Tube City IMS Corporation
9 3/4% Senior Subordinated Notes due 2015
January 18, 2007
CREDIT SUISSE SECURITIES (USA) LLC (“Credit Suisse”),
As Representative of the Several Purchasers,
Eleven Madison Avenue,
New York, N.Y. 10010-3629
1. Introductory. Metal Services Merger Sub Corp., a Delaware corporation (the “Merger Sub”), which is a direct wholly-owned subsidiary of Metal Services Holdco LLC, a Delaware limited liability company (“Holdco”), and an indirect wholly-owned subsidiary of Metal Services Acquisition Corp., a Delaware corporation (“Acquiror”) and an affiliate of Onex Partners II LP (“Onex Partners”) agrees with the several initial purchasers named in Schedule A hereto (the “Purchasers”), subject to the terms and conditions stated herein, to issue and sell to the several Purchasers, in the respective amounts set forth on Schedule A hereto, an aggregate of $225,000,000 principal amount of its 9 3/4% Senior Subordinated Notes due 2015 (“Offered Securities”) to be issued under an indenture, dated as of January 25, 2007, and as supplemented through the Closing Date (the “Indenture”), among the Company (as defined below), Holdco and The Bank of New York, as trustee (the “Trustee”). As used in this Agreement, the term “Issuer” means, prior to the consummation of the Merger (as defined below), Merger Sub and thereafter, the Company (as defined below) as the surviving entity of the Merger. The Offered Securities and the Exchange Securities (as defined below), when issued, executed and authenticated in accordance with the terms of the Exchange Offer (as defined below) and the Indenture, will be unconditionally guaranteed as to the payment of principal and interest by Holdco and, immediately upon the consummation of the Merger (as defined below), each of the Issuer’s domestic subsidiaries as listed on Schedule B (collectively, the “Subsidiary Guarantors” and, together with Holdco, the “Guarantors” and such guarantees, the “Guarantees”) on a senior subordinated basis.
As part of the transactions (the “Transactions”) described under the heading “The Transactions” in the Preliminary Offering Circular (as defined below) and the Final Offering Circular (as defined below), Merger Sub shall acquire all of the issued and outstanding capital stock of Tube City IMS Corporation, a Delaware corporation (“Tube City IMS” or the “Company”) pursuant to the terms and conditions of the Stock Purchase Agreement, dated as of November 10, 2006 (the “Stock Purchase Agreement”), by and among, Mill Services Holdings, LLC, a Delaware limited liability company and an affiliate of Wellspring Capital Partners III, L.P., the other sellers party thereto and Acquiror. Acquiror has assigned its rights under the Stock Purchase Agreement to Merger Sub. Following the Transactions, Merger Sub will merge (the “Merger”) with and into Tube City IMS with Tube City IMS continuing as the surviving entity. In connection with the Transactions, (i) Onex Partners (together with its affiliates, “Onex”) and certain members of the management of the Company (together with Onex, the “Investors”) will contribute an aggregate amount of approximately $217,000,000 to Acquiror (the “Equity Contribution”), which will in turn contribute the funds to Holdco, which will in turn contribute the funds to Merger Sub; (ii) Merger Sub will enter into a senior secured asset-based loan credit agreement (together with the related guarantees and security documents, the “ABL Credit Agreement”), among itself, Holdco, the guarantors named therein, Credit Suisse, as administrative agent, The CIT Group/Business Credit Inc., as collateral agent, and the lenders and agents named therein that will provide for a new senior secured asset-based revolving credit facility providing for up to $165,000,000 of loans and letters of credit; (iii) Merger Sub will enter into a senior secured credit agreement (together with the related guarantees and security documents, the “Term Loan Credit Agreement” and, together with the ABL Credit Agreement, the “Credit Agreements”), among itself, the guarantors named therein, Credit Suisse, Cayman Islands Branch, as administrative agent and collateral agent, and
the lenders and agents named therein in an aggregate principal amount of $185,000,000 (consisting of a $165,000,000 senior secured term loan facility and a $20,000,000 synthetic letter of credit facility); (iv) Merger Sub and Holdco will execute the Indenture and, immediately upon the consummation of the Merger, the Company, the Guarantors and the Trustee will have executed a supplemental indenture (the “Supplemental Indenture”) whereby, Tube City IMS will assume all of the obligations of Merger Sub under the Indenture and the Offered Securities and the Guarantors will guarantee the obligations of the Company under the Indenture and the Offered Securities and (v) immediately upon consummation of the Merger, the Company and each Subsidiary Guarantor will execute counterparts to this Agreement (the “Counterparts to this Purchase Agreement”) and counterparts to the Registration Rights Agreement (as defined below) (the “Counterparts to the Registration Rights Agreement”) pursuant to which each such entity will observe and perform all of the respective rights, obligations and liabilities as provided in this Agreement and the Registration Rights Agreement (as defined below) as if it was an original signatory hereto and thereto. Regardless of the foregoing clauses (iv) and (v), as a result of the Merger, all of Merger Sub’s obligations under the Indenture, the Offered Securities, this Agreement (together with the Counterparts to this Purchase Agreement, “this Agreement”) and the Registration Rights Agreement will, by operation of law, become obligations of the Company.