SUPPORT AGREEMENT
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This SUPPORT AGREEMENT (this "Agreement"), is dated as of May 18, 2005, by
and between Flag Holdings Corporation, a Delaware corporation ("Parent"),
Citadel Equity Fund Ltd., a Cayman Islands company ("Citadel Equity") and
Citadel Credit Trading Ltd., a Cayman Islands company (together with Citadel
Equity, the "Stockholders" and each a "Stockholder").
W I T N E S S E T H:
WHEREAS, concurrently with the execution and delivery of this Agreement,
Parent, Metals USA, Inc., a Delaware corporation (the "Company"), and Flag
Acquisition Corporation, a Delaware corporation and a wholly owned subsidiary of
Parent ("Merger Sub"), are entering into an Agreement and Plan of Merger (as the
same may be modified or amended from time to time, the "Merger Agreement"),
providing for, among other things, the Merger and the other transactions
contemplated thereby, on the terms and subject to the conditions set forth
therein (capitalized terms used herein and not otherwise defined shall have the
meanings ascribed to such terms in the Merger Agreement);
WHEREAS, as of the date hereof, each of Stockholders beneficially owns the
number of Voting Shares (as defined herein) set forth, and in the manner
reflected, on Attachment A hereto (the "Owned Shares");
WHEREAS, as a condition to Parent's willingness to enter into and perform
its obligations under the Merger Agreement, Parent has required that each
Stockholder agree, and each Stockholder has agreed, (i) to vote all of the Owned
Shares, together with any shares of the Common Stock, par value $.01 per share,
of the Company (the "Common Stock") acquired after the date of this Agreement,
whether upon the exercise of options or warrants, conversion of convertible
securities or otherwise, and any other voting securities of the Company (whether
acquired heretofore or hereafter) that are beneficially owned by such
Stockholder or over which such Stockholder has, directly or indirectly, the
right to vote (collectively, the "Voting Shares"), in favor of (a) the Merger
Agreement and the transactions contemplated thereby, including the Merger, and
(b) any other matter that is required by law or regulatory authority to be
approved by the stockholders of the Company to facilitate the transactions
contemplated by the Merger Agreement, including the Merger and (ii) to take the
other actions described herein; and
WHEREAS, each Stockholder desires to express its support for the Merger and
the other transactions contemplated by the Merger Agreement.
NOW, THEREFORE, in consideration of the premises and for other good and
valuable consideration given to each party hereto, the receipt of which is
hereby acknowledged, the parties agree as follows:
1. Agreement to Vote and Irrevocable Proxy.
1.1 Agreement to Vote. Each Stockholder hereby agrees that, during the
time this Agreement is in effect, at any meeting of the stockholders of the
Company, however called, or any adjournment or postponement thereof, such
Stockholder shall be present (in person or by proxy) and vote (or cause to be
voted) all of its Voting Shares (a) in favor of approval of (1) the Merger
Agreement and the transactions contemplated thereby, including the Merger and
(2) any other matter that is required by law or regulatory authority to be
approved by the stockholders of the Company to facilitate the transactions
contemplated by the Merger Agreement, including the Merger; and (b) against (1)
any Acquisition Proposal other than as contemplated by the Merger Agreement, (2)
any liquidation or winding up of the Company and (3) any other action that may
reasonably be expected to impede, interfere with, delay, postpone or attempt to
discourage or have the effect of discouraging the consummation of the
transactions contemplated by the Merger Agreement, including the Merger.
1.2 Irrevocable Proxy. Solely with respect to the matters described in
Section 1.1, if any Stockholder has not taken a Qualifying Action (as defined
below) on or prior to the third business day prior to the MUSA Stockholders
Meeting, such Stockholder hereby irrevocably appoints Parent as its proxy (which
proxy is irrevocable and which appointment is coupled with an interest,
including for purposes of Section 212 of the Delaware General Corporation Law)
to vote all Voting Shares solely on the matters described in Section 1.1, and in
accordance therewith, effective from and after such third business day and until
the valid termination of this Agreement. Each Stockholder agrees to execute any
further agreement or form reasonably necessary or appropriate to confirm and
effectuate the grant of the proxy contained herein. "Qualifying Action" means
either (a) the delivery by each Stockholder to Parent of a copy of such
Stockholder's duly executed and valid proxy (and any amendment of such proxy)
with respect to the MUSA Stockholders Meeting, provided the votes authorized in
such proxy or amendment thereof is consistent with the terms of this Agreement
and such proxy or amendment thereof is otherwise consistent with this Agreement
or (b) the delivery by each Stockholder to Parent of a written certificate by
one of its duly authorized individuals certifying that such Stockholder shall
attend the MUSA Stockholders Meeting in person and vote its Voting Shares in
accordance with Section 1.1 hereof.
