EXHIBIT 2.2
WESCO DISTRIBUTION, INC.
$300,000,000
9-1/8% Senior Subordinated Notes due 2008
WESCO INTERNATIONAL, INC.
$87,000,000
11-1/8% Senior Discount Notes due 2008
PURCHASE AGREEMENT
May 29, 1998
CHASE SECURITIES INC.
XXXXXX BROTHERS INC.
c/o Chase Securities Inc.
000 Xxxx Xxxxxx, 0xx xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Ladies and Gentlemen:
WESCO Distribution, Inc., a Delaware corporation (the "Company"),
proposes to issue and sell $300,000,000 aggregate principal amount of its 9-1/8%
Senior Subordinated Notes due 2008 (the "Senior Subordinated Notes"). WESCO
International, Inc., a Delaware corporation ("Holdings" and, together with the
Company, the "Issuers"), proposes to issue and sell $87,000,000 aggregate
principal amount at maturity of its 11-1/8% Senior Discount Notes due 2008 (the
"Senior Discount Notes" and, together with the Senior Subordinated Notes, the
"Securities"). The Senior Subordinated Notes will be issued pursuant to an
Indenture to be dated as of June 5, 1998 (the "Senior Subordinated Notes
Indenture"), among the Company, Holdings, as guarantor, and Bank One, N.A., as
trustee (the "Senior Subordinated Notes Trustee") and will be guaranteed on an
unsecured senior subordinated basis by Holdings. The Senior Discount Notes will
be issued pursuant to an Indenture to be dated as of June 5, 1998 (the "Senior
Discount Notes Indenture" and, together with the Senior Subordinated Notes
Indenture, the "Indentures"), between Holdings and Bank One, N.A., as trustee
(the "Senior Discount Notes Trustee" and, together with the Senior Subordinated
Notes Trustee, the "Trustees"). The Issuers hereby confirm their agreement with
Chase Securities Inc. ("CSI") and Xxxxxx Brothers Inc. ("Xxxxxx Brothers" and,
together with CSI, the "Initial Purchasers") concerning the purchase of the
Securities from the Issuers by the several Initial Purchasers.
The Securities will be offered and sold to the Initial Purchasers
without being registered under the Securities Act of 1933, as amended (the
"Securities Act"), in reliance upon an exemption therefrom. The Issuers have
prepared a preliminary offering memorandum dated May 13, 1998 (the "Preliminary
Offering Memorandum"), and will prepare an offering memorandum dated the date
hereof (the "Offering Memorandum") setting forth information concerning the
Issuers and the Securities. Copies of the Preliminary Offering Memorandum have
been, and copies of the Offering Memorandum will be, delivered by the Issuers to
the Initial Purchasers pursuant to the terms of this
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Agreement. Any references herein to the Preliminary Offering Memorandum and the
Offering Memorandum shall be deemed to include all amendments and supplements
thereto, unless otherwise noted. The Issuers hereby confirm that they have
authorized the use of the Preliminary Offering Memorandum and the Offering
Memorandum in connection with the offering and resale of the Securities by the
Initial Purchasers in accordance with Section 2.
Holders of the Senior Subordinated Notes (including the Initial
Purchasers and their direct and indirect transferees) will be entitled to the
benefits of an Exchange and Registration Rights Agreement, substantially in the
form attached hereto as Annex A (the "Senior Subordinated Notes Registration
Rights Agreement"), pursuant to which the Company will agree to file with the
Securities and Exchange Commission (the "Commission") (i) a registration
statement under the Securities Act (the "Senior Subordinated Notes Exchange
Offer Registration Statement") registering an issue of senior subordinated notes
of the Company (the "Senior Subordinated Exchange Securities") which are
identical in all material respects to the Senior Subordinated Notes (except that
the Senior Subordinated Exchange Securities will not contain terms with respect
to transfer restrictions) and (ii) under certain circumstances, a shelf
registration statement pursuant to Rule 415 under the Securities Act (the
"Senior Subordinated Notes Shelf Registration Statement"). Holders of the Senior
Discount Notes (including the Initial Purchasers and their direct and indirect
transferees) will be entitled to the benefits of an Exchange and Registration
Rights Agreement, substantially in the form attached hereto as Annex B (the
"Senior Discount Notes Registration Rights Agreement" and, together with the
Senior Subordinated Notes Registration Rights Agreement, the "Registration
Rights Agreements"), pursuant to which Holdings will agree to file with the
Commission (i) a registration statement under the Securities Act (the "Senior
Discount Notes Exchange Offer Registration Statement" and, together with the
Senior Subordinated Notes Exchange Offer Registration Statement, the "Exchange
Offer Registration Statements") registering an issue of senior discount notes of
Holdings (the "Senior Discount Exchange Securities" and, together with the
Senior Subordinated Exchange Securities, the "Exchange Securities") which are
identical in all material respects to the Senior Discount Notes (except that the
Senior Discount Exchange Securities will not contain terms with respect to
transfer restrictions) and (ii) under certain circumstances, a shelf
registration statement pursuant to Rule 415 under the Securities Act (the
"Senior Discount Notes Shelf Registration Statement" and, together with the
Senior Subordinated Notes Shelf Registration Statement, the "Shelf Registration
Statements").
The Securities are being offered in connection with the
Recapitalization (as defined in the Offering Memorandum) pursuant to which,
among other things, an investor group led by affiliates of The Cypress Group
L.L.C. will acquire approximately 88.7% of the outstanding common stock of
Holdings.
Capitalized terms used but not defined herein shall have the
meanings given to such terms in the Offering Memorandum.
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1. Representations, Warranties and Agreements of the Issuers. Each
of the Issuers represents and warrants to, and agrees with, the several Initial
Purchasers on and as of the date hereof and the Closing Date (as defined in
Section 3) that:
(a) Each of the Preliminary Offering Memorandum and the Offering
Memorandum, as of its respective date, did not, and on the Closing Date the
Offering Memorandum will not, contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary in
order to make the statements therein, in the light of the circumstances under
which they were made, not misleading; provided that the Issuers make no
representation or warranty as to information contained in or omitted from the
Preliminary Offering Memorandum or the Offering Memorandum in reliance upon and
in conformity with written information relating to the Initial Purchasers
furnished to the Issuers by or on behalf of any Initial Purchaser specifically
for use therein (the "Initial Purchasers' Information").
(b) Each of the Preliminary Offering Memorandum and the Offering
Memorandum, as of its respective date, contains all of the information that, if
requested by a prospective purchaser of the Securities, would be required to be
provided to such prospective purchaser pursuant to Rule 144A(d)(4) under the
Securities Act.
(c) Assuming the accuracy of the representations and warranties of
the Initial Purchasers contained in Section 2 and their compliance with the
agreements set forth therein, it is not necessary, in connection with the
issuance and sale of the Securities to the Initial Purchasers and the offer,
resale and delivery of the Securities by the Initial Purchasers in the manner
contemplated by this Agreement and the Offering Memorandum, to register the
Securities under the Securities Act or to qualify the Indentures under the Trust
Indenture Act of 1939, as amended (the "Trust Indenture Act").
(d) Each of the Issuers and each "significant subsidiary" (within
the meaning of Rule 1-02 of Regulation S-X) of the Issuers has been duly
incorporated and is validly existing as a corporation in good standing under the
laws of the jurisdiction of its incorporation, is duly qualified to do business
and is in good standing as a foreign corporation in each jurisdiction in which
its ownership or lease of property or the conduct of its business requires such
qualification, and has all power and authority necessary to own or hold its
properties and to conduct the business in which it is engaged, except where the
failure to so qualify, be in good standing or have such power or authority would
not, singularly or in the aggregate, have a material adverse effect on the
condition (financial or otherwise), results of operations, business or prospects
of the Issuers and their respective subsidiaries taken as a whole (a "Material
Adverse Effect").
(e) As of the Closing Date, each of the Issuers will have a pro
forma capitalization as set forth in the Offering Memorandum under the heading
"Capitalization". All of the outstanding shares of capital stock of each
"significant subsidiary" (within the meaning of Rule 1-02 of Regulation S-X) of
the Issuers (including, without limitation, the Company) have been duly and
validly authorized and issued, are fully paid and non-assessable and are owned
directly or indirectly by the applicable Issuer, free and clear of any lien,
charge, encumbrance, security interest, restriction upon voting or transfer or
any other claim of any third party, other than those incurred in connection with
the Credit Agreement. WESCO Distribution-Canada, Inc. is the only "significant
subsidiary" (within the meaning of Rule 1-02 of Regulation S-X) of
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the Company on the date hereof. The Company is the only direct subsidiary of
Holdings on the date hereof.
