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EXHIBIT 10.2
METAL MANAGEMENT, INC.
$30,000,000
12-3/4% SENIOR SECURED NOTES DUE 2004
PURCHASE AGREEMENT
May 5, 1999
BT ALEX. BROWN INCORPORATED
One Bankers Trust Plaza
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
Metal Management, Inc., a Delaware corporation (the
"Company"), and the Company's subsidiaries listed on the signature pages hereof
(collectively, the "Subsidiary Guarantors") hereby confirm their agreement with
you (the "Initial Purchaser"), as set forth below.
1. The Securities. Subject to the terms and conditions herein
contained, the Company proposes to issue and sell to the Initial Purchaser
$30,000,000 aggregate principal amount of its 12-3/4% Senior Secured Notes due
2004 (the "Notes"). The Notes will be unconditionally guaranteed (collectively,
the "Guarantees") on a senior secured basis by each of the Subsidiary
Guarantors. The Notes and the Guarantees are collectively referred to herein as
the "Securities." The Securities are to be issued under an indenture (the
"Indenture") to be dated as of May 7, 1999 by and among the Company, the
Subsidiary Guarantors and ▇▇▇▇▇▇ Trust & Savings Bank, as Trustee (the
"Trustee").
The Securities will be offered and sold to the Initial
Purchaser without being registered under the Securities Act of 1933, as amended
(the "Act"), in reliance on exemptions therefrom.
In connection with the sale of the Securities, the Company has
prepared an offering memorandum dated May 5, 1999 (the "Final Memorandum")
setting forth or including a description of the terms of the Securities, the
terms of the offering of the Securities, a description of the Company and its
sub-
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sidiaries and any material developments relating to the Company and the
Subsidiary Guarantors occurring after December 31, 1998. Capitalized terms used
herein and not defined shall have the meanings ascribed to such terms in the
Final Memorandum.
The Company understands that the Initial Purchaser proposes to
make an offering of the Securities only on the terms and in the manner set forth
in the Final Memorandum and Section 8 hereof as soon as the Initial Purchaser
deems advisable after this Agreement has been executed and delivered, to persons
in the United States whom the Initial Purchaser reasonably believes to be
qualified institutional buyers ("Qualified Institutional Buyers" or "QIBs") as
defined in Rule 144A under the Act, as such rule may be amended from time to
time ("Rule 144A"), and outside the United States to certain persons in reliance
on Regulation S under the Act.
The Initial Purchaser and its direct and indirect transferees
of the Securities will be entitled to the benefits of the Exchange and
Registration Rights Agreement (the "Registration Rights Agreement"), to be dated
the Closing Date (as defined in Section 3 below) pursuant to which the Company
and the Subsidiary Guarantors have agreed, among other things, to file a
registration statement (the "Registration Statement") with the Securities and
Exchange Commission (the "Commission") registering the Notes or the Exchange
Notes (as defined in the Registration Rights Agreement) under the Act.
The Initial Purchaser and its direct and indirect transferees
of the Securities will also be entitled to the benefits, and otherwise subject
to the terms, of the Security Documents (as defined in the Indenture) pursuant
to which the Company and the Subsidiary Guarantors have agreed, among other
things, to grant a second priority security interest in the Collateral (as
defined in the Indenture), subject to certain exceptions in accordance with the
terms of the Indenture and as described in the Final Memorandum.
2. Representations and Warranties. The Company and each of the
Subsidiary Guarantors, jointly and severally, represent and warrant to and agree
with the Initial Purchaser that:
(a) Neither the Final Memorandum nor any amendment or
supplement thereto as of the date thereof and at all times subsequent thereto to
the Closing Date (as defined in Section 3 below) contained or contains any
untrue statement of a material fact or omitted or omits to state a material fact
necessary to
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make the statements therein, in the light of the circumstances under which they
were made, not misleading, except that the representations and warranties set
forth in this Section 2(a) do not apply to statements or omissions made in
reliance upon and in conformity with information relating to the Initial
Purchaser furnished to the Company in writing by the Initial Purchaser expressly
for use in the Final Memorandum or any amendment or supplement thereto.
(b) As of December 31, 1998, the Company had the authorized,
issued and outstanding capitalization set forth in the Final Memorandum under
the caption "Capitalization" and in the financial statements and the related
notes included in the Final Memorandum; all of the subsidiaries of the Company,
direct or indirect, are listed in Schedule 1 attached hereto (each, a
"Subsidiary" and collectively, the "Subsidiaries"); all of the outstanding
shares of capital stock of the Company and the Subsidiaries have been, and as of
the Closing Date will be, duly authorized and validly issued, are fully paid and
nonassessable and were not issued in violation of any preemptive or similar
rights; except as set forth in the Final Memorandum, all of the outstanding
shares of capital stock of each of the Subsidiaries will be free and clear of
all liens, encumbrances, equities and claims or restrictions on transferability
(other than those imposed by the securities or "Blue Sky" laws of certain
jurisdictions) or voting; except for options to purchase common stock of the
Company under the Company's employee benefit plans existing on the date hereof
and except as set forth in the Final Memorandum, there are no (i) options,
warrants or other rights to purchase from the Company or the Subsidiaries, (ii)
agreements or other obligations of the Company or the Subsidiaries to issue or
(iii) other rights to convert any obligation into, or exchange any securities
for, shares of capital stock of or ownership interests in the Company or any of
the Subsidiaries outstanding. Except as disclosed in the Final Memorandum,
neither the Company nor any of the Subsidiaries owns, directly or indirectly,
any shares of capital stock or any other equity or long-term debt securities or
have any equity interest in any firm, partnership, joint venture or other
entity.
(c) Each of the Company and the Subsidiaries is duly
incorporated or organized, as the case may be, and is validly existing and in
good standing as a corporation, limited liability company or limited
partnership, as the case may be, under the laws of its respective jurisdiction
of incorporation or organization and has all requisite corporate power and/or
other requisite power and authority to own or lease its properties
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and conduct its business as now conducted and as described in the Final
Memorandum; each of the Company and the Subsidiaries is duly qualified to do
business as a foreign corporation in good standing in all other jurisdictions
where the ownership or leasing of its properties or the conduct of its business
requires such qualification, except where the failure to be so qualified would
not, individually or in the aggregate, have a material adverse effect on the
general affairs, management, business, condition (financial or otherwise),
prospects or results of operations of the Company and the Subsidiaries, taken as
a whole (any such event, a "Material Adverse Effect").
(d) The Company has all requisite corporate power and
authority to execute, deliver and perform each of its obligations under the
Notes, the Exchange Notes and the Private Exchange Notes (as defined in the
Registration Rights Agreement). The Notes, Exchange Notes and Private Exchange
Notes, if any, when issued, will be in the form contemplated by the Indenture.
The Notes, the Exchange Notes and the Private Exchange Notes have each been duly
and validly authorized by the Company and, when executed by the Company and
authenticated by the Trustee in accordance with the provisions of the Indenture
and, in the case of the Notes, when delivered to and paid for by the Initial
Purchaser in accordance with the terms of this Agreement, and, in the case of
the Exchange Notes and the Private Exchange Notes, when delivered in accordance
with the terms of the Registration Rights Agreement and the Indenture, will each
constitute valid and legally binding obligations of the Company, entitled to the
benefits of the Indenture, and enforceable against the Company in accordance
with their terms, except that the enforcement thereof may be subject to (i)
bankruptcy, insolvency, reorganization, fraudulent conveyance, moratorium or
other similar laws now or hereafter in effect relating to creditors' rights
generally, and (ii) general principles of equity and the discretion of the court
before which any proceeding therefor may be brought.
(e) Each of the Subsidiary Guarantors has all requisite
corporate and/or other requisite power and authority to execute, deliver and
perform each of its obligations under the Guarantees and the guarantees of the
Exchange Notes and the Private Exchange Notes. The Guarantees, when issued, will
be in the form contemplated by the Indenture. The Guarantees and the guarantees
of the Exchange Notes and the Private Exchange Notes have been duly and validly
authorized by each of the Subsidiary Guarantors and, when executed by each of
the Subsidiary Guarantors and delivered in accordance with the provisions of the
Indenture, will constitute valid and legally binding obli-
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gations of the Subsidiary Guarantors, entitled to the benefits of the Indenture
and enforceable against the Subsidiary Guarantors in accordance with their
terms, except that the enforcement thereof may be subject to (i) bankruptcy,
insolvency, reorganization, fraudulent conveyance, moratorium or other similar
laws now or hereafter in effect relating to creditors' rights generally, and
(ii) general principles of equity and the discretion of the court before which
any proceeding therefor may be brought.
