of human health, safety or
the environment, including, without limitation, ambient air, indoor air,
soil, surface water, ground water, wetlands, land or subsurface strata,
including, without limitation, those relating to releases or threatened
releases of Hazardous Materials into the environment, or otherwise
relating to the manufacture, processing, generation, distribution, use,
treatment, storage, disposal, transport or handling of Hazardous
Materials. For the purposes of this Agreement, "Hazardous Material" shall
mean any pollutant, contaminant, toxic, hazardous or extremely hazardous
substance, constituent or waste, or any other constituent, waste,
material, compound or substance, including, without limitation, petroleum
including crude oil and any fraction thereof, or any petroleum product,
subject to regulation under any Environmental Law.
(xviii) Each of the Company and its subsidiaries has (i) good and
marketable title to all of the properties and assets described in the
Offering Memorandum as owned by it, free and clear of all liens, charges,
encumbrances and restrictions, except such as are described in the
Offering Memorandum or as would not have a Material Adverse Effect, (ii)
peaceful and undisturbed possession under all leases to which it is party
as lessee, (iii) all licenses, certificates, permits, authorizations,
approvals, franchises and other rights from, and has made all declarations
and filings with, all federal, state and local authorities, all
self-regulatory authorities and all courts and other tribunals (each an
"Authorization") necessary to engage in the business currently conducted
by it in the manner described in the Offering Memorandum, except where
failure to hold such Authorizations would not have a Material Adverse
Effect and (iv) no reason to believe that any governmental body or agency
is considering limiting, suspending or revoking any such Authorization.
All such Authorizations are valid and in full force and effect and the
Company and its subsidiaries are in compliance in all material respects
with the terms and conditions of all such Authorizations and with the
rules and regulations of the regulatory authorities having jurisdiction
with respect thereto. All leases to which the Company or any of its
subsidiaries is a party are valid and binding and no default by the
Company or any of its subsidiaries has occurred and is continuing
thereunder, and no material defaults by the landlord are existing under
any such lease.
(xix) All tax returns required to be filed by the Company or any of
its subsidiaries, in all jurisdictions, have been so filed. All taxes,
including withholding
-12-
taxes, penalties and interest, assessments, fees and other charges due or
claimed to be due from such entities or that are due and payable have been
paid, other than those being contested in good faith and for which
adequate reserves have been provided or those currently payable without
penalty or interest. Neither the Company nor any of its subsidiaries knows
of any material proposed additional tax assessments against it or any of
its subsidiaries.
(xx) Neither the Company nor any of its subsidiaries is (i) an
"investment company" or a company "controlled" by an "investment company"
within the meaning of the Investment Company Act of 1940, as amended (the
"Investment Company Act"), or analogous foreign laws and regulations, or
(ii) a "holding company" or a "subsidiary company" or an "affiliate" of a
holding company within the meaning of the Public Utility Holding Company
Act of 1935, as amended.
(xxi) There are no holders of securities of the Company who, by
reason of the execution by the Company of this Agreement or any other
Operative Document to which it is a party or the consummation of the
transactions contemplated hereby and thereby, have the right to request or
demand that the Company register under the Act or analogous foreign laws
and regulations securities held by them.
(xxii) The authorized, issued and outstanding capital stock of the
Company has been duly and validly authorized and issued, is fully paid and
nonassessable and was not issued in violation of or subject to any
preemptive or similar rights. The Company and its subsidiaries had at July
31, 1996, an authorized and outstanding capitalization as set forth in the
Offering Memorandum.
(xxiii) Each certificate signed by any officer of the Company and
delivered to the Purchaser or counsel for the Purchaser shall be deemed to
be a representation and warranty by the Company to the Purchaser as to the
matters covered thereby.
(xxiv) The Company and each of its subsidiaries maintains a system
of internal accounting controls sufficient to provide reasonable assurance
that: (i) transactions are executed in accordance with management's
general or specific authorizations; (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 the existing assets at
reasonable intervals and appropriate action is taken with respect thereto.
(xxv) The Company and each of its subsidiaries maintains insurance
covering their properties, operations, personnel and businesses. Such
insurance insures against such losses and risks as are adequate in
accordance with customary industry practice to protect the Company and its
subsidiaries and their businesses. Neither the Company nor
-13-
any of its subsidiaries has received notice from any insurer or agent of
such insurer that substantial capital improvements or other expenditures
will have to be made in order to continue such insurance. All such
insurance is outstanding and duly in force on the date hereof and will be
outstanding and duly in force on the Closing Date.
(xxvi) Neither the Company nor any of its subsidiaries has (i)
taken, directly or indirectly, any action designed to, or that might
reasonably be expected to, cause or result in stabilization or
manipulation of the price of any security of the Company or any of its
subsidiaries to facilitate the sale or resale of the Securities or (ii)
since the date of the Preliminary Offering Memorandum (A) sold, bid for,
purchased or paid any person any compensation for soliciting purchases of,
the Securities or (B) paid or agreed to pay to any person any compensation
for soliciting another to purchase any other securities of the Company or
any of its subsidiaries.
(xxvii) No registration under the Act of the Series A Notes is
required for the sale of the Series A Notes to the Purchaser as
contemplated hereby or for the Exempt Resales assuming (i) that the
purchasers who buy the Series A Senior Notes in the Exempt Resales are
either QIBs, Accredited Investors (up to a maximum of 35 such Accredited
Investors) or Regulation S Purchasers and (ii) the accuracy of the
Purchaser's representations regarding the absence of general solicitation
in connection with the sale of Series A Notes to the Purchaser and the
Exempt Resales contained herein. No form of general solicitation or
general advertising was used by the Company or any of its representatives
in connection with the offer and sale of any of the Series A Notes or in
connection with Exempt Resales, including, but not limited to, articles,
notices or other communications published in any newspaper, magazine, or
similar medium or broadcast over television or radio, or any seminar or
meeting whose attendees have been invited by any general solicitation or
general advertising. No securities of the same class as the Series A Notes
have been issued and sold by the Company within the six-month period
immediately prior to the date hereof.
(xxviii) Set forth on Exhibit A hereto is a list of each employee
pension or benefit plan with respect to which the Company or any
corporation considered an affiliate of the Company within the meaning of
Section 407(d)(7) of ERISA (an "Affiliate") is a party in interest or
disqualified person. The execution and delivery of this Agreement, the
other Operative Documents and the sale of the Series A Notes to be
purchased by the Eligible Purchasers will not involve any prohibited
transaction within the meaning of Section 406 of ERISA or Section 4975 of
the Internal Revenue Code of 1986, as amended. The representation made by
the Company in the preceding sentence is made in reliance upon and subject
to the accuracy of, and compliance with, the representations and covenants
made or deemed made by the Eligible Purchasers as set forth in the
Offering Memorandum under the Section entitled "Notices to Investors."
(xxix) Subsequent to the respective dates as of which information is
given in the Offering Memorandum and up to the Closing Date, except as set
forth in the Offering
-14-
Memorandum, neither the Company nor any of its subsidiaries has incurred
any liabilities or obligations, direct or contingent, which are material
to the Company and its subsidiaries taken as a whole, nor entered into any
transaction not in the ordinary course of business, there has not been,
singly or in the aggregate, any material adverse change, or any
development which may reasonably be expected to involve a material adverse
change, in the properties, business, results of operations, condition
(financial or otherwise), affairs or prospects of the Company and its
subsidiaries, taken as a whole (a "Material Adverse Change") and there
have not been dividends or distributions of any kind declared, paid or
made by the Company or any of its subsidiaries on any class of its capital
stock.
(xxx) Neither the Company nor any agent thereof acting on the behalf
of the Company has taken, and the Company will not take, any action that
might cause this Agreement or the issuance or sale of the Securities to
violate Regulation G (12 C.F.R. Part 207), Regulation T (12 C.F.R. Part
220), Regulation U (12 C.F.R. Part 221) or Regulation X (12 C.F.R. Part
224) of the Board of Governors of the Federal Reserve System or analogous
foreign laws and regulations.
(xxxi) The accountants who have certified or shall certify the
financial statements and supporting schedules included or to be included
as part of the Offering Memorandum are independent accountants. The
consolidated historical statements fairly present the consolidated
financial condition and results of operations of the Company and its
subsidiaries at the respective dates and for the respective periods
indicated, in accordance with generally accepted accounting principles
consistently applied throughout such periods, except as stated therein.
