Exhibit 10.4
EXECUTION COPY
$100,000,000
Steel Dynamics, Inc.
9 1/2% Senior Notes Due 2009
PLACEMENT AGREEMENT
November 14, 2003
November 14, 2003
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated
▇▇▇▇▇▇▇, Sachs & Co.
▇.▇. ▇▇▇▇▇▇ Securities Inc.
c/o Morgan ▇▇▇▇▇▇▇ & Co. Incorporated
▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Dear Sirs and Mesdames:
Steel Dynamics, Inc., an Indiana corporation (the "Company"),
proposes to issue and sell to the several purchasers named in Schedule I hereto
(the "Placement Agents") $100,000,000 principal amount of its 9 1/2% Senior
Notes Due 2009 (the "Securities") to be issued pursuant to the provisions of an
Indenture, dated as of March 26, 2002 (the "Original Indenture"), between the
Company, the Initial Subsidiary Guarantor (as defined therein) and Fifth Third
Bank, as Trustee (the "Trustee"), as amended and supplemented by the First
Supplemental Indenture, dated as of September 6, 2002 (the "First Supplemental
Indenture"), the Second Supplemental Indenture, dated as of September 30, 2002
(the "Second Supplemental Indenture") and the Third Supplemental Indenture,
dated as of December 31, 2002 (the "Third Supplemental Indenture") and as
further supplemented by a fourth supplemental indenture to be dated as of
November 26, 2003 (the "Fourth Supplemental Indenture" and the Original
Indenture, as so amended and supplemented, is herein referred to as the
"Indenture"). The obligations of the Company under the Securities and the
Indenture will be unconditionally guaranteed on a senior unsecured basis by the
subsidiaries of the Company listed on Schedule II hereto (the "Guarantors")
pursuant to the terms of the Indenture (each a, "Guarantee" and, collectively,
the "Guarantees").
The Securities will be offered without being registered under
the Securities Act of 1933, as amended (the "Securities Act"), to qualified
institutional buyers in compliance with the exemption from registration provided
by Rule 144A under the Securities Act and in offshore transactions in reliance
on Regulation S under the Securities Act ("Regulation S").
The Placement Agents and their direct and indirect transferees
will be entitled to the benefits of a Registration Rights Agreement dated the
date hereof between the Company, the Guarantors and the Placement Agents (the
"Registration Rights Agreement").
In connection with the sale of the Securities, the Company
will prepare a final offering memorandum (the "Final Memorandum" or
"Memorandum") including or incorporating by reference a description of the terms
of the Securities and the Guarantee, the terms of the offering and a description
of the Company and the Guarantors. As used herein, the term "Memorandum" shall
include in each case the documents incorporated by reference therein. The terms
"supplement", "amendment" and "amend" as used herein with respect to the
Memorandum shall include all documents deemed to be incorporated by reference in
the Final Memorandum that are filed subsequent to the date of the Memorandum
with the Securities and Exchange Commission (the "Commission") pursuant to the
Securities Exchange Act of 1934, as amended (the "Exchange Act").
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Prior to the execution of this Agreement, the Company entered
into that certain Sixth Amendment to the Credit Agreement dated as of November
13, 2003 (the "Sixth Amendment") which amends the Credit Agreement dated as of
November 14, 2003, as amended, among the Company, the Lenders defined therein,
JPMorgan Chase Bank, as administrative agent for the Lenders thereunder, General
Electric Capital Corporation, as documentation agent and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Senior
Funding, Inc., as arranger and syndication agent, (the "Credit Agreement") in
order to allow the Company to incur the indebtedness evidenced by the
Securities.
1. Representations and Warranties. The Company and the
Guarantors, jointly and severally, represent and warrant to, and agree with, you
that:
(a) (i) Each document, if any, filed or to be filed
pursuant to the Exchange Act and incorporated by reference in the
Memorandum complied or will comply when so filed in all material
respects with the Exchange Act and the applicable rules and regulations
of the Commission thereunder and (ii) the Memorandum, in the form used
by the Placement Agents to confirm sales and on the Closing Date (as
defined in Section 4), will not contain 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, except that the representations and
warranties set forth in this paragraph do not apply to statements or
omissions in the Memorandum based upon information relating to any
Placement Agent furnished to the Company in writing by such Placement
Agent through you expressly for use therein.
(b) The Company has been duly incorporated, is validly
existing as a corporation in good standing under the laws of the
jurisdiction of its incorporation, has the corporate power and
authority to own its property and to conduct its business as described
in the Memorandum and is duly qualified to transact business and is in
good standing in each jurisdiction in which the conduct of its business
or its ownership or leasing of property requires such qualification,
except to the extent that the failure to be so qualified or be in good
standing would not have a material adverse effect on the Company and
its subsidiaries, taken as a whole.
(c) Each subsidiary of the Company has been duly
incorporated, is validly existing as a corporation in good standing
under the laws of the jurisdiction of its incorporation, has the
corporate power and authority to own its property and to conduct its
business as described in the Memorandum and is duly qualified to
transact business and is in good standing in each jurisdiction in which
the conduct of its business or its ownership or leasing of property
requires such qualification, except to the extent that the failure to
be so qualified or be in good standing would not have a material
adverse effect on the Company and its subsidiaries, taken as a whole;
each subsidiary of the Company and the percentage of capital stock and
voting stock of each such subsidiary owned by the Company is set forth
on Schedule III hereto and all of the issued shares of capital stock of
each subsidiary of the Company have been duly and validly authorized
and issued, are fully paid and non-assessable and are owned directly by
the Company, free and clear of all liens, encumbrances, equities or
claims.
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(d) This Agreement has been duly authorized, executed and
delivered by the Company and the Guarantors.
(e) The shares of common stock outstanding on the date
hereof have been duly authorized and are validly issued, fully paid and
non-assessable.
(f) The Securities have been duly authorized and, when
executed and authenticated in accordance with the provisions of the
Indenture and delivered to and paid for by the Placement Agents in
accordance with the terms of this Agreement, will be valid and binding
obligations of the Company, enforceable in accordance with their terms,
subject to applicable bankruptcy, insolvency or similar laws affecting
creditors' rights generally and general principles of equity, and will
be entitled to the benefits of the Indenture and the Registration
Rights Agreement.
(g) The Guarantee by each Guarantor has been duly
authorized, executed and delivered by each Guarantor and is a valid and
binding obligation of the Guarantor, enforceable in accordance with its
terms, subject to applicable bankruptcy, insolvency or similar laws
affecting creditors' rights generally and general principles of equity.
(h) The Original Indenture, as amended by the First
Supplemental Indenture, the Second Supplemental Indenture and the Third
Supplemental Indenture has been duly authorized, executed and delivered
by the Company and each of the Guarantors, and is a valid and binding
agreement of the Company and each of the Guarantors, enforceable in
accordance with its terms, subject to applicable bankruptcy, insolvency
or similar laws affecting creditors' rights generally and general
principles of equity. The Fourth Supplemental Indenture has been duly
authorized, and when executed and delivered by the Company and each of
the Guarantors, will be a valid and binding agreement of the Company
and each of the Guarantors, enforceable in accordance with its terms,
subject to applicable bankruptcy, insolvency or similar laws affecting
creditors' rights generally and general principles of equity.
