1
EXHIBIT 4.2
COLORADO PRIME CORPORATION
COLORADO PRIME HOLDINGS, INC.
100,000 Units Consisting of
$100,000,000 12.50% Senior Notes due 2004
and
Warrants to Purchase 19,608 Shares
Purchase Agreement
May 6, 1997
X.X. Xxxxxx Securities Inc.
NatWest Capital Markets Limited
Dresdner Kleinwort Xxxxxx North America LLC
c/o X.X. Xxxxxx Securities Inc.
00 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Ladies and Gentlemen:
Colorado Prime Corporation, a corporation formed under the laws of the
state of Delaware (the "Company"), and Colorado Prime Holdings, Inc., a
corporation formed under the laws of the state of Delaware ("CPH"), propose to
issue and sell to X.X. Xxxxxx Securities Inc., NatWest Capital Markets Limited
and Dresdner Kleinwort Xxxxxx North America LLC (the "Initial Purchasers")
100,000 Units (the "Units") consisting in the aggregate of $100,000,000
principal amount of the Company's 12.50% Senior Notes due 2004 (the "Notes") and
Warrants (the "Warrants") to purchase 19,608 shares of common stock, par value
$0.01 per share (the "Shares"), of CPH. The Company's payment obligations under
the Notes will be guaranteed by all existing subsidiaries and any future U.S.
subsidiaries (the "Subsidiary Guarantors"). The Notes will be issued pursuant to
the provisions of an Indenture to be dated as of May 9, 1997 (the "Indenture")
among the Company, the Subsidiary Guarantors and The Bank of New York, as
trustee (the "Trustee"). The Shares issuable upon exercise of the Warrants are
collectively referred to herein as the "Warrant Shares." The Warrants are to be
issued pursuant to a Warrant Agreement (the "Warrant Agreement") to be dated as
of the Closing Date (as defined) between CPH and The Bank of New York, as
warrant agent (the "Warrant Agent").
The sale of the Units to the Initial Purchasers will be made without
registration of the Units under the Securities Act of 1933, as amended (the
"Securities Act"), in reliance upon the exemption therefrom provided in Section
4(2)
2
of the Securities Act. Holders of the Notes will have the benefits of a
Registration Rights Agreement to be dated as of May 9, 1997 among the Company,
the Subsidiary Guarantors and the Initial Purchasers (the "Registration Rights
Agreement").
It is understood that the Units are being offered in connection with
the merger (the "Merger") of KPC Holdings Corporation ("KPC Holdings"), the
parent of the Company, and Colorado Prime Acquisition Corp. ("XXXX"), a
transitory acquisition subsidiary to be established prior to consummation of the
Merger. Upon consummation of the Merger, KPC Holdings will be the surviving
corporation and will be renamed Colorado Prime Holdings, Inc. References to
"Holdings" herein refer to KPC Holdings prior to the Merger and CPH after the
Merger. The Merger is part of the Transactions (as defined in the Offering
Memorandum). It is understood that the Company will, as part of the
Transactions, enter into a Credit Agreement (together with the related
guarantees and collateral documents required to be delivered by the Company, the
Subsidiary Guarantors and Holdings on the Closing Date, the "Credit Agreement")
with Dresdner Bank AG, New York and Grand Cayman Branches, as agent and certain
other financial institutions.
Each of the Company and Holdings hereby agrees with the Initial
Purchasers as follows:
1. Each of the Company and Holdings agrees to issue and sell the
Units to the Initial Purchasers as hereinafter provided, and each Initial
Purchaser, upon the basis of the representations and warranties herein
contained, but subject to the conditions hereinafter stated, agrees to purchase,
severally and not jointly, from the Company and Holdings the respective amount
of Units set forth opposite such Initial Purchaser's name in Schedule I hereto
at a price (the "Purchase Price") equal to $958.60 per Unit.
2. Each of the Company and Holdings understands that the Initial
Purchasers intend (i) to offer privately their respective portions of the Units
as soon after this Agreement has become effective as in the judgment of the
Initial Purchasers is advisable and (ii) initially to offer the Units upon the
terms set forth in the Offering Memorandum (as defined below).
Each of the Company and Holdings confirms that it has authorized the
Initial Purchasers, subject to the restrictions set forth below, to distribute
copies of the Offering Memorandum in connection with the offering of the Units.
Each Initial Purchaser hereby makes to each of the Company and Holdings the
following representations and agreements:
(i) it is a qualified institutional buyer within the meaning
of Rule 144A under the Securities Act;
2
3
(ii) it will not solicit offers for, or offer to sell, the
Units by any form of general solicitation or general advertising (as
those terms are used in Regulation D under the Securities Act); and
(iii) it will solicit offers for the Units only from, and will
offer the Units only to, (1) in the case of offers inside the United
States (A) persons whom it reasonably believes to be "qualified
institutional buyers" within the meaning of Rule 144A under the
Securities Act and that in connection with each such offer it will take
reasonable steps to ensure that the purchaser of such Units is aware
that such sale is being made in reliance on Rule 144A and (B)
institutions which it reasonably believes are "accredited investors" as
defined in Rule 501(a)(1), (2), (3) or (7) of Regulation D under the
Securities Act, who, in the case of purchasers described in this clause
(B), purchase not less than $250,000 in aggregate amount of Units for
their own account and for any discretionary account for which they are
acquiring Units and provide it a letter in the form of Annex A to the
Offering Memorandum and (2) in the case of offers outside the United
States, upon the terms and conditions set forth in Annex I hereto.
3. Payment for the Units shall be made by wire transfer in immediately
available funds, to the account specified by the Company to the Initial
Purchasers no later than noon on the Business Day (as defined below) prior to
the Closing Date (as defined below), on May 9, 1997, or at such other time on
the same or such other date, not later than the fifth Business Day thereafter,
as the Initial Purchasers and the Company may agree upon in writing. The time
and date of such payment are referred to herein as the "Closing Date." As used
herein, the term "Business Day" means any day other than a day on which banks
are permitted or required to be closed in New York City.
Certificates for the Units shall be registered in such names and issued
in such denominations as the Initial Purchasers shall request not later than two
Business Days prior to the Closing Date. Such certificates will be made
available for inspection by the Initial Purchasers at the office of X.X. Xxxxxx
Securities Inc. at the address set forth above not later than 1:00 p.m., New
York City time, on the Business Day prior to the Closing Date. Certificates
evidencing the Units, each such Unit consisting of $1,000 aggregate principal
amount of Notes and one Warrant, shall be delivered to the Initial Purchasers on
the Closing Date against payment therefor, with any transfer taxes payable in
connection with the transfer to the Initial Purchasers of the Units duly paid by
the Company.
4. Each of the Company, Holdings and the Subsidiary Guarantors
represent and warrant to each Initial Purchaser that:
3
4
(a) a preliminary offering memorandum, dated April 15, 1997,
as amended by alternative pages including a new cover page dated April
22, 1997 (the "Preliminary Offering Memorandum"), and an offering
memorandum, dated May 6, 1997 (the "Offering Memorandum"), have been
prepared in connection with the offering of the Units. The Offering
Memorandum and any amendments or supplements thereto did not, as of its
date, contain an untrue statement of a material fact or omit 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
and will not, as of the Closing Date, contain 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 under
which they were made, not misleading, except that the representations
and warranties set forth in this Section 4(a) do not apply to
statements or omissions in the Offering Memorandum based upon
information furnished to the Company in writing by the Initial
Purchasers expressly for use therein;
(b) the financial statements, and the related notes thereto,
included in the Offering Memorandum present fairly in conformity with
United States generally accepted accounting principles and practices
applied on a consistent basis, the consolidated financial position of
the Company and its subsidiaries, as of the dates indicated and the
results of their operations and the changes in their consolidated cash
flows for the periods specified: and the pro forma financial
information, and the related notes thereto, included in the Offering
Memorandum are based upon good faith estimates and assumptions believed
by the Company to be reasonable;
(c) since the respective dates as of which information is
given in the Offering Memorandum, there has not been any material
change in the capital stock or long-term debt of either Holdings or the
Company and its subsidiaries, or any material adverse change, or any
development which could reasonably be expected to result in a
prospective material adverse change, in the general affairs, business,
prospects, management, financial position, stockholders' equity or
results of operations of either Holdings or the Company and its
subsidiaries, otherwise than as set forth or contemplated in the
Offering Memorandum; and except as set forth or contemplated in the
Offering Memorandum, none of Holdings, the Company or any of its
subsidiaries has entered into any transaction or agreement (whether or
not in the ordinary course of business) material to Holdings or the
Company and its subsidiaries taken as a whole;
(d) each of Holdings, the Company and each subsidiary of the
Company has been duly incorporated and is validly existing as a
corporation under the laws of its jurisdiction of incorporation, with
power and authority
4
5
(corporate and other) to own its properties and conduct its business as
described in the Offering Memorandum, and has been duly qualified as a
foreign corporation for the transaction of business and is in good
standing under the laws of each other jurisdiction in which it owns or
leases properties, or conducts any business, so as to require such
qualification, other than where the failure to be so qualified or in
good standing would not have a material adverse effect on either of
Holdings or the Company and its subsidiaries taken as a whole; and all
the outstanding shares of capital stock of the Subsidiary Guarantors
have been duly authorized and validly issued, are fully paid and
nonassessable, and (except to secure obligations under the Credit
Agreement) are owned by the Company, directly or indirectly, free and
clear of all liens, encumbrances, security interests and claims; and
all of the outstanding shares of capital stock of the Company have been
duly and validly authorized and issued, are fully paid and
non-assessable and (except to secure obligations under the Credit
Agreement) are owned directly or indirectly by Holdings, free and clear
of all liens, encumbrances, equities or claims;
(e) the Company and each of the Subsidiary Guarantors has all
requisite corporate power and authority to execute, deliver and perform
its obligations under this Agreement, the Indenture, the Notes and the
Registration Rights Agreement and in the case of the Company to issue,
sell and deliver the Notes to the Initial Purchasers as provided herein
and to consummate the Transactions and in the case of the Subsidiary
Guarantors to guarantee the Notes; and Holdings has all requisite
corporate power and authority to execute, deliver and perform its
obligations under this Agreement, the Warrant Agreement and the
Warrants and to issue, sell and deliver the Warrants to the Initial
Purchasers as provided herein and to consummate the Transactions and to
issue, sell and deliver the Warrant Shares upon exercise of the
Warrants;
(f) this Agreement has been duly authorized, executed and
delivered by each of the Company and each of the Subsidiary Guarantors
and on the Closing Date, this Agreement shall be duly authorized,
executed and delivered by Holdings;
(g) the Registration Rights Agreement has been duly and
validly authorized by each of the Company and the Subsidiary Guarantors
and, when duly executed and delivered by each of the Company and the
Subsidiary Guarantors, will be the legally valid and binding agreement
of the Company and the Subsidiary Guarantors, enforceable against the
Company and the Subsidiary Guarantors in accordance with its terms
except that (i) the enforceability thereof may be limited by
bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer
or similar laws relating to or
5
6
affecting creditors generally, (ii) the availability of equitable
remedies may be limited by equitable principles of general
applicability and (iii) the enforceability of rights to indemnification
and contribution under the Registration Rights Agreement may be limited
by applicable law and equitable consideration of public policy issues;
when executed and delivered the Registration Rights Agreement will
conform in all material respects to the description thereof in the
Offering Memorandum.
(h) each of the agreements and other documents comprising the
Credit Agreement have been duly authorized by the Company and the
Subsidiary Guarantors, and when executed and delivered by the Company
and the Subsidiary Guarantors, will constitute valid and binding
agreements of the Company and the Subsidiary Guarantors, enforceable in
accordance with their terms, except that the enforceability thereof may
be limited by bankruptcy, insolvency, reorganization, moratorium,
fraudulent transfer or similar laws relating to or affecting creditors
generally and the availability of equitable remedies may be limited by
equitable principles of general applicability;
(i) the Transactions have been duly authorized by all
requisite corporate action on the part of each of the Company and the
Subsidiary Guarantors and on the Closing Date, the Transactions shall
be duly authorized by all requisite corporate action on the part of
Holdings;
(j) the Notes and the guarantees thereof have been duly
authorized, and when issued and authenticated in accordance with the
terms of the Indenture and delivered against payment therefor in
accordance with the terms hereof will constitute valid and binding
obligations of the Company and the Subsidiary Guarantors, respectively,
enforceable against the Company and the Subsidiary Guarantors,
respectively, in accordance with their terms and entitled to the
benefits provided by the Indenture except that the enforceability
thereof may be limited by bankruptcy, insolvency, reorganization,
moratorium, fraudulent transfer or similar laws relating to or
affecting creditors generally and the availability of equitable
remedies may be limited by equitable principles of general
applicability; the Indenture (including the guarantees of the Notes by
each of the Subsidiary Guarantors) has been duly authorized by the
Company and the Subsidiary Guarantors and, when executed and delivered
by the Company and the Subsidiary Guarantors (assuming the due
execution and delivery thereof by the Trustee), the Indenture will
constitute a valid and binding instrument of the Company and the
Subsidiary Guarantors enforceable against the Company and the
Subsidiary Guarantors in accordance with its terms, except that the
enforceability thereof may be limited by bankruptcy, insolvency,
reorganization, moratorium, fraudulent transfer or similar laws
relating to or
6
7
affecting creditors generally and the availability of equitable
remedies may be limited by equitable principles of general
applicability; and the Notes and the Indenture will conform, in all
material respects, to the descriptions thereof in the Offering
Memorandum;
(k) as of the Closing Date, (i) the Warrants will have been
duly authorized and, when issued and countersigned in accordance with
the terms of the Warrant Agreement and delivered against payment
therefor in accordance with the terms hereof, will constitute valid and
binding obligations of Holdings, and (ii) the Warrant Agreement will
have been duly authorized and, when executed and delivered by Holdings,
will constitute a valid and binding instrument of Holdings, in each
case enforceable against Holdings in accordance with its terms, except
that the enforceability thereof may be limited by bankruptcy,
insolvency, reorganization, moratorium, fraudulent transfer or similar
laws relating to or affecting creditors generally and the availability
of equitable remedies may be limited by equitable principles of general
applicability; and the Warrants and the Warrant Agreement will conform,
in all material respects, to the descriptions thereof in the Offering
Memorandum;
(l) the authorized capital stock of Holdings conforms, in all
material respects, to the description thereof in the Offering
Memorandum; all shares of capital stock of Holdings to be outstanding
upon the consummation of the Transactions have been duly authorized and
will be validly issued, fully paid and non-assessable; and the Warrant
Shares have been duly authorized and reserved for issuance upon
exercise of the Warrants and, upon issuance in accordance with the
terms of the Warrants, the Warrant Shares will be validly issued, fully
paid and non-assessable and such issuance will not be subject to any
pre-emptive or similar rights;
(m) none of the transactions contemplated by this Agreement
(including, without limitation, the use of the proceeds from the sale
of the Units) will violate or result in a violation of Section 7 of the
Exchange Act, or any regulation promulgated thereunder, including,
without limitation, Regulations G, T, U and X of the Board of Governors
of the Federal Reserve System;
(n) none of Holdings, the Company or any Subsidiary Guarantor
is (i) in violation of or in default under its Certificate of
Incorporation or ByLaws, (ii) in breach or violation of any judgment,
decree or order to which it is a named party, except for any such
breach or violation which would not individually or in the aggregate
have a material adverse effect on Holdings or the Company and its
subsidiaries, taken as a whole or (iii) in breach or default under any
terms of any indenture, mortgage, deed of trust, loan
7
8
agreement or other agreement or instrument to which Holdings, the
Company or a Subsidiary Guarantor is a party or by which it or any of
its properties is bound, except for any breaches or defaults which
individually or in the aggregate do not have a material adverse effect
on Holdings or the Company and its subsidiaries, taken as a whole; the
issue and sale of the Units and the execution, delivery and performance
by Holdings, the Company and the Subsidiary Guarantors of all of their
respective obligations under the Notes, the Warrants, the Indenture,
the Warrant Agreement, the Registration Rights Agreement and this
Agreement and the consummation of the transactions herein and therein
contemplated and the consummation by Holdings, the Company and the
Subsidiary Guarantors of the Transactions will not conflict with or
constitute or result in a breach of any of the terms or provisions of,
or constitute a default under, or violation of any of the terms or