The pro forma financial statements have been prepared on a basis
consistent with such historical statements, except for the pro forma
adjustments specified therein, and give effect to assumptions made on a
reasonable basis and present fairly the historical and proposed
transactions contemplated by this Agreement and the other Operative
Documents. Other financial and statistical information and data included
in the Offering Memorandum, historical and pro forma, are accurately
presented and prepared on a basis consistent with such financial
statements and the books and records of the Company and its subsidiaries.
(xxxii) The present fair salable value of the assets of the Company
exceeds the amount that will be required to be paid on or in respect of
the existing debts and other liabilities (including contingent
liabilities) of each such person as they become absolute and matured. The
assets of the Company do not constitute unreasonably small capital to
carry out its businesses as conducted or as proposed to be conducted. The
Company does not intend to, nor does it believe that it will, incur debts
beyond its ability to pay such debts as they mature. Upon the issuance of
the Series A Notes, the present fair saleable value of the assets of the
Company will exceed the amount that will be required to be paid on or in
respect of the existing debts and other liabilities (including contingent
liabilities) of the Company as they become absolute and matured. The
assets of the Company, upon the issuance of the Series A Notes, will not
constitute unreasonably
-15-
small capital to carry out its businesses as now conducted, including the
capital needs of the Company, taking into account the projected capital
requirements and capital availability of the Company.
(xxxiii) There are no contracts, agreements or understandings
between the Company or any of its subsidiaries and any person that would
give rise to a valid claim against the Company, its subsidiaries or the
Purchaser for a brokerage commission, finder's fee or like payment in
connection with the issuance, purchase and sale of the Securities.
The Company acknowledges that the Purchaser and, for purposes of the
opinions to be delivered to the Purchaser pursuant to Section 7 hereof, counsel
to the Company and counsel to the Purchaser will rely upon the accuracy and
truth of the foregoing representations and hereby consent to such reliance.
(b) The Purchaser represents and warrants to the Company and agrees that:
(i) It is a QIB, with such knowledge and experience in financial and
business matters as are necessary in order to evaluate the merits and
risks of an investment in the Series A Notes.
(ii) It (A) is not acquiring the Series A Notes with a view to any
distribution thereof that would violate the Act or the securities laws of
any state of the United States or any other applicable jurisdiction and
(B) will be reoffering and reselling the Series A Notes only to QIBs in
reliance on the exemption from the registration requirements of the Act
provided by Rule 144A, to Accredited Investors in a private placement
exempt from the registration requirements of the Act and in offshore
transactions in compliance with Regulation S under the Act.
(iii) No form of general solicitation or general advertising has
been or will be used by it or any of its representatives in connection
with the offer and sale of any of the Series A Notes, including, but not
limited to, articles, notices or other communications published in any
newspaper, magazine, or similar medium or broadcast over television or
radio, or any seminar or meeting whose attendees have been invited by any
general solicitation or general advertising.
(iv) It agrees that, in connection with the Exempt Resales, it will
solicit offers to buy the Series A Notes only from, and will offer to sell
the Series A Notes only to, QIBs, a total of no more than 35 Accredited
Investors and to Regulation S Purchasers in offshore transactions in
compliance with Regulation S under the Act. It further agrees (A) that it
will offer to sell the Series A Notes only to, and will solicit offers to
buy the Series A Notes only from (1) QIBs who in purchasing such Series A
Notes will be deemed to have represented and agreed that they are
purchasing the Series A Notes for their own account or accounts with
respect to which they exercise sole investment
-16-
discretion and that they or such accounts are QIBs, (2) Accredited
Investors who make the representations contained in, and execute and
return to the Purchaser, a certificate in the form of Annex A attached to
the Offering Memorandum and (3) to Regulation S Purchasers in offshore
transactions in compliance with Regulation S under the Act and (B) that,
in the case of such QIBs, Accredited Investors and Regulation S
Purchasers, acknowledges and agrees that such Series A Notes will not have
been registered under the Act and may be resold, pledged or otherwise
transferred only (x)(I) to a person who the seller reasonably believes is
a QIB in a transaction meeting the requirements of Rule 144A, (II) in a
transaction meeting the requirements of Rule 144, (III) to a foreign
person in a transaction meeting the requirements of Rule 904 under the Act
or (IV) in accordance with another exemption from the registration
requirements of the Act (and based upon an opinion of counsel if the
Company so requests), (y) to the Company, (z) pursuant to an effective
registration statement under the Act and, in each case, in accordance with
any applicable securities laws of any state of the United States or any
other applicable jurisdiction and (C) that the holder will, and each
subsequent holder is required to, notify any purchaser from it of the
security evidenced thereby of the resale restrictions set forth in (B)
above.
(v) It will comply with the applicable provisions of Rule 144A under
the Act and Regulation S under the Act.
(vi) It also understands that the Company and, for purposes of the
opinions to be delivered to you pursuant to Section 7 hereof, counsel to
the Company and counsel to the Purchaser will rely upon the accuracy and
truth of the foregoing representations and hereby consents to such
reliance.
6. Indemnification.
(a) The Company agrees to indemnify and hold harmless (i) the
Purchaser and (ii) each person, if any, who controls (within the meaning
of Section 15 of the Act or Section 20 of the Exchange Act) the Purchaser
(any of the persons referred to in this clause (ii) being hereinafter
referred to as a "controlling person"), and (iii) the respective officers,
directors, partners, employees, representatives and agents of the
Purchaser or any controlling person (any person referred to in clause (i),
(ii) or (iii) may hereinafter be referred to as an "Indemnified Person")
to the fullest extent lawful, from and against any and all losses, claims,
damages, liabilities, judgments, actions and expenses (including without
limitation and as incurred, reimbursement of all reasonable costs of
investigating, preparing, pursuing or defending any claim or action, or
any investigation or proceeding by any governmental agency or body,
commenced or threatened, including the reasonable fees and expenses of
counsel to any Indemnified Person) directly or indirectly caused by,
related to, based upon, arising out of or in connection with any untrue
statement or alleged untrue statement of a material fact contained in the
Preliminary Offering Memorandum or the Offering Memorandum (or any
amendment or supplement thereto), or any omission or alleged omission to
state therein a material
-17-
fact required to be stated therein or necessary to make the statements
therein not misleading, except insofar as such losses, claims, damages,
liabilities or expenses are caused by an untrue statement or omission or
alleged untrue statement or omission that is made in reliance upon and in
conformity with information relating to the Purchaser furnished in writing
to the Company by the Purchaser expressly for use therein; provided,
however, that the foregoing indemnity agreement with respect to any
Preliminary Offering Memorandum shall not inure to the benefit of the
Purchaser from whom the person asserting any such losses, claims, damages,
liabilities, judgments, actions or expenses purchased Series A Notes, or
any person controlling such Purchaser, if a copy of the Offering
Memorandum (as then amended or supplemented if the Company shall have
furnished any amendments or supplements thereto) was not sent or given by
or on behalf of the Purchaser to such person, at or prior to the written
confirmation of the sale of the Series A Notes to such person, and if the
Offering Memorandum (as so amended and supplemented) would have cured the
defect giving rise to such loss, claim, damage, liability, judgment,
action or expense. The Company shall notify you promptly of the
institution, threat or assertion of any claim, proceeding (including any
governmental investigation) or litigation in connection with the matters
addressed by this Agreement which involves the Company or an Indemnified
Person.