2. Representations and Warranties of the Stockholders. The Stockholders
hereby represent and warrant to Parent as follows:
2.1 Due Organization. Each Stockholder has been duly organized, is
validly existing and is in good standing under the laws of the state of its
incorporation, formation or organization.
2.2 Power; Due Authorization; Binding Agreement. Each Stockholder has
full corporate power and authority to execute and deliver this Agreement, to
perform its obligations hereunder and to consummate the transactions
contemplated hereby. This Agreement has been duly and validly executed and
delivered by each Stockholder and constitutes a valid and binding agreement of
each Stockholder, enforceable against each Stockholder in accordance with its
terms, except that enforceability may be subject to the effect
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of any applicable bankruptcy, reorganization, insolvency, moratorium or other
similar laws affecting or relating to the enforcement of creditors rights
generally and to general principles of equity.
2.3 Ownership of Shares. On the date hereof, the Owned Shares set forth
opposite each Stockholder's name on Attachment A hereto are owned of record or
beneficially by such Stockholder in the manner reflected thereon and include all
of the Voting Shares owned of record or beneficially by such Stockholder, free
and clear of any claims, liens, encumbrances and security interests. As of the
date hereof, each Stockholder has, and as of the date of the MUSA Stockholders
Meeting, each Stockholder will have (except as otherwise permitted by this
Agreement), sole voting power (to the extent such securities have voting power)
and sole dispositive power with respect to all of the Owned Shares.
2.4 No Conflicts. The execution and delivery of this Agreement by each
Stockholder does not, and the performance of the terms of this Agreement by each
Stockholder will not, (a) except for filings with the Securities and Exchange
Commission, require any Stockholder to obtain the consent or approval of, or
make any filing with or notification to, any governmental or regulatory
authority, domestic or foreign, (b) require the consent or approval of any other
person pursuant to any agreement, obligation or instrument binding on any
Stockholder or its properties and assets, (c) conflict with or violate any
organizational document or law, rule, regulation, order, judgment or decree
applicable to any Stockholder or pursuant to which any of its or its affiliates'
respective properties or assets are bound or (d) violate any other agreement to
which any Stockholder or any of its affiliates is a party including, without
limitation, any voting agreement, stockholders agreement, irrevocable proxy or
voting trust, except for any consent, approval, filing or notification which has
been obtained as of the date hereof or the failure of which to obtain, make or
give would not, or any conflict or violation which would not, impair in any
material respect any Stockholder's ability to perform its obligations under this
Agreement or in any event impair any Stockholder's ability to perform its
obligations under Section 1.1 hereof. The Voting Shares are not, with respect to
the voting or transfer thereof, subject to any other agreement, including any
voting agreement, stockholders agreement, irrevocable proxy or voting trust.
3. Representations and Warranties of Parent. Parent hereby represents and
warrants to Stockholder as follows:
3.1 Power; Due Authorization; Binding Agreement. Parent is a corporation
duly organized, validly existing and in good standing under the laws of the
state of Delaware. Parent has full corporate power and authority to execute and
deliver this Agreement, to perform its obligations hereunder and to consummate
the transactions contemplated hereby. The execution and delivery of this
Agreement and the consummation by Parent of the transactions contemplated hereby
have been duly and validly authorized by all necessary corporate action on the
part of Parent, and no other proceedings on the part of Parent are necessary to
authorize this Agreement or to consummate the transactions contemplated hereby.
This Agreement has been duly and validly executed and delivered by Parent and
constitutes a valid and binding agreement of Parent, except that enforceability
may be subject to the effect of any applicable bankruptcy, reorganization,
insolvency, moratorium or other similar laws affecting or relating to the
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enforcement of creditors rights generally and to general principles of equity.
3.2 No Conflicts. The execution and delivery of this Agreement by Parent
does not, and the performance of the terms of this Agreement by Parent will not,
(a) require Parent to obtain the consent or approval of, or make any filing with
or notification to, any governmental or regulatory authority, domestic or
foreign, (b) require the consent or approval of any other person pursuant to any
agreement, obligation or instrument binding on Parent or its properties and
assets, (c) conflict with or violate any organizational document or law, rule,
regulation, order, judgment or decree applicable to Parent or pursuant to which
any of its or its subsidiaries' respective assets are bound or (d) violate any
other agreement to which Parent or any of its subsidiaries is a party, except
for any consent, approval, filing or notification which has been obtained, as of
the date hereof, or the failure of which to obtain, make or give would not, or
any conflict or violation which would not, impair Parent's ability to perform is
obligations under this Agreement.