(i) The Registration Rights Agreement has been duly
authorized, executed and delivered by, and is a valid and binding
agreement of, the Company and each Guarantor, enforceable in accordance
with its terms, subject to applicable bankruptcy, insolvency or similar
laws affecting creditors' rights generally and general principles of
equity and except as rights to indemnification and contribution under
the Registration Rights Agreement may be limited under applicable law.
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(j) The execution and delivery by the Company and the
Guarantors of, and the performance by the Company and the Guarantors of
their respective obligations under, this Agreement, the Indenture, the
Registration Rights Agreement, the Securities (in the case of the
Company) and the Guarantees (in the case of the Guarantors) will not
contravene any provision of applicable law or the articles of
incorporation or by-laws of the Company or the Guarantors or any
agreement or other instrument binding upon the Company or any of its
subsidiaries that is material to the Company and its subsidiaries,
taken as a whole (including, but not limited to, the Credit Agreement
as amended by the Sixth Amendment), or any judgment, order or decree of
any governmental body, agency or court having jurisdiction over the
Company or any subsidiary, and no consent, approval, authorization or
order of, or qualification with, any governmental body or agency is
required for the performance by the Company or the Guarantors of their
respective obligations under this Agreement, the Indenture, the
Registration Rights Agreement, the Securities (in the case of the
Company) and the Guarantees (in the case of the Guarantors), except
such as may be required by the securities or Blue Sky laws of the
various states in connection with the offer and sale of the Securities
and by Federal and state securities laws with respect to the Company's
and the Guarantors' obligations under the Registration Rights
Agreement.
(k) There has not occurred any material adverse change,
or any development involving a prospective material adverse change, in
the condition, financial or otherwise, or in the earnings, business or
operations of the Company and its subsidiaries, taken as a whole, from
that set forth in the Final Memorandum (exclusive of any amendments or
supplements thereto subsequent to the date of this Agreement).
(l) There are no legal or governmental proceedings
pending or threatened to which the Company or any of its subsidiaries
is a party or to which any of the properties of the Company or any of
its subsidiaries is subject other than proceedings accurately described
in all material respects in the Memorandum and proceedings that would
not have a material adverse effect on the Company and its subsidiaries,
taken as a whole, or on the power or ability of the Company or the
Guarantors to perform their respective obligations under this
Agreement, the Indenture, the Registration Rights Agreement, the
Securities (in the case of the Company) and the Guarantee (in the case
of the Guarantors) or to consummate the transactions contemplated by
the Final Memorandum.
(m) Each of the Company and its subsidiaries has all
necessary consents, authorizations, approvals, orders, certificates and
permits of and 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, to
own, lease, license and use its properties and assets and to conduct
its business in the manner described in the Final Memorandum, except to
the extent that the failure to obtain such consents, authorizations,
approvals, orders, certificates and permits or make such declarations
and filings would not have a material adverse effect on the Company and
its subsidiaries, taken as a whole. Neither the Company nor any of its
subsidiaries has received any notice of proceedings relating to the
revocation or modification of any such consent, authorization,
approval, order, certificate or permit which, singly or in the
aggregate, if the subject of an unfavorable decision, ruling or
finding, would result in a material adverse change in the condition,
financial or otherwise, or in the earnings, business or operations of
the Company and its subsidiaries, taken as a whole, except as described
in or contemplated by the Final Memorandum.
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(n) The Company and its subsidiaries (i) are in
compliance with any and all applicable foreign, federal, state and
local laws and regulations relating to the protection of human health
and safety, the environment or hazardous or toxic substances or wastes,
pollutants or contaminants ("Environmental Laws"), (ii) have received
all permits, licenses or other approvals required of them under
applicable Environmental Laws to conduct their respective businesses
and (iii) are in compliance with all terms and conditions of any such
permit, license or approval, except where such noncompliance with
Environmental Laws, failure to receive required permits, licenses or
other approvals or failure to comply with the terms and conditions of
such permits, licenses or approvals would not, singly or in the
aggregate, have a material adverse effect on the Company and its
subsidiaries, taken as a whole.
(o) In the ordinary course of business, the Company
conducts a periodic review of the effect of Environmental Laws on the
business, operations and properties of the Company and its
subsidiaries, in the course of which it identifies and evaluates
associated costs and liabilities (including, without limitation, any
capital or operating expenditures required for clean-up, closure of
properties or compliance with Environmental Laws or any permit, license
or approval, any related constraints on operating activities and any
potential liabilities to third parties). On the basis of such review,
the Company has reasonably concluded that such associated costs and
liabilities would not, singly or in the aggregate, have a material
adverse effect on the Company and its subsidiaries, taken as a whole.
(p) Neither the Company nor the Guarantors, after giving
effect to the offering and sale of the Securities and the application
of the proceeds thereof as described in the Final Memorandum, will be
an "investment company" as such term is defined in the Investment
Company Act of 1940, as amended.
(q) None of the Company, any Guarantor or any affiliate
(as defined in Rule 501(b) of Regulation D under the Securities Act, an
"Affiliate") of the Company or any Guarantor 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
Securities Act) which is or will be integrated with the sale of the
Securities in a manner that would require the registration under the
Securities Act of the Securities or (ii) engaged in any form of general
solicitation or general advertising in connection with the offering of
the Securities, (as those terms are used in Regulation D under the
Securities Act) or in any manner involving a public offering within the
meaning of Section 4(2) of the Securities Act.
(r) None of the Company, any Guarantor, their Affiliates
or any person acting on its or their behalf has engaged or will engage
in any directed selling efforts (within the meaning of Regulation S)
with respect to the Securities and the Company, any Guarantor and their
Affiliates and any person acting on its or their behalf have complied
and will comply with the offering restrictions requirement of
Regulation S.
(s) It is not necessary in connection with the offer,
sale and delivery of the Securities to the Placement Agents in the
manner contemplated by this Agreement to register the Securities or the
Guarantees under the Securities Act or to qualify the Indenture under
the Trust Indenture Act of 1939, as amended.
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(t) The Securities and the Guarantees satisfy the
requirements set forth in Rule 144A(d)(3) under the Securities Act.
(u) The Securities and the Guarantees conform in all
material respects to the description thereof contained in the Final
Memorandum under the heading "Description of the Notes".
(v) Subsequent to the respective dates as of which
information is given in the Final Memorandum, (1) the Company and its
subsidiaries have not incurred any material liability or obligation,
direct or contingent, nor entered into any material transaction not in
the ordinary course of business; (2) the Company has not purchased any
of its outstanding capital stock, nor declared, paid or otherwise made
any dividend or distribution of any kind on its capital stock; and (3)
there has not been any material change in the capital stock, short-term
debt or long-term debt of the Company and its consolidated
subsidiaries, except in each case as described in or contemplated by
the Final Memorandum.