(b) In case any action or proceeding (including any governmental
investigation) shall be brought or asserted against any of the Indemnified
Persons with respect to which indemnity may be sought against the Company,
such Indemnified Person shall promptly notify the Company in writing
(provided, that the failure to give such notice shall not relieve the
Company of its obligations pursuant to this Agreement unless it shall have
been determined by a court of competent jurisdiction, by a final judgment
not subject to appeal or review, that such failure shall have resulted in
a material adverse effect upon the Company). Such Indemnified Person shall
have the right to employ its own counsel in any such action and the fees
and expenses of such counsel shall be paid, as incurred, by the Company;
provided, however, that the Company shall be entitled to participate in
such action or proceeding and, to the extent that the Company shall wish
to assume the defense thereof (provided that any such participation or
assumption shall be permitted only upon written notice to the Indemnified
Person which notice is received within 10 days of the Company's actual
knowledge of such action or proceeding), with counsel satisfactory to such
Indemnified Person (which counsel shall not, except with the consent of
the Indemnified Person, be counsel to the Company), at the Company's
expense, and after notice from the Company to such Indemnified Person of
the Company's election so to assume the defense thereof, the Company shall
not be liable to such Indemnified Person under this Section 6(b) for any
legal expenses of other counsel or any other expenses, in each case
subsequently incurred by such Indemnified Person, in connection with the
defense thereof other than reasonable costs of investigation; provided,
further, that the Company shall not be entitled to control the defense of,
or investigation by, such Indemnified Person if such Indemnified Person
has been advised by its counsel that there could reasonably be expected to
be a conflict of interest between the Company and such Indemnified Person
under applicable standards of professional responsibility. The
-18-
Company shall not, in connection with any one such action or proceeding or
separate but substantially similar or related actions or proceedings in
the same jurisdiction arising out of the same general allegations or
circumstances, be liable for the reasonable fees and expenses of more than
one separate firm of attorneys (in addition to any local counsel) at any
time for the Indemnified Persons, which firm shall be designated by
Xxxxxxxxx, Xxxxxx & Xxxxxxxx Securities Corporation. The Company shall be
liable for any settlement of any such action or proceeding effected with
the Company's prior written consent, which consent will not be
unreasonably withheld, and the Company agrees to indemnify and hold
harmless any Indemnified Person from and against any loss, claim, damage,
liability or expense by reason of any settlement of any action effected
with the written consent of the Company. Notwithstanding the immediately
preceding sentence, if at any time an Indemnified Person shall have
requested an indemnifying party to reimburse the Indemnified Person for
fees and expenses of counsel as contemplated by the second sentence of
this paragraph, the indemnifying party agrees that it shall be liable for
any settlement of any proceeding effected without its written consent if
(i) such settlement is entered into more than twenty business days after
receipt by such indemnifying party of the aforesaid request and (ii) such
indemnifying party shall not have reimbursed the Indemnified Person in
accordance with such request prior to the date of such settlement. The
Company shall not, without the prior written consent of an Indemnified
Person (which consent shall not be unreasonably withheld), settle or
compromise or consent to the entry of judgment in or otherwise seek to
terminate any pending or threatened action, claim, litigation or
proceeding in respect of which indemnification or contribution may be
sought hereunder (whether or not any Indemnified Person is a party
thereto), unless such settlement, compromise, consent or termination
includes an unconditional release of such Indemnified Person from all
liability arising out of such action, claim, litigation or proceeding.
(c) The Purchaser agrees to indemnify and hold harmless the Company,
any person controlling (within the meaning of Section 15 of the Act or
Section 20 of the Exchange Act) the Company, and their respective
officers, directors, partners, employees, representatives and agents
(collectively, the "Indemnified Company Persons"), to the same extent as
the foregoing indemnity from the Company to each of the Indemnified
Persons, but only with respect to claims and actions based on information
relating to the Purchaser furnished in writing by the Purchaser to the
Company expressly for use in the Preliminary Offering Memorandum or the
Offering Memorandum.
The statements in the Offering Memorandum in the paragraph under the
pricing table on the cover page of the Offering Memorandum and in the
third paragraph under the caption "Plan of Distribution" constitute the
only information heretofore furnished to the Company in writing by the
Purchaser expressly for use in the Preliminary Offering Memorandum or the
Offering Memorandum, or any amendment or supplement thereto.
-19-
(d) In case any action (including any governmental investigation)
shall be brought against any Indemnified Company Person based on the
Offering Memorandum or the Preliminary Offering Memorandum and in respect
of which indemnity may be sought against the Purchaser, the Purchaser
shall have the rights and duties given to the Company (except that if the
Company shall have assumed the defense thereof, the Purchaser shall not be
required to do so, but may employ separate counsel therein and participate
in the defense thereof but the fees and expenses of such counsel shall be
at the expense of the Purchaser), and the Indemnified Company Person shall
have the rights and duties given to the Purchaser by Section 6(b) hereof.
(e) If the indemnification provided for in this Section 6 is
unavailable to an indemnified party in respect of any losses, claims,
damages, liabilities or expenses referred to herein, then each
indemnifying party, in lieu of indemnifying such indemnified party, shall
contribute to the amount paid or payable by such indemnified party as a
result of such losses, claims, damages, liabilities and expenses (i) in
such proportion as is appropriate to reflect the relative benefits
received by the indemnifying party on the one hand and the indemnified
party on the other hand from the offering of the Series A Notes or (ii) if
the allocation provided by clause (i) above is not permitted by applicable
law, in such proportion as is appropriate to reflect not only the relative
benefits referred to in clause (i) above but also the relative fault of
the indemnifying party and the indemnified party, as well as any other
relevant equitable considerations. The relative benefits received by the
Company, on the one hand, and the Purchaser, on the other hand, shall be
deemed to be in the same proportion as the total proceeds from the
offering of the Series A Notes (net of commissions but before deducting
expenses) received by the Company and the total commissions received by
the Purchaser bear to the total price of the Series A Notes paid in the
Exempt Resales, in each case as set forth in the pricing table on the
cover page of the Offering Memorandum. The relative fault of the Company,
on the one hand, and the Purchaser, on the other hand, 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 related to information supplied by the Company, on the one
hand, and the Purchaser, on the other hand, and the parties' relative
intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission. The indemnity set forth herein shall
be in addition to any liability or obligation the Company may otherwise
have to any Indemnified Person.
The Company and the Purchaser agree that it would not be just and
equitable if contribution to this Section 6(e) were determined by pro rata
allocation or by any other method of allocation which does not take
account of the equitable considerations referred to in the immediately
preceding paragraph. The amount paid or payable by an indemnified party as
a result of the losses, claims, damages, liabilities or expenses referred
to in the immediately preceding paragraph shall be deemed to include,
subject to the limitations set forth above, any legal or other expenses
reasonably incurred by such indemnified party in connection with
investigating or defending any such action or
-20-
claim. Notwithstanding the provisions of this Section 6, the Purchaser
(nor the related Indemnified Persons) shall not be required to contribute,
in the aggregate, any amount in excess of the amount by which the total
discounts and commissions received by the Purchaser with respect to the
Series A Notes, exceeds the amount of any damages which the Purchaser has
otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission. 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.
(f) The Company hereby designates The Renco Group, Inc., a New York
corporation, as its authorized agent upon whom process may be served in
any action, suit or proceeding that may be instituted in any state or
federal court in the State of New York by the Purchaser or any person
controlling the Purchaser asserting a claim for indemnification or
contribution under or pursuant to this Section 6, and the Company will
accept the jurisdiction of such court in such action, and waive, to the
fullest extent permitted by applicable law, any defense based upon lack of
personal jurisdiction or venue. A copy of any such process shall be sent
or given to the Company and counsel to the Company at their respective
address for notices specified in Section 9 hereof.
7. Conditions of Purchaser's Obligations. The obligations of the Purchaser
under this Agreement are subject to the satisfaction of each of the following
conditions:
(a) All of the representations and warranties of the Company
contained in this Agreement shall be true and correct on the date hereof
and on the Closing Date with the same force and effect as if made on and
as of the date hereof and the Closing Date, respectively. The Company
shall have performed or complied with all of the agreements herein
contained and required to be performed or complied with by it at or prior
to the Closing Date.
(b) The Offering Memorandum shall have been printed and copies
distributed to the Eligible Purchasers to whom the Purchaser intends to
resell in Exempt Resales the Series A Notes on the Closing Date not later
than 10:00 a.m., New York City time, on the date of this Agreement or at
such later date and time as to which you may agree, and no stop order
suspending the qualification or exemption from qualification of any of the
Series A Notes in any jurisdiction referred to in Section 4(e) shall have
been issued and no proceeding for that purpose shall have been commenced
or shall be pending or threatened.
