EXHIBIT 10.13
$150,000,000
CALIFORNIA STEEL INDUSTRIES, INC.
PURCHASE AGREEMENT
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March 30, 1999
▇▇▇▇▇▇▇ ▇▇▇▇▇ & CO.
▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇
Incorporated
BANCBOSTON ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ INC.
NATIONSBANC ▇▇▇▇▇▇▇▇▇▇ SECURITIES LLC
▇/▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ & ▇▇.
▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇
Incorporated
▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Ladies and Gentlemen:
California Steel Industries, Inc., a Delaware corporation (the
"Company"), confirms its agreement with ▇▇▇▇▇▇▇ ▇▇▇▇▇ & Co., ▇▇▇▇▇▇▇ Lynch,
Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇ Incorporated ("▇▇▇▇▇▇▇ ▇▇▇▇▇") and each of the other
Initial Purchasers named in Schedule A hereto (collectively, the "Initial
Purchasers," which term shall also include any initial purchaser substituted as
hereinafter provided in Section 11 hereof), for whom ▇▇▇▇▇▇▇ ▇▇▇▇▇, BancBoston
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Inc. and NationsBanc ▇▇▇▇▇▇▇▇▇▇ Securities LLC are acting as
representatives (in such capacity, the "Representatives"), with respect to the
issue and sale by the Company and the purchase by the Initial Purchasers, acting
severally and not jointly, of the respective principal amounts set forth in said
Schedule A of $150,000,000 aggregate principal amount of the Company's 8 1/2%
Senior Notes due 2009 (the "Securities"). The Securities are to be issued
pursuant to an indenture dated as of April 6, 1999 (the "Indenture") between the
Company and State Street Bank and Trust Company of California, N.A., as trustee
(the "Trustee"). Securities issued in book-entry form will be issued to Cede &
Co. as nominee of The Depository Trust Company ("DTC") pursuant to a letter
agreement, to be dated as of the Closing Time (as
defined in Section 2(b)) (the "DTC Agreement"), among the Company, the Trustee
and DTC.
The Company understands that the Initial Purchasers propose to make an
offering of the Securities on the terms and in the manner set forth herein and
agrees that the Initial Purchasers may resell, subject to the conditions set
forth herein, all or a portion of the Securities to purchasers ("Subsequent
Purchasers") at any time after the date of this Agreement. The Securities are
to be offered and sold through the Initial Purchasers without being registered
under the Securities Act of 1933, as amended (the "1933 Act"), in reliance upon
exemptions therefrom. Pursuant to the terms of the Securities and the
Indenture, investors that acquire Securities may only resell or otherwise
transfer such Securities if such Securities are hereafter registered under the
1933 Act or if an exemption from the registration requirements of the 1933 Act
is available (including the exemption afforded by Rule 144A ("Rule 144A") or
Regulation S ("Regulation S") of the rules and regulations promulgated under the
1933 Act by the Securities and Exchange Commission (the "Commission")).
The holders of Securities (including the Initial Purchasers and
subsequent transferees) will be entitled to the benefits of a registration
rights agreement, to be dated as of April 6, 1999 (the "Registration Rights
Agreement"), by and among the Company and the Initial Purchasers substantially
in the form attached as Exhibit A hereto.
The Company has prepared and delivered to each Initial Purchaser
copies of a preliminary offering memorandum dated March 17, 1999 (the
"Preliminary Offering Memorandum") and has prepared and will deliver to each
Initial Purchaser, on the date hereof or the next succeeding day, copies of a
final offering memorandum dated March 30, 1999 (the "Final Offering
Memorandum"), each for use by such Initial Purchaser in connection with its
solicitation of purchases of, or offering of, the Securities. "Offering
Memorandum" means, with respect to any date or time referred to in this
Agreement, the most recent offering memorandum (whether the Preliminary Offering
Memorandum or the Final Offering Memorandum, or any amendment or supplement to
either such document) which has been prepared and delivered by the Company to
the Initial Purchasers in connection with their solicitation of purchases of, or
offering of, the Securities.
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SECTION 1. Representations and Warranties.
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(a) Representations and Warranties by the Company. The Company
represents and warrants to each Initial Purchaser as of the date hereof and as
of the Closing Time referred to in Section 2(b) hereof, and agrees with each
Initial Purchaser as follows:
(i) Similar Offerings. The Company has not, directly or
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indirectly, solicited any offer to buy or offered to sell, and will not,
directly or indirectly, solicit any offer to buy or offer to sell, in the
United States or to any U.S. citizen or resident, any security that is or
would be integrated with the sale of the Securities in a manner that would
require the Securities to be registered under the 1933 Act.
(ii) Offering Memorandum. The Offering Memorandum does not, and
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at the Closing Time will not, include an untrue statement of a material
fact or omit to state a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading; provided the Company makes no representation,
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warranty or agreement as to statements contained in or omitted from the
Offering Memorandum made in reliance upon and in conformity with
information furnished to the Company in writing by any Initial Purchaser
through the Representatives expressly for use in the Offering Memorandum.
(iii) Independent Accountants. The accountants who certified the
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financial statements and supporting schedules included in the Offering
Memorandum are independent certified public accountants with respect to the
Company and its subsidiary within the meaning of Regulation S-X under the
1933 Act.
(iv) Financial Statements. The financial statements of the Company
--------------------
and its consolidated subsidiary, together with the related schedules and
notes, included in the Offering Memorandum present fairly the financial
position of the Company and its consolidated subsidiary at the dates
indicated and the statement of operations, stockholders' equity and cash
flows of the Company and its consolidated subsidiary for the periods
specified; said financial statements have been prepared in conformity with
generally accepted accounting principles ("GAAP") applied on a consistent
basis throughout the periods involved. The sup-
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porting schedules, if any, included in the Offering Memorandum present
fairly in accordance with GAAP the information required to be stated
therein. The selected financial data and the summary financial information
included in the Offering Memorandum present fairly the information shown
therein and have been compiled on a basis consistent with that of the
audited financial statements included in the Offering Memorandum.
Each of the Company and its subsidiary maintains a system of internal
accounting controls sufficient to provide reasonable assurance that (1)
transactions are executed in accordance with management's general or
specific authorizations; (2) transactions are recorded as necessary to
permit preparation of financial statements in conformity with GAAP and to
maintain asset accountability; (3) access to assets is permitted only in
accordance with management's general or specific authorization; and (4) the
recorded accountability for assets is compared with the existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences.
(v) No Material Adverse Change in Business. Since the respective
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dates as of which information is given in the Offering Memorandum, except
as otherwise stated therein, (A) there has been no material adverse change
in the condition, financial or otherwise, or in the earnings or business
affairs of the Company and its subsidiary considered as one enterprise (a
"Material Adverse Effect"), whether or not arising in the ordinary course
of business, (B) there have been no transactions entered into by the
Company or its subsidiary, other than those in the ordinary course of
business, which are material with respect to the Company and its subsidiary
considered as one enterprise and (C) there has been no dividend or
distribution of any kind declared, paid or made by the Company on any class
of its capital stock.
(vi) Good Standing of the Company. The Company has been duly
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organized and is validly existing as a corporation in good standing under
the laws of the State of Delaware and has the corporate power and authority
to own, lease and operate its properties and to conduct its business as
described in the Offering Memorandum and to enter into and perform its
obligations under this Agreement; and the Company is duly qualified as a
foreign corporation to transact business and is in good standing in each
other jurisdiction in which such qualification is required,
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whether by reason of the ownership or leasing of property or the conduct of
business, except where the failure so to qualify or to be in good standing
would not result in a Material Adverse Effect.
(vii) No Significant Subsidiaries. The Company does not have a
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"significant subsidiary" (as such term is defined in Rule 1-02 of
Regulation S-X).
(viii) Capitalization. The capitalization of the Company is as set
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forth in the Offering Memorandum in the column entitled "Actual" under the
caption "Capitalization."
(ix) Authorization of Agreement. This Agreement has been duly
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authorized, executed and delivered by the Company.
(x) Authorization of the Indenture. The Indenture has been duly
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authorized by the Company and, at the Closing Time, will have been duly
executed and delivered by the Company and will constitute a valid and
binding agreement of the Company, enforceable against the Company in
accordance with its terms, except as the enforcement thereof may be limited
by bankruptcy, insolvency (including, without limitation, all laws relating
to fraudulent transfers), reorganization, moratorium or other similar laws
relating to or affecting enforcement of creditors' rights generally, or by
general principles of equity (regardless of whether enforcement is
considered in a proceeding in equity or at law).
(xi) Authorization of the Registration Rights Agreement. The
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Registration Rights Agreement has been duly authorized by the Company and,
when executed and delivered by the Company, will constitute a valid and
binding obligation of the Company, enforceable against the Company in
accordance with its terms, except as the enforcement thereof may be limited
by bankruptcy, insolvency (including, without limitation, all laws relating
to fraudulent transfers), reorganization, moratorium and similar laws
affecting creditors' rights and remedies generally, and subject, as to
enforceability, to general principles of equity, including principles of
commercial reasonableness, good faith and fair dealing (regardless of
whether enforcement is sought in a proceeding at law or in equity) and
except as rights to indemnity and contribution there-
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under may be limited by Federal and state securities laws or principles of
public policy.