(w) The Company and its subsidiaries have good and
marketable title in fee simple to all real property and good and
marketable title to all personal property owned by them which is
material to the business of the Company and its subsidiaries, in each
case free and clear of all liens, encumbrances and defects except such
as are described in the Final Memorandum or such as do not 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 Company and its
subsidiaries: and any real property and buildings held under lease by
the Company and its subsidiaries are held by them under valid,
subsisting and enforceable leases with such exceptions as are not
material and do not interfere with the use made and proposed to be made
of such property and buildings by the Company and its subsidiaries, in
each case except as described in or contemplated by the Final
Memorandum.
(x) The Company and its subsidiaries own or possess, or
can acquire on reasonable terms, all material patents, patent rights,
licenses, inventions, copyrights, know-how (including trade secrets and
other unattended and/or unpatentable proprietary or confidential
information, systems or procedures), trademarks, service marks and
trade names currently employed by them in connection with the business
now operated by them, and neither the Company nor any of its
subsidiaries has received any notice of infringement of or conflict
with asserted rights of others with respect to any of the foregoing
which, singly or in the aggregate, if the subject of an unfavorable
decision, ruling or finding, would result in any material adverse
change in the condition, financial or otherwise, or in the earnings,
business or operations of the Company and its subsidiaries, taken as a
whole.
(y) No material labor dispute with the employees of the
Company or any of its subsidiaries exists, except as described in or
contemplated by the Final Memorandum, or, to the knowledge of the
Company, is imminent; and the Company is not aware of any existing,
threatened or imminent labor disturbance by the employees of any of its
principal suppliers, manufacturers or contractors that could result in
any material adverse change in the condition, financial or otherwise,
or in the earnings, business or operations of the Company and its
subsidiaries, taken as a whole.
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(z) The Company and each of its subsidiaries are insured
by insurers of recognized financial responsibility against such losses
and risks and in such amounts as are prudent and customary in the
businesses in which they are engaged; neither the Company nor any such
subsidiary has been refused any insurance coverage sought or applied
for; and neither the Company nor any such subsidiary 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 as may be necessary to continue its
business at a cost that would not materially and adversely affect the
condition, financial or otherwise, or the earnings, business or
operations of the Company and its subsidiaries, taken as a whole,
except as described in or contemplated by the Final Memorandum.
(aa) The Company and each of its subsidiaries maintain 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 generally accepted accounting principles 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.
2. Agreements to Sell and Purchase. The Company hereby agrees to
sell to the several Placement Agents, and each Placement Agent, upon the basis
of the representations and warranties herein contained, but subject to the
conditions hereinafter stated, agrees, severally and not jointly, to purchase
from the Company the respective principal amount of Securities set forth in
Schedule I hereto opposite its name at a purchase price of 106.956725% of the
principal amount, plus accrued interest thereon from September 15, 2003 to but
excluding the Closing Date thereof (the "Purchase Price").
The Company and the Guarantors hereby agree that, without the
prior written consent of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated on behalf of the
Placement Agents, it will not, during the period beginning on the date hereof
and continuing to and including the Closing Date, offer, sell, contract to sell
or otherwise dispose of any debt of the Company or any Guarantor or warrants to
purchase debt of the Company or any Guarantor substantially similar to the
Securities or the Guarantees (other than the sale of the Securities under this
Agreement.)
3. Terms of Offering. You have advised the Company and the
Guarantors that the Placement Agents will make an offering of the Securities
purchased by the Placement Agents hereunder on the terms to be set forth in the
Final Memorandum, as soon as practicable after this Agreement is entered into as
in your judgment is advisable.
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4. Payment and Delivery. Payment for the Securities shall be made
to the Company in Federal or other funds immediately available in New York City
against delivery of such Securities for the respective accounts of the several
Placement Agents at 10:00 a.m., New York City time, on November 26, 2003, or at
such other time on the same or such other date, not later than December 8, 2003,
as shall be designated in writing by you. The time and date of such payment are
hereinafter referred to as the "Closing Date."
Certificates for the Securities shall be in definitive form or
global form, as specified by you, and registered in such names and in such
denominations as you shall request in writing not later than one full business
day prior to the Closing Date. The certificates evidencing the Securities shall
be delivered to you on the Closing Date for the respective accounts of the
several Placement Agents, with any transfer taxes payable in connection with the
transfer of the Securities to the Placement Agents duly paid, against payment of
the Purchase Price therefor.
5. Conditions to the Placement Agents' Obligations. The several
obligations of the Placement Agents to purchase and pay for the Securities on
the Closing Date are subject to the following conditions:
(a) Subsequent to the execution and delivery of this
Agreement and prior to the Closing Date:
(i) there shall not have occurred any
downgrading, nor shall any notice have been given of any
intended or potential downgrading or of any review for a
possible change that does not indicate the direction of the
possible change, in the rating accorded the Company or any of
the Company's securities or in the rating outlook for the
Company by any "nationally recognized statistical rating
organization," as such term is defined for purposes of Rule
436(g)(2) under the Securities Act; and
(ii) there shall not have occurred any change, or
any development involving a prospective change, in the
condition, financial or otherwise, or in the earnings,
business or operations of the Company and its subsidiaries,
taken as a whole, from that set forth in the Final Memorandum
(exclusive of any amendments or supplements thereto subsequent
to the date of this Agreement) that, in your judgment, is
material and adverse and that makes it, in your judgment,
impracticable to market the Securities on the terms and in the
manner contemplated in the Final Memorandum.
(b) The Placement Agents shall have received on the
Closing Date a certificate, dated the Closing Date and signed by an
executive officer of the Company and each Guarantor, to the effect set
forth in Section 5(a)(i) and to the effect that the representations and
warranties of the Company and such Guarantor contained in this
Agreement are true and correct as of the Closing Date and the Company
and such Guarantor has complied with all of the agreements and
satisfied all of the conditions on its part to be performed or
satisfied hereunder on or before the Closing Date.
The officer signing and delivering such certificate may rely
upon the best of his or her knowledge as to proceedings threatened.
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(c) The Placement Agents shall have received on the
Closing Date an opinion of ▇▇▇▇▇▇▇ & McNagny LLP, counsel for the
Company and the Guarantors, dated the Closing Date, to the effect set
forth in Exhibit A. Such opinion shall be rendered to the Placement
Agents at the request of the Company and the Guarantors and shall so
state therein.
(d) The Placement Agents shall have received on the
Closing Date an opinion of ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, New York counsel for the
Company and the Guarantors, dated the Closing Date, to the effect set
forth in Exhibit B. Such opinion shall be rendered to the Placement
Agents at the request of the Company and the Guarantors and shall so
state therein.
(e) The Placement Agents shall have received on the
Closing Date an opinion of Shearman & Sterling LLP, counsel for the
Placement Agents, dated the Closing Date, in form and substance
satisfactory to you.