(c) No action shall have been taken and no statute, rule, regulation
or order shall have been enacted, adopted or issued by any governmental
agency which would, as of the Closing Date, prevent the issuance of any of
the Series A Notes; no action, suit or proceeding shall be pending against
or affecting or, to the knowledge of the Company, threatened against, the
Company or any of its subsidiaries before any court or arbitrator or any
governmental body, agency or official that, if adversely determined, would
-21-
prohibit, interfere with or adversely affect the issuance of the Series A
Notes or would have a Material Adverse Effect, or in any manner draw into
question the validity of any of the Operative Documents; and no stop order
preventing the use of the Offering Memorandum, or any amendment or
supplement thereto, or any order asserting that any of the transactions
contemplated by this Agreement are subject to the registration
requirements of the Act shall have been issued.
(d) Since the dates as of which information is given in the Offering
Memorandum and other than as contemplated in the Offering Memorandum, (i)
there shall not have been any material change, or any development that is
reasonably likely to result in a material change, in the capital stock or
the long-term debt, or material increase in the short-term debt, of the
Company or any of its subsidiaries from that set forth in the Offering
Memorandum, (ii) no dividend or distribution of any kind shall have been
declared, paid or made by the Company or any of its subsidiaries on any
class of its capital stock, and (iii) neither the Company nor any of its
subsidiaries shall have incurred any liabilities or obligations, direct or
contingent, that are material, individually or in the aggregate, to the
Company and its subsidiaries, taken as a whole, and that are required to
be disclosed on a balance sheet in accordance with generally accepted
accounting principles and are not disclosed on the latest balance sheet
included in the Offering Memorandum. Since the date hereof and since the
dates as of which information is given in the Offering Memorandum, there
shall not have been any Material Adverse Change.
(e) You shall have received certificates, dated the Closing Date,
signed by (i) the President or any Vice President and (ii) a principal
financial or accounting officer of the Company confirming, as of the
Closing Date, the matters set forth in paragraphs (a), (b), (c) and (d) of
this Section 7.
(f) You shall have received on the Closing Date an opinion
(satisfactory to you and your counsel), dated the Closing Date, of
Xxxxxxxxxx, Xxxxxxxxxx & Xxxx, counsel for the Company to the effect that:
(i) The Company and each of its subsidiaries has been duly
organized and is validly existing as a corporation in good standing
under the laws of its respective jurisdiction of incorporation, has
all requisite corporate power and authority to own, lease and
operate its properties and to conduct its business as it is
currently being conducted and as described in the Offering
Memorandum, and is duly qualified and in good standing as a foreign
corporation authorized to do business in each jurisdiction in which
the ownership, leasing and operating of its property and the conduct
of its business requires such qualification, except where the
failure to be so qualified would not have a Material Adverse Effect.
(ii) The entities listed on Schedule I hereto are the only
subsidiaries, direct or indirect, of the Company. The Company owns,
directly or indirectly
-22-
through other subsidiaries, 100% of the outstanding capital stock or
other securities evidencing equity ownership of such subsidiaries,
free and clear of any security interest, claim, lien, limitation on
voting rights or encumbrance; and all of such securities have been
duly authorized, validly issued, are fully paid and nonassessable
and were not issued in violation of any preemptive or similar
rights. There are no outstanding subscriptions, rights, warrants,
calls, commitments of sale or options to acquire, or instruments
convertible into or exchangeable for, any such shares of capital
stock or other equity interest of such subsidiaries.
(iii) The Company has all requisite corporate power and
authority to execute, deliver and perform its obligations under this
Agreement, the Note Indenture, the Supplemental Indenture, the
Registration Rights Agreement, each of the Collateral Documents and
the other Operative Documents to which it is a party and to
consummate the transactions contemplated hereby or thereby,
including, without limitation, with respect to the Company, the
corporate power and authority to issue, sell and deliver the
Securities as provided herein.
(iv) The Company has duly and validly authorized, executed and
delivered this Agreement.
(v) The Company has duly and validly authorized, executed and
delivered the Note Indenture and (assuming the due authorization,
execution and delivery thereof by the Trustee) the Note Indenture is
the legally valid and binding obligation of the Company, enforceable
against the Company in accordance with its terms, except (i) as such
enforcement may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting creditors'
rights and remedies generally, (ii) as to general principles of
equity, regardless of whether enforcement is sought in a proceeding
at law or in equity, and (iii) to the extent that a waiver of rights
under any usury laws may be unenforceable. The Note Indenture
conforms to the description thereof in the Offering Memorandum.
(vi) The Series A Notes have been duly and validly authorized
for issuance and sale to you by the Company pursuant to this
Agreement and, when issued and authenticated in accordance with the
terms of the Note Indenture and delivered against payment therefor
in accordance with the terms hereof, will be the legally valid and
binding obligations of the Company, enforceable against the Company
in accordance with their terms and entitled to the benefits of the
Note Indenture, except (i) as such enforcement may be limited by
bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting creditors' rights and remedies generally, (ii) as to
general principles of equity, regardless of whether enforcement is
sought in a proceeding at law or in equity, and (iii) to the extent
that a waiver of rights under any usury laws may be unenforceable.
The
-23-
Series A Notes, when issued, authenticated and delivered, will
conform to the description thereof in the Offering Memorandum.
(vii) The Series B Notes have been duly and validly authorized
for issuance by the Company and, when issued and authenticated in
accordance with the terms of the Note Indenture, the Registration
Rights Agreement and the Exchange Offer, will be the legally valid
and binding obligations of the Company, enforceable against the
Company in accordance with their terms and entitled to the benefits
of the Note Indenture, except (i) as such enforcement may be limited
by bankruptcy, insolvency, reorganization, moratorium or similar
laws affecting creditors' rights and remedies generally, (ii) as to
general principles of equity, regardless of whether enforcement is
sought in a proceeding at law or in equity, and (iii) to the extent
that a waiver of rights under any usury laws may be unenforceable.
(viii) The Company has duly and validly authorized, executed
and delivered the Supplemental Indenture and (assuming the due
authorization, execution and delivery thereof by the Trustee) the
Supplemental Indenture is the legally valid and binding obligation
of the Company, enforceable against the Company in accordance with
its terms, except (i) as such enforcement may be limited by
bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting creditors' rights and remedies generally, (ii) as to
general principles of equity, regardless of whether enforcement is
sought in a proceeding at law or in equity, and (iii) to the extent
that a waiver of rights under any usury laws may be unenforceable.
The Supplemental Indenture conforms to the description thereof in
the Statement.
(ix) Each of the Collateral Documents has been duly and
validly authorized by the Company and, when duly executed and
delivered by the Company (assuming the due authorization, execution
and delivery thereof by the other parties thereto), will be the
legally valid and binding obligation of the Company, enforceable
against the Company in accordance with its terms, except (i) as such
enforcement may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting creditors'
rights and remedies generally, (ii) as to general principles of
equity, regardless of whether enforcement is sought in a proceeding
at law or in equity, and (iii) to the extent that a waiver of rights
under any usury laws may be unenforceable.
(x) The Registration Rights Agreement has been duly and
validly authorized, by the Company and, when duly executed and
delivered by the Company (assuming the due authorization, execution
and delivery thereof by Purchaser), will be the legally valid and
binding obligation of the Company, enforceable against the Company
in accordance with its terms, except (i) as such enforcement may be
limited by bankruptcy, insolvency, reorganization,
-24-
moratorium or similar laws affecting creditors' rights and remedies
generally and (ii) as to general principles of equity, regardless of
whether enforcement is sought in a proceeding at law or in equity.
The Registration Rights Agreement, when executed and delivered, will
conform to the description thereof in the Offering Memorandum.
(xi) When the Series A Notes are issued and delivered pursuant
to this Agreement, none of the Series A Notes will be of the same
class (within the meaning of Rule 144A under the Act) as securities
of the Company that are listed on a national securities exchange
registered under Section 6 of the Exchange Act or that are quoted in
a United States automated inter-dealer quotation system.
(xii) No registration under the Act of any of the Series A
Notes is required for the sale of the Series A Notes to you as
contemplated hereby or for the Exempt Resales assuming (i) that each
of the Eligible Purchasers is a QIB, an Accredited Investor or a
Regulation S Purchaser, (ii) the accuracy of your representations
regarding the absence of general solicitation in connection with the
sale of the Series A Notes to you and the Exempt Resales contained
herein and (iii) the accuracy of the representations made by each
Accredited Investor as set forth in the letters of representation
executed by such Accredited Investor in the form of Annex A to the
Offering Memorandum.