(f) Each of the Issuers has full right, power and authority to
execute and deliver this Agreement, the Senior Subordinated Notes Indenture, the
Senior Subordinated Notes Registration Rights Agreement and the Senior
Subordinated Notes (in the case of the Company only) (collectively, the "Senior
Subordinated Notes Transaction Documents") and to perform its obligations
hereunder and thereunder; and all corporate action required to be taken for the
due and proper authorization, execution and delivery of each of the Senior
Subordinated Notes Transaction Documents and the consummation of the
transactions contemplated thereby has been duly and validly taken. Holdings has
full right, power and authority to execute and deliver the Senior Discount Notes
Indenture, the Senior Discount Notes Registration Rights Agreement and the
Senior Discount Notes (collectively, the "Senior Discount Notes Transaction
Documents" and, together with (i) the Senior Subordinated Notes Transaction
Documents, (ii) the Recapitalization Agreement, (iii) the Credit Agreement and
(iv) the U.S. Receivables Sale Agreement, the Canadian Receivables Sales
Agreement, the Pooling Agreement, the Series 1998-1 Supplement to the Pooling
Agreement and the Servicing Agreement, in each case to be entered into in
connection with the Receivables Facility (collectively, the "Receivables
Agreements"), the "Transaction Documents") and to perform its obligations
thereunder; and all corporate action required to be taken for the due and proper
authorization, execution and delivery of each of the Senior Discount Notes
Transaction Documents and the consummation of the transactions contemplated
thereby has been duly and validly taken.
(g) This Agreement has been duly authorized, executed and delivered
by each of the Issuers.
(h) The Senior Subordinated Notes Registration Rights Agreement has
been duly authorized by each of the Issuers and, when duly executed and
delivered in accordance with its terms by each of the parties thereto, will
constitute a valid and legally binding agreement of each of the Issuers
enforceable against each of the Issuers in accordance with its terms, except to
the extent that such enforceability may be limited by applicable bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium and other similar
laws affecting creditors' rights generally and by general equitable principles
(whether considered in a proceeding in equity or at law). The Senior Discount
Notes Registration Rights Agreement has been duly authorized by Holdings and,
when duly executed and delivered in accordance with its terms by each of the
parties thereto, will constitute a valid and legally binding agreement of
Holdings enforceable against Holdings in accordance with its terms, except to
the extent that such enforceability may be limited by applicable bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium and other similar
laws affecting creditors' rights generally and by general equitable principles
(whether considered in a proceeding in equity or at law).
(i) The Senior Subordinated Notes Indenture has been duly authorized
by each of the Issuers and, when duly executed and delivered in accordance with
its terms by each of the parties thereto, will constitute a valid and legally
binding agreement of each of the Issuers enforceable against each of the Issuers
in accordance with its terms, except to the extent that such enforceability may
be limited by applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and other similar laws affecting creditors' rights
generally and by general equitable principles (whether
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considered in a proceeding in equity or at law). The Senior Discount Notes
Indenture has been duly authorized by Holdings and, when duly executed and
delivered in accordance with its terms by each of the parties thereto, will
constitute a valid and legally binding agreement of Holdings enforceable against
Holdings in accordance with its terms, except to the extent that such
enforceability may be limited by applicable bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium and other similar laws affecting
creditors' rights generally and by general equitable principles (whether
considered in a proceeding in equity or at law). On the Closing Date, each of
the Indentures will conform in all material respects to the requirements of the
Trust Indenture Act and the rules and regulations of the Commission applicable
to an indenture which is qualified thereunder.
(j) The Senior Subordinated Notes have been duly authorized by each
of the Issuers and, when duly executed, authenticated, issued and delivered as
provided in the Senior Subordinated Notes Indenture and paid for as provided
herein, will be duly and validly issued and outstanding and will constitute
valid and legally binding obligations of the Company, as issuer, and Holdings,
as guarantor, entitled to the benefits of the Senior Subordinated Notes
Indenture and enforceable against the Company as issuer, and Holdings, as
guarantor, in accordance with their terms, except to the extent that such
enforceability may be limited by applicable bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium and other similar laws affecting
creditors' rights generally and by general equitable principles (whether
considered in a proceeding in equity or at law). The Senior Discount Notes have
been duly authorized by Holdings and, when duly executed, authenticated, issued
and delivered as provided in the Senior Discount Notes Indenture and paid for as
provided herein, will be duly and validly issued and outstanding and will
constitute valid and legally binding obligations of Holdings entitled to the
benefits of the Senior Discount Notes Indenture and enforceable against Holdings
in accordance with their terms, except to the extent that such enforceability
may be limited by applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and other similar laws affecting creditors' rights
generally and by general equitable principles (whether considered in a
proceeding in equity or at law).
(k) The Recapitalization Agreement has been duly authorized,
executed and delivered by Holdings and constitutes a valid and legally binding
agreement of Holdings enforceable against Holdings in accordance with its terms,
except to the extent that such enforceability may be limited by applicable
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and
other similar laws affecting creditors' rights generally and by general
equitable principles (whether considered in a proceeding in equity or at law).
(l) Each Transaction Document conforms in all material respects to
the description thereof contained in the Offering Memorandum.
(m) The execution, delivery and performance by each of the Issuers
and each of their respective subsidiaries of each of the Transaction Documents
to which each is a party, the issuance, authentication, sale and delivery of the
Securities and compliance by the applicable Issuer with the terms thereof and
the consummation of the transactions contemplated by the Transaction Documents
will not conflict with or contravene, or result in the creation or imposition of
any lien, charge or encumbrance upon any property or assets of either of the
Issuers or any of their respective subsidiaries pursuant to, (i) the
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charter or by-laws of either of the Issuers, (ii) any agreement or other
instrument binding upon either of the Issuers or any of their respective
subsidiaries or their respective assets or (iii) any provision of applicable law
or any judgment, order or decree of any governmental body, agency or court
having jurisdiction over either of the Issuers or any of their respective
subsidiaries or their respective assets, except, in the case of clause (ii) and
(iii), for conflicts, contraventions, liens, charges or encumbrances which would
not, singularly or in the aggregate, have a Material Adverse Effect. No consent,
approval, authorization or order of, or qualification with, any governmental
body or agency is required for the execution, delivery and performance by each
of the Issuers of each of the Transaction Documents to which each is a party,
the issuance, authentication, sale and delivery of the Securities and compliance
by the applicable Issuer with the terms thereof and the consummation of the
transactions contemplated by the Transaction Documents, except for such
consents, approvals, authorizations or qualifications (i) which shall have been
obtained or made prior to the Closing Date, (ii) as may be required to be
obtained or made under the Securities Act as provided in the Registration Rights
Agreements and under applicable state securities laws and (iii) the failure to
obtain would not, singularly or in the aggregate, have a Material Adverse
Effect.
(n) Xxxxxxx & Xxxxxxx L.L.P. are independent certified public
accountants with respect to each of the Issuers and their respective
subsidiaries within the meaning of Rule 101 of the Code of Professional Conduct
of the American Institute of Certified Public Accountants ("AICPA") and its
interpretations and rulings thereunder. The historical financial statements
(including the related notes) contained in the Offering Memorandum have been
prepared in accordance with generally accepted accounting principles
consistently applied throughout the periods covered thereby and fairly present
the financial position of the entities purported to be covered thereby at the
respective dates indicated and the results of their operations and their cash
flows for the respective periods indicated; and the financial information
contained in the Offering Memorandum under the headings "Selected Historical
Consolidated Financial Data", "Management's Discussion and Analysis of Financial
Condition and Results of Operations" and "Management--Executive Compensation"
are derived from the accounting records of the Issuers and their respective
subsidiaries and fairly present the information purported to be shown thereby.
The pro forma financial information contained in the Offering Memorandum has
been prepared on a basis consistent with the historical financial statements
contained in the Offering Memorandum (except as specified therein), includes all
material adjustments to the historical financial information required by Rule
11-02 of Regulation S-X under the Securities Act and the Exchange Act to reflect
the transactions described in the Offering Memorandum, gives effect to
assumptions made on a reasonable basis and fairly presents the historical and
proposed transactions contemplated by the Offering Memorandum and the
Transaction Documents.
(o) There are no legal or governmental proceedings pending or, to
the knowledge of the Issuers, threatened to which either of the Issuers or any
of their respective subsidiaries is a party or to which any property or assets
of either of the Issuers or any of their respective subsidiaries is subject
other than proceedings that could not, singularly or in the aggregate,
reasonably be expected to have a Material Adverse Effect or have a material
adverse effect on the power or ability of either of the Issuers or any of their
respective subsidiaries to perform its obligations under the applicable
Transaction Documents or to consummate the transactions contemplated by the
applicable Transaction Documents or the Offering Memorandum.