provisions of any indenture, mortgage, deed of trust, loan agreement or
other agreement or instrument to which Holdings, the Company or any
Subsidiary Guarantor is or will be, following the Transactions, a party
or by which it is or will be bound or to which any of the property or
assets of Holdings, the Company or any Subsidiary Guarantor is or will
be subject, except for conflicts, breaches, defaults or violations
which individually or in the aggregate would not have a material
adverse effect on Holdings or the Company and its subsidiaries, taken
as a whole, nor will any such action result in any violation of the
provisions of the Certificate of Incorporation or By-Laws of Holdings,
the Company or any Subsidiary Guarantor or any applicable law or
statute or any order, rule or regulation of any court or governmental
agency or body having jurisdiction over Holdings, the Company or any
Subsidiary Guarantor or any of their respective properties, except for
violations which individually or in the aggregate would not have a
material adverse effect on Holdings, the Company and its subsidiaries,
taken as a whole; and no consent, approval, authorization, order,
license, registration or qualification of or with any court or
governmental agency or body is required for the issue and sale of the
Units in accordance with this Agreement, the consummation by Holdings,
the Company and the Subsidiary Guarantors of the Transactions or, the
execution, delivery and performance of this Agreement, the Indenture,
the Warrant Agreement, the Notes, the Warrants or the Registration
Rights Agreement by Holdings, the Company and the Subsidiary
Guarantors, as the case may be, and compliance by Holdings, the Company
and the Subsidiary Guarantors with all the provisions thereof to which
they are subject, and the consummation of the transactions herein and
therein contemplated, except such consents, approvals, authorizations,
registrations or qualifications as have been, or prior to the Closing
Date will be, obtained or as may be required under any state securities
or Blue Sky Laws in connection with the purchase and distribution of
the Units by the Initial Purchasers;
8
9
(o) there are no legal or governmental investigations,
actions, suits or proceedings pending or, to the knowledge of either of
Holdings or the Company, threatened against or affecting Holdings or
the Company or any of its subsidiaries or any of their properties or to
which Holdings or the Company or any of its subsidiaries is or may be a
party following the Transactions or to which any property of Holdings
or the Company or any of its subsidiaries is or may be subject which,
if determined adversely to Holdings or the Company or any of its
subsidiaries, could individually or in the aggregate have, or
reasonably be expected to have, a material adverse effect on the
general affairs, business, prospects, management, financial position,
stockholders' equity or results of operations of Holdings or the
Company and its subsidiaries, taken as a whole or which would interfere
with or adversely affect the issuance of the Units or the consummation
of the Transactions or in any manner draw into question the validity of
this Agreement, the Indenture, the Warrant Agreement, the Notes, the
Warrants or the Registration Rights Agreement and, to the best of each
of Holdings' and the Company's knowledge, no such proceedings are
threatened or contemplated by governmental authorities or threatened by
others;
(p) none of Holdings, the Company, any Subsidiary Guarantor or
any affiliate (as defined in Rule 501(b) of Regulation D under the
Securities Act ("Regulation D")) of Holdings or the Company or any
Subsidiary Guarantor has directly, or through any agent, sold, offered
for sale, solicited offers to buy or otherwise negotiated in respect
of, any security (as defined in the Securities Act) which is or will be
integrated with the sale of the Units in a manner that would require
the registration under the Securities Act of the offering contemplated
by the Offering Memorandum;
(q) none of Holdings, the Company, any Subsidiary Guarantor or
any person acting on its behalf (other than the Initial Purchasers as
to which Holdings, the Company and the Subsidiary Guarantors make no
representations) has offered or sold the Units by means of any general
solicitation or general advertising within the meaning of Rule 502(c)
under the Securities Act or, with respect to Units sold outside the
United States to non- U.S. persons (as defined in Rule 902 under the
Securities Act), by means of any directed selling efforts within the
meaning of Rule 902 under the Securities Act and each of Holdings, the
Company and each Subsidiary Guarantor and any person acting on its
behalf (other than the Initial Purchasers as to which Holdings, the
Company and the Subsidiary Guarantors make no representations) has
complied with and will implement the "offering restriction" within the
meaning of such Rule 902;
(r) none of Holdings, the Company or any subsidiary is or will
be after giving effect to the Transactions, an "investment company" or
an entity
9
10
"controlled" by an "investment company" as such terms are defined in
the Investment Company Act of 1940, as amended;
(s) it is not necessary in connection with the offer, sale and
delivery of the Units in the manner contemplated by this Agreement to
register the Units under the Securities Act or to qualify an indenture
with respect to the Notes under the Trust Indenture Act of 1939, as
amended (the "TIA");
(t) the Units satisfy the requirements set forth in Rule
144A(d)(3) under the Securities Act;
(u) Xxxxxx Xxxxxxxx LLP, who have certified certain financial
statements of the Company and its consolidated subsidiaries, are
independent public accountants as required by the Securities Act;
(v) each of Holdings and the Company and its subsidiaries have
good and marketable title in fee simple to all material items of real
property and good and marketable title to all material personal
property owned by them or to be owned by them following the
Transactions, in each case free and clear of all liens, encumbrances
and defects except to secure obligations under the Credit Agreement and
to secure other liens permitted by the terms and conditions of the
Notes and the Indenture and such as do not materially affect the value
of such property and do not interfere with the use made or proposed to
be made of such property by Holdings or the Company and its
subsidiaries; and after giving effect to the Transactions any material
real property and buildings held under lease by Holdings or the Company
and its subsidiaries are and will be held by them under valid, existing
and enforceable leases with such exceptions as are not material and do
not interfere with the use made or proposed to be made of such property
and buildings by Holdings or the Company and its subsidiaries;
(w) each of Holdings and the Company has complied, to the
extent applicable, 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;
(x) Holdings, the Company and its subsidiaries have filed all
federal, state, local and foreign tax returns which have been required
to be filed and have paid all taxes shown thereon and all assessments
received by them or any of them to the extent that such taxes have
become due and are not being contested in good faith; and, there is no
material tax deficiency which has been or might reasonably be expected
to be asserted or threatened against Holdings, the Company or any of
its subsidiaries;
10
11
(y) Holdings, the Company and its subsidiaries own, possess
or have obtained all material licenses, permits, certificates,
consents, orders, approvals and other authorizations from and have made
all declarations and filings with, all federal, state, local and other
governmental authorities (including foreign regulatory agencies), all
self-regulatory organizations and all courts and other tribunals,
domestic or foreign, necessary to own or lease, as the case may be, and
to operate their properties, and Holdings, the Company and its
subsidiaries have not received any actual notice, and are not aware, of
any proceeding relating to revocation or modification of any such
license, permit, certificate, consent, order, approval or other
authorization; and, Holdings, the Company and its subsidiaries are in
compliance with all laws and regulations relating to the conduct of
their business as of the date hereof, except for violations which
individually and in the aggregate would not have a material adverse
effect on Holdings or the Company and its subsidiaries, taken as a
whole;
(z) there are no existing or, to the best knowledge of the
Company, threatened labor disputes with the employees of the Company
which are likely to have a material adverse effect on the Company and
its subsidiaries, taken as a whole;
(aa) the Company and its subsidiaries (i) are in compliance
with any and all applicable federal, state and local laws and
regulations relating to the protection of human health and safety, the
environment or hazardous or toxic substances or wastes, pollutants or
contaminants ("Environmental Laws"), (ii) have received all permits,
licenses or other approvals required of them under applicable
Environmental Laws to conduct their business and (iii) are in
compliance with all terms and conditions of any such permit, license or
approval except where such noncompliance with Environmental Laws,
failure to receive required permits, licenses or other approvals or
failure to comply with the terms and conditions of such permits,
licenses or approvals would not, individually or in the aggregate,
reasonably be expected to have a material adverse effect on the Company
and its subsidiaries, taken as a whole; associated costs and
liabilities (including, without limitation, any capital or operating
expenditures required for clean-up, closure of properties or compliance
with Environmental Laws or any permit, license or approval, any related
constraints on operating activities and any potential liabilities to
third parties) would not, individually or in the aggregate, reasonably
be expected to have a material adverse effect on the Company and its
subsidiaries, taken as a whole;
(bb) upon consummation of the Transactions, the present fair
salable value of the assets of the Company and the Subsidiary
Guarantors, taken as a whole, will exceed the amount that will be
required to be paid on or in
11
12
respect of their existing debts and other liabilities (including
contingent liabilities) as they become absolute and matured. The assets
of the Company and the Subsidiary Guarantors, taken as a whole, upon
the issuance of the Notes, will not constitute unreasonably small
capital to carry out their business as now conducted, including the
capital needs of the Company and the Subsidiary Guarantors, taking into
account the projected capital requirements and capital availability of
the Company and the Subsidiary Guarantors. Neither the Company nor the
Subsidiary Guarantors (i) is entering into the Transactions with the
intent to hinder, delay, or defraud any entity to which it is or will
become indebted or (ii) will receive less than reasonably equivalent
value in exchange for entering into the Transactions;
(cc) except as disclosed in the Offering Memorandum, other
than this Agreement there are no contracts, agreements or
understandings that would give rise to a valid claim against Holdings,
the Company or any Subsidiary Guarantor or the Initial Purchasers for a
brokerage commission, finder's fee or like payment in connection with
the issuance, purchase or sale of the Units;
(dd) except as disclosed in the Offering Memorandum, there are
no business relationships or related party transactions which would be
required to be disclosed by Item 404 of Regulation S-K of the
Securities Act in a registration statement of Holdings, the Company and
the Subsidiary Guarantors becoming effective on the date hereof; and
(ee) following the merger of each of Lexington Funding, Inc.
and Verdi Funding Corp. with and into Concord Financial Services, Inc.,
there are no subsidiaries of the Company except for the Subsidiary
Guarantors.
5. Each of Holdings, the Company and the Subsidiary Guarantors
covenants and agrees with each of the Initial Purchasers as follows:
(a) before distributing any amendment or supplement to the
Offering Memorandum, to furnish to the Initial Purchasers a copy of the
proposed amendment or supplement for review and not to distribute any
such proposed amendment or supplement to which the Initial Purchasers
reasonably object;
(b) if, at any time prior to the completion of the offering
of the Units, any event shall occur as a result of which it is
necessary to amend or supplement the Offering Memorandum in order that
the Offering Memorandum does not contain 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 when the
Offering Memorandum is delivered
12
13
to a purchaser, not misleading, or if it is necessary to amend or
supplement the Offering Memorandum to comply with law, forthwith to
prepare and furnish, at the expense of the Company, to the Initial
Purchasers, such amendments or supplements to the Offering Memorandum
as may be necessary so that the Offering Memorandum as so amended or
supplemented will not contain 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 when the Offering Memorandum
is delivered to a purchaser, not misleading or so that the Offering
Memorandum will comply with law;
(c) to cooperate with you and your counsel in connection with
the registration or qualification of the Units for offering and sale by
the Initial Purchasers under the securities or Blue Sky laws of such
jurisdictions as you may reasonably request and will file such consents
to service of process or other documents necessary or appropriate in
order to effect such registration or qualification; provided that in no
event shall any of Holdings, the Company or the Subsidiary Guarantors
be obligated to qualify to do business in any jurisdiction where it is
not now so qualified or to take any action that would subject it to
taxation or service of process in suits, other than those arising out
of the offering or sale of the Units, in any jurisdiction where it is
not now so subject;
(d) for five years from the Closing Date, to furnish to the
Initial Purchasers copies of all reports or other material
communications (financial or other) furnished to holders of Units, and
copies of any reports and financial statements filed with the
Commission (other than where confidential treatment has been requested)
or any national securities exchange;
(e) other than the warrants to be issued to Xxxxxx Equity
Investors III, L.P. in connection with the Transactions, during the
period beginning on the date hereof and continuing to and including the
Business Day following the Closing Date, not to offer, sell, contract
to sell, or otherwise dispose of any debt securities of or guaranteed
by the Company or any warrants, in each case which are substantially
similar to the Notes or the Warrants;
(f) to use the net proceeds received in connection with the
Transactions in the manner specified in the Offering Memorandum under
the caption "Use of Proceeds";
(g) if requested by you, to use its best efforts to cause such
the Units, the Notes and the Warrants to be eligible for the PORTAL
trading system of the National Association of Securities Dealers, Inc.;
13
14
(h) during the period of two years after the Closing Date,
not, and not to permit any of their "affiliates" (as defined in Rule
144 under the Securities Act) to, resell any of the Units which
constitute "restricted securities" under Rule 144 that have been
reacquired by any of them, except with respect to "affiliates" as may
be permitted by Rule 144A or Regulation S;
(i) whether or not the transactions contemplated by this
Agreement are consummated or this Agreement is terminated, the Company
will pay or cause to be paid all costs and expenses incident to the
performance of Holdings', the Company's and the Subsidiary Guarantors'
obligations hereunder, including without limiting the generality of the
foregoing, all costs and expenses (i) incident to the preparation,
issuance, execution, authentication and delivery of the Notes,
including any expenses of the Trustee and its counsel, (ii) incident to
the preparation, printing and distribution of the Offering Memorandum
and any preliminary offering memorandum (including in each case all
exhibits, amendments and supplements thereto), (iii) incurred in
connection with the registration or qualification and determination of
eligibility for investment of the Units under the laws of such
jurisdictions as the Initial Purchasers may designate (including fees
of counsel for the Initial Purchasers and their disbursements), (iv) in
connection with the admission of the Notes to the PORTAL trading system
of the National Association of Securities Dealers, Inc., (v) in
connection with the printing (including word processing and duplication
costs) and delivery of the Preliminary and Supplemental Blue Sky
Memoranda and any Legal Investment Survey and the furnishing to the
Initial Purchasers and dealers of copies of the Offering Memorandum,
including mailing and shipping, as herein provided, (vi) payable to
rating agencies in connection with the rating of the Notes, (vii)
incurred in connection with a "road show" presentation to potential
investors, (viii) of any transfer agent, (ix) incident to the
preparation, issuance, execution, countersigning and delivery of the
Warrants and (x) of the Initial Purchasers (including, but not limited
to, the fees and expenses of counsel for the Initial Purchasers) in an
amount not to exceed $350,000;
(j) not to solicit any offer to buy or offer to sell the Units
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;
(k) for so long as any of the Notes or Warrants remain
outstanding and are "restricted securities" within the meaning of Rule
l44(a)(3) under the Securities Act the Company will, during any period
in which it is not subject to Section 13 or 15(d) under the Exchange
Act, make available to the Initial Purchasers and any holder of Notes
or Warrants in connection with any sale
14
15
thereof and any prospective purchaser of such Notes or Warrants, in
each case upon request, the information specified in, and meeting the
requirements of, Rule 144A(d)(4) ("Rule l44A(d)(4) Information") under
the Securities Act (or any successor thereto); and
(l) not to take any action prohibited by Regulation M under
the Exchange Act in connection with the distribution of the Units
contemplated hereby;
(m) to reserve and continue to reserve as long as any Warrants
are outstanding, a sufficient number of Shares for issuance upon
exercise of the Warrants.
6. The several obligations of the Initial Purchasers hereunder to
purchase the Units on the Closing Date are subject to the performance, in all
material respects, by Holdings, the Company and each Subsidiary Guarantor of its
obligations hereunder and to the following additional conditions:
(a) the representations and warranties of each of Holdings,
the Company and each Subsidiary Guarantor contained herein are true and
correct on and as of the Closing Date and after consummation of the
Transactions as if made on and as of the Closing Date and after
consummation of the Transactions; and Holdings, the Company and each
Subsidiary Guarantor shall have complied, in all material respects,
with all agreements and all conditions on its part to be performed or
satisfied hereunder at or prior to the Closing Date;
(b) subsequent to the execution and delivery of this Agreement
and prior to the Closing Date, there shall not have occurred any
downgrading, nor shall any notice have been given of (i) any
downgrading, (ii) any intended or potential downgrading or (iii) any
review or possible change that does not indicate an improvement, in the
rating accorded any securities of or guaranteed by Holdings or the
Company by any "nationally recognized statistical rating organization",
as such term is defined for purposes of Rule 436(g)(2) under the
Securities Act;
(c) since the respective dates as of which information is
given in the Offering Memorandum, there shall not have been any
material change in the capital stock or long-term debt of Holdings or
the Company and its subsidiaries or any material adverse change, or any
development which could reasonably be expected to result in a
prospective material adverse change, in the general affairs, business,
prospects, management, financial position, stockholders' equity or
results of operations of Holdings or the Company and its subsidiaries,
otherwise than as set forth or contemplated in the Offering Memorandum,
the effect of which in the judgment of the Initial Purchasers makes it
impracticable or inadvisable to proceed with the offering or the
delivery of the Units on the Closing Date on the terms and in the
manner contemplated in the Offering
15
16
Memorandum; and none of Holdings, the Company and its subsidiaries has
sustained since the date of the latest audited financial statements
included in the Offering Memorandum any material loss or interference
with their business from fire, explosion, flood or other calamity,
whether or not covered by insurance, or from any labor dispute or court
or governmental action, order or decree, otherwise than as set forth or
contemplated in the Offering Memorandum;
(d) the Initial Purchasers shall have received on and as of
the Closing Date a certificate of an executive officer of Holdings and
a certificate of an executive officer of the Company, in each case with
specific knowledge about Holdings or the Company's and its
subsidiaries' financial matters, as the case may be, satisfactory to
the Initial Purchasers to the effect set forth in subsections (a) and
(b) of this Section and to the further effect that there has not
occurred any material adverse change, or any development which could
reasonably be expected to result in a prospective material adverse
change, in the general affairs, business, prospects, management,
financial position, stockholders' equity or results of operations of
Holdings or the Company and its subsidiaries taken as a whole, as the
case may be, from those set forth or contemplated in the Offering
Memorandum;
(e) Xxxxxxx Xxxxxxxxxx & Xxxxxx, LLP, counsel for the Company,
shall have furnished to the Initial Purchasers their written opinion,
dated the Closing Date in form and substance satisfactory to the
Initial Purchasers, to the effect that:
(i) the Company and each of its subsidiaries has
been duly incorporated and is validly existing as a
corporation in good standing under the laws of its
jurisdiction of incorporation with power and authority
(corporate and other) to own its properties and conduct its
business as described in the Offering Memorandum;
(ii) the Company and each of its subsidiaries have
been duly qualified as a foreign corporation for the
transaction of business and is in good standing under the laws
of each other jurisdiction in which it owns or leases
properties or conducts any business, so as to require such
qualification, other than where the failure to be so qualified
or in good standing would not have a material adverse effect
on the Company and its subsidiaries, taken as a whole;
16
17
(iii) all of the outstanding shares of capital stock