(f) The Placement Agents shall have received on each of
the date hereof and the Closing Date letters, dated the date hereof or
the Closing Date, as the case may be, in form and substance
satisfactory to the Placement Agents, from Ernst & Young LLP,
independent public accountants, containing statements and information
of the type ordinarily included in accountants' "comfort letters" to
underwriters with respect to the financial statements and certain
financial information contained in or incorporated by reference into
the Final Memorandum; provided that the letters delivered on the
Closing Date shall use a "cut-off date" not less than three business
days prior to the Closing Date.
(g) The Sixth Amendment to the Credit Agreement shall
have been duly authorized, executed and delivered by the parties
thereto, and be in full force and effect.
(h) The Securities shall have been designated PORTAL
securities in accordance with the rules and regulations adopted by the
National Association of Securities Dealers, Inc. relating to trading in
the PORTAL Market.
(i) The Placement Agents shall have received such other
documents and certificates as are reasonably requested by you or your
counsel.
6. Covenants of the Company and Guarantors. In further
consideration of the agreements of the Placement Agents contained in this
Agreement, each of the Company and the Guarantors, jointly and severally,
covenants with each Placement Agent as follows:
(a) To furnish to you in New York City, without charge,
prior to 10:00 a.m. New York City time on the business day next
succeeding the date of this Agreement and during the period mentioned
in Section 6(c), as many copies of the Final Memorandum, any documents
incorporated by reference therein and any supplements and amendments
thereto as you may reasonably request.
(b) Before amending or supplementing the final
Memorandum, to furnish to you a copy of each such proposed amendment or
supplement and not to use any such proposed amendment or supplement to
which you reasonably object.
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(c) If, during such period after the date hereof and
prior to the date on which all of the Securities shall have been sold
by the Placement Agents, any event shall occur or condition exist as a
result of which it is necessary to amend or supplement the Final
Memorandum in order to make the statements therein, in the light of the
circumstances when the Final Memorandum is delivered to a purchaser,
not misleading, or if, in the opinion of counsel for the Placement
Agents, it is necessary to amend or supplement the Final Memorandum to
comply with applicable law, forthwith to prepare and furnish, at its
own expense, to the Placement Agents, either amendments or supplements
to the Final Memorandum so that the statements in the Final Memorandum
as so amended or supplemented will not, in the light of the
circumstances when the Final Memorandum is delivered to a purchaser, be
misleading or so that the Final Memorandum, as amended or supplemented,
will comply with applicable law.
(d) To endeavor to qualify the Securities and the
Guarantees for offer and sale under the securities or Blue Sky laws of
such jurisdictions as you shall reasonably request.
(e) Whether or not the transactions contemplated in this
Agreement are consummated or this Agreement is terminated, to pay or
cause to be paid all expenses incident to the performance of its
obligations under this Agreement, including: (i) the fees,
disbursements and expenses of the Company's and the Guarantors' counsel
and the Company's and the Guarantors' accountants in connection with
the issuance and sale of the Securities and all other fees or expenses
in connection with the preparation of the Memorandum (including the fee
and expenses of counsel to the Placement Agents in connection with the
preparation therewith) and all amendments and supplements thereto,
including all printing costs associated therewith, and the delivering
of copies thereof to the Placement Agents, in the quantities herein
above specified, (ii) all costs and expenses related to the transfer
and delivery of the Securities to the Placement Agents, including any
transfer or other taxes payable thereon, (iii) the cost of printing or
producing any Blue Sky or legal investment memorandum in connection
with the offer and sale of the Securities under state securities laws
and all expenses in connection with the qualification of the Securities
for offer and sale under state securities laws as provided in Section
6(d) hereof, including filing fees and the reasonable fees and
disbursements of counsel for the Placement Agents in connection with
such qualification and in connection with the Blue Sky or legal
investment memorandum, (iv) any fees charged by rating agencies for the
rating of the Securities, (v) all document production charges and
expenses of counsel to the Placement Agents (but not including their
fees for professional services) in connection with the preparation of
this Agreement, (vi) the fees and expenses, if any, incurred in
connection with the admission of the Securities for trading in PORTAL
or any appropriate market system, (vii) the costs and charges of the
Trustee and any transfer agent, registrar or depositary, (viii) the
cost of the preparation, issuance and delivery of the Securities, (ix)
the costs and expenses of the Company relating to investor
presentations on any "road show" undertaken in connection with the
marketing of the offering of the Securities, including, without
limitation, expenses associated with the production of road show slides
and graphics, fees and expenses of any consultants engaged in
connection with the road show presentations with the prior approval of
the Company, travel and lodging expenses of the representatives and
officers of the Company, the Guarantors and any such consultants, and
the cost of any aircraft chartered in connection with the road show,
and (x) all other costs and expenses incident to the performance of the
obligations of the Company and the Guarantors hereunder for which
provision is not otherwise made in this Section. It is understood,
however, that except as provided in this Section, Section 8, and the
last paragraph of Section 10, the Placement Agents will pay all of
their costs and expenses, including fees and disbursements of their
counsel, transfer taxes payable on resale of any of the Securities by
them and any advertising expenses connected with any offers they may
make.
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(f) None of the Company, the Guarantors or their
Affiliates will sell, offer for sale or solicit offers to buy or
otherwise negotiate in respect of any security (as defined in the
Securities Act) which could be integrated with the sale of the
Securities in a manner which would require the registration under the
Securities Act of the Securities or the Guarantees.
(g) Not to solicit any offer to buy or offer or sell the
Securities by means of any form of general solicitation or general
advertising (as those terms are used in Regulation D under the
Securities Act) or in any manner involving a public offering within the
meaning of Section 4(2) of the Securities Act.
(h) While any of the Securities remain "restricted
securities" within the meaning of the Securities Act, to make
available, upon request, to any seller of the Securities the
information specified in Rule 144A(d)(4) under the Securities Act,
unless the Company is then subject to Section 13 or 15(d) of the
Exchange Act.
(i) To use its best efforts to permit the Securities to
be designated PORTAL securities in accordance with the rules and
regulations adopted by the National Association of Securities Dealers,
Inc. relating to trading in the PORTAL Market.
(j) None of the Company, the Guarantors or their
Affiliates or any person acting on their behalf (other than the
Placement Agents) will engage in any directed selling efforts (as that
term is defined in Regulation S) with respect to the Securities, and
the Company, the Guarantors and their Affiliates and each person acting
on their behalf (other than the Placement Agents) will comply with the
offering restrictions requirement of Regulation S.
(k) During the period of two years after the Closing
Date, the Company and the Guarantors will not, and will not permit any
of their affiliates (as defined in Rule 144 under the Securities Act)
to resell any of the Securities which constitute "restricted
securities" under Rule 144 that have been reacquired by any of them.