(f) Each of the Company and the Subsidiary Guarantors has all
requisite corporate and/or other requisite power and authority to execute,
deliver and perform its obligations under the Indenture. The Indenture has been
duly and validly authorized by the Company and each of the Subsidiary Guarantors
and, when executed and delivered by the Company and each of the Subsidiary
Guarantors (assuming the due authorization, execution and delivery by the
Trustee), will constitute a valid and legally binding agreement of the Company
and each of the Subsidiary Guarantors, enforceable against the Company and each
of the Subsidiary Guarantors in accordance with its terms, except that the
enforcement thereof may be subject to (i) bankruptcy, insolvency,
reorganization, fraudulent conveyance, moratorium or other similar laws now or
hereafter in effect relating to creditors' rights generally and (ii) general
principles of equity and the discretion of the court before which any proceeding
therefor may be brought.
(g) Each of the Company and the Subsidiary Guarantors has all
requisite corporate and/or other requisite power and authority to execute,
deliver and perform its obligations under the Registration Rights Agreement. The
Registration Rights Agreement has been duly and validly authorized by the
Company and each of the Subsidiary Guarantors and, when executed and delivered
by the Company and each of the Subsidiary Guarantors will constitute a valid and
legally binding agreement of the Company and each of the Subsidiary Guarantors,
enforceable against each of them in accordance with its terms, except that (A)
the enforcement thereof may be subject to (i) bankruptcy, insolvency,
reorganization, fraudulent conveyance, moratorium or other similar laws now or
hereafter in effect relating to creditors' rights generally and (ii) general
principles of equity and the discretion of the court before which any proceeding
therefor may be brought and (B) any rights to indemnity or contribution
thereunder may be limited by federal and state securities laws and public policy
considerations.
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(h) Each of the Company and the Subsidiary Guarantors has all
requisite corporate power and authority to execute, deliver and perform its
obligations under this Agreement and to consummate the transactions contemplated
hereby. This Agreement and the consummation by the Company and each of the
Subsidiary Guarantors of the transactions contemplated hereby have been duly and
validly authorized by the Company and each of the Subsidiary Guarantors. This
Agreement has been duly executed and delivered by the Company and each of the
Subsidiary Guarantors.
(i) Each of the Company and the Subsidiary Guarantors has all
requisite corporate power and authority to execute, deliver and perform its
respective obligations under the Security Documents and to consummate the
transactions contemplated thereby. The Security Documents and the consummation
by the Company and each of the Subsidiary Guarantors of the transactions
contemplated thereby have been duly and validly authorized by the Company and
each of the Subsidiary Guarantors and, when the Security Documents are executed
and delivered, each of the Security Documents will constitute a valid and
legally binding obligations of the Company and each of the Subsidiary
Guarantors, enforceable against the Company and each of the Subsidiary
Guarantors in accordance with its terms, except that the enforcement thereof may
be subject to (i) bankruptcy, insolvency, reorganization, fraudulent conveyance,
moratorium or other similar laws now or hereafter in effect relating to
creditor's rights generally and (ii) general principals of equity and the
discretion of the court before which any proceeding therefore may be brought. On
the Closing Date, the Collateral and the Security Documents will conform to the
description thereof contained in the Final Memorandum.
(j) No consent, approval, authorization or order of any court,
governmental agency or body, or third party is required for the issuance and
sale by the Company of the Securities to the Initial Purchasers and the initial
resales of the Securities by the Initial Purchaser in the manner described in
the Final Memorandum, the execution, delivery and performance by the Company and
the Subsidiary Guarantors of this Agreement, the Indenture, the Notes, the
Guarantees, the Exchange Notes, the Private Exchange Notes, the Registration
Rights Agreement and the Security Documents or the consummation by the Company
and the Subsidiary Guarantors of the other transactions contemplated hereby or
thereby, except (i) such as have been obtained, (ii) such as may be required
under state securities or "Blue Sky" laws in connection with the purchase and
resale of the Securities by the Initial Purchaser, (iii) such as are re-
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quired pursuant to the terms of the Registration Rights Agreement and (iv) such
as are required under the Senior Credit Facility which will be obtained by the
Closing Date. None of the Company or the Subsidiaries is (i) in violation of its
certificate of incorporation or bylaws (or other similar organizational
documents), (ii) in breach or violation of any statute, judgment, decree, order,
rule or regulation applicable to the Company or any Subsidiary or any of their
respective properties or assets, except for any such breach or violation which
would not, individually or in the aggregate, have a Material Adverse Effect, or
(iii) in breach of or default under (nor has any event occurred which, with
notice or passage of time or both, would constitute a default under) or in
violation of any of the terms or provisions of any indenture, mortgage, deed of
trust, loan agreement, note, lease, license, franchise agreement, permit,
certificate, contract or other agreement or instrument to which any of them is a
party or to which any of them or their respective properties or assets is
subject (collectively, "Contracts"), except for any such breach, default,
violation or event which would not, individually or in the aggregate, have a
Material Adverse Effect.
(k) The execution, delivery and performance by the Company and
the Subsidiary Guarantors of this Agreement, the Indenture, the Registration
Rights Agreement and the Security Documents and the consummation by the Company
and the Subsidiary Guarantors of the transactions contemplated hereby and
thereby (including, without limitation, the issuance and sale of the Securities
to the Initial Purchaser) will not conflict with or constitute or result in a
breach of or a default under (or an event which with notice or passage of time
or both would constitute a default under) or violation of any of (i) the terms
or provisions of any Contract, (ii) the certificate of incorporation or bylaws
(or other similar organizational documents) of the Company or any of the
Subsidiaries, or (iii) (assuming compliance with all applicable state securities
or "Blue Sky" laws and assuming the accuracy of the representations and
warranties of the Initial Purchaser in Section 8 hereof) any statute, judgment,
decree, order, rule or regulation applicable to the Company or any of the
Subsidiaries or any of their respective properties or assets, except in the case
of (i) for such conflicts, breaches, defaults or violations that would not,
individually or in the aggregate, have a Material Adverse Effect or adversely
affect the holders of the Notes.
(l) The audited consolidated financial statements of the
Company and the Subsidiaries included or incorporated by
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reference in the Final Memorandum present fairly in all material respects the
financial position, results of operations and cash flows of the Company and the
Subsidiaries at the dates and for the periods to which they relate and have been
prepared in accordance with generally accepted accounting principles applied on
a consistent basis, except as otherwise stated therein. The summary and selected
financial and statistical data in the Final Memorandum present fairly in all
material respects the information shown therein and have been prepared and
compiled on a basis consistent with the audited financial statements included
therein, except as otherwise stated therein. PricewaterhouseCoopers, LLP (the
"Independent Accountants") is an independent public accounting firm with respect
to the Company and the Subsidiaries within the meaning of the Act and the rules
and regulations promulgated thereunder.
(m) The pro forma financial statements (including the notes
thereto) and the other pro forma financial information included in the Final
Memorandum (i) comply as to form in all material respects with the applicable
requirements of Regulation S-X promulgated under the Securities Exchange Act of
1934, as amended (the "Exchange Act"), (ii) have been prepared in accordance
with the Commission's rules and guidelines with respect to pro forma financial
statements, and (iii) have been properly computed on the bases described
therein; the assumptions used in the preparation of the pro forma financial data
and other pro forma financial information included in the Final Memorandum are
reasonable and the adjustments used therein are appropriate to give effect to
the transactions or circumstances referred to therein.
(n) There is not pending or, to the knowledge of the Company
or any of the Subsidiaries, threatened any action, suit, proceeding, inquiry or
investigation to which the Company or any of the Subsidiaries is a party, or to
which the property or assets of the Company or any of the Subsidiaries are
subject, before or brought by any court, arbitrator or governmental agency or
body which, if determined adversely to the Company or any of the Subsidiaries,
would, individually or in the aggregate, have a Material Adverse Effect, except
as disclosed in the Final Memorandum, or which seeks to restrain, enjoin,
prevent the consummation of or otherwise challenge the issuance or sale of the
Securities to be sold hereunder or the consummation of the other transactions
described in the Final Memorandum.
(o) Each of the Company and the Subsidiaries owns or possesses
adequate licenses or other rights to use all material
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patents, trademarks, service marks, trade names, copyrights and know-how
necessary to conduct the businesses now or proposed to be operated by it as
described in the Final Memorandum, and none of the Company or the Subsidiaries
has received any notice of infringement of or conflict with (or knows of any
such infringement of or conflict with) asserted rights of others with respect to
any patents, trademarks, service marks, trade names, copyrights or know-how
that, if such assertion of infringement or conflict were sustained, would,
individually or in the aggregate, have a Material Adverse Effect.
(p) Each of the Company and the Subsidiaries possesses all
licenses, permits, certificates, consents, orders, approvals and other
authorizations from, and has made all declarations and filings with, all
federal, state, local and other governmental authorities, all self-regulatory
organizations and all courts and other tribunals, presently required or
necessary to own or lease, as the case may be, and to operate its respective
properties and to carry on its respective businesses as now or proposed to be
conducted as set forth in the Final Memorandum ("Permits"), except as described
in the Final Memorandum and except where the failure to obtain such Permits
would not, individually or in the aggregate, have a Material Adverse Effect;
each of the Company and the Subsidiaries has fulfilled and performed all of its
obligations with respect to such Permits and no event has occurred which allows,
or after notice or lapse of time would allow, revocation or termination thereof
or results in any other impairment of the rights of the holder of any such
Permit, except for such revocations, terminations or impairments as would not,
individually or in the aggregate, have a Material Adverse Effect; and none of
the Company or the Subsidiaries has received any notice of any proceeding
relating to revocation or modification of any such Permit, except as described
in the Final Memorandum and except where such revocation or modification would
not, individually or in the aggregate, have a Material Adverse Effect.