(xiii) Neither the Company nor any of its subsidiaries is in
violation of its respective charter or bylaws or, to such counsel's
knowledge, is in default in the performance of any obligation,
agreement or condition contained in any bond, debenture, note or any
other evidence of indebtedness or in any other agreement, indenture,
mortgage or deed of trust or other material agreement to which it is
a party or by which it is bound or to which any of its properties is
subject or is in violation of any law, statute, rule, regulation,
judgment or court decree applicable to the Company or its
subsidiaries and there exists no condition that, with notice, the
passage of time or otherwise, would constitute such default under
any such document or instrument, which any such default would result
in a Material Adverse Effect.
(xiv) The execution, delivery and performance by the Company
of this Agreement and the other Operative Documents to which it is a
party, the issuance and sale of the Securities, and the consummation
of the transactions contemplated hereby and thereby will not
violate, conflict with or constitute a breach of any of the terms or
provisions of, or a default under (or an event that with notice or
the lapse of time, or both, would constitute a default), or require
consent under, or result in the imposition of a lien or encumbrance
on any properties of the Company or any of its subsidiaries, or an
acceleration of indebtedness pursuant to, (i) the charter or bylaws
of the Company or any of its subsidiaries, (ii) to the best of such
counsel's knowledge, any bond, debenture, note, indenture,
-25-
mortgage, deed of trust or other agreement or instrument to which
the Company or any of its subsidiaries is a party or by which any of
them or their property is or may be bound, (iii) any statute, rule
or regulation applicable to the Company, any of its subsidiaries or
their assets or properties (except (with respect to this clause
(iii)) such violations, conflicts, breaches or defaults as could not
reasonably be expected to have a Material Adverse Effect), or (iv)
to the best of such counsel's knowledge, any judgment, order or
decree of any court or governmental agency or authority having
jurisdiction over the Company, any of its subsidiaries or their
assets or properties. To such counsel's knowledge, no consent,
approval, authorization or order of, or filing, registration,
qualification, license or permit of or with, any court or
governmental agency, body or administrative agency is required for
the execution, delivery and performance of this Agreement and the
other Operative Documents and the consummation of the transactions
contemplated hereby and thereby, except such as have been obtained
and made (or, in the case of the Registration Rights Agreement, will
be obtained and made) under the Act, the Trust Indenture Act and
state securities or Blue Sky laws and regulations or such as may be
required by NASD. To such counsel's knowledge, no consents or
waivers from any other person are required for the execution,
delivery and performance of this Agreement and the other Operative
Documents and the consummation of the transactions contemplated
hereby and thereby, other than such consents and waivers as have
been obtained (or, in the case of the Registration Rights Agreement,
will be obtained).
(xv) To the best knowledge of such counsel, no action has been
taken and no statute, rule or regulation or order has been enacted,
adopted or issued by any governmental agency that prevents the
issuance of the Securities; no injunction, restraining order or
order of any nature by a federal or state court of competent
jurisdiction has been issued that prevents the issuance of the
Securities or suspends the sale of the Securities in any
jurisdiction referred to in Section 4(e) hereof; and (other than
matters set forth in letters from the law firm of Wechsler Xxxxxxx
Halebian & Xxxxxx LLP) no action, suit or proceeding is pending
against or affecting or, to the best knowledge of such counsel,
threatened against, the Company or any of its subsidiaries before
any court or arbitrator or any governmental body, agency or official
which, if adversely determined, would prohibit, interfere with or
adversely affect the issuance or marketability of the Securities or
in any manner draw into question the validity of any Operative
Document; and every request of any securities authority or agency of
any jurisdiction for additional information has been complied with
in all material respects.
(xvi) To the best knowledge of such counsel, the Company and
each of its subsidiaries has (i) good and marketable title to all of
the properties and assets described in the Offering Memorandum as
owned by it, free and clear of all liens, charges, encumbrances and
restrictions, except such as are described in the
-26-
Offering Memorandum or as would not have a Material Adverse Effect,
(ii) peaceful and undistributed possession under all leases to which
it is party as lessee, (iii) all Authorizations necessary to engage
in the business currently conducted by it in the manner described in
the Offering Memorandum, except where failure to hold such
Authorizations would not have a Material Adverse Effect and (iv) no
reason to believe that any governmental body or agency is
considering limiting, suspending or revoking any such Authorization.
To the best knowledge of such counsel, all such Authorizations are
valid and in full force and effect and the Company and its
subsidiaries are in compliance in all material respects with the
terms and conditions of all such Authorizations and with the rules
and regulations of the regulatory authorities having jurisdiction
with respect thereto. To the best knowledge of such counsel, all
leases to which the Company or any of its subsidiaries is a party
are valid and binding and no default by the Company or any of its
subsidiaries has occurred and is continuing thereunder, and no
material defaults by the landlord are existing under any such lease.
(xvii) To the best knowledge of such counsel, other than as
disclosed in the Offering Memorandum neither the Company nor any of
its subsidiaries has violated any Environmental Laws, lacks any
permits, licenses or other approvals required of them under
applicable Environmental Laws or is violating any terms and
conditions of any such permit, license or approval, nor has the
Company or any of its subsidiaries violated any federal, state,
local or foreign law relating to discrimination in the hiring,
promotion or pay of employees nor any applicable wage or hourly
laws, nor any provisions of ERISA or the rules and regulations
promulgated thereunder, which in each case would result in a
Material Adverse Effect.
(xviii) Neither the Company nor any of its subsidiaries is (i)
an "investment company" or a company "controlled" by an "investment
company" within the meaning of the Investment Company Act of 1940 or
analogous foreign laws and regulations, or (ii) a "holding company"
or a "subsidiary company" or an "affiliate" of a holding company
within the meaning of the Public Utility Holding Company Act of
1935, as amended.
(xix) Prior to the consummation of the Exchange Offer or the
effectiveness of the Shelf Registration Statement, the Note
Indenture is not required to be qualified under the Trust Indenture
Act of 1939.
(xx) The Offering Memorandum, as of its date, and each
amendment or supplement thereto, as of its date (except for the
financial statements, including the notes thereto, and supporting
schedules and other financial, statistical and accounting data
included therein or omitted therefrom, as to which no opinion need
be expressed), contains all the information specified in, and
meeting the requirements of, Rule 144A(d)(4) under the Act.
-27-
(xxi) The authorized, issued and outstanding capital stock of
the Company has been duly and validly authorized and issued, is
fully paid and nonassessable and was not issued in violation of or
subject to preemptive or similar rights. The Company and its
subsidiaries had at July 31, 1996, an authorized and outstanding
capitalization as set forth in the Offering Memorandum.
In addition, such counsel shall state that it has participated in
conferences with officers and other representatives of the Company,
representatives of the independent public accountants for the Company, your
representatives and your counsel in connection with the preparation of the
Offering Memorandum and has considered the matters required to be stated therein
and the statements contained therein and, although such counsel has not
independently verified the accuracy, completeness or fairness of such statements
(except as indicated above), such counsel advises you that, on the basis of the
foregoing, no facts came to its attention that caused it to believe that the
Offering Memorandum (as amended or supplemented, if applicable), at the time
such Offering Memorandum was circulated or at the Closing Date, contained or
contains an untrue statement of a material fact or omitted or omits to state a
material fact required to be stated therein or necessary to make the statements
therein, in the light of the circumstances under which they were made, not
misleading. Without limiting the foregoing, such counsel may further state that
they assume no responsibility for, and have not independently verified, the
accuracy, completeness or fairness of the financial statements, notes and
schedules and other financial data included in the Offering Memorandum.
In rendering such opinion, such counsel may rely (i) as to matters of
fact, to the extent such counsel deems proper, on certificates of responsible
officers of the Company and public officials, (ii) as to matters of Ohio law and
environmental law, on an opinion or opinions of Xxxxxx, Xxxxxxx & Xxxxxxx L.L.P.
satisfactory to the Purchaser and counsel to the Purchaser and (iii) as to
matters of labor law, on an opinion of Xxxxx Xxxx LLP satisfactory to the
Purchaser and counsel to the Purchaser.
The opinions of such counsel described in this paragraph shall be rendered
to you at the request of the Company and shall so state therein.
(g) You shall have received an opinion, dated the Closing Date, of Xxxxxx
Xxxxxx & Xxxxxxx, your counsel, in form and substance reasonably satisfactory to
you, covering such matters as are customarily covered in such opinions.
(h) At the time this Agreement is executed and delivered by the Company
and on the Closing Date, you shall have received letters, substantially in the
form previously approved by you, from KPMG Peat Marwick LLP, independent
certified public accountants, with respect to the financial statements and
certain financial information contained in Offering Memorandum.
(i) The Company and the Trustee shall have entered into the Note Indenture
and you shall have received counterparts, conformed as executed, thereof.
-28-
(j) The Company shall have entered into the Registration Rights Agreement
and you shall have received counterparts, conformed as executed, thereof.
(k) On or before the Closing Date, the Purchaser and counsel for the
Purchaser shall have received an opinion from Xxxxxxxx, Xxxxx, Xxxxxx & Xxxxx,
in form and substance satisfactory to the Purchaser and counsel for the
Purchaser, with respect to the solvency of the Company upon issuance of the
Series A Notes and the consummation of the other transactions contemplated in
this Agreement, the other Operative Documents and the Offering Memorandum.
(l) The Offer shall have been consummated in accordance with the terms of
the Statement, and the Depositary shall have received the Requisite Consents.
(m) The Amendment shall have been duly authorized, executed and delivered
by the Company and Congress Financial Corporation. The Purchaser shall have
received true and correct copies of the Amendment and there exists 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 Series A Notes) no condition that would constitute a Default or an
Event of Default (each as defined in the WCI Revolving Credit Facility) under
the WCI Revolving Credit Facility.
(n) The Company shall not have failed at or prior to the Closing Date to
perform or comply with any of the agreements herein contained and required to be
performed or complied with by the Company at or prior to the Closing Date.
(o) The Equity Offer shall have been consummated in accordance with the
terms of the Equity Statement, and the Public Acceptance Condition shall have
been met, as confirmed by the Equity Depositary.
(p) Each of the Collateral Documents shall be satisfactory in form and
substance to the Purchaser and counsel to the Purchaser and shall have been
executed and delivered by all the respective parties thereto.
(q) Xxxxx Xxxx LLP shall have delivered to the Company or its counsel its
opinion to the effect that the Company is not in default in the performance of
the agreements between the Company and the United Steelworkers of America (the
"VEBA Term Sheet") related to the VEBA Trust, and there exists no condition
that, with notice, the passage of time or otherwise, would constitute such
default under the VEBA Term Sheet.
(r) On or before the Closing Date, the Purchaser shall have received:
(i) The Security Agreement (as defined in the Indenture), duly
executed by the Company and dated on or before the Closing Date, together
with:
-29-
A. acknowledgment copies of appropriate UCC-1 financing
statements or other documents under the provisions of the UCC or any
other applicable state law filed in each office where such filing is
necessary or appropriate to grant to the Trustee a lien of the
character contemplated by the Security Agreement and the priority
contemplated in Section 10.01(a) of the Indenture; and
B. evidence that all other actions necessary to perfect and
protect the liens created by the Security Agreement have been taken.
(ii) With respect to the Mortgaged Property (as defined in the
Indenture):
A. a Mortgage (as defined in the Indenture), duly executed and
acknowledged by the owner or holder of the fee interest constituting
the Mortgaged Property, dated on or before the Closing Date and
otherwise in form for recording in the appropriate recording office
of the political subdivision where the Mortgaged Property is
situated, together with such certificates, affidavits,
questionnaires or returns as shall be required in connection with
the recording or filing thereof and such UCC-1 financing statements
and other similar statements as are contemplated in respect of the
Mortgage by the local counsel opinion referred to in paragraph (w),
and any other instruments necessary to grant the interests purported
to be granted by the Mortgage under the laws of any applicable
jurisdiction, which Mortgage and financing statements and other
instruments shall be effective to create a lien on the Mortgaged
Property in favor of the Trustee, subject to no liens other than
liens permitted to be outstanding pursuant to the Mortgage or
permitted to be pari passu pursuant to Section 10.01(a) of the
Indenture;
B. such consents, approvals, amendments, supplements,
estoppels, tenant subordination agreements or other instruments as
shall be necessary in order for the owner or holder of the fee
interest to grant the lien contemplated by the Mortgage with respect
to the Mortgaged Property;
C. with respect to the Mortgage, a policy of title insurance
(or a commitment to issue such a policy) insuring (or committing to
insure) the lien of the Mortgage as a valid mortgage lien on the
real property and fixtures described therein with the priority
contemplated in Section 10.01(a) of the Indenture in respect of the
Securities in an amount not less than 100% of the fair market value
thereof which policy (or commitment) shall (a) be issued by First
American Title Insurance Company, (b) include such reinsurance
arrangements (with provisions for direct access) as shall be
acceptable to the Purchaser, (c) have been supplemented by such
endorsements, or, where such endorsements are not available at
commercially reasonable premium costs, opinion letters of special
-30-
counsel, architects or other professionals, which counsel,
architects or other professionals shall be acceptable to the
Purchaser, as shall be requested by the Purchaser (including,
without limitation, endorsements or opinion letters on matters
relating to usury, first loss, zoning, non-imputation, public road
access, contiguity (where appropriate), cluster, survey, variable
rate and so-called comprehensive coverage over covenants and
restrictions) and (d) contain only such exceptions to title as shall
be agreed to by the Purchaser prior to the Closing Date with respect
to the Mortgaged Property;
D. a survey of the Mortgaged Property complying with the
minimum detail requirements of the American Land Title Association
(as such requirements are in effect on the date of delivery of such
survey) certified to the Trustee and dated (or redated) not earlier
than six months prior to the date of delivery thereof, unless there
shall have occurred any exterior change in the property affected
thereby during such period, in which event such survey shall be
dated or redated to a date after the completion of such change,
which survey shall locate all improvements, public streets and
recorded easements affecting the Mortgaged Property;
E. policies or certificates of insurance as required by the
Mortgage, which policies or certificates shall bear mortgagee
endorsements of the character required by the Mortgage;
F. UCC, judgment and tax lien searches confirming that the
personal property comprising a part of the Mortgaged Property is
subject to no liens other than Prior Liens (as defined in the
Mortgage);
G. such affidavits, certificates and instruments of
indemnification as shall be required to induce the title company to
issue the policy or policies (or commitment) contemplated in
subparagraph (C) above;
H. checks payable to the appropriate public officials in
payment of all recording costs and transfer taxes (or checks or wire
transfers to the title insurance company in respect of such amounts)
due in respect of the execution, delivery or recording of the
Mortgage, together with a check or wire transfer for the title
insurance company in payment of its premium, search and examination
charges, survey costs and any other amounts due in connection with
the issuance of its policies (or commitments);
I. copies of all Leases (as defined in the Mortgage), all of
which Leases shall be satisfactory to the Purchaser; and
X. a certificate of an officer of the Company certifying that,
as of the date of delivery of such certificate, there is not
outstanding any citation, violation
-31-
or similar notice indicating that such real property contains
conditions which are not in compliance with local codes or
ordinances relating to building or fire safety or structural
soundness (other than any provisions of such codes or ordinances the
validity or applicability of which is being contested in good faith
by appropriate proceedings diligently prosecuted and as to which
enforcement proceedings have not been instituted or, if instituted,
have been stayed).
(iii) The VEBA Security Agreement (as defined in the Indenture),
duly executed by the Company and dated on or before the Closing Date,
together with:
A. acknowledgment copies of appropriate UCC-1 financing
statements or other documents under the provisions of the UCC or any
other applicable state law filed in each office where such filing is
necessary or appropriate to grant to the VEBA Trustee a lien of the
character contemplated by the VEBA Security Agreement and the
priority contemplated in Section 10.01(a) of the Indenture; and
B. evidence that all other actions necessary to perfect and
protect the liens created by the VEBA Security Agreement have been
taken.