4. Certain Covenants of Stockholder. Each Stockholder hereby covenants and
agrees with Parent as follows:
4.1 Restriction on Transfer, Proxies and Non-Interference. Each
Stockholder hereby agrees, while this Agreement is in effect, at any time prior
to the completion of the MUSA Stockholders Meeting (including any adjournment or
postponement thereof), not to (a) sell, transfer, pledge, encumber (except due
to this Agreement), assign or otherwise dispose of, or enter into any contract,
option or other arrangement or understanding with respect to the sale, transfer,
pledge, encumbrance, assignment or other disposition of, or limitation on the
voting rights of, any of the Voting Shares, provided that nothing in this
Agreement shall prohibit the exercise by a Stockholder of any options to
purchase Voting Shares, (b) grant any proxies or powers of attorney, deposit any
Voting Shares into a voting trust or enter into a voting agreement with respect
to any Voting Shares, (c) take any action that would cause any representation or
warranty of any Stockholder contained herein to become untrue or incorrect or
have the effect of preventing or disabling any Stockholder from performing its
obligations under this Agreement or (d) commit or agree to take any of the
foregoing actions. Any transfer of Voting Shares not permitted hereby shall be
null and void. If any involuntary transfer of any of the Voting Shares shall
occur (including, but not limited to, a sale by a Stockholder's trustee in any
bankruptcy, or a sale to a purchaser at any creditor's or court sale), the
transferee (which term, as used herein, shall include any and all transferees
and subsequent transferees of the initial transferee) shall take and hold such
Voting Shares subject to all of the restrictions, liabilities and rights under
this Agreement, which shall continue in full force and effect until the earlier
of (i) the date on which such restrictions, liabilities and rights terminate
pursuant to this Agreement and (ii) a valid termination of this Agreement.
4.2 Additional Shares. Each Stockholder hereby agrees, while this
Agreement is in effect, to promptly notify Parent of the number of any new
Voting Shares acquired by such Stockholder, if any, after the date hereof. Any
such shares shall be subject to the terms of this Agreement as though owned by
such Stockholder on the date hereof.
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4.3 No Limitations on Actions. Each Stockholder signs this Agreement
solely in its capacity as the record and/or beneficial owner, as applicable, of
its Voting Shares; this Agreement shall not limit or otherwise affect the
actions of any Stockholder or any affiliate, employee or designee of such
Stockholder or any of its affiliates in any other capacity, including such
person's capacity, if any, as an officer of the Company or a member of the board
of directors of the Company; and nothing herein shall limit or affect the
Company's rights in connection with the Merger Agreement.
5. Miscellaneous.
5.1 Termination of this Agreement. This Agreement shall terminate upon
the earlier of (i) termination of the Merger Agreement in accordance with its
terms, (ii) the Effective Time, (iii) any amendment of the Merger Agreement
without the prior written consent of the Stockholders that provides for a
reduction of the Merger Consideration below $22.00 or changes the form of the
Merger Consideration to other than cash and (iv) December 15, 2005.
5.2 Effect of Termination. In the event of termination of this Agreement
pursuant to Section 5.1, this Agreement shall become void and of no effect with
no liability on the part of any party hereto; provided, however, no such
termination shall relieve any party hereto from any liability for any breach of
this Agreement occurring prior to such termination.
5.3 Non-Survival. The representations and warranties made herein shall
not survive the termination of this Agreement.
5.4 Entire Agreement; Assignment. This Agreement constitutes the entire
agreement among the parties with respect to the subject matter hereof and
supersedes all other prior agreements and understandings, both written and oral,
among the parties with respect to the subject matter hereof. Nothing in this
Agreement, express or implied, is intended to or shall confer upon any other
person any right, benefit or remedy of any nature whatsoever under or by reason
of this Agreement. This Agreement shall not be assigned by operation of law or
otherwise and shall be binding upon and inure solely to the benefit of each
party hereto; provided, however, that Parent shall be permitted to assign this
Agreement and any of its rights, interests or obligations under this Agreement
(including, without limitation, in connection with the conversion of Parent from
a corporation to a limited liability company) so long as such assignee or
successor shall be an affiliate of Apollo Management V, L.P. to whom the Merger
Agreement shall have been assigned pursuant to the proviso of Section 8.9 of the
Merger Agreement (it being understood and agreed by each of the parties hereto
that such assignment or conversion shall not be deemed to be a breach by Parent
of any of its representations and warranties set forth herein, shall not be
deemed to result in any such representation or warranty becoming untrue or
inaccurate and shall not be deemed to be a breach by Parent of any covenant or
agreement contained herein).
5.5 Amendments. This Agreement may not be modified, amended, altered or
supplemented, except upon the execution and delivery of a written agreement
executed by each of the parties hereto.