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(p) No action has been taken by either of the Issuers or their
respective subsidiaries and no statute, rule, regulation or order has been
enacted, adopted or issued by any governmental agency or body which prevents the
issuance of the Securities or suspends the sale of the Securities in any
jurisdiction; no injunction, restraining order or order of any nature by any
federal or state court of competent jurisdiction has been issued with respect to
either of the Issuers or any of their respective subsidiaries which would
prevent or suspend the issuance or sale of the Securities or the use of the
Preliminary Offering Memorandum or the Offering Memorandum in any jurisdiction;
no action, suit or proceeding is pending against or, to the knowledge of the
Issuers, threatened against or affecting either of the Issuers or any of their
respective subsidiaries before any court or arbitrator or any governmental
agency, body or official, domestic or foreign, which could reasonably be
expected to interfere with or adversely affect the issuance of the Securities or
in any manner draw into question the validity or enforceability of any of the
Transaction Documents or any action taken or to be taken pursuant thereto; and
each of the Issuers has complied with any and all requests by any securities
authority in any jurisdiction for additional information to be included in the
Preliminary Offering Memorandum and the Offering Memorandum.
(q) None of the Issuers or any of their respective "significant
subsidiaries" (within the meaning of Rule 1-02 of Regulation S-X) is (i) in
violation of its charter or by-laws, (ii) in default in any respect, and no
event has occurred which, with notice or lapse of time or both, would constitute
such a default, in the due performance or observance of any term, covenant or
condition contained in any indenture, mortgage, deed of trust, loan agreement or
other agreement or instrument to which it is a party or by which it is bound or
to which any of its property or assets is subject or (iii) in violation in any
respect of any law, ordinance, governmental rule, regulation or court decree to
which it or its property or assets may be subject, except, in the case of
clauses (ii) or (iii), as would not have a Material Adverse Effect.
(r) Except as would not, singularly or in the aggregate, have a
Material Adverse Effect, each of the Issuers and each of their respective
subsidiaries possesses all licenses, certificates, authorizations and permits
issued by, and has made all declarations and filings with, the appropriate
federal, state or foreign regulatory agencies or bodies which are necessary or
desirable for the ownership of its properties or the conduct of its business as
described in the Offering Memorandum, and none of the Issuers or any of their
respective subsidiaries has received notification of any revocation or
modification of any such license, certificate, authorization or permit or has
any reason to believe that any such license, certificate, authorization or
permit will not be renewed in the ordinary course.
(s) Each of the Issuers and each of their respective subsidiaries
has filed all federal, state, local and foreign income and franchise tax returns
required to be filed through the date hereof and has paid all taxes due thereon,
and no tax deficiency has been determined adversely to either of the Issuers or
any of their respective subsidiaries which has had (nor do the Issuers or any of
their respective subsidiaries have any knowledge of any tax deficiency which, if
determined adversely to either of the Issuers or any of their respective
subsidiaries, could reasonably be expected to have) a Material Adverse Effect.
(t) Neither of the Issuers is and, after giving effect to the
offering and sale of the applicable Securities and the application of the
proceeds thereof as described in the Offering Memorandum, will be an "investment
company" or an entity "controlled by" an
8
investment company within the meaning of the Investment Company Act of 1940, as
amended (the "Investment Company Act"), and the rules and regulations of the
Commission thereunder.
(u) Each of the Issuers and each of their respective subsidiaries
has insurance covering its properties, operations, personnel and business, which
insurance is in amounts and insures against such losses and risks as are
adequate to protect each of the Issuers and each of their respective
subsidiaries and each of their respective businesses.
(v) Each of the Issuers and each of their respective subsidiaries
has good and marketable title in fee simple to, or has valid rights to lease or
otherwise use, all items of real and personal property which are material to the
business of each of the Issuers and their respective subsidiaries, in each case
free and clear of all liens, encumbrances, claims and defects and imperfections
of title except such as (i) do not materially interfere with the use made and
proposed to be made of such property by the applicable Issuer and its
subsidiaries or (ii) could not reasonably be expected to have a Material Adverse
Effect.
(w) No labor disturbance by or dispute with the employees of either
of the Issuers or any of their respective subsidiaries exists or, to the best
knowledge of the Issuers, is contemplated or threatened, except as would not
have a Material Adverse Effect.
(x) No "prohibited transaction" (as defined in Section 406 of the
Employee Retirement Income Security Act of 1974, as amended, including the
regulations and published interpretations thereunder ("ERISA"), or Section 4975
of the Internal Revenue Code of 1986, as amended from time to time (the "Code"))
or "accumulated funding deficiency" (as defined in Section 302 of ERISA) or any
of the events set forth in Section 4043(b) of ERISA (other than events with
respect to which the 30-day notice requirement under Section 4043 of ERISA has
been waived) has occurred with respect to any employee benefit plan of either of
the Issuers or any of their respective subsidiaries which could reasonably be
expected to have a Material Adverse Effect; each such employee benefit plan is
in compliance in all respects with applicable law, including ERISA and the Code,
except as would not have a Material Adverse Effect; each of the Issuers and each
of their respective subsidiaries has not incurred and does not expect to incur
liability under Title IV of ERISA with respect to the termination of, or
withdrawal from, any pension plan for which the applicable Issuer or any of its
subsidiaries would have any liability, except as would not have a Material
Adverse Effect; and each such pension plan that is intended to be qualified
under Section 401(a) of the Code is so qualified in all respects and nothing has
occurred, whether by action or by failure to act, which could reasonably be
expected to cause the loss of such qualification, except as would not have a
Material Adverse Effect.
(y) Except as described in the Offering Memorandum, there are no
costs or liabilities of either of the Issuers or any of their respective
subsidiaries associated with or arising from the application of 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")
(including, without limitation, any capital or operating expenditures required
for clean-up, closure of properties or compliance with any Environmental Laws or
any permits, licenses or other approvals required of either of the
9
Issuers or any of their respective subsidiaries under applicable Environmental
Laws to conduct its business, any related constraints on operating activities
and any potential liabilities to third parties, including governmental
authorities) which would, singularly or in the aggregate, have a Material
Adverse Effect.
(z) On and immediately after the Closing Date, each of the Issuers
(after giving effect to the issuance of the applicable Securities and to the
other transactions related thereto as described in the Offering Memorandum) will
be Solvent. As used in this paragraph, the term "Solvent" means, with respect to
a particular date, that on such date (i) the present fair market value (or
present fair saleable value) of the assets of each of the Issuers is not less
than the total amount required to pay the probable liabilities of each of the
Issuers on its total existing debts and liabilities (including contingent
liabilities) as they become absolute and matured, (ii) each of the Issuers is
able to realize upon its assets and pay its debts and other liabilities,
contingent obligations and commitments as they mature and become due in the
normal course of business, (iii) assuming the sale of the applicable Securities
as contemplated by this Agreement and the Offering Memorandum, each of the
Issuers is not incurring debts or liabilities beyond its ability to pay as such
debts and liabilities mature; and (iv) each of the Issuers is not engaged in any
business or transaction, and is not about to engage in any business or
transaction, for which its property would constitute unreasonably small capital
after giving due consideration to the prevailing practice in the industry in
which each of the Issuers is engaged. In computing the amount of such contingent
liabilities at any time, it is intended that such liabilities will be computed
at the amount that, in the light of all the facts and circumstances existing at
such time, represents the amount that can reasonably be expected to become an
actual or matured liability.
(aa) None of the Issuers or any of their respective subsidiaries
owns any "margin securities" as that term is defined in Regulation U of the
Board of Governors of the Federal Reserve System (the "Federal Reserve Board"),
and none of the proceeds of the sale of the Securities will be used, directly or
indirectly, for the purpose of purchasing or carrying any margin security, for
the purpose of reducing or retiring any indebtedness which was originally
incurred to purchase or carry any margin security or for any other purpose which
might cause any of the Securities to be considered a "purpose credit" within the
meanings of Regulation T, U or X of the Federal Reserve Board.
(bb) The Securities satisfy the eligibility requirements of Rule
144A(d)(3) under the Securities Act.
(cc) None of the Issuers, any of their respective affiliates or any
person acting on their behalf (other than the Initial Purchasers) has engaged or
will engage in any directed selling efforts (as such term is defined in
Regulation S under the Securities Act ("Regulation S")) with respect to the
Securities, and all such persons have complied and will comply with the offering
restrictions requirement of Regulation S to the extent applicable.
(dd) None of the Issuers or any of their respective affiliates has,
directly or through any agent, (i) sold, offered for sale, solicited offers to
buy or otherwise negotiated in respect of, any security (as such term is defined
in the Securities Act), which is or will be integrated with the sale of the
Securities in a manner that would require registration of the Securities under
the Securities Act or (ii) engaged, in
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connection with the offering of the Securities, in any form of general
solicitation or general advertising within the meaning of Rule 502(c) under the
Securities Act or in any manner involving a public offering within the meaning
of Section 4(2) of the Securities Act.
(ee) Neither of the Issuers has taken or will take, directly or
indirectly, any action prohibited by Regulation M under the Exchange Act in
connection with the offering of the applicable Securities.
(ff) No forward-looking statement (within the meaning of Section 27A
of the Securities Act and Section 21E of the Exchange Act) contained in the
Preliminary Offering Memorandum or the Offering Memorandum has been made or
reaffirmed without a reasonable basis or has been disclosed other than in good
faith.
(gg) Each of the Issuers and each of their respective subsidiaries
has complied with all provisions of Section 517.075, Florida Statutes (Chapter
92-198, Laws of Florida) relating to doing business with the Government of Cuba
or with any person or affiliate located in Cuba.
(hh) Since the date as of which information is given in the Offering
Memorandum, except as otherwise stated therein, there has been no material
adverse change or any development involving a prospective material adverse
change in the condition, financial or otherwise, or in the earnings, business
affairs, management or business prospects of either of the Issuers, whether or
not arising in the ordinary course of business.
2. Purchase and Resale of the Securities. (a) On the basis of the
representations, warranties and agreements contained herein, and subject to the
terms and conditions set forth herein, the Issuers agree to issue and sell to
each of the Initial Purchasers, severally and not jointly, and each of the
Initial Purchasers, severally and not jointly, agrees to purchase from the
Issuers, the principal amount of Securities set forth opposite the name of such
Initial Purchaser on Schedule 1 hereto at a purchase price equal to (i) 96.175%
of the principal amount thereof for the Senior Subordinated Notes and (ii)
55.990% of the principal amount at maturity thereof for the Senior Discount
Notes. The Issuers shall not be obligated to deliver any of the Securities
except upon payment for all of the Securities to be purchased as provided
herein.
(b) The Initial Purchasers have advised the Issuers that they
propose to offer the Securities for resale upon the terms and subject to the
conditions set forth herein and in the Offering Memorandum. Each Initial
Purchaser, severally and not jointly, represents, warrants and agrees that (i)
it is a Qualified Institutional Buyer (as defined below), (ii) it is purchasing
the Securities pursuant to a private sale exempt from registration under the
Securities Act, (iii) it has not solicited offers for, or offered or sold, and
will not solicit offers for, or offer or sell, the Securities by means of any
form of general solicitation or general advertising within the meaning of Rule
502(c) of Regulation D under the Securities Act ("Regulation D") or in any
manner involving a public offering within the meaning of Section 4(2) of the
Securities Act and (iv) it has solicited and will solicit offers for the
Securities only from, and has offered or sold and will offer, sell or deliver
the Securities, as part of their initial offering, only (A) within the United
States to persons whom it reasonably believes to be qualified institutional
buyers ("Qualified Institutional Buyers"), as defined in Rule 144A under the
Securities
11
Act ("Rule 144A"), or if any such person is buying for one or more institutional
accounts for which such person is acting as fiduciary or agent, only when such
person has represented to it that each such account is a Qualified Institutional
Buyer to whom notice has been given that such sale or delivery is being made in
reliance on Rule 144A and in each case, in transactions in accordance with Rule
144A and (B) outside the United States to persons other than U.S. persons in
reliance on Regulation S under the Securities Act ("Regulation S").
(c) In connection with the offer and sale of Securities in reliance
on Regulation S, each Initial Purchaser, severally and not jointly, represents,
warrants and agrees that:
(i) the Securities have not 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 pursuant to an exemption from,
or in transactions not subject to, the registration requirements of the
Securities Act.
(ii) such Initial Purchaser has offered and sold the Securities, and
will offer and sell the Securities, (A) as part of its distribution at any
time and (B) otherwise until 40 days after the later of the commencement
of the offering of the Securities and the Closing Date, only in accordance
with Regulation S or Rule 144A or any other available exemption from
registration under the Securities Act.
(iii) none of such Initial Purchaser or any of its affiliates or any
other person acting on its or their behalf has engaged or will engage in
any directed selling efforts with respect to the Securities, and all such
persons have complied and will comply with the offering restriction
requirements of Regulation S.
(iv) at or prior to the confirmation of sale of any Securities sold
in reliance on Regulation S, it will have sent to each distributor, dealer
or other person receiving a selling concession, fee or other remuneration
that purchases Securities from it during the restricted period a
confirmation or notice to substantially the following effect:
"The Securities covered hereby have not been registered under the
U.S. Securities Act of 1933, as amended (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 (i) as part of their
distribution at any time or (ii) otherwise until 40 days after the
later of the commencement of the offering of the Securities and the
date of original issuance of the Securities, except in accordance
with Regulation S or Rule 144A or any other available exemption from
registration under the Securities Act. Terms used above have the
meanings given to them by Regulation S."
(v) it has not and will not enter into any contractual arrangement
with any distributor with respect to the distribution of the Securities,
except with its affiliates or with the prior written consent of the
Issuers
Terms used in this Section 2(c) have the meanings given to them by
Regulation S.
12
(d) Each Initial Purchaser, severally and not jointly, represents,
warrants and agrees that (i) it has not offered or sold and prior to the date
six months after the Closing Date will not offer or sell any 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; (ii) it has complied and will comply with all
applicable provisions of the Financial Services Act 1986 and the Public Offers
of Securities Regulations 1995 with respect to anything done by it in relation
to the Securities in, from or otherwise involving the United Kingdom; and (iii)
it has 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 Act 1986 (Investment Advertisements) (Exemptions) Order 1996
or is a person to whom such document may otherwise lawfully be issued or passed
on.
(e) Each Initial Purchaser, severally and not jointly, agrees that,
prior to or simultaneously with the confirmation of sale by such Initial
Purchaser to any purchaser of any of the Securities purchased by such Initial
Purchaser from the Issuers pursuant hereto, such Initial Purchaser shall furnish
to that purchaser a copy of the Offering Memorandum (and any amendment or
supplement thereto that the Issuers shall have furnished to such Initial
Purchaser prior to the date of such confirmation of sale). In addition to the
foregoing, each Initial Purchaser acknowledges and agrees that the Issuers and,
for purposes of the opinions to be delivered to the Initial Purchasers pursuant
to Sections 5(d) and (e), counsel for the Issuers and for the Initial
Purchasers, respectively, may rely upon the accuracy of the representations and
warranties of the Initial Purchasers and their compliance with their agreements
contained in this Section 2, and each Initial Purchaser hereby consents to such
reliance.
(f) Each of the Issuers acknowledges and agrees that the Initial
Purchasers may sell Securities to any affiliate of an Initial Purchaser and that
any such affiliate may sell Securities purchased by it to an Initial Purchaser.
3. Delivery of and Payment for the Securities. (a) Delivery of and
payment for the Securities shall be made at the offices of Xxxxxxx Xxxxxxx &
Xxxxxxxx, New York, New York, or at such other place as shall be agreed upon by
the Initial Purchasers and the Issuers, at 10:00 A.M., New York City time, on
June 5, 1998, or at such other time or date, not later than seven full business
days thereafter, as shall be agreed upon by the Initial Purchasers and the
Issuers (such date and time of payment and delivery being referred to herein as
the "Closing Date").
(b) On the Closing Date, payment of the purchase price for the
Securities shall be made to the Issuers by wire or book-entry transfer of
same-day funds to such account or accounts as the Issuers shall specify prior to
the Closing Date or by such other means as the parties hereto shall agree prior
to the Closing Date against delivery to the Initial Purchasers of the
certificates evidencing the Securities. Time shall be of the essence, and
delivery at the time and place specified pursuant to this Agreement is a further
condition of the obligations of the Initial Purchasers hereunder. Upon delivery,
the Securities shall be in global form, registered in such names and in such
denominations as CSI on behalf of the Initial Purchasers shall have requested in
writing not less than two full business days prior to the Closing Date. The
Issuers agree to make
13
global certificates evidencing the Securities available for inspection by CSI on
behalf of the Initial Purchasers in New York, New York at least 24 hours prior
to the Closing Date.
4. Further Agreements of the Issuers. Each of the Issuers agrees
with each of the several Initial Purchasers:
(a) to advise the Initial Purchasers promptly and, if requested,
confirm such advice in writing, of the happening of any event which makes any
statement of a material fact made in the Offering Memorandum untrue or which
requires the making of any additions to or changes in the Offering Memorandum
(as amended or supplemented from time to time) in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading; to advise the Initial Purchasers promptly of any order preventing or
suspending the use of the Preliminary Offering Memorandum or the Offering
Memorandum, of any suspension of the qualification of the Securities for
offering or sale in any jurisdiction and of the initiation or threatening of any
proceeding for any such purpose; and to use its reasonable best efforts to
prevent the issuance of any such order preventing or suspending the use of the
Preliminary Offering Memorandum or the Offering Memorandum or suspending any
such qualification and, if any such suspension is issued, to obtain the lifting
thereof at the earliest possible time;
(b) to furnish promptly to each of the Initial Purchasers and
counsel for the Initial Purchasers, without charge, as many copies of the
Offering Memorandum (and any amendments or supplements thereto) as may be
reasonably requested;
(c) prior to making any amendment or supplement to the Offering
Memorandum, to furnish a copy thereof to each of the Initial Purchasers and
counsel for the Initial Purchasers and not to effect any such amendment or
supplement to which the Initial Purchasers shall reasonably object by notice to
the Issuers after a reasonable period to review;
(d) if, at any time prior to completion of the resale of the
Securities by the Initial Purchasers, any event shall occur or condition exist
as a result of which it is necessary, in the opinion of counsel for the Initial
Purchasers or counsel for the Issuers, to amend or supplement the Offering
Memorandum in order that the Offering Memorandum will not include an untrue
statement of a material fact or omit to state a material fact necessary in order
to make the statements therein, in the light of the circumstances existing at
the time it is delivered to a purchaser, not misleading, or if it is necessary
to amend or supplement the Offering Memorandum to comply with applicable law, to
promptly prepare such amendment or supplement as may be necessary to correct
such untrue statement or omission or so that the Offering Memorandum, as so
amended or supplemented, will comply with applicable law;
(e) for so long as the Securities are outstanding and are
"restricted securities" within the meaning of Rule 144(a)(3) under the
Securities Act, to furnish to holders of the Securities and prospective
purchasers of the Securities designated by such holders, upon request of such
holders or such prospective purchasers, the information required to be delivered
pursuant to Rule 144A(d)(4) under the Securities Act, unless the Issuers are
then subject to and in compliance with Section 13 or 15(d) of the Exchange Act
(the foregoing agreement being for the benefit of the holders from time to time
of the Securities and prospective purchasers of the Securities designated by
such holders);
14
(f) to promptly take from time to time such actions as the Initial
Purchasers may reasonably request to qualify the Securities for offering and
sale under the securities or Blue Sky laws of such jurisdictions as the Initial
Purchasers may designate and to continue such qualifications in effect for so
long as required for the resale of the Securities; and to arrange for the
determination of the eligibility for investment of the Securities under the laws
of such jurisdictions as the Initial Purchasers may reasonably request; provided
that none of the Issuers or any of their respective subsidiaries shall be
obligated to qualify as foreign corporations in any jurisdiction in which they
are not so qualified or to file a general consent to service of process in any
jurisdiction or to take any action which would subject it to taxation in any
jurisdiction where it is not then so subject;
(g) to assist the Initial Purchasers in arranging for the Securities
to be designated Private Offerings, Resales and Trading through Automated
Linkages ("PORTAL") Market securities in accordance with the rules and
regulations adopted by the National Association of Securities Dealers, Inc.
("NASD") relating to trading in the PORTAL Market and for the Securities to be
eligible for clearance and settlement through The Depository Trust Company
("DTC");
(h) not to, and to cause its affiliates not to, sell, offer for sale
or solicit offers to buy or otherwise negotiate in respect of any security (as
such term is defined in the Securities Act) which could be integrated with the
sale of the Securities in a manner which would require registration of the
Securities under the Securities Act;
(i) except following the effectiveness of the applicable Exchange
Offer Registration Statement or the applicable Shelf Registration Statement, as
the case may be, not to, and to cause its affiliates not to, and not to
authorize or knowingly permit any person acting on their behalf to, solicit any
offer to buy or offer to sell the applicable Securities by means of any form of
general solicitation or general advertising within the meaning of Regulation D
or in any manner involving a public offering within the meaning of Section 4(2)
of the Securities Act; and not to offer, sell, contract to sell or otherwise
dispose of, directly or indirectly, any securities under circumstances where
such offer, sale, contract or disposition would cause the exemption afforded by
Section 4(2) of the Securities Act to cease to be applicable to the offering and
sale of the Securities as contemplated by this Agreement and the Offering
Memorandum;
(j) for a period of 90 days from the date of the Offering
Memorandum, not to offer for sale, sell, contract to sell or otherwise dispose
of, directly or indirectly, or file a registration statement for, or announce
any offer, sale, contract for sale of or other disposition of any debt
securities issued or guaranteed by such Issuer or any of its subsidiaries (other
than the applicable Securities) without the prior written consent of the Initial
Purchasers;
(k) in connection with the offering of the Securities, until CSI on
behalf of the Initial Purchasers shall have notified the Issuers of the
completion of the resale of the Securities, not to, and to cause their
affiliated purchasers (as defined in Regulation M under the Exchange Act) not
to, either alone or with one or more other persons, bid for or purchase, for any
account in which they or any of their affiliated purchasers has a beneficial
interest, any Securities, or attempt to induce any person to purchase any
Securities; and not to, and to cause their affiliated purchasers not to, make
bids or
15
purchase for the purpose of creating actual, or apparent, active trading in or
of raising the price of the Securities;
(l) to apply the net proceeds from the sale of the applicable
Securities as set forth in the Offering Memorandum under the heading "Use of
Proceeds".
5. Conditions of Initial Purchasers' Obligations. The respective
obligations of the several Initial Purchasers hereunder are subject to the
accuracy, on and as of the date hereof and the Closing Date, of the
representations and warranties of each of the Issuers contained herein, to the
accuracy of the statements of each of the Issuers and their respective officers
made in any certificates delivered pursuant hereto, to the performance by each
of the Issuers of their respective obligations hereunder, and to each of the
following additional terms and conditions:
(a) The Offering Memorandum (and any amendments or supplements
thereto) shall have been printed and copies distributed to the Initial
Purchasers as promptly as practicable on or following the date of this Agreement
or at such other date and time as to which the Initial Purchasers may agree.
(b) None of the Initial Purchasers shall have discovered and
disclosed to either Issuer on or prior to the Closing Date that the Offering
Memorandum or any amendment or supplement thereto contains an untrue statement
of a fact which, in the opinion of counsel for the Initial Purchasers, is
material or omits to state any fact which, in the opinion of such counsel, is
material and is required to be stated therein or is necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading.
(c) All corporate proceedings and other legal matters incident to
the authorization, form and validity of each of the Transaction Documents and
the Offering Memorandum, and all other legal matters relating to the Transaction
Documents and the transactions contemplated thereby, shall be satisfactory in
all material respects to the Initial Purchasers, and the Issuers shall have
furnished to the Initial Purchasers all documents and information that they or
their counsel may reasonably request to enable them to pass upon such matters.
(d) Xxxxxxx Xxxxxxx & Xxxxxxxx and Xxxxxxx X. Xxxxx shall have
furnished to the Initial Purchasers their written opinions, as counsel to the
Issuers, addressed to the Initial Purchasers and dated the Closing Date, in form
and substance reasonably satisfactory to the Initial Purchasers, substantially
to the effect set forth in Annex C-1 and Annex C-2 hereto.
(e) The Initial Purchasers shall have received from Cravath, Swaine
& Xxxxx, counsel for the Initial Purchasers, such opinion or opinions, dated the
Closing Date, with respect to such matters as the Initial Purchasers may
reasonably require, and the Issuers shall have furnished to such counsel such
documents and information as they request for the purpose of enabling them to
pass upon such matters.
(f) The Issuers shall have furnished to the Initial Purchasers a
letter (the "Initial Letter") of Coopers & Xxxxxxx L.L.P., addressed to the
Initial Purchasers and dated the date hereof, in form and substance satisfactory
to the Initial Purchasers, substantially to the effect set forth in Annex D
hereto.
16
(g) The Issuers shall have furnished to the Initial Purchasers a
letter (the "Bring-Down Letter") of Xxxxxxx & Xxxxxxx L.L.P., addressed to the
Initial Purchasers and dated the Closing Date (i) confirming that they are
independent public accountants with respect to each of the Issuers and their
respective subsidiaries within the meaning of Rule 101 of the Code of
Professional Conduct of the AICPA and its interpretations and rulings
thereunder, (ii) stating, as of the date of the Bring-Down Letter (or, with
respect to matters involving changes or developments since the respective dates
as of which specified financial information is given in the Offering Memorandum,
as of a date not more than three business days prior to the date of the
Bring-Down Letter), that the conclusions and findings of such accountants with
respect to the financial information and other matters covered by the Initial
Letter are accurate and (iii) confirming in all material respects the
conclusions and findings set forth in the Initial Letter.
(h) Each of the Issuers shall have furnished to the Initial
Purchasers a certificate, dated the Closing Date, of its chief executive officer
and its chief financial officer stating that (A) such officers have carefully
examined the Offering Memorandum, (B) in their opinion, the Offering Memorandum,
as of its date, did not include any untrue statement of a material fact and did
not omit to state a material fact required to be stated therein or necessary in
order to make the statements therein, in the light of the circumstances under
which they were made, not misleading, and since the date of the Offering
Memorandum, no event has occurred which should have been set forth in a
supplement or amendment to the Offering Memorandum so that the Offering
Memorandum (as so amended or supplemented) would not include any untrue
statement of a material fact and would not omit to state a material fact
required to be stated therein or necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading, (C) as of the Closing Date, the representations and warranties of
each of the Issuers in this Agreement are true and correct in all material
respects, each of the Issuers has complied in all material respects with all
agreements and satisfied in all material respects all conditions on its part to
be performed or satisfied hereunder on or prior to the Closing Date, and (D)
subsequent to the date of the most recent financial statements contained in the
Offering Memorandum, there has been no material adverse change in the financial
position or results of operation of either of the Issuers or any of their
respective subsidiaries, or any change, or any development including a
prospective change, in or affecting the condition (financial or otherwise),
results of operations, business or prospects of the Issuers and their respective
subsidiaries taken as a whole.
(i) The Initial Purchasers shall have received a counterpart of each
of the Registration Rights Agreements which shall have been executed and
delivered by a duly authorized officer of the Issuers, as applicable.
(j) The Senior Subordinated Notes Indenture shall have been duly
executed and delivered by the Company, Holdings and the Senior Subordinated
Notes Trustee, and the Senior Subordinated Notes shall have been duly executed
and delivered by the Company and duly authenticated by the Senior Subordinated
Notes Trustee. The Senior Discount Notes Indenture shall have been duly executed
and delivered by Holdings and the Senior Discount Notes Trustee, and the Senior
Discount Notes shall have been duly executed and delivered by Holdings and duly
authenticated by the Senior Discount Notes Trustee.
17
(k) The Securities shall have been approved by the NASD for trading
in the PORTAL Market.
(l) If any event shall have occurred that requires the Issuers under
Section 4(d) to prepare an amendment or supplement to the Offering Memorandum,
such amendment or supplement shall have been prepared, the Initial Purchasers
shall have been given a reasonable opportunity to comment thereon, and copies
thereof shall have been delivered to the Initial Purchasers reasonably in
advance of the Closing Date.
(m) There shall not have occurred any invalidation of Rule 144A
under the Securities Act by any court or any withdrawal or proposed withdrawal
of any rule or regulation under the Securities Act or the Exchange Act by the
Commission or any amendment or proposed amendment thereof by the Commission
which in the judgment of the Initial Purchasers would materially impair the
ability of the Initial Purchasers to purchase, hold or effect resales of the
Securities as contemplated hereby.
(n) Subsequent to the execution and delivery of this Agreement or,
if earlier, the dates as of which information is given in the Offering
Memorandum (exclusive of any amendment or supplement thereto), there shall not
have been any change in the capital stock or long-term debt or any change, or
any development involving a prospective change, in or affecting the condition
(financial or otherwise), results of operations, business or prospects of the
Issuers and their respective subsidiaries taken as a whole, the effect of which,
in any such case described above, is, in the judgment of the Initial Purchasers,
so material and adverse as to make it impracticable or inadvisable to proceed
with the sale or delivery of the Securities on the terms and in the manner
contemplated by this Agreement and the Offering Memorandum (exclusive of any
amendment or supplement thereto).
(o) No action shall have been taken and no statute, rule, regulation
or order shall have been enacted, adopted or issued by any governmental agency
or body which would, as of the Closing Date, prevent the issuance or sale of the
Securities; and no injunction, restraining order or order of any other nature by
any federal or state court of competent jurisdiction shall have been issued as
of the Closing Date which would prevent the issuance or sale of the Securities.
(p) Subsequent to the execution and delivery of this Agreement (i)
no downgrading shall have occurred in the rating accorded the Securities or any
of the Issuers' other debt securities or preferred stock by any "nationally
recognized statistical rating organization", as such term is defined by the
Commission for purposes of Rule 436(g)(2) of the rules and regulations of the
Commission under the Securities Act and (ii) no such organization shall have
publicly announced that it has under surveillance or review (other than an
announcement with positive implications of a possible upgrading), its rating of
the Securities or any of the Issuers' other debt securities or preferred stock.
(q) Subsequent to the execution and delivery of this Agreement there
shall not have occurred any of the following: (i) trading in securities
generally on the New York Stock Exchange, the American Stock Exchange or the
over-the-counter market shall have been suspended or limited, or minimum prices
shall have been established on any such exchange or market by the Commission, by
any such exchange or by any other regulatory body or governmental authority
having jurisdiction, or trading in any securities of either of the Issuers on
any exchange or in the over-the-counter
18
market shall have been suspended or (ii) any moratorium on commercial banking
activities shall have been declared by federal or New York state authorities or
(iii) an outbreak or escalation of hostilities or a declaration by the United
States of a national emergency or war or (iv) a material adverse change in
general economic, political or financial conditions (or the effect of
international conditions on the financial markets in the United States shall be
such) the effect of which, in the case of this clause (iv), is, in the judgment
of the Initial Purchasers, so material and adverse as to make it impracticable
or inadvisable to proceed with the sale or the delivery of the Securities on the
terms and in the manner contemplated by this Agreement and in the Offering
Memorandum (exclusive of any amendment or supplement thereto).
(r) All conditions to the consummation of the Recapitalization
(including, without limitation, the execution of the Credit Agreement and the
Receivables Agreements), other than the offering of the Securities, shall have
been satisfied and the Recapitalization shall be consummated substantially
concurrently with the sale of the Securities hereunder. The initial funding
under the Credit Agreement and the Receivables Agreements shall occur
substantially concurrently with the sale of the Securities hereunder and all
conditions thereto shall have been satisfied.
All opinions, letters, evidence and certificates mentioned above or
elsewhere in this Agreement shall be deemed to be in compliance with the
provisions hereof only if they are in form and substance reasonably satisfactory
to counsel for the Initial Purchasers.
6. Termination. The obligations of the Initial Purchasers hereunder
may be terminated by the Initial Purchasers, in their absolute discretion, by
notice given to and received by the Issuers prior to delivery of and payment for
the Securities if, prior to that time, any of the events described in Section
5(m), (n), (o), (p) or (q) shall have occurred and be continuing.
7. Defaulting Initial Purchasers. (a) If, on the Closing Date, any
Initial Purchaser defaults in the performance of its obligations under this
Agreement, the non-defaulting Initial Purchasers may make arrangements for the
purchase of the Securities which such defaulting Initial Purchaser agreed but
failed to purchase by other persons satisfactory to the Issuers and the
non-defaulting Initial Purchasers, but if no such arrangements are made within
36 hours after such default, this Agreement shall terminate without liability on
the part of the non-defaulting Initial Purchasers or the Issuers, except that
the Issuers will continue to be liable for the payment of expenses to the extent
set forth in Section 12 and except that the provisions of Sections 9 and 10
shall not terminate and shall remain in effect. As used in this Agreement, the
term "Initial Purchasers" includes, for all purposes of this Agreement unless
the context otherwise requires, any party not listed in Schedule 1 hereto that,
pursuant to this Section 7, purchases Securities which a defaulting Initial
Purchaser agreed but failed to purchase.
(b) Nothing contained herein shall relieve a defaulting Initial
Purchaser of any liability it may have to the Issuers or any non-defaulting
Initial Purchaser for damages caused by its default. If other persons are
obligated or agree to purchase the Securities of a defaulting Initial Purchaser,
either the non-defaulting Initial Purchasers or the Issuers may postpone the
Closing Date for up to seven full business days in order to effect any changes
that in the opinion of counsel for the Issuers or counsel for the Initial
Purchasers may be necessary in the Offering Memorandum or in any other document
or
19
arrangement, and the Issuers agree to promptly prepare any amendment or
supplement to the Offering Memorandum that effects any such changes.
8. Reimbursement of Initial Purchasers' Expenses. If this Agreement
shall have been terminated pursuant to Section 7 or as a result of the
occurrence of any event described in Sections 5(m) or 5(q), the Issuers shall
not be under any liability to pay the expenses of the Initial Purchasers, except
as provided in Sections 9, 10 and 12. If the sale of the Securities is not
consummated for any other reason, the Issuers shall jointly and severally
reimburse the Initial Purchasers for such out-of-pocket expenses (including
reasonable fees and disbursements of counsel) as shall have been reasonably
incurred by the Initial Purchasers in connection with this Agreement and the
proposed purchase and resale of the Securities. If this Agreement is terminated
pursuant to Section 7 by reason of the default of one or more of the Initial
Purchasers, the Issuers shall not be obligated to reimburse any Initial
Purchaser on account of such expenses.
9. Indemnification. (a) Each of the Issuers shall jointly and
severally indemnify and hold harmless each Initial Purchaser, its affiliates,
their respective officers, directors, employees, representatives and agents, and
each person, if any, who controls any Initial Purchaser within the meaning of
the Securities Act or the Exchange Act (collectively referred to for purposes of
this Section 9(a) and Section 10 as an Initial Purchaser), from and against any
loss, claim, damage or liability, joint or several, or any action in respect
thereof (including, without limitation, any loss, claim, damage, liability or
action relating to purchases and sales of the Securities), to which that Initial
Purchaser may become subject, whether commenced or threatened, under the
Securities Act, the Exchange Act, any other federal or state statutory law or
regulation, at common law or otherwise, insofar as such loss, claim, damage,
liability or action arises out of, or is based upon, (i) any untrue statement or
alleged untrue statement of a material fact contained in the Preliminary
Offering Memorandum or the Offering Memorandum or in any amendment or supplement
thereto or in any information provided by the Issuers pursuant to Section 4(e)
or (ii) the omission or alleged omission to state therein a material fact
required to be stated therein or necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading, and shall reimburse each Initial Purchaser promptly upon demand for
any legal or other expenses reasonably incurred by that Initial Purchaser in
connection with investigating or defending or preparing to defend against or
appearing as a third party witness in connection with any such loss, claim,
damage, liability or action as such expenses are incurred; provided, however,
that neither of the Issuers shall be liable in any such case to the extent that
any such loss, claim, damage, liability or action arises out of, or is based
upon, an untrue statement or alleged untrue statement in or omission or alleged
omission from any of such documents in reliance upon and in conformity with any
Initial Purchasers' Information; and provided, further, that with respect to any
such untrue statement in or omission from the Preliminary Offering Memorandum,
the indemnity agreement contained in this Section 9(a) shall not inure to the
benefit of any such Initial Purchaser to the extent that the sale to the person
asserting any such loss, claim, damage, liability or action was an initial
resale by such Initial Purchaser and any such loss, claim, damage, liability or
action of or with respect to such Initial Purchaser results from the fact that
both (A) to the extent required by applicable law, a copy of the Offering
Memorandum was not sent or given to such person at or prior to the written
confirmation of the sale of such Securities to such person and (B) the untrue
statement in or omission from the Preliminary Offering Memorandum was corrected
in the Offering
20
Memorandum unless, in either case, such failure to deliver the Offering
Memorandum was a result of non-compliance by either of the Issuers with Section
4(b).
(b) Each Initial Purchaser, severally and not jointly, shall
indemnify and hold harmless each of the Issuers, its affiliates, their
respective officers, directors, employees, representatives and agents, and each
person, if any, who controls either of the Issuers within the meaning of the
Securities Act or the Exchange Act (collectively referred to for purposes of
this Section 9(b) and Section 10 as the Issuers), from and against any loss,
claim, damage or liability, joint or several, or any action in respect thereof,
to which the Issuers may become subject, whether commenced or threatened, under
the Securities Act, the Exchange Act, any other federal or state statutory law
or regulation, at common law or otherwise, insofar as such loss, claim, damage,
liability or action arises out of, or is based upon, (i) any untrue statement or
alleged untrue statement of a material fact contained in the Preliminary
Offering Memorandum or the Offering Memorandum or in any amendment or supplement
thereto or (ii) the omission or alleged omission to state therein a material
fact required to be stated therein or necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading, but in each case only to the extent that the untrue statement or
alleged untrue statement or omission or alleged omission was made in reliance
upon and in conformity with any Initial Purchasers' Information, and shall
reimburse the Issuers for any legal or other expenses reasonably incurred by the
Issuers in connection with investigating or defending or preparing to defend
against or appearing as a third party witness in connection with any such loss,
claim, damage, liability or action as such expenses are incurred.
(c) Promptly after receipt by an indemnified party under this
Section 9 of notice of any claim or the commencement of any action, the
indemnified party shall, if a claim in respect thereof is to be made against the
indemnifying party pursuant to Section 9(a) or 9(b), notify the indemnifying
party in writing of the claim or the commencement of that action; provided,
however, that the failure to notify the indemnifying party shall not relieve it
from any liability which it may have under this Section 9 except to the extent
that it has been materially prejudiced (through the forfeiture of substantive
rights or defenses) by such failure; and, provided, further, that the failure to
notify the indemnifying party shall not relieve it from any liability which it
may have to an indemnified party otherwise than under this Section 9. If any
such claim or action shall be brought against an indemnified party, and it shall
notify the indemnifying party thereof, the indemnifying party shall be entitled
to participate therein and, to the extent that it wishes, jointly with any other
similarly notified indemnifying party, to assume the defense thereof with
counsel reasonably satisfactory to the indemnified party. After notice from the
indemnifying party to the indemnified party of its election to assume the
defense of such claim or action, the indemnifying party shall not be liable to
the indemnified party under this Section 9 for any legal or other expenses
subsequently incurred by the indemnified party in connection with the defense
thereof other than reasonable costs of investigation; provided, however, that an
indemnified party shall have the right to employ its own counsel in any such
action, but the fees, expenses and other charges of such counsel for the
indemnified party will be at the expense of such indemnified party unless (1)
the employment of counsel by the indemnified party has been authorized in
writing by the indemnifying party, (2) the indemnified party has reasonably
concluded (based upon advice of counsel to the indemnified party) that there may
be legal defenses available to it or other indemnified parties that are
different from or in addition to those available to the indemnifying party, (3)
a conflict or potential
21
conflict exists (based upon advice of counsel to the indemnified party) between
the indemnified party and the indemnifying party (in which case the indemnifying
party will not have the right to direct the defense of such action on behalf of
the indemnified party) or (4) the indemnifying party has not in fact employed
counsel reasonably satisfactory to the indemnified party to assume the defense
of such action within a reasonable time after receiving notice of the
commencement of the action, in each of which cases the reasonable fees,
disbursements and other charges of counsel will be at the expense of the
indemnifying party or parties. It is understood that the indemnifying party or
parties shall not, in connection with any proceeding or related proceedings in
the same jurisdiction, be liable for the reasonable fees, disbursements and
other charges of more than one separate firm of attorneys (in addition to any
local counsel) at any one time for all such indemnified party or parties. Each
indemnified party, as a condition of the indemnity agreements contained in
Sections 9(a) and 9(b), shall use all reasonable efforts to cooperate with the
indemnifying party in the defense of any such action or claim. No indemnifying
party shall be liable for any settlement of any such action effected without its
written consent (which consent shall not be unreasonably withheld), but if
settled with its written consent or if there be a final judgment for the
plaintiff in any such action, the indemnifying party agrees to indemnify and
hold harmless any indemnified party from and against any loss or liability by
reason of such settlement or judgment. No indemnifying party shall, without the
prior written consent of the indemnified party (which consent shall not be
unreasonably withheld), 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.
The obligations of each of the Issuers and the Initial Purchasers in
this Section 9 and in Section 10 are in addition to any other liability that
either of the Issuers or the Initial Purchasers, as the case may be, may
otherwise have, including in respect of any breaches of representations,
warranties and agreements made herein by any such party.
10. Contribution. If the indemnification provided for in Section 9
is unavailable or insufficient to hold harmless an indemnified party under
Section 9(a) or 9(b), then each indemnifying party shall, in lieu of
indemnifying such indemnified party, contribute to the amount paid or payable by
such indemnified party as a result of such loss, claim, damage or liability, or
action in respect thereof, (i) in such proportion as shall be appropriate to
reflect the relative benefits received by the Issuers on the one hand and the
Initial Purchasers on the other from the offering of the Securities or (ii) if
the allocation provided by clause (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 (i) above but also the relative fault of the Issuers on
the one hand and the Initial Purchasers on the other with respect to the
statements or omissions that resulted in such loss, claim, damage or liability,
or action in respect thereof, as well as any other relevant equitable
considerations. The relative benefits received by the Issuers on the one hand
and the Initial Purchasers on the other with respect to such offering shall be
deemed to be in the same proportion as the total net proceeds from the offering
of the Securities purchased under this Agreement (before deducting expenses)
received by or on behalf of the Issuers, on the one hand, and the total
discounts and commissions received by the Initial Purchasers with respect to the
Securities purchased under this
22
Agreement, on the other, bear to the total gross proceeds from the sale of the
Securities under this Agreement, in each case as set forth in the table on the
cover page of the Offering Memorandum. The relative fault 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 the Issuers or information supplied by Issuers on the one hand or to
any Initial Purchasers' Information on the other, the intent of the parties and
their relative knowledge, access to information and opportunity to correct or
prevent such untrue statement or omission. Each of the Issuers and the Initial
Purchasers agree that it would not be just and equitable if contributions
pursuant to this Section 10 were to be determined by pro rata allocation (even
if the Initial Purchasers were treated as one entity for such purpose) or by any
other method of allocation that does not take into account the equitable
considerations referred to herein. The amount paid or payable by an indemnified
party as a result of the loss, claim, damage or liability, or action in respect
thereof, referred to above in this Section 10 shall be deemed to include, for
purposes of this Section 10, any legal or other expenses reasonably incurred by
such indemnified party in connection with investigating or defending or
preparing to defend any such action or claim. Notwithstanding the provisions of
this Section 10, no Initial Purchaser shall be required to contribute any amount
in excess of the amount by which the total discounts and commissions received by
such Initial Purchaser with respect to the Securities purchased by it under this
Agreement exceeds the amount of any damages which such Initial Purchaser has
otherwise paid or become liable to pay by reason of any 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 Initial Purchasers' obligations to contribute
as provided in this Section 10 are several in proportion to their respective
purchase obligations and not joint.