(iv) With respect to the Mortgaged Property:
A. a VEBA Mortgage (as defined in the Indenture), duly
executed and acknowledged by the owner or holder of the fee interest
constituting the Mortgaged Property, dated on or before the Closing
Date and otherwise in form for recording in the appropriate
recording office of the political subdivision where the Mortgaged
Property is situated, together with such certificates, affidavits,
questionnaires or returns as shall be required in connection with
the recording or filing thereof and such UCC-1 financing statements
and other similar statements as are contemplated in respect of the
VEBA Mortgage by the local counsel opinion referred to in paragraph
(w), and any other instruments necessary to grant the interests
purported to be granted by the VEBA Mortgage under the laws of any
applicable jurisdiction, which VEBA Mortgage and financing
statements and other instruments shall be effective to create a lien
on the Mortgaged Property in favor of the VEBA Trustee (as defined
in the Mortgage), subject to no liens other than liens permitted to
be outstanding pursuant to the VEBA Mortgage;
B. with respect to the VEBA Mortgage, a policy of title
insurance (or a commitment to issue such a policy) insuring (or
committing to insure) the lien of the VEBA Mortgage as a valid
mortgage lien on the real property and fixtures described therein
with the priority contemplated in Section 10.01(a) of the Indenture
in respect of the Obligations (as defined in the VEBA Mortgage) in
an amount not less than $10,000,000 which policy (or commitment)
shall (a) be issued by First American Title Insurance Company and
(b) contain customary provisions and endorsements;
-32-
C. a survey of the Mortgaged Property complying with the
minimum detail requirements of the American Land Title Association
(as such requirements are in effect on the date of delivery of such
survey) certified to the VEBA Trustee and dated (or redated) not
earlier than six months prior to the date of delivery thereof,
unless there shall have occurred any exterior change in the property
affected thereby during such period, in which event such survey
shall be dated or redated to a date after the completion of such
change, which survey shall locate all improvements, public streets
and recorded easements affecting the Mortgaged Property;
D. policies or certificates of insurance as required by the
VEBA Mortgage, which policies or certificates shall bear mortgagee
endorsements of the character required by the VEBA Mortgage;
E. UCC, judgment and tax lien searches confirming that the
personal property comprising a part of the Mortgaged Property is
subject to no liens other than those liens permitted to be superior
to the VEBA Mortgage by the terms thereof;
F. such affidavits, certificates and instruments of
indemnification as shall be required to induce the title company to
issue the policy or policies (or commitment) contemplated in
subparagraph (B) above;
G. checks payable to the appropriate public officials in
payment of all recording costs and transfer taxes (or checks or wire
transfers to the title insurance company in respect of such amounts)
due in respect of the execution, delivery or recording of the VEBA
Mortgage, together with a check or wire transfer for the title
insurance company in payment of its premium, search and examination
charges, survey costs and any other amounts due in connection with
the issuance of its policies (or commitments); and
H. a certificate of an officer of the Company certifying that,
as of the date of delivery of such certificate, there is not
outstanding any citation, violation or similar notice indicating
that such real property contains conditions which are not in
compliance with local codes or ordinances relating to building or
fire safety or structural soundness (other than any provisions of
such codes or ordinances the validity or applicability of which is
being contested in good faith by appropriate proceedings diligently
prosecuted and as to which enforcement proceedings have not been
instituted or, if instituted, have been stayed).
(s) The Purchaser shall have received an opinion, dated the Closing Date,
from Xxxxxx, Xxxxxxx and Xxxxxxx L.L.P., local Ohio counsel, substantially in
the form of Exhibit B hereto.
-33-
(t) On or before the Closing Date, the Purchaser and counsel for the
Purchaser shall have received such further certificates, documents or other
information as they may have reasonably requested from the Company.
All opinions, certificates, letters and other documents required by this
Section 7 to be delivered by the Company will be in compliance with the
provisions hereof only if they are reasonably satisfactory in form and substance
to you. The Company will furnish the Purchaser with such conformed copies of
such opinions, certificates, letters and other documents as they shall
reasonably request.
8. Effective Date of Agreement and Termination. This Agreement shall
become effective upon the execution hereof.
This Agreement may be terminated at any time on or prior to the Closing
Date by you by notice to the Company if any of the following has occurred: (i)
subsequent to the date information is provided in the Offering Memorandum, any
Material Adverse Change which, in your judgment, materially impairs the
investment quality of any of the Series A Notes, (ii) any outbreak or escalation
of hostilities or other national or international calamity or crisis or material
adverse change in the financial markets of the United States or elsewhere, or
any other substantial national or international calamity or emergency if the
effect of such outbreak, escalation, calamity, crisis, crisis, material adverse
change or emergency would, in your judgment, make it impracticable or
inadvisable to market any of the Series A Notes or to enforce contracts for the
sale of any of the Series A Notes, (iii) any suspension or limitation of trading
generally in securities on the New York Stock Exchange or in the
over-the-counter markets or any setting of minimum prices for trading on such
exchange or markets, (iv) any declaration of a general banking moratorium by
either federal or New York authorities, (v) the taking of any action by any
federal, state or local government or agency in respect of its monetary or
fiscal affairs that in your judgment has a material adverse effect on the
financial markets in the United States, and would, in your judgment, make it
impracticable or inadvisable to market any of the Series A Notes or to enforce
contracts for the sale of any of the Series A Notes, (vi) the enactment,
publication, decree, or other promulgation of any federal or state statute,
regulation, rule or order of any court or other governmental authority which, in
your judgment, would have a Material Adverse Effect, or (vii) any securities of
the Company or any of its subsidiaries shall have been downgraded or placed on
any "watch list" for possible downgrading by any nationally recognized
statistical rating organization.
The indemnities and contribution provisions and the other agreements,
representations and warranties of the Company, its officers and directors and of
the Purchasers set forth in or made pursuant to this Agreement shall remain
operative and in full force and effect, and will survive delivery of and payment
for the Series A Notes, regardless of (i) any investigation, or statement as to
the results thereof, made by or on behalf of the Purchaser or by or on behalf of
the Company, the officers or directors of the Company or controlling person of
the Company, (ii) acceptance of the Series A Notes and payment for them
hereunder and (iii) termination of this Agreement.
-34-
If this Agreement shall be terminated by the Purchaser pursuant to clauses
(i) or (vii) of the first paragraph of this Section 8 or because of the failure
or refusal on the part of the Company to comply with the terms or to fulfill any
of the conditions of this Agreement, the Company agrees to reimburse you for all
out-of-pocket expenses (including the reasonable fees and disbursements of
counsel) incurred by you. Notwithstanding any termination of this Agreement, the
Company shall be liable for all expenses which it has agreed to pay pursuant to
Section 4(f) hereof.
Except as otherwise provided, this Agreement has been and is made solely
for the benefit of and shall be binding upon the Company, the Purchaser, any
Indemnified Person referred to herein and their respective successors and
assigns, all as and to the extent provided in this Agreement, and no other
person shall acquire or have any right under or by virtue of this Agreement. The
terms "successors and assigns" shall not include a purchaser of any of the
Series A Notes from the Purchaser merely because of such purchase.
9. Miscellaneous. Notices given pursuant to any provision of this
Agreement shall be addressed as follows: (a) if to the Company, WCI Steel, Inc.,
0000 Xxxx Xxxxxx, X.X., Xxxxxx, Xxxx 00000-0000, Attention: Xxxx X. Xxxx, with a
copy to Cadwalader, Xxxxxxxxxx & Xxxx, 000 Xxxxxx Xxxx, Xxx Xxxx, Xxx Xxxx
00000, Attention: Xxxxxxx X. Xxxx, Esq., c/o Managing Attorneys' Office, and (b)
if to the Purchaser, c/x Xxxxxxxxx, Xxxxxx & Xxxxxxxx Securities Corporation,
000 Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Xxxxxx Xxxxx, with, a copy
to Xxxxxx Xxxxxx & Xxxxxxx, 00 Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx, 00000 Attention:
Xxxxxxx X. Xxxxxxxx, Esq., or in any case to such other address as the person to
be notified may have requested in writing.
This Agreement shall be governed and construed in accordance with the
internal laws of the State of New York. This Agreement may be signed in various
counterparts which together shall constitute one and the same instrument.
-35-
Please confirm that the foregoing correctly sets forth the Agreement by
and between the Company and the Purchaser.
Very truly yours,
WCI STEEL, INC.