(xii) Authorization of the Securities. The Securities, Exchange
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Notes and Private Exchange Notes (each as defined in the Registration
Rights Agreement), if any, have been duly authorized and, at the Closing
Time, will have been duly executed by the Company and, when authenticated
in the manner provided for in the Indenture and delivered against payment
of the purchase price therefor, will constitute valid and binding
obligations of the Company, enforceable against the Company in accordance
with their terms, except as the enforcement thereof may be limited by
bankruptcy, insolvency (including, without limitation, all laws relating to
fraudulent transfers), reorganization, moratorium or other similar laws
relating to or affecting enforcement of creditors' rights generally, or by
general principles of equity (regardless of whether enforcement is
considered in a proceeding in equity or at law), and will be in the form
contemplated by, and entitled to the benefits of, the Indenture; and the
Exchange Notes and the Private Exchange Notes, if any, when executed,
authenticated, issued and delivered by the Company, in exchange for the
Securities in accordance with the terms of the Registration Rights
Agreement, will constitute valid and binding obligations of the Company,
entitled to the benefits of the Indenture and enforceable against the
Company in accordance with the terms thereof, except as the enforcement
thereof may be limited by bankruptcy, insolvency (including, without
limitation, all laws relating to fraudulent transfers), reorganization,
moratorium and similar laws affecting creditors' rights and remedies
generally, and subject, as to enforceability, to general principles of
equity, including principles of commercial reasonableness, good faith and
fair dealing (regardless of whether enforcement is sought in a proceeding
at law or in equity).
(xiii) Authorization of New Credit Facility. The Credit Facility
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(as defined in the Indenture) has been duly authorized by the Company and
constitutes a valid and binding obligation of the Company, enforceable
against the Company in accordance with its terms, except as the enforcement
thereof may be limited by bankruptcy, insolvency (including without
limitation, all laws relating to fraudulent transfer), reorganization,
moratorium or other similar laws relating to or affecting enforcement of
creditor's rights generally, or by general principles of
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equity (regardless of whether enforcement is considered in a proceeding in
equity or at law).
(xiv) Description of the Securities, the Registration Rights
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Agreement and the Indenture. The Securities, the Exchange Notes, the
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Private Exchange Notes, if any, the Registration Rights Agreement and the
Indenture will conform in all material respects to the respective
statements relating thereto contained in the Offering Memorandum and will
be in substantially the respective forms previously delivered to the
Initial Purchasers.
(xv) Absence of Defaults and Conflicts. Neither the Company nor
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its subsidiary is in violation of its charter or by-laws or in default in
the performance or observance of any obligation, agreement, covenant or
condition contained in any contract, indenture, mortgage, deed of trust,
loan or credit agreement, note, lease or other agreement or instrument to
which the Company or its subsidiary is a party or by which it or its
subsidiary may be bound, or to which any of the property or assets of the
Company or its subsidiary is subject (collectively, "Agreements and
Instruments"), except for such defaults that would not result in a Material
Adverse Effect; and the execution, delivery and performance of this
Agreement, the Indenture and the Securities and any other agreement or
instrument entered into or issued or to be entered into or issued by the
Company in connection with the transactions contemplated hereby or thereby
or in the Offering Memorandum and the consummation of the transactions
contemplated herein and in the Offering Memorandum (including the issuance
and sale of the Securities and the use of the proceeds from the sale of the
Securities as described in the Offering Memorandum under the caption "Use
of Proceeds") and compliance by the Company with its obligations hereunder
have been duly authorized by all necessary corporate action and do not and
will not, whether with or without the giving of notice or passage of time
or both, conflict with or constitute a breach of, or default or a Repayment
Event (as defined below) under, or result in the creation or imposition of
any lien, charge or encumbrance upon any property or assets of the Company
or any of its subsidiaries pursuant to, the Agreements and Instruments,
except for such conflicts, breaches or defaults or liens, charges or
encumbrances that, in the aggregate, would not result in a Material Adverse
Effect, nor will such action result in any violation of the provisions of
the charter or by-laws of the Company or its subsidiary or any appli-
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cable law, statute, rule, regulation, judgment, order, writ or decree of
any government, government instrumentality or court, domestic or foreign,
having jurisdiction over the Company or its subsidiary or any of their
assets or properties. As used herein, a "Repayment Event" means any event
or condition that gives the holder of any note, debenture or other evidence
of indebtedness (or any person acting on such holder's behalf) the right to
require the repurchase, redemption or repayment of all or a portion of such
indebtedness by the Company or its subsidiary.
(xvi) Absence of Labor Dispute. No labor dispute with the
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employees of the Company or its subsidiary exists or, to the knowledge of
the Company, is imminent, and the Company is not aware of any existing or
imminent labor disturbance by the employees of any of its or any of its
subsidiary's principal suppliers, manufacturers, customers or contractors,
which, in either case, may reasonably be expected to result in a Material
Adverse Effect.
(xvii) Absence of Proceedings. Except as disclosed in the Offering
----------------------
Memorandum, there is no action, suit, proceeding, inquiry or investigation
before or by any court or governmental agency or body, domestic or foreign,
now pending, or, to the knowledge of the Company, threatened, against or
affecting the Company or its subsidiary that might reasonably be expected
to result in a Material Adverse Effect, or that might reasonably be
expected to materially and adversely affect the properties or assets of the
Company or its subsidiary or the consummation of this Agreement or the
performance by the Company of its obligations hereunder. The aggregate of
all pending legal or governmental proceedings to which the Company or its
subsidiary is a party or of which any of their respective property or
assets is the subject which are not described in the Offering Memorandum,
including ordinary routine litigation incidental to the business, could not
reasonably be expected to result in a Material Adverse Effect.
(xviii) Possession of Intellectual Property. The Company and its
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subsidiary own or otherwise possess the right to use patents, licenses,
inventions, copyrights, know-how (including trade secrets and other
unpatented and/or unpatentable proprietary or confidential information,
systems or procedures), trademarks, service marks, trade names or other
intellectual property (collectively, "Intellectual Property") used in the
conduct of the business as currently conducted, and neither the Company nor
its
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subsidiary has received any notice or is otherwise aware of any
infringement of or conflict with asserted rights of others with respect to
any Intellectual Property except to the extent the absence of which would
have a Material Adverse Effect, that would result in a Material Adverse
Effect.
(xix) Absence of Further Requirements. No filing with, or
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authorization, approval, consent, license, order, registration,
qualification or decree of, any court or governmental authority or agency
is necessary or required for the performance by the Company of its
obligations hereunder, in connection with the offering, issuance or sale of
the Securities hereunder or the consummation of the transactions
contemplated by this Agreement.
(xx) Possession of Licenses and Permits. The Company and its
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subsidiary possess such permits, licenses, approvals, consents and other
authorizations (collectively, "Governmental Licenses") issued by the
appropriate federal, state, local or foreign regulatory agencies or bodies
necessary to conduct the business now operated by them except for those the
lack of which would not cause a Material Adverse Effect; the Company and
its subsidiary are in compliance with the terms and conditions of all such
Governmental Licenses, except where the failure so to comply would not, in
the aggregate, have a Material Adverse Effect; all of the Governmental
Licenses are valid and in full force and effect, except when the invalidity
of such Governmental Licenses or the failure of such Governmental Licenses
to be in full force and effect would not have a Material Adverse Effect;
and neither the Company nor its subsidiary has received any notice of
proceedings relating to the revocation or modification of any such
Governmental Licenses which, singly or in the aggregate, if the subject of
an unfavorable decision, ruling or finding, would result in a Material
Adverse Effect.
(xxi) Title to Property. The Company and its subsidiary have valid
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title to all real property owned by the Company and its subsidiary and
valid title to all other properties owned by them, in each case, free and
clear of all mortgages, pledges, liens, security interests, claims,
restrictions or encumbrances of any kind, except such as (a) are described
in the Offering Memorandum or (b) do not, singly or in the aggregate,
materially affect the value of such property and do not interfere with the
use made and proposed to be made of such property by the Com-
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pany or its subsidiary; and all of the leases and subleases material to the
business of the Company and its subsidiary, considered as one enterprise,
and under which the Company or its subsidiary holds properties described in
the Offering Memorandum, are in full force and effect, and neither the
Company nor its subsidiary has any notice of any material claim of any sort
that has been asserted by anyone adverse to the rights of the Company or
its subsidiary under any of the leases or subleases mentioned above, or
materially affecting or questioning the rights of such the Company or its
subsidiary to the continued possession of the leased or subleased premises
under any such lease or sublease.
(xxii) Tax Returns. The Company and its subsidiary have filed all
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material federal, state, local and foreign tax returns that are required to
be filed or have duly requested extensions thereof and have paid all taxes
reflected as due on such returns and any related assessments, fines or
penalties, except for any such tax, assessment, fine or penalty that is
being contested in good faith and by appropriate proceedings or except for
any failure to file such returns that, in the aggregate, would not have a
Material Adverse Effect; and adequate charges, accruals and reserves have
been provided for in the financial statements referred to in Section
1(a)(iv) above in respect of all federal, state, local and foreign taxes
for all periods as to which the tax liability of the Company or any of its
subsidiaries has not been finally determined or remains open to examination
by applicable taxing authorities.
(xxiii) Environmental Laws. Except as described in the Offering
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Memorandum and except such matters as would not, singly or in the
aggregate, result in a Material Adverse Effect, to the knowledge of the
Company, after due inquiry, (A) neither the Company nor its subsidiary is
in violation of any federal, state, local or foreign statute, law, rule,
regulation, ordinance, code, or rule of common law or any judicial or
administrative interpretation thereof, including any judicial or
administrative order, decree or judgment, relating to pollution or
protection of human health or the environment (including, without
limitation, ambient air, indoor air, surface water, groundwater, land
surface or subsurface strata, and natural resources such as flora, fauna
and wetlands) including, without limitation, laws and regulations relating
to the release or threatened release of Hazardous Materials or to
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the manufacture, processing, distribution, use, treatment, storage,
disposal, transport or handling of Hazardous Materials (collectively,
"Environmental Laws"), (B) the Company and its subsidiary have all material
permits, authorizations and approvals required under any applicable
Environmental Laws which are all in full force and effect, and are each in
compliance with their requirements, (C) there are no pending or threatened
administrative, regulatory or judicial actions, suits, demands, demand
letters, claims, liens, notices of noncompliance or violation,
investigations or proceedings relating to any Environmental Law against the
Company or its subsidiary, and (D) there are no past or present events,
conditions, activities or circumstances that might reasonably be expected
to prevent the Company or its subsidiary from compliance with Environmental
Laws or give rise to any liability under any Environmental Law (E) neither
the Company nor its subsidiary has assumed by contract or agreement any
liabilities or obligations arising under any Environmental Law including,
without limitation, any such liabilities or obligations with respect to
formerly owned, leased or operated real property or facilities, or former
divisions or subsidiaries, (F) neither the Company nor its subsidiary has
entered into or agreed to any judgment, decree or order by any judicial or
administrative tribunal or agency and neither the Company nor its
subsidiary is subject to any judgment, decree order or agreement, in each
case relating to compliance with any Environmental Law or requiring the
Company or its subsidiary to conduct any investigation, response,
corrective or other action with respect to any Hazardous Materials under
any Environmental Laws.
(xxiv) ERISA. Except as described in the Offering Memorandum, to the
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knowledge of the Company, after due inquiry, none of the Company or its
subsidiary has incurred any liability for any prohibited transaction or
funding deficiency or any complete or partial withdrawal liability with
respect to any pension, profit sharing or other plan which is subject to
the Employee Retirement Income Security Act of 1974, as amended ("ERISA"),
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to which the Company or its subsidiary makes or ever has made a
contribution and in which any employee of the Company or its subsidiary is
or has ever been a participant, which, individually or in the aggregate,
could reasonably be expected to have or result in a Material Adverse
Effect. With respect to such plans, to the knowledge of Company, after due
inquiry, each of the Company and its subsidiary is in compliance in all
respects with all applicable provisions
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of ERISA, except where the failure to so comply could not, in the
aggregate, reasonably be expected to have or result in a Material Adverse
Effect.
(xxv) Insurance. The Company and its subsidiary are insured by
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financially sound and reputable insurers, in such amounts and covering such
risks as is prudent and customary in the business and in the location in or
at which they are engaged, and all such insurance is in full force and
effect.
(xxvi) Questionable Payments. To the Company's knowledge, neither
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the Company nor its subsidiary nor any employee or agent of the Company or
its subsidiary has received or retained any funds in violation of any law,
rule or regulation, which payment, receipt or retention of funds is of a
character required to be disclosed in the Offering Memorandum.
(xxvii) Investment Company Act. The Company is not, and upon the
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issuance and sale of the Securities as herein contemplated and the
application of the net proceeds therefrom as described in the Offering
Memorandum will not be, an "investment company" or an entity "controlled"
by an "investment company" as such terms are defined in the Investment
Company Act of 1940, as amended (the "1940 Act").
(xxviii) Market Data. The statistical and market-related data
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included in the Offering Memorandum are based on or derived from sources
that the Company believes to be reliable and accurate in all material
respects or represent the Company's good faith estimates that are made on
the basis of data derived from such sources.
(xxix) Registration Rights. There are no holders of securities
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(debt or equity) of the Company, or holders of rights (including, without
limitation, preemptive rights), warrants or options to obtain securities of
the Company, who in connection with the issuance, sale and delivery of the
Securities and the Exchange Notes, if any, and the execution, delivery and
performance of this Agreement and the Registration Rights Agreement, have
the right to request the Company to register securities held by them under
the ▇▇▇▇ ▇▇▇.
(xxx) Rule 144A Eligibility. The Securities are eligible for
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resale pursuant to Rule 144A and will not be, at
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the Closing Time, of the same class as securities listed on a national
securities exchange registered under Section 6 of the 1934 Act, or quoted
in a U.S. automated interdealer quotation system.
(xxxi) No General Solicitation. None of the Company, its
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affiliates, as such term is defined in Rule 501(b) under the 1933 Act
("Affiliates"), or any person acting on its or any of their behalf (other
than the Initial Purchasers, as to whom the Company makes no
representation) has engaged or will engage, in connection with the offering
of the Securities, in any form of general solicitation or general
advertising within the meaning of Rule 502(c) under the 1933 Act.
(xxxii) No Registration Required. Subject to compliance by the
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Initial Purchasers with the representations and warranties set forth in
Section 2 and the procedures set forth in Section 6 hereof, it is not
necessary in connection with the offer, sale and delivery of the Securities
to the Initial Purchasers and to each Subsequent Purchaser in the manner
contemplated by this Agreement and the Offering Memorandum to register the
Securities under the 1933 Act or to qualify the Indenture under the Trust
Indenture Act of 1939, as amended (the "1939 Act").
(xxxiii) No Directed Selling Efforts. With respect to those
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Securities sold in reliance on Regulation S, (A) none of the Company, its
Affiliates or any person acting on its or their behalf (other than the
Initial Purchasers, as to whom the Company makes no representation) has
engaged or will engage in any directed selling efforts within the meaning
of Regulation S and (B) each of the Company and its Affiliates and any
person acting on its or their behalf (other than the Initial Purchasers, as
to whom the Company makes no representation) has complied and will comply
with the offering restrictions requirement of Regulation S.
(xxxiv) Solvency. Neither the Company nor its subsidiary is now,
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or hereafter giving effect to the issuance of the Notes and the
consummation of the transactions contemplated by the Final Memorandum will
be (i) insolvent, (ii) left with unreasonable small capital with which to
engage in its business or (iii) incurring debt beyond its ability to pay
such debts as they become due or intends to, nor do any of them believe
that they will, incur debts beyond their ability to pay such debts as they
mature. As
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of the date hereof, the fair market value of the assets of the Company and
its subsidiary exceeds, and at the Closing Time the fair market value of
the assets of the Company and its subsidiary will exceed, the amounts that
will be required to be paid on or in respect of their existing debts and
other liabilities when and as they become absolute and mature. The assets
of the Company and its subsidiary do not constitute unreasonably small
capital to carry on their respective businesses as conducted or proposed to
be conducted.
(xxxv) No Stabilization or Manipulation. Neither the Company nor
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any of its officers, directors or controlling persons has taken, directly
or indirectly, any action designed to cause or result in, or that has
constituted or that might reasonably be expected to constitute, the
stabilization or manipulation (as such terms are defined under the
Securities Exchange Act of 1934, as amended) of the price of any security
of the Company to facilitate the sale or resale of the Securities.
(b) Officer's Certificates. Any certificate signed by any officer
of the Company or its subsidiary delivered to the Representatives or to counsel
for the Initial Purchasers shall be deemed a representation and warranty by the
Company to each Initial Purchaser as to the matters covered thereby.
SECTION 2. Sale and Delivery to Initial Purchasers; Closing.
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(a) Securities. On the basis of the representations and warranties
herein contained and subject to the terms and conditions herein set forth, the
Company agrees to sell to each Initial Purchaser, severally and not jointly, and
each Initial Purchaser, severally and not jointly, agrees to purchase from the
Company, at the price set forth in Schedule B, the aggregate principal amount of
Securities set forth in Schedule A opposite the name of such Initial Purchaser,
plus any additional principal amount of Securities that such Initial Purchaser
may become obligated to purchase pursuant to the provisions of Section 11
hereof.
(b) Payment. Payment of the purchase price for, and delivery of
certificates for, the Securities shall be made at the office of ▇▇▇▇▇▇ ▇▇▇▇▇▇ &
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, or at such other place as
shall be agreed upon by the Representatives and the Company, at 9:00 A.M. on the
fifth business day after the date hereof (unless postponed
-14-
in accordance with the provisions of Section 11), or such other time not later
than ten business days after such date as shall be agreed upon by the
Representatives and the Company (such time and date of payment and delivery
being herein called the "Closing Time").
Payment shall be made to the Company by wire transfer of immediately
available funds to a bank account or accounts designated by the Company, against
delivery to the Representatives for the respective accounts of the Initial
Purchasers of certificates for the Securities to be purchased by them. It is
understood that each Initial Purchaser has authorized the Representatives, for
its account, to accept delivery of, receipt for, and make payment of the
purchase price for, the Securities which it has agreed to purchase. ▇▇▇▇▇▇▇
▇▇▇▇▇, individually and not as representative of the Initial Purchasers, may
(but shall not be obligated to) make payment of the purchase price for the
Securities to be purchased by any Initial Purchaser whose funds have not been
received by, the Closing Time, but such payment shall not relieve such Initial
Purchaser from its obligations hereunder. The certificates representing the
Securities shall be registered in the name of Cede & Co. pursuant to the DTC
Agreement and shall be made available for examination and packaging by the
Initial Purchasers in The City of New York not later than 10:00 A.M. on the last
business day prior to the Closing Time.
(c) Qualified Institutional Buyer. Each Initial Purchaser severally
and not jointly represents and warrants to, and agrees with, the Company that it
is a "qualified institutional buyer" within the meaning of Rule 144A under the
1933 Act (a "Qualified Institutional Buyer").
(d) Denominations; Registration. Certificates for the Securities
shall be in such denominations ($1,000 or integral multiples thereof) and
registered in such names as the Representatives may request in writing at least
one full business day before the Closing Time.
SECTION 3. Covenants of the Company. The Company covenants with each
------------------------
Initial Purchaser as follows:
(a) Offering Memorandum. The Company, as promptly as possible, will
furnish to each Initial Purchaser, without charge, such number of copies of the
Preliminary Offering Memorandum, the Final Offering Memorandum and any
amendments and supplements thereto and documents incorporated by reference
therein as such Initial Purchaser may reasonably request.
-15-
(b) Notice and Effect of Material Events. The Company will
immediately notify each Initial Purchaser, and confirm such notice in writing,
of (x) any filing made by the Company of information relating to the offering of
the Securities with any securities exchange or any other regulatory body in the
United States or any other jurisdiction, and (y) prior to the completion of the
placement of the Securities by the Initial Purchasers as evidenced by a notice
in writing from the Initial Purchasers to the Company, any material changes in
or affecting the earnings, business affairs or business prospects of the Company
and its subsidiaries that (i) make any statement in the Offering Memorandum
false or misleading or (ii) are not disclosed in the Offering Memorandum. In
such event or if during such time any event shall occur as a result of which it
is necessary, in the reasonable opinion of the Company, its counsel, the Initial
Purchasers or counsel for the Initial Purchasers, to amend or supplement the
Final Offering Memorandum in order that the Final Offering Memorandum not
include any untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements therein not misleading in the light of
the circumstances then existing, the Company will forthwith amend or supplement
the Final Offering Memorandum by preparing and furnishing to each Initial
Purchaser an amendment or amendments of, or a supplement or supplements to, the
Final Offering Memorandum (in form and substance satisfactory in the reasonable
opinion of counsel for the Initial Purchasers) so that, as so amended or
supplemented, the Final Offering Memorandum will not include an untrue statement
of a material fact or omit to state a material fact necessary in order to make
the statements therein, in the light of the circumstances existing at the time
it is delivered to a Subsequent Purchaser, not misleading.
(c) Amendment to Offering Memorandum and Supplements. The Company
will advise each Initial Purchaser promptly of any proposal to amend or
supplement the Offering Memorandum and will not effect such amendment or
supplement without the consent of the Initial Purchasers. Neither the consent
of the Initial Purchasers, nor the Initial Purchasers' delivery of any such
amendment or supplement, shall constitute a waiver of any of the conditions set
forth in Section 5 hereof.
(d) Qualification of Securities for Offer and Sale. The Company will
use its best efforts, in cooperation with the Initial Purchasers, to qualify the
Securities for offering and sale under the applicable securities laws of such
jurisdictions as the Representatives may designate and will maintain such
qualifications in effect as long as required for the sale of
-16-
the Securities; provided, however, that the Company shall not be obligated to
-------- -------
file any general consent to service of process or to qualify as a foreign
corporation or as a dealer in securities in any jurisdiction in which it is not
so qualified or to subject itself to taxation in respect of doing business in
any jurisdiction in which it is not otherwise so subject.
(e) Rating of Securities. The Issuer shall take all reasonable
action necessary to enable Standard & Poor's Ratings Group, a division of McGraw
Hill, Inc. ("S&P"), and ▇▇▇▇▇'▇ Investors Service, Inc. ("Moody's"), to provide
their respective credit ratings of the Securities.
(f) DTC. The Company will cooperate with the Representatives and use
its best efforts to permit the Securities to be eligible for clearance and
settlement through the facilities of DTC.
(g) Use of Proceeds. The Company will use the net proceeds received
by it from the sale of the Securities in the manner specified in the Offering
Memorandum under "Use of Proceeds."
(h) Restriction on Sale of Securities. During a period of 180 days
from the date of the Offering Memorandum, the Company will not, without the
prior written consent of ▇▇▇▇▇▇▇ ▇▇▇▇▇, directly or indirectly, issue, sell,
offer or agree to sell, grant any option for the sale of, or otherwise dispose
of, any other debt securities of the Company or securities of the Company that
are convertible into, or exchangeable for, the Securities or such other debt
securities (other than in connection with the Exchange Offer (as defined in the
Offering Memorandum) or borrowings under the New Credit Facility).
(i) Legends. Each certificate for a Security will bear the legend
contained in "Notice to Investors" in the Offering Memorandum for the time
period and upon the other terms stated in the Offering Memorandum.
(j) Periodic Reports. For a period of three years after the Closing
Time, the Company will furnish to the Initial Purchasers copies of all annual
reports, quarterly reports and current reports filed with the Commission on
Forms 10-K, 10-Q and 8-K, or such other similar forms as may be designated by
the Commission, and such other documents, reports and information as shall be
furnished by the Company generally to the
-17-
holders of the Securities or to security holders of its publicly issued
securities generally.
SECTION 4. Payment of Expenses.
-------------------
(a) Expenses. The Company will pay all expenses incident to the
performance of its obligations under this Agreement, including (i) the
preparation and printing of the Offering Memorandum (including financial
statements and any schedules or exhibits and any document incorporated therein
by reference) and of each amendment or supplement thereto, (ii) the preparation,
printing and delivery to the Initial Purchasers of this Agreement, the
Registration Rights Agreement, any Agreement among Initial Purchasers, the
Indenture and such other documents as may be required in connection with the
offering, purchase, sale and delivery of the Securities, (iii) the preparation,
issuance and delivery of the certificates for the Securities to the Initial
Purchasers, including any charges of DTC in connection therewith; (iv) the fees
and disbursements of the Company's counsel, accountants and other advisors, (v)
the qualification of the Securities under securities laws in accordance with the
provisions of Section 3(d) hereof, including filing fees and the fees and
disbursements of counsel for the Initial Purchasers in connection therewith and
in connection with the preparation of the Blue Sky Survey and any supplement
thereto, (vi) the fees and expenses of the Trustee, including the fees and
disbursements of counsel for the Trustee in connection with the Indenture and
the Securities, (vii) any fees payable in connection with the rating of the
Securities and (viii) any fees payable to the review by the National Association
of Securities Dealers, Inc. (the "NASD") in connection with the initial and
continued designation of the Securities as PORTAL securities under the PORTAL
Market Rules pursuant to NASD Rule 5322.
(b) Termination of Agreement. If this Agreement is terminated by the
Representatives in accordance with the provisions of Section 5 or Section
10(a)(i) hereof, the Company shall reimburse the Initial Purchasers for all of
their documented out-of-pocket expenses, including the reasonable fees and
disbursements of counsel for the Initial Purchasers.
-18-
SECTION 5. Conditions of Initial Purchasers' Obligations. The
---------------------------------------------
obligations of the several Initial Purchasers hereunder are subject to the
accuracy of the representations and warranties of the Company contained in
Section 1 hereof or in certificates of any officer of the Company or its
subsidiary delivered pursuant to the provisions hereof, to the performance by
the Company of its covenants and other obligations hereunder, and to the
following further conditions:
(a) Opinion of Counsel for Company. At the Closing Time, the
Representatives shall have received the favorable opinion, dated as of the
Closing Time, of ▇▇▇▇▇▇, ▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP, counsel for the Company, in form
and substance satisfactory to counsel for the Initial Purchasers, together with
signed or reproduced copies of such letter for each of the other Initial
Purchasers to the effect set forth in Exhibit B hereto and to such further
effect as counsel to the Initial Purchasers may reasonably request. Such
counsel may also state that, insofar as such opinion involves factual matters,
they have relied, to the extent they deem proper, upon certificates of officers
of the Company and its subsidiary and certificates of public officials.
(b) Opinion of Counsel for Initial Purchasers. At the Closing Time,
the Representatives shall have received the favorable opinion, dated as of the
Closing Time, of ▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, counsel for the Initial Purchasers,
with respect to matters in form and substance satisfactory to the
Representatives. In giving such opinion such counsel may rely, as to all
matters governed by the laws of jurisdictions other than the law of the State of
New York, the federal law of the United States and the General Corporation Law
of the State of Delaware, upon the opinions of counsel satisfactory to the
Representatives. Such counsel may also state that, insofar as such opinion
involves factual matters, they have relied, to the extent they deem proper, upon
certificates of officers of the Company and its subsidiary and certificates of
public officials.
(c) Officers' Certificate. At the Closing Time, there shall not have
been, since the date hereof or since the respective dates as of which
information is given in the Offering Memorandum, any material adverse change in
the condition, financial or otherwise, or in the earnings, business affairs or,
to such officer's knowledge, business prospects, of the Company and its
subsidiary considered as one enterprise, whether or not arising in the ordinary
course of business, and the Representatives shall have received a certificate of
the
-19-
President or an Executive Vice President of the Company and of the chief
financial or chief accounting officer of the Company, dated as of the Closing
Time, to the effect that (i) there has been no such material adverse change,
(ii) the representations and warranties in Section 1 hereof are true and
correct, in all material respects, with the same force and effect as though
expressly made at and as of the Closing Time (except the representations and
warranties in Section 1 qualified as to materiality shall be true and correct
with the same force and effect as though expressly made at and as of the Closing
Time) and (iii) the Company has complied, in all material respects, with all
agreements and satisfied all conditions on its part to be performed or satisfied
at or prior to the Closing Time.
(d) Accountant's Comfort Letter. At the time of the execution of
this Agreement, the Representatives shall have received from KPMG Peat Marwick
LLP, a letter dated such date, in form and substance satisfactory to the
Representatives, containing statements and information of the type ordinarily
included in accountants' "comfort letters" to Initial Purchasers with respect to
the financial statements and certain financial information contained in the
Offering Memorandum.
(e) Bring-down Comfort Letter. At the Closing Time, the
Representatives shall have received from KPMG Peat Marwick LLP a letter, dated
as of the Closing Time, to the effect that they reaffirm the statements made in
the letter furnished pursuant to subsection (d) of this Section, except that the
specified date referred to shall be a date not more than three business days
prior to the Closing Time.
(f) Maintenance of Rating. At the Closing Time, the Securities shall
be rated at least Ba3 by ▇▇▇▇▇'▇ Investors Service Inc. and BB by Standard &
Poor's Corporation, and the Company shall have delivered to the Representatives
a letter dated the Closing Time, from each such rating agency, or other evidence
satisfactory to the Representatives, confirming that the Securities have such
ratings; and since the date of this Agreement, there shall not have occurred a
downgrading in the rating assigned to the Securities or any of the Company's
other debt securities by any nationally recognized securities rating agency, and
no such securities rating agency shall have publicly announced that it has under
surveillance or review, with possible negative implications, its rating of the
Securities or any of the Company's other debt securities.
(g) PORTAL. At the Closing Time, the Securities shall have been
designated for trading on PORTAL.
-20-
(h) Additional Documents. At the Closing Time, counsel for the
Initial Purchasers shall have been furnished with such documents and opinions as
they may require for the purpose of enabling them to pass upon the issuance and
sale of the Securities as herein contemplated, or in order to evidence the
accuracy of any of the representations or warranties, or the fulfillment of any
of the conditions, herein contained; and all proceedings taken by the Company in
connection with the issuance and sale of the Securities as herein contemplated
shall be reasonably satisfactory in form and substance to the Representatives
and counsel for the Initial Purchasers.
(i) Termination of Agreement. If any condition specified in this
Section shall not have been fulfilled in all material respects when and as
required to be fulfilled, this Agreement may be terminated by the
Representatives by notice to the Company at any time at or prior to the Closing
Time, and such termination shall be without liability of any party to any other
party except as provided in Section 4 and except that Sections 1, 7, 8 and 14
shall survive any such termination and remain in full force and effect. Notice
of such termination shall be given in writing to the Company.
SECTION 6. Subsequent Offers and Resales of the Securities.
-----------------------------------------------
(a) Offer and Sale Procedures. Each of the Initial Purchasers and
the Company hereby establish and agree to observe the following procedures in
connection with the offer and sale of the Securities:
(i) Offers and Sales Only to Institutional Accredited Investors or
--------------------------------------------------------------
Non-U.S. Persons. Offers and sales of the Securities will be made only
----------------
by the Initial Purchasers or Affiliates thereof qualified to do so in the
jurisdictions in which such offers or sales are made. Each such offer or
sale shall only be made (A) to persons whom the offeror or seller
reasonably believes to be qualified institutional buyers, as defined in
Rule 144A under the 1933 Act, and (B) non-U.S. persons outside the United
States, as defined in Regulation S under the 1933 Act, to whom the offeror
or seller reasonably believes offers and sales of the Securities may be
made in reliance upon Regulation S under the 1933 Act.
(ii) No General Solicitation. The Securities will be offered by
-----------------------
approaching prospective Subsequent Purchasers on an individual basis. No
general solicitation or gen-
-21-
eral advertising (within the meaning of Rule
502(c) under the ▇▇▇▇ ▇▇▇) will be used in the United States in connection
with the offering of the Securities.
(iii) Purchases by Non-Bank Fiduciaries . In the case of a non-
---------------------------------
bank Subsequent Purchaser of a Security acting as a fiduciary for one or
more third parties, in connection with an offer and sale to such purchaser
pursuant to clause (i) above, each third party shall, in the judgment of
the applicable Initial Purchaser, be a Qualified Institutional Buyer or a
non-U.S. person outside the United States.
(iv) Subsequent Purchaser Notification . Each Initial Purchaser
---------------------------------
will take reasonable steps to inform, and cause each of its U.S. Affiliates
to take reasonable steps to inform, persons acquiring Securities from such
Initial Purchaser or affiliate, as the case may be, in the United States
that the Securities (A) have not been and will not be registered under the
1933 Act, (B) are being sold to them without registration under the 1933
Act in reliance on Rule 144A or in accordance with another exemption from
registration under the 1933 Act, as the case may be, and (C) may not be
offered, sold or otherwise transferred except (1) to the Company, (2)
outside the United States in accordance with Rule 904 of Regulation S, or
(3) inside the United States in accordance with (x) Rule 144A to a person
whom the seller reasonably believes is a Qualified Institutional Buyer that
is purchasing such Securities for its own account or for the account of a
Qualified Institutional Buyer to whom notice is given that the offer, sale
or transfer is being made in reliance on Rule 144A or (y) another available
exemption from registration under the 1933 Act.
(v) Minimum Principal Amount . No sale of the Securities to any
------------------------
one Subsequent Purchaser will be for less than U.S. $1,000 principal amount
and no Security will be issued in a smaller principal amount. If the
Subsequent Purchaser is a non-bank fiduciary acting on behalf of others,
each person for whom it is acting must purchase at least U.S. $1,000
principal amount of the Securities.
(vi) Restrictions on Transfer . The transfer restrictions and
------------------------
the other provisions set forth in Section Two of the Indenture, including
the legend required thereby, shall apply to the Securities except as
otherwise agreed by the Company and the Initial Purchasers. Following the
-22-
sale of the Securities by the Initial Purchasers to Subsequent Purchasers
pursuant to the terms hereof, the Initial Purchasers shall not be liable or
responsible to the Company for any losses, damages or liabilities suffered
or incurred by the Company, including any losses, damages or liabilities
under the 1933 Act, arising from or relating to any resale or transfer of
any Security.
(vii) Delivery of Offering Memorandum. Each Initial Purchaser
-------------------------------
will deliver to each purchaser of the Securities from such Initial
Purchaser, in connection with its original distribution of the Securities,
a copy of the Offering Memorandum, as amended and supplemented at the date
of such delivery.
(b) Covenants of the Company. The Company covenants with each
Initial Purchaser as follows:
(i) Due Diligence. In connection with the original distribution
-------------
of the Securities, the Company agrees that, prior to any offer or resale of
the Securities by the Initial Purchasers, the Initial Purchasers and
counsel for the Initial Purchasers shall have the right to make reasonable
inquiries into the business of the Company and its subsidiaries. The
Company also agrees to provide answers to each prospective Subsequent
Purchaser of Securities who so requests concerning the Company and its
subsidiaries (to the extent that such information is available or can be
acquired and made available to prospective Subsequent Purchasers without
unreasonable effort or expense and to the extent the provision thereof is
not prohibited by applicable law) and the terms and conditions of the
offering of the Securities, as provided in the Offering Memorandum.
(ii) Integration. The Company agrees that it will not and will
-----------
cause its Affiliates not to make any offer or sale of securities of the
Company of any class if, as a result of the doctrine of "integration"
referred to in Rule 502 under the 1933 Act, such offer or sale would render
invalid (for the purpose of (i) the sale of the Securities by the Company
to the Initial Purchasers, (ii) the resale of the Securities by the Initial
Purchasers to Subsequent Purchasers or (iii) the resale of the Securities
by such Subsequent Purchasers to others) the exemption from the
registration requirements of the 1933 Act provided by Section 4(2) thereof
or by Rule 144A or by Regulation S thereunder or otherwise.
-23-
(iii) Rule 144A Information. The Company agrees that, in order
---------------------
to render the Securities eligible for resale pursuant to Rule 144A under
the 1933 Act, while any of the Securities remain outstanding, it will make
available, upon request, to any holder of Securities or prospective
purchasers of Securities the information specified in Rule 144A(d)(4),
unless the Company furnishes information to the Commission pursuant to
Section 13 or 15(d) of the 1934 Act (such information, whether made
available to holders or prospective purchasers or furnished to the
Commission, is herein referred to as "Additional Information").
(iv) Restriction on Repurchases. Until the expiration of two
--------------------------
years after the original issuance of the Securities, the Company will not,
and will cause its Affiliates not to, purchase or agree to purchase or
otherwise acquire any Securities which are "restricted securities" (as such
term is defined under Rule 144(a)(3) under the 1933 Act), whether as
beneficial owner or otherwise (except as agent acting as a securities
broker on behalf of and for the account of customers in the ordinary course
of business in unsolicited broker's transactions) unless, immediately upon
any such purchase, the Company or any Affiliate shall submit such
Securities to the Trustee for cancellation.
SECTION 7. Indemnification.
---------------
(a) Indemnification of Initial Purchasers. The Company agrees to
indemnify and hold harmless each Initial Purchaser and each person, if any, who
controls any Initial Purchaser within the meaning of Section 15 of the 1933 Act
or Section 20 of the 1934 Act as follows:
(i) against any and all loss, liability, claim, damage and expense
whatsoever, as incurred, arising out of any untrue statement or alleged
untrue statement of a material fact contained in any Preliminary Offering
Memorandum or the Final Offering Memorandum (or any amendment or supplement
thereto), or the omission or alleged omission therefrom of a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading;
(ii) against any and all loss, liability, claim, damage and expense
whatsoever, as incurred, to the extent of the aggregate amount paid in
settlement of any litigation, or any investigation or proceeding by any
governmental
-24-
agency or body, commenced or threatened, or of any claim
whatsoever based upon any such untrue statement or omission, or any such
alleged untrue statement or omission; provided that (subject to Section
7(d) below) any such settlement is effected with the written consent of the
Company; and
(iii) against any and all expenses, as incurred (including the
reasonable and documented fees and disbursements of outside counsel chosen
by ▇▇▇▇▇▇▇ ▇▇▇▇▇), reasonably incurred in investigating, preparing or
defending against any litigation, or any investigation or proceeding by any
governmental agency or body, commenced or threatened, or any claim
whatsoever based upon any such untrue statement or omission, or any such
alleged untrue statement or omission, to the extent that any such expense
is not paid under (i) or (ii) above;
provided, however, that this indemnity agreement shall not apply to any loss,
-------- -------
liability, claim, damage or expense to the extent arising out of or based on any
untrue statement or omission or alleged untrue statement or omission made in
reliance upon and in conformity with written information furnished to the
Company by any Initial Purchaser through the Representatives expressly for use
in the Offering Memorandum (or any amendment thereto); and provided, further,
-------- -------
that the Company will not be liable to any Initial Purchaser hereunder with
respect to any such loss, liability, claim, damage or expense that resulted from
the fact that such Initial Purchaser sold Securities to a person to whom such
Initial Purchaser failed to send or give, at or prior to the Closing Time, a
copy of the Final Offering Memorandum, as then amended or supplemented, if the
Company has previously furnished copies thereof (sufficiently in advance of the
Closing Time to allow for distribution by the Closing Time) to the Initial
Purchasers and the loss, liability, claim, damage or expense of such Initial
Purchaser resulted from an untrue statement or omission or alleged untrue
statement or omission of a material fact contained in or omitted from the
Preliminary Offering Memorandum as amended by the Supplement that was corrected
in the Final Offering Memorandum or, if applicable, amended or supplemented
prior to the Closing Time and such Final Offering Memorandum was required by law
to be delivered at or prior to the written confirmation of sale to such person.
(b) Indemnification of Company, Directors and Officers. Each
Initial Purchaser severally agrees to indemnify and hold harmless the Company,
its directors, its officers and each
-25-
person, if any, who controls the Company within the meaning of Section 15 of the
1933 Act or Section 20 of the 1934 Act against any and all loss, liability,
claim, damage and expense described in the indemnity contained in subsection (a)
of this Section, as incurred, but only with respect to untrue statements or
omissions, or alleged untrue statements or omissions, made in the Offering
Memorandum in reliance upon and in conformity with written information furnished
to the Company by such Initial Purchaser through the Representatives expressly
for use in the Offering Memorandum.
(c) Actions Against Parties; Notification. Each indemnified party
shall give notice as promptly as reasonably practicable to each indemnifying
party of any action commenced against it in respect of which indemnity may be
sought hereunder, but failure to so notify an indemnifying party shall not
relieve such indemnifying party from any liability hereunder to the extent it is
not materially prejudiced as a result thereof and in any event shall not relieve
it from any liability which it may have otherwise than on account of this
indemnity agreement. In the case of parties indemnified pursuant to Section
7(a) above, counsel to the indemnified parties shall be selected by ▇▇▇▇▇▇▇
▇▇▇▇▇, and, in the case of parties indemnified pursuant to Section 7(b) above,
counsel to the indemnified parties shall be selected by the Company. An
indemnifying party may participate at its own expense in the defense of any such
action; provided, however, that counsel to the indemnifying party shall not
-------- -------
(except with the consent of the indemnified party) also be counsel to the
indemnified party. In no event shall the indemnifying parties be liable for
fees and expenses of more than one counsel (in addition to any local counsel)
separate from their own counsel for all indemnified parties in connection with
any one action or separate but similar or related actions in the same
jurisdiction arising out of the same general allegations or circumstances. No
indemnifying party shall, without the prior written consent of the indemnified
parties, settle or compromise or consent to the entry of any judgment with
respect to any litigation, or any investigation or proceeding by any
governmental agency or body, commenced or threatened, or any claim whatsoever in
respect of which indemnification or contribution could be sought under this
Section 7 or Section 8 hereof (whether or not the indemnified parties are actual
or potential parties thereto), unless such settlement, compromise or consent (i)
includes an unconditional release of each indemnified party from all liability
arising out of such litigation, investigation, proceeding or claim and (ii) does
not include a statement as to or an admis-
-26-
sion of fault, culpability or a failure to act by or on behalf of any
indemnified party.
(d) Settlement Without Consent if Failure to Reimburse. If at any
time an indemnified party shall have requested an indemnifying party to
reimburse the indemnified party for fees and expenses of counsel, such
indemnifying party agrees that it shall be liable for any settlement of the
nature contemplated by Section 7(a)(ii) effected without its written consent if
(i) such settlement is entered into more than 45 days after receipt by such
indemnifying party of the aforesaid request, (ii) such indemnifying party shall
have received notice of the terms of such settlement at least 30 days prior to
such settlement being entered into and (iii) such indemnifying party shall not
have reimbursed such indemnified party in accordance with such request prior to
the date of such settlement. Notwithstanding the immediately preceding
sentence, if at any time an indemnified party shall have requested an
indemnifying party to reimburse the indemnified party for fees and expenses of
counsel, an indemnifying party shall not be liable for an settlement of the
nature contemplated by Section (a)(ii) effected without its consent if such
indemnifying party (i) reimburses such indemnified party in accordance with such
request to the extent it considers such request to be reasonable and (ii)
provides written notice to the indemnified party substantiating the unpaid
balance as unreasonable, in each case prior to the date of such settlement.
SECTION 8. Contribution. If the indemnification provided for in
------------
Section 7 hereof is for any reason unavailable to or insufficient to hold
harmless an indemnified party in respect of any losses, liabilities, claims,
damages or expenses referred to therein, then each indemnifying party shall
contribute to the aggregate amount of such losses, liabilities, claims, damages
and expenses incurred by such indemnified party, as incurred, (i) in such
proportion as is appropriate to reflect the relative benefits received by the
Company on the one hand and the Initial Purchasers on the other hand from the
offering of the Securities pursuant to this Agreement or (ii) if the allocation
provided by clause (i) 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 Company on the one hand and of the
Initial Purchasers on the other hand in connection with the statements or
omissions which resulted in such losses, liabilities, claims, damages or
expenses, as well as any other relevant equitable considerations.
-27-
The relative benefits received by the Company on the one hand and the
Initial Purchasers on the other hand in connection with the offering of the
Securities pursuant to this Agreement shall be deemed to be in the same
respective proportions as the total net proceeds from the offering of the
Securities pursuant to this Agreement (before deducting expenses) received by
the Company and the total underwriting discount received by the Initial
Purchasers, bear to the aggregate initial offering price of the Securities.
The relative fault of the Company on the one hand and the Initial
Purchasers on the other hand shall be determined by reference to, among other
things, whether any such untrue or alleged untrue statement of a material fact
or omission or alleged omission to state a material fact relates to information
supplied by the Company or by the Initial Purchasers and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission.
The Company and the Initial Purchasers agree that it would not be just
and equitable if contribution pursuant to this Section 8 were determined by pro
rata allocation (even if the Initial Purchasers were treated as one entity for
such purpose) or by any other method of allocation which does not take account
of the equitable considerations referred to above in this Section 8. The
aggregate amount of losses, liabilities, claims, damages and expenses incurred
by an indemnified party and referred to above in this Section 8 shall be deemed
to include any legal or other expenses reasonably incurred by such indemnified
party in investigating, preparing or defending against any litigation, or any
investigation or proceeding by any governmental agency or body, commenced or
threatened, or any claim whatsoever based upon any such untrue or alleged untrue
statement or omission or alleged omission.
Notwithstanding the provisions of this Section 8, no Initial Purchaser
shall be required to contribute any amount in excess of the amount by which the
total price at which the Securities underwritten by it and distributed to the
public were offered to the public exceeds the amount of any damages which such
Initial 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 ▇▇▇▇ ▇▇▇) shall be entitled to contribution from any
person who was not guilty of such fraudulent misrepresentation.
-28-
For purposes of this Section 8, each person, if any, who controls an
Initial Purchaser within the meaning of Section 15 of the 1933 Act or Section 20
of the 1934 Act shall have the same rights to contribution as such Initial
Purchaser, and each director of the Company, each officer of the Company, and
each person, if any, who controls the Company within the meaning of Section 15
of the 1933 Act or Section 20 of the 1934 Act shall have the same rights to
contribution as the Company. The Initial Purchasers' respective obligations to
contribute pursuant to this Section 8 are several in proportion to the principal
amount of Securities set forth opposite their respective names in Schedule A
hereto and not joint.
SECTION 9. Representations, Warranties and Agreements to Survive
-----------------------------------------------------
Delivery. All representations, warranties and agreements contained in this
--------
Agreement or in certificates of officers of the Company submitted pursuant
hereto, shall remain operative and in full force and effect, regardless of any
investigation made by or on behalf of any Initial Purchaser or controlling
person, or by or on behalf of the Company, and shall survive delivery of the
Securities to the Initial Purchasers.
SECTION 10. Termination of Agreement.
------------------------
(a) Termination; General. The Representatives may terminate this
Agreement, by notice to the Company, at any time at or prior to the Closing Time
(i) if there has been, since the time of execution of this Agreement or since
the respective dates as of which information is given in the Offering
Memorandum, any material adverse change in the condition, financial or otherwise
or in the earnings, business affairs or business prospects of the Company and
its subsidiary considered as one enterprise, whether or not arising in the
ordinary course of business, or (ii) if there has occurred any material adverse
change in the financial markets in the United States or the international
financial markets, any outbreak of hostilities or escalation thereof or other
calamity or crisis or any change or development involving a prospective change
in national or international political, financial or economic conditions, in
each case the effect of which is such as to make it, in the judgment of the
Representatives, impracticable to market the Securities or to enforce contracts
for the sale of the Securities, or (iii) if trading in any securities of the
Company has been suspended or limited by the Commission or, if trading generally
on the American Stock Exchange or the New York Stock Exchange or in the NASDAQ
National Market System has been suspended or limited, or minimum or maximum
prices for trading
-29-
have been fixed, or maximum ranges for prices have been required, by any of said
exchanges or by such system or by order of the Commission, the National
Association of Securities Dealers, Inc. or any other governmental authority or
(iv) if a banking moratorium has been declared by either Federal or New York
authorities.
(b) Liabilities. If this Agreement is terminated pursuant to this
Section, such termination shall be without liability of any party to any other
party except as provided in Section 4 hereof, and provided further that Sections
1, 7, 8 and 14 shall survive such termination and remain in full force and
effect.
SECTION 11. Default by One or More of the Initial Purchasers. If one
------------------------------------------------
or more of the Initial Purchasers shall fail at the Closing Time to purchase the
Securities which it or they are obligated to purchase under this Agreement (the
"Defaulted Securities"), the Representatives shall have the right, but not the
obligation, within 24 hours thereafter, to make arrangements for one or more of
the non-defaulting Initial Purchasers, or any other Initial Purchasers, to
purchase all, but not less than all, of the Defaulted Securities in such amounts
as may be agreed upon and upon the terms herein set forth; if, however, the
Representatives shall not have completed such arrangements within such 24-hour
period, then this Agreement shall terminate without liability on the part of any
non-defaulting Initial Purchaser.
No action pursuant to this Section shall relieve any defaulting
Initial Purchaser from liability in respect of its default.
In the event of any such default that does not result in a termination
of this Agreement, either the Representatives or the Company shall have the
right to postpone the Closing Time for a period not exceeding seven days in
order to effect any required changes in the Offering Memorandum or in any other
documents or arrangement.
SECTION 12. Notices. All notices and other communications hereunder
-------
shall be in writing and shall be deemed to have been duly given if mailed or
transmitted by any standard form of telecommunication. Notices to the Initial
Purchasers shall be directed to the Representatives at North Tower, World
Financial Center, New York, New York 10281-1201, attention of ▇▇▇▇▇▇ ▇▇▇▇▇;
notices to the Company shall be directed to it at
-30-
▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, attention of Executive
Vice President, Finance.
SECTION 13. Parties. This Agreement shall each inure to the benefit
-------
of and be binding upon the Initial Purchasers and the Company and their
respective successors. Nothing expressed or mentioned in this Agreement is
intended or shall be construed to give any person, firm or corporation, other
than the Initial Purchasers and the Company and their respective successors and
the controlling persons and officers and directors referred to in Sections 7 and
8 and their heirs and legal representatives, any legal or equitable right,
remedy or claim under or in respect of this Agreement or any provision herein
contained. This Agreement and all conditions and provisions hereof are intended
to be for the sole and exclusive benefit of the Initial Purchasers and the
Company and their respective successors, and said controlling persons and
officers and directors and their heirs and legal representatives, and for the
benefit of no other person, firm or corporation. No purchaser of Securities
from any Initial Purchaser shall be deemed to be a successor by reason merely of
such purchase.
SECTION 14. GOVERNING LAW AND TIME. THIS AGREEMENT SHALL BE GOVERNED
----------------------
BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. SPECIFIED
TIMES OF DAY REFER TO NEW YORK CITY TIME.
SECTION 15. Effect of Headings. The Section headings herein and the
------------------
Table of Contents are for convenience only, and shall not affect the
construction hereof.
-31-
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to the Company a counterpart hereof, whereupon
this instrument, along with all counterparts, will become a binding agreement
between the Initial Purchasers and the Company in accordance with its terms.
Very truly yours,
CALIFORNIA STEEL INDUSTRIES, INC.
By:/s/ CELO ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
_____________________________
Name:CELO ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Title:PRESIDENT AND CHIEF
EXECUTIVE OFFICER
CONFIRMED AND ACCEPTED,
as of the date first above written:
▇▇▇▇▇▇▇ ▇▇▇▇▇ & CO.
▇▇▇▇▇▇▇ LYNCH, PIERCE, ▇▇▇▇▇▇ & ▇▇▇▇▇
INCORPORATED
BANCBOSTON ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ INC.
NATIONSBANC ▇▇▇▇▇▇▇▇▇▇ SECURITIES LLC
By: ▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇
Incorporated
By:/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
__________________________
Name:▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title:MANAGING DIRECTOR
-32-
SCHEDULE A
----------
Principal
Amount of
Name of Initial Purchaser Securities
-------------------------- -----------
▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇
Incorporated.................................................. $ 90,000,000
BancBoston ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Inc............................. 30,000,000
NationsBanc ▇▇▇▇▇▇▇▇▇▇ Securities LLC......................... 30,000,000
------------
Total......................................................... $150,000,000
============
Sch A-1
SCHEDULE B
CALIFORNIA STEEL INDUSTRIES, INC.
$150,000,000 of 8 1/2% Senior Notes due 2009
1. The initial public offering price of the Securities shall be 100%
of the principal amount thereof, plus accrued interest, if any, from the date of
issuance.
2. The purchase price to be paid by the Initial Purchasers for the
Securities shall be 97.75% of the principal amount thereof.
3. The interest rate on the Securities shall be 8 1/2% per annum.
A-1
Exhibit A
REGISTRATION RIGHTS AGREEMENT
A-1
Exhibit B
FORM OF OPINION OF COMPANY'S COUNSEL
TO BE DELIVERED PURSUANT TO
SECTION 5(a)
(i) The Company is a corporation validly existing and in good
standing under the laws of the State of Delaware.
(ii) The Company has corporate power and authority to own, lease and
operate its properties and to conduct its business as described in the Offering
Memorandum and to enter into and perform its obligations under the Purchase
Agreement.
(iii) The Company is duly qualified as a foreign corporation to
transact business and is in good standing in the State of California.
(iv) Based solely on such counsel's review of the stock certificates
available to such counsel, all of the outstanding shares of the Company are
owned of record by Rio Doce Limited and Kawasaki Steel Holdings (USA), Inc.
(v) The Purchase Agreement has been duly authorized, executed and
delivered by the Company.
(vi) The Registration Rights Agreement has been duly authorized,
executed and delivered by the Company and (assuming the due authorization,
execution and delivery thereof by the Initial Purchasers) constitutes a valid
and binding agreement of the Company, enforceable against the Company in
accordance with its terms, except as the enforcement thereof may be limited by
bankruptcy, insolvency (including, without limitation, all laws relating to
fraudulent transfers), reorganization, moratorium or similar laws affecting
enforcement of creditors' rights generally and except as enforcement thereof is
subject to general principles of equity (regardless of whether enforcement is
considered in a proceeding in equity or at law) and except as rights to
indemnity and contribution thereunder may be limited by Federal or state
securities laws or principles of public policy.
(vii) The Indenture has been duly authorized, executed and delivered
by the Company and (assuming the due authorization, execution and delivery
thereof by the Trustee) constitutes a valid and binding agreement of the
Company, enforceable
B-1
against the Company in accordance with its terms, except as
the enforcement thereof may be limited by bankruptcy, insolvency (including,
without limitation, all laws relating to fraudulent transfers), reorganization,
moratorium or other similar laws relating to or affecting enforcement of
creditors' rights generally, or by general principles of equity (regardless of
whether enforcement is considered in a proceeding in equity or at law).
(viii) The Securities are in the form contemplated by the Indenture,
have been duly authorized by the Company and, when executed by the Company and
authenticated by the Trustee in the manner provided in the Indenture (assuming
the due authorization, execution and delivery of the Indenture by the Trustee)
and delivered against payment of the purchase price therefor, and the Exchange
Notes and the Private Exchange Notes (other than with respect to the delivery in
book-entry form), if any, when executed, authenticated and delivered in exchange
for the Securities in accordance with the terms of the Registration Rights
Agreement, will be entitled to the benefits of the Indenture and will be
enforceable against the Company in accordance with their terms, except as the
enforcement thereof may be limited by bankruptcy, insolvency, reorganization,
moratorium (including, without limitation, all laws relating to fraudulent
transfers), or other similar laws relating to or affecting enforcement of
creditor's rights generally, or by general principles of equity (regardless of
whether enforcement is considered in a proceeding in equity or at law), and will
be entitled to the benefits of the Indenture.
(ix) The Securities, the Exchange Notes, the Private Exchange
Notes, the Registration Rights Agreement and the Indenture conform in all
material respects to the descriptions thereof contained in the Offering
Memorandum.
(x) To such counsel's knowledge except as set forth in the
Offering Memorandum, there is not pending or threatened any material action,
suit, proceeding, inquiry or investigation, to which the Company or its
subsidiary is a party, or to which the property of the Company is subject,
before or brought by any court or governmental agency or body.
(xi) The statements set forth in the Offering Memorandum under
"Summary -- The Offering", "Business--Legal Proceedings", "Description of the
Notes", and "Certain U.S. Federal Income Tax Considerations", to the extent that
they constitute matters of law, summaries of legal matters, or legal
B-2
proceedings, or legal conclusions, have been reviewed by them fairly summarize
the matters referred to therein.
(xii) All descriptions in the Offering Memorandum of contracts and
other documents to which the Company or its subsidiary are a party are accurate
in all material respects; and to the best of our knowledge, there are no
franchises, contracts, indentures, mortgages, loan agreements, notes, leases or
other instruments that would be required to be described in the Offering
Memorandum that are not described or referred to in the Offering Memorandum
other than those described or referred to therein.
(xiii) Neither the Company nor its subsidiary is in violation of its
charter or by-laws in any material respects and, to the best of our knowledge,
no default by the Company or its subsidiary exists in the due performance or
observance of any material obligation, agreement, covenant or condition
contained in any contract, indenture, mortgage, loan agreement, note, lease or
other agreement or instrument that is listed on the certificate such counsel
receives from the officers of the Company (the "CSI Officers' Certificate").
(xiv) To such counsel's knowledge, no material authorization,
approval, consent or order of any court or governmental authority or agency,
other than such as may be required under the applicable securities laws of the
various jurisdictions in which the Securities will be offered or sold, as to
which we need express no opinion, is required in connection with the due
authorization, execution and delivery of the Purchase Agreement or the due
execution, delivery or performance of the Indenture by the Company, or for the
offering, issuance, sale or delivery of the Securities to the Initial Purchasers
or the resale by the Initial Purchasers in accordance with the Purchase
Agreement.
(xv) Assuming the accuracy of the representations and warranties of
the Initial Purchasers and compliance by them with their agreements contained
herein, it is not necessary in connection with the offer, sale and delivery of
the Securities to the Initial Purchasers and to each Subsequent Purchaser in the
manner contemplated by the Purchase Agreement and the Offering Memorandum to
register the Securities under the 1933 Act or to qualify the Indenture under the
Trust Indenture Act.
(xvi) The execution, delivery and performance of the Purchase
Agreement, the DTC Agreement, the Indenture and the Securities and the
consummation of the transactions contem-
B-3
plated in the Purchase Agreement and in the Offering Memorandum (including the
use of the proceeds from the sale of the Securities as described in the Offering
Memorandum under the caption "Use Of Proceeds") and compliance by the Company
with its obligations under the Purchase Agreement, the Indenture and the
Securities will not, whether with or without the giving of notice or lapse of
time or both, conflict with or constitute a breach of, or default or Repayment
Event (as defined in Section l(a)(xv) of the Purchase Agreement) under or result
in the creation or imposition of any lien, charge or encumbrance upon any
property or assets of the Company or its subsidiary pursuant to any contract,
indenture, mortgage, deed of trust, loan or credit agreement, note, lease or any
other agreement or instrument, including agreements governing the rights of
stockholders of the Company (in each case, as listed on the CSI Officers'
Certificate) to which the Company or its subsidiary is a party or by which it or
its subsidiary may be bound, or to which any of the property or assets of the
Company or its subsidiary is subject (except for such conflicts, breaches or
defaults or liens, charges or encumbrances that would not have a Material
Adverse Effect), nor will such action result in any violation of the provisions
of the charter or by-laws of the Company or its subsidiary, or any applicable
law, statute, rule, regulation, judgment, order, writ or decree, known to us, of
any government, government instrumentality or court, domestic or foreign, having
jurisdiction over the Company or its subsidiary or any of their respective
properties, assets or operations.
(xvii) The Company is not an "investment company" or an entity
"controlled" by an "investment company," as such terms are defined in the ▇▇▇▇
▇▇▇.
(xviii) Assuming the application of the proceeds of the Securities as
set forth in the Offering Memorandum, neither the consummation of the
transactions contemplated by the Purchase Agreement nor the sale, issuance,
execution or delivery of the Securities will violate Regulation T, U or X of the
Board of Governors of the Federal Reserve System.
In addition such counsel shall state that such counsel has
participated in conferences with representatives of the Initial Purchasers,
officers and other representatives of the Company and representatives of the
independent certified accountants of the Company, at which conferences the
contents of the Offering Memorandum and the business and affairs of the Company
and its subsidiaries were discussed, and although such counsel has not verified
and does not pass upon or assume any
B-4
responsibility for the accuracy, completeness or fairness of the statements
contained in the Offering Memorandum (except and only to the extent set forth in
subclause (xi) above), on the basis of the foregoing participation, no facts
have come to the attention of such counsel that lead such counsel to believe
that the Offering Memorandum at the date thereof or as of the Closing Time,
contained or contains an untrue statement of a material fact or omitted or omits
to state a material fact necessary to make the statements therein, in the light
of the circumstances under which they were made, not misleading (it being
understood that such counsel need not express any comment with respect to the
financial statements, including the notes thereto and supporting schedules, or
any other financial or statistical data found in or derived from the internal
accounting or other records of the Company set forth or referred to in the
Offering Memorandum).
In rendering such opinions, such counsel (A) need not express any
opinion with regard to the application of laws of any jurisdiction other than
the Federal law of the United States, the General Corporation Law of the State
of Delaware and the laws of the State of New York and (B) may rely, as to
matters of fact, to the extent they deem proper on representations or
certificates of responsible officers of the Company and certificates of public
officials.
References to the Offering Memorandum in this subsection include any
supplements thereto at or prior to the Closing Time.
B-5