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5.6 Notices. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be given (and shall be
deemed to have been duly received if so given) by hand delivery, by facsimile
transmission or by mail (registered or certified mail, postage prepaid, return
receipt requested) or by any courier service, such as Federal Express, providing
proof of delivery. All communications hereunder shall be delivered to the
respective parties at the following addresses:
If to either Stockholder:
Citadel Equity Fund Ltd.
c/o Citadel Investment Group, L.L.C.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
Sidley ▇▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇ LLP
Bank One Plaza
▇▇ ▇. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
If to Parent:
Flag Holdings Corporation
c/o Apollo Management V, L.P.
▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. Press
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
Wachtell, Lipton, ▇▇▇▇▇ & ▇▇▇▇
▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
or to such other address as the person to whom notice is given may have
previously furnished to the others in writing in the manner set forth above.
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5.7 Governing Law. (a) This Agreement shall be governed by and construed
in accordance with the laws of the State of Delaware, regardless of the laws
that might otherwise govern under applicable principles of conflicts of laws
thereof.
(b) Each party hereto irrevocably submits to the jurisdiction of the
Court of Chancery in Wilmington, Delaware or any federal court sitting in
the State of Delaware in any action arising out of or relating to this
Agreement, and hereby irrevocably agrees that all claims in respect of such
action may be heard and determined in such Delaware state or federal court.
Each party hereto hereby irrevocably waives, to the fullest extent it may
effectively do so, the defense of an inconvenient forum to the maintenance
of such action or proceeding. The parties hereto further agree, to the
extent permitted by law, that final and unappealable judgment against any
of them in any action or proceeding contemplated above shall be conclusive
and may be enforced in any other jurisdiction within or outside the United
States by suit on the judgment, a certified copy of which shall be
conclusive evidence of the fact and amount of such judgment.
(c) To the extent that any party hereto has or hereafter may acquire
any immunity from jurisdiction of any court or from any legal process
(whether through service or notice, attachment prior to judgment,
attachment in aid of execution, execution or otherwise) with respect to
itself or its property, each party hereto hereby irrevocably waives such
immunity in respect of its obligations with respect to this Agreement.
(d) Each party hereto waives, to the fullest extent permitted by
applicable laws, any right it may have to a trial by jury in respect of any
action, suit or proceeding arising out of or relating to this Agreement.
Each party hereto certifies that it has been induced to enter into this
Agreement by, among other things, the mutual waivers and certifications set
forth above in this Section.
5.8 Remedies. The Stockholders and Parent recognize and acknowledge that
a breach by it of any covenants or agreements contained in this Agreement will
cause the other party to sustain irreparable injury and damages, for which money
damages would not provide an adequate remedy, and therefore each Stockholder and
Parent agrees that in the event of any such breach by the other, the
Stockholders or Parent, as the case may be, shall be entitled to the remedy of
specific performance of such covenants and agreements and injunctive and other
equitable relief to enforce each and every provision of this agreement.
5.9 Counterparts. This Agreement may be executed by facsimile and in two
or more counterparts, each of which shall be deemed to be an original, but all
of which together shall constitute one and the same Agreement.
5.10 Severability. Whenever possible, each provision or portion of any
provision of this Agreement will be interpreted in such manner as to be
effective and valid under applicable law but if any provision or portion of any
provision of this Agreement is held to be invalid, illegal or unenforceable in
any respect under any applicable law or rule in any
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jurisdiction, such invalidity, illegality or unenforceability will not affect
any other provision or portion of any provision in such jurisdiction, and this
Agreement will be reformed, construed and enforced in such jurisdiction as if
such invalid, illegal or unenforceable provision or portion of any provision had
never been contained herein.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
FLAG HOLDINGS CORPORATION
By: ▇▇▇▇ ▇. Press
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Name: ▇▇▇▇ ▇. Press
Title: Chairman of the Board
CITADEL CREDIT TRADING LTD.
By: Citadel Limited Partnership
its portfolio manager
By: Citadel Investment Group, L.L.C.
its general partner
By: ▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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Name: ▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Director and Associate
General Counsel
CITADEL EQUITY FUND LTD.
By: Citadel Limited Partnership
its portfolio manager
By: Citadel Investment Group, L.L.C.
its general partner
By: ▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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Name: ▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Director and Associate
General Counsel
ATTACHMENT A
Beneficial Ownership of the Voting Shares
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Stockholder Shares of Common Warrants to Acquire Options to Acquire
Stock Owned Common Stock Common Stock*
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Citadel Equity 2,351,554 6,721 15,750
Fund Ltd.
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Citadel Credit 1,027,777 584 6,750
Trading Ltd.
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* Options received by ▇▇▇▇▇ ▇▇▇▇▇ pursuant to the Metals USA, Inc. 2002
Long-Term Incentive Plan, which, pursuant to a Letter Agreement, ▇▇. ▇▇▇▇▇ has
agreed to hold for the benefit of and solely as the nominee of CEF and CCT. ▇▇.
▇▇▇▇▇ has agreed to take actions with respect to the options only as CEF and CCT
direct.