By: /s/ Xxxx X. Xxxx
-----------------------------
Name: Xxxx X. Xxxx
Title: VP, Finance and Chief
Financial Officer
Accepted and agreed to as of
the date first above written:
XXXXXXXXX, XXXXXX & XXXXXXXX
SECURITIES CORPORATION
By: /s/ Xxxx Xxxxxx
------------------------------
Name: Xxxx Xxxxxx
Title: Senior Vice President
-36-
SCHEDULE I
Niles Properties, Inc.
Youngstown Sinter Company
EXHIBIT A
WCI Steel, Incorporated USWA Defined Benefit Pension Plan
WCI Steel, Incorporated USWA Pension Plan
WCI Steel, Incorporated Retirement and Capital Accumulation Plan
WCI Steel, Incorporated Voluntary Employees Beneficiary Association
Youngstown Sinter Company - USWA Pension Plan
EXHIBIT B
[FORM OF OPINION OF LOCAL COUNSEL]
November 27, 1996
Fleet National Bank, N.A.,
as Collateral Agent,
and
The Purchasers Party to the Purchase
Agreement Referenced Below
Ladies and Gentlemen:
We have acted as special counsel in the State of Ohio to WCI Steel,
Inc. ("WCI"), an Ohio corporation, in connection with the execution and delivery
today of and the consummation of the transactions contemplated by (i) a purchase
agreement dated as of November 22, 1996 (as at any time amended, the "Purchase
Agreement"; unless otherwise defined herein, capitalized terms used herein have
the meanings assigned to them in the Purchase Agreement), among WCI and
Xxxxxxxxx, Xxxxxx & Xxxxxxxx Securities Corporation (the "Purchasers") and (ii)
each of the Collateral Documents, including, without limitation, the UCC-1
financing statements (collectively, the "Financing Statements") relating to the
Collateral naming WCI as debtor thereunder and Fleet National Bank, N.A. as
collateral agent and secured party thereunder (the "Collateral Agent").
There has been furnished to us for review the final forms of (i) the
Purchase Agreement, (ii) the Collateral Documents and (iii) the Financing
Statements (collectively, the "Documents"). We have reviewed the returns of
Uniform Commercial Code searches of _____________ relating to WCI, dated
_______________, 1996 (collectively, "UCC Searches"), copies of which are
attached hereto as Schedule A, and such other instruments, documents and
agreements as we have deemed necessary or appropriate to enable us to render the
opinions hereinafter set forth.
In rendering the opinions hereinafter set forth, we have assumed
that (a) there has occurred due execution and delivery of the Documents and all
documentation in connection therewith and (b) WCI owns the Collateral.
In addition, the opinions contained in Paragraphs 2 and 3 below are
qualified to the extent that enforceability of any of the Documents may be
limited by (i) bankruptcy,
insolvency, moratorium, reorganization or other laws relating to creditors'
rights generally, and (ii) general principles of equity, whether considered in
an action at law or in equity.
Subject to the foregoing assumptions and qualifications, we are of
the opinion that:
1. Neither Collateral Agent nor the Purchaser is required (a) to be
qualified to transact business, file any designation for service of process, or
file any reports or pay any taxes in the State of Ohio, (b) to comply with any
statutory or regulatory requirement applicable only to financial institutions
chartered or qualified to do business in the State of Ohio or required to be
chartered or qualified to do business in the State of Ohio, in each case, solely
by reason of the execution and delivery, or filing or recording, of any of the
Documents or by reason of the participation in any of the transactions under or
contemplated by the Documents, including, without limitation, the extension of
any credit contemplated thereby, the making and receipt of payments pursuant
thereto and the exercise of any remedy thereunder. If it were determined that
any such qualification, filing or payment were required, the validity of the
Documents would not be affected thereby, but if the Collateral Agent or the
Purchasers were not qualified, the Collateral Agent or the Purchasers, as the
case may be, would be precluded from enforcing their respective rights in the
courts of the State of Ohio until such time as they are qualified to transact
business in the State of Ohio.
2. The Mortgage creates and constitutes (i) a valid mortgage lien on
the real property described therein (the "Real Property"), (ii) a valid security
interest in such of the Mortgaged Property (the "UCC Property") as is subject to
the provisions of Article 9 of the Uniform Commercial Code as in effect in the
State of Ohio (the "UCC") and (iii) a valid common law lien on or pledge of such
of the Mortgaged Property as is not UCC Property or Real Property (such
property, together with the UCC Property, the "Personal Property"). The Mortgage
is enforceable against the mortgagor named therein in accordance with its terms.
The Mortgage is in proper form under applicable laws of the State of Ohio to be
accepted for recording by the Recorder of Trumbull County. [Describe
limitations, if any, to foreclosure or exercise of remedies.]
3. The Security Agreement creates and constitutes a valid security
interest in, lien on or pledge of the Pledged Collateral (as defined therein)
and, to the extent that the laws of the State of Ohio are applied thereto, each
Collateral Document is enforceable against the pledgor named therein in
accordance with its terms.
4. The Financing Statements relating to (i) the Mortgage have been
properly filed with the Office of the Secretary of State of Ohio and with the
Recorder of Trumbull County and (ii) each other Collateral Document has been
properly filed with the Office of the Secretary of State of Ohio and with the
Recorder of Trumbull County. The security interest, lien or pledge created by
each Collateral Document (assuming that the Mortgage has been duly recorded) is
duly perfected.
-2-
5. The recording of the Mortgage and the filing of the Financing
Statements with the recorders and in the offices described above are the only
actions, recordings or fillings necessary to publish notice and protect the
validity of and to establish of record the rights of the parties under the
Documents, except (i) that continuation statements under the UCC are required to
be filed within ________ months prior to the expiration of _____ years from the
date of filing of the Financing Statements, and (ii) that a security interest in
or pledge of [specify collateral] cannot be perfected by filing Financing
Statements or recording a Mortgage, but must be perfected by taking physical
possession thereof.
6. The execution, delivery, recordation and performance by the
Collateral Agent, the Purchaser and WCI of the Documents to which each is a
party (i) will not violate any existing law, governmental rule or regulation of
the State of Ohio and (ii) do not require any license, permit, authorization,
consent or other approval of any court, administrative agency or other
governmental authority of the State of Ohio.
7. Neither the Collateral Agent nor the Purchaser shall be liable
for any loss, cost, expense or liability (including, without limitation,
clean-up, corrective action or response costs, penalties, fines or other
impositions of governmental agencies and judgments of private or public
litigants) in respect of any matter arising out of or relating to or under any
Environmental Laws of the State of Ohio by reason of the execution and delivery
of or participation in any of the transactions under or contemplated by any of
the Documents, including, without limitation, the extension of any credit
contemplated thereby, the making and receipt of payments pursuant thereto and
the exercise of any remedy under any of the Documents. The laws of the State of
Ohio do not provide for a statutory or regulatory lien in favor of any
governmental entity for liability under the Environmental Laws of the State of
Ohio. Under the laws of the State of Ohio, there are no statutory or regulatory
requirements which will be imposed on the Collateral Agent or the Purchasers
relating to the granting of a mortgage or security interest in the Real Property
that (i) require any notification or certification to the State of Ohio or any
applicable political subdivision thereof of such mortgage or security interest,
or (ii) in the event of a discharge of any Hazardous Materials (as defined in
the Mortgages), impose responsibility or liability on the part of the Collateral
Agent or any of the Purchasers for the undertaking of remedial measures to
alleviate environmental contamination resulting from such discharge.
8. The Collateral Agent is permitted under the laws of the State of
Ohio without naming all of the Purchasers in any applicable legal proceeding to
exercise remedies under the Documents for the realization of any of the
Collateral in its own name, as collateral agent.
9. No taxes or other charges, including, without limitation,
intangible or documentary stamp taxes, mortgage or recording taxes, transfer
taxes or similar charges, are payable to the State of Ohio, Trumbull County or
to any jurisdiction therein on account of the execution and delivery of the
Documents or the creation of the indebtedness evidenced or
-3-
secured by any of the Documents or the recording by any of the Documents or the
recording or filing of any of the Collateral Documents, except for nominal
filing or recording fees, which filing or recording fees have been paid.
We are admitted to practice in the State of Ohio. We express no
opinion as to matters under or involving the laws of any jurisdiction other than
the laws of the United States and the State of Ohio and its political
subdivisions.
The foregoing opinions may be relied on by any successor or assignee
of your interest under the Documents, but may not be relied upon or distributed
to any other person without our consent.
-4-
