EXECUTION COPY
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NOVAR USA INC.
To Be Merged With and Into
CA INVESTMENT CORP.
and Renamed
XXXXXX AMERICAN CORP.
AND
THE GUARANTORS LISTED ON SCHEDULE I HERETO
$175,000,000
11 3/4% Senior Notes due 2013
Purchase Agreement
December 8, 2005
BEAR, XXXXXXX & CO. INC.
X.X. XXXXXX SECURITIES INC.
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NOVAR USA INC.
To Be Merged With and Into
CA INVESTMENT CORP.
and Renamed
XXXXXX AMERICAN CORP.
AND
THE GUARANTORS LISTED ON SCHEDULE I HERETO
$175,000,000
11 3/4% Senior Notes due 2013
PURCHASE AGREEMENT
December 8, 2005
New York, New York
BEAR, XXXXXXX & CO. INC.
X.X. XXXXXX SECURITIES INC.
c/o Bear, Xxxxxxx & Co. Inc.
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Ladies & Gentlemen:
Novar USA Inc., a Delaware corporation (the "TARGET"), to be merged with
and into CA Investment Corp., a Delaware corporation ("CAIC") in which CAIC will
be the surviving entity (the "MERGER") and will be renamed Xxxxxx American
Corp., a Delaware corporation (the "COMPANY"), proposes to issue and sell to
Bear, Xxxxxxx & Co. Inc. and X.X. Xxxxxx Securities Inc. (each, an "INITIAL
PURCHASER" and together, the "INITIAL PURCHASERS"), $175,000,000 in aggregate
principal amount of 11 3/4% Senior Notes due 2013 (the "INITIAL NOTES"), subject
to the terms and conditions set forth herein.
The Notes (as defined) will be issued pursuant to an indenture (the
"INDENTURE"), to be dated the Closing Date (as defined), among the Company, the
Guarantors (as defined) listed on Schedule I hereto, and The Bank of New York,
as trustee (the "TRUSTEE"). The Notes will be fully and unconditionally
guaranteed (the "GUARANTEES") as to payment of principal, interest, premium and
liquidated damages, if any, on a senior unsecured basis, jointly and severally
by each entity listed on Schedule I hereto (the "GUARANTORS").
The Notes are being issued and sold in connection with the acquisition (the
"ACQUISITION") by M&F Worldwide Corp., a Delaware corporation, ("M&F") of all of
the outstanding stock of the Target, pursuant to the Stock Purchase Agreement,
dated as of October 31, 2005 (the "ACQUISITION AGREEMENT"). Upon the
consummation of the Acquisition, all of the Target's outstanding capital stock
will be owned directly or indirectly by M&F. In order to pay for the Acquisition
and pay related fees and expenses, (i) the Company and the Guarantors expect to
enter into a new senior secured credit facility in the amount of
$480.0 million (the "NEW SENIOR CREDIT FACILITY") pursuant to a credit agreement
among the Company, the Guarantors party thereto and the lenders party thereto
(the "CREDIT AGREEMENT"), (ii) the Company expects to issue and to become
obligated under the Notes and (iii) M&F will make a cash contribution of $203.0
million to the common equity capital of CAIC (the "EQUITY CONTRIBUTION"). As
used herein, the term "the TRANSACTIONS" means collectively (w) offering the
Initial Notes, (x) entering into the New Senior Credit Facility, (y) the
Acquisition and (z) the Merger.
In addition, on the Closing Date, the Company and the Guarantors will agree
to become bound by this Agreement pursuant to the First Amendment to the
Purchase Agreement, dated as of the date hereof, among the Company, the
Guarantors and the Initial Purchasers, substantially in the form attached hereto
as Exhibit A (the "FIRST AMENDMENT"). The representations, warranties and
agreements of the Company and the Guarantors under this Agreement shall not
become effective until the Company and the Guarantors execute the First
Amendment, at which time such representations, warranties and agreements shall
become effective and each of the Company and the Guarantors shall become party
to this Agreement.
1. Issuance of Securities. Target, to be merged with and into CAIC in
the Merger and renamed Xxxxxx American Corp., proposes, upon the terms and
subject to the conditions set forth herein, to issue and sell to the Initial
Purchasers an aggregate of $175,000,000 in principal amount of Initial Notes.
The Initial Notes and the Exchange Notes (as defined) issuable in exchange
therefor are collectively referred to herein as the "NOTES."
Upon original issuance thereof, and until such time as the same is no
longer required under the applicable requirements of the Securities Act of 1933,
as amended (the "ACT"), the Initial Notes (and all securities issued in exchange
therefor or in substitution thereof other than the Exchange Notes) shall bear
the following legend:
"THE SECURITY (OR ITS PREDECESSOR) EVIDENCED HEREBY WAS ORIGINALLY ISSUED
IN A TRANSACTION EXEMPT FROM REGISTRATION UNDER XXXXXXX 0 XX XXX XXXXXX
XXXXXX SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND MAY
NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH
REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM. EACH PURCHASER OF THE
SECURITY EVIDENCED HEREBY IS HEREBY NOTIFIED THAT THE SELLER MAY BE RELYING
ON THE EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE SECURITIES ACT.
THE HOLDER OF THE SECURITY EVIDENCED HEREBY AGREES FOR THE BENEFIT OF THE
ISSUER THAT (A) SUCH SECURITY MAY BE RESOLD, PLEDGED OR OTHERWISE
TRANSFERRED ONLY (1) (a) IN THE UNITED STATES TO A PERSON WHO THE SELLER
REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER (AS DEFINED IN RULE
144A UNDER THE SECURITIES ACT) IN A TRANSACTION MEETING THE REQUIREMENTS OF
RULE 144A, (b) OUTSIDE THE UNITED STATES IN AN OFFSHORE TRANSACTION IN
ACCORDANCE WITH RULE 904 UNDER THE SECURITIES ACT, (c) IN A TRANSACTION
MEETING THE REQUIREMENTS OF RULE 144 UNDER THE SECURITIES ACT, (d) TO AN
INSTITUTIONAL "ACCREDITED INVESTOR" (AS DEFINED IN RULE 501 (a) (1), (2),
(3) OR (7) OF THE SECURITIES ACT (AN "INSTITUTIONAL ACCREDITED INVESTOR"))
THAT, PRIOR TO SUCH TRANSFER, FURNISHES THE TRUSTEE A SIGNED LETTER
CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS (THE FORM OF WHICH CAN BE
OBTAINED FROM THE TRUSTEE) AND, IF SUCH TRANSFER IS IN RESPECT OF AN
AGGREGATE PRINCIPAL AMOUNT OF NOTES LESS THAN $250,000, AN
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OPINION OF COUNSEL ACCEPTABLE TO XXXXXX AMERICAN CORP. THAT SUCH TRANSFER
IS IN COMPLIANCE WITH THE SECURITIES ACT OR (e) IN ACCORDANCE WITH ANOTHER
EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND
BASED UPON AN OPINION OF COUNSEL IF XXXXXX AMERICAN CORP. SO REQUESTS, (2)
TO XXXXXX AMERICAN CORP. OR (3) PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT AND, IN EACH CASE, IN ACCORDANCE WITH ANY APPLICABLE SECURITIES
LAWS OF ANY STATE OF THE UNITED STATES OR ANY OTHER APPLICABLE JURISDICTION
AND (B) THE HOLDER WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY
ANY PURCHASER FROM IT OF THE SECURITY EVIDENCED HEREBY OF THE RESALE
RESTRICTIONS SET FORTH IN (A) ABOVE."
2. Offering. The Initial Notes will be offered and sold to the Initial
Purchasers pursuant to an exemption from the registration requirements under the
Act. CAIC and the Target have prepared a preliminary offering memorandum, dated
November 25, 2005 (the "PRELIMINARY OFFERING MEMORANDUM"), and a final offering
memorandum, dated December 8, 2005 (the "OFFERING MEMORANDUM"), relating to the
Company, its subsidiaries and the Notes.
The Initial Purchasers have advised CAIC and the Target that the Initial
Purchasers will make offers (the "EXEMPT RESALES") of the Initial Notes on the
terms set forth in the Offering Memorandum, as amended or supplemented, solely
to (i) persons whom the Initial Purchasers reasonably believe to be "qualified
institutional buyers" ("QIBS"), as defined in Rule 144A under the Act and (ii)
non-U.S. persons outside the United States in reliance upon Regulation S
("REGULATION S") under the Act (each, a "REG S INVESTOR"). The QIBs and the Reg
S Investors are collectively referred to herein as the "ELIGIBLE PURCHASERS."
The Initial Purchasers will offer the Initial Notes to such Eligible Purchasers
initially at a price equal to 100.0% of the principal amount thereof. Such price
may be changed at any time without notice.
Holders (including subsequent transferees) of the Initial Notes will have
the registration rights set forth in the registration rights agreement relating
thereto (the "REGISTRATION RIGHTS AGREEMENT"), among the Initial Purchasers, the
Guarantors and the Company, to be dated the Closing Date, for so long as such
Initial Notes constitute "TRANSFER RESTRICTED SECURITIES" (as defined in the
Registration Rights Agreement). Pursuant to the Registration Rights Agreement,
the Company and the Guarantors 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 11 3/4% Senior Notes due 2013
(the "EXCHANGE NOTES") and Guarantees thereof to be offered in exchange for the
Initial Notes and Guarantees thereof (the "EXCHANGE OFFER") and (ii) under
certain circumstances, 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 Initial Notes and the Guarantees thereof, and
to use their commercially reasonable efforts to cause such Registration
Statements to be declared effective and to consummate the Exchange Offer.
This Agreement (including the First Amendment), the Initial Notes, the
Guarantees of the Initial Notes, the Exchange Notes, the Guarantees of the
Exchange Notes, the Indenture, the Registration Rights Agreement, the Credit
Agreement and the Acquisition Agreement are hereinafter referred to collectively
as the "OPERATIVE DOCUMENTS."
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3. Purchase, Sale and Delivery.
(a) On the basis of the representations, warranties and covenants
contained in this Agreement, and subject to its terms and conditions, CAIC
agrees to issue and sell to each Initial Purchaser, and each Initial
Purchaser agrees, severally and not jointly, to purchase from CAIC, the
principal amount of Initial Notes set forth opposite such Initial
Purchaser's name on Schedule II hereto. The purchase price for the Initial
Notes will be $975.00 per $1,000 principal amount of Initial Notes.
(b) Delivery of the Initial Notes shall be made, against payment
of the purchase price therefor, at the offices of Xxxx, Weiss, Rifkind,
Xxxxxxx & Xxxxxxxx LLP, New York, New York or such other location as may be
mutually acceptable. Such delivery and payment shall be made at 9:00 a.m.,
New York City time, on December 15, 2005 or at such other time as shall be
agreed upon by the Initial Purchasers and the CAIC. The time and date of
such delivery and payment are herein called the "CLOSING DATE."
(c) On the Closing Date, one or more Initial Notes in definitive
global form, registered in the name of Cede & Co., as nominee of The
Depository Trust Company ("DTC"), having an aggregate amount corresponding
to the aggregate principal amount of the Initial Notes (the "GLOBAL NOTES")
sold pursuant to Exempt Resales to Eligible Purchasers shall be delivered
by the Company to the Initial Purchasers (or as the Initial Purchasers
direct), against payment by the Initial Purchasers of the purchase price
therefor, by wire transfer of same day funds, to an account designated by
CAIC; provided that CAIC shall give at least one business day's prior
written notice to the Initial Purchasers of the information required to
effect such wire transfer. The Global Notes shall be made available to the
Initial Purchasers for inspection not later than 5:00 p.m., New York City
time, on the business day preceding the Closing Date.
4. Agreements of CAIC, the Company and the Guarantors. As of the date
hereof, CAIC, and as of the Closing Date, the Company and each Guarantor,
jointly and severally, covenants and agrees with the Initial Purchasers as
follows:
(a) To advise the Initial Purchasers promptly and, if requested
by the Initial Purchasers, confirm such advice in writing (i) of the
issuance by any state securities commission or other regulatory authority
of any stop order or order suspending the qualification or exemption from
qualification of any Notes or the Guarantees thereof for offering or sale
in any jurisdiction, or the initiation of any proceeding for such purpose
by any state securities commission or other regulatory authority and (ii)
of the happening of any event that makes any statement of a material fact
made in the Preliminary Offering Memorandum or the Offering Memorandum
untrue or that requires the making of any additions to or changes in the
Preliminary Offering Memorandum or the Offering Memorandum in order to make
the statements therein, in the light of the circumstances under which they
are made, not misleading. CAIC, the Company and the Guarantors shall use
their respective commercially reasonable efforts to prevent the issuance of
any stop order or order suspending the qualification or exemption from
qualification of any Note or the Guarantees thereof under any state
securities or Blue Sky laws and, if at any time any state securities
commission or other regulatory authority shall issue an order suspending
the qualification or exemption from qualification of any Note or the
Guarantees thereof under any state securities or Blue Sky laws, CAIC, the
Company and the Guarantors shall use their respective commercially
reasonable efforts to obtain the withdrawal or lifting of such order at the
earliest practicable time.
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(b) To furnish the Initial Purchasers and those persons
identified by the Initial Purchasers to CAIC or the Company, without
charge, as many copies of the Preliminary Offering Memorandum and the
Offering Memorandum, and any amendments or supplements thereto, as the
Initial Purchasers may reasonably request. CAIC, the Company and the
Guarantors consent to the use of the Preliminary Offering Memorandum and
the Offering Memorandum, and any amendments and supplements thereto
required pursuant hereto, by the Initial Purchasers in connection with
Exempt Resales.
(c) Not to amend or supplement the Preliminary Offering
Memorandum or the Offering Memorandum during such period that, in the
opinion of counsel for the Initial Purchasers, the Preliminary Offering
Memorandum or the Offering Memorandum is required by law to be delivered in
connection with Exempt Resales and in connection with market-making
activities of the Initial Purchasers for so long as any Initial Notes are
outstanding unless the Initial Purchasers previously have been advised
thereof and have not objected thereto within a reasonable time after being
furnished a copy thereof. CAIC, the Company and the Guarantors shall
promptly prepare, upon the Initial Purchasers' request, any amendment or
supplement to the Preliminary Offering Memorandum or the Offering
Memorandum that may be necessary or advisable in connection with such
Exempt Resales or such market making activities.
(d) If, during the period referred to in 4(c) above, any event
occurs as a result of which, in the judgment of CAIC or the Company or in
the reasonable opinion of counsel for CAIC and the Company or counsel for
the Initial Purchasers, it becomes necessary or advisable to amend or
supplement the Preliminary Offering Memorandum or the Offering Memorandum
in order to make the statements therein, in the light of the circumstances
when such Preliminary Offering Memorandum or Offering Memorandum is
delivered to an Eligible Purchaser, not misleading, or if it is necessary
or advisable to amend or supplement the Preliminary Offering Memorandum or
the Offering Memorandum to comply with applicable law, (i) to notify the
Initial Purchasers and (ii) to use its commercially reasonable efforts to
prepare forthwith, subject to Section 4(c) above, an appropriate amendment
or supplement to such Preliminary Offering Memorandum or the Offering
Memorandum so that the statements therein as so amended or supplemented
will not, in the light of the circumstances when it is so delivered, be
misleading, or so that such Preliminary Offering Memorandum or the Offering
Memorandum will comply with applicable law.
(e) To use commercially reasonable efforts to cooperate with the
Initial Purchasers and counsel for the Initial Purchasers in connection
with the qualification or registration of the Initial Notes and the
Guarantees thereof under the securities or Blue Sky laws of such
jurisdictions as the Initial Purchasers may reasonably request and to
continue such qualification in effect so long as required for the Exempt
Resales; provided, however, that neither CAIC, nor the Company nor the
Guarantors shall be required in connection therewith to register or qualify
as a foreign corporation where it is not now so qualified or to take any
action that would subject it to service of process in suits or taxation, in
any jurisdiction where it is not now so subject.
(f) 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 the
performance of the obligations of CAIC, the Company and the Guarantors
hereunder, including in connection with: (i) the preparation, printing,
filing and distribution of the Preliminary Offering Memorandum and the
Offering Memorandum (including, without limitation, financial statements)
and all amendments and supplements thereto required pursuant hereto, (ii)
the preparation (including, without limitation, duplication costs) and
delivery
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of all agreements, correspondence and all other documents prepared and
delivered in connection herewith and with the Exempt Resales, (iii) the
issuance, transfer and delivery of the Initial Notes and the Guarantees
thereof to the Initial Purchasers, (iv) the qualification or registration
of the Notes and the Guarantees thereof for offer and sale under the
securities or Blue Sky laws of the several states (including, without
limitation, the cost of printing and mailing a preliminary and final Blue
Sky memorandum and the reasonable fees and disbursements of one counsel
(and any local counsel) for the Initial Purchasers relating thereto), (v)
the furnishing of such copies of the Preliminary Offering Memorandum and
the Offering Memorandum, and all amendments and supplements thereto, as may
reasonably be requested for use in connection with Exempt Resales, (vi) the
preparation of certificates for the Notes and the Guarantees thereof
(including, without limitation, printing and engraving thereof), (vii) the
fees, disbursements and expenses of CAIC's, the Company's and the
Guarantors' counsel and accountants, (viii) all fees and expenses
(including fees and expenses of counsel) of CAIC, the Company and the
Guarantors in connection with the approval of the Notes by DTC for
"book-entry" transfer, (ix) the rating of the Notes by rating agencies, (x)
the reasonable fees and expenses of the Trustee and its counsel, (xi) the
performance by CAIC, the Company and the Guarantors of their other
obligations under this Agreement and the other Operative Documents, and
(xii) "roadshow" travel and other expenses incurred in connection with the
marketing and sale of the Notes.
(g) To use the proceeds from the sale of the Initial Notes
substantially in the manner described in the Preliminary Offering
Memorandum and the Offering Memorandum under the caption "Use of Proceeds."
(h) For so long as any of the Notes remain outstanding, not to
voluntarily claim, and to resist actively any attempts to claim, the
benefit of any usury laws against the holders of any Notes.
(i) Not to sell, offer for sale or solicit offers to buy or
otherwise negotiate in respect of any security (as defined in the Act) that
would be integrated with the sale of the Initial Notes in a manner that
would require the registration under the Act of the sale to the Initial
Purchasers or the Eligible Purchasers of the Initial Notes or to take any
other action that would result in the Exempt Resales not being exempt from
registration under the Act.
(j) For so long as any of the Initial Notes remain outstanding
and during any period in which the Company and the Guarantors are not
subject to Section 13 or 15(d) of the Securities Exchange Act of 1934, as
amended (the "EXCHANGE ACT"), to make available to any holder or beneficial
owner of Initial Notes in connection with any sale thereof and any
prospective purchaser of such Initial Notes from such holder or beneficial
owner, the information required by Rule 144A(d)(4) under the Act.
(k) For so long as any of the Notes remain outstanding, to comply
with all of its agreements set forth in the representation letters to DTC
relating to the approval of the Notes by DTC for "book-entry" transfer.
(l) To use commercially reasonable efforts to effect the
inclusion of the Notes in The PORTAL(SM) Market ("PORTAL") and obtain
approval of the Initial Notes by DTC for "book-entry" transfer.
(m) During a period of five years following the Closing Date, for
so long as any of the Initial Notes remain outstanding, if not otherwise
available on the Commission's Electronic Data Gathering, Analysis, and
Retrieval ("XXXXX") system, to deliver without charge
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to the Initial Purchasers, as the Initial Purchasers may reasonably
request, promptly upon their becoming available, copies of (i) all publicly
available reports or other information that the Company or the Guarantors
mail or otherwise make available to their stockholders and (ii) all
reports, financial statements and proxy or information statements filed by
the Company or the Guarantors with the Commission or any national
securities exchange.
(n) Prior to the Closing Date, to furnish to the Initial
Purchasers, as soon as practicable in the ordinary course by CAIC or the
Target, copies of any unaudited interim financial statements (excluding the
footnotes thereto if they are unavailable) for any period subsequent to the
periods covered by the financial statements in the Offering Memorandum.
(o) Not to take, directly or indirectly, any action designed to,
or that might reasonably be expected to, cause or result in stabilization
or manipulation of the price of any security of the Company to facilitate
the sale or resale of the Notes. Except as permitted in writing by the
Initial Purchasers, none of CAIC, the Company nor any Guarantor will
distribute any (i) preliminary offering memorandum, including, without
limitation, the Preliminary Offering Memorandum, (ii) offering memorandum,
including, without limitation, the Offering Memorandum, or (iii) other
offering material in connection with the offering and sale of the Notes.
(p) Prior to the Closing Date, not to issue any press release or
other communications, directly or indirectly, or hold any press conference
with respect to the issuance of the Initial Notes, CAIC, the Target or any
of its subsidiaries, the properties, business, results of operations,
condition (financial or otherwise), affairs or prospects of CAIC, the
Company or any of its subsidiaries, without the prior consent of the
Initial Purchasers, such consent not to be unreasonably withheld or
delayed.
(q) Prior to the Closing Date, not to amend any material
provision of the Acquisition Agreement without the prior written consent of
the Initial Purchasers, such consent not to be unreasonably withheld or
delayed.
(r) Without the prior consent of the Initial Purchasers, not to
make any offer relating to the Notes that would constitute a "free writing
prospectus" (if the offering of the Notes was made pursuant to a registered
offering under the Act) as defined in Rule 405 under the Act (a "FREE
WRITING OFFERING DOCUMENT"); any such Free Writing Offering Document the
use of which has been consented to by the Initial Purchasers is listed on
Schedule IV(a) hereto; if at any time following issuance of a Free Writing
Offering Document any event occurred or occurs as a result of which such
Free Writing Offering Document would conflict with the information in the
Preliminary Offering Memorandum or the Offering Memorandum or would include
an 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 then prevailing, not misleading, CAIC or the Company will
give prompt notice thereof to the Initial Purchasers and, if requested by
the Initial Purchasers, will prepare and furnish without charge to each
Initial Purchaser a Free Writing Offering Document or other document which
will correct such conflict, statement or omission.
(s) To use its commercially reasonable efforts to do and perform
all things required or necessary to be done and performed under this
Agreement prior to or after the Closing Date and to satisfy all conditions
precedent on its part to the delivery of the Initial Notes and the
Guarantees thereof.
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The Initial Purchasers may, in their sole discretion, waive in writing
the performance by CAIC, the Company or the Guarantors of any one or more
of the foregoing covenants or extend the time for their performance
5. Representations and Warranties.
(a) As of the date hereof, CAIC, with respect to itself and to
its knowledge, with respect to the Target, the Company and each Guarantor,
with respect to Sections 5(a)(xviii), (xx), (xxii), (xxiii), (xxiv), (xxv),
(xxvi), (xxvii), (xxviii), (xxix), and (xxx) hereof, and as of the Closing
Date, the Company and each Guarantor, jointly and severally, represent and
warrant to the Initial Purchasers that:
(i) The Preliminary Offering Memorandum as of its date does not,
and the Offering Memorandum as of its date does not, and as of the
Closing Date will not, and any supplement or amendment thereto, as of
its date, will not, contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading; the
Preliminary Offering Memorandum as supplemented by the information and
documents listed in Schedule IV(b) hereto, taken together (the
"DISCLOSURE PACKAGE") as of the Applicable Time (as defined), did not
include any untrue statement of a material fact or omit to state any
material fact necessary in order to make the statements therein, in
the light of the circumstances under which they were made, not
misleading, except that the representations and warranties contained
in this paragraph shall not apply to statements in or omissions from
the Preliminary Offering Memorandum or the Offering Memorandum (or any
supplement or amendment thereto, including the Disclosure Package)
made in reliance upon and in conformity with information relating to
the Initial Purchasers furnished to CAIC or the Company in writing by
the Initial Purchasers expressly for use therein. For purposes of this
Agreement, the "APPLICABLE TIME" is 5:00 p.m. (New York City time) on
the date of this Agreement.
(ii) CAIC, the Company and each of their respective subsidiaries
(A) has been duly incorporated or formed and is validly existing as a
corporation or other entity in good standing under the laws of its
jurisdiction of incorporation or formation, (B) has all requisite
corporate or other power and authority to carry on its business as it
is currently being conducted and as described in the Preliminary
Offering Memorandum and the Offering Memorandum and to own, lease and
operate its properties, and (C) is duly qualified and is in good
standing as a foreign corporation or other entity authorized to do
business in each jurisdiction in which the nature of its business or
its ownership or leasing of property requires such qualification,
except where the failure to be so qualified could not reasonably be
expected to (1) result, individually or in the aggregate, in a
material adverse effect on the properties, business, results of
operations, condition (financial or otherwise), affairs or prospects
of CAIC, the Company and the Guarantors, taken as a whole or (2) in
any manner draw into question the validity of this Agreement or any
other Operative Document or the transactions described in the
Preliminary Offering Memorandum and the Offering Memorandum under the
caption "Use of Proceeds" (any of the events set forth in clauses (1)
or (2), a "MATERIAL ADVERSE EFFECT").
(iii) CAIC, the Company and each Guarantor has all requisite
corporate or other power and authority to execute, deliver and perform
its obligations under this Agreement and each other Operative Document
to which it is a party and to consummate
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the transactions contemplated hereby and thereby, including, without
limitation, the corporate or other power and authority to issue, sell
and deliver the Initial Notes and to issue and deliver the Guarantees
thereof as provided herein and therein.
(iv) As of the date hereof, CAIC does not have any subsidiaries,
and as of the Closing Date, upon consummation of the Transactions, the
Company will not have any subsidiaries other than the entities listed
on Schedule III hereto.
(v) Except as described in the Preliminary Offering Memorandum
and the Offering Memorandum, all of the outstanding shares of capital
stock of each subsidiary of the Company are owned, directly or
indirectly, by the Company, free and clear of any security interest,
claim, lien, limitation on voting rights or encumbrance (other than
transfer restrictions imposed by the New Senior Credit Facility, the
Act and the securities or Blue Sky laws of certain jurisdictions); and
all such securities have been duly authorized, validly issued and are
fully paid and nonassessable and were not issued in violation of any
preemptive or similar rights.
(vi) Except as described in the Preliminary Offering Memorandum
and the Offering Memorandum, there are not currently any outstanding
subscriptions, rights, warrants, calls, commitments of sale or options
to acquire, or instruments convertible into or exchangeable for, any
capital stock or other equity interests of the Company and its
subsidiaries.
(vii) When the Initial Notes and the Guarantees thereof are
issued and delivered pursuant to this Agreement, no Initial Note or
Guarantee thereof will be of the same class (within the meaning of
Rule 144A under the Act) as securities of the Company or any Guarantor
that are listed on a national securities exchange registered under
Section 6 of the Exchange Act or quoted in a United States automated
interdealer quotation system.
(viii) This Agreement has been duly and validly authorized,
executed and delivered by CAIC and is the legal, valid and binding
agreement of CAIC, enforceable against it in accordance with its
terms, and when the First Amendment has been duly and validly
authorized, executed and delivered by the Company and each Guarantor,
this Agreement will be the legal, valid and binding agreement of the
Company and each Guarantor, in each case, enforceable against each of
them in accordance with its terms, subject to applicable bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium and
similar laws affecting the rights of creditors generally and subject
to general principles of equity (regardless of whether enforceability
is considered in a proceeding in equity or at law).
(ix) At the Closing Date, the First Amendment will be duly and
validly authorized, executed and delivered by the Company and each
Guarantor and when executed and delivered will be the legal, valid and
binding agreement of the Company and each Guarantor, enforceable
against each of them in accordance with its terms, subject to
applicable bankruptcy, insolvency fraudulent conveyance,
reorganization, moratorium and similar laws affecting the rights of
creditors generally and subject to general principles of equity
(regardless of whether enforceability is considered in a proceeding in
equity or at law).
9
(x) The Indenture has been duly and validly authorized by CAIC,
and at the Closing Date will be duly and validly authorized by the
Company and each Guarantor and, when duly executed and delivered by
the Company and each Guarantor, will be the legal, valid and binding
agreement of the Company and each Guarantor, enforceable against each
of them in accordance with its terms, subject to applicable
bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and similar laws affecting the rights of creditors
generally and subject to general principles of equity (regardless of
whether enforceability is considered in a proceeding in equity or at
law). On the Closing Date, the Indenture will conform in all material
respects to the requirements of the Trust Indenture Act of 1939, as
amended (the "TRUST INDENTURE ACT"), and the rules and regulations of
the Commission applicable to an indenture that is qualified
thereunder. The Disclosure Package and the Offering Memorandum each
contain a summary of the terms of the Indenture, which summary is
accurate in all material respects.
(xi) The Registration Rights Agreement has been duly and validly
authorized by CAIC, and at the Closing Date will be duly and validly
authorized by the Company and each Guarantor and, when duly executed
and delivered by the Company and each Guarantor, will be the legal,
valid and binding obligation of the Company and each Guarantor,
enforceable against each of them in accordance with its terms, subject
to applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and similar laws affecting the rights of
creditors generally and subject to general principles of equity
(regardless of whether enforceability is considered in a proceeding in
equity or at law). The Preliminary Offering Memorandum and the
Offering Memorandum each contain a summary of the terms of the
Registration Rights Agreement, which summary is accurate in all
material respects.
(xii) The Initial Notes have been duly and validly authorized by
CAIC for issuance and sale to the Initial Purchasers pursuant to this
Agreement, and at the Closing Date, the Initial Notes will be duly and
validly authorized by the Company and, when issued and authenticated
in accordance with the terms of the Indenture and delivered against
payment therefor in accordance with the terms hereof and thereof, will
be the legal, valid and binding obligations of the Company,
enforceable against it in accordance with their terms and entitled to
the benefits of the Indenture, subject to applicable bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium and
similar laws affecting the rights of creditors generally and subject
to general principles of equity (regardless of whether enforceability
is considered in a proceeding in equity or at law). The Disclosure
Package and the Offering Memorandum each contain a summary of the
terms of the Notes, which summary is accurate in all material
respects.
(xiii) At the Closing Date, the Guarantees of the Initial Notes
will be duly and validly authorized by each Guarantor and, when
executed and delivered in accordance with the terms of the Indenture,
will be the legal, valid and binding obligations of such Guarantor,
enforceable against it in accordance with their terms and entitled to
the benefits of the Indenture, subject to applicable bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium and
similar laws affecting the rights of creditors generally and subject
to general principles of equity (regardless of whether enforceability
is considered in a proceeding in equity or at law). The Disclosure
Package and the Offering Memorandum each contain a summary of the
terms of the Guarantees of the Initial Notes, which summary is
accurate in all material respects.
10
(xiv) The Exchange Notes have been duly and validly authorized
for issuance by CAIC, and at the Closing Date the Exchange Notes will
be duly authorized by the Company and, when issued and authenticated
in accordance with the terms of the Exchange Offer, the Registration
Rights Agreement and the Indenture, will be the legal, valid and
binding obligations of the Company, enforceable against it in
accordance with their terms and entitled to the benefits of the
Indenture, subject to applicable bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium and similar laws affecting the
rights of creditors generally and subject to general principles of
equity (regardless of whether enforceability is considered in a
proceeding in equity or at law).
(xv) At the Closing Date, the Guarantees of the Exchange Notes
will be duly and validly authorized by each Guarantor, and when
executed and delivered in accordance with the terms of the Indenture
and when the Exchange Notes have been issued and authenticated in
accordance with the terms of the Exchange Offer and the Indenture,
will be the legal, valid and binding obligations of such Guarantor,
enforceable against it in accordance with their terms and entitled to
the benefits of the Indenture, subject to applicable bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium and
similar laws affecting the rights of creditors generally and subject
to general principles of equity (regardless of whether enforceability
is considered in a proceeding in equity or at law).
(xvi) CAIC has delivered to the Initial Purchasers true and
correct copies of the Acquisition Agreement and all material documents
and agreements related to the transactions contemplated thereby, and
there have been no amendments, modifications or waivers thereto or in
the exhibits or schedules thereto, except as have been delivered to
the Initial Purchasers.
(xvii) At the Closing Date, the Credit Agreement will be duly and
validly authorized by the Company and each guarantor party thereto
and, when duly executed and delivered by the Company and each
guarantor party thereto, will be the legal, valid and binding
obligation of the Company and each guarantor party thereto,
enforceable against each of them in accordance with its terms, subject
to applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and similar laws affecting the rights of
creditors generally and subject to general principles of equity
(regardless of whether enforceability is considered in a proceeding in
equity or at law). The Disclosure Package and the Offering Memorandum
each contain a summary of the terms of the Credit Agreement, which
summary is accurate in all material respects and reflects the proposed
terms as of the date hereof.
(xviii) Each of CAIC and the Target and its respective
subsidiaries, is not (A) in violation of its charter or bylaws or
other organizational documents, (B) in default in the performance of
any bond, debenture, note, indenture, mortgage, deed of trust or other
agreement or instrument to which it is a party or by which it is bound
or to which any of its properties is subject that, individually or in
the aggregate, could reasonably be expected to have a Material Adverse
Effect or (C) except as disclosed in the Preliminary Offering
Memorandum and the Offering Memorandum, in violation of any local,
state, federal or foreign law, statute, ordinance, rule, regulation,
requirement, judgment or court decree (including, without limitation,
environmental laws, statutes, ordinances, rules, regulations,
requirements, judgments or court decrees) applicable to it or any of
its assets or properties (whether owned or leased) that, individually
or in the aggregate, could reasonably be expected to have a Material
Adverse Effect. To the knowledge of CAIC,
11
there exists no condition that, with notice, the passage of time or
otherwise, would constitute a default under any such document or
instrument.
(xix) Assuming the accuracy of the Initial Purchasers'
representations and warranties in Section 5(b) of this Agreement, none
of (A) the execution, delivery, assumption or performance by CAIC, the
Company or any Guarantor, of this Agreement, or any of the other
Operative Documents to which it is a party, (B) the issuance and sale
of the Notes by the Company, (C) the assumption of CAIC's obligations
by the Company and the issuance of the Guarantees by any of the
Guarantors, (D) the consummation by the Company, CAIC or the
Guarantors of the transactions described in the Preliminary Offering
Memorandum and the Offering Memorandum under the caption "Use of
Proceeds," (E) the merger of Novar USA Inc. with and into CAIC or (F)
the compliance in all material respects by CAIC with all of the
provisions of the Acquisition Agreement required to be complied with
by it on or before the Closing Date violates, conflicts with or
constitutes a breach of any of the terms or provisions of, or will
violate, conflict with or constitute a breach of any of the terms or
provisions of, or a default under (or an event that with notice or the
lapse of time, or both, would constitute a default under), or require
consent under, or result in the imposition of a lien or encumbrance on
any properties of CAIC, the Company, the Target or their respective
subsidiaries, or an acceleration of any indebtedness of CAIC, the
Company, the Target or their respective subsidiaries pursuant to, (1)
the charter or bylaws or other organizational documents of CAIC, the
Company, the Target or their respective subsidiaries, (2) any bond,
debenture, note, indenture, mortgage, deed of trust or other agreement
or instrument to which CAIC, the Company, the Target or their
respective subsidiaries is a party or by which any of them is bound or
to which any of their properties are subject (except as set forth on
Schedule V hereto), (3) any statute, rule or regulation applicable to
CAIC, the Company, the Target or their respective subsidiaries or any
of their assets or properties or (4) any judgment, order or decree of
any court or governmental agency, body or authority or administrative
agency having jurisdiction over CAIC, the Company, the Target, or
their respective subsidiaries or any of their assets or properties
except, with respect to clauses (2) through (4) as could not
reasonably be expected to result in a Material Adverse Effect.
Assuming the accuracy of the Initial Purchasers' representations and
warranties in Section 5(b) of this Agreement, no consent, approval,
authorization or order of, or filing, registration, qualification,
license or permit of or with, (A) any court or governmental agency,
body or authority or administrative agency or (B) any other person is
required (except as set forth on Schedule V hereto) for (1) the
execution, delivery and performance by CAIC, the Company or the
Guarantors of this Agreement or any of the other Operative Documents
to which it is a party, (2) the issuance and sale of the Notes, the
issuance of the Guarantees and the transactions contemplated hereby
and thereby or (3) the compliance in all material respects by CAIC
with all of the provisions of the Acquisition Agreement required to be
complied with by it on or prior to the Closing Date, except (w) such
consents as have been or will be obtained or made on or prior to the
Closing Date, (x) registration of the Exchange Offer or resale of the
Initial Notes under the Act pursuant to the Registration Rights
Agreement, and qualification of the Indenture under the Trust
Indenture Act, in connection with the issuance of the Exchange Notes,
(y) such filings and recordings required to perfect liens under the
documents executed in connection with the New Senior Credit Facility
and (z) where the failure to obtain such consents, approvals,
authorizations or orders, filings, registrations, qualifications,
licenses or permits could not be reasonably expected to result in a
Material Adverse Effect.
12
(xx) There is (A) no action, suit, investigation or proceeding
before or by any court, arbitrator or governmental agency, body or
authority or administrative agency, domestic or foreign, now pending,
or, to the knowledge of each of CAIC, the Company and the Guarantors,
threatened or contemplated, to which CAIC, the Company, the Target or
any of their respective subsidiaries is or may be a party or to which
the assets or property of CAIC, the Company, the Target or any of
their respective subsidiaries is or may be subject, (B) no statute,
rule, regulation or order that has been enacted, adopted or issued by
any governmental agency, body or authority or administrative agency or
that has been proposed by any governmental agency, body or authority
or administrative agency and (C) no injunction, restraining order or
order of any nature by a federal or state court or foreign court of
competent jurisdiction to which CAIC, the Company, the Target or any
of their respective subsidiaries is or may be subject or to which the
business, assets or property of CAIC, the Company, the Target or any
of their respective subsidiaries is or may be subject, that, in the
case of clauses (A), (B) and (C) above, (1) is required to be
disclosed in the Preliminary Offering Memorandum and the Offering
Memorandum and that is not so disclosed or (2) could, individually or
in the aggregate, reasonably be expected to have a Material Adverse
Effect.
(xxi) No action has been taken and no statute, rule, regulation
or order has been enacted, adopted or issued by any governmental
agency that prevents the issuance of the Notes or the Guarantees or
prevents or suspends the use of the Offering Memorandum; no
injunction, restraining order or order of any nature by a federal or
state court of competent jurisdiction has been issued that prevents
the issuance of the Notes or the Guarantees or prevents or suspends
the sale of the Notes or the Guarantees in any jurisdiction referred
to in Section 4(e) hereof; and every request of any securities
authority or agency of any jurisdiction for additional information in
connection with the offering of Notes has been complied with in all
material respects.
(xxii) There is (A) no significant unfair labor practice
complaint pending against the Company, the Target or any of their
respective subsidiaries, nor, to the knowledge of CAIC and the
Company, threatened against any of them, before the National Labor
Relations Board, any state or local labor relations board or any
foreign labor relations board, and no significant grievance or
significant arbitration proceeding arising out of or under any
collective bargaining agreement is so pending against the Company, the
Target or any of their respective subsidiaries, or, to the knowledge
of CAIC and the Company, threatened against any of them, (B) no
significant strike, labor dispute, slowdown or stoppage pending
against the Company, the Target or any of their subsidiaries, or to
the knowledge of CAIC and the Company, threatened against any of them
and (C) to the knowledge of CAIC and the Company, there is no union
representation question existing with respect to the employees of the
Company, the Target or any of their respective subsidiaries. To the
knowledge of CAIC and the Company, no collective bargaining organizing
activities are taking place with respect to the Company, the Target or
any of their respective subsidiaries. Neither the Company, the Target
or any of their respective subsidiaries has violated (A) any federal,
state or local law or foreign law relating to discrimination in
hiring, promotion or pay of employees, (B) any applicable wage or hour
laws or (C) any provision of the Employee Retirement Income Security
Act of 1974, as amended ("ERISA"), or the rules and regulations
thereunder, except those violations that could not, individually or in
the aggregate, reasonably be expected to have a Material Adverse
Effect.
13
(xxiii) Except as described in the Preliminary Offering
Memorandum and the Offering Memorandum, neither CAIC, the Company, the
Target nor any of their respective subsidiaries, has violated, or is
in violation of, any foreign, federal, state or local law or
regulation relating to the protection of human health and safety, the
environment or hazardous or toxic substances or wastes, pollutants or
contaminants (collectively, "ENVIRONMENTAL LAWS"), which violations
could, individually or in the aggregate, reasonably be expected to
have a Material Adverse Effect.
(xxiv) There is no alleged liability, or to the knowledge of CAIC
and the Company, potential liability (including, without limitation,
alleged or potential liability or investigatory costs, cleanup costs,
governmental response costs, natural resource damages, property
damages, personal injuries or penalties) of CAIC, the Company, the
Target or any of their respective subsidiaries, arising out of, based
on or resulting from either (A) the presence or release into the
environment of any Hazardous Material (as defined) at any location of
the Company, the Target or any such subsidiary, as the case may be, or
(B) any violation or alleged violation of any Environmental Law, which
alleged or potential liability is required to be disclosed in the
Preliminary Offering Memorandum and the Offering Memorandum, in either
case, other than as disclosed therein, or could not reasonably be
expected to have a Material Adverse Effect. The term "HAZARDOUS
MATERIAL" means (1) any "hazardous substance" as defined by the
Comprehensive Environmental Response, Compensation, and Liability Act
of 1980, as amended, (2) any "hazardous waste" as defined by the
Resource Conservation and Recovery Act of 1976, as amended, (3) any
petroleum or petroleum product, (4) any polychlorinated biphenyl and
(5) any pollutant or contaminant or hazardous, dangerous or toxic
chemical, material, waste or substance regulated under or within the
meaning of any other law relating to protection of human health or the
environment or imposing liability or standards of conduct concerning
any such chemical material, waste or substance.
(xxv) Each of CAIC, the Company, the Target and their respective
subsidiaries has such permits, licenses, franchises and authorizations
of governmental or regulatory authorities ("PERMITS"), including,
without limitation, under any applicable Environmental Laws, as are
necessary to lease and operate its respective properties and to
conduct its businesses in accordance with current business plans,
except where the failure to have such permits could not reasonably be
expected to have a Material Adverse Effect; each of CAIC, the Company,
the Target and each of their respective subsidiaries has fulfilled and
performed all of its obligations with respect to such permits and no
event has occurred that allows, or after notice or lapse of time would
allow, revocation, termination or modification thereof in either case,
except where such failure to perform or occurrence of such event could
not reasonably be expected to have a Material Adverse Effect.
(xxvi) Each of the Company, the Target and their respective
subsidiaries, has peaceful and undisturbed possession under all
material leases to which any of them is a party as lessee and each of
which lease is valid and binding and no default exists thereunder,
except in each case as could not reasonably be expected to have a
Material Adverse Effect.
(xxvii) Each of the Company, the Target and their respective
subsidiaries owns, possesses or has the right to employ all patents,
patent rights, licenses, inventions, copyrights, know-how (including
trade secrets and other unpatented and/or unpatentable proprietary or
confidential information, software, systems or procedures),
trademarks, service marks and trade names, computer programs,
technical data and information
14
(collectively, the "INTELLECTUAL PROPERTY") presently employed by it
in connection with the businesses now operated by it free and clear of
and without violating any right, claimed right, charge, encumbrance,
pledge, security interest, restriction or lien of any kind of any
other person, and neither the Company nor the Target has received any
written notice of infringement of or conflict with asserted rights of
others with respect to any of the foregoing, except such infringements
as could not, individually or in the aggregate, reasonably be expected
to have a Material Adverse Effect. The use of the Intellectual
Property in connection with the business and operations of the
Company, the Target and their respective subsidiaries does not
infringe on the rights of any person, except such infringements as
could not, individually or in the aggregate, reasonably be expected to
have a Material Adverse Effect.
(xxviii) All federal, state and foreign income and franchise tax
returns required to be filed by CAIC, the Company, the Target or their
respective subsidiaries in all jurisdictions have been so filed and
are accurate in all material respects. All taxes, including
withholding taxes, penalties and interest, assessments, fees and other
charges due or claimed to be due from such entities or that are due
and payable have been paid, other than those being contested in good
faith and for which adequate reserves have been provided in accordance
with generally accepted accounting principles or those currently
payable without penalty or interest and except where the failure to
make such required filings or payments could not, individually or in
the aggregate, reasonably be expected to result in a Material Adverse
Effect. To the knowledge of CAIC, the Company and the Guarantors there
are no material proposed additional tax assessments against CAIC, the
Company, the Target or their respective subsidiaries or the assets or
property of CAIC, the Company, the Target or their respective
subsidiaries, except those tax assessments for which adequate reserves
have been established.
(xxix) Each of the Company, the Target and their respective
subsidiaries, maintains a system of internal accounting controls
sufficient to provide reasonable assurance that (A) transactions are
executed in accordance with management's general or specific
authorizations, (B) transactions are recorded as necessary to permit
preparation of financial statements in conformity with generally
accepted accounting principles and to maintain accountability for
assets, (C) access to assets is permitted only in accordance with
management's general or specific authorization and (D) the recorded
accountability for assets is compared with the existing assets at
reasonable intervals and appropriate action is taken with respect
thereto.
(xxx) Each of the Company, the Target and their respective
subsidiaries, maintains insurance covering its properties, operations,
personnel and businesses, insuring against such losses and risks as
are consistent with industry practice, except where failure to
maintain such insurance could not reasonably be expected to have a
Material Adverse Effect. Neither the Company nor the Target has
received written notice from any insurer or agent of such insurer that
substantial capital improvements or other expenditures will have to be
made in order to continue such insurance.
(xxxi) Except as described in the Preliminary Offering Memorandum
and the Offering Memorandum, after giving effect to the Transactions,
no relationship, direct or indirect, exists between or among CAIC, the
Company, the Target or their respective subsidiaries on the one hand,
and the directors, officers, stockholders, customers or suppliers of
CAIC, the Company, the Target or their respective subsidiaries on the
other hand, that would be required by the Act to be described in the
Offering Memorandum if
15
the Offering Memorandum were a prospectus included in a registration
statement on Form S-1 filed with the Commission.
(xxxii) Neither CAIC, nor the Company, nor the Target nor their
respective subsidiaries is, or after giving effect to the Transactions
and applying the net proceeds as described in the Preliminary Offering
Memorandum and the Offering Memorandum under the caption "Use of
Proceeds" will be, an "investment company" or a company "controlled"
by an "investment company" required to be registered under the
Investment Company Act of 1940, as amended (the "INVESTMENT COMPANY
ACT").
(xxxiii) There are no holders of securities of the Company, the
Target or their respective subsidiaries who, by reason of the
execution by CAIC, the Company or the Guarantors of this Agreement or
any other Operative Document to which it is a party, or the
consummation by CAIC, the Company or the Guarantors of the
transactions contemplated hereby and thereby, have the right to
request or demand that CAIC, the Company, the Target or their
respective subsidiaries register under the Act or analogous foreign
laws and regulations securities held by them, other than pursuant to
the Registration Rights Agreement.
(xxxiv) Neither CAIC, nor the Company, nor the Target nor their
respective subsidiaries has taken, directly or indirectly, any action
designed to, or that might reasonably be expected to, cause or result
in stabilization or manipulation of the price of any security of the
Company, the Target or their respective subsidiaries to facilitate the
sale or resale of the Notes.
(xxxv) The accountants who have certified or will certify the
financial statements included or to be included as part of the
Offering Memorandum are independent accountants as required by the
Act. Except as described in the Preliminary Offering Memorandum and
the Offering Memorandum, the historical consolidated financial
statements, together with related schedules and notes thereto,
included in the Preliminary Offering Memorandum and the Offering
Memorandum comply as to form in all material respects with the
requirements applicable to financial statements required in
registration statements on Form S-1 under the Act and present fairly
in all material respects the financial position and results of
operations at the dates and for the periods indicated, except that
such historical consolidated financial statements do not include
selected historical financial data for the 2000 and 2001 fiscal years.
All such financial statements have been prepared in accordance with
generally accepted accounting principles in the United States applied
on a consistent basis throughout the periods presented, except as
disclosed therein. The pro forma consolidated financial statements and
related notes thereto included in the Preliminary Offering Memorandum
and the Offering Memorandum, have been prepared on a basis consistent
with that of the historical financial statements, except for the pro
forma adjustments specified therein, and give effect to assumptions
made on a reasonable basis and present fairly in all material respects
the historical and proposed transactions described in the Preliminary
Offering Memorandum and the Offering Memorandum, and such pro forma
financial statements comply as to form in all material respects with
the requirements applicable to pro forma financial statements included
in registration statements on Form S-1 under the Act, except as stated
therein and except that pro forma financial statements with respect to
the twelve months ended September 30, 2005 are not required by
Regulation S-X and except that pro forma financial statements included
in the Preliminary Offering Memorandum do not reflect the terms of the
New Senior Credit Facility and the Notes
16
included or directly derived from the information set forth on
Schedule IV(b) hereto. The other financial and statistical information
and data included in the Preliminary Offering Memorandum and the
Offering Memorandum derived from the historical and pro forma
consolidated financial statements are fairly presented in all material
respects and prepared on a basis consistent with the historical
consolidated financial statements included in the Preliminary Offering
Memorandum and the Offering Memorandum and the books and records as
applicable.
(xxxvi) No registration under the Act of the Initial Notes or the
Guarantees thereof is required for the offer, sale and delivery of the
Initial Notes to the Initial Purchasers as contemplated hereby or for
the Exempt Resales assuming (A) that the purchasers who buy the
Initial Notes in the Exempt Resales are Eligible Purchasers and (B)
the accuracy of the Initial Purchasers' representations regarding the
absence of general solicitation in connection with the sale of Initial
Notes to the Initial Purchasers and the Exempt Resales contained
herein. No form of general solicitation or general advertising (as
defined in Regulation D under the Act) was used by CAIC, the Company,
the Guarantors or any of their representatives (other than the Initial
Purchasers, as to which CAIC, the Company and the Guarantors make no
representation or warranty) in connection with the offer and sale of
any of the Initial Notes or the Guarantees thereof or in connection
with Exempt Resales, including, but not limited to, 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. No securities of the same class
as the Notes or the Guarantees have been issued and sold by CAIC, the
Company, the Target or their respective subsidiaries within the
six-month period immediately prior to the date hereof.
(xxxvii) The statistical, industry and market-related data
included in the Preliminary Offering Memorandum and the Offering
Memorandum are based on or derived from management estimates and
third-party sources, and CAIC, the Company and the Guarantors believe
such estimates and sources are reasonable, reliable and accurate in
all material respects.
(xxxviii) Since the respective dates as of which information is
given in the Preliminary Offering Memorandum, (A) there has not been
any material adverse change, or any development that is reasonably
expected to result in a material adverse change, in the capital stock
or the long-term debt, or material increase in the short-term debt, of
CAIC, the Company, the Target or their respective subsidiaries from
that set forth in the Disclosure Package and the Offering Memorandum,
(B) no dividend or distribution of any kind has been declared, paid or
made by CAIC, the Company, the Target or their subsidiaries on any
class of its stock, and (C) neither CAIC, nor the Company, nor the
Target nor any of their respective subsidiaries has incurred any
liabilities or obligations, direct or contingent, that are material,
individually or in the aggregate, to CAIC, the Company, the Target or
their respective subsidiaries taken as a whole, and that are required
to be disclosed on a balance sheet or notes thereto in accordance with
generally accepted accounting principles in the United States and are
not disclosed on the latest balance sheet or notes thereto included in
the Offering Memorandum, nor entered into any transaction not in the
ordinary course of business. Since the date hereof and since the dates
as of which information is given in the Offering Memorandum, there has
not occurred any change, or any development that is reasonably likely
to result in a Material Adverse Effect.
17
(xxxix) Each of the Preliminary Offering Memorandum and the
Offering Memorandum, as of its date, and each amendment or supplement
thereto, as of its date, contains the information specified in, and
meets the requirements of, Rule 144A(d)(4) under the Act.
(xl) Prior to the effectiveness of any Registration Statements,
the Indenture is not required to be qualified under the Trust
Indenture Act.
(xli) None of CAIC, the Company or the Guarantors or any of their
affiliates, or any person acting on their behalf (it being understood
that no representation or warranty is made by CAIC, the Company or the
Guarantors regarding the Initial Purchasers) (A) has, within the six
month period prior to the date hereof, offered or sold in the United
States or to and U.S. Person, the Initial Notes or any security of the
same class or series as the Initial Notes or (B) has offered or will
offer or sell the Initial Notes (1) in the United States or to any
U.S. Person by means of any form of general solicitation or general
advertising within the meaning of Rule 502(c) under the Act or (2)
with respect to any such securities sold in reliance on Rule 903 of
Regulation S, by means of any directed selling efforts within the
meaning of Rule 902(c) of Regulation S.
(xlii) The Initial Notes offered and sold in reliance on
Regulation S have been and will be offered and sold only in offshore
transactions (assuming that the purchasers who buy the Initial Notes
in the Exempt Resales to Reg S Investors are Reg S Investors).
(xliii) The sale of the Initial Notes pursuant to Regulation S is
not part of a plan or scheme to evade the registration provisions of
the Act.
(xliv) CAIC, the Company, the Guarantors and their respective
affiliates and all persons acting on their behalf (other than the
Initial Purchasers, as to whom CAIC, the Company and the Guarantors
make no representation or warranty) have complied with and will comply
with the offering restrictions requirements of Regulation S in
connection with the offering of the Notes outside the United States
(assuming that the purchasers who buy the Initial Notes in the Exempt
Resales to Reg S Investors are Reg S Investors) and, in connection
therewith, the Preliminary Offering Memorandum and the Offering
Memorandum contain or will contain the disclosure required by Rule
902(g)(2) under the Act. The Initial Notes sold in Reliance on
Regulations S will be represented upon issuance by a temporary global
security that may not be exchanged for definitive securities until the
expiration of the 40-day distribution compliance period referred to in
Rule 903(c)(3) of the Act and only upon certification of beneficial
ownership of such Initial Notes by a non-U.S. Person or U.S. Persons
who purchased such Initial Notes in transactions that were exempt from
the registration requirements of the Act.
(xlv) None of the execution, delivery and performance of this
Agreement, the issuance and sale of the Notes, the application of the
proceeds from the issuance and sale of the Notes and the consummation
of the transactions contemplated thereby as set forth in the
Preliminary Offering Memorandum and the Offering Memorandum, will
violate Regulations T, U or X promulgated by the Board of Governors of
the Federal Reserve System or analogous foreign laws and regulations.
18
(xlvi) Except pursuant to the Operative Documents, there are no
contracts, agreements or understandings among CAIC, the Company, the
Target and any other person that would give rise to a valid claim
against CAIC, the Company, the Target, their respective subsidiaries
or the Initial Purchasers for a brokerage commission, finder's fee or
like payment in connection with the issuance, purchase and sale of the
Notes.
(xlvii) Neither CAIC, nor the Company nor the Target has
distributed or, prior to the later to occur of (A) the Closing Date
and (B) completion of the distribution of the Initial Notes, will
distribute any material in connection with the offering and sale of
the Initial Notes other than the Preliminary Offering Memorandum, the
Offering Memorandum or other material, if any, not prohibited by the
Act and the Financial Services and Markets Xxx 0000 of the United
Kingdom ("FSMA") (or regulations promulgated to the Act or the FSMA)
and approved by the Initial Purchasers, such approval not to be
unreasonably withheld or delayed.
(xlviii) Neither CAIC, nor the Company, nor the Target nor any
Guarantor has entered or will enter into any contractual arrangement
with respect to the distribution of the Initial Notes except for this
Agreement.
(xlix) Upon consummation of the Acquisition, all the
representations and warranties contained in this Agreement will be
true and correct.
(l) Each certificate signed by any officer of CAIC, the Company
or the Guarantors and delivered to the Initial Purchasers or counsel
for the Initial Purchasers shall be deemed to be a representation and
warranty by CAIC, the Company or the Guarantors, as the case may be,
to the Initial Purchasers as to the matters covered thereby.
Each of CAIC, the Company and the Guarantors acknowledge that the
Initial Purchasers and, for purposes of the opinions to be delivered to the
Initial Purchasers pursuant to Section 8 hereof, counsel for CAIC, the
Company and the Guarantors and counsel for the Initial Purchasers, will
rely upon the accuracy and truth of the foregoing representations and
hereby consent to such reliance.
(b) Each of the Initial Purchasers, severally and not jointly,
represents, warrants and covenants to CAIC, the Company and the Guarantors:
(i) Such Initial Purchaser is an institutional "accredited
investor" (as defined in Rule 501(a)(1), (2), (3) or (7) under the
Act) 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 Initial Notes.
(ii) Such Initial Purchaser is not acquiring the Initial Notes
with a view to any distribution thereof that would violate the Act or
the securities laws of any state of the United States or any other
applicable jurisdiction.
(iii) No form of general solicitation or general advertising
(within the meaning of Regulation D under the Act) has been or will be
used by such Initial Purchaser or any of its representatives in
connection with the offer and sale of any of the Initial Notes,
including, but not limited to, articles, notices or other
communications published in any newspaper, magazine or similar medium
or broadcast over television or
19
radio, or any seminar or meeting whose attendees have been invited by
any general solicitation or general advertising.
(iv) Such Initial Purchaser agrees that, in connection with the
Exempt Resales, it will solicit offers to buy the Initial Notes only
from, and will offer to sell the Initial Notes only to, Eligible
Purchasers. Such Initial Purchaser further (A) agrees that it will
offer to sell the Initial Notes only to, and will solicit offers to
buy the Initial Notes only from (1) Eligible Purchasers that such
Initial Purchaser reasonably believes are QIBs and (2) Reg S Investors
and (B) acknowledges and agrees that, in the case of such QIBs and
such Reg S Investors, such Initial Notes will not have been registered
under the Act and may be resold, pledged or otherwise transferred only
(x)(I) to a person whom the seller reasonably believes is a QIB
purchasing for its own account or for the account of a QIB for which
such person is acting as fiduciary or agent, in a transaction meeting
the requirements of Rule 144A under the Act, (II) in an offshore
transaction (as defined in Rule 902 under the Act) meeting the
requirements of Rule 904 under the Act, (III) in a transaction meeting
the requirements of Rule 144 under the Act, (IV) to an institutional
accredited investor that, prior to such transfer, furnishes the
Trustee a signed letter containing certain representations and
agreements relating to the registration of transfer of such Initial
Notes (the form of which can be obtained from the Trustee) and, if
such transfer is in respect of an aggregate principal amount of
Initial Notes in excess of $250,000, an opinion of counsel acceptable
to the Company that such transfer is in compliance with the Act or (V)
in accordance with another exemption from the registration
requirements of the Act (and based upon an opinion of counsel if the
Company so requests), (y) to the Company or any of its subsidiaries,
(z) pursuant to an effective registration statement under the Act and,
in each case, in accordance with any applicable securities laws of any
state of the United States or any other applicable jurisdiction and
(C) acknowledges that they will, and each subsequent holder is
required to, notify any purchaser of the security evidenced thereby of
the resale restrictions set forth in (B) above.
(v) Such Initial Purchaser and its affiliates or any person
acting on its or their behalf has not engaged or will not engage in
any directed selling efforts within the meaning of Regulation S with
respect to the Initial Notes or the Guarantees thereof.
(vi) The Initial Notes offered and sold by such Initial Purchaser
pursuant hereto in reliance on Regulation S have been and will be
offered and sold only in offshore transactions (assuming that the
purchasers who buy the Initial Notes in the Exempt Resales to Reg S
Investors are Reg S Investors).
(vii) The sale of Initial Notes offered and sold by such Initial
Purchaser pursuant hereto in reliance on Regulation S is not part of a
plan or scheme to evade the registration provisions of the Act.
(viii) Such Initial Purchaser has not distributed nor, prior to
the later to occur of (A) the Closing Date and (B) completion of the
distribution of the Initial Notes, will distribute any material in
connection with the offering and sale of the Initial Notes other than
the Preliminary Offering Memorandum, the Offering Memorandum or other
material, if any, not prohibited by the Act and the FSMA (or
regulations promulgated to the Act or the FSMA).
20
(ix) Such Initial Purchaser agrees that it has not offered or
sold and will not offer or sell the Initial Notes in the United States
or to, or for the benefit or account of, a U.S. Person (other than a
distributor), in each case, as defined in Rule 902 under the Act (i)
as part of its distribution at any time and (ii) otherwise until 40
days after the later of the commencement of the offering of the
Initial Notes pursuant hereto and the Closing Date, other than in
accordance with Rule 903 of Regulation S of the Act or another
exemption from the registration requirements of the Act. Such Initial
Purchaser agrees that, during such 40-day distribution compliance
period, it will not cause any advertisement with respect to the
Initial Notes (including any "tombstone" advertisement) to be
published in any newspaper or periodical or posted in any public place
and will not issue any circular relating to the Initial Notes, except
such advertisements as are permitted by and include the statements
required by Regulation S.
(x) Such Initial Purchaser agrees that the Initial Notes offered
and sold in reliance on Regulation S will be represented upon issuance
by a global security that may not be exchanged for definitive
securities until the expiration of the 40-day distribution compliance
period referred to in Rule 903(b)(3) under the Act and only upon
certification of beneficial ownership of such Initial Notes by
non-U.S. persons or U.S. persons who purchased such Initial Notes in
transactions that were exempt from the registration requirements of
the Act.
(xi) Such Initial Purchaser agrees that, at or prior to
confirmation of a sale of Initial Notes by it to any distributor,
dealer or person receiving a selling concession, fee or other
remuneration during the 40-day distribution compliance period referred
to in Rule 903(b)(2) under the Act, it will send to such distributor,
dealer or person receiving a selling concession, fee or other
remuneration a confirmation or notice to substantially the following
effect:
"THE INITIAL NOTES COVERED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
U.S. SECURITIES ACT OF 1933, AS AMENDED (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 YOUR DISTRIBUTION
AT ANY TIME OR (II) OTHERWISE UNTIL 40 DAYS AFTER THE LATER OF THE
COMMENCEMENT OