1
Exhibit 1.01
EXECUTION COPY
K & F INDUSTRIES, INC.
9 1/4% Senior Subordinated Notes due 2007
PURCHASE AGREEMENT
October 9, 1997
XXXXXX BROTHERS INC.
UNTERBERG HARRIS
c/x Xxxxxx Brothers Inc.
Three World Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Dear Ladies and Gentlemen:
K & F Industries, Inc., a Delaware corporation (the "Company"),
proposes to issue and sell to you (the "Initial Purchasers") $185.0 million in
aggregate principal amount of its 9 1/4% Senior Subordinated Notes due 2007 (the
"Series A Notes") pursuant to the terms of an Indenture (the "Indenture")
between the Company and State Street Bank and Trust Company, as trustee (the
"Trustee"), relating to the Series A Notes. Capitalized terms used but not
defined herein shall have the meanings given to such terms in the Indenture.
The Series A Notes will be offered and sold to you pursuant to an
exemption from the registration requirements under the Securities Act of 1933,
as amended (the "Act"). The Company has prepared a preliminary offering
memorandum (the "Preliminary Offering Memorandum"), dated September 22, 1997 and
a final offering memorandum (the "Offering Memorandum," and together with the
Preliminary Offering Memorandum, the "Offering Documents"), dated October 9,
1997, relating to the Company and the Series A Notes. As described in the
Offering Memorandum, the Company will use all of the net proceeds from the
offering of the Series A Notes to effect the Recapitalization (as defined in the
Offering Memorandum) of the Company.
2
Upon original issuance thereof, and until such time as the same is
no longer required under the applicable requirements of the Act, the Series A
Notes (and all securities issued in exchange therefor or in substitution
thereof) shall bear the following legend:
"THE SECURITY (OR ITS PREDECESSOR) EVIDENCED HEREBY HAS NOT BEEN
REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT") OR ANY STATE SECURITIES LAWS, AND, ACCORDINGLY, MAY NOT
BE OFFERED OR SOLD EXCEPT AS SET FORTH IN THE FOLLOWING SENTENCE. BY ITS
ACQUISITION HEREOF, THE HOLDER: (1) REPRESENTS THAT (A) IT IS A "QUALIFIED
INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) OR
(B) IT IS AN "ACCREDITED INVESTOR" (AS DEFINED IN RULE 501(a) UNDER THE
SECURITIES ACT) ("ACCREDITED INVESTOR") OR (C) IT IS NOT A U.S. PERSON AND
IS ACQUIRING THE SECURITY EVIDENCED HEREBY IN AN OFF-SHORE TRANSACTION;
(2) AGREES THAT IT WILL NOT RESELL OR OTHERWISE TRANSFER THE SECURITY
EVIDENCED HEREBY EXCEPT (A) TO THE COMPANY OR ANY SUBSIDIARY THEREOF, (B)
TO A QUALIFIED INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A UNDER THE
SECURITIES ACT, (C) TO AN ACCREDITED INVESTOR OR A PURCHASER WHO IS NOT A
U.S. PERSON THAT, PRIOR TO SUCH TRANSFER, FURNISHES TO STATE STREET BANK
AND TRUST COMPANY, AS TRUSTEE (OR A SUCCESSOR TRUSTEE, AS APPLICABLE), A
SIGNED LETTER CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS RELATING
TO THE RESTRICTIONS ON TRANSFER OF THE SECURITY EVIDENCED HEREBY (THE FORM
OF WHICH LETTER CAN BE OBTAINED FROM SUCH TRUSTEE OR A SUCCESSOR TRUSTEE,
AS APPLICABLE), (D) OUTSIDE THE UNITED STATES IN COMPLIANCE WITH RULE 904
UNDER THE SECURITIES ACT, (E) PURSUANT TO THE EXEMPTION FROM REGISTRATION
PROVIDED BY RULE 144 UNDER THE SECURITIES ACT (IF AVAILABLE) OR IN
ACCORDANCE WITH ANOTHER EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF
THE SECURITIES ACT, OR (F) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE SECURITIES ACT, AND, IN EACH CASE, IN ACCORDANCE WITH ANY
APPLICABLE SECURITIES LAWS OF ANY STATE OR ANY OTHER APPLICABLE
JURISDICTION; AND (3) AGREES THAT IT WILL DELIVER TO EACH PERSON TO WHOM
THE SECURITY EVIDENCED HEREBY IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE
EFFECT OF THIS LEGEND. IF THE PROPOSED TRANSFER IS PURSUANT TO CLAUSE (C),
(D) OR (E) ABOVE, THE HOLDER MUST, PRIOR TO SUCH TRANSFER, FURNISH TO
STATE STREET BANK AND TRUST COMPANY, AS TRUSTEE (OR A SUCCESSOR TRUSTEE,
AS APPLICABLE), SUCH CERTIFICATIONS, LEGAL OPINIONS OR OTHER INFORMATION
AS IT MAY REASONABLE REQUIRE TO CONFIRM THAT SUCH TRANSFER IS BEING MADE
PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT. AS USED HEREIN, THE TERMS
"OFFSHORE TRANSACTION," "UNITED STATES" AND "U.S. PERSON" HAVE THE
MEANINGS GIVEN TO THEM BY REGULATION S UNDER THE SECURITIES ACT."
You have advised the Company that you will make offers (the "Exempt
Resales") of the Series A Notes purchased by you hereunder on the terms set
forth in the Offering Memorandum, as
2
3
amended or supplemented, solely to (i) persons whom you reasonably believe to be
"qualified institutional buyers" as defined in Rule 144A under the Act ("QIBs"),
(ii) a limited number of other "accredited investors," as defined in Rule 501(a)
under the Act, who execute a letter containing certain representations and
agreements in the form set forth as Annex A to the Offering Memorandum (each, an
"Accredited Investor") and (iii) outside the United States to persons other than
U.S. Persons in offshore transactions meeting the requirements of Rule 904 of
Regulation S ("Regulation S") under the Act (such persons specified in clauses
(i) through (iii) being referred to herein as the "Eligible Purchasers"). As
used herein, the terms "offshore transaction," "United States" and "U.S. person"
have the respective meanings given to them in Regulation S. You will offer the
Series A Notes to Eligible Purchasers initially at a price equal to 100% of the
principal amount thereof. Such price may be changed at any time without notice.
It is understood by the parties hereto that on or prior to the
Closing Date (as defined herein) the Company will (i) purchase approximately 63%
of its outstanding capital stock pursuant to the Stock Purchase Agreement (as
defined in the Offering Memorandum), (ii) repay all of its outstanding
indebtedness under the Existing Credit Agreement (as defined in the Offering
Memorandum), (iii) redeem the remaining $70 million outstanding of its 11 7/8%
Senior Secured Notes due 2003, (iv) consummate the Tender Offer (as defined in
the Offering Memorandum) and Consent Solicitation (as defined in the Offering
Memorandum), and (v) enter into the New Credit Facility (as defined in the
Offering Memorandum under the caption "Description of the Notes") with the
Company, as guarantor, the Subsidiaries (as defined herein), and the other
parties thereto and the Company will use the proceeds from the Offering,
together with borrowings under the New Credit Facility, to effect the
Recapitalization.
Holders (including subsequent transferees) of the Series A Notes
will have the registration rights set forth in the registration rights agreement
(the "Registration Rights Agreement"), to be dated October 15, 1997 (the
"Closing Date"), in the form of Exhibit A hereto, for so long as such Series A
Notes constitute "Transfer Restricted Securities" (as defined in the
Registration Rights Agreement). Pursuant to the Registration Rights Agreement,
the Company will agree to file with the Securities and Exchange Commission (the
"Commission") under the circumstances set forth therein, (i) a registration
statement under the Act (the "Exchange Offer Registration Statement") relating
to the Company's 9 1/4% Series B Senior Subordinated Notes due 2007 (the "Series
B Notes" and, together with the Series A Notes, the "Notes") to be offered in
exchange for the Series A Notes (such offer to exchange being referred to
collectively as the "Registered Exchange Offer") and (ii) a shelf registration
statement pursuant to Rule 415 under the Act (the "Shelf Registration Statement"
and together with the Exchange Offer Registration Statement, the "Registration
Statements") relating to the resale by certain holders of the Series A Notes,
and to use its best efforts to cause such Registration Statements to be declared
effective. This Agreement, the Indenture and the Registration Rights Agreement
are hereinafter referred to collectively as the "Operative Documents." This is
to confirm the agreements concerning the purchase of the Series A Notes from the
Company by you.
1. Representations, Warranties and Agreements of the Company. The
Company represents, warrants and agrees as follows:
(a) The Offering Documents have been prepared by the Company for use
by the Initial Purchasers in connection with the Exempt Resales. No order or
decree preventing the use of the Offering Documents, or any order asserting that
the transactions contemplated by this Agreement are subject to the registration
requirements of the Act has been issued and no proceeding for that purpose has
commenced or is pending or, to the knowledge of the Company, is contemplated.
(b) The Preliminary Offering Memorandum and the Offering Memorandum
as of their respective dates and the Offering Memorandum as of the Closing Date,
did not and will not at any time
3
4
contain an untrue statement of a material fact or omit to state a material fact
necessary, in order to make the statements, in light of the circumstances under
which they were made, not misleading, except that this representation and
warranty does not apply to statements in or omissions from the Offering
Documents made in reliance upon and in conformity with information relating to
the Initial Purchasers furnished to the Company in writing by or on behalf of
the Initial Purchasers expressly for use therein.
(c) Each of the Company and its Subsidiaries (as defined below) has
been duly organized and is validly existing and in good standing under the laws
of its respective jurisdiction of incorporation, is duly qualified to do
business as a foreign corporation, and is a corporation in good standing in each
jurisdiction in which its ownership or leasing of property or the conduct of its
business requires such qualification (except where the failure to be so
qualified and in good standing would not have a Material Adverse Effect), and
has all necessary corporate power and authority necessary to own or hold its
properties and to conduct the business in which it is engaged. As used herein,
"Material Adverse Effect" means a material adverse effect on the condition
(financial or otherwise), results of operations, business or prospects of the
Company and its Subsidiaries taken as a whole. The term "Subsidiaries" as used
herein shall refer only to Aircraft Braking Systems Corporation ("ABS") and
Engineered Fabrics Corporation ("EFC"). The Subsidiaries are the only
"significant subsidiaries" of the Company within the meaning of Rule 1-02(v) of
Regulation S-K.
(d) Assuming (i) that your representations and warranties in Section
2 are true, (ii) that the representations of the Accredited Investors set forth
in the certificates of such Accredited Investors in the form set forth in Annex
A to the Offering Memorandum are true, (iii) compliance by you with your
covenants set forth in Section 2 and (iv) that each of the Eligible Purchasers
is a QIB, an Accredited Investor or a person who is not a "U.S. person" who
acquires the Series A Notes outside the United States in an "offshore
transaction" (within the meaning of Rule 904 of Regulation S) (A) registration
under the Securities Act of the Notes or qualification of the Indenture in
respect of the Notes under the Trust Indenture Act of 1939, as amended (the
"Trust Indenture Act"), is not required in connection with the offer and sale of
the Notes to the Initial Purchasers in the manner contemplated by the Offering
Memorandum or this Agreement and (B) initial resales of the Notes by the Initial
Purchasers on the terms and in the manner set forth in the Offering Memorandum
and Section 2 hereof are exempt from the registration requirements of the
Securities Act.
(e) The authorized and outstanding capital stock of the Company at
June 30, 1997 was as set forth in the unaudited balance sheet of the Company as
of June 30, 1997 included in the Offering Memorandum. All of the shares of
capital stock of the Company have been duly authorized and validly issued and
are fully paid and nonassessable.
(f) Except as described in the Offering Memorandum, the Company owns
100% of the outstanding shares of capital stock of its Subsidiaries and all of
such shares of capital stock are duly authorized and validly issued and are
fully paid and nonassessable. Except as described in the Offering Memorandum,
all of the shares of capital stock of the Company's Subsidiaries are owned by
the Company free and clear of any security interest, claim, lien or encumbrance.
Except as described in or expressly contemplated by the Offering Memorandum,
there are no outstanding rights, warrants or options to acquire, or instruments
convertible into or exchangeable for, the shares of capital stock of the
Company.
(g) The Company has all requisite power and authority to execute,
deliver and perform its obligations under this Agreement, the Indenture, the
Notes and the Registration Rights Agreement.
(h) This Agreement has been duly and validly authorized, executed
and delivered by the Company and, assuming due authorization, execution and
delivery by the Initial Purchasers, constitutes
4
5
the valid and binding agreement of the Company, enforceable against the Company
in accordance with its terms, except that (i) enforcement thereof may be subject
to (A) bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium
and other similar laws now or hereafter in effect relating to or affecting
creditors' rights generally and (B) general principles of equity (regardless of
whether enforceability is considered in a proceeding in equity or at law) and
(ii) the enforceability of any indemnification or contribution provisions
thereof may be limited under applicable securities laws or the public policies
underlying such laws.
(i) The Indenture has been duly and validly authorized by the
Company, and upon its execution and delivery and, assuming due authorization,
execution and delivery by the Trustee, will constitute the valid and binding
agreement of the Company, enforceable against the Company in accordance with its
terms, except that (i) enforcement thereof may be subject to (A) bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium and other similar
laws now or hereafter in effect relating to or affecting creditors' rights
generally and (B) general principles of equity (regardless of whether
enforceability is considered in a proceeding in equity or at law) and (ii) the
enforceability of any indemnification or contribution provisions thereof may be
limited under applicable securities laws or the public policies underlying such
laws.
(j) The Series A Notes have been duly and validly authorized by the
Company and when duly executed by the Company in accordance with the terms of
the Indenture and, assuming due authentication of the Series A Notes by the
Trustee, upon delivery to the Initial Purchasers against payment therefor in
accordance with the terms hereof, will have been validly issued and delivered,
and will constitute valid and binding obligations of the Company entitled to the
benefits of the Indenture, enforceable against the Company in accordance with
their terms, except that (i) enforcement thereof may be subject to (A)
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and
other similar laws now or hereafter in effect relating to or affecting
creditors' rights generally and (B) general principles of equity (regardless of
whether enforceability is considered in a proceeding in equity or at law) and
(ii) the enforceability of any indemnification or contribution provisions
thereof may be limited under applicable securities laws or the public policies
underlying such laws.
(k) The Series B Notes have been duly and validly authorized by the
Company and if and when duly issued and authenticated in accordance with the
terms of the Indenture and delivered in accordance with the Exchange Offer
provided for in the Registration Rights Agreement, will constitute valid and
binding obligations of the Company entitled to the benefits of the Indenture,
enforceable against the Company in accordance with their terms, except that (i)
enforcement thereof may be subject to (A) bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium and other similar laws now or hereafter
in effect relating to or affecting creditors' rights generally and (B) general
principles of equity (regardless of whether enforceability is considered in a
proceeding in equity or at law) and (ii) the enforceability of any
indemnification or contribution provisions thereof may be limited under
applicable securities laws or the public policies underlying such laws.
(l) The Registration Rights Agreement has been duly and validly
authorized by the Company and, upon its execution and delivery by the Company
and, assuming due authorization, execution and delivery by the Initial
Purchasers, will constitute the valid and binding agreement of the Company,
enforceable against the Company in accordance with its terms, except that (i)
enforcement thereof may be subject to (A) bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium and other similar laws now or hereafter
in effect relating to or affecting creditors' rights generally and (B) general
principles of equity (regardless of whether enforceability is considered in a
proceeding in equity or at law) and (ii) the enforceability of any
indemnification or contribution provisions thereof may be limited under
applicable securities laws or the public policies underlying such laws.
5
6
(m) Each of the Company and its Subsidiaries, as applicable, has all
requisite corporate power and authority to consummate the Recapitalization and
to enter into and perform its obligations under (i) the New Credit Facility and
(ii) the Stock Purchase Agreement.
(n) Each of the New Credit Facility and the Stock Purchase Agreement
has been duly and validly authorized, executed and delivered by the Company and
each of the Subsidiaries, as applicable, and, assuming due authorization,
execution and delivery by the other parties thereto, constitutes the valid and
binding agreement of the Company and each of the Subsidiaries, as applicable,
enforceable against the Company and each of the Subsidiaries, as applicable, in
accordance with its terms, except that (x) enforcement thereof may be subject to
(A) bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium
and other similar laws now or hereafter in effect relating to or affecting
creditors' rights generally and (B) general principles of equity (regardless of
whether enforceability is considered in a proceeding in equity or at law) and
(y) the enforceability of any indemnification or contribution provisions thereof
may be limited under applicable securities laws or the public policies
underlying such laws.
(o) None of the issuance, offer or sale of the Notes, the execution,
delivery or performance by the Company of this Agreement or the other Operative
Documents, compliance by the Company and the Subsidiaries with the provisions
hereof or thereof, as applicable, nor consummation by the Company of the
transactions contemplated hereby or thereby; and none of the execution, delivery
or performance by the Company and the Subsidiaries, as applicable, of the New
Credit Facility or the Stock Purchase Agreement, compliance by the Company and
the Subsidiaries, as applicable, with the provisions thereof nor consummation by
the Company and the Subsidiaries, as applicable, of the transactions
contemplated thereby will conflict with or result in a breach or violation of
any of the terms or provisions of, or constitute a default under, any indenture,
mortgage, deed of trust, loan or credit agreement or other agreement or
instrument to which either the Company or any of its Subsidiaries is a party or
by which the Company or any of its Subsidiaries is bound or to which any of the
properties or assets of the Company or any of its Subsidiaries are subject, nor
will such actions result in any violation of the provisions of the charter or
by-laws of the Company or any of its Subsidiaries or any statute to which it or
its properties may be subject or any order, rule or regulation of any court or
governmental agency or body having jurisdiction over the Company or any of its
Subsidiaries or any of their properties or assets (except to the extent any such
conflict, breach, violation or default does not or will not, as the case may be,
have a Material Adverse Effect); and except for such consents, approvals,
authorizations, registrations or qualifications as may be required under
applicable state securities and Blue Sky laws in connection with the purchase
and distribution of the Notes by the Initial Purchasers or as set forth in the
Registration Rights Agreement, no consent, approval, authorization or order of,
or filing or registration with, any such court or governmental agency or body is
required for the execution, delivery and performance of this Agreement, the
Indenture and the Registration Rights Agreement by the Company, the consummation
of the transactions contemplated hereby and thereby (including the
Recapitalization), and the issuance and sale of the Notes by the Company.
(p) Neither the Company nor any of its Subsidiaries is in breach 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 the Company or
any of its Subsidiaries is a party or by which the Company or any of its
Subsidiaries is bound or to which any of the properties or assets of the Company
or any of its Subsidiaries are subject, nor is the Company or any of its
Subsidiaries in violation of the provisions of its respective charter or by-laws
or any statute or any judgment, order, rule or regulation of any court or
governmental agency or body having jurisdiction over the Company, any of its
Subsidiaries or any of their properties or assets (except to the extent any such
conflict, breach, violation or default is cured at or prior to the Closing Date
and within the grace period applicable thereto or would not have a Material
Adverse Effect).
6
7
(q) The Notes, the Indenture and the Registration Rights Agreement
conform or will conform, as applicable, in all material respects to the
descriptions thereof contained in the Offering Memorandum.
(r) There are no legal or governmental proceedings pending or, to
the knowledge of the Company or any Subsidiary, threatened, against the Company
or any Subsidiary or to which any of the properties of the Company or any
Subsidiary is subject, that are not disclosed in the Offering Memorandum and
which, if adversely decided, are reasonably likely to cause a Material Adverse
Effect or to materially affect the issuance of the Notes or the consummation of
the other transactions contemplated by the Operative Documents. The Offering
Memorandum contains accurate summaries of all material agreements, contracts,
indentures, leases or other instruments. The Company is not involved in any
strike, job action or labor dispute with any group of employees, and, to the
Company's knowledge, no such action or dispute is threatened.
(s) Except as described in the Offering Memorandum, there are no
contracts, agreements or understandings between the Company or any of its
Subsidiaries and any person granting such person the right to require the
Company or any of its Subsidiaries to file a registration statement under the
Securities Act with respect to any securities owned or to be owned by such
person or to require the Company or any of its Subsidiaries to include such
securities in the securities registered pursuant to the Exchange Offer
Registration Statement, the Shelf Registration Statement or in any securities
being registered pursuant to any other registration statement filed by the
Company or any of its Subsidiaries under the Securities Act.
(t) Neither the Company nor any of its Subsidiaries has sustained,
since the date of the latest audited financial statements included in the
Offering Memorandum, any material losses or interferences with its 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,
other than as set forth or contemplated in the Offering Memorandum; and, since
such date, there have not been any material changes in the capital stock or
long-term debt of the Company or any of its Subsidiaries or any material adverse
changes in the condition (financial or otherwise), results of operations,
business or prospects of the Company or any of its Subsidiaries, taken as a
whole (a "Material Adverse Change"), or any developments that could reasonably
be expected to involve a prospective Material Adverse Change, other than as set
forth or contemplated in the Offering Memorandum.
(u) The consolidated historical and pro forma financial statements,
together with related notes, set forth in the Offering Memorandum comply as to
form in all material respects with the requirements of Regulation S-X under the
Act applicable to registration statements on Form S-1 under the Act. Such
historical financial statements fairly present the financial position of the
Company at the respective dates indicated and the results of operations and cash
flows for the respective periods indicated, in accordance with GAAP consistently
applied throughout such periods. Such pro forma financial statements have been
prepared on a basis consistent with such historical statements, except for the
pro forma adjustments specified therein, and give effect to assumptions made on
a reasonable basis and in good faith and present fairly the historical and
proposed transactions contemplated by the Offering Memorandum and this
Agreement. The other financial and statistical information and data included in
the Offering Memorandum, historical and pro forma, are, in all material
respects, accurately presented and prepared on a basis consistent with such
financial statements and the books and records of the Company.
(v) The accountants, Deloitte & Touche, LLP, who have certified
certain of the financial statements included as part of the Offering Memorandum,
are independent public accountants under Rule 101 of the AICPA's Code of
Professional Conduct, and its interpretation and rulings.
7
8
(w) The Company and each of its Subsidiaries has good and marketable
title in fee simple to all real property and good title to all personal property
owned by each of them, in each case free and clear of all liens, encumbrances
and defects except (i) such as are described in the Offering Memorandum or (ii)
such as do not materially affect the value of such property and do not
materially interfere with the use made and proposed to be made of such property
by the Company and its Subsidiaries; and all real property and buildings held
under lease by the Company and its Subsidiaries are held by them under valid,
subsisting and enforceable leases, with such exceptions as are not material and
do not interfere with the use made and proposed to be made of such property and
buildings by the Company and its Subsidiaries. The Company and its Subsidiaries
enjoy peaceful and undisturbed possession under all leases to which they are
parties as lessee, except for such leases that, singly or in the aggregate,
would not have a Material Adverse Effect. The Company and each of its
Subsidiaries maintains such insurance as may be required by law and such other
insurance, to such extent and against such hazards and liabilities, as is
customarily maintained by companies similarly situated (which may include
self-insurance in the same form as is customarily maintained by companies
similarly situated).
(x) Except as described in the Offering Memorandum, the Company and
its Subsidiaries own or possess adequate rights to use all material patents,
patent applications, trademarks, service marks, tradenames, trademark
registrations, service xxxx registrations, copyrights and licenses necessary for
the conduct of their businesses, and to the Company's knowledge, the conduct of
their businesses will not conflict with, and neither the Company nor any of its
Subsidiaries has received any notice of any claim of conflict with, any such
rights of others (except in any such case for any conflict that would not have a
Material Adverse Effect).
(y) Except as described in the Offering Documents, the Company and
each of its Subsidiaries owns or has the right to use in accordance with the
terms thereof all necessary franchises, licenses, permits, consents, approvals
or authorizations of any public or governmental agency, including any permits
required by the Department of Defense (the "DOD") and the Federal Aviation
Administration (the "FAA") that are in a material respect necessary for the
ownership, maintenance and operation of its properties, assets and business
operations, and that, if not obtained, could have a Material Adverse Effect on
the Company and its Subsidiaries, taken as a whole. Each of the foregoing is
valid and in full force and effect and, except as disclosed in the Offering
Documents, no event has occurred and is continuing which permits, or after
notice or lapse of time or both would permit, modifications or terminations of
the foregoing which, in the aggregate, would have a Material Adverse Effect. The
Company and its Subsidiaries are presently conducting their respective
businesses in substantial compliance with the rules and regulations of the DOD
and the FAA and all other material applicable laws.
(z) The Company and its Subsidiaries are (i) in compliance with any
and all applicable foreign, federal, state and local laws and regulations
relating to the protection of human health and safety, the environment or
hazardous or toxic substances or wastes, pollutants or contaminants
("Environmental Laws"), (ii) have received all permits, licenses or other
approvals required of them under applicable Environmental Laws to conduct their
respective businesses 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, singly or in the aggregate, have a Material
Adverse Effect.
(aa) In the ordinary course of its business, the Company conducts a
periodic review of the effect of Environmental Laws on the business, operations
and properties of the Company and its Subsidiaries, in the course of which it
identifies and evaluates associated costs and liabilities (including, without
limitation, any capital or operating expenditures required for clean-up, closure
of properties or
8
9
compliance with Environmental Laws or any permit, license or approval, any
related constraints on operating activities and any potential liabilities to
third parties). On the basis of such review, the Company has reasonably
concluded that such associated costs and liabilities would not, singly or in the
aggregate, have a Material Adverse Effect.
(ab) Except as described in the Offering Memorandum, the Company and
its Subsidiaries are in compliance in all material respects with all presently
applicable provisions of the Employee Retirement Income Security Act of 1974, as
amended, including the regulations and published interpretations thereunder
("ERISA"); no "reportable event" (as defined in ERISA) has occurred with respect
to any "pension plan" (as defined in ERISA) for which the Company or any of its
Subsidiaries would have any liability; neither the Company nor any of its
Subsidiaries has incurred or expects to incur liability under (i) Title IV of
ERISA with respect to termination of, or withdrawal from, any "pension plan" or
(ii) Section 412 or 4971 of the Internal Revenue Code of 1986, as amended,
including the regulations and published interpretations thereunder (the "Code");
and each "pension plan" for which the Company and its Subsidiaries would have
any liability that is intended to be qualified under Section 401(a) of the Code
is so qualified in all material respects and nothing has occurred, whether by
action or by failure to act, which would cause the loss of such qualification.
(ac) The Company and each of its Subsidiaries (i) make and keep
accurate books and records and (ii) maintain internal accounting controls which
provide reasonable assurance that (A) transactions are executed in accordance
with management's general or specific authorization, (B) transactions are
recorded as necessary to permit preparation of their consolidated financial
statements in accordance with GAAP and to maintain accountability for their
assets, (C) access to their assets is permitted only in accordance with
management's general or specific authorization and (D) the reported
accountability for their assets is compared with existing assets at reasonable
intervals and appropriate action is taken with respect to any differences.
(ad) No relationship, direct or indirect, exists between or among
the Company or any of its Subsidiaries on the one hand, and the directors,
officers, stockholders, customers or suppliers of the Company or any of its
Subsidiaries on the other hand, which would be required by the Act or by the
Rules and Regulations to be described in the Offering Documents, if the Act and
the rules and regulations were applicable thereto, which is not so described.
(ae) Except as described in the Offering Documents, no labor problem
or disturbance with the employees of the Company or any of its Subsidiaries
exists or, to the knowledge of the Company, is threatened which might reasonably
be expected to have a Material Adverse Effect.
(af) Neither the Company nor any of its Subsidiaries, nor, to the
Company's or any Subsidiary's knowledge, any director, officer, agent, employee
or other person associated with or acting on behalf of the Company or any of its
Subsidiaries, has used any corporate funds during the last five years for any
unlawful contribution, gift, entertainment or other unlawful expense relating to
political activity; made any unlawful payment to any foreign or domestic
government official or employee from corporate funds; violated or is in
violation of any provision of the Foreign Corrupt Practices Act of 1977; or made
any bribe, rebate, payoff, influence payment, kickback or other unlawful
payment.
(ag) Neither the Company nor any of its Subsidiaries is (i) an
"investment company" within the meaning of the Investment Company Act of 1940,
as amended, or (ii) a "holding company" or a "subsidiary company" or an
"affiliate" of a holding company within the meaning of the Public Utility
Holding Company Act of 1935, as amended.
9
10
(ah) No securities of the same class (within the meaning of Rule
144A(d)(3) under the Securities Act) as the Notes are listed on any national
securities exchange registered under Section 6 of the Exchange Act or quoted on
an automated inter-dealer quotation system.
(ai) Neither the Company nor any affiliate (as defined in Rule
501(b) of Regulation D ("Regulation D") under the Act) of the Company has
directly, or through any agent (provided that no representation is made as to
the Initial Purchasers or any person acting on its behalf), (i) sold, offered
for sale, solicited offers to buy or otherwise negotiated in respect of, any
security (as defined in the Act) which is or could be integrated with the
offering and sale of the Notes in a manner that would require the registration
of the Series A Notes under the Act or (ii) engaged in any form of general
solicitation or general advertising (within the meaning of Regulation D,
including, but not limited to, advertisements, articles, notices or other
communications published in any newspaper, magazine, or similar medium or
broadcast over television or radio, or any seminar or meeting whose attendees
have been invited by any general solicitation or general advertising) in
connection with the offering of the Series A Notes. No securities of the same
class as the Series A Notes have been issued and sold by the Company within the
six-month period immediately prior to the date hereof.
(aj) Neither the Company nor any of its Subsidiaries has taken, nor
will any of them take, directly or indirectly, any action designed to, or that
could reasonably be expected to, cause or result in stabilization or
manipulation of the price of the Notes to facilitate the sale and resale of the
Notes.
(ak) The Offering Documents and each amendment or supplement
thereto, as of its date, contains the information specified in Rule 144A(d)(4)
under the Act.
(al) Neither the Company nor any of its Subsidiaries has taken, and
none of them will take, any action that might cause this Agreement or the
issuance or sale of the Notes to violate Regulation G, T, U or X of the Board of
Governors of the Federal Reserve System or analogous foreign laws and
regulations.
(am) The Company and each of its Subsidiaries has complied with all
provisions of Section 517.075, Florida Statutes (Chapter 92-198, Laws of
Florida).
(an) None of the Company or any of its affiliates or any person
acting on its or their behalf has engaged or will engage in any directed selling
efforts within the meaning of Rule 902(b) of Regulation S with respect to the
Notes, and the Company and its affiliates and all persons acting on its of their
behalf have complied with and will comply with the offering restrictions
requirements of Regulation S in connection with the offering of the Notes
outside of the United States.
(ao) Any sales of the Series A Notes pursuant to, and in accordance
with, Regulation S are "offshore transactions" and are not part of a plan or
scheme to evade the registration provision of the Act.
2. Representations, Warranties and Agreements of the Initial
Purchasers. Each Initial Purchaser represents and warrants with respect to
itself that:
(a) Such Initial Purchaser is either a QIB or an Accredited
Investor, in either case with such knowledge and experience in financial and
business matters as are necessary in order to evaluate the merits and risks of
an investment in the Series A Notes.
10
11
(b) Such Initial Purchaser (i) is not acquiring the Series A Notes
with a view to any distribution thereof or with any present intention of
offering or selling any of the Series A Notes in a transaction that would
violate the Act or the securities laws of any State of the United States or any
other applicable jurisdiction; (ii) in connection with the Exempt Resales, will
solicit offers to buy the Notes only from, and will offer to sell the Notes only
to, the Eligible Purchasers in accordance with this Agreement and on the terms
contemplated by the Offering Memorandum; and (iii) will not offer or sell the
Notes, nor has it offered or sold the Notes by, or otherwise engaged in, any
form of general solicitation or general advertising (within the meaning of
Regulation D; including, but not limited to, advertisements, articles, notices
or other communications published in any newspaper, magazine, or similar medium
or broadcast over television or radio, or any seminar or meeting whose attendees
have been invited by any general solicitation or general advertising) in
connection with the offering of the Series A Notes.
(c) The Notes have not been and will not be registered under the 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 Act or pursuant to an exemption from the registration requirements of the
Act. The Initial Purchasers represent that they have not offered, sold or
delivered the Notes, and will not offer, sell or deliver the Notes (i) as part
of its distribution at any time or (ii) otherwise until 40 days after the later
of the commencement of the offering and the Closing Date (such period, the
"Restricted Period"), within the United States or to, or for the account or
benefit of U.S. persons, except in accordance with Rule 144A under the Act, or
to Accredited Investors in transactions that are exempt from the registration
requirements of the Act. Accordingly, each Initial Purchaser represents and
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 within the
meaning of Rule 902(b) of Regulation S with respect to the Notes, and it, its
affiliates and all persons acting on its behalf have complied and will comply
with the offering restrictions requirements of Regulation S.
(d) Such Initial Purchaser agrees that, at or prior to confirmation
of a sale of Notes (other than a sale pursuant to Rule 144A or to Accredited
Investors in transactions that are exempt from the registration requirements of
the Act), it will have sent to each distributor, dealer or person receiving a
selling concession, fee or other remuneration that purchases Notes from it
during the Restricted Period a confirmation or notice substantially to the
following effect:
"The Notes covered hereby have 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 or the closing date, except in either case in accordance with
Regulation S (or Rule 144A if available) under the Securities Act. Terms
used above have the meanings assigned to them in Regulation S."
Such 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 Notes, except with its affiliates or with the prior written
consent of the Company.
(e) Such Initial Purchaser further represents and agrees that (i) it
has not offered or sold and will not offer or sell any Notes to persons in the
United Kingdom prior to the expiry of the period of six months from the issue
date of the Notes, except to persons whose ordinary activities involve them in
acquiring, holding, managing or disposing of investments (as principal or agent)
for the purposes of their businesses or otherwise in circumstances which have
not resulted and will not result in an offer to the public in the United Kingdom
within the meaning of the Public Offers of Securities Regulations 1995, (ii)
11
12
it has complied and will comply with all applicable provisions of the Financial
Services Xxx 0000 with respect to anything done by it in relation to the Notes
in, from or otherwise involving the United Kingdom, and (iii) it has only issued
or passed on and will only issue or pass on in the United Kingdom any document
received by it in connection with the issuance of the Notes to a person who is
of a kind described in Article 11(3) of the Financial Services Xxx 0000
(Investment Advertisements) (Exemptions) Order 1995 or is a person to whom the
document may otherwise lawfully be issued or passed on.
(f) Such Initial Purchaser agrees not to cause any advertisement of
the Notes to be published in any newspaper or periodical or posted in any public
place and not to issue any circular relating to the Notes, except such
advertisements as include the statements required by Regulation S.
(g) The sale of the Series A Notes pursuant to Regulation S are
"offshore transactions" and are not part of a plan or scheme to evade the
registration provisions of the Act.
(h) Such Initial Purchaser understands that the Company and, for
purposes of the opinions to be delivered to you pursuant to Section 7 hereof,
counsel to the Company, General Counsel to the Company and counsel to the
Initial Purchasers, will rely upon the accuracy and truth of the foregoing
representations and you hereby consent to such reliance.
The terms used in this Section 2 that have meanings assigned to them
in Regulation S are used herein as so defined.
Each Initial Purchaser further agrees that, in connection with the
Exempt Resales, it will solicit offers to buy the Series A Notes only from, and
will offer to sell the Series A Notes only to, the Eligible Purchasers in Exempt
Resales.
3. Purchase of the Notes by the Initial Purchasers. On the basis of
the representations and warranties contained in, and subject to the terms and
conditions of, this Agreement, the Company agrees to sell $185.0 million in
aggregate principal amount of Series A Notes to the several Initial Purchasers
and each of the Initial Purchasers, severally and not jointly, agrees to
purchase the aggregate principal amount of Series A Notes set opposite that
Initial Purchaser's name in Schedule 1 hereto. Each Initial Purchaser will
purchase such aggregate principal amount of Series A Notes at an aggregate
purchase price equal to 97.25% of the principal amount thereof (the "Purchase
Price"). Unterberg Harris hereby agrees to act as a "qualified independent
underwriter," within the meaning of, and in accordance with, Section (b)(15) of
Rule 2720 of the Conduct Rules of the National Association of Securities
Dealers, Inc. with respect to the offering and sale of the Notes and will not be
paid a fee in connection therewith. Therefore, in accordance with Rule 2720 of
the Conduct Rules, the price at which the Series A Notes will be sold shall not
be higher than the maximum price recommended by Unterberg Harris.
The Company shall not be obligated to deliver any of the Series A
Notes to be delivered, except upon payment for all the Series A Notes to be
purchased on such Closing Date as provided herein.
4. Delivery of and Payment.
(a) Delivery to the Initial Purchasers of and payment for the Series
A Notes shall be made at 9:00 a.m., New York City time, on the Closing Date at
the offices of Xxxxxx & Xxxxxxx, 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, or
such other time or place as you and the Company shall designate.
12
13
(b) One or more Series A Notes in definitive form, registered in the
name of Cede & Co., as nominee of the Depository Trust Company ("DTC"), or such
other names as the Initial Purchasers may request upon at least one business
days' notice to the Company, having an aggregate principal amount corresponding
to the aggregate principal amount of Series A Notes sold pursuant to Eligible
Resales (collectively, the "Global Note"), shall be delivered by the Company to
the Initial Purchasers, against payment by the Initial Purchasers of the
purchase price thereof by wire transfer of immediately available funds as the
Company may direct by written notice delivered to you two business days prior to
the Closing Date. The Global Note in definitive form shall be made available to
you for inspection not later than 9:30 a.m. on the business day immediately
preceding the Closing Date.
(c) Time shall be of the essence, and delivery at the time and place
specified pursuant to this Agreement is a further condition of the obligation of
each Initial Purchaser hereunder.
5. Further Agreements of the Company. The Company agrees:
(a) To advise you promptly and, if requested by you, to confirm such
advice in writing, of (i) the issuance by any state securities commission of any
stop order suspending the qualification or exemption from qualification of any
Series A Notes for offering or sale in any jurisdiction, or the initiation of
any proceeding for such purpose by the Commission or any state securities
commission or other regulatory authority, and (ii) the happening of any event
that makes any statement of a material fact made in the Offering Documents
untrue or which requires the making of any additions to or changes in the
Offering Documents in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. The Company shall use
its reasonable best efforts to prevent the issuance of any stop order or order
suspending the qualification or exemption of the Series A Notes under any state
securities or Blue Sky laws and, if at any time any state securities commission
shall issue any stop order suspending the qualification or exemption of the
Series A Notes under any state securities or Blue Sky laws, the Company shall
use every reasonable effort to obtain the withdrawal or lifting of such order at
the earliest possible time.
(b) To furnish to you, without charge, as many copies of the
Offering Documents, and any amendments or supplements thereto, as you may
reasonably request. The Company consents to the use of the Offering Documents,
and any amendments and supplements thereto required pursuant to this Agreement,
by you in connection with the Exempt Resales that are in compliance with this
Agreement.
(c) Prior to making any amendment or supplement to the Offering
Memorandum, the Company shall furnish a copy thereof to the Initial Purchasers
and counsel to the Initial Purchasers and will not effect any such amendment or
supplement to which the Initial Purchasers shall reasonably object by notice to
the Company after a reasonable period to review, which shall not in any case be
longer than five business days after receipt of such copy.
(d) If, at any time prior to completion of the distribution of the
Notes by the Initial Purchasers to eligible purchasers, any event shall occur or
condition exist as a result of which it is necessary, in the opinion of counsel
for the Initial Purchasers or counsel for the Company, to amend or supplement
the Offering Memorandum in order that the Offering Memorandum will not include
an untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements therein not misleading in light of the
circumstances existing at the time it is delivered to a purchaser, or if it is
necessary to amend or supplement the Offering Memorandum to comply with
applicable law, to promptly prepare such amendment or supplement as may be
necessary to correct such untrue statement or omission or so that the Offering
Memorandum, as so amended or supplemented, will comply with applicable law
13
14
and to furnish to the Initial Purchasers such number of copies of such amendment
or supplement as they may reasonably request.
(e) So long as any Notes are outstanding and are "Restricted
Securities" within the meaning of Rule 144(a)(3) under the Securities Act and
during any period in which the Company is not subject to Section 13 or 15(d) of
the Exchange Act, to furnish to holders of the Notes and prospective purchasers
of Notes designated by such holders, upon request of such holders or such
prospective purchasers, the information, if any, required to be delivered
pursuant to Rule 144A(d)(4) under the Securities Act.
(f) So long as the Notes are outstanding, to furnish to the Initial
Purchasers copies of any annual reports, quarterly reports and current reports
filed with the Commission on Forms 10-K, 10-Q and 8-K, or such other similar
forms as may be designated by the Commission, and such other documents, reports
and information as shall be furnished by the Company to the Trustee or to the
holders of the Notes pursuant to the Indenture.
(g) To use its reasonable best efforts to qualify the Notes for sale
under the securities or Blue Sky laws of such jurisdictions as the Initial
Purchasers reasonably designate and to continue such qualifications in effect so
long as reasonably required for the distribution of the Notes. The Company will
also arrange for the determination of the eligibility for investment of the
Notes under the laws of such jurisdictions as the Initial Purchasers reasonably
request. Notwithstanding the foregoing, the Company shall not be obligated to
qualify as a foreign corporation in any jurisdiction in which it is not so
qualified or to file a general consent to service of process or to subject
itself to taxation in respect of doing business in any jurisdiction in which it
is not otherwise subject.
(h) To use its best efforts to permit the Notes to be designated
Private Offerings, Resales and Trading through Automated Linkages Market
("PORTAL") securities in accordance with the rules and regulations adopted by
the National Association of Securities Dealers, Inc. relating to trading in the
PORTAL market and to permit the Notes to be eligible for clearance and
settlement through DTC.
(i) Not to, and will cause its affiliates not to, sell, offer for
sale or solicit offers to buy or otherwise negotiate in respect of any security
(as defined in the Securities Act) in a transaction that could be integrated
with the sale of the Notes in a manner which would require the registration
under the Securities Act of the Notes.
(j) Except following the effectiveness of any Registration Statement
(as defined in the Registration Rights Agreement) and except for such offers as
may be made as a result of, or subsequent to, filing such Registration Statement
or amendments thereto prior to the effectiveness thereof, not to, and will cause
its affiliates not to, solicit any offer to buy or offer to sell the Notes by
means of any form of general solicitation or general advertising (as those terms
are used in Regulation D under the Securities Act) or in any manner involving a
public offering within the meaning of Section 4(2) of the Securities Act.
(k) To consummate the Recapitalization and to apply the net proceeds
from the sale of the Notes, in each case, as set forth in the Offering
Memorandum.
(l) To take such steps as shall be necessary to ensure that neither
the Company nor any of its Subsidiaries shall become an "investment company"
within the meaning of the Investment Company Act of 1940, as amended, or (ii) a
"holding company" or a "subsidiary company" or an "affiliate" of a holding
company within the meaning of the Public Utility Holding Company Act of 1935, as
amended.
14
15
(m) Not to, and will cause its affiliates not to, take any actions
which would require the registration under the Securities Act of the Notes.
(n) Prior to the consummation of the Exchange Offer or the
effectiveness of an applicable shelf registration statement if, in the
reasonable judgment of the Initial Purchasers, the Initial Purchasers or any of
their affiliates (as such term is defined in the rules and regulations under the
Securities Act) are required to deliver an offering memorandum in connection
with sales of, or market-making activities with respect to, the Notes, (A) to
periodically amend or supplement the Offering Documents so that the information
contained in the Offering Documents complies with the requirements of Rule 144A
of the Securities Act, (B) to amend or supplement the Offering Documents when
necessary to reflect any material changes in the information provided therein so
that the Offering Documents will not contain any untrue statement of a material
fact or omit to state any material fact necessary in order to make the
statements therein, in light of the circumstances existing as of the date the
Offering Documents are so delivered, not misleading and (C) to provide the
Initial Purchasers with copies of each such amended or supplemented Offering
Documents, as the Initial Purchasers may reasonably request.
The Company hereby expressly acknowledges that the indemnification
and contribution provisions of Section 8 hereof are specifically applicable and
relate to each offering memorandum, registration statement, prospectus,
amendment or supplement referred to in this Section 5(n).
(o) To do all things necessary to satisfy the closing conditions set
forth in Section 7 hereof.
(p) Not to voluntarily claim, and to actively resist any attempts to
claim, the benefit of any usury laws against the holders of the Series A Notes.
(q) For so long as any of the Notes remain outstanding and during
any period in which the Company is not subject to Section 13 or 15(d) of the
Exchange Act, to make available to any registered holder or beneficial owner of
Series A Notes in connection with any sale thereof and any prospective purchaser
of such Series A Notes from such registered holder or beneficial owner, the
information required by Rule 144A(d)(4) under the Act.
6. Expenses. The Company agrees that, whether or not the
transactions contemplated by this Agreement are consummated or this Agreement
becomes effective or is terminated, to pay all costs, expenses, fees and taxes
incident to and in connection with: (i) the preparation, printing, filing and
distribution of the Offering Documents (including, without limitation, financial
statements) and all amendments and supplements thereto (but not, however, legal
fees and expenses of your counsel incurred in connection therewith), (ii) the
preparation, printing (including, without limitation, word processing and
duplication costs) and delivery of this Agreement, the Indenture, all Blue Sky
Memoranda and all other agreements, memoranda, correspondence and other
documents printed and delivered in connection herewith and with the Exempt
Resales (but not, however, legal fees and expenses of your counsel incurred in
connection with any of the foregoing other than reasonable fees of such counsel
plus reasonable disbursements incurred in connection with the preparation,
printing and delivery of such Blue Sky Memoranda), (iii) the issuance and
delivery by the Company of the Notes, (iv) the qualification of the Notes for
offer and sale under the securities or Blue Sky laws of the several states
(including, without limitation, the reasonable fees and disbursements of your
counsel relating to such registration or qualification), (v) furnishing such
copies of the Offering Documents, and all amendments and supplements thereto, as
may be reasonably requested for use in connection with the Exempt Resales, (vi)
the preparation of certificates for the Notes (including, without limitation,
printing and engraving thereof), (vii) the fees, disbursements and expenses of
the Company's counsel and accountants, (viii) all expenses and listing fees
15
16
in connection with the application for quotation of the Series A Notes in
PORTAL, (ix) all fees and expenses (including fees and expenses of counsel) of
the Company in connection with approval of the Notes by DTC for "book-entry"
transfer and (x) the performance by the Company of their other obligations under
this Agreement.
7. Conditions of Initial Purchasers' Obligations. The respective
obligations of the Initial Purchasers hereunder are subject to the accuracy,
when made and again on the Closing Date (as if made again on and as of such
date), of the representations and warranties of the Company contained herein, to
the performance by the Company of its obligations hereunder, and to each of the
following additional terms and conditions:
(a) The Initial Purchasers shall not have discovered and disclosed
to the Company on or prior to the Closing Date that the Offering Documents or
any amendment or supplement thereto contains an untrue statement of a fact
which, in the opinion of Xxxxxx & Xxxxxxx, counsel for the Initial Purchasers,
is material or omits to state a fact which, in the opinion of such counsel, is
material and is necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.
(b) All of the representations and warranties of the Company
contained in this Agreement shall be true and correct in all material respects
on the date hereof and on the Closing Date with the same force and effect as if
made on and as of the date hereof and the Closing Date, respectively. The
Company shall have performed or complied in all material respects with all of
the agreements herein contained and required to be performed or complied with by
it at or prior to the Closing Date.
(c) The Offering Memorandum shall have been printed and copies
distributed to the Initial Purchasers on the next Business Day following the
date of this Agreement or at such later date and time as to which the Initial
Purchasers may agree, and no stop order suspending the qualification or
exemption from qualification of the Notes in any jurisdiction referred to in
Section 5(g) shall have been issued and no proceeding for that purpose shall
have been commenced or shall be pending or threatened.
(d) Except as described in the Offering Memorandum, no action shall
have been taken and no statute, rule, regulation or order shall have been
enacted, adopted or issued by any governmental agency which would, as of the
Closing Date, have a Material Adverse Effect; no action, suit or proceeding
shall have been commenced and be pending against or affecting or, to the best
knowledge of the Company, threatened against, the Company or any of its
Subsidiaries before any court or arbitrator or any governmental body, agency or
official that, if adversely determined, could reasonably be expected to result
in a Material Adverse Effect; and no stop order shall have been issued by the
Commission or any governmental agency of any jurisdiction referred to in Section
5(g) preventing the use of the Offering Memorandum, or any amendment or
supplement thereto, or which could reasonably be expected to have a Material
Adverse Effect.
(e) Since the dates as of which information is given in the Offering
Memorandum and other than as set forth in the Offering Memorandum, (i) there
shall not have been any Material Adverse Change, or any development that is
reasonably likely to result in a Material Adverse Change, or any material change
in the long-term debt, or material increase in the short-term debt, from that
set forth in the Offering Memorandum; (ii) except as disclosed in the Offering
Memorandum, no dividend or distribution of any kind shall have been declared,
paid or made by the Company on any class of its capital stock; (iii) the Company
and its Subsidiaries shall not have incurred any liabilities or obligations,
direct or contingent, that are material, individually or in the aggregate, to
the Company and its Subsidiaries, taken as a whole, and that are required to be
disclosed on a balance sheet or notes thereto in accordance with
16
17
generally accepted accounting principles and are not disclosed on the latest
balance sheet or notes thereto included in the Offering Memorandum.
(f) The Initial Purchasers shall have received a certificate, dated
the Closing Date, signed on behalf of the Company by (i) Xxxxxxx X. Xxxxxxxx,
Executive Vice President and (ii) Xxxxxxx Xxxxxxx, Chief Financial Officer,
confirming that (A) such officers, have participated in conferences with other
officers and representatives of the Company, representatives of the independent
public accountants of the Company and representatives of counsel to the Company
at which the contents of the Offering Memorandum and related matters were
discussed and (B) the matters set forth in paragraphs (b), (c), (d) and (e) of
this Section 7 are true and correct as of the Closing Date.
(g) All corporate proceedings and other legal matters incident to
the authorization, form and validity of this Agreement, the Notes, the
Indenture, the Registration Rights Agreement, the Offering Documents, the New
Credit Facility and all other legal matters relating to this Agreement and the
transactions contemplated hereby (including, without limitation, the
Recapitalization), shall be satisfactory in all material respects to counsel for
the Initial Purchasers, and the Company shall have furnished to such counsel all
documents and information that they may reasonably request to enable them to
pass upon such matters.
(h) X'Xxxxxxxx Graev & Karabell, LLP, counsel for the Company, shall
have furnished to the Initial Purchasers its written opinion, as counsel to the
Company, addressed to the Initial Purchasers and dated the Closing Date, in form
and substance reasonably satisfactory to the Initial Purchasers, to the effect
that:
(i) The Company and each of its Subsidiaries is validly existing as
a corporation and in good standing under the laws of its jurisdiction of
incorporation. Each of ABS and EFC is qualified to do business and is in
good standing as a foreign corporation in the States of Ohio and Georgia.
(ii) Assuming, without independent investigation, (i) that the Notes
are sold to the Initial Purchasers, and initially resold by the Initial
Purchasers, in accordance with the terms of, and in the manner
contemplated by, this Agreement and the Offering Memorandum, (ii) the
accuracy of the representations, warranties and covenants of the Company
set forth in this Agreement, (iii) the accuracy of the Initial Purchasers'
representations and warranties set forth in this Agreement, (iv) the due
performance by the Company of the covenants and agreements set forth in
this Agreement, (v) the Initial Purchasers' compliance with the offering
and transfer procedures and restrictions described in the Offering
Memorandum, (vi) the accuracy of the representations and warranties made
in accordance with this Agreement and the Offering Memorandum by each
purchaser to whom the Initial Purchasers initially resell the Notes and
(vii) that each purchaser to whom the Initial Purchasers initially resell
the Notes receives a copy of the Offering Memorandum if requested by such
purchaser prior to such sale, the offer, issuance, sale and delivery of
the Notes to the Initial Purchasers, and the initial reoffer, resale and
delivery of the Notes by the Initial Purchasers, as contemplated by this
Agreement and the Offering Memorandum, do not require registration under
the Act, or qualification of the Indenture under the TIA, it being
understood that no opinion is expressed as to any subsequent resale of
Notes or any resale of Notes by any person other than the Initial
Purchasers.
(iii) The Company has the corporate power and authority to execute
and deliver, and to consummate the transactions contemplated by, this
Agreement, the Indenture and the
17
18
Registration Rights Agreement; and the Company has the corporate power and
authority to issue, sell and deliver the Notes as contemplated by this
Agreement.
(iv) The execution and delivery of this Agreement have been duly
authorized by all requisite corporate action of the Company, and this
Agreement has been duly executed and delivered by the Company.
(v) The execution and delivery of the Indenture have been duly
authorized by all requisite corporate action of the Company; and the
Indenture has been duly executed and delivered by the Company, and
assuming due authorization, execution and delivery by the Trustee, is a
valid and binding agreement of the Company, enforceable against the
Company in accordance with its terms, except that (i) enforcement thereof
may be subject to (A) bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and other similar laws now or hereafter in
effect relating to or affecting creditors' rights generally and (B)
general principles of equity (regardless of whether enforceability is
considered in a proceeding in equity or at law) and (ii) the
enforceability of any indemnification or contribution provisions thereof
may be limited under applicable securities laws or the public policies
underlying such laws.
(vi) The execution and delivery of the Notes have been duly
authorized by all requisite corporate action of the Company; and the Notes
have been duly executed and delivered by the Company and, assuming due
authentication by the Trustee, are valid and binding obligations of the
Company, entitled to the benefits of the Indenture, enforceable against
the Company in accordance with their terms, except that (i) enforcement
thereof may be subject to (A) bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium and other similar laws now or
hereafter in effect relating to or affecting creditors' rights generally
and (B) general principles of equity (regardless of whether enforceability
is considered in a proceeding in equity or at law) and (ii) the
enforceability of any indemnification or contribution provisions thereof
may be limited under applicable securities laws or the public policies
underlying such laws.
(vii) The execution and delivery of the Series B Notes have been
duly authorized by all requisite corporate action of the Company; and,
when duly executed and delivered by the Company and duly authenticated by
the Trustee, will be valid and binding obligations of the Company,
entitled to the benefits of the Indenture, enforceable against the Company
in accordance with their terms, except that (i) enforcement thereof may be
subject to (A) bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and other similar laws now or hereafter in
effect relating to or affecting creditors' rights generally and (B)
general principles of equity (regardless of whether enforceability is
considered in a proceeding in equity or at law) and (ii) the
enforceability of any indemnification or contribution provisions thereof
may be limited under applicable securities laws or the public policies
underlying such laws.
(viii) The execution and delivery of the Registration Rights
Agreement have been duly authorized by all requisite corporate action of
the Company; the Registration Rights Agreement has been duly executed and
delivered by the Company and, assuming due authorization, execution and
delivery by the Initial Purchasers, the Registration Rights Agreement
(other than the indemnification and contribution provisions thereof, as to
which such counsel need express no opinion) is a valid and binding
agreement of the Company, enforceable against the Company in accordance
with its terms, except that (i) enforcement thereof may be subject to (A)
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium
and other similar laws now or hereafter in effect relating to or affecting
creditors' rights generally and (B) general principles of equity
(regardless of whether enforceability is considered in a proceeding in
equity or at law) and
18
19
(ii) the enforceability of any indemnification or contribution provisions
thereof may be limited under applicable securities laws or the public
policies underlying such laws.
(ix) Each of the Company and the Subsidiaries has all requisite
corporate power and authority to enter into the New Credit Facility. The
execution and delivery of the New Credit Facility have been duly
authorized by all requisite corporate action of the Company and the
Subsidiaries; and the New Credit Facility has been duly executed and
delivered by the Company and the Subsidiaries and, assuming the due
authorization, execution and delivery by the lenders party thereto, is a
valid and binding agreement of the Company and the Subsidiaries,
enforceable against each of them in accordance with its terms, except that
(i) enforcement thereof may be subject to (A) bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and other similar laws
now or hereafter in effect relating to or affecting creditors' rights
generally and (B) general principles of equity (regardless of whether
enforceability is considered in a proceeding in equity or at law) and (ii)
the enforceability of any indemnification or contribution provisions
thereof may be limited under applicable securities laws or the public
policies underlying such laws.
(x) The Company is the record owner of 100 shares of the common
stock, $.01 par value, of ABS (the "ABS Shares") and 100 shares of the
common stock, $.01 par value, of EFC (the "EFC Shares" and the EFC shares
collectively with the ABS shares, the "Shares"). The Shares have been duly
authorized and validly issued, are fully paid and nonassessable and to the
knowledge of such counsel constitute all of the issued and outstanding
shares of capital stock of the Subsidiaries. Except as disclosed in the
Offering Documents, to the knowledge of such counsel, the shares are owned
by the Company free and clear of any security interests, liens, pledges or
encumbrances.
(xi) The execution, delivery or performance by the Company of this
Agreement or the other Operative Documents, compliance by the Company with
the provisions hereof or thereof nor consummation by the Company of the
transactions contemplated hereby or thereby, the issuance, offer and sale
of the Notes by the Company, the consummation by the Company and the
Subsidiaries (as applicable) of the transactions contemplated by the New
Credit Facility, the repurchase by the Company of certain shares of its
issued and outstanding capital stock in accordance with the terms of the
Stock Purchase Agreement, the repurchase by the Company of its 10 3/8%
Senior Subordinated Notes due 2004 and the redemption by the Company of
its 11 7/8% Senior Secured Notes due 2003, will not (A) to the knowledge
of such counsel, and subject to the following paragraph, result in a
breach or violation of any of the terms or provisions of, or constitute a
default under, any agreement or instrument listed on Exhibit A to the
opinion or (B) result in any violation of the provisions of the charter or
bylaws of the Company or, to the knowledge of such counsel, any Applicable
Law with respect to the Company, except for such violations that would
not, singly or in the aggregate, have a Material Adverse Effect; and
except for such consents, approvals or authorizations of, or registrations
or qualifications with, Governmental Authorities as may be required under
the Securities Act and the rules and regulations thereunder or applicable
states securities or Blue Sky laws in connection with the purchase and
distribution of the Notes by the Initial Purchasers and as set forth in
the Registration Rights Agreement, no consent, approval, authorization or
order of, or filing or registration with, any Governmental Authority, is
required in connection with the execution and delivery by the Company of
this Agreement, the Indenture and the Registration Rights Agreement, the
consummation by the Company of the transactions contemplated hereby and
thereby, and the issuance and sale of the Notes by the Company; provided,
however, that the foregoing opinion with respect to Governmental
Authorities is limited to such consents, approvals, authorizations, orders
and filings which are actually known to such counsel and which, in such
counsel's experience, are
19
20
typically applicable to offerings of the type contemplated by this
Agreement. The term "Applicable Laws" means those statutes, judgments,
rules, regulations, orders or decrees of any Governmental Authority of the
State of Delaware, the State of New York and the United States of America
by which the Company is bound, the existence of which is actually known to
such counsel and which,in such counsel's experience, are typically
applicable to offerings of the type contemplated by this Agreement. The
term "Governmental Authority" means any governmental, legislative,
judicial, administrative or regulatory body of the State of Delaware, the
State of New York or the United States of America.
(xii) The Indenture, the Notes, and the Registration Rights
Agreement conform in all material respects to the descriptions thereof
contained in the Offering Memorandum.
(xiii) To such counsel's knowledge, no legal or governmental
proceedings are pending to which the Company is a party that would be
required under the Securities Act to be described in a registration
statement or a prospectus delivered at the time of the confirmation of the
sale of an offering of securities registered under the Securities Act and
are not described in the Offering Memorandum, or, to such counsel's
knowledge, which seek to restrain, enjoin, prevent the consummation of or
otherwise challenge the issuance or sale of the Notes to the Initial
Purchasers or the consummation of the transactions described in the
Offering Memorandum under the caption "The Recapitalization."
(xiv) Neither the Company nor any of its Subsidiaries is (i) subject
to registration and regulation as an "investment company" within the
meaning of the Investment Company Act of 1940, as amended, or (ii) a
"holding company" or a "subsidiary company" or, to the knowledge of such
counsel, an "affiliate" of a holding company within the meaning of the
Public Utility Holding Company Act of 1935, as amended.
(xv) When the Notes are issued and delivered pursuant to this
Agreement, such Notes will not be of the same class (within the meaning of
Rule 144A(d)(3) under the Securities Act) as securities of the Company
that are listed on a national securities exchange registered under Section
6 of the Exchange Act or quoted on an automated inter-dealer quotation
system.
(xvi) Assuming the Initial Purchasers purchase the Notes in
accordance with Rule 144A under the Securities Act, neither the issuance
or sale of the Notes nor the application by the Company of the net
proceeds thereof as set forth in the Offering Memorandum will violate
Regulation G, T, U or X of the Board of Governors of the Federal Reserve
System.
(xvii) To the knowledge of such counsel, except as disclosed in the
Offering Memorandum, there are no contracts, agreements or understandings
between the Company and any person granting such person the right to
require the Company to file a registration statement under the Securities
Act with respect to any securities of the Company owned or to be owned by
such person or to require the Company to include such securities in the
securities registered pursuant to the Exchange Offer Registration
Statement, the Shelf Registration Statement or in any securities being
registered pursuant to any other registration statement filed by the
Company under the Securities Act.
(xviii) The Company is not required to obtain stockholder consent
for the issuance or offering of the Notes.
20
21
(xix) The statements under the captions "Certain United States
Federal Tax Consequences for Non-United States Holders" and "Description
of Certain Indebtedness" in the Offering Memorandum, insofar as they are
descriptions of contracts, agreements or other legal documents, or refer
to statements of law or legal conclusions, are accurate in all material
respects.
In addition, such counsel shall state that it has participated in
conferences with officers and other representatives of the Company,
representatives of the independent public accountants of the Company,
representatives of the Initial Purchasers and representatives of counsel
for the Initial Purchasers at which the contents of the Offering
Memorandum and related matters were discussed and, although such counsel
has not undertaken to investigate or verify independently, and does not
assume any responsibility for, the accuracy, completeness or fairness of
the statements contained in the Offering Memorandum, on the basis of the
foregoing (relying as to materiality upon the opinions of officers and
other representatives of the Company) no information has come to the
attention of such counsel that causes such counsel to believe that the
Offering Memorandum (except as to financial statements, including the
notes thereto and other financial, statistical and accounting data
included therein or omitted therefrom, as to which no belief need be
expressed), as of its date or 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 the
light of the circumstances under which they were made, not misleading.
In rendering such opinion, such counsel may state that its opinion
is limited to matters governed by the federal laws of the United States of
America and the General Corporation Law of the State of Delaware.
(i) Xxxxxx X. Xxxxxx, General Counsel to the Company, shall have
furnished to the Initial Purchasers, his written opinion, as General Counsel to
the Company, addressed to the Initial Purchasers and dated the Closing Date, in
form and substance reasonably satisfactory to the Initial Purchasers, to the
effect that:
(i) The Company and each of its Subsidiaries are duly qualified to
do business and in good standing as foreign corporations in each
jurisdiction in which their respective businesses require such
qualification (except whether failure to so qualify would not have a
Material Adverse Effect.
(ii) To the best knowledge of such counsel, the Company and each of
its Subsidiaries are not in violation of its corporate charter or by-laws,
or in default under any agreement (including loan and credit agreements),
indenture or instrument known to such counsel, which default would have a
Material Adverse Effect; to the best knowledge of such counsel, the
Company is not in violation of any law, ordinance, governmental rule or
regulation or court decree to which it may be subject and has obtained
each license, permit, patent, certificate, franchise or other governmental
authorization or permit (collectively, "permits") necessary to the
ownership of its properties or to the conduct of its business as described
in the Offering Memorandum, other than permits being applied for in the
ordinary course of business of the Subsidiaries and other than permits
violation of or failure to obtain which would not have a Material Adverse
Effect; provided, however that to the extent of permits that have been
applied for, the ownership of such property and the conduct of such
business during the pendency of receipt of such permits would not to the
knowledge of such counsel, be expected to have a Material Adverse Effect.
(iii) The execution, delivery or performance by the Company of this
Agreement or the other Operative Documents, compliance by the Company with
the provisions hereof or thereof nor
21
22
consummation by the Company of the transactions contemplated hereby or
thereby, the issuance, offer and sale of the Notes by the Company, the
consummation by the Company and the Subsidiaries (as applicable) of the
transactions contemplated by the New Credit Facility, the repurchase by
the Company of certain shares of its issued and outstanding capital stock
in accordance with the terms of the Stock Purchase Agreement, the
repurchase by the Company of its 103/8% Senior Subordinated Notes due 2004
and the redemption by the Company of its 117/8% Senior Secured Notes due
2003, will not (A) to the knowledge of such counsel, conflict with or
result in a breach or violation of any of the terms or provisions of, or
constitute a default under, any indenture, mortgage, deed of trust, loan
or credit agreement, or other agreement or instrument known to such
counsel to which the Company is a party or by which the Company or any of
its properties are subject, which conflict, breach, violation or default
has or would have a Material Adverse Effect, except as set forth below, or
(B) result in any violation of the provisions of the charter or bylaws of
the Company or, to the knowledge of such counsel, any statute, or any
order, rule or regulation of any court or governmental agency or body
having jurisdiction over the Company or any of its Subsidiaries or any of
their properties or assets, which violation has or would have a Material
Adverse Effect; and, except for such consents, approvals, authorizations,
registrations or qualifications as may be required under applicable states
or Blue Sky securities laws in connection with the purchase and
distribution of the Notes by the Initial Purchasers and as set forth in
the Registration Rights Agreement, no consent, approval, authorization or
order of, or filing or registration with, any court or governmental agency
or body having jurisdiction over the Company or any of its Subsidiaries or
any of their properties or assets, is required in connection with the
execution and delivery by the Company of this Agreement, the Indenture and
the Registration Rights Agreement, the consummation by the Company of the
transactions contemplated hereby and thereby, and the issuance and sale of
the Notes by the Company.
(iv) To the knowledge of such counsel, and except as set forth or
referred to in the Offering Memorandum, no legal or governmental
proceedings are pending or threatened against the Company or any of its
Subsidiaries is party or of which any property or asset of the Company or
any of its Subsidiaries which would affect the subject matter of this
Agreement or would be required under the Securities Act to be described in
a registration statement or a prospectus delivered at the time of the
confirmation of an offering of securities registered under the Securities
Act and are not described in the Offering Memorandum.
(v) To the knowledge of such counsel, the statements made in the
Offering Documents under the headings "Risk Factors -- Certain Collective
Bargaining Matters," "Risk Factors -- Litigation," "Business -- Government
Contracts," "Business -- Patents and Licenses," "Business -- Legal
Proceedings" and "Business -- Environmental Matters" to the extent they
constitute matters of law or legal conclusions, have been reviewed by such
counsel and fairly present the information disclosed therein.
(j) You shall have received on the Closing Date an opinion of Xxxxxx &
Xxxxxxx, counsel for the Initial Purchasers, dated the Closing Date and
addressed to you, in form and substance reasonably satisfactory to you.
(k) With respect to the letter of Deloitte & Touche LLP delivered to the
Initial Purchasers concurrently with the execution of this Agreement (the
"initial letter"), the Company shall have furnished to the Initial Purchasers a
letter (as used in this paragraph, the "bring-down letter") of such accountant,
addressed to the Initial Purchasers and dated such Closing Date (i) confirming
that it is an independent public accountant under the Securities Act, (ii)
stating, as of the date of the bring-down letter (or, with respect to matters
involving changes or developments since the respective dates as of which
specified
22
23
financial information is given in the Offering Memorandum, as of a date not more
than two days prior to the date of the bring-down letter), the conclusions and
findings of such firm with respect to the financial information and other
matters covered by the initial letter and (iii) confirming in all material
respects the conclusions and findings set forth in the initial letter.
(l) The Company and the Trustee shall have entered into the Indenture and
the Initial Purchasers shall have received counterparts, conformed as executed,
thereof.
(m) The Company and the Initial Purchasers shall have entered into the
Registration Rights Agreement and the Initial Purchasers shall have received
counterparts, conformed as executed, thereof.
(n) Prior to or simultaneously with the closing of the transactions
contemplated by the Operative Documents, the Company shall have closed the
transactions contemplated by the Recapitalization, including, without
limitation, the closing of the New Credit Facility and the Stock Purchase
Agreement, the repayment of all indebtedness under the Existing Credit Agreement
and the consummation of the Tender Offer and Consent Solicitation.
(o) Xxxxxx & Xxxxxxx shall have been furnished with executed copies of the
New Credit Facility and such other documents and opinions, in addition to those
set forth above, as they may reasonably require for the purpose of enabling them
to review or pass upon the matters referred to in this Agreement and in order to
evidence the accuracy, completeness or satisfaction in all material respects of
any of the representations, warranties or conditions herein contained.
(p) The Company shall have furnished to the Initial Purchasers a
certificate, dated such Closing Date, of its Chief Financial Officer as to the
solvency of the Company following consummation of the transactions contemplated
hereby.
(q) (i) Neither the Company nor its Subsidiaries shall have sustained
since the date of the latest audited financial statements included in the
Offering Memorandum losses or interferences with their businesses, taken as a
whole, 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
or (ii) since such date there shall not have been any change in the capital
stock or long-term debt of the Company or any of its Subsidiaries or any change,
or any development involving a prospective change, in or affecting the general
affairs, management, financial position, stockholders' equity or results of
operations of the Company or its Subsidiaries, taken as a whole, otherwise than
as set forth or contemplated in the Offering Memorandum, the effect of which, in
any such case described in clause (i) or (ii), is, in the reasonable judgment of
the Initial Purchasers, so material and adverse as to make it impracticable or
inadvisable to proceed with the offering or the delivery of the Notes being
delivered on the Closing Date on the terms and in the manner contemplated herein
and in the Offering Memorandum.
(r) Subsequent to the execution and delivery of this Agreement there shall
not have occurred any of the following: (i) trading in securities generally on
the New York Stock Exchange or The Nasdaq Stock Market's National Market or in
the over-the-counter market shall have been suspended or materially limited, or
minimum prices shall have been established on such exchange by the Commission,
or by such exchange or by any other regulatory body or governmental authority
having jurisdiction, (ii) a banking moratorium shall have been declared by
Federal or state authorities, (iii) the United States shall have become engaged
in hostilities, there shall have been an escalation in hostilities involving the
United States or there shall have been a declaration of a national emergency or
war by the United States or (iv) there shall have occurred such a material
adverse change in general economic, political or financial conditions
23
24
(or the effect of international conditions on the financial markets in the
United States shall be such) as to make it, in the reasonable judgment of the
Initial Purchasers, impracticable or inadvisable to proceed with the offering or
delivery of the Notes being delivered on the Closing Date on the terms and in
the manner contemplated herein and in the Offering Memorandum.
(s) Subsequent to the execution and delivery of this Agreement, (i) no
downgrading shall have occurred in the rating accorded the Notes or any other
Indebtedness of the Company by a nationally recognized statistical rating
organization, as that term is defined by the Commission for purposes of Rule
436(g)(2) under the Securities Act, and (ii) no such organization shall have
publicly announced that it has under surveillance or review, with possible
negative implications, its rating of any of the Notes or any other Indebtedness
of the Company.
(t) There shall exist at and as of the Closing Date no conditions that
would constitute a default (or an event that with notice or the lapse of time,
or both, would constitute a default) under the New Credit Facility. On the
Closing Date, the New Credit Facility shall be in full force and effect and
shall not have been modified.
(u) Xxxxxx & Xxxxxxx shall have been furnished with such documents, in
addition to those set forth above, as they may reasonably require for the
purpose of enabling them to review or pass upon the matters referred to in this
Section 7 and in order to evidence the accuracy, completeness or satisfaction in
all material respects of any of the representations, warranties or conditions
herein contained.
(v) Prior to the Closing Date, the Company shall have furnished to the
Initial Purchasers such further information, certificates and documents as the
Initial Purchasers may reasonably request.
All opinions, letters, evidence and certificates mentioned above or
elsewhere in this Agreement shall be deemed to be in compliance with the
provisions hereof only if they are in form and substance reasonably satisfactory
to counsel for the Initial Purchasers.
8. Indemnification and Contribution.
(a) The Company agrees to indemnify and hold harmless the
Initial Purchasers, their officers and employees and each person, if any,
who controls an Initial Purchaser within the meaning of the Securities
Act, from and against any loss, claim, damage or liability, joint or
several, or any action in respect thereof (including, but not limited to,
any loss, claim, damage, liability or action relating to purchases and
sales of Notes), to which the Initial Purchasers, their respective
officers and employees or any such controlling person may become subject,
under the Securities Act or otherwise, insofar as such loss, claim,
damage, liability or action arises out of, or is based upon, (i) any
untrue statement or alleged untrue statement of a material fact contained
in the Offering Documents or in any amendment or supplement thereto or in
any blue sky application or other document prepared or executed by the
Company (or based upon any written information furnished by the Company)
specifically for the purpose of qualifying any or all of the Series A
Notes under the securities laws of any state or other jurisdiction (any
such application, document or information being hereinafter called a "Blue
Sky Application"), the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the
statements therein not misleading, or (iii) any act or failure to act or
any alleged act or failure to act by any Initial Purchaser in connection
with, or relating in any manner to, the Notes or the offering contemplated
hereby, and which is included as part of or referred to in any loss,
claim, damage, liability or action arising out of or based upon matters
covered by clause (i) or (ii) above (provided that the Company shall not
be liable under this clause (iii) to the
24
25
extent that it is determined in a final judgment by a court of competent
jurisdiction that such loss, claim, damage, liability or action resulted
directly from any such acts or failures to act undertaken or omitted to be
taken by such Initial Purchaser through its gross negligence or willful
misconduct), and shall reimburse the Initial Purchasers and each such
officer, employee or controlling person on a quarterly basis for any legal
or other expenses reasonably incurred by the Initial Purchasers or
officer, employee or controlling person in connection with investigating
or defending or preparing to defend against any such loss, claim, damage,
liability or action as such expenses are incurred; provided, however, that
the Company shall not be liable to an Initial Purchaser, officer, employee
or controlling person of such Initial Purchaser in any such case to the
extent that any such loss, claim, damage, liability or action arises out
of, or is based upon, any untrue statement or alleged untrue statement or
omission or alleged omission made in the Offering Documents or in any such
amendment or supplement in reliance upon and in conformity with written
information furnished to the Company by or on behalf of such Initial
Purchaser specifically for inclusion therein; and provided further that
with respect to any such untrue statement or omission made in the
Preliminary Offering Memorandum, the indemnity agreement contained in this
Section 8(a) shall not inure to the benefit of an Initial Purchaser from
whom the person asserting any such losses, claims, damages, liabilities,
judgments, actions or expenses purchased Notes, or any controlling person
of such Initial Purchaser, if a copy of the Offering Memorandum was not
sent or given by or on behalf of such Initial Purchaser to such person at
or prior to the written confirmation of the sale of Notes to such person,
and the Offering Memorandum cured the defect giving rise to such losses,
claims, damages, liabilities, judgments, actions or expenses, unless, such
failure to deliver the Offering Memorandum was a result of non-compliance
by the Company with Section 5(d) hereof. The foregoing indemnity agreement
is in addition to any liability which the Company may otherwise have to
the Initial Purchasers or to any controlling person of the Initial
Purchasers.
(b) Each Initial Purchaser, severally but not jointly, shall
indemnify and hold harmless the Company, its respective directors,
employees, officers and each person, if any, who controls the Company
within the meaning of the Securities Act, from and against any loss,
claim, damage or liability, joint or several, or any action in respect
thereof, to which the Company or any such director, employee, officer, or
controlling person may become subject, under the Securities Act or
otherwise, insofar as such loss, claim, damage, liability or action arises
out of, or is based upon, (i) any untrue statement or alleged untrue
statement of a material fact contained in the Offering Documents, or in
any amendment or supplement thereto or in any Blue Sky Application or (ii)
the omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not
misleading, but in each case only to the extent that the untrue statement
or alleged untrue statement or omission or alleged omission was made in
reliance upon and in conformity with written information furnished to the
Company by or on behalf of such Initial Purchaser specifically for
inclusion therein, and shall reimburse the Company and any such director,
employee, officer or controlling person on a quarterly basis for any legal
or other expenses reasonably incurred by the Company or any such director,
employee, officer or controlling person in connection with investigating
or defending or preparing to defend against any such loss, claim, damage,
liability or action as such expenses are incurred. The foregoing indemnity
agreement is in addition to any liability which the Initial Purchasers may
otherwise have to the Company or any such director, employee, officer or
controlling person.
(c) Promptly after receipt by an indemnified party under this
Section 8 of notice of any claim or the commencement of any action, the
indemnified party shall, if a claim in respect thereof is to be made
against the indemnifying party under this Section 8, notify the
indemnifying party in writing of the claim or the commencement of that
action; provided, however,
25
26
that the failure to notify the indemnifying party shall not relieve it
from any liability which it may have under this Section 8 except to the
extent it has been materially prejudiced by such failure and, provided
further, that the failure to notify the indemnifying party pursuant to
this Section 8 shall not relieve it from any liability which it may have
to an indemnified party otherwise than under this Section 8. If any such
claim or action shall be brought against an indemnified party, and it
shall notify the indemnifying party thereof, the indemnifying party shall
be entitled to participate therein and, to the extent that it wishes,
jointly with any other similarly notified indemnifying party, to assume
the defense thereof with counsel reasonably satisfactory to the
indemnified party. After notice from the indemnifying party to the
indemnified party of its election to assume the defense of such claim or
action, the indemnifying party shall not be liable to the indemnified
party under this Section 8 for any legal or other expenses subsequently
incurred by the indemnified party in connection with the defense thereof
other than reasonable costs of investigation; provided, however, that any
indemnified party shall have the right to employ separate counsel in any
such action and to participate in the defense thereof but the fees and
expenses of such counsel shall be at the expense of such indemnified party
unless (i) the employment thereof has been specifically authorized by the
indemnifying party in writing, (ii) such indemnified party shall have been
advised by such counsel that there may be one or more legal defenses
available to it which are different from or additional to those available
to the indemnifying party and in the reasonable judgment of such counsel
it is advisable for such indemnified party to employ separate counsel or
(iii) the indemnifying party has failed to assume the defense of such
action and employ counsel reasonably satisfactory to the indemnified
party, in which case, if such indemnified party notifies the indemnifying
party in writing that it elects to employ separate counsel at the expense
of the indemnifying party, the indemnifying party shall not have the right
to assume the defense of such action on behalf of such indemnified party,
it being understood, however, that the indemnifying party shall not, in
connection with any one such action or separate but substantially similar
or related actions in the same jurisdiction arising out of the same
general allegations or circumstances, be liable for the reasonable fees
and expenses of more than one separate firm of attorneys at any time for
all such indemnified parties, which firm shall be designated in writing by
the Initial Purchasers, if the indemnified parties under this Section 8
consist of the Initial Purchasers or any of its controlling persons, or by
the Company, if the indemnified parties under this Section 8 consist of
the Company or any of its respective directors, employees, officers or
controlling persons. Each indemnified party, as a condition of the
indemnity agreements contained in Sections 8(a) and 8(b), shall use its
best efforts to cooperate with the indemnifying party in the defense of
any such action or claim. No indemnifying party shall be liable for any
settlement of any such action effected without its written consent (which
consent shall not be unreasonably withheld), but if settled with its
written consent or if there be a final judgment for the plaintiff in any
such action, the indemnifying party agrees to indemnify and hold harmless
any indemnified party from and against any loss or liability by reason of
such settlement or judgment.
(d) If the indemnification provided for in this Section 8
shall for any reason be unavailable to or insufficient to hold harmless an
indemnified party under Section 8(a) or 8(b) in respect of any loss,
claim, damage or liability, or any action in respect thereof, referred to
therein, then each indemnifying party shall, in lieu of indemnifying such
indemnified party, contribute to the amount paid or payable by such
indemnified party as a result of such loss, claim, damage or liability, or
action in respect thereof, (i) in such proportion as shall be appropriate
to reflect the relative benefits received by the Company on the one hand
and the Initial Purchasers on the other from the offering of the Notes or
(ii) if the allocation provided by clause (i) above is not permitted by
applicable law, in such proportion as is appropriate to reflect not only
the relative benefits referred to in clause (i) above but also the
relative fault of the Company on the one hand and the Initial Purchasers
on the other with respect to the statements or omissions which resulted
26
27
in such loss, claim, damage or liability, or action in respect thereof, as
well as any other relevant equitable considerations. The relative benefits
received by the Company on the one hand and the Initial Purchasers on the
other with respect to such offering shall be deemed to be in the same
proportion as the total net proceeds from the offering of the Notes
purchased under this Agreement (before deducting expenses) received by the
Company, on the one hand, and the total discounts and commissions received
by the Initial Purchasers with respect to the Notes purchased under this
Agreement, on the other hand, bear to the total gross proceeds from the
offering of the Notes under this Agreement, in each case as set forth in
the table on the cover page of the Offering Memorandum. The relative fault
shall be determined by reference to whether the untrue or alleged untrue
statement of a material fact or omission or alleged omission to state a
material fact relates to information supplied by the Company, on the one
hand, or the Initial Purchasers, on the other hand, the intent of the
parties and their relative knowledge, access to information and
opportunity to correct or prevent such statement or omission. The Company
and the Initial Purchasers agree that it would not be just and equitable
if contributions pursuant to this Section 8(d) were to be determined by
pro rata allocation or by any other method of allocation which does not
take into account the equitable considerations referred to herein. The
amount paid or payable by an indemnified party as a result of the loss,
claim, damage or liability, or action in respect thereof, referred to
above in this Section 8(d) shall be deemed to include, for purposes of
this Section 8(d), any legal or other expenses reasonably incurred by such
indemnified party in connection with investigating or defending any such
action or claim. Notwithstanding the provisions of this Section 8(d), the
Initial Purchasers shall not be required to contribute any amount in
excess of the amount by which the total discounts and commissions with
respect to the Notes purchased by it and distributed to the public was
offered to the public exceeds the amount of any damages which the Initial
Purchasers has otherwise paid or become liable to pay by reason of any
untrue or alleged untrue statement or omission or alleged omission. No
person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the Securities Act) shall be entitled to contribution
from any person who was not guilty of such fraudulent misrepresentation.
The Initial Purchasers' obligation to contribute as provided in this
Section 8(d) are several in proportion to their respective underwriting
obligations and not joint.
(e) The Initial Purchasers severally confirm and the Company
acknowledges that the last paragraph on the cover page and the
stabilization legend on page ii of the Offering Memorandum are correct and
constitute the only information furnished in writing to the Company by or
on behalf of the Initial Purchasers specifically for inclusion in the
Offering Memorandum.
9. Termination. The obligations of the Initial Purchasers hereunder
may be terminated by Xxxxxx Brothers Inc. by notice given to the Company prior
to delivery of and payment for the Series A Notes if, prior to that time, any of
the events described in Sections 7(n), 7(o) or 7(p), shall have occurred or if
the Initial Purchasers shall decline to purchase the Series A Notes for any
reason permitted under this Agreement.
If on the Closing Date, any one or more of the Initial Purchasers
shall fail or refuse to purchase the Notes which it or they have agreed to
purchase hereunder on such date and the aggregate principal amount of Notes
which such defaulting Initial Purchaser or Initial Purchasers, as the case may
be, agreed but failed or refused to purchase is not more than one-tenth of the
aggregate principal amount of Notes to be purchased on such date by all Initial
Purchasers, each nondefaulting Initial Purchaser shall be obligated severally,
in the proportion which the principal amount of Notes set forth opposite its
name in Schedule I bears to the principal amount of Notes which all the
non-defaulting Initial Purchasers have agreed to purchase, or in such other
proportion as you may specify, to purchase the Notes which such defaulting
Initial Purchaser or Initial Purchasers, as the case may be, agreed but failed
or refused to
27
28
purchase on such date; provided that in no event shall the principal amount of
Notes which any Initial Purchaser has agreed to purchase pursuant to Section 3
hereof be increased pursuant to this Section 9 by an amount in excess of
one-ninth of such principal amount of Notes without the written consent of such
Initial Purchaser. If on the Closing Date, any Initial Purchaser shall fail or
refuse to purchase Notes and the aggregate principal amount of Notes with
respect to which such default occurs is more than one-tenth of the aggregate
principal amount of Notes to be purchased on such date by all Initial Purchasers
in the event of a default by an Initial Purchaser and arrangements satisfactory
to you for purchase of such Notes are not made within 48 hours after such
default, this Agreement will terminate without liability on the part of any
non-defaulting Initial Purchaser. In any such case which does not result in
termination of this Agreement, you 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 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 any such Initial Purchaser under this Agreement.
10. Reimbursement of Initial Purchasers' Expenses. If the Company
shall fail to tender the Series A Notes for delivery to the Initial Purchasers
by reason of any failure, refusal or inability on the part of the Company to
perform any agreement on its part to be performed, or because any other
condition of the Initial Purchasers' obligations hereunder required to be
fulfilled by the Company is not fulfilled, the Company will reimburse the
Initial Purchasers for all reasonable out-of-pocket expenses (including the fees
and disbursements of its counsel) incurred by the Initial Purchasers in
connection with this Agreement and the proposed purchase of the Series A Notes,
and upon demand the Company shall pay the full amount thereof to Xxxxxx Brothers
Inc.
11. Notices, etc. All statements, requests, notices and agreements
hereunder shall be in writing, and:
(a) if to the Initial Purchasers, shall be delivered or sent
by mail, telex or facsimile transmission to Xxxxxx Brothers Inc.,
Three World Financial Center, New York, New York 10285, Attention:
Syndicate Department (Fax: 000-000-0000), with a copy to Xxxxxx &
Xxxxxxx, 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention:
Xxxxxxx X. Xxx (Fax: 000-000-0000);
(b) if to the Company, shall be delivered or sent by mail,
telex or facsimile transmission to the address of the Company set
forth in the Offering Memorandum, Attention: Xxxxxxx X. Xxxxxxxx
(Fax: 000-000-0000), with a copy to X'Xxxxxxxx Graev & Karabell,
LLP, 00 Xxxxxxxxxxx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention:
Xxxxxx Xxxxx (Fax: 000-000-0000);
Any such statements, requests, notices or agreements shall take
effect at the time of receipt thereof. The Company shall be entitled to act and
rely upon any request, consent, notice or agreement given or made on behalf of
the Initial Purchasers by Xxxxxx Brothers Inc.
12. Persons Entitled to Benefit of Agreement. This Agreement shall
inure to the benefit of and be binding upon the Initial Purchasers, the Company,
and their respective personal representatives and successors. This Agreement and
the terms and provisions hereof are for the sole benefit of only those persons,
except that the representations, warranties, indemnities and agreements of the
Company contained in this Agreement shall also be deemed to be for the benefit
of the person or persons, if any, who control any Initial Purchaser within the
meaning of Section 15 of the Securities Act.
28
29
13. Survival. The respective indemnities, representations,
warranties and agreements of the Company and the Initial Purchasers contained in
this Agreement or made by or on behalf on them, respectively, pursuant to this
Agreement, shall survive the delivery of and payment for the Notes and shall
remain in full force and effect, regardless of any investigation made by or on
behalf of any of them or any person controlling any of them.
14. Definition of the Term "Business Day." For purposes of this
Agreement, "business day" means any day on which the New York Stock Exchange,
Inc. is open for trading.
15. Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of New York.
16. Counterparts. This Agreement may be executed in one or more
counterparts and, if executed in more than one counterpart, the executed
counterparts shall each be deemed to be an original but all such counterparts
shall together constitute one and the same instrument.
17. Headings. The headings herein are inserted for convenience of
reference only and are not intended to be part of, or to affect the meaning or
interpretation of, this Agreement.
[signature pages follow]
29
30
If the foregoing correctly sets forth the agreement between the
Company and the Initial Purchasers, please indicate your acceptance in the space
provided for that purpose below.
Very truly yours,
K & F INDUSTRIES, INC.
By: /s/ XXXXXXX X. XXXXXXXX
------------------------------------
Name: Xxxxxxx X. Xxxxxxxx
Title: Executive Vice President
Accepted:
XXXXXX BROTHERS INC.
By: /s/ Xxxxxx Xxxxx
-----------------------------------
Name: Xxxxxx Xxxxx
Title: Vice President
UNTERBERG HARRIS
By: /s/ A. Xxxxxx Xxxxxx
-----------------------------------
Name: A. Xxxxxx Xxxxxx
Title: Managing Director
31
SCHEDULE 1
Principal Amount of
Initial Purchaser Notes
----------------- -------------
Xxxxxx Brothers Inc...................................... 166,500,000
Unterberg Harris......................................... 18,500,000
-----------
Total 185,000,000
xxxxxxxxxxx
X - 0
