EXHIBIT 1.1
EXECUTION COPY
XXXXXX RESPIRATORY CARE INC.
$115,000,000
9 1/8% Senior Subordinated Notes due 2008
RIVER HOLDING CORP.
300,000 Shares of 11 1/2%
Senior Exchangeable PIK Preferred Stock due 2010
PURCHASE AGREEMENT
New York, New York
April 2, 1998
Xxxxxxx Xxxxx Xxxxxx
Xxxxxxx Brothers Inc
BT Xxxx. Xxxxx Incorporated
c/o Salomon Brothers Inc
Seven World Trade Center
New York, New York 10048
Ladies and Gentlemen:
Xxxxxx Respiratory Care Inc., a California corporation (the "Company")
proposes to issue and sell to the several initial purchasers named in Schedule A
hereto (the "Purchasers"), $115,000,000 aggregate principal amount of the
Company's 9 1/8% Senior Subordinated Notes due 2008 (the "Notes"). The Notes
are to be issued under an indenture (the "Indenture") dated as of April 7, 1998,
among the Company, River Holding Corp., a Delaware corporation ("Holding") and
United States Trust Company of New York, as trustee (the "Trustee"). In
addition, Holding proposes to issue and sell to the Purchasers 300,000 shares of
Holding's 11 1/2% Senior Exchangeable PIK Preferred Stock due 2010, $.01 par
value per share (the "Holding Preferred Stock"). The Holding Preferred Stock is
exchangeable at Holding's option, subject to certain conditions, in whole but
not in part, for either (a) the Company's 11 1/2% Subordinated Exchange
Debentures due 2010 (the "Company Exchange Debentures") or (b) the Company's 11
1/2% Senior PIK Preferred Stock due 2010 (the "Company Preferred Stock" and,
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together with the Notes, the Holding Preferred Stock and the Company Exchange
Debentures, the "Securities").
The sale of the Notes and the Holding Preferred Stock to you will be
made without registration of the Securities under the Securities Act of 1933, as
amended (the "Securities Act"), in reliance upon the exemption from the
registration requirements of the Securities Act provided by Section 4(2)
thereof. You have advised the Company and Holding that you will make an
offering of the Notes and the Holding Preferred Stock purchased by you hereunder
in accordance with Section 4 hereof as soon as you deem advisable after the
execution and delivery of this Agreement.
In connection with the sale of the Notes and the Holding Preferred
Stock, the Company and Holding have prepared a preliminary offering memorandum,
dated March 19, 1998, relating to the offering of the Notes and a preliminary
offering memorandum, dated March 19, 1998, relating to the offering of the
Holding Preferred Stock (collectively, the "Preliminary Memorandum"), and a
final offering memorandum, dated April 2, 1998, relating to the offering of the
Notes and a final offering memorandum, dated April 2, 1998, relating to the
offering of the Holding Preferred Stock (collectively, the "Final Memorandum").
Each of the Preliminary Memorandum and the Final Memorandum sets forth certain
information concerning the Company, Holding and the Securities. The Company and
Holding, jointly and severally, hereby confirm that they have authorized the
use of the Preliminary Memorandum and the Final Memorandum, and any amendment or
supplement thereto, in connection with the offer and sale of the Notes and the
Holding Preferred Stock by the Purchasers. Unless stated to the contrary, all
references herein to the Final Memorandum are to the Final Memorandum at the
Execution Time (as defined below) and are not meant to include any amendment or
supplement thereto subsequent to the Execution Time.
The holders of the Securities will be entitled to the benefits of the
Registration Agreement dated the Closing Date, between the Company, Holding and
the Purchasers (the "Registration Agreement").
Capitalized terms used herein without definition have the respective
meanings assigned to them in the Final Memorandum.
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1. Representations and Warranties. The Company and Holding, jointly
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and severally, represent and warrant to, and agree with, the Purchasers as set
forth below in this Section 1.
(a) The Preliminary Memorandum, at the date thereof, did not contain
any untrue statement of a material fact or omit to state any material fact
(other than pricing terms and other financial terms for the Securities
intentionally left blank) necessary to make the statements therein, in the
light of the circumstances under which they were made, not misleading.
The Final Memorandum, at the date hereof, does not contain any untrue
statement of a material fact or omit to state any material fact necessary
to make the statements therein, in the light of the circumstances under
which they were made, not misleading; provided, however, that no
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representation or warranty is made as to the information contained in or
omitted from the Preliminary Memorandum or the Final Memorandum, or any
amendment or supplement thereto, in reliance upon and in conformity with
information furnished in writing to the Company and Holding by or on behalf
of the Purchasers specifically for inclusion therein, it being understood
that the only such information is that described in Section 8(b) hereof.
(b) Neither the Company nor Holding has taken nor will take, directly
or indirectly, any action prohibited by Regulation M under the Exchange Act
of 1934, as amended (the "Exchange Act"), in connection with the offering
of the Securities.
(c) None of the Company, Holding, any of their respective Affiliates
(as defined in Rule 501(b) of Regulation D under the Securities Act
("Regulation D")), or any person acting on their behalf, has (i) sold,
offered for sale, solicited offers to buy or otherwise negotiated in
respect of, any security (as defined in the Securities Act) which is or
will be integrated with the Securities in a manner that would require the
registration of the Securities under the Securities Act or (ii) engaged in
any form of general solicitation or general advertising (within the meaning
of Regulation D) in connection with any offer or sale of the Securities in
the United States.
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(d) The Securities satisfy the eligibility requirements of Rule
144A(d)(3) under the Securities Act.
(e) None of Holding, the Company, any of their respective Affiliates
or any person acting on their behalf has engaged in any directed selling
efforts with respect to the Securities, and each of them has complied
with the offering restrictions requirement of Regulation S ("Regulation S")
under the Securities Act. Terms used in this paragraph have the meanings
given to them by Regulation S.
(f) Neither Holding nor the Company is an "investment company" within
the meaning of the Investment Company Act of 1940, as amended (the
"Investment Company Act"), without taking account of any exemption arising
out of the number of holders of the Company's or Holding's securities.
(g) Holding and the Company have been duly incorporated and are
validly existing as corporations in good standing under the laws of their
respective jurisdictions of organization, with full corporate power and
authority to own or lease, as the case may be, their properties and conduct
their business as described in the Final Memorandum, and are duly qualified
to do business as foreign corporations and are in good standing under the
laws of all jurisdictions in which their ownership or lease of property or
the conduct of their business requires such qualification except where the
failure to be so qualified would not, individually or in the aggregate,
have a Material Adverse Effect (as defined below). Each of the Company and
Holding has full corporate power and authority to enter into this
Agreement, the Registration Agreement, the Amended and Restated Merger
Agreement dated as of March 15, 1998, among Holding, River Acquisition
Corp., the Company and the shareholders of the Company (the "Merger
Agreement"), the Credit Agreement dated as of the Closing Date among the
Company, Holding, Xxxxxxx Xxxxx Xxxxxx Inc, as arranger, and the Bankers
Trust Company, as administrative agent (the "New Credit Facility"), the
Indenture, the Indenture governing the Company Exchange Debentures (the
"Exchange Indenture") and the Securities and to perform the transactions
contemplated
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xxxxxx and thereby (the "Transactions"). This Agreement and the
Registration Agreement have been duly authorized, executed and delivered by
Holding and the Company. The execution and delivery of the Merger
Agreement, the New Credit Facility, the Indenture and the Exchange
Indenture have been duly authorized by the Company and Holding and, when
duly executed and delivered by the parties thereto (assuming the due
authorization, execution and delivery of the Indenture and the Exchange
Indenture by the Trustee), each of the Merger Agreement, the New Credit
Facility, the Indenture and the Exchange Indenture will constitute a valid
and binding obligation of the Company and Holding, enforceable against the
Company and Holding, as applicable, in accordance with its terms, subject
to applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and similar laws affecting creditors' rights and
remedies generally and to general principles of equity (regardless of
whether enforcement is sought in a proceeding at law or in equity) and to
Sections 500 et seq. of the California Corporations Code (the "Code")
regarding distributions. The term "Subsidiary" means Industrias Xxxxxx,
X.X. de C.V.