11
7. Offering of Securities; Restrictions on Transfer. (a) Each
Placement Agent, severally and not jointly, represents and warrants that such
Placement Agent is a qualified institutional buyer as defined in Rule 144A under
the Securities Act (a "QIB"). Each Placement Agent, severally and not jointly,
agrees with the Company and the Guarantors that (i) it will not solicit offers
for, or offer or sell, such Securities by any form of general solicitation or
general advertising (as those terms are used in Regulation D under the
Securities Act) or in any manner involving a public offering within the meaning
of Section 4(2) of the Securities Act and (ii) it will solicit offers for such
Securities only from, and will offer such Securities only to, persons that it
reasonably believes to be (A) in the case of offers inside the United States,
QIBs 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)) in reliance
upon Regulation S under the Securities Act that, in each case, in purchasing
such Securities are deemed to have represented and agreed as provided in the
Final Memorandum under the caption "Transfer Restrictions".
(b) Each Placement Agent, severally and not jointly,
represents, warrants, and agrees with respect to offers and sales
outside the United States that:
(ii) such Placement Agent understands that no
action has been or will be taken in any jurisdiction by the
Company or the Guarantors that would permit a public offering
of the Securities, or possession or distribution of the
Memorandum or any other offering or publicity material
relating to the Securities, in any country or jurisdiction
where action for that purpose is required;
(iii) such Placement Agent 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 the Memorandum or any such other
material, in all cases at its own expense;
(iv) neither the Securities nor the Guarantee
have been registered under the Securities Act and may 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
Rule 144A or Regulation S under the Securities Act or pursuant
to another exemption from the registration requirements of the
Securities Act;
(v) such Placement Agent has offered the
Securities and will offer and sell the Securities (A) as part
of their 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 or as otherwise permitted in Section 7(a);
accordingly, neither such Placement Agent, its Affiliates nor
any persons acting on its or their 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
Placement Agent, its Affiliates and any such persons have
complied and will comply with the offering restrictions
requirement of Regulation S;
(vi) such Placement Agent has (A) not offered or
sold and, prior to the date six months after the Closing Date,
will not offer or sell the Securities to persons in the United
Kingdom except to persons whose ordinary activities involve
them in acquiring, holding, managing or disposing of
investments (as principal or agent) for the purposes of their
businesses or otherwise in circumstances which have not
resulted and will not result in an offer to the public in the
United Kingdom within the meaning of the Public Offers of
Securities Regulations 1995; (B) complied and will comply with
all applicable provisions of the Financial Services ▇▇▇ ▇▇▇▇
with respect to anything done by it in relation to the
Securities in, from or otherwise involving the United Kingdom,
and (C) only issued or passed on and will only issue or pass
on in the United Kingdom any document received by it in
connection with the issue of the Securities to a person who is
of a kind described in Article 11(3) of the Financial Services
▇▇▇ ▇▇▇▇ (Investment Advertisements) (Exemptions) Order 1996
or is a person to whom such document may otherwise lawfully be
issued or passed on; and
12
(vii) such Placement Agent 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 the
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 U.S. 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 their distribution at any time or (ii)
otherwise until 40 days after the later of the commencement of
the offering and the closing date, 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 by Regulation S."
Terms used in this Section 7(b) have the meanings
given to them by Regulation S.
8. Indemnity and Contribution. (a) Each of the Company and the
Guarantors agrees, jointly and severally, to indemnify and hold harmless each
Placement Agent, each person, if any, who controls any Placement Agent within
the meaning of either Section 15 of the Securities Act or Section 20 of the
Exchange Act and each affiliate of any Placement Agent within the meaning of
Rule 405 under the Securities Act from and against any and all losses, claims,
damages and liabilities (including, without limitation, any legal or other
expenses reasonably incurred in connection with defending or investigating any
such action or claim) caused by any untrue statement or alleged untrue statement
of a material fact contained in either Memorandum (as amended or supplemented if
the Company or the Guarantors shall have furnished any amendments or supplements
thereto), or caused by any omission or alleged omission to state therein a
material fact necessary to make the statements therein in the light of the
circumstances under which they were made not misleading, except insofar as such
losses, claims, damages or liabilities are caused by any such untrue statement
or omission or alleged untrue statement or omission based upon information
relating to any Placement Agent furnished to the Company and the Guarantors in
writing by such Placement Agent through you expressly for use therein.
(b) Each Placement Agent agrees, severally and not
jointly, to indemnify and hold harmless the Company, the Guarantors,
their directors and officers and each person, if any, who controls the
Company or the Guarantors within the meaning of either Section 15 of
the Securities Act or Section 20 of the Exchange Act to the same extent
as the foregoing indemnity from the Company and the Guarantors to such
Placement Agent, but only with reference to information relating to
such Placement Agent furnished to the Company and the Guarantors in
writing by such Placement Agent through you expressly for use in either
Memorandum or any amendments or supplements thereto.
13
(c) In case any proceeding (including any governmental
investigation) shall be instituted involving any person in respect of
which indemnity may be sought pursuant to Section 8(a) or 8(b), such
person (the "indemnified party") shall promptly notify the person
against whom such indemnity may be sought (the "indemnifying party") in
writing and the indemnifying party, upon request of the indemnified
party, shall retain counsel reasonably satisfactory to the indemnified
party to represent the indemnified party and any others the
indemnifying party may designate in such proceeding and shall pay the
fees and disbursements of such counsel related to such proceeding. In
any such proceeding, any indemnified party shall have the right to
retain its own counsel, but the fees and expenses of such counsel shall
be at the expense of such indemnified party unless (i) the indemnifying
party and the indemnified party shall have mutually agreed to the
retention of such counsel or (ii) the named parties to any such
proceeding (including any impleaded parties) include both the
indemnifying party and the indemnified party and representation of both
parties by the same counsel would be inappropriate due to actual or
potential differing interests between them. It is understood that the
indemnifying party shall not, in respect of the legal expenses of any
indemnified party in connection with any proceeding or related
proceedings in the same jurisdiction, be liable for the fees and
expenses of more than one separate firm (in addition to any local
counsel) for all such indemnified parties and that all such fees and
expenses shall be reimbursed as they are incurred. Such firm shall be
designated in writing by ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated, in the case
of parties indemnified pursuant to Section 8(a), and by the Company, in
the case of parties indemnified pursuant to Section 8(b). The
indemnifying party shall not be liable for any settlement of any
proceeding effected without its written consent, but if settled with
such consent or if there be a final judgment for the plaintiff, the
indemnifying party agrees to indemnify the indemnified party from and
against any loss or liability by reason of such settlement or judgment.
Notwithstanding the foregoing 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 as contemplated by
the second and third sentences of this paragraph, the indemnifying
party agrees that it shall be liable for any settlement of any
proceeding effected without its written consent if (i) such settlement
is entered into more than 30 days after receipt by such indemnifying
party of the aforesaid request and (ii) such indemnifying party shall
not have reimbursed the indemnified party in accordance with such
request prior to the date of such settlement. No indemnifying party
shall, without the prior written consent of the indemnified party,
effect any settlement of any pending or threatened proceeding in
respect of which any indemnified party is or could have been a party
and indemnity could have been sought hereunder by such indemnified
party, unless such settlement includes an unconditional release of such
indemnified party from all liability on claims that are the subject
matter of such proceeding.
14
(d) To the extent the indemnification provided for in
Section 8(a) or 8(b) is unavailable to an indemnified party or
insufficient in respect of any losses, claims, damages or liabilities
referred to therein, then each indemnifying party under such paragraph,
in lieu of indemnifying such indemnified party thereunder, shall
contribute to the amount paid or payable by such indemnified party as a
result of such losses, claims, damages or liabilities (i) in such
proportion as is appropriate to reflect the relative benefits received
by the Company and the Guarantors, on the one hand, and the Placement
Agents, on the other hand, from the offering of the Securities or (ii)
if the allocation provided by clause 8(d)(i) above is not permitted by
applicable law, in such proportion as is appropriate to reflect not
only the relative benefits referred to in clause 8(d)(i) above but also
the relative fault of the Company and the Guarantors, on the one hand,
and of the Placement Agents, on the other hand, in connection with the
statements or omissions that resulted in such losses, claims, damages
or liabilities, as well as any other relevant equitable considerations.
The relative benefits received by the Company and the Guarantors, on
the one hand, and the Placement Agents, on the other hand, in
connection with the offering of the Securities shall be deemed to be in
the same respective proportions as the net proceeds from the offering
of the Securities (before deducting expenses) received by the Company
and the total discounts and commissions received by the Placement
Agents in respect thereof, bear to the aggregate offering price of the
Securities. The relative fault of the Company and the Guarantors, on
the one hand, and of the Placement Agents, on the other hand, shall be
determined by reference to, among other things, whether the untrue or
alleged untrue statement of a material fact or the omission or alleged
omission to state a material fact relates to information supplied by
the Company and the Guarantors or by the Placement Agents and the
parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission. The
Placement Agents' respective obligations to contribute pursuant to this
Section 8 are several in proportion to the respective principal amount
of Securities they have purchased hereunder, and not joint.
(e) The Company, the Guarantors and the Placement Agents
agree that it would not be just or equitable if contribution pursuant
to this Section 8 were determined by pro rata allocation (even if the
Placement Agents were treated as one entity for such purpose) or by any
other method of allocation that does not take account of the equitable
considerations referred to in Section 8(d). The amount paid or payable
by an indemnified party as a result of the losses, claims, damages and
liabilities referred to in Section 8(d) shall be deemed to include,
subject to the limitations set forth above, any legal or other expenses
reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim. Notwithstanding
the provisions of this Section 8, no Placement Agent shall be required
to contribute any amount in excess of the amount by which the total
price at which the Securities resold by it in the initial placement of
such Securities were offered to investors exceeds the amount of any
damages that such Placement Agent 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 Securities Act) shall be
entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. The remedies provided for in this Section
8 are not exclusive and shall not limit any rights or remedies which
may otherwise be available to any indemnified party at law or in
equity.
(f) The indemnity and contribution provisions contained
in this Section 8 and the representations, warranties and other
statements of the Company and the Guarantors contained in this
Agreement shall remain operative and in full force and effect
regardless of (i) any termination of this Agreement, (ii) any
investigation made by or on behalf of any Placement Agent, any person
controlling any Placement Agent or any affiliate of any Placement Agent
or by or on behalf of the Company, the Guarantors, their officers or
directors or any person controlling the Company or the Guarantors and
(iii) acceptance of and payment for any of the Securities.
15
9. Termination. The Placement Agents may terminate this Agreement
by notice given by you to the Company, if after the execution and delivery of
this Agreement and prior to the Closing Date (i) trading generally shall have
been suspended or materially limited on, or by, as the case may be, any of the
New York Stock Exchange, the American Stock Exchange, the Nasdaq National
Market, the Chicago Board of Options Exchange, the Chicago Mercantile Exchange
or the Chicago Board of Trade, (ii) trading of any securities of the Company
shall have been suspended on any exchange or in any over-the-counter market,
(iii) a material disruption in securities settlement, payment or clearance
services in the United shall have occurred, (iv) any moratorium on commercial
banking activities shall have been declared by Federal or New York State
authorities or (v) there shall have occurred any outbreak or escalation of
hostilities, or any change in financial markets or any calamity or crisis that,
in your judgment, is material and adverse and which, singly or together with any
other event specified in this clause (v), makes it, in your judgment,
impracticable or inadvisable to proceed with the offer, sale or delivery of the
Securities on the terms and in the manner contemplated in the Final Memorandum.
10. Effectiveness; Defaulting Placement Agents. This Agreement
shall become effective upon the execution and delivery hereof by the parties
hereto.
If, on the Closing Date, any one or more of the Placement Agents shall
fail or refuse to purchase Securities that it or they have agreed to purchase
hereunder on such date, and the aggregate principal amount of Securities which
such defaulting Placement Agent or Placement Agents agreed but failed or refused
to purchase is not more than one-tenth of the aggregate principal amount of
Securities to be purchased on such date, the other Placement Agents shall be
obligated severally in the proportions that the principal amount of Securities
set forth opposite their respective names in Schedule I bears to the aggregate
principal amount of Securities set forth opposite the names of all such
non-defaulting Placement Agents, or in such other proportions as you may
specify, to purchase the Securities which such defaulting Placement Agent or
Placement Agents agreed but failed or refused to purchase on such date; provided
that in no event shall the principal amount of Securities that any Placement
Agent has agreed to purchase pursuant to this Agreement be increased pursuant to
this Section 10 by an amount in excess of one-ninth of such principal amount of
Securities without the written consent of such Placement Agent. If, on the
Closing Date any Placement Agent or Placement Agents shall fail or refuse to
purchase Securities which it or they have agreed to purchase hereunder on such
date and the aggregate principal amount of Securities with respect to which such
default occurs is more than one-tenth of the aggregate principal amount of
Securities to be purchased on such date, and arrangements satisfactory to you
and the Company for the purchase of such Securities are not made within 36 hours
after such default, this Agreement shall terminate without liability on the part
of any non-defaulting Placement Agent or of the Company or of the Guarantors. In
any such case either you or the Company shall have the right to postpone the
Closing Date, but in no event for longer than seven days, in order that the
required changes, if any, in the Final Memorandum or in any other documents or
arrangements may be effected. Any action taken under this paragraph shall not
relieve any defaulting Placement Agent from liability in respect of any default
of such Placement Agent under this Agreement.
16
If this Agreement shall be terminated by the Placement Agents, or any
of them, because of any failure or refusal on the part of the Company or the
Guarantors to comply with the terms or to fulfill any of the conditions of this
Agreement, or if for any reason the Company shall be unable to perform its
obligations under this Agreement, the Company will reimburse the Placement
Agents or such Placement Agents as have so terminated this Agreement with
respect to themselves, severally, for all out-of-pocket expenses (including the
fees and disbursements of their counsel) reasonably incurred by such Placement
Agents in connection with this Agreement or the offering contemplated hereunder.
11. Notices. All notices and other communications under this
Agreement shall be in writing and mailed, delivered or sent by facsimile
transmission to: if sent to the Placement Agents, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co.
Incorporated, ▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, attention: High Yield New
Issues Group, facsimile number (▇▇▇) ▇▇▇-▇▇▇▇ and if sent to the Company or to
the Guarantors, to Steel Dynamics, Inc., ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇ ▇▇▇,
▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇, attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇, facsimile number (219)
969-3555.
12. Counterparts. This Agreement may be signed in any number of
counterparts, each of which shall be an original, with the same effect as if the
signatures thereto and hereto were upon the same instrument.
13. Applicable Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York.
14. Headings. The headings of the sections of this Agreement have
been inserted for convenience of reference only and shall not be deemed a part
of this Agreement
17
Very truly yours,
STEEL DYNAMICS, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇▇
-------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇▇
Title:
SDI INVESTMENT COMPANY
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇▇
-------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇▇
Title:
DYNAMIC BAR PRODUCTS LLC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇▇
-------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇▇
Title:
STLD HOLDINGS, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇▇
-------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇▇
Title:
FERROUS RESOURCES LLC
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇▇
-------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇▇
Title:
STEEL DYNAMICS SALES NORTH
AMERICA, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇▇
-------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇▇
Title:
Accepted as of the date hereof
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & CO. INCORPORATED
▇▇▇▇▇▇▇, SACHS & CO.
▇.▇. ▇▇▇▇▇▇ SECURITIES INC.
By: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated
By: /s/
-------------------------------
Name:
Title:
SCHEDULE I
Placement Agents
--------------------------------------------------------------------------------
Principal Amount of
Placement Agent Securities to be Purchased
--------------------------------------------------------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated............... $ 70,000,000
--------------------------------------------------------------------------------
▇▇▇▇▇▇▇, Sachs & Co. ........................... $ 25,000,000
--------------------------------------------------------------------------------
▇.▇. ▇▇▇▇▇▇ Securities Inc. .................... $ 5,000,000
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Total: ........................................ $100,000,000
--------------------------------------------------------------------------------
SCHEDULE II
Guarantors
SDI Investment Company
Dynamic Bar Products LLC
STLD Holdings, Inc
Ferrous Resources LLC
Steel Dynamics Sales North America, Inc.
SCHEDULE III
Subsidiaries
Percent of capital Percent of voting
stock/equity units owned by stock/voting units owned by
Name Steel Dynamics, Inc. Steel Dynamics, Inc.
---- --------------------------- ---------------------------
Iron Dynamics, Inc. 100% 100%
New Millennium Building Systems, LLC 100% 100%
Omni Dynamic Aviation, LLC 97.5% 97.5%
Paragon Steel Enterprises, LLC 50% 50%
SDI Investment Company 100% 100%
Dynamic Bar Products LLC 100% 100%
STLD Holdings, Inc 100% 100%
Ferrous Resources LLC 100% 100%
Steel Dynamics Sales North America, Inc 100% 100%
EXHIBIT A
OPINION OF COUNSEL FOR THE COMPANY AND THE GUARANTORS
Attach draft opinion of the counsel for the Company and the Guarantors
to be delivered pursuant to Section 5(c) of the Placement Agreement to the
effect that:
A. The Company has been duly incorporated, is validly existing as
a corporation in good standing under the laws of the jurisdiction of its
incorporation, has the corporate power and authority to own its property and to
conduct its business as described in the Final Memorandum and is duly qualified
to transact business and is in good standing in each jurisdiction in which the
conduct of its business or its ownership or leasing of property requires such
qualification, except to the extent that the failure to be so qualified or be in
good standing would not have a material adverse effect on the Company and its
subsidiaries, taken as a whole.
B. Each subsidiary of the Company has been duly incorporated or
organized, is validly existing as a corporation or as a limited liability
company in good standing under the laws of the jurisdiction of its incorporation
or organization, has the corporate power and authority to own its property and
to conduct its business as described in the Final Memorandum and is duly
qualified to transact business and is in good standing in each jurisdiction in
which the conduct of its business or its ownership or leasing of property
requires such qualification, except to the extent that the failure to be so
qualified or be in good standing would not have a material adverse effect on the
Company and its subsidiaries, taken as a whole; all of the issued shares of
capital stock, and all membership units or interests, of each subsidiary of the
Company have been duly and validly authorized and issued, are fully paid and
non-assessable, and are owned directly by the Company, free and clear of all
liens, encumbrances, equities or claims.
C. The Placement Agreement has been duly authorized, executed and
delivered by the Company and the Guarantors.
D. All shares of common stock of the Company and its subsidiaries
outstanding on the Closing Date have been duly authorized and are validly
issued, fully paid and non-assessable.
E. The Securities have been duly authorized, executed and
delivered by the Company.
F. The Guarantee by each Guarantor has been duly authorized,
executed and delivered by such.
G. The Indenture has been duly authorized, executed and delivered
by the Company and the Guarantors.
H. The Registration Rights Agreement has been duly authorized,
executed and delivered by the Company and the Guarantors.
A-1
I. The Sixth Amendment to the Credit Agreement has been duly
authorized, executed and delivered by the Company and the Guarantors named
therein and is in full force and effect.
J. The execution and delivery by the Company and the Guarantors
of, and the performance by the Company and the Guarantors of their respective
obligations under, the Placement Agreement, the Indenture, the Registration
Rights Agreement, the Securities (in the case of the Company) and the Guarantees
(in the case of the Guarantors) will not contravene any provision of applicable
law or the articles of incorporation or by-laws of the Company or the Guarantors
or, to the best of such counsel's knowledge, any agreement or other instrument
binding upon the Company or any of its subsidiaries that is material to the
Company and its subsidiaries, taken as a whole, (including, but not limited to,
the Credit Agreement as amended by the Sixth Amendment) or, to the best of such
counsel's knowledge, any judgment, order or decree of any governmental body,
agency or court having jurisdiction over the Company or any subsidiary, and no
consent, approval, authorization or order of, or qualification with, any
governmental body or agency is required for the performance by the Company or
the Guarantors of their respective obligations under the Placement Agreement,
the Indenture, the Registration Rights Agreement, the Securities (in the case of
the Company) and the Guarantees (in the case of the Guarantors), except such as
may be required by the securities or Blue Sky laws of the various states in
connection with the offer and sale of the Securities and by Federal and state
securities laws with respect to the Company's and the Guarantors' obligations
under the Registration Rights Agreement.
K. After due inquiry, such counsel does not know of any legal or
governmental proceedings pending or threatened to which the Company or any of
its subsidiaries is a party or to which any of the properties of the Company or
any of its subsidiaries is subject other than proceedings fairly summarized in
all material respects in the Final Memorandum and proceedings which such counsel
believes are not likely to have a material adverse effect on the Company and its
subsidiaries, taken as a whole, or on the power or ability of the Company and
the Guarantors to perform their respective obligations under the Placement
Agreement, the Indenture, the Registration Rights Agreement, the Securities (in
the case of the Company), and the Guarantees (in the case of the Guarantors) or
to consummate the transactions contemplated by the Final Memorandum.
L. After due inquiry, to the best of our knowledge, the Company
and its subsidiaries (i) are in compliance with any and all applicable foreign,
federal, state and local laws and regulations relating to the protection of
human health and safety, the environment or hazardous or toxic substances or
wastes, pollutants or contaminants ("Environmental Laws"), (ii) have received
all permits, licenses or other approvals required of them under applicable
Environmental Laws to conduct their respective businesses and (iii) are in
compliance with all terms and conditions of any such permit, license or
approval, except where such noncompliance with Environmental Laws, failure to
receive required permits, licenses or other approvals or failure to comply with
the terms and conditions of such permits, licenses or approvals would not,
singly or in the aggregate, have a material adverse effect on the Company and
its subsidiaries, taken as a whole.
A-2
M. Each of the Company and the Guarantors are not, and after
giving effect to the offering and sale of the Securities and the application of
the proceeds thereof as described in the Final Memorandum, will not be an
"investment company" as such term is defined in the Investment Company Act of
1940, as amended.
N. The statements related to legal matters, documents or
proceedings included in the Final Memorandum under the captions "Risk
Factors--Environmental regulation imposes substantial costs and limitations on
our operations," "Description of Notes," "Description of Capital Stock,"
"Description of Certain Indebtedness," "Certain ERISA Considerations," "Private
Placement," and "Transfer Restrictions," and in "Item 1 -
Business--Environmental Matters," "Item 3 - Legal Proceedings," "Item 1 -
Business - Section 201 Investigation," "Item 1 - Business--Risk Factors--Risks
Related to Our Business--Environmental regulation imposes substantial costs and
limitations on our operations" and "Item 13 - Certain Relationships and Related
Transactions" of the Company's most recent annual report on Form 10-K and in
"Item 1 - Legal Proceedings," of each quarterly report on Form 10-Q included or
incorporated by reference in the Final Memorandum, in each case fairly summarize
in all material respects such matters, documents or proceedings.
O. The statements in the Final Memorandum under the caption
"United States Federal Income Tax Considerations," insofar as such statements
constitute a summary of the United States federal tax laws referred to therein,
are accurate and fairly summarize in all material respects the United States
federal tax laws referred to therein.
P. Such counsel (i) is of the opinion that each document
incorporated by reference in the Final Memorandum (except for financial
statements and schedules and other financial and statistical data included
therein as to which such counsel need not express any opinion), complied as to
form when filed with the Commission in all material respects with the Exchange
Act and the rules and regulations of the Commission thereunder and (ii) has no
reason to believe that (except for financial statements and schedules and other
financial and statistical data as to which such counsel need not express any
belief) the Final Memorandum when issued contained, or as of the date such
opinion is delivered contains, any untrue statement of a material fact or
omitted or omits 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.
Q. Based upon the representations, warranties and agreements of
the Company in the Placement Agreement and of the Placement Agents in the
Placement Agreement, it is not necessary in connection with the offer, sale and
delivery of the Securities to the Placement Agents under the Placement Agreement
or in connection with the initial resale of such Securities by the Placement
Agents in accordance with the Placement Agreement to register the Securities
under the Securities Act of 1933, as amended, or to qualify the Indenture under
the Trust Indenture Act of 1939, it being understood that no opinion is
expressed as to any subsequent resale of any Security.
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R. Each of the Company and its subsidiaries has all necessary
certificates, orders, permits, licenses, authorizations, consents and approvals
of and from, and has made all declarations and filings with, all federal, state
and local governmental authorities, all self-regulatory organizations and all
courts and tribunals, to own, lease, license and use its properties and assets
and to conduct its business in the manner described in the Final Memorandum, and
neither the Company nor any of its subsidiaries has received any notice of
proceedings relating to revocation or modification of any such certificates,
orders, permits, licenses, authorizations, consents or approvals, nor is the
Company or any of its subsidiaries in violation of, or in default under, any
federal, state or local law, regulation, rule, decree, order or judgment
applicable to the Company or any of its subsidiaries the effect of which, singly
or in the aggregate, would have a material adverse effect on the prospects,
condition, financial or otherwise, or in the earnings, business or operations of
the Company and its subsidiaries, taken as a whole, except as described in the
Final Memorandum.
With respect to paragraph P above, counsel may state that his or her
opinion and belief are based upon his or her participation in the preparation of
the Final Memorandum (and any amendments or supplements thereto), and review and
discussion of the contents thereof and review of the documents incorporated by
reference therein, but are without independent check or verification except with
respect to paragraphs N and O.
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EXHIBIT B
OPINION OF NEW YORK COUNSEL FOR THE COMPANY AND THE GUARANTORS
Attach draft opinion of the New York counsel for the Company and the
Guarantors to be delivered pursuant to Section 5(d) of the Placement Agreement
to the effect that:
A. Assuming the Securities have been duly authorized, executed
and delivered by the parties thereto, the Securities are valid and binding
obligations of the Company, enforceable in accordance with their terms, subject
to applicable bankruptcy, insolvency or similar laws affecting creditors' rights
generally and general principles of equity, and will be entitled to the benefits
of the Indenture and the Registration Rights Agreement.
B. Assuming the Guarantees have been duly authorized, executed
and delivered by the parties thereto, the Guarantees are valid and binding
agreements of the Guarantors enforceable against the Guarantors in accordance
with its terms, subject to applicable bankruptcy, insolvency or similar laws
affecting creditors' rights generally and general principles of equity, and will
be entitled to the benefits of the Indenture and the Registration Rights
Agreement.
C. Assuming the Indenture has been duly authorized, executed and
delivered by the parties thereto, the Indenture is a valid and binding agreement
of the Company and the Guarantors, enforceable in accordance with its terms,
subject to applicable bankruptcy, insolvency or similar laws affecting
creditors' rights generally and general principles of equity.
D. Assuming the Registration Rights Agreement has been duly
authorized, executed and delivered by the parties thereto, the Registration
Rights Agreement is a valid and binding agreement of the Company and the
Guarantors, enforceable in accordance with its terms, subject to applicable
bankruptcy, insolvency or similar laws affecting creditors' rights generally and
general principles of equity and except as rights to indemnification and
contribution under the Registration Rights Agreement may be limited under
applicable law.
E. Assuming the Sixth Amendment has been duly authorized,
executed and delivered by the parties thereto, the Sixth Amendment is a valid
and binding agreement of the Company and the Guarantors, enforceable in
accordance with its terms, subject to applicable bankruptcy, insolvency or
similar laws affecting creditors' rights generally and general principles of
equity.
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