11. Persons Entitled to Benefit of Agreement. This Agreement shall
inure to the benefit of and be binding upon the Initial Purchasers, the Issuers
and their respective successors. This Agreement and the terms and provisions
hereof are for the sole benefit of only those persons, except as provided in
Sections 9 and 10 with respect to affiliates, officers, directors, employees,
representatives, agents and controlling persons of the Issuers and the Initial
Purchasers and in Section 4(e) with respect to holders and prospective
purchasers of the Securities. Nothing in this Agreement is intended or shall be
construed to give any person, other than the persons referred to in this Section
11, any legal or equitable right, remedy or claim under or in respect of this
Agreement or any provision contained herein.
12. Expenses. The Issuers jointly and severally agree with the
Initial Purchasers to pay (a) the costs incident to the authorization, issuance,
sale, preparation and delivery of the Securities and any taxes payable in that
connection; (b) the costs incident to the preparation, printing and distribution
of the Preliminary Offering Memorandum, the Offering Memorandum and any
amendments or supplements thereto; (c) the costs of reproducing and distributing
each of the Transaction Documents; (d) the costs incident to the preparation,
printing and delivery of the certificates evidencing the Securities, including
stamp duties and transfer taxes, stock exchange taxes, value added taxes,
withholding taxes or similar duties or taxes, if any, payable upon
authorization, issuance, sale or delivery of the Securities; (e) the fees and
expenses of the Issuers' counsel and independent accountants; (f) the fees and
expenses of qualifying the Securities under the securities laws of the several
jurisdictions as provided in Section 4(g) and of preparing, printing and
distributing Blue Sky Memoranda (including related
23
fees and expenses of counsel for the Initial Purchasers); (g) any fees charged
by rating agencies for rating the Securities; (h) the fees and expenses of the
Trustees and any paying agents (including related fees and expenses of any
counsel to such parties); (i) all expenses and application fees incurred in
connection with the application for the inclusion of the Securities on the
PORTAL Market and the approval of the Securities for book-entry transfer through
DTC, Euroclear and Cedel and any listing of the Securities on any securities
exchange; and (j) all other costs and expenses incident to the performance of
the obligations of the Issuers under this Agreement which are not otherwise
specifically provided for in this Section 12; provided, however, that except as
provided in this Section 12 and Section 8, the Initial Purchasers shall pay
their own costs and expenses.
13. Survival. The respective indemnities, rights of contribution,
representations, warranties and agreements of each of the Issuers and the
Initial Purchasers contained in this Agreement or made by or on behalf of each
of the Issuers or the Initial Purchasers pursuant to this Agreement or any
certificate delivered pursuant hereto shall survive the delivery of and payment
for the Securities and shall remain in full force and effect, regardless of any
termination or cancelation of this Agreement or any investigation made by or on
behalf of any of them or any of their respective affiliates, officers,
directors, employees, representatives, agents or controlling persons.
14. Notices, etc.. All statements, requests, notices and agreements
hereunder shall be in writing, and:
(a) if to the Initial Purchasers, shall be delivered or sent by mail
or telecopy transmission to Chase Securities Inc., 000 Xxxx Xxxxxx, Xxx Xxxx,
Xxx Xxxx 00000, Attention: Xx. Xxxxx X. Xxxxx (telecopier no.: (000) 000-0000);
or
(b) if to the Issuers, shall be delivered or sent by mail or
telecopy transmission to the address of the Issuers set forth in the Offering
Memorandum, Attention: Xx. Xxxxxxx X. Xxxxx (telecopier no.:412-454-2515);
provided that any notice to an Initial Purchaser pursuant to Section 9(c) shall
also be delivered or sent by mail to such Initial Purchaser at its address set
forth on the signature page hereof. Any such statements, requests, notices or
agreements shall take effect at the time of receipt thereof. The Issuers shall
be entitled to act and rely upon any request, consent, notice or agreement given
or made on behalf of the Initial Purchasers by CSI.
15. Definition of Terms. For purposes of this Agreement, (a) the
term "business day" means any day on which the New York Stock Exchange, Inc. is
open for trading, (b) the term "subsidiary" has the meaning set forth in Rule
405 under the Securities Act and (c) except where otherwise expressly provided,
the term "affiliate" has the meaning set forth in Rule 405 under the Securities
Act.
16. Initial Purchasers' Information. The parties hereto acknowledge
and agree that, for all purposes of this Agreement, the Initial Purchasers'
Information consists solely of the following information in the Preliminary
Offering Memorandum and the Offering Memorandum: (i) the last paragraph on the
front cover page concerning the terms of the offering by the Initial Purchasers;
(ii) the legend on page "i" concerning over-allotment and trading activities by
the Initial Purchasers; (iii) the statements concerning CSI contained in the
paragraph under the heading "Certain Relationships and
24
Related Transactions--Certain Relationships With Chase"; and (iv) the statements
concerning the Initial Purchasers contained in the third, twelfth, thirteenth
and fourteenth paragraphs under the heading "Plan of Distribution".
17. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
18. Counterparts. This Agreement may be executed in one or more
counterparts (which may include counterparts delivered by telecopier) and, if
executed in more than one counterpart, the executed counterparts shall each be
deemed to be an original, but all such counterparts shall together constitute
one and the same instrument.
19. Amendments. No amendment or waiver of any provision of this
Agreement, nor any consent or approval to any departure therefrom, shall in any
event be effective unless the same shall be in writing and signed by the parties
hereto.
20. Headings. The headings herein are inserted for convenience of
reference only and are not intended to be part of, or to affect the meaning or
interpretation of, this Agreement.
If the foregoing is in accordance with your understanding of our
agreement, kindly sign and return to us a counterpart hereof, whereupon this
instrument will become a binding agreement among each of the Issuers and the
several Initial Purchasers in accordance with its terms.
Very truly yours,
WESCO DISTRIBUTION, INC.
By /s/ [ILLEGIBLE]
------------------
Name:
Title:
WESCO INTERNATIONAL, INC.
By /s/ [ILLEGIBLE]
------------------
Name:
Title:
Accepted:
CHASE SECURITIES INC.
By
--------------------------
Authorized Signatory
Address for notices pursuant to Section 9(c):
0 Xxxxx Xxxxx, 00xx xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Legal Department
XXXXXX BROTHERS INC.
By
--------------------------
Authorized Signatory
Address for notices pursuant to Section 9(c):
Three World Financial Center
New York, New York 10285
Attention:
If the foregoing is in accordance with your understanding of our
agreement, kindly sign and return to us a counterpart hereof, whereupon this
instrument will become a binding agreement among each of the Issuers and the
several Initial Purchasers in accordance with its terms.
Very truly yours,
WESCO DISTRIBUTION, INC.
By
------------------
Name:
Title:
WESCO INTERNATIONAL, INC.
By
------------------
Name:
Title:
Accepted:
CHASE SECURITIES INC.
By /s/ [ILLEGIBLE]
--------------------------
Authorized Signatory
Address for notices pursuant to Section 9(c):
0 Xxxxx Xxxxx, 00xx xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Legal Department
XXXXXX BROTHERS INC.
By
--------------------------
Authorized Signatory
Address for notices pursuant to Section 9(c):
Three World Financial Center
New York, New York 10285
Attention:
If the foregoing is in accordance with your understanding of our
agreement, kindly sign and return to us a counterpart hereof, whereupon this
instrument will become a binding agreement among each of the Issuers and the
several Initial Purchasers in accordance with its terms.
Very truly yours,
WESCO DISTRIBUTION, INC.
By
------------------
Name:
Title:
WESCO INTERNATIONAL, INC.
By
------------------
Name:
Title:
Accepted:
CHASE SECURITIES INC.
By
--------------------------
Authorized Signatory
Address for notices pursuant to Section 9(c):
0 Xxxxx Xxxxx, 00xx xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Legal Department
XXXXXX BROTHERS INC.
By /s/ [ILLEGIBLE]
--------------------------
Authorized Signatory
Address for notices pursuant to Section 9(c):
Three World Financial Center
New York, New York 10285
Attention:
SCHEDULE 1
--------------------------------------------------------------------------------
Principal Amount of Principal Amount
Senior at Maturity of Senior
Initial Purchasers Subordinated Notes Discount Notes
--------------------------------------------------------------------------------
Chase Securities Inc. $165,000,000 $47,850,000
--------------------------------------------------------------------------------
Xxxxxx Brothers Inc. $135,000,000 $39,150,000
--------------------------------------------------------------------------------
Total $300,000,000 $87,000,000
--------------------------------------------------------------------------------