(h) All the outstanding shares of capital stock of Holding and the
Company have been duly and validly authorized and issued and are fully paid
and nonassessable, and, except as otherwise set forth in the Final
Memorandum, as of the Closing Date, all outstanding shares of capital stock
of the Company are owned by Holding and, as of the Closing Date, all
outstanding ownership interests of the Subsidiary will be owned by the
Company free and clear of any perfected security interest and any other
security interests, claims or encumbrances, except for security interests,
claims and encumbrances under the New Credit Facility.
(i) (i) The Notes have been duly and validly authorized for issuance
and sale by the Company to the Purchasers, and upon execution and delivery
of the Indenture, and when the Notes are issued, authenticated and
delivered in accordance with the Indenture and paid for in accordance with
the terms of this Agreement, the Notes will constitute valid and binding
obligations of the Company and Holding enforceable against the Company and
Holding in accordance with their terms and entitled
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to the benefits of the Indenture, subject to applicable bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium and similar
laws affecting creditors' rights and remedies generally and to general
principles of equity (regardless of whether enforcement is sought in a
proceeding at law or in equity).
(ii) The Holding Preferred Stock has been duly and validly
authorized for issuance and sale by Holding to the Purchasers, and
when the Holding Preferred Stock has been delivered and paid for in
accordance with the terms of this Agreement, the Holding Preferred
Stock will be validly issued, fully paid and nonassessable; and the
issuance of the Holding Preferred Stock is not subject to preemptive
or other similar rights.
(iii) The Company Preferred Stock has been duly and validly
authorized for issuance in exchange for the Holding Preferred Stock by
the Company; and when the Company Preferred Stock, if issued, is
delivered by the Company in exchange for the Holding Preferred Stock,
such Company Preferred Stock will be validly issued, fully paid and
nonassessable; and the issuance of the Company Preferred Stock will
not be subject to preemptive or other similar rights.
(iv) The Company Exchange Debentures have been duly authorized
for issuance in exchange for Holding Preferred Stock by the Company;
and upon execution and delivery of the Exchange Indenture, and, when
the Company Exchange Debentures are issued and authenticated in
accordance with the Exchange Indenture and delivered in exchange for
the Holding Preferred Stock, the Company Exchange Debentures will
constitute valid and binding obligations of the Company enforceable
against the Company in accordance with their terms and entitled to the
benefits of the Exchange Indenture, subject to applicable bankruptcy,
insolvency, reorganization, fraudulent transfer, moratorium, and
similar laws affecting creditors' rights and remedies generally and to
general principles of equity (regardless of whether enforcement is
sought in a proceeding at law or in equity) and Sections 500 et seq.
of the Code.
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(j) The Securities conform, in all material respects, to the
description thereof contained in the Preliminary Memorandum and Final
Memorandum.
(k) The execution, delivery and performance of this Agreement, the
Registration Agreement, the Merger Agreement, the New Credit Facility, the
Indenture, the Exchange Indenture, the Notes, the Holding Preferred Stock,
the Company Exchange Debentures and the Company Preferred Stock by the
Company and Holding, as applicable, and the consummation of the
Transactions, will not conflict with or result in a breach or violation of
any of the terms and provisions of, or constitute a default under, (i) the
articles of incorporation, by-laws or other organizational documents of the
Company, Holding or the Subsidiary, (ii) any material statute, rule or
regulation applicable to the Company, Holding or the Subsidiary (other than
California Corporations Code Sections 500 et seq.) or any order of any
governmental agency or body or any court having jurisdiction over the
Company, Holding or the Subsidiary or any of their respective properties,
(iii) any agreement or instrument relating to borrowed money to which the
Company, Holding or the Subsidiary is a party or by which the Company,
Holding or the Subsidiary is bound or to which any of their respective
properties is subject or (iv) any other material agreement or instrument to
which the Company, Holding or the Subsidiary is a party or by which the
Company, Holding or the Subsidiary is bound or to which any of their
respective properties is subject, except in the cases of clauses (iii) or
(iv) for conflicts, breaches, violations or defaults which would not
reasonably be expected to have a Material Adverse Effect. Assuming the
Securities are sold as described in this Agreement, no consent, approval,
authorization or other order of any court, regulatory body, administrative
agency or other governmental body which has not already been obtained is
required for the execution and delivery of this Agreement, the Registration
Agreement, the Merger Agreement, the New Credit Facility, the Indenture or
the Securities or for the consummation of the Transactions, except for
compliance with state securities or blue sky laws and the Securities Act
and Trust Indenture Act in connection with the Registration Rights
Agreement.
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(l) Except as disclosed in the Final Memorandum, (i) there are no
legal or governmental actions, suits or proceedings pending or, to the best
of Holding's or the Company's knowledge, threatened to which Holding, the
Company, or the Subsidiary is, or to the best of Holding's or the Company's
knowledge, is threatened to be made a party or of which property owned or
leased by the Company, Holding or the Subsidiary is or, to the best of
Holding's or the Company's knowledge, is threatened to be made the subject,
which actions, suits or proceedings could, individually or in the
aggregate, have a material adverse effect on the condition (financial or
otherwise), properties, business, results of operations or prospects of
Holding, the Company and their Subsidiaries, taken as a whole, or
materially and adversely affect the ability of the Company and Holding to
perform their respective obligations under this Agreement, the Registration
Agreement, the Merger Agreement, the New Credit Facility, the Indenture or
the Securities or to consummate the Transactions (a "Material Adverse
Effect"), and (ii) no labor disturbance by the employees of Holding, the
Company, or the Subsidiary exists or, to the best of Holding's or the
Company's knowledge is imminent, in either case which could have a Material
Adverse Effect. Neither Holding, the Company, nor any of their
Subsidiaries is a party or subject to the provisions of any material
injunction, judgment, decree or order of any court, regulatory body,
administrative agency or other governmental body.
(m) Neither Holding nor the Company has paid or agreed to pay to any
person any compensation for soliciting another to purchase any securities
of Holding or the Company (except as contemplated by this Agreement).
(n) Upon the closing of the purchase and sale of the Notes and the
Holding Preferred Stock and the application of the proceeds therefrom, all
of the Company's obligations under the Second Amended and Restated Credit
Agreement between the Company and the lenders named therein dated April 28,
1995, as amended (the "1995 Credit Agreement"), will be permanently
satisfied and discharged and the 1995 Credit Agreement will be terminated.
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(o) The Company and the Subsidiary are conducting business in
compliance with all applicable laws, rules and regulations of the
jurisdictions in which they are conducting business, including, without
limitation, the Food, Drug and Cosmetic Act (the "FDC Act") and the
regulations of the Food and Drug Administration ("FDA") and all applicable
environmental laws and regulations, except where the failure to be so in
compliance would not have a Material Adverse Effect.
(p) Neither Holding, the Company nor the Subsidiary (i) is in
violation of its charter, by-laws or other constituent documents or (ii) is
in default in any material respect, and no event has occurred which, with
notice or lapse of time or both, would constitute such default, in the due
performance or observance of any term, covenant or condition contained in
any material indenture, mortgage, deed of trust, loan agreement or other
material agreement or instrument to which it is a party or by which it is
bound or to which any of its properties or assets is subject which
violation or default would cause a Material Adverse Effect.
(q) There are no defects in title to the owned properties or
encumbrances upon the leased properties of the Company and the Subsidiary
or the assets or facilities used by the Company and the Subsidiary, except
any such defects that are in the ordinary course of business of the Company
or such Subsidiary which, individually or in the aggregate, have a Material
Adverse Effect.
(r) Each of the Company and its Subsidiaries owns or possesses
adequate rights to use all material patents, patent applications,
trademarks, service marks, trade names, trademark registrations, service
mark registrations, copyrights, licenses and know-how (including trade
secrets and other unpatented and/or unpatentable proprietary or
confidential information, systems or procedures) necessary for the conduct
of its business, except where the failure to own or possess such rights
would not have a Material Adverse Effect, and has no reason to believe that
the conduct of its business will conflict with any such rights of others
which is reasonably likely to have a Material Adverse Effect, and has not
received any notice of any claim of
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conflict with any such rights of others which is reasonably likely to have
a Material Adverse Effect.
(s) (i) The consolidated financial statements with respect to
Holding and the Company included in the Final Memorandum present fairly the
consolidated financial position of Holding, and its consolidated
Subsidiaries and the Company and its consolidated Subsidiary, as
applicable, as of the dates shown and their results of operations and cash
flows for the periods shown, and such consolidated financial statements
have been prepared in conformity with the generally accepted accounting
principles in the United States applied on a consistent basis.
(ii) The pro forma financial statements of Holding and the Company
included in the Final Memorandum are based upon reasonable assumptions for
presenting the significant effects of the Transactions, give appropriate
effect to those assumptions, and reflect the proper application of those
adjustments to the historical consolidated financial statement amounts in
the consolidated financial statements of Holding and the Company, as
applicable. Such pro forma financial statements comply in form in all
material respects with the applicable accounting requirements of the
Exchange Act and the related published rules and regulations that would
apply to the Final Memorandum if the Final Memorandum were a prospectus
included in a registration statement on Form S-1 under the Securities Act.
(t) On the Closing Date (after giving effect to the issuance of the
Notes and the Holding Preferred Stock and the consummation of the
Transactions) each of Holding and the Company will be Solvent. As used in
this paragraph, the term "Solvent" means, with respect to a particular
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date, that on such date (i) the aggregate fair value or present fair
salable value of the assets of Holding and the Company, as applicable, is
not less than its total existing debts and liabilities (including
identified contingent liabilities) as they become absolute and matured in
the normal course of business, (ii) Holding and the Company are able to pay
their debts and other liabilities, contingent obligations and commitments
as they mature and become due in the normal course of business and (iii)
Holding and the Company do not have an
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unreasonably small amount of capital with which to conduct their business.
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
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.
(u) Since the date of the latest audited consolidated financial
statements of the Company and Holding included in the Final Memorandum,
there has been no material adverse change, nor to the Company's and
Holding's knowledge any development or event involving a prospective
material adverse change, in the condition (financial or other), business,
properties or results of operations of Holding, the Company and their
Subsidiaries taken as a whole, and, except as disclosed in the Final
Memorandum, since the date of the latest audited consolidated financial
statements of the Company and Holding included in the Final Memorandum,
there has been no dividend or distribution of any kind declared, paid or
made by the Company or Holding on any class of its capital stock.
(v) Assuming the accuracy of the representations and warranties
contained in Section 4, it is not necessary in connection with the offer,
sale and delivery of the Notes and Preferred Stock in the manner
contemplated by this Agreement and the Final Memorandum to register the
Securities under the Securities Act or to qualify the Indenture or the
Exchange Indenture under the Trust Indenture act of 1939, as amended (the
"Trust Indenture Act").
(w) The Company and Holding have agreed to permit the Securities to
be designated Portal eligible securities, will pay the requisite fees
related thereto and have provided all necessary information to the National
Association of Securities Dealers, Inc., in order to ensure that the
Securities are designated Portal eligible securities.
(x) The Company has preliminary determined that the computer hardware
and software used by the Company and the Subsidiary are and will be able to
process all date information prior to and after December 31, 1999
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without any errors, aborts, delays or other interruptions in operations
arising from the inability of computer hardware and software to recognize
and properly execute date sensitive function involving certain dates prior
to and any dates after December 31, 1999 (the "Year 2000 Problem") which
could reasonably be expected to result in a Material Adverse Effect.
2. Purchase and Sale. Subject to the terms and conditions and in
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reliance upon the representations and warranties herein set forth, the Company
agrees, to sell to the Purchasers and each Purchaser agrees severally and not
jointly, to purchase from the Company the principal amount of Notes set forth
opposite each Purchaser's name in Schedule I hereto, at a purchase price of
97.0% of the principal amount thereof, plus accrued interest, if any, from April
7, 1998, to the Closing Date. Subject to the terms and conditions and in
reliance upon the representations and warranties herein set forth, Holding
agrees to sell to the Purchasers and each Purchaser agrees, severally and not
jointly, to purchase from Holding the number of shares of Holding Preferred
Stock set forth opposite each Purchaser's name in Schedule I hereto at a
purchase price of $96.50 per share, plus accrued dividends, if any, with respect
to the Preferred Stock from April 7, 1998, to the Closing Date.
3. Delivery and Payment. Delivery of and payment for the Notes and
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the Holding Preferred Stock shall be made at 10:00 AM, New York City time, on
April 7, 1998, or such later date as the Purchasers may agree or as provided in
Section 9 hereof (such date and time of delivery and payment for the Notes and
the Holding Preferred Stock being herein called the "Closing Date"). Delivery
of the Notes and the Holding Preferred Stock shall be made to the Purchasers
against payment by the Purchasers of the respective purchase prices thereof to
or upon the order of the Company and Holding, as applicable, by wire transfer in
Federal (same day) funds to U.S. dollar accounts previously designated by the
Company and Holding, as applicable. In the event that the Merger has not been
consummated at the time such funds are transferred by the Purchasers, such
accounts shall be segregated from the other accounts of the Company and Holding
and each of the Company and Holding hereby agrees that until the Merger has been
declared effective by the Secretary of State of the State of California such
funds shall not be withdrawn from such accounts or commingled with
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other funds of the Company or Holding. Delivery of the Notes and the Holding
Preferred Stock shall be made at the office of Cravath, Swaine & Xxxxx ("Counsel
for the Purchasers"), 000 Xxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx. Certificates for
the Notes and the Holding Preferred Stock shall be registered in such names and
in such denominations as the Purchasers may request not less than two full
business days in advance of the Closing Date.
The Company and Holding agree to have the Notes and the Holding
Preferred Stock available for inspection, checking and packaging by the
Purchasers in New York, New York, not later than 1:00 PM on the business day
prior to the Closing Date.
4. Offering of Securities. Each Purchaser (i) acknowledges that the
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Securities have not been registered under the Securities Act and may not be
offered or sold except pursuant to an exemption from, or in a transaction not
subject to, the registration requirements of the Securities Act or pursuant to
an effective registration statement under the Securities Act and (ii) severally
and not jointly, represents and warrants to and agrees with the Company and
Holding that:
(a) It has not offered or sold, and will not offer or sell, any
Securities except (i) to those it reasonably believes to be qualified
institutional buyers (as defined in Rule 144A under the Securities Act) and
that, in connection with each such sale, it has taken or will take
reasonable steps to ensure that the purchaser of such Securities is aware
that such sale is being made in reliance on Rule 144A or (ii) in accordance
with the restrictions set forth in Exhibit A hereto.
(b) Neither it nor any person acting on its behalf has made or will
make offers or sales of the Securities in the United States by means of any
form of general solicitation or general advertising (within the meaning of
Regulation D) in the United States, except pursuant to a registered public
offering, whether an exchange offer or shelf registration, as provided in
the Registration Agreement.
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5. Agreements. The Company and Holding jointly and severally agree
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with the Purchasers that:
(a) The Company and Holding will furnish to the Purchasers and
Cravath, Swaine & Xxxxx, without charge, as many copies of the Final
Memorandum and any supplements or amendments thereof or thereto as the
Purchasers may reasonably request, and will pay the expenses of printing or
other production of all documents relating to the offerings.
(b) Neither the Company nor Holding will amend or supplement the
Final Memorandum without the prior consent of the Purchasers.
(c) If at any time prior to the completion of the sale of the
Securities by the Purchasers, any event occurs as a result of which the
Final Memorandum, as then amended or supplemented, would include any untrue
statement of a material fact or omit to state any material fact necessary
to make the statements therein, in the light of the circumstances under
which they were made, not misleading, or if it shall be necessary to amend
or supplement the Final Memorandum to comply with the Exchange Act or the
rules thereunder or other applicable law, the Company and Holding promptly
will notify the Purchasers of the same and, subject to paragraph (b) of
this Section 5, will prepare and provide to the Purchasers pursuant to
paragraph (a) of this Section 5 an amendment or supplement which will
correct such statement or omission or effect such compliance.
(d) The Company and Holding will arrange for the qualification of the
Securities for sale under the laws of such U.S. jurisdictions as the
Purchasers may designate and will maintain such qualifications in effect so
long as required for the sale of the Securities provided that Company and
Holding will not be obligated to qualify as foreign corporations or to
execute a general consent to service of process in any jurisdiction or to
take any other action that would subject them to general service of process
or taxation in any jurisdiction in which they are not otherwise subject.
The Company and Holding will promptly advise the Purchasers of the receipt
by them of any notification with respect to the suspension of the
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qualification of any Securities for sale in any jurisdiction or the
initiation or threatening of any proceeding for such purpose.
(e) Neither the Company nor Holding will, nor will either of them
permit any of their respective Affiliates to, resell any Securities which
constitute "restricted securities" under Rule 144 that have been reacquired
by any of them.
(f) None of the Company, Holding, nor any of their respective
Affiliates, or any person acting on their behalf will, directly or
indirectly, make offers or sales of any security, or solicit offers to buy
any security, under circumstances that would require the registration of
the Securities under the Securities Act.
(g) None of the Company, Holding nor any of their respective
Affiliates or any person acting on their behalf will engage in any form of
general solicitation or general advertising (within the meaning of
Regulation D) in connection with any offer or sale of the Securities in the
United States, except pursuant to a registered public offering, whether an
exchange offer or shelf registration, as provided in the Registration
Agreement.
(h) So long as any of the Securities are "restricted securities"
within the meaning of Rule 144(a)(3) under the Securities Act, the Company
and Holding will, during any period in which it is not subject to and in
compliance with Section 13 or 15(d) of the Exchange Act, provide to each
holder of such restricted securities and to each prospective purchaser (as
designated by such holder) of such restricted securities, upon the request
of such holder or prospective purchaser, any information required to be
provided by Rule 144A(d)(4) under the Securities Act. The information
provided pursuant hereto will not, at the date thereof, contain any untrue
statement of a material fact or omit to state any material fact necessary
to make the statements therein, in the light of the circumstances under
which they were made, not misleading. This covenant is intended to be for
the benefit of the holders, and the prospective purchasers
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designated by such holders, from time to time of such restricted
securities.
(i) None of the Company, Holding, any of their respective Affiliates,
or any person acting on their behalf will engage in any directed selling
efforts with respect to the Securities except pursuant to a registered
public offering as provided in the Registration Agreement and each of them
will comply with the offering restrictions requirement of Regulation S.
Terms used in this paragraph have the meanings given to them by Regulation
S.
(j) The Company and Holding will cooperate with the Purchasers and
use their reasonable best efforts to permit the Securities to be eligible
for clearance and settlement through The Depository Trust Company.
(k) The Company and Holding hereby agree to permit the Securities to
be designated Portal eligible securities, will pay the requisite fees
related thereto and have been advised by The Portal Market that the
Securities have or will be designated Portal eligible securities in
accordance with the rules and regulations of the National Association of
Securities Dealers, Inc.
(l) Neither Holding nor the Company will take, directly or
indirectly, any action prohibited by Regulation M under the Exchange Act,
in connection with the offering of the Securities.
(m) Neither Holding nor the Company will, until 90 days following the
Closing Date, without the prior written consent of Salomon Brothers Inc,
offer, sell or contract to sell, or otherwise dispose of, directly or
indirectly, or announce the offering of, or file a registration statement
for, any debt securities or capital stock which is preferred as to payment
of dividends, or as to distribution upon liquidation, over any other class
of capital stock issued or guaranteed by Holding or the Company ("preferred
stock") (other than (i) the Securities and (ii) pursuant to a registered
public offering as provided in the Registration Agreement).
(n) Holding and The Company will apply the net proceeds from the sale
of the Securities sold by them
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substantially in accordance with the statements under the caption "Use of
Proceeds" in the Final Memorandum.
(o) Immediately following consummation of the Merger, the Company
will file with the Secretary of State of the State of California a
certificate of amendment relating to the Certificate of Determination for
the Mirror Preferred Stock in the form previously agreed to by the
Purchasers. The Company will not agree to any modification in the economic
or other material terms of such certificate of amendment without the
consent of a majority of holders of the Holding Preferred Stock.
(p) In the event that the Merger has not been consummated within
three business days following consummation of the offering and sale of the
Notes and Holding Preferred Stock, the Company and Holding will redeem the
Notes and Holding Preferred Stock in accordance with the terms of the
Indenture and the Certificate of Designation governing the Holding
Preferred Stock.
6. Conditions to the Obligations of the Purchasers. The obligations
------------------------------------------------
of the Purchasers to purchase the Securities shall be subject to the accuracy of
the representations and warranties on the part of the Company and Holding
contained herein at the date and time that this Agreement is executed and
delivered by the parties hereto (the "Execution Time") and the Closing Date, to
the accuracy of the statements of the Company or Holding made in any
certificates pursuant to the provisions hereof, to the performance by the
Company and Holding of their respective obligations hereunder and to the
following additional conditions:
(a) The Company and Holding shall have caused Xxxxxxx & XxXxxxxx,
counsel for the Company and Holding, to have furnished to the Purchasers
their opinion dated the Closing Date and addressed to the Purchasers, to
the effect that:
(i) Holding and the Company have been duly incorporated and are
validly existing as corporations in good standing under the laws of
the State of Delaware and California, respectively, with full
corporate power and
18
authority to own or lease, as the case may be, their properties and
conduct their business as described in the Final Memorandum;
(ii) the authorized equity capitalization of Holding and of the
Company effective upon the consummation of the Recapitalization is as
set forth in the Final Memorandum;
(iii) the information contained in the Final Memorandum under the
headings "Description of Senior Credit Facility" and "Certain Federal
Income Tax Considerations", fairly summarizes the matters therein
described in all material respects and the information contained in
the Final Memorandum under the heading "Risk Factors --- Fraudulent
Conveyance and Distribution Limitation Considerations" relating to
Sections 500 et seq. of the California Corporations Code fairly
summarizes the possible consequences of the violation of these
sections to holders of Securities;
(iv) the Indenture and the Exchange Indenture conform as to form
in all material respects with the requirements of the Trust Indenture
Act of 1939, as amended (the "Trust Indenture Act"), and the rules and
regulations of the Commission applicable to an indenture which is
qualified thereunder;
(v) provided the Securities are sold in the manner contemplated
by the Purchase Agreement and Final Memorandum, no consent, approval,
authorization or order of, or filing or registration with, any court
or governmental agency or body is required for the execution, delivery
and performance of this Agreement, the Indenture, the Exchange
Indenture, the Registration Agreement and the Securities or for the
consummation of the Transactions contemplated thereby, except such as
may be required under the blue sky or securities laws of any
jurisdiction and such other approvals (specified in such opinion) as
have been obtained and except such as may be required under the
Securities Act and the Trust Indenture Act with respect to the
19
Registration Agreement and the transactions contemplated thereunder;
(vi) except as set forth in the Final Memorandum, none of the
issue and sale of the Securities, the execution and delivery of this
Agreement, the Registration Agreement, the Merger Agreement, the New
Credit Facility, the Indenture, or the Exchange Indenture, the
fulfillment of the terms hereof or thereof or the consummation of the
transactions contemplated thereby will conflict with, result in a
breach or violation of, or constitute a default under any law (other
than California Corporations Code (S)(S) 500 et seq. as to which such
counsel may express no opinion) or the charter or by-laws of Holding
or the Company or the terms of any material indenture or other
material agreement or instrument identified in an officer's
certificate as material to the Company and to which Holding or the
Company or the Subsidiary is a party or bound or any judgment, order
or decree, identified in an officer's certificate, of any court,
regulatory body, administrative agency, governmental body or
arbitrator having jurisdiction over Holding or the Company;
(vii) Holding and the Company have full corporate right, power
and authority to execute and deliver the Securities, the Registration
Agreement, the Merger Agreement, the New Credit Facility, the
Indenture, the Exchange Indenture and this Agreement and to perform
their respective obligations thereunder; and all corporate action
required to be taken for the due and proper authorization, execution
and delivery of the Indenture, the Exchange Indenture, the Merger
Agreement, the New Credit Facility, the Securities, the Registration
Agreement and this Agreement and for the consummation of the
transactions contemplated thereby has been duly and validly taken;
(viii) the Merger Agreement has been duly authorized, executed
and delivered by Holding, the Company and River Acquisition Corp., and
constitutes a legal, valid and binding instrument
20
enforceable against Holding, the Company and River Acquisition Corp.
in accordance with its terms (subject, as to the enforcement of
remedies, to applicable bankruptcy, reorganization, insolvency,
moratorium or other laws affecting creditors' rights generally from
time to time in effect);
(ix) the New Credit Facility has been duly authorized, executed
and delivered by Holding and the Company and constitutes a legal,
valid and binding instrument enforceable against Holding and the
Company in accordance with its terms (subject, as to the enforcement
of remedies, to applicable bankruptcy, reorganization, insolvency,
moratorium or other laws affecting creditors' rights generally from
time to time in effect);
(x) this Agreement and the Registration Agreement have been
duly authorized, executed and delivered by the Company and Holding;
(xi) the Indenture has been duly authorized, executed and
delivered, and constitutes a legal, valid and binding instrument
enforceable against the Company and Holding in accordance with its
terms (subject, as to the enforcement of remedies, to applicable
bankruptcy, reorganization, insolvency, moratorium or other laws
affecting creditors' rights generally from time to time in effect);
the Notes are in the form contemplated by the Indenture and have been
duly authorized and executed by the Company and, when authenticated in
accordance with the provisions of the Indenture and delivered to and
paid for by the Purchasers pursuant to this Agreement, will be duly
and validly issued and outstanding and will constitute legal, valid
and binding obligations of the Company and Holding entitled to the
benefits of the Indenture and enforceable in accordance with their
terms (subject, as to the enforcement of remedies, to applicable
bankruptcy, reorganization, insolvency, moratorium or other laws
affecting creditors' rights generally from time to time in effect);
and the statements set forth under the heading "Description of Notes"
in the Final Memorandum, insofar as such statements purport to
summarize certain provisions of the
21
Notes and the Indenture, provide a fair summary of such provisions in
all material respects;
(xii) the Holding Preferred Stock has been duly and validly
authorized by Holding and when the Holding Preferred Stock has been
delivered by Holding, countersigned by the Transfer Agent, and paid
for in accordance with the terms of this Agreement the Holding
Preferred Stock will be validly issued, fully paid and nonassessable;
to such counsel's knowledge, the issuance of the Holding Preferred
Stock is not subject to preemptive or other similar rights; and the
statements set forth under the heading "Description of the Holding
Preferred Stock" in the Final Memorandum, insofar as such statements
purport to summarize certain provisions of the Holding Preferred
Stock, provide a fair summary of such provisions in all material
respects.
(xiii) the Company Preferred Stock has been duly and validly
authorized by the Company; and the statements set forth under the
heading "Description of the Company Exchange Securities" in the Final
Memorandum, insofar as such statements purport to summarize certain
provisions of the Company Preferred Stock, provide a fair summary of
such provisions;
(xiv) each of the Company Exchange Indenture and the Company
Exchange Debentures have been duly and validly authorized by the
Company; and the statements set forth under the heading "Description
of the Exchange Securities--Company Exchange Debentures" in the Final
Memorandum, insofar as such statements purport to summarize certain
provisions of the Company Exchange Debentures and the Company Exchange
Indenture, provide a fair summary of such provisions;
(xv) to such counsel's knowledge (without independent
investigation), there is no pending or threatened action or suit or
judicial, arbitral or other administrative proceeding to which
Holding, the Company or any of their Subsidiaries is a party or of
which any property or assets of Holding, the Company or any of their
Subsidiaries
22
is the subject that, singly or in the aggregate, questions the
validity of this Agreement, the Registration Agreement, the Indenture,
the Securities, the Transactions or any action taken or to be taken
pursuant hereto or thereto;
(xvi) assuming the accuracy of the representations and
warranties and compliance with the agreements contained herein, no
registration of the Securities under the Securities Act is required,
and no qualification of the Indenture or the Exchange Indenture under
the Trust Indenture Act is necessary, for the offer, sale and delivery
of the Securities in the manner contemplated by this Agreement; and
(xvii) neither Holding nor the Company is an "investment company"
within the meaning of the Investment Company Act of 1940, as amended
(the "Investment Company Act"), without taking account of any
exemption arising out of the number of holders of the Company's or
Holding's securities.
Such counsel shall also state that such counsel has participated in
conferences with officers and other representatives of the Company and
Holding, representatives of the independent public accountants for the
Company and Holding and representatives of the Initial Purchasers at which
the contents of the Final Memorandum and related matters were discussed.
Such counsel shall state that although such counsel has made no independent
check or verification of the accuracy, completeness or fairness of the
statements made in the Final Memorandum (except as set forth in paragraphs
(ii), (iii), (xi), (xii), (xiii) and (xiv) above) on the basis of the
foregoing (relying as to materiality to a large extent upon the statements
of officers and other representatives of the Company and Holding) no facts
have come to such counsel's attention that have caused such counsel to
believe that the Final Memorandum as of its date and as of the Closing Date
contained or contains an untrue statement of a material fact or omitted or
omits to state a material fact necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading (it being understood that such counsel need express no opinion
on the financial statements or
23
other financial and statistical data included in the Final Memorandum).
In rendering such opinion, such counsel may rely (A) as to matters
involving the application of laws of any jurisdiction other than the State
of California and the federal laws of the United States to the extent they
deem proper and specified in such opinion, upon the opinion of other
counsel of good standing whom they believe to be reliable and who are
satisfactory to counsel for the purchasers and (B) as to matters of fact,
to the extent they deem proper, on certificates of responsible officers of
Holding and the Company and public officials, copies of which shall be
provided to the Purchasers.
Such counsel may deliver the opinions relating to the Merger Agreement
and the New Credit Facility set forth in paragraphs 6(vii), 6(viii), 6(ix)
and 6(x) above by delivering letters dated the Closing Date permitting the
Purchasers to rely upon separate opinion letters dated the Closing Date
rendered to the parties to the Merger Agreement and the New Credit Facility
and containing substantially similar opinions.
All references in this Section 6(a) to the Final Memorandum shall be
deemed to include any amendment or supplement thereto at the Closing Date.
(b) The Company and Holding shall have caused Xxxxx, Xxxxxx &
XxXxxxxx, P.C., special regulatory counsel for the Company and Holding, to
have furnished to the Purchasers their opinion dated the Closing Date and
addressed to the Purchasers, to the effect that the information and
disclosure contained in the Final Memorandum under the headings "Risk
Factors--Government Regulation" and "Business--Government Regulation and
Environmental Matters", is accurate and complete in all material respects,
insofar as such information and disclosure relate to Food and Drug
Administration law, legal matters and compliance requirements.
Such counsel shall also state that, with respect to the other
information and disclosure contained in the Final Memorandum not specified
above, they have no reason to believe that at the Execution Time the Final
Memorandum contained an untrue statement of a material
24
fact or omitted to state a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading or that the Final Memorandum includes an untrue
statement of a material fact or omits to state a material fact necessary in
order to make the statements therein, in the light of the circumstances
under which they were made, not misleading.