(q) Except as described in the Final Memorandum, since
December 31, 1998, except as described therein, (i) none of the Company or the
Subsidiaries has incurred any liabilities or obligations, direct or contingent,
or entered into or agreed to enter into any transactions or contracts (written
or oral) not in the ordinary course of business which liabilities, obligations,
transactions or contracts would, individually or in the aggregate, have a
Material Adverse Effect, (ii) none of the Company or the Subsidiaries has
purchased any of its outstanding capital stock, nor declared, paid or otherwise
made any dividend or distribution of any kind on its capital stock
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(other than with respect to any of such Subsidiaries, the purchase of, or
dividend or distribution on, capital stock owned by the Company) and (iii) there
shall not have been any change in the capital stock or long-term indebtedness of
the Company or the Subsidiaries.
(r) Each of the Company and the Subsidiaries has filed all
necessary federal, state and foreign income and franchise tax returns, except
where the failure to so file such returns would not, individually or in the
aggregate, have a Material Adverse Effect, and has paid all taxes shown as due
thereon; and other than tax deficiencies which the Company or any Subsidiary is
contesting in good faith and for which the Company or such Subsidiary has
provided adequate reserves, there is no tax deficiency that has been asserted
against the Company or any of the Subsidiaries that would have, individually or
in the aggregate, a Material Adverse Effect.
(s) The statistical and market-related data included in the
Final Memorandum are based on or derived from sources which the Company and the
Subsidiaries believe to be reliable and accurate.
(t) None of the Company, the Subsidiaries or any agent acting
on their behalf has taken or will take any action that might cause this
Agreement or the sale of the Securities to violate Regulations T, U or X of the
Board of Governors of the Federal Reserve System, in each case as in effect, or
as the same may hereafter be in effect, on the Closing Date.
(u) Each of the Company and the Subsidiaries has good and
marketable title to all real property and good and (except in the case of
inventory) marketable title to all personal property, including, without
limitation, all Collateral, owned by it and good title to a leasehold interest
in the real and personal property including, without limitation, all Collateral,
leased by it, in each case free and clear of all Liens (as defined in the
Indenture), charges, encumbrances or restrictions, except as described in the
Final Memorandum or to the extent the failure to have such title or the
existence of such Liens would not, individually or in the aggregate, have a
Material Adverse Effect or conflict with the provisions of the Security
Documents. All leases, contracts and agreements to which the Company or any of
the Subsidiaries is a party or by which any of them is bound are valid and
enforceable against the Company or such Subsidiary, to the Company's and the
Subsidiaries' knowledge are valid and enforceable against the other party or
parties thereto, and are in full force and ef-
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fect with only such exceptions as would not, individually or in the aggregate,
have a Material Adverse Effect.
(v) In the ordinary course of business, each of the Company
and the Subsidiaries conducts periodic reviews of the effect of Environmental
Laws (as defined below) and the handling, storage, transport, treating and
disposal of hazardous materials, on the business, operations and properties of
the Company and the Subsidiaries. On the basis of such reviews, the Company and
the Subsidiaries have concluded that such associated costs and liabilities would
not, individually or in the aggregate have a Material Adverse Effect except as
described in the Final Memorandum. Except as described in the Final Memorandum
or as would not, individually or in the aggregate, have a Material Adverse
Effect, (A) each of the Company and the Subsidiaries is in compliance with and
not subject to liability under applicable Environmental Laws, (B) each of the
Company and the Subsidiaries has made all filings and provided all notices
required under any applicable Environmental Law, and has and is in compliance
with all Permits required under any applicable Environmental Laws and each of
them is in full force and effect, (C) there is no civil, criminal or
administrative action, suit, demand, claim, hearing, notice of violation,
investigation, proceeding, notice or demand letter pending or, to the knowledge
of the Company or any of the Subsidiaries, threatened against the Company or any
of the Subsidiaries under any Environmental Law, (D) no lien, charge,
encumbrance or restriction has been recorded under any Environmental Law with
respect to any assets, facility or property owned, operated, leased or
controlled by the Company or any of the Subsidiaries, (E) none of the Company or
the Subsidiaries has received notice that it has been identified as a
potentially responsible party under the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended ("CERCLA"), or any comparable
state law, (F) no property or facility of the Company or any of the Subsidiaries
is (i) listed or proposed for listing on the National Priorities List under
CERCLA or is (ii) listed in the Comprehensive Environmental Response,
Compensation, Liability Information System List promulgated pursuant to CERCLA
or on any comparable list maintained by any state or local governmental
authority.
For purposes of this Agreement, "Environmental Laws" means the
common law and all applicable federal, state and local laws or regulations,
codes, orders, decrees, judgments or injunctions issued, promulgated, approved
or entered thereunder, relating to pollution or protection of public or employee
health and safety or the environment, including, without limi-
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tation, laws relating to (i) emissions, discharges, releases or threatened
releases of hazardous materials into the environment (including, without
limitation, ambient air, surface water, ground water, land surface or subsurface
strata), (ii) the manufacture, processing, distribution, use, generation,
treatment, storage, disposal, transport or handling of hazardous materials and
(iii) underground and above ground storage tanks and related piping, and
emissions, discharges, releases or threatened releases therefrom.
(w) Except as disclosed in the Final Memorandum, there is (i)
no material unfair labor practice complaint pending against the Company or any
Subsidiary, or to the knowledge of the Company and the Subsidiaries, threatened
against any of them, before the National Labor Relations Board or any state or
local labor relations board, and no material grievance or material arbitration
proceeding arising out of or under any collective bargaining agreement is
pending against the Company or any Subsidiary, or to the knowledge of the
Company or any Subsidiary threatened against them, (ii) no strike, labor
dispute, slowdown or work stoppage with the employees of the Company or any of
the Subsidiaries which is pending or, to the knowledge of the Company or any of
the Subsidiaries, threatened and (iii) to the knowledge of the Company and the
Subsidiaries, no union organizing activities taking place.
(x) Each of the Company and the Subsidiaries carries
insurance, by insurers of recognized financial responsibility in such amounts
and covering such risks as the Company and the Subsidiaries believe to be
adequate for the conduct of their business and the value of their properties and
as the Company and the Subsidiaries believe to be customary for companies
engaged in similar business and, in the case of its properties, as would be
maintained by a prudent operator of properties, similar in use and configuration
to such properties and located in the locality where such properties are
located; and neither the Company nor any of the Subsidiaries (i) has received
notice from any insurer or agent of such insurer that substantial capital
improvements or other material expenditures will have to be made in order to
continue such insurance or (ii) has any reason to believe that it will not be
able to renew its existing insurance coverage as and when such coverage expires
or to obtain similar coverage from similar insurers at a cost that would not
have a Material Adverse Effect.
(y) Except as disclosed in the Final Memorandum, no
relationship, direct or indirect, exists between or among the Company or any of
the Subsidiaries on the one hand, and the di-
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rectors, officers, stockholders, customers or suppliers of the Company or any of
the Subsidiaries on the other hand, which would be required by the Act to be
described in the Final Memorandum by Item 404 of Regulation S-K if the Final
Memorandum were a prospectus included in a registration statement on Form S-1
filed with the SEC and each business relationship or related party transaction
described therein is a fair and accurate description of the relationship and
transactions so described.
(z) The Security Documents, once executed and delivered, will
create, in favor of the Trustee for the benefit of the Trustee and the holders
of the Securities, a valid and enforceable, and upon filing or recording with
the appropriate governmental authorities and delivery of the applicable
documents to the Trustee, perfected security interest in and Lien upon all of
the Collateral, and to the Company's and the Subsidiaries' knowledge, such Lien
shall be superior to and prior to the rights of all third persons other than the
lenders under the Senior Credit Facility (as defined in the Indenture) and
subject to no other Liens except for Liens expressly permitted to exist on such
Collateral by the terms of the applicable Security Document.
(aa) To the Company's knowledge, none of the Company or the
Subsidiaries has 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"), to which the
Company or any of the Subsidiaries makes or ever has made a contribution and in
which any employee of the Company or of any Subsidiary is or has ever been a
participant. With respect to such plans, the Company and each Subsidiary is in
compliance in all material respects with all applicable provisions of ERISA.
(bb) Neither the Company or any of the Subsidiaries does
business with the government of Cuba or with any person located in Cuba within
the meaning of Section 517.075, Florida Statutes.
(cc) Each of the Company and the Subsidiaries (i) makes and
keeps accurate books and records and (ii) maintains internal accounting controls
which provide reasonable assurance that (A) transactions are executed in
accordance with management's authorization, (B) transactions are recorded as
necessary to permit preparation of its financial statements and to maintain
accountability for its assets, (C) access to its as-
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sets is permitted only in accordance with management's authorization and (D) the
reported accountability for its assets is compared with existing assets at
reasonable intervals.