of the Company have been duly and validly authorized and
issued and are fully paid and non-assessable;
(iv) all of the outstanding shares of capital stock
of the Subsidiary Guarantors have been duly and validly
authorized and issued, are fully paid and non-assessable, and
(except to secure obligations under the Credit Agreement) are
owned by the Company, directly or indirectly, free and clear
of all liens, encumbrances, security interests and claims;
(v) each of the Company and its subsidiaries has
all requisite corporate power and authority to execute,
deliver and perform its obligations under this Agreement, the
Indenture, the Notes and the Registration Rights Agreement and
in the case of the Company to issue, sell and deliver the
Notes to the Initial Purchasers as provided herein and to
consummate the Transactions and in the case of the Subsidiary
Guarantors to guarantee the Notes;
(vi) this Agreement has been duly authorized,
executed and delivered by the Company and the Subsidiary
Guarantors;
(vii) the Registration Rights Agreement has been
duly and validly authorized, executed and delivered by the
Company and the Subsidiary Guarantors and is the legally valid
and binding agreement of the Company and the Subsidiary
Guarantors, enforceable against the Company and the Subsidiary
Guarantors in accordance with its terms except that (i) the
enforceability thereof may be limited by bankruptcy,
insolvency, reorganization, moratorium, fraudulent transfer or
similar laws relating to or affecting creditors generally,
(ii) the availability of equitable remedies may be limited by
equitable principles of general applicability and (iii) the
enforceability of rights to indemnification and contribution
under the Registration Rights Agreement may be limited by
applicable law and equitable consideration of public policy
issues; the Registration Rights Agreement conforms in all
material respects to the description thereof in the Offering
Memorandum;
(viii) each of the agreements and other documents
comprising the Credit Agreement have been duly authorized,
executed and delivered by the Company and the Subsidiary
Guarantors, and constitute valid and binding agreements of the
Company and the Subsidiary Guarantors, enforceable in
accordance with their terms, except that the enforceability
thereof may be limited by bankruptcy,
17
18
insolvency, reorganization, moratorium, fraudulent transfer or
similar laws relating to or affecting creditors generally and
the availability of equitable remedies may be limited by
equitable principles of general applicability;
(ix) the Transactions have been duly authorized by
all requisite corporate action on the part of each of the
Company and the Subsidiary Guarantors;
(x) the Notes and the guarantees thereof have been
duly authorized, and when issued and authenticated in
accordance with the terms of the Indenture and delivered
against payment therefor in accordance with the terms hereof
will constitute valid and binding obligations of the Company
and the Subsidiary Guarantors, respectively, enforceable
against the Company and the Subsidiary Guarantors,
respectively, in accordance with their terms and entitled to
the benefits provided by the Indenture except that the
enforceability thereof may be limited by bankruptcy,
insolvency, reorganization, moratorium, fraudulent transfer or
similar laws relating to or affecting creditors generally and
the availability of equitable remedies may be limited by
equitable principles of general applicability; the Indenture
(including the guarantees of the Notes by each of the
Subsidiary Guarantors) has been duly authorized by the Company
and the Subsidiary Guarantors and, when executed and delivered
by the Company and the Subsidiary Guarantors (assuming the due
execution and delivery thereof by the Trustee), the Indenture
will constitute a valid and binding instrument of the Company
and the Subsidiary Guarantors enforceable against the Company
and the Subsidiary Guarantors in accordance with its terms,
except that the enforceability thereof may be limited by
bankruptcy, insolvency, reorganization, moratorium, fraudulent
transfer or similar laws relating to or affecting creditors
generally and the availability of equitable remedies may be
limited by equitable principles of general applicability; and
the Notes and the Indenture conform, in all material respects,
to the descriptions thereof in the Offering Memorandum;
(xi) no consent, approval, authorization, order,
license, registration or qualification of or with any United
States court or governmental agency or body is required for
the issue and sale by the Company of the Notes, the
consummation by the Company and the Subsidiary Guarantors of
the Transactions or, the execution, delivery and performance
of this Agreement, the Indenture, the Notes or the
Registration Rights Agreement by the Company and the
Subsidiary Guarantors and compliance by the Company and the
Subsidiary
18
19
Guarantors with all the provisions thereof and the
consummation of the transactions herein and therein
contemplated, except as may be required under state securities
or Blue Sky laws (as to which such counsel need not express an
opinion), and those which have heretofore been obtained in
connection with the purchase and distribution of the Notes by
the Initial Purchasers;
(xii) to such counsel's knowledge, neither the
Company nor any Subsidiary Guarantor is (i) in violation of
its Certificate of Incorporation or By-Laws, (ii) in breach or
violation of any judgment, decree or order to which it is a
named party, except for any such breach or violation which
would not, individually or in the aggregate, have a material
adverse effect on the Company and its subsidiaries, taken as a
whole, or (iii) in breach or default under any of the terms or
provisions of any indenture, mortgage, deed of trust, loan
agreement or other agreement or instrument to which the
Company or a Subsidiary Guarantor is or will be, following the
Transactions a party or by which it is or will be bound or to
which any of the property or assets of the Company or any
Subsidiary Guarantor is or will be subject, except for any
such breach, or default, which would not, individually or in
the aggregate, have a material adverse effect on the Company
and its subsidiaries taken as a whole; the issue and sale of
the Notes and the execution, delivery and performance by the
Company and the Subsidiary Guarantors of all of their
respective obligations under the Notes, the Indenture, the
Registration Rights Agreement and this Agreement and the
consummation of the transactions herein and therein
contemplated and the consummation by the Company and the
Subsidiary Guarantors of the Transactions will not conflict
with or constitute or result in a breach or a default under or
violation of any of (i) the terms or provisions of any
indenture, mortgage, deed of trust, loan agreement or other
agreement or instrument to which the Company or any Subsidiary
Guarantor is a party or by which it is bound or to which any
of the property or assets of the Company or any Subsidiary
Guarantor is subject except for any such conflict, breach,
default or violation which would not, individually or in the
aggregate, have a material adverse effect on the Company and
its subsidiaries, taken as a whole, (ii) the Certificate of
Incorporation or By-Laws of the Company or any Subsidiary
Guarantor, or (iii) any judgment, decree or order known to
such counsel to which the Company or any Subsidiary Guarantor
is a named party, except for any such conflict, breach or
violation which would not, individually or in the aggregate,
have a material adverse effect on the Company and its
subsidiaries, taken as a whole;
19
20
(xiii) to such counsel's knowledge, no legal or
governmental investigations, actions, suits or proceedings are
pending or threatened to which the Company or any of its
subsidiaries is a party (i) that would be required under the
Securities Act to be described in a prospectus and are not
described in the Offering Memorandum or (ii) which seek to
restrain, enjoin or prevent the consummation of or otherwise
challenge (A) the issuance or sale of the Notes in the manner
contemplated by the Offering Memorandum or (B) the
Transactions; no contract, agreement, instrument or document
known to such counsel of a character required to be described
in the Offering Memorandum in order to make the statements
therein not misleading, is not so described;
(xiv) the statements in the Offering Memorandum
under "Certain Transactions" insofar as such statements
constitute a summary of the documents or legal matters
referred to therein, fairly present in all material respects
such documents or legal matters;
(xv) neither the Company nor any Subsidiary
Guarantor is, or, after giving effect to the Transactions,
will be, an "investment company" as defined in the Investment
Company Act of 1940, as amended;
(xvi) except as disclosed in the Offering
Memorandum, there are no business relationships or related
party transactions known to such counsel which would be
required to be disclosed by Item 404 of Regulation S-K of the
Securities and Exchange Commission in a registration statement
of the Company and the Subsidiary Guarantors becoming
effective on the date hereof;
(xvii) nothing has come to such counsel's attention
which causes such counsel to believe that (except for the
financial statements and other financial and statistical
information included therein as to which such counsel need
express no belief) the Offering Memorandum, as of its date of
issuance contained, and, as amended or supplemented if
applicable, as of the Closing Date contains, any untrue
statement of a material fact or omitted or omits to state a
material fact necessary in order to make the statements
therein, in the light of the circumstances under which they
were made, not misleading.
In rendering such opinions, such counsel may rely (A) as to matters
involving the application of laws other than the laws of the United States and
the States of Delaware and New York, to the extent such counsel deems proper and
to the extent
20
21
specified in such opinion, if at all, upon an opinion or opinions (reasonably
satisfactory to the Initial Purchasers' counsel) of other counsel, reasonably
acceptable to the Initial Purchasers' counsel, familiar with the applicable
laws; and (B) as to matters of fact, to the extent such counsel deems proper, on
certificates of public officials and responsible officers of the Company. The
opinion of such counsel for the Company shall state that the opinion of any such
other counsel upon which they relied is in form satisfactory to such counsel
and, in such counsel's opinion, the Initial Purchasers and they are justified in
relying thereon.
With respect to the matters to be covered in subparagraph (xiv) above
counsel may state their opinion and belief is based upon their participation in
the preparation of the Offering Memorandum and any amendment or supplement
thereto but is without independent check or verification except as specified.
The opinion of Xxxxxxx Xxxxxxxxxx & Xxxxxx, LLP described above shall
be rendered to the Initial Purchasers at the request of the Company and shall so
state therein.
(f) Xxxxxx & Xxxxxx, counsel for Holdings, shall have
furnished to the Initial Purchasers their written opinion, dated the
Closing Date in form and substance satisfactory to the Initial
Purchasers, to the effect that:
(i) Holdings has been duly incorporated and is
validly existing as a corporation in good standing under laws
of Delaware;
(ii) except to secure obligations under the Credit
Agreement, all of the outstanding shares of capital stock of
the Company are owned by Holdings, free and clear of all
liens, encumbrances, equities or claims;
(iii) Holdings has all requisite corporate power and
authority to consummate the Transactions, to execute, deliver
and perform its obligations under this Agreement, the Warrant
Agreement and the Warrants and to issue, sell and deliver the
Warrants to the Initial Purchasers as provided herein;
(iv) this Agreement has been duly authorized,
executed and delivered by Holdings;
(v) the Transactions have been duly authorized by
all requisite corporate action on the part of XXXX;
(vi) each of the agreements and other documents
comprising the Credit Agreement have been duly authorized,
executed and
21
22
delivered by Holdings, and constitute valid and binding
agreements of Holdings, enforceable in accordance with their
terms, except that the enforceability thereof may be limited
by bankruptcy, insolvency, reorganization, moratorium,
fraudulent transfer or similar laws relating to or affecting
creditors generally and the availability of equitable remedies
may be limited by equitable principles of general
applicability;
(vii) no consent, approval, authorization, order,
license, registration or qualification of or with any United
States court or governmental agency or body is required for
the issue and sale by Holdings of the Warrants, the
consummation by XXXX of the Transactions, the execution,
delivery and performance of this Agreement, the Warrant
Agreement or the Warrants, and compliance by Holdings with all
the provisions thereof and the consummation of the
transactions herein and therein contemplated, except as may be
required under state securities or Blue Sky laws (as to which
such counsel need not express an opinion), and those which
have been obtained in connection with the purchase and
distribution of the Units by the Initial Purchasers;
(viii) to such counsel's knowledge, Holdings is not
in violation of its Certificate of Incorporation or By-Laws,
except for any such breach, which would not, individually or
in the aggregate, have a material adverse effect on the
Company and its subsidiaries taken as a whole; the issue and
sale of the Warrants and the execution, delivery and
performance by Holdings of all of its obligations under the
Warrants, the Warrant Agreement and this Agreement and the
consummation of the transactions herein and therein by
Holdings will not conflict with or constitute or result in a
breach or a default under or violation of any of (i) the terms
or provisions of any indenture, mortgage, deed of trust, loan
agreement or other agreement or instrument to which XXXX is a
party or by which it is bound or to which any of the property
or assets of XXXX is subject except for any such conflict,
breach, default or violation which would not, individually or
in the aggregate, have a material adverse effect on Holdings,
(ii) the Certificate of Incorporation or By-Laws of Holdings,
or (iii) any judgment, decree or order known to such counsel
to which Holdings is a named party, except for any such
conflict, breach or violation which would not, individually or
in the aggregate, have a material adverse effect on Holdings;
(ix) the consummation by XXXX of the Transactions
will not conflict with or constitute or result in a breach or
a default under or
22
23
violation of any of (i) the terms or provisions of any
indenture, mortgage, deed of trust, loan agreement or other
agreement or instrument to which XXXX is a party or by which
it is bound or to which any of the property or assets of XXXX
is subject except for any such conflict, breach, default or
violation which would not, individually or in the aggregate,
have a material adverse effect on the Company and its
subsidiaries, taken as a whole, (ii) the Certificate of
Incorporation or By-Laws of XXXX, or (iii) any judgment,
decree or order known to such counsel to which XXXX is a named
party, except for any such conflict, breach or violation which
would not, individually or in the aggregate, have a material
adverse effect on the Company and its subsidiaries, taken as a
whole;
(x) the capital stock of Holdings outstanding upon
consummation of the Transactions is as described in the
Offering Memorandum and is duly authorized, validly issued,
fully paid and non-assessable and owned by Xxxxxx and the
Management Investors; the capital stock of Holdings held by
Xxxxxx will be free and clear of all liens, encumbrances,
security interests and claims; and the Warrant Shares have
been duly authorized and reserved for issuance upon exercise
of the Warrants and, upon issuance in accordance with the
terms of the Warrants, the Warrant Shares will be validly
issued, fully paid and non-assessable and such issuance will
not be subject to any pre-emptive or similar rights;
(xi) the statements in the Offering Memorandum under
"The Transactions", "Description of the Units", "Description
of Notes," "Description of Warrants," "Description of Credit
Agreement" and "Certain Federal Income Tax Considerations,"
insofar as such statements constitute a summary of the
documents or legal matters referred to therein, fairly present
in all material respects such documents or legal matters;
(xii) no registration under the Securities Act of the
Units is required in connection with the sale of the Units to
the Initial Purchasers as contemplated by this Agreement and
the Offering Memorandum or in connection with the initial
resale of the Units by the Initial Purchasers in accordance
with Section 2 (including Annex I) of this Agreement, and the
Indenture is not required to be qualified under the TIA, in
each case assuming (i) that the purchasers who buy the Units
in the initial resales are "qualified institutional buyers"
(within the meaning of Rule 144A under the Securities Act),
non-U.S. Persons (as defined in Rule 902 under the Securities
Act) or accredited investors (as defined in Rule 501(a)(1),
(2), (3) or (7) of
23
24
Regulation D under the Securities Act), (ii) the accuracy of
the Initial Purchasers' representations and those of the
Company and the Subsidiary Guarantors contained in this
Agreement regarding the absence of a general solicitation in
connection with the sale of the Units to the Initial
Purchasers and the initial resales thereof, and (iii) the
accuracy of the representations made by each accredited
investor who purchases Units in the initial resale as set
forth in the Offering Memorandum;
(xiii) the Units satisfy the requirements set forth
in Rule l44A(d)(3) under the Securities Act;
(xiv) the Warrants have been duly authorized and,
when issued and countersigned in accordance with the terms of
the Warrant Agreement and delivered against payment therefor
in accordance with the terms thereof, will conform in all
material respects to the description thereof in the Offering
Memorandum and will constitute valid and binding obligations
of Holdings, enforceable in accordance with their terms,
except that the enforceability thereof may be limited by
bankruptcy, insolvency, reorganization, moratorium, fraudulent
transfer or similar laws relating to or affecting creditors
generally and the availability of equitable remedies may be
limited by equitable principles of general applicability; and
(xv) the Warrant Agreement has been duly authorized
and, when executed and delivered, will constitute a valid and
binding obligation of Holdings, enforceable against it in
accordance with its terms, except that the enforceability
thereof may be limited by bankruptcy, insolvency,
reorganization, moratorium, fraudulent transfer or similar
laws relating to or affecting creditors and the availability
of equitable remedies may be limited by equitable principles
of general applicability;
In rendering such opinions, such counsel may rely (A) as to matters
involving the application of laws other than the laws of the United States and
the States of Delaware and New York, to the extent such counsel deems proper and
to the extent specified in such opinion, if at all, upon an opinion or opinions
(reasonably satisfactory to the Initial Purchasers' counsel) of other counsel,
reasonably acceptable to the Initial Purchasers' counsel, familiar with the
applicable laws; and (B) as to matters of fact, to the extent such counsel deems
proper, on certificates of public officials and responsible officers of the
Company. The opinion of such counsel for the Company shall state that the
opinion of any such other counsel upon which they relied is in form satisfactory
to such counsel and, in such counsel's opinion, the Initial Purchasers and they
are justified in relying thereon.
24
25
The opinion of Xxxxxx & Xxxxxx described above shall be rendered to the
Initial Purchasers at the request of Holdings and shall so state therein.
(g) on the date of the issuance of the Offering Memorandum and
also on the Closing Date, Xxxxxx Xxxxxxxx LLP shall have furnished to
the Initial Purchasers letters, dated the respective dates of delivery
thereof, in form and substance satisfactory to you, containing
statements and information of the type customarily included in
accountants' "comfort letters" to underwriters with respect to the
financial statements and certain other financial information contained
in the Offering Memorandum;
(h) The Company and the Subsidiary Guarantors shall have
executed and delivered the Registration Rights Agreement substantially
in the form attached hereto as Annex II;
(i) the Credit Agreement shall have been executed in form and
substance reasonably satisfactory to the Initial Purchasers and each of
the other Transactions shall occur simultaneously with the Closing;
(j) the Initial Purchasers shall have received on and as of
the Closing Date an opinion of Xxxxx Xxxx & Xxxxxxxx, counsel to the
Initial Purchasers, with respect to the validity of the Indenture, the
Warrant Agreement, the Notes and the Warrants, and such other related
matters as the Initial Purchasers may reasonably request, and such
counsel shall have received such papers and information as they may
reasonably request to enable them to pass upon such matters;
(k) on or prior to the Closing Date, the Company shall have
furnished to the Initial Purchasers such further certificates and
documents as the Initial Purchasers shall reasonably request; and
(l) on or prior to the Closing Date, each of Lexington
Funding, Inc. and Verdi Funding Corp. shall have merged with and into
Concord Financial Services, Inc., with Concord Financial Services, Inc.
as the surviving corporation.
7. Each of Holdings, the Company and the Subsidiary Guarantors jointly
and severally agree to indemnify and hold harmless each Initial Purchaser and
each person, if any, who controls any Initial Purchaser within the meaning of
either Section 15 of the Securities Act or Section 20 of the Exchange Act, from
and against any and all losses, claims, damages and liabilities (including
without limitation the legal fees and other expenses reasonably incurred in
connection with any suit, action or proceeding or any claim asserted) caused by
any untrue statement or alleged untrue statement of a material fact contained in
the Offering Memorandum (and any
25
26
amendment or supplement thereto if the Company shall have furnished any
amendments or supplements thereto), or caused by any omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, except insofar as such
losses, claims, damages or liabilities are caused by any untrue statement or
omission or alleged untrue statement or omission made in reliance upon and in
conformity with information relating to any Initial Purchaser furnished to the
Company in writing by such Initial Purchaser through X.X. Xxxxxx Securities Inc.
expressly for use therein.
Each Initial Purchaser agrees, severally and not jointly, to indemnify
and hold harmless Holdings, the Company, the Subsidiary Guarantors, their
directors and officers and each person who controls Holdings or the Company
within the meaning of Section 15 of the Securities Act and Section 20 of the
Exchange Act, to the same extent as the foregoing indemnity from Holdings, the
Company and the Subsidiary Guarantors to each Initial Purchaser, but only with
reference to information relating to such Initial Purchaser furnished to the
Company in writing by such Initial Purchaser through X.X. Xxxxxx Securities Inc.
expressly for use in the Offering Memorandum, any amendment or supplement
thereto, or any preliminary offering memorandum.
If any suit, action, proceeding (including any governmental or
regulatory investigation), claim or demand shall be brought or asserted against
any person in respect of which indemnity may be sought pursuant to either of the
two preceding paragraphs, such person (the "Indemnified Person") shall promptly
notify the person against whom such indemnity may be sought (the "Indemnifying
Person") in writing, and the Indemnifying Person, upon request of the
Indemnified Person, shall retain counsel reasonably satisfactory to the
Indemnified Person to represent the Indemnified Person and any others the
Indemnifying Person may designate in such proceeding and shall pay the fees and
expenses of such counsel related to such proceeding. In any such proceeding, any
Indemnified Person shall have the right to retain its own counsel, but the fees
and expenses of such counsel shall be at the expense of such Indemnified Person
unless (i) the Indemnifying Person and the Indemnified Person shall have
mutually agreed to the contrary, (ii) the Indemnifying Person has failed within
a reasonable time to retain counsel reasonably satisfactory to the Indemnified
Person or (iii) the named parties in any such proceeding (including any
impleaded parties) include both the Indemnifying Person and the Indemnified
Person and representation of both parties by the same counsel would be
inappropriate due to actual or potential differing interests between them. It is
understood that the Indemnifying Person shall not, in connection with any
proceeding or related proceeding in the same jurisdiction, be liable for the
fees and expenses of more than one separate firm (in addition to any local
counsel) for all Indemnified Persons, and that all such fees and expenses shall
be reimbursed as they are incurred, reasonably promptly after the Indemnifying
Person has been provided documentation in customary form therefor. Any such
separate firm for the Initial
26
27
Purchasers and such control persons of Initial Purchasers shall be designated in
writing by X.X. Xxxxxx Securities Inc. and any such separate firm for Holdings,
the Company, the Subsidiary Guarantors, their directors, and officers and such
control persons of Holdings and the Company shall be designated in writing by
Holdings or the Company, as the case may be. The Indemnifying Person shall not
be liable for any settlement of any proceeding effected without its written
consent, but if settled with such consent or if there be a final judgment for
the plaintiff, the Indemnifying Person agrees to indemnify any Indemnified
Person from and against any loss or liability by reason of such settlement or
judgment. Notwithstanding the foregoing sentence, if at any time an Indemnified
Person shall have requested an Indemnifying Person to approve and consent to a
settlement of any proceeding or claim and to reimburse the Indemnified Person
for fees and expenses related thereto contemplated by the third sentence of this
paragraph, the Indemnifying Person agrees that it shall be liable for any
settlement of any proceeding or claim effected without its written consent if
(i) such settlement is entered into more than 30 days after receipt by such
Indemnifying Person of the aforesaid request and (ii) such Indemnifying Person
shall not have given written notice to such Indemnified Person stating whether
or not such Indemnifying Person consents to such settlement in accordance with
such request prior to the date of such settlement. No Indemnifying Person shall,
without the prior written consent of the Indemnified Person, effect any
settlement of any pending or threatened proceeding in respect of which any
Indemnified Person is or could have been a party and indemnity could have been
sought hereunder by such Indemnified Person, unless such settlement includes an
unconditional release of such Indemnified Person from all liability on claims
that are the subject matter of such proceeding.
If the indemnification provided for in the first and second paragraphs
of this Section 7 is unavailable to an Indemnified Person in respect of any
losses, claims, damages or liabilities referred to therein, then each
Indemnifying Person under such paragraph, in lieu of indemnifying such
Indemnified Person thereunder, shall contribute to the amount paid or payable by
such Indemnified Person as a result of such losses, claims, damages or
liabilities (i) in such proportion as is appropriate to reflect the relative
benefits received by Holdings, the Company and the Subsidiary Guarantors on the
one hand and the Initial Purchasers on the other hand from the offering of the
Units 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
Holdings, the Company and the Subsidiary Guarantors on the one hand and the
Initial Purchasers on the other in connection with the statements or omissions
that resulted in such losses, claims, damages or liabilities, as well as any
other relevant equitable considerations. The relative benefits received by
Holdings, the Company and the Subsidiary Guarantors on the one hand and the
Initial Purchasers on the other shall be deemed to be in the same respective
proportions as the net proceeds from the offering (before deducting expenses)
received by Holdings and the Company, respectively, and the total discounts and
commissions received by the Initial
27
28
Purchasers, in each case as set forth in the table on the cover of the Offering
Memorandum, bear to the aggregate offering price of the Units. The relative
fault of Holdings, the Company and the Subsidiary Guarantors on the one hand and
the Initial Purchasers on the other shall be determined by reference to, among
other things, whether the untrue or alleged untrue statement of a material fact
or the omission or alleged omission to state a material fact relates to
information supplied by the Company or by the Initial Purchasers and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission.
Holdings, the Company, the Subsidiary Guarantors and the Initial
Purchasers agree that it would not be just and equitable if contribution
pursuant to this Section 7 were 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 account of the equitable considerations
referred to in the immediately preceding paragraph. The amount paid or payable
by an Indemnified Person as a result of the losses, claims, damages and
liabilities referred to in the immediately preceding paragraph shall be deemed
to include, subject to the limitations set forth above, any legal or other
expenses incurred by such Indemnified Person in connection with investigating or
defending any such action or claim. Notwithstanding the provisions of this
Section 7, in no event shall an Initial Purchaser be required to contribute any
amount in excess of the amount by which the total price at which the Notes
purchased by it were offered exceeds the amount of any damages that such Initial
Purchaser has otherwise been required to pay by reason of such untrue or alleged
untrue statement or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. The Initial Purchasers' obligations to contribute
pursuant to this Section 7 are several in proportion to the respective principal
amount of the Notes set forth opposite their names in Schedule I hereto, and not
joint.
The remedies provided for in this Section 7 are not exclusive and shall
not limit any rights or remedies which may otherwise be available to any
Indemnified Party at law or in equity.
The indemnity and contribution agreements contained in this Section 7
and the representations and warranties of Holdings, the Company and the
Subsidiary Guarantors set forth in this Agreement shall remain operative and in
full force and effect regardless of (i) any termination of this Agreement, (ii)
any investigation made by or on behalf of any Initial Purchaser or any person
controlling any Initial Purchaser or by or on behalf of Holdings, the Company,
the Subsidiary Guarantors, their officers or directors or any person controlling
the Company and (iii) acceptance of and payment for any of the Units.
28
29
8. Notwithstanding anything herein contained, this Agreement may be
terminated in the absolute discretion of the Initial Purchasers, by notice given
to the Company, if after the execution and delivery of this Agreement and prior
to the Closing Date (i) trading generally shall have been suspended or
materially limited on or by, as the case may be, any of the New York Stock
Exchange, the American Stock Exchange, the National Association of Securities
Dealers, Inc., the Chicago Board Options Exchange, the Chicago Mercantile
Exchange or the Chicago Board of Trade, (ii) trading of any securities of or
guaranteed by the Company shall have been suspended on any exchange or in any
over-the-counter market, (iii) a general moratorium on commercial banking
activities in New York shall have been declared by either Federal or New York
State authorities, or (iv) there shall have occurred any outbreak or escalation
of hostilities or any change in financial markets or any calamity or crisis
that, in the judgment of the Initial Purchasers, is material and adverse and
which, in the judgment of the Initial Purchasers, makes it impracticable to
market the Notes on the terms and in the manner contemplated in the Offering
Memorandum.
9. This Agreement shall become effective upon the execution and
delivery hereof by the parties hereto.
If, on the Closing Date any of the Initial Purchasers shall fail or
refuse to purchase Units which it or they have agreed to purchase hereunder on
such date, and arrangements satisfactory to the Initial Purchasers and the
Company for the purchase of such Units are not made within 36 hours after such
default, this Agreement shall terminate without liability on the part of any
non-defaulting Initial Purchaser or the Company. In any such case either the
Initial Purchasers or the Company shall have the right to postpone the Closing
Date, but in no event for longer than seven days, in order that the required
changes, if any, in the Offering Memorandum or in any other documents or
arrangements may be effected. Any action taken under this paragraph shall not
relieve any defaulting Initial Purchaser from liability in respect of any
default of such Initial Purchaser under this Agreement.
10. If this Agreement shall be terminated by the Initial Purchasers, or
any of them, because of any failure or refusal on the part of Holdings, the
Company or any Subsidiary Guarantor to comply with the terms or to fulfill any
of the conditions of this Agreement, or if for any reason Holdings, the Company
or any Subsidiary Guarantor shall be unable to perform their obligations under
this Agreement or any condition of the Initial Purchasers' obligations cannot be
fulfilled, the Company agrees to reimburse the Initial Purchasers or such
Initial Purchasers as have so terminated this Agreement with respect to
themselves severally, for all out-of-pocket expenses (including the fees and
expenses of their counsel) reasonably incurred by such Initial Purchasers in
connection with this Agreement or the offering contemplated hereunder.
29
30
11. This Agreement shall inure to the benefit of and be binding upon
Holdings, the Company and the Subsidiary Guarantors, the Initial Purchasers, any
controlling persons referred to herein and their respective successors and
assigns. Nothing expressed or mentioned in this Agreement is intended or shall
be construed to give any other person, firm or corporation any legal or
equitable right, remedy or claim under or in respect of this Agreement or any
provision herein contained. No purchaser of Units from any Initial Purchaser
shall be deemed to be a successor by reason merely of such purchase.
12. Any action by the Initial Purchasers hereunder may be taken by X.X.
Xxxxxx Securities Inc. alone on behalf of the Initial Purchasers, and any such
action taken by X.X. Xxxxxx Securities Inc. alone shall be binding upon the
Initial Purchasers. All notices and other communications hereunder shall be in
writing and shall be deemed to have been duly given if mailed or transmitted by
any standard form of telecommunication and will be effective only on receipt.
Notices to the Initial Purchasers shall be given to the Initial Purchasers c/o
X.X. Xxxxxx Securities Inc., 00 Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000;
Attention: Syndicate Department. Notices to Holdings shall be given to it c/x
Xxxxxx Equity Investors III, L.P., 0000 Xxxxxxxxxxxx Xxxxxx, X.X., #000,
Xxxxxxxxxx, X.X. 00000; Attention: Xxxx X. Xxxxx, with a copy to Xxxxxx &
Xxxxxx, 000 00xx Xxxxxx, X.X., Xxxxxxxxxx, X.X. 00000; Attention: Xxxx Xxxxxxx.
Notice to the Company shall be given to it at Xxx Xxxxxxx Xxxxxx, Xxxxxxxxxxx,
Xxx Xxxx 00000; Attention: President with a copy to Xxxxxxx Xxxxxxxxxx & Xxxxxx,
LLP, 000 Xxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000-0000; Attention: Xxxx Xxxxxx
Xxxxxxx.
13. This Agreement may be signed in counterparts, each of which shall
be an original and all of which together shall constitute one and the same
instrument.
14. This Agreement shall be governed by and construed in accordance
with the laws of the State of New York, without giving effect to the conflicts
of laws provisions thereof.
30
31
If the foregoing is in accordance with your understanding, please sign
and return four counterparts hereof.
Very truly yours,
COLORADO PRIME CORPORATION
By: /s/ Xxxxxx X. Xxxxxx
---------------------------------
Name: Xxxxxx X. Xxxxxx
Title:
COLORADO PRIME HOLDINGS, INC.
By: /s/ V. Xxxxx Xxxxxx
---------------------------------
Name: V. Xxxxx Xxxxxx
Title: Treasurer
KAL-MAR PROPERTIES CORP.
By: /s/ Xxxxxx X. Xxxxxx
---------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Chief Financial Officer
CONCORD FINANCIAL SERVICES, INC.
By: /s/ Xxxxxx X. Xxxxxx
---------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Chief Financial Officer
PRIME FOODS DEVELOPMENT CORP.
By: /s/ Xxxxxx X. Xxxxxx
---------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Chief Financial Officer
31
32
Accepted: May 6, 1997
X.X. XXXXXX SECURITIES INC.
NATWEST CAPITAL MARKETS LIMITED
DRESDNER KLEINWORT
XXXXXX NORTH AMERICA LLC
By: X.X. Xxxxxx Securities Inc.
By: /s/ Xxxxx X. Xxx Xxxxxxxxx
----------------------------------
Name: Xxxxx X. Xxx Xxxxxxxxx
Title: Vice President
32
33
ANNEX I
(A) The Units have not been and will not be registered under the
Securities Act and may not be offered or sold within the United States or to, or
for the account or benefit of, U.S. persons except in accordance with Regulation
S under the Securities Act or pursuant to an exemption from the registration
requirements of the Securities Act. Each Initial Purchaser represents that in
connection with sales outside the United States, it has offered and sold the
Units and will offer and sell the Units to, or for the account or benefit of
U.S. persons (i) as part of their distribution at any time and (ii) otherwise
until 40 days after the later of the commencement of the offering and the
Closing Date, only in accordance with Rule 903 of Regulation S or otherwise in
accordance with Section 2 of this Agreement. Accordingly, each Initial Purchaser
agrees that neither it, its affiliates nor any persons acting on its or their
behalf has engaged or will engage in any directed selling efforts with respect
to the Units and it and they have complied and will comply with the offering
restrictions requirement of Regulation S. Each Initial Purchaser agrees that, at
or prior to confirmation of sale of Units (other than a sale pursuant to Rule
144A), it will have sent to each distributor, dealer or person receiving a
selling concession, fee or other remuneration that purchases Units from it
during the restricted period a confirmation or notice to substantially the
following effect:
"The Units covered hereby has not been registered under the
U.S. Securities Act of 1933 (the "Securities Act") and may not be
offered and sold within the United States or to, or for the account or
benefit of, U.S. persons (i) as part of their distribution at any time
or (ii) otherwise until 40 days after the later of the commencement of
the offering and the closing date, except in either case in accordance
with Regulation S under the Securities Act or otherwise in accordance
with Section 2 of this Agreement. Terms used above have the meaning
given to them by Regulation S."
Terms used in this paragraph have the meanings given to them by Regulation S.
Each Initial Purchaser further agrees that it has not entered and will
not enter into any contractual arrangement with respect to the distribution or
delivery of the Units, except with its affiliates or with the prior written
consent of the Company.
(B) Notwithstanding the foregoing, Units in registered form may be
offered, sold and delivered by the Initial Purchasers in the United States and
to U.S. persons pursuant to Section 2 of this Agreement without delivery of the
written statement required by paragraph (A) above.
(C) Each Initial Purchaser agrees that it will not offer, sell or
deliver any of the Units in any jurisdiction outside the United States except
under circumstances that will result in compliance with the applicable laws
thereof, and that it will take
34
at its own expense whatever action is required to permit its purchase and resale
of the Units in such jurisdictions. Each Initial Purchaser understands that no
action has been taken to permit a public offering in any jurisdiction outside
the United States where action would be required for such purposes. Each Initial
Purchaser agrees not to cause any advertisement of the Units to be published in
any newspaper or periodical or posted in any public place and not to issue any
circular relating to the Units.
(D) Each Initial Purchaser represents and agrees that it (i) will not
offer or sell any Notes or Warrants to persons in the United Kingdom prior to
admission of the Notes or Warrants as applicable, to listing in accordance with
Part IV of the Financial Services Act of 1986 (the "Financial Services Act"),
except to persons whose ordinary activities involve them in acquiring, holding,
managing or disposing of investments (as principal or agent) for purpose of
their business within the meaning of the Public Offers of Securities Regulations
1995 or the Financial Services Act, (ii) will comply with all applicable
provisions of the Financial Services Act with respect to anything done by them
in relation to the Notes or Warrants in, from or otherwise involving the United
Kingdom, and (iii) will only issue or pass on in the United Kingdom any document
received by it in connection with the issue of the Units other than any document
required or permitted to be published by listing rules under Part IV of the
Financial Services Act, to a person who is of a kind described in Article II(3)
of the Financial Services Xxx 0000 (Investment Advertisements) (Exemptions)
Order 1996 or is a person to whom the document may otherwise lawfully be issued
or passed on.
35
SCHEDULE I
Number
of Units
Initial Purchaser To Be Purchased
----------------- ---------------
X.X. Xxxxxx Securities Inc ............................. 45,000
NatWest Capital Markets Limited ........................ 45,000
Dresdner Kleinwort Xxxxxx North America LLC ............ 10,000
-------
Total: ........................................ 100,000
=======