All references in this Section 6(b) to the Final Memorandum shall be
deemed to include any amendment or supplement thereto at the Closing Date.
(c) The Purchasers shall have received from Cravath, Swaine & Xxxxx
such opinion or opinions, dated the Closing Date, with respect to the
issuance and sale of the Securities, the Final Memorandum (as amended or
supplemented at the Closing Date) and other related matters as the
Purchasers may reasonably require, and the Company and Holding shall have
furnished to such counsel such documents as they request for the purpose of
enabling them to pass upon such matters.
(d) The Company and Holding shall have furnished to the Purchasers
certificates of the Company and of Holding, signed by the President and
Chief Financial Officer of the Company and the President or Vice President
and an Assistant Secretary of Holding, dated the Closing Date, to the
effect that the signers of such certificate have examined the Final
Memorandum, any amendment or supplement to the Final Memorandum and this
Agreement and the Registration Agreement and that:
(i) the representations and warranties of the Company and of
Holding in this Agreement and the Registration Agreement are true and
correct in all material respects on and as of the Closing Date with
the same effect as if made on the Closing Date, and the Company and
Holding have complied in all material respects with all the agreements
and satisfied all the conditions on their part to be performed or
satisfied hereunder or thereunder at or prior to the Closing Date; and
(ii) since the date of the most recent financial statements
included in the Final Memorandum, there has been no material adverse
25
change in the condition (financial or otherwise), properties,
business, results of operations or prospects of the Company, Holding
or any of their respective Subsidiaries, taken as a whole, whether or
not arising from transactions in the ordinary course of business,
except as disclosed in the Final Memorandum (exclusive of any
amendment or supplement thereto).
(e) At the Execution Time and at the Closing Date, the Holding and
Company shall have caused Xxxxxx Xxxxxxxx LLP to have furnished to the
Purchasers a letter or letters, dated respectively as of the Execution Time
and as of the Closing Date, in form and substance satisfactory to the
Purchasers, confirming that they are independent accountants within the
meaning of the Securities Act and the Exchange Act and the applicable rules
and regulations thereunder and Rule 101 of the Code of Professional Conduct
of the American Institute of Certified Public Accountants (the "AICPA") and
stating in effect that:
(i) in their opinion the audited financial statements of Holding
and the Company and the audited pro forma financial statements of the
Company included in the Final Memorandum and reported on by them, and
the unaudited pro forma financial statements of Holding included in
the Final Memorandum, comply in form in all material respects with the
applicable accounting requirements of the Exchange Act and the related
published rules and regulations that would apply to the Final
Memorandum if the Final Memorandum were a prospectus included in a
registration statement on Form S-1 under the Securities Act;
(ii) on the basis of a reading of the unaudited pro forma
financial statements of Holding included in the Final Memorandum;
carrying out certain specified procedures; inquiries of certain
officials of Holding and the Company who have responsibility for
financial and accounting matters; and proving the arithmetic accuracy
of the application of the pro forma adjustments to the historical
amounts in such unaudited pro forma financial statements, nothing came
to their attention which causes them to believe that the
26
pro forma adjustments have not been properly applied to the historical
amounts in the compilation of such statements.
(iii) based upon the procedures detailed in such letter with
respect to the period subsequent to the date of the latest audited
financial statements included in the Final Memorandum, including the
reading of the minutes and inquiries of certain officials of Holding
and of the Company who have responsibility for the financial and
accounting matters and certain other limited procedures requested by
the Purchasers and described in detail in such letter, nothing has
come to their attention that causes them to believe that:
(A) with respect to the period subsequent to December 26,
1997, there were any changes, at a specified date not more than
five business days prior to the date of the letter, in the total
debt of Holding, the Company and any of their Subsidiaries or
capital stock of Holding or the Company or decreases in the
stockholders' equity of Holding or the Company or decreases in
working capital of Holding, the Company, and any of their
Subsidiaries, as compared with the amounts shown on the December
26, 1997 consolidated balance sheet included in the Final
Memorandum, or for the period from December 26, 1997, to such
specified date there were any decreases, as compared with the
corresponding period in the preceding year in total revenues, net
income before income taxes, net income or EBITDA, as defined in
the Indenture, except in all instances for changes or decreases
set forth in such letter, in which case the letter shall be
accompanied by an explanation by Holding or the Company, as the
case may be, as to the significance thereof unless said
explanation is not deemed necessary by the Purchasers; or
(B) the information included under the heading "Selected
Historical Financial Data"
27
is not in conformity with the disclosure requirements of
Regulation S-K that would apply to the Final Memorandum if the
Final Memorandum were a prospectus included in a registration
statement on Form S-1 under the Securities Act; and
(iii) they have performed certain other specified procedures as a
result of which they determined that certain information of an
accounting, financial or statistical nature (which is limited to
accounting, financial or statistical information derived from the
general accounting records of Holding, the Company or any of their
Subsidiaries) set forth in the Final Memorandum, including the
information set forth under the captions "Summary", "Risk Factors",
"Use of Proceeds", "Capitalization" "Selected Historical Financial
Data", "Management's Discussion and Analysis of Financial Condition
and Results of Operations", "Business", "Management", "Description of
Senior Credit Facility" and "Description of the Notes" in the Final
Memorandum, agrees with the accounting records of Holding, the
Company, or any of their Subsidiaries, excluding any questions of
legal interpretation.
All references in this Section 6(e) to the Final Memorandum shall be
deemed to include any amendment or supplement thereto at the date of the
letter.
(f) Subsequent to the Execution Time or, if earlier, the dates as of
which information is given in the Final Memorandum, there shall not have
been (i) any change or decrease specified in the letter or letters referred
to in paragraph (e)(iii)(A)of this Section 6 or (ii) any change, or any
development involving a prospective change, in or affecting the business or
properties of the Company, Holding or any of their respective Subsidiaries
the effect of which, in any case referred to in clause (i) or (ii) above,
is not disclosed in the Final Memorandum and is, in the judgment of the
Purchasers, so material and adverse as to make it impractical or
inadvisable to market the Securities as contemplated by the Final
Memorandum.
28
(g) Subsequent to the Execution Time, there shall not have been (i)
any decrease in the rating of any of the Securities or any other debt
securities or preferred stock of the Company or Holding by any "nationally
recognized statistical rating organization" (as defined for purposes of
Rule 436(g) under the Securities Act) or (ii) any notice given of any
intended or potential decrease in any such rating or that such organization
has under surveillance or review (other than any such notice with positive
implications of a possible upgrading) its rating of any of the Securities
or any other debt securities or preferred stock of the Company or Holding.
(h) On or prior to the Closing Date, the Registration Agreement shall
have been executed substantially in the form hereto delivered to you and
shall have been delivered to you and the Trustee.
(i) Each of the New Credit Facility and the Merger Agreement shall
have been executed and delivered by the parties thereto. The terms of the
New Credit Facility and the Merger Agreement shall be reasonably
satisfactory to the Purchasers, and the Purchasers shall have received
executed copies of the New Credit Facility and the Merger Agreement and all
other documents and agreements entered into and received in connection
therewith certified by the Secretary of the Company as being true, complete
and correct. There shall exist at and as of the Closing Date (after giving
effect to the Transactions) no condition that would constitute a default
(or an event that with notice or lapse of time, or both, would constitute a
default) under the New Credit Facility.
(j) The Purchasers shall have received evidence, reasonably
satisfactory to them, that (A) the merger of River Acquisition Corp. with
and into the Company shall have been consummated in accordance with the
terms of the Merger Agreement, (B) the initial funding shall have occurred
under the New Credit Facility, (C) Xxxxxxx Xxxxxx & Co. and certain members
of the Company's management shall have made a $61.5 million equity
investment in Holding and (D) the Company shall have issued shares of its
11 1/2% Senior PIK Preferred Stock due 2010 ("Mirror Preferred Stock")
having an aggregate liquidation preference of $30.0 million to Holding on
the terms described in the Final Memorandum
29
and otherwise reasonably satisfactory to the Purchasers. Notwithstanding
the foregoing, the condition set forth in clause (A) above shall be deemed
to have been satisfied if the Purchasers have not received evidence of the
consummation of the Merger solely as a result of differences in time zones
in connection with the processing of the certificate of merger relating to
the Merger by the Secretary of State of the State of California.
(k) Prior to the Closing Date, the Company and Holding shall have
furnished to the Purchasers such further information, certificates and
documents as the Purchasers may reasonably request.
If any of the conditions specified in this Section 6 shall not have
been fulfilled in all material respects when and as provided in this Agreement,
or if any of the opinions and certificates mentioned above or elsewhere in this
Agreement shall not be in all material respects reasonably satisfactory in form
and substance to the Purchasers and Counsel for the Purchasers, this Agreement
and all obligations of the Purchasers hereunder may be canceled at, or at any
time prior to, the Closing Date by the Purchasers. Notice of such cancelation
shall be given to the Company and to Holding in writing or by telephone
confirmed in writing.
The documents required to be delivered by this Section 6 will be
delivered at the office of Counsel for the Purchasers, 000 Xxxxxx Xxxxxx, Xxx
Xxxx, Xxx Xxxx, on the Closing Date.
7. Reimbursement of Expenses. If the sale of the Securities provided
--------------------------
for herein is not consummated because any condition to the obligations of the
Purchasers set forth in Section 6 hereof is not satisfied or because of any
refusal, inability or failure on the part of the Company or Holding to perform
any agreement herein or comply with any provision hereof, in each case other
than by reason of a default by the Purchasers, the Company or Holding will
reimburse the Purchasers upon demand for all reasonable out-of-pocket expenses
(including reasonable fees and disbursements of counsel) that shall have been
incurred by them in connection with the proposed purchase and sale of the
Securities.
30
8. Indemnification and Contribution. (a) The Company and Holding
---------------------------------
agree, jointly and severally, to indemnify and hold harmless each Purchaser,
each director, officer, employee and agent of any Purchaser and each other
person, if any, who controls any Purchaser within the meaning of Section 15 of
the Securities Act or Section 20 of the Exchange Act against any and all losses,
claims, damages or liabilities, joint or several, to which they or any of them
may become subject under the Securities Act, the Exchange Act or other Federal
or state statutory law or regulation, at common law or otherwise, insofar as
such losses, claims, damages or liabilities (or actions in respect thereof)
arise out of or are based upon any untrue statement or alleged untrue statement
of a material fact contained in the Preliminary Memorandum, the Final Memorandum
or any information provided by the Company or Holding to any holder or
prospective purchaser of Securities pursuant to Section 5(h), or in any
amendments thereof or supplements thereto, or arise out of or are based upon the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading, and agrees to
reimburse each such indemnified party, as incurred, for any legal or other
expenses reasonably incurred by them in connection with investigating or
defending any such loss, claim, damage, liability or action; provided, however,
-------- -------
that the Company and Holding will not be liable in any such case to the extent
that any such loss, claim, damage or liability arises out of or is based upon
any such untrue statement or alleged untrue statement or omission or alleged
omission made in the Preliminary Memorandum or the Final Memorandum, or in any
amendment thereof or supplement thereto, in reliance upon and in conformity with
written information furnished to the Company or Holding by or on behalf of the
Purchasers specifically for inclusion therein, it being understood that the only
such information is that described in Section 8(b); provided further, however,
---------------- -------
that the indemnity agreement contained in this Section 8(a) shall not inure to
the benefit of any indemnified party to the extent that it is determined by a
final, non-appealable judgment that (i) the Preliminary Memorandum contained an
untrue statement of a material fact or omitted to state therein a material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading, (ii) the
sale to the person asserting any such losses, claims, damages or
31
liabilities was an initial resale of the Securities by any Purchaser, (iii) any
such loss, claim, damage or liability of such indemnified party results from the
fact that there was not sent or given to such person, at or prior to the written
confirmation of the sale of such Securities to such person, a copy of any
revised Preliminary Memorandum, the Final Memorandum or the Final Memorandum as
amended or supplemented, and the Company had previously furnished copies thereof
to such Purchaser and (iv) the revised Preliminary Memorandum, the Final
Memorandum or the Final Memorandum as amended or supplemented corrected such
untrue statement or omission. This indemnity agreement will be in addition to
any liability that the Company and Holding may otherwise have.
(b) Each Purchaser severally and not jointly agrees to indemnify and
hold harmless the Company, Holding, their directors and officers, and each other
person, if any, who controls the Company or Holding within the meaning of either
Section 15 of the Securities Act or Section 20 of the Exchange Act, to the same
extent as the foregoing indemnity from the Company and Holding to the
Purchasers, but only with reference to written information relating to the
Purchasers furnished to the Company or Holding by or on behalf of the Purchasers
specifically for inclusion in the Preliminary Memorandum or the Final Memorandum
(or in any amendment thereof or supplement thereto). This indemnity agreement
will be in addition to any liability which the Purchasers may otherwise have.
The Company and Holding acknowledge that the statements set forth in the last
paragraph of the cover page and under the heading "Plan of Distribution" in the
Preliminary Memorandum and the Final Memorandum (or in any amendment or
supplement thereto) constitute the only information furnished in writing by or
on behalf of the Purchasers for inclusion in the Preliminary Memorandum or the
Final Memorandum (or in any amendment thereof or supplement thereto).
(c) Promptly after receipt by an indemnified party under this Section
8 of notice of the commencement of any action, such indemnified party will, if a
claim in respect thereof is to be made against the indemnifying party under this
Section 8, notify the indemnifying party in writing of the commencement thereof;
but the failure so to notify the indemnifying party (i) will not relieve it from
liability under paragraph (a) or (b) above unless and to the extent it did not
otherwise learn of such action and such
32
failure results in the forfeiture by the indemnifying party of substantial
rights and defenses and (ii) will not, in any event, relieve the indemnifying
party from any obligations to any indemnified party other than the
indemnification obligation provided in paragraph (a) or (b) above. The
indemnifying party shall be entitled to participate therein, and to the extent
it may wish, to assume the defense thereof with counsel of the indemnifying
party's choice at the indemnifying party's expense to represent the indemnified
party in any action for which indemnification is sought (in which case the
indemnifying party shall not thereafter be responsible for the fees and expenses
of any separate counsel retained by the indemnified party or parties except as
set forth below); provided, however, that such counsel shall be satisfactory to
-------- -------
the indemnified party. Notwithstanding the indemnifying party's election to
appoint counsel to represent the indemnified party in an action, the indemnified
party shall have the right to employ separate counsel (including local counsel),
and the indemnifying party shall bear the reasonable fees, costs and expenses of
such separate counsel, if (i) the use of counsel chosen by the indemnifying
party to represent the indemnified party would present such counsel with a
conflict of interest, (ii) the actual or potential defendants in, or targets of,
any such action include both the indemnified party and the indemnifying party
and the indemnified party shall have reasonably concluded that there may be
legal defenses available to it and/or other indemnified parties which are
different from or additional to those available to the indemnifying party, (iii)
the indemnifying party shall not have employed counsel satisfactory to the
indemnified party to represent the indemnified party within a reasonable time
after notice of the institution of such action or (iv) the indemnifying party
shall authorize the indemnified party to employ separate counsel at the expense
of the indemnifying party; provided that the indemnifying party shall not be
responsible for the expenses of more than one separate counsel (in addition to
one local counsel in each relevant jurisdiction) in any one action. An
indemnifying party will not, without the prior written consent of the
indemnified parties, settle or compromise or consent to the entry of any
judgment with respect to any pending or threatened claim, action, suit or
proceeding in respect of which indemnification or contribution may be sought
hereunder (whether or not the indemnified parties are actual or potential
parties to such claim or action) unless such settlement, compromise or consent
includes an unconditional release of each
33
indemnified party from all liability arising out of such claim, action, suit or
proceeding. An indemnified party will not, without the prior written consent of
the indemnifying party, which consent will not be unreasonably withheld, settle
or compromise or consent to the entry of any judgment with respect to any
pending or threatened claim, action, suit or proceeding in respect of which
indemnification or contribution may be sought hereunder.
(d) In the event that the indemnity provided in paragraph (a) or (b)
of this Section 8 is unavailable to or insufficient to hold harmless an
indemnified party for any reason (other than as provided in paragraph (a)), the
Company, Holding and the Purchasers agree to contribute to the aggregate losses,
claims, damages and liabilities (including legal or other expenses reasonably
incurred in connection with investigating or defending same) (collectively
"Losses") to which the Company, Holding and the Purchasers may be subject in
such proportion as is appropriate to reflect the relative benefits received by
the Company and Holding on the one hand and by the Purchasers on the other from
the offering of the Securities; provided, however, that in no case shall the
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Purchasers be responsible for any amount in excess of the purchase discount or
commission applicable to the Securities purchased by such the Purchasers
hereunder. If the allocation provided by the immediately preceding sentence is
unavailable for any reason, the Company, Holding and the Purchasers shall
contribute in such proportion as is appropriate to reflect not only such
relative benefits but also the relative fault of the Company and Holding on the
one hand and of the Purchasers on the other in connection with the statements or
omissions which resulted in such Losses as well as any other relevant equitable
considerations. Benefits received by the Company and Holding shall be deemed to
be equal to the total net proceeds from the offering of the Securities (before
deducting expenses), and benefits received by the Purchasers shall be deemed to
be equal to the total purchase discounts and commissions, in each case as set
forth on the cover page of the Final Memorandum. Relative fault shall be
determined by reference to whether any alleged untrue statement or omission
relates to information provided by the Company or Holding on the one hand or the
Purchasers on the other. The Company, Holding and the Purchasers agree that it
would not be just and equitable if contribution were determined by pro rata
allocation or any other method of allocation which does not take account of the
equitable considerations referred to
34
above. Notwithstanding the provisions of this paragraph (d), 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. For purposes of this Section 8,
each person who controls a Purchaser within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act and each director, officer,
employee and agent of a Purchaser shall have the same rights to contribution as
such Purchaser, and each person who controls the Company or Holding within the
meaning of either the Securities Act or the Exchange Act and each officer and
director of the Company or Holding shall have the same rights to contribution
as the Company or Holding, subject in each case to the applicable terms and
conditions of this paragraph (d).
9. Default by a Purchaser. If either Purchaser shall fail to
-----------------------
purchase and pay for any of the Securities agreed to be purchased by such
Purchaser hereunder and such failure to purchase shall constitute a default in
the performance of its or their obligations under this Agreement, the remaining
Purchaser shall be obligated severally to take up and pay for (in the proportion
which the amount of Securities set forth opposite its name in Schedule I hereto
bears to the aggregate amount of Securities set forth opposite the name of the
remaining Purchaser) the Securities that the defaulting Purchaser agreed but
failed to purchase; provided, however, that in the event that the aggregate
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amount of Securities that the defaulting Purchaser agreed but failed to purchase
shall exceed 10% of the aggregate principal amount of Securities set forth in
Schedule I hereto, the remaining Purchaser shall have the right to purchase all,
but shall not be under any obligation to purchase any, of the Securities, and if
the non-defaulting Purchaser does not purchase all the Securities, this
Agreement will terminate without liability to the non-defaulting Purchaser, the
Company or Holding. In the event of a default by either Purchaser as set forth
in this Section 9, the Closing Date shall be postponed for such period, not
exceeding seven days, as the Purchasers shall determine in order that the
required changes in the Final Memorandum or in any other documents or
arrangements may be effected. Nothing contained in this Agreement shall relieve
any defaulting Purchaser of its liability, if any, to the Company, Holding or
the non-defaulting Purchaser for damages occasioned by its default hereunder.
35
10. Termination. This Agreement shall be subject to termination in
------------
the absolute discretion of the Purchasers, by notice given to the Company and to
Holding prior to delivery of and payment for the Securities, if prior to such
time (i) trading in securities generally on the New York Stock Exchange shall
have been suspended or limited or minimum prices shall have been established on
such Exchange, (ii) a banking moratorium shall have been declared either by
Federal or New York State authorities or (iii) there shall have occurred any
outbreak or escalation of hostilities, declaration by the United States of a
national emergency or war or other calamity or crisis the effect of which on
financial markets of the United States is such as to make it, in the judgment of
the Purchasers, impracticable or inadvisable to proceed with the offering or
delivery of the Securities as contemplated by the Final Memorandum.
11. Representations and Indemnities to Survive. The respective
-------------------------------------------
agreements, representations, warranties, indemnities and other statements of the
Company, Holding or their respective officers and of the Purchasers set forth in
this Agreement will remain in full force and effect, regardless of any
investigation made by or on behalf of the Purchasers, the Company, Holding or
any of the officers, directors or controlling persons referred to in Section 8
hereof, and will survive delivery of and payment for the Securities. The
provisions of Sections 7 and 8 hereof shall survive the termination or
cancelation of this Agreement.
12. Notices. All communications hereunder will be in writing and
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effective only on receipt, and, if sent to the Purchasers, will be mailed,
delivered or sent by fax and confirmed to them, care of Salomon Brothers Inc, at
000 Xxxxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx, 00000; or, if sent to Holding or the
Company, will be mailed, delivered or telegraphed and confirmed to it at 00000
Xxxx Xxxx, X.X. Box 9020, Temecula, CA 92589-9020.
13. Successors. This Agreement will inure to the benefit of and be
-----------
binding upon the parties hereto and their respective successors and the officers
and directors and controlling persons referred to in Section 8 hereof, and,
except as expressly set forth in Section 5(h) hereof, no other person will have
any right or obligation hereunder.
14. APPLICABLE LAW. THIS AGREEMENT WILL BE GOVERNED BY AND CONSTRUED
---------------
IN ACCORDANCE WITH THE LAWS OF THE
36
STATE OF NEW YORK (WITHOUT REGARD TO THE CONFLICT OF LAW PROVISIONS THEREOF).
15. Business Day. For purposes of this Agreement, "business day"
-------------
means each Monday, Tuesday, Wednesday, Thursday and Friday that is not a day on
which banking institutions in The City of New York, New York are authorized or
obligated by law, executive order or regulation to close.
16. Counterparts. This Agreement may be executed in one or more
-------------
counterparts, each of which will be deemed to be an original, but all such
counterparts will together constitute one and the same instrument.
37
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to us the enclosed duplicate hereof, whereupon
this Agreement and your acceptance shall represent a binding agreement between
the Company, Holding and the Purchasers.
Very truly yours,
XXXXXX RESPIRATORY CARE, INC.
by /s/ Xxxxxxx X. Xxxxxxxx
__________________________________
Name: Xxxxxxx X. Xxxxxxxx
Title: President and Chief Executive Officer
by /s/ Xxx X. Xxxxx
__________________________________
Name: Xxx X. Xxxxx
Title: Chief Financial Officer
RIVER HOLDING CORP.
by /s/ Xxxxxxx X. Xxxxxxx
__________________________________
Name: Xxxxxxx X. Xxxxxxx
Title: President
The foregoing Agreement is hereby
confirmed and accepted as of the
date first above written.
SALOMON BROTHERS INC
BT XXXX. BROWN INCORPORATED
By: SALOMON BROTHERS INC
By: /s/ X. Xxxxx Xxxxx
_____________________
Name: X. Xxxxx Xxxxx
Title: Director
For themselves and the other
Purchaser named in
Schedule I to the foregoing Agreement