(dd) None of the Company or the Subsidiaries are, and after
giving effect to the offering of the Securities and the application of the net
proceeds thereof as described in the Final Memorandum, none of the Company or
the Subsidiaries will be an "investment company" or an entity "controlled" by an
investment company or "promoter" or "principal underwriter" for an "investment
company," as such terms are defined in the Investment Company Act of 1940, as
amended, and the rules and regulations thereunder.
(ee) The Notes, the Guarantees, the Exchange Notes, the
Indenture, the Registration Rights Agreement and the Security Documents will
conform in all material respects to the descriptions thereof in the Final
Memorandum.
(ff) No holder of securities of the Company or any Subsidiary
will be entitled to have such securities registered under the registration
statements required to be filed by the Company pursuant to the Registration
Rights Agreement other than as expressly permitted thereby.
(gg) Immediately after the consummation of the transactions
contemplated by this Agreement, the fair value and present fair saleable value
of the assets of each of the Company and the Subsidiaries (each on a
consolidated basis) will exceed the sum of its stated liabilities and identified
contingent liabilities; none of the Company or the Subsidiaries (each on a
consolidated basis) is, nor will any of the Company or the Subsidiaries (each on
a consolidated basis) be, after giving effect to the execution, delivery and
performance of this Agreement, and the consummation of the transactions
contemplated hereby, (a) left with unreasonably small capital with which to
carry on its business as it is proposed to be conducted, (b) unable to pay its
debts (contingent or otherwise) as they mature or (c) otherwise insolvent.
(hh) None of the Company, the Subsidiaries or any of their
respective Affiliates (as defined in Rule 501(b) of Regulation D under the Act)
has directly, or through any agent, (i) sold, offered for sale, solicited offers
to buy or otherwise negotiated in respect of, any "security" (as defined in the
Act) which is or could be integrated with the sale of the Securities in a manner
that would require the registration under the Act of the Securities or (ii)
engaged in any form of
15
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general solicitation or general advertising (as those terms are used in
Regulation D under the Act) in connection with the offering of the Securities or
in any manner involving a public offering within the meaning of Section 4(2) of
the Act. Assuming the accuracy of the representations and warranties of the
Initial Purchaser in Section 8 hereof, it is not necessary in connection with
(i) the offer, sale and delivery of the Securities to the Initial Purchaser in
the manner contemplated by this Agreement or (ii) the initial resales of the
Securities by the Initial Purchaser as described in the Final Memorandum to
register any of the Securities under the Act or to qualify the Indenture under
the TIA.
(ii) No securities of the Company or any Subsidiary are of the
same class (within the meaning of Rule 144A under the Act) as the Securities and
listed on a national securities exchange registered under Section 6 of the
Exchange Act, or quoted in a U.S. automated inter-dealer quotation system.
(jj) None of the Company or the Subsidiaries has taken, nor
will any of them take, directly or indirectly, any action designed to, or that
might be reasonably expected to, cause or result in stabilization or
manipulation of the price of the Notes.
(kk) None of the Company, the Subsidiaries, any of their
respective Affiliates or any person acting on its or their behalf (other than
the Initial Purchaser) has engaged or will engage in any directed selling
efforts (as that term is defined in Regulation S under the Act ("Regulation S"))
with respect to the Notes; the Company, the Subsidiaries and their respective
Affiliates and any person acting on its or their behalf (other than the Initial
Purchaser) have complied with the offering restrictions requirement of
Regulation S.
Any certificate signed by any officer of the Company or any
Subsidiary and delivered to any Initial Purchaser or to counsel for the Initial
Purchaser shall be deemed a joint and several representation and warranty by the
Company and each of the Subsidiaries to the Initial Purchaser as to the matters
covered thereby.
3. Purchase, Sale and Delivery of the Securities. On the basis
of the representations, warranties, agreements and covenants herein contained
and subject to the terms and conditions herein set forth, the Company agrees to
issue and sell to the Initial Purchaser, and the Initial Purchaser, agrees to
purchase the Securities from the Company at 86.5% of the prin-
16
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cipal amount of the Notes. One or more certificates in definitive form for the
Notes that the Initial Purchaser has agreed to purchase hereunder, and in such
denomination or denominations and registered in such name or names as the
Initial Purchaser requests upon notice to the Company at least 36 hours prior to
the Closing Date, shall be delivered by or on behalf of the Company to the
Initial Purchaser, against payment by or on behalf of the Initial Purchaser of
the purchase price therefor by wire transfer (same day funds), to such account
or accounts as the Company shall specify prior to the Closing Date, or by such
means as the parties hereto shall agree prior to the Closing Date. Such delivery
of and payment for the Securities shall be made at the offices of ▇▇▇▇▇▇ ▇▇▇▇▇▇
& ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ at 9:00 A.M., New York time, on
May 7, 1999, or at such other place, time or date as the Initial Purchaser, on
the one hand, and the Company, on the other hand, may agree upon, such time and
date of delivery against payment being herein referred to as the "Closing Date."
The Company will make such certificate or certificates for the Securities
available for checking and packaging by the Initial Purchaser at the offices of
▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, or at such other place as the Initial Purchaser may
designate, at least 24 hours prior to the Closing Date.
4. Offering by the Initial Purchaser. The Initial Purchaser
proposes to make an offering of the Securities at the price and upon the terms
set forth in the Final Memorandum, as soon as practicable after this Agreement
is entered into and as in the judgment of the Initial Purchaser is advisable.
5. Covenants of the Company and the Subsidiary Guarantors. The
Company and each of the Subsidiary Guarantors, jointly and severally covenant
and agree with the Initial Purchaser that:
(a) The Company will not amend or supplement the Final
Memorandum or any amendment or supplement thereto of which the Initial Purchaser
shall not previously have been advised and furnished a copy for a reasonable
period of time prior to distributing the proposed amendment or supplement and as
to which the Initial Purchaser shall not have given their consent. The Company
will promptly, upon the reasonable request of the Initial Purchaser or counsel
for the Initial Purchaser, make any amendments or supplements to the Final
Memorandum that may be necessary or advisable in connection with the resale of
the Securities by the Initial Purchaser.
17
- 17 -
(b) The Company and the Subsidiary Guarantors will cooperate
with the Initial Purchaser in arranging for the qualification of the Securities
for offering and sale under the securities or "Blue Sky" laws of such
jurisdictions as the Initial Purchaser may designate and will continue such
qualification in effect for as long as may be necessary to complete the resale
of the Securities; provided, however, that in connection therewith, none of the
Company or the Subsidiary Guarantors shall be required to qualify as a foreign
corporation or to execute a general consent to service of process in any
jurisdiction or subject themselves to taxation in excess of a nominal dollar
amount in any such jurisdiction where it is not then so subject.
(c) If, at any time prior to the earlier of the completion of
the distribution by the Initial Purchaser of the Securities or the Private
Exchange Notes or the effectiveness of a registration statement pursuant to the
terms of the Registration Rights Agreement, any event occurs or information
becomes known as a result of which the Final Memorandum as then amended or
supplemented would include any untrue statement of a material fact, or omit to
state a material fact necessary to make the statements therein, in the light of
the circumstances under which they were made, not misleading, or if for any
other reason it is necessary during such time to amend or supplement the Final
Memorandum to comply with applicable law, the Company will promptly notify the
Initial Purchaser thereof and will prepare, at the expense of the Company, an
amendment or supplement to the Final Memorandum that corrects such statement or
omission or effects such compliance.
(d) The Company will, without charge, provide to the Initial
Purchaser and to counsel for the Initial Purchaser as many copies of the Final
Memorandum or any amendment or supplement thereto as the Initial Purchaser may
reasonably request.
(e) The Company will apply the net proceeds from the sale of
the Securities as set forth under "Use of Proceeds" in the Final Memorandum.
(f) For so long as any of the Securities remain outstanding,
the Company will furnish to the Initial Purchaser copies of all reports and
other communications (financial or otherwise) furnished by the Company to the
Trustee or to the holders of the Securities and, as soon as available, copies of
any reports or financial statements furnished to or filed by the Company with
the Commission or any national securities ex-
18
- 18 -
change on which any class of securities of the Company may be listed.
(g) Prior to the Closing Date, the Company will furnish to the
Initial Purchaser, as soon as it has been prepared, a copy of any unaudited
interim financial statements of the Company for any period subsequent to the
period covered by the most recent financial statements appearing in the Final
Memorandum.
(h) None of the Company, the Subsidiaries or any of their
Affiliates will sell, offer for sale or solicit offers to buy or otherwise
negotiate in respect of any "security" (as defined in the Act) which could be
integrated with the sale of the Securities in a manner which would require the
registration under the Act of the Securities.
(i) The Company will not, and will not permit any of the
Subsidiaries to, engage in any form of general solicitation or general
advertising (as those terms are used in Regulation D under the Act) in
connection with the offering of the Securities or in any manner involving a
public offering of the Securities within the meaning of Section 4(2) of the Act.
(j) For so long as any of the Securities remain outstanding,
the Company will make available at its expense, upon request, to any holder of
such Securities and any prospective purchasers thereof the information specified
in Rule 144A(d)(4) under the Act, unless the Company is then subject to Section
13 or 15(d) of the Exchange Act.
(k) The Company will use its best efforts to (i) permit the
Securities to be designated PORTAL securities in accordance with the rules and
regulations adopted by the NASD relating to trading in the Private Offerings,
Resales and Trading through Automated Linkages market (the "Portal Market") and
(ii) permit the Securities to be eligible for clearance and settlement through
The Depository Trust Company.
(l) In connection with Securities offered and sold in an
offshore transaction (as defined in Regulation S) the Company will not register
any transfer of such Securities not made in accordance with the provisions of
Regulation S and will not, except in accordance with the provisions of
Regulation S, if applicable, issue any such Securities in the form of definitive
securities.
19
- 19 -
6. Expenses. The Company and each of the Subsidiary
Guarantors, jointly and severally, agrees to pay all costs and expenses incident
to the performance of their respective obligations under this Agreement, whether
or not the transactions contemplated herein are consummated or this Agreement is
terminated pursuant to any provision hereof, including all costs and expenses
incident to (i) the printing, word processing or other production of documents
with respect to the transactions contemplated hereby, including any costs of
printing the Final Memorandum and any amendment or supplement thereto, and any
"Blue Sky" memoranda, (ii) all arrangements relating to the delivery to the
Initial Purchaser of copies of the foregoing documents, (iii) the fees and
disbursements of the counsel, the accountants and any other experts or advisors
retained by the Company, (iv) preparation (including printing), issuance and
delivery to the Initial Purchaser of the Securities, (v) the qualification of
the Securities under state securities and "Blue Sky" laws, including filing fees
and fees and disbursements of counsel for the Initial Purchaser relating
thereto, (vi) expenses in connection with any meetings with prospective
investors in the Securities, (vii) fees and expenses of the Trustee including
fees and expenses of counsel for the Trustee, (viii) all expenses and listing
fees incurred in connection with the application for quotation of the Securities
on the PORTAL Market, (ix) any fees charged by investment rating agencies for
the rating of the Securities and (x) all filing fees and other disbursements
associated with the Security Documents and the perfection of the security
interests created thereby. Additionally, in the event the sale of the Securities
provided for herein is consummated, the Company and the Subsidiary Guarantors,
jointly and severally, agree to promptly reimburse the Initial Purchaser upon
demand for 50% of all out-of-pocket expenses (including the reasonable fees,
disbursements and charges of ▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, counsel for the Initial
Purchaser) that shall have been incurred by the Initial Purchaser in connection
with the proposed purchase and sale of the Securities and the related
transactions contemplated herein. In the event the sale of the Securities
provided for herein is not consummated or this Agreement is terminated (other
than solely by reason of a default by the Initial Purchaser of its obligations
hereunder after all conditions hereunder have been satisfied in accordance
herewith), the Company and the Subsidiary Guarantors, jointly and severally,
agree to promptly reimburse the Initial Purchaser upon demand for all
out-of-pocket expenses (including the reasonable fees, disbursements and charges
of ▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, counsel for the Initial Purchaser) that shall have
been incurred by the Initial Pur-
20
- 20 -
chaser in connection with the proposed purchase and sale of the Securities and
the related transactions contemplated herein.
7. Conditions of the Initial Purchaser's Obligations. The
obligation of the Initial Purchaser to purchase and pay for the Securities
shall, in its sole discretion, be subject to the satisfaction or waiver of the
following conditions on or prior to the Closing Date:
(a) On the Closing Date, the Initial Purchaser shall have
received the opinion, dated as of the Closing Date and addressed to the Initial
Purchaser, of ▇▇▇▇▇, Brown & ▇▇▇▇▇ counsel for the Company, in form and
substance reasonably satisfactory to counsel for the Initial Purchaser.
(b) On the Closing Date, the Initial Purchaser shall have
received opinions dated the Closing Date and addressed to the Initial Purchaser
and the Trustee, of local counsel for each of the Subsidiary Guarantors listed
on Schedule 3 hereto, in form and substance reasonably satisfactory to counsel
for the Initial Purchaser.
(c) On the Closing Date, the Initial Purchaser shall have
received opinions, dated the Closing Date and addressed to the Initial
Purchaser, of local counsel for the Company and the Subsidiaries, in each of the
jurisdictions listed on Schedule 4 hereto substantially in the form of the local
counsel opinions delivered pursuant to the provisions of the Senior Credit
Facility, relating to the creation, enforceability and perfection of the
security interests and Liens created by the Security Documents delivered in
accordance therewith, with such changes thereto as shall be reasonably requested
by counsel to the Initial Purchaser and, in form and substance satisfactory to
counsel for the Initial Purchaser.
(d) On the Closing Date, the Initial Purchaser shall have
received the opinion, in form and substance satisfactory to the Initial
Purchaser, dated as of the Closing Date and addressed to the Initial Purchaser,
of ▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, counsel for the Initial Purchaser, with respect to
certain legal matters relating to this Agreement and such other related matters
as the Initial Purchaser may reasonably require. In rendering such opinion,
▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ shall have received and may rely upon such certificates
and other documents and information as it may reasonably request to pass upon
such matters.
21
- 21 -
(e) The Initial Purchaser shall have received from the
Independent Accountants a comfort letter or letters dated the date hereof and
the Closing Date, in form and substance satisfactory to counsel for the Initial
Purchaser.
(f) The representations and warranties of the Company and the
Subsidiary Guarantors contained in this Agreement shall be true and correct on
and as of the date hereof and on and as of the Closing Date as if made on and as
of the Closing Date; the statements of the Company's and the Subsidiary
Guarantors' officers made pursuant to any certificate delivered in accordance
with the provisions hereof shall be true and correct on and as of the date made
and on and as of the Closing Date; the Company and the Subsidiary Guarantors
shall have performed all covenants and agreements and satisfied all conditions
on their part to be performed or satisfied hereunder at or prior to the Closing
Date; and, except as described in the Final Memorandum (exclusive of any
amendment or supplement thereto after the date hereof), subsequent to the date
of the most recent financial statements in such Final Memorandum, there shall
have been no event or development, and no information shall have become known,
that, individually or in the aggregate, has or would be reasonably likely to
have a Material Adverse Effect.
(g) The sale of the Securities hereunder shall not be enjoined
(temporarily or permanently) on the Closing Date.
(h) The Initial Purchaser shall have received a certificate of
the Company and each of the Subsidiary Guarantors, dated the Closing Date,
signed on behalf of the Company by its Chief Executive Officer, Chief Financial
Officer or Chief Operating Officer and any Vice President and signed on behalf
of each of the Subsidiary Guarantors by two officers of each of the Subsidiary
Guarantors, to the effect that:
(i) The representations and warranties of the Company and
the Subsidiary Guarantors contained in this Agreement are true and
correct on and as of the date hereof and on and as of the Closing Date,
and the Company and the Subsidiary Guarantors have performed all
covenants and agreements and satisfied all conditions on their part to
be performed or satisfied hereunder at or prior to the Closing Date;
(ii) Upon the execution of the Security Documents and filings
of financing statements in all required jurisdictions, the Trustee on
behalf of the Trustee and holders of
22
- 22 -
Securities will have a valid and perfected lien on the Collateral and
subject to no Liens, other than Liens permitted by the Indenture and
the Security Documents;
(iii) At the Closing Date, since the date hereof or since the
date of the most recent financial statements in the Final Memorandum
(exclusive of any amendment or supplement thereto after the date
hereof), no event or development has occurred, and no information has
become known, that, individually or in the aggregate, has or would be
reasonably likely to have a Material Adverse Effect; and
(iv) The sale of the Securities hereunder has not been
enjoined (temporarily or permanently).
(i) On the Closing Date, the Initial Purchaser shall have
received the Registration Rights Agreement, the Indenture and the Security
Documents executed by the Company and the Subsidiary Guarantors and each such
agreement shall be in full force and effect at all times from and after the
Closing Date.
(j) On the Closing Date, Amendment No. 6 to the Senior Credit
Facility, in the form previously delivered to the Initial Purchaser, shall be in
full force and effect or the Initial Purchaser shall have received, in form and
substance satisfactory to the Initial Purchaser and counsel to the Initial
Purchaser, such consents, amendments or approvals required in connection with
the Company's Senior Credit Facility in order to issue and sell the Securities
and consummate the other transactions contemplated hereby.
On or before the Closing Date, the Initial Purchaser and
counsel for the Initial Purchaser shall have received such further documents,
opinions, certificates, letters and schedules or instruments relating to the
business, corporate, legal and financial affairs of the Company and the
Subsidiaries as they shall have heretofore reasonably requested from the
Company.
All such documents, opinions, certificates, letters, schedules
or instruments delivered pursuant to this Agreement will comply with the
provisions hereof only if they are reasonably satisfactory in all material
respects to the Initial Purchaser and counsel for the Initial Purchaser. The
Company shall furnish to the Initial Purchaser such conformed copies of such
documents, opinions, certificates, letters, schedules and instruments in such
quantities as the Initial Purchaser shall reasonably request.
23
- 23 -
8. Offering of Securities; Restrictions on Transfer. (a) The
Initial Purchaser represents and warrants that it is a QIB. The Initial
Purchaser agrees with the Company (as to itself only) that (i) it has not and
will not solicit offers for, or offer or sell, the Securities by any form of
general solicitation or general advertising (as those terms are used in
Regulation D under the Act) or in any manner involving a public offering within
the meaning of Section 4(2) of the Act; and (ii) it has and will solicit offers
for the Securities only from, and will offer the Securities only to (A) in the
case of offers inside the United States, persons whom the Initial Purchaser
reasonably believes to be QIBs or, if any such person is buying for one or more
institutional accounts for which such person is acting as fiduciary or agent,
only when such person has represented to the Initial Purchaser that each such
account is a QIB, to whom notice has been given that such sale or delivery is
being made in reliance on Rule 144A, and, in each case, in transactions under
Rule 144A and (B) in the case of offers outside the United States, to persons
other than U.S. persons ("foreign purchasers," which term shall include dealers
or other professional fiduciaries in the United States acting on a discretionary
basis for foreign beneficial owners (other than an estate or trust)); provided,
however, that, in the case of this clause (B), in purchasing such Securities
such persons are deemed to have represented and agreed as provided under the
caption "Notice to Investors" contained in the Final Memorandum.
(b) The Initial Purchaser represents and warrants with respect
to offers and sales outside the United States that (i) it has and will comply
with all applicable laws and regulations in each jurisdiction in which it
acquires, offers, sells or delivers Securities or has in its possession or
distributes any Final Memorandum or any such other material, in all cases at its
own expense; (ii) the Securities have not been and will not be offered or sold
within the United States or to, or for the account or benefit of, U.S. persons
except in accordance with Regulation S under the Act or pursuant to an exemption
from the registration requirements of the Act; (iii) it has offered the
Securities and will offer and sell the Securities (A) as part of its
distribution at any time and (B) otherwise until 40 days after the later of the
commencement of the offering and the Closing Date, only in accordance with Rule
903 of Regulation S and, accordingly, neither it nor any persons acting on its
behalf have engaged or will engage in any directed selling efforts (within the
meaning of Regulation S) with respect to the Securities, and any such persons
have complied and will comply with the offering restrictions requirement of
Regu-
24
- 24 -
▇▇▇▇▇▇ S; and (iv) it agrees that, at or prior to confirmation of sales of the
Securities, it will have sent to each distributor, dealer or person receiving a
selling concession, fee or other remuneration that purchases Securities from it
during the restricted period a confirmation or notice to substantially the
following effect:
"The Securities covered hereby have not been registered under
the United States Securities Act of 1933 (the "Securities
Act") and may not be offered and sold within the United States
or to, or for the account or benefit of, U.S. persons (i) as
part of the distribution of the Securities at any time or (ii)
otherwise until 40 days after the later of the commencement of
the offering and the closing date of the offering, except in
either case in accordance with Regulation S (or Rule 144A if
available) under the Securities Act. Terms used above have the
meaning given to them in Regulation S."
Terms used in this Section 8 and not defined in this Agreement
have the meanings given to them in Regulation S.
9. Indemnification and Contribution. (a) The Company and each
of the Subsidiary Guarantors agree, jointly and severally, to indemnify and hold
harmless the Initial Purchaser, and each person, if any, who controls the
Initial Purchaser or its affiliates within the meaning of Section 15 of the Act
or Section 20 of the Exchange Act, against any losses, claims, damages or
liabilities to which the Initial Purchaser or such controlling person may become
subject under the Act, the Exchange Act or otherwise, insofar as any such
losses, claims, damages or liabilities (or actions in respect thereof) arise out
of or are based upon:
(i) any untrue statement or alleged untrue statement of any
material fact contained in the Final Memorandum or any amendment or
supplement thereto or any application or other document, or any
amendment or supplement thereto, executed by the Company or the
Subsidiary Guarantors or based upon written information furnished by or
on behalf of the Company or the Subsidiary Guarantors filed in any
jurisdiction in order to qualify the Notes under the securities or
"Blue Sky" laws thereof or filed with any secu-
25
- 25 -
rities association or securities exchange (each an "Application"); or
(ii) the omission or alleged omission to state, in the Final
Memorandum or any amendment or supplement thereto or any Application, a
material fact required to be stated therein or necessary to make the
statements therein not misleading,
and will reimburse, as incurred, the Initial Purchaser and each such controlling
person for any legal or other expenses incurred by the Initial Purchaser or such
controlling person in connection with investigating, defending against or
appearing as a third-party witness in connection with any such loss, claim,
damage, liability or action; provided, however, the Company and the Subsidiary
Guarantors will not be liable in any such case to the extent that any such loss,
claim, damage, or liability arises out of or is based upon any untrue statement
or alleged untrue statement or omission or alleged omission made in the Final
Memorandum or any amendment or supplement thereto or any Application in reliance
upon and in conformity with written information concerning the Initial Purchaser
furnished to the Company by the Initial Purchaser specifically for use therein.
This indemnity agreement will be in addition to any liability that the Company
and the Subsidiary Guarantors may otherwise have to the indemnified parties. The
Company and the Subsidiary Guarantors shall not be liable under this Section 9
for any settlement of any claim or action effected without prior written
consent, which shall not be unreasonably withheld. The Initial Purchaser shall
not, without the prior written consent of the Company, effect any settlement or
compromise of any pending or threatened proceeding in respect of which the
Company or the Subsidiary Guarantors is or could have been a party, or indemnity
could have been sought hereunder by the Company or the Subsidiary Guarantors,
unless such settlement (A) includes an unconditional written release of the
Company and the Subsidiary Guarantors, in form and substance reasonably
satisfactory to the Company, from all liability on claims that are the subject
matter of such proceeding and (B) does not include any statement as to an
admission of fault, culpability or failure to act by or on behalf of the Company
or the Subsidiary Guarantors.
(b) The Initial Purchaser agrees to indemnify and hold
harmless the Company and the Subsidiary Guarantors, their respective directors
and officers and each person, if any, who controls the Company and the
Subsidiary Guarantors within the meaning of Section 15 of the Act or Section 20
of the Exchange
26
- 26 -
Act against any losses, claims, damages or liabilities to which the Company or
the Subsidiary Guarantors or any such director, officer or controlling person
may become subject under the Act, the Exchange Act or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) arise out
of or are based upon (i) any untrue statement or alleged untrue statement of any
material fact contained in the Final Memorandum or any amendment or supplement
thereto or any Application, or (ii) the omission or the alleged omission to
state therein a material fact required to be stated in the Final Memorandum or
any amendment or supplement thereto or any Application, or necessary to make the
statements therein not misleading, in each case to the extent, but only to the
extent, that such untrue statement or alleged untrue statement or omission or
alleged omission was made in reliance upon and in conformity with written
information concerning the Initial Purchaser, furnished to the Company by the
Initial Purchaser specifically for use therein; and subject to the limitation
set forth immediately preceding this clause, will reimburse, as incurred, any
legal or other expenses incurred by the Company or any of the Subsidiary
Guarantors or any such director, officer or controlling person in connection
with investigating or defending against or appearing as a third party witness in
connection with any such loss, claim, damage, liability or action in respect
thereof. This indemnity agreement will be in addition to any liability that the
Initial Purchaser may otherwise have to the indemnified parties. The Initial
Purchaser shall not be liable under this Section 9 for any settlement of any
claim or action effected without its consent, which shall not be unreasonably
withheld. The Company and the Subsidiary Guarantors shall not, without the prior
written consent of the Initial Purchaser, effect any settlement or compromise of
any pending or threatened proceeding in respect of which the Initial Purchaser
is or could have been a party, or indemnity could have been sought hereunder by
the Initial Purchaser, unless such settlement (A) includes an unconditional
written release of the Initial Purchaser, in form and substance reasonably
satisfactory to the Initial Purchaser, from all liability on claims that are the
subject matter of such proceeding and (B) does not include any statement as to
an admission of fault, culpability or failure to act by or on behalf of the
Initial Purchaser.
(c) Promptly after receipt by an indemnified party under this
Section 9 of notice of the commencement of any action for which such indemnified
party is entitled to indemnification under this Section 9, such indemnified
party will, if a claim in respect thereof is to be made against the indemnifying
27
- 27 -
party under this Section 9, notify the indemnifying party of the commencement
thereof in writing; but the omission to so notify the indemnifying party (i)
will not relieve it from any liability under paragraph (a) or (b) above unless
and to the extent such failure results in the forfeiture by the indemnifying
party of substantial rights and defenses and (ii) will not, in any event,
relieve the indemnifying party from any obligations to any indemnified party
other than the indemnification obligation provided in paragraphs (a) and (b)
above. In case any such action is brought against any indemnified party, and it
notifies the indemnifying party of the commencement thereof, the indemnifying
party will be entitled to participate therein and, to the extent that it may
wish, jointly with any other indemnifying party similarly notified, to assume
the defense thereof, with counsel reasonably satisfactory to such indemnified
party; provided, however, that if (i) the use of counsel chosen by the
indemnifying party to represent the indemnified party would present such counsel
with a conflict of interest, (ii) the defendants in any such action include both
the indemnified party and the indemnifying party and the indemnified party shall
have been advised by counsel that there may be one or more legal defenses
available to it and/or other indemnified parties that are different from or
additional to those available to the indemnifying party, or (iii) the
indemnifying party shall not have employed counsel reasonably satisfactory to
the indemnified party to represent the indemnified party within a reasonable
time after receipt by the indemnifying party of notice of the institution of
such action, then, in each such case, the indemnifying party shall not have the
right to direct the defense of such action on behalf of such indemnified party
or parties and such indemnified party or parties shall have the right to select
separate counsel to defend such action on behalf of such indemnified party or
parties. After notice from the indemnifying party to such indemnified party of
its election so to assume the defense thereof and approval by such indemnified
party of counsel appointed to defend such action, the indemnifying party will
not be liable to such indemnified party under this Section 9 for any legal or
other expenses, other than reasonable costs of investigation, subsequently
incurred by such indemnified party in connection with the defense thereof,
unless (i) the indemnified party shall have employed separate counsel in
accordance with the proviso to the immediately preceding sentence (it being
understood, however, that in connection with such action the indemnifying party
shall not be liable for the expenses of more than one separate counsel (in
addition to local counsel) in any one action or separate but substantially
similar actions in the same jurisdiction arising out of the same general
allegations or circumstances, desig-
28
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nated by the Initial Purchaser in the case of paragraph (a) of this Section 9 or
the Company and the Subsidiary Guarantors in the case of paragraph (b) of this
Section 9, representing the indemnified parties under such paragraph (a) or
paragraph (b), as the case may be, who are parties to such action or actions) or
(ii) the indemnifying party has authorized in writing the employment of counsel
for the indemnified party at the expense of the indemnifying party. After such
notice from the indemnifying party to such indemnified party, the indemnifying
party will not be liable for the costs and expenses of any settlement of such
action effected by such indemnified party without the prior written consent of
the indemnifying party (which consent shall not be unreasonably withheld),
unless such indemnifying party waived in writing its rights under this Section
9, in which case the indemnified party may effect such a settlement without such
consent.
(d) In circumstances in which the indemnity agreement provided
for in the preceding paragraphs of this Section 9 is unavailable to, or
insufficient to hold harmless, an indemnified party in respect of any losses,
claims, damages or liabilities (or actions in respect thereof), each
indemnifying party, in order to provide for just and equitable contribution,
shall contribute to the amount paid or payable by such indemnified party as a
result of such losses, claims, damages or liabilities (or actions in respect
thereof) in such proportion as is appropriate to reflect (i) the relative
benefits received by the indemnifying party or parties on the one hand and the
indemnified party on the other from the offering of the Securities or (ii) if
the allocation provided by the foregoing clause (i) is not permitted by
applicable law, not only such relative benefits but also the relative fault of
the indemnifying party or parties on the one hand and any indemnified party on
the other in connection with the statements or omissions or alleged statements
or omissions that resulted in such losses, claims, damages or liabilities (or
actions in respect thereof). The relative benefits received by the Company and
the Subsidiary Guarantors on the one hand and the Initial Purchaser on the other
shall be deemed to be in the same proportion as the total proceeds from the
offering (before deducting expenses) received by the Company and the Subsidiary
Guarantors bear to the total discounts and commissions received by the Initial
Purchaser. The relative fault of the parties shall be determined by reference
to, among other things, whether the untrue or alleged untrue statement of a
material fact or the omission or alleged omission to state a material fact
relates to information supplied by the Company and the Subsidiary Guarantors on
the one hand, or the Initial Purchaser on the other, the parties' rela-
29
- 29 -
tive intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission or alleged statement or omission, and any
other equitable considerations appropriate in the circumstances. The Company and
the Subsidiary Guarantors and the Initial Purchaser agree that it would not be
equitable if the amount of such contribution were determined by pro rata or per
capita allocation or by any other method of allocation that does not take into
account the equitable considerations referred to in the first sentence of this
paragraph (d). Notwithstanding any other provision of this paragraph (d), the
Initial Purchaser shall not be obligated to make contributions hereunder that in
the aggregate exceed the total discounts, commissions and other compensation
received by the Initial Purchaser under this Agreement, less the aggregate
amount of any damages that the Initial Purchaser has otherwise been required to
pay by reason of the untrue or alleged untrue statements or the omissions or
alleged omissions to state a material fact, and 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. For purposes of this paragraph (d), each person, if any, who
controls the Initial Purchaser within the meaning of Section 15 of the Act or
Section 20 of the Exchange Act shall have the same rights to contribution as the
Initial Purchaser, and each director of the Company or any Subsidiary Guarantor,
each officer of the Company or any Subsidiary Guarantor and each person, if any,
who controls the Company or any Subsidiary Guarantor within the meaning of
Section 15 of the Act or Section 20 of the Exchange Act, shall have the same
rights to contribution as the Company and the Subsidiary Guarantors.
10. Survival Clause. The respective representations,
warranties, agreements, covenants, indemnities and other statements of the
Company, the Subsidiary Guarantors, their respective officers and the Initial
Purchaser set forth in this Agreement or made by or on behalf of them pursuant
to this Agreement shall remain in full force and effect, regardless of (i) any
investigation made by or on behalf of the Company, the Subsidiary Guarantors,
any of their respective officers or directors, the Initial Purchaser or any
controlling person referred to in Section 9 hereof and (ii) delivery of and
payment for the Securities. The respective agreements, covenants, indemnities
and other statements set forth in Sections 6, 9 and 15 hereof shall remain in
full force and effect, regardless of any termination or cancellation of this
Agreement.
30
- 30 -
11. Termination. (a) This Agreement may be terminated in the
sole discretion of the Initial Purchaser by notice to the Company given prior to
the Closing Date in the event that the Company or any of the Subsidiary
Guarantors shall have failed, refused or been unable to perform all obligations
and satisfy all conditions on their part to be performed or satisfied hereunder
at or prior thereto or, if at or prior to the Closing Date:
(i) any of the Company or the Subsidiaries shall have
sustained any loss or interference with respect to its businesses or
properties from fire, flood, hurricane, accident or other calamity,
whether or not covered by insurance, or from any strike, labor dispute,
slow down or work stoppage or any legal or governmental proceeding,
which loss or interference, in the sole judgment of the Initial
Purchaser, has had or has a Material Adverse Effect, or there shall
have been, in the sole judgment of the Initial Purchaser, any event or
development that, individually or in the aggregate, has or could be
reasonably likely to have a Material Adverse Effect (including without
limitation a change in control of the Company or the Subsidiaries),
except in each case as described in the Final Memorandum (exclusive of
any amendment or supplement thereto);
(ii) trading in securities of the Company (other than in
connection with a delisting of the Common Stock of the Company from the
NASDAQ National Market) or in securities generally on the New York
Stock Exchange, American Stock Exchange or the NASDAQ National Market
shall have been suspended or minimum or maximum prices shall have been
established on any such exchange or market;
(iii) a banking moratorium shall have been declared by New
York or United States authorities;
(iv) there shall have been (A) an outbreak or escalation of
hostilities between the United States and any foreign power, or (B) an
outbreak or escalation of any other insurrection or armed conflict
involving the United States or any other national or international
calamity or emergency, or (C) any material change in the financial
markets of the United States which, in the case of (A), (B) or (C)
above and in the sole judgment of the Initial Purchaser, makes it
impracticable or inadvisable to proceed with the offering or the
delivery of the Securities as contemplated by the Final Memorandum; or
31
- 31 -
(v) any securities of the Company shall have been downgraded
or placed (from and after the date hereof) on any "watch list" for
possible downgrading by any nationally recognized statistical rating
organization.
(b) Termination of this Agreement pursuant to this Section 11
shall be without liability of any party to any other party except as provided in
Section 10 hereof.
12. Information Supplied by the Initial Purchaser. The
statements set forth in the third paragraph, second sentence of the fifth
paragraph and the sixth paragraph under the heading "Private Placement" in the
Final Memorandum (to the extent such statements relate to the Initial Purchaser)
constitute the only information furnished by the Initial Purchaser to the
Company for the purposes of Sections 2(a) and 9 hereof.
13. Notices. All communications hereunder shall be in writing
and, if sent to the Initial Purchaser, shall be mailed or delivered to (i) BT
▇▇▇▇. ▇▇▇▇▇ Incorporated, ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇,
Attention: Corporate Finance Department; and (ii) if sent to the Company or any
Subsidiary Guarantor, shall be mailed or delivered to the Company at ▇▇▇ ▇.
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: Chief Financial
Officer with a copy to ▇▇▇▇▇, Brown & ▇▇▇▇▇, ▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇
▇▇▇▇▇, Attention: ▇▇▇▇ ▇▇▇▇▇▇.
All such notices and communications shall be deemed to have
been duly given: when delivered by hand, if personally delivered; five business
days after being deposited in the mail, postage prepaid, if mailed; and one
business day after being timely delivered to a next-day air courier.
14. Successors. This Agreement shall inure to the benefit of
and be binding upon the Initial Purchaser, the Company and the Subsidiary
Guarantors and their respective successors and legal representatives, and
nothing expressed or mentioned in this Agreement is intended or shall be
construed to give any other person any legal or equitable right, remedy or claim
under or in respect of this Agreement, or any provisions herein contained; this
Agreement and all conditions and provisions hereof being intended to be and
being for the sole and exclusive benefit of such persons and for the benefit of
no other person except that (i) the indemnities of the Company and the
Subsidiary Guarantors contained in Section 9 of this Agreement shall also be for
the benefit of any person or persons who control the Initial Purchaser within
the meaning of Section 15
32
- 32 -
of the Act or Section 20 of the Exchange Act and (ii) the indemnities of the
Initial Purchaser contained in Section 9 of this Agreement shall also be for the
benefit of the directors of the Company and the Subsidiary Guarantors, their
respective officers and any person or persons who control the Company or any of
the Subsidiary Guarantors within the meaning of Section 15 of the Act or Section
20 of the Exchange Act. No purchaser of Securities from the Initial Purchaser
will be deemed a successor because of such purchase.
15. APPLICABLE LAW. THE VALIDITY AND INTERPRETATION OF THIS
AGREEMENT, AND THE TERMS AND CONDITIONS SET FORTH HEREIN SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO
CONTRACTS MADE AND TO BE PERFORMED WHOLLY THEREIN, WITHOUT GIVING EFFECT TO ANY
PROVISIONS THEREOF RELATING TO CONFLICTS OF LAW.
16. Counterparts. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
33
S-1
If the foregoing correctly sets forth our understanding,
please indicate your acceptance thereof in the space provided below for that
purpose, whereupon this letter shall constitute a binding agreement between the
Company, the Subsidiary Guarantors and the Initial Purchaser.
Very truly yours,
METAL MANAGEMENT, INC.
By: /s/ ▇. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Name: ▇. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: Chairman and
Chief Executive Officer
AEROSPACE METALS, INC.
AMERICAN SCRAP PROCESSING, INC.
C SHREDDING CORP.
CALIFORNIA METALS RECYCLING, INC.
CIM TRUCKING, INC.
COMETCO CORP.
▇▇▇▇▇ BUILDING CORPORATION
▇▇▇▇▇ IRON & METAL, INC.
EMCO TRADING, INC.
FERREX TRADING CORPORATION
FIRMA, INC.
FIRMA PLASTIC CO., INC.
FPX, INC.
HOUSTON COMPRESSED STEEL CORP.
HOUTEX METALS COMPANY, INC.
THE ▇▇▇▇▇ CORPORATION
▇. ▇▇▇▇▇▇ IRON & METAL, INC.
KANKAKEE SCRAP CORPORATION
▇▇▇▇▇▇▇▇▇ ACQUISITION CORP.
▇▇▇▇▇▇▇ METALS CO.
METAL MANAGEMENT ARIZONA, INC.
METAL MANAGEMENT GULF COAST, INC.
METAL MANAGEMENT PITTSBURGH, INC.
METAL MANAGEMENT REALTY, INC.
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ & SONS, INC.
NAPORANO IRON & METAL CO.
▇▇▇▇▇▇ RECYCLING WEST, INC.
NIMCO SHREDDING CO.
138 SCRAP, INC.
▇▇▇▇▇▇, ▇.▇.▇.
PROLER SOUTHWEST INC.
PROLER STEELWORKS L.L.C.
R&P HOLDINGS, INC.
SALT RIVER RECYCLING, L.L.C.
SCRAP PROCESSING, INC.
34
S-2
TORRINGTON SCRAP COMPANY
TROJAN TRADING, INC.
USA SOUTHWESTERN CARRIER, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
_________________________
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Title: Vice President
RESERVE IRON & METAL LIMITED PARTNERSHIP
By: ▇. ▇▇▇▇▇▇ IRON & METAL, INC.,
its general partner
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
________________________
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Title: Vice President
35
S-3
The foregoing Agreement is
hereby confirmed and accepted
as of the date first above
written.
BT ALEX. BROWN INCORPORATED
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇
____________________
Name: ▇▇▇▇ ▇▇▇▇▇▇
Title: Managing Director
36
SCHEDULE 1
SUBSIDIARIES OF THE COMPANY
Name
AEROSPACE METALS, INC.
AMERICAN SCRAP PROCESSING, INC.
C SHREDDING CORP.
CALIFORNIA METALS RECYCLING, INC.
CIM TRUCKING, INC.
COMETCO CORP.
▇▇▇▇▇ BUILDING CORPORATION
▇▇▇▇▇ IRON & METAL, INC.
EMCO TRADING, INC.
FERREX TRADING CORPORATION
FIRMA, INC.
FIRMA PLASTIC CO., INC.
FPX, INC.
HOUSTON COMPRESSED STEEL CORP.
HOUTEX METALS COMPANY, INC.
THE ▇▇▇▇▇ CORPORATION
▇. ▇▇▇▇▇▇ IRON & METAL, INC.
KANKAKEE SCRAP CORPORATION
▇▇▇▇▇▇▇▇▇ ACQUISITION CORP.
▇▇▇▇▇▇▇ METALS CO.
METAL MANAGEMENT ARIZONA, INC.
METAL MANAGEMENT GULF COAST, INC.
METAL MANAGEMENT PITTSBURGH, INC.
METAL MANAGEMENT REALTY, INC.
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ & SONS, INC.
NAPORANO IRON & METAL CO.
▇▇▇▇▇▇ RECYCLING WEST, INC.
NIMCO SHREDDING CO.
138 SCRAP, INC.
▇▇▇▇▇▇, ▇.▇.▇.
PROLER SOUTHWEST INC.
PROLER STEELWORKS L.L.C.
R&P HOLDINGS, INC.
RESERVE IRON & METAL LIMITED PARTNERSHIP
SALT RIVER RECYCLING, L.L.C.
SCRAP PROCESSING, INC.
TORRINGTON SCRAP COMPANY
TROJAN TRADING, INC.
USA SOUTHWESTERN CARRIER, INC.
37
SCHEDULE 2
DESIGNATED SUBSIDIARIES*
(For purposes of Section 7(a) of the Agreement)
AEROSPACE METALS, INC.
AMERICAN SCRAP PROCESSING, INC.
CIM TRUCKING, INC.
COMETCO CORP.
▇▇▇▇▇ BUILDING CORPORATION
▇▇▇▇▇ IRON & METAL, INC.
C SHREDDING CORP.
FERREX TRADING CORPORATION
KANKAKEE SCRAP CORPORATION
▇▇▇▇▇▇▇▇▇ ACQUISITION CORP.
METAL MANAGEMENT GULF COAST, INC.
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ & SONS, INC.
138 SCRAP, INC.
PROLER STEELWORKS L.L.C.
R&P HOLDINGS, INC.
RESERVE IRON & METAL LIMITED PARTNERSHIP
SCRAP PROCESSING, INC.
TORRINGTON SCRAP COMPANY
* List should reflect all Subsidiaries incorporated or organized under the laws
of Illinois or Delaware
38
SCHEDULE 3
SUBSIDIARY GUARANTORS
(For purposes of Section 7(b) of the Agreement)
CALIFORNIA METALS RECYCLING, INC.
FIRMA, INC.
FIRMA PLASTIC CO., INC.
FPX, INC.
HOUSTON COMPRESSED STEEL CORP.
HOUTEX METALS COMPANY, INC.
THE ▇▇▇▇▇ CORPORATION
▇. ▇▇▇▇▇▇ IRON & METAL, INC.
▇▇▇▇▇▇▇ METALS CO.
METAL MANAGEMENT ARIZONA, INC.
METAL MANAGEMENT REALTY, INC.
NAPORANO IRON & METAL CO.
▇▇▇▇▇▇ RECYCLING WEST, INC.
NIMCO SHREDDING CO.
▇▇▇▇▇▇, ▇.▇.▇.
PROLER SOUTHWEST INC.
SALT RIVER RECYCLING, L.L.C.
TROJAN TRADING, INC.
USA SOUTHWESTERN CARRIER, INC.
39
SCHEDULE 4
REQUIRED LOCAL COUNSEL OPINIONS
(For purposes of Section 7(c) of the Agreement)
Alabama
Arizona
California
Colorado
Connecticut
Illinois
Indiana
Louisiana
Mississippi
New Jersey
Ohio
Pennsylvania
Tennessee
Texas
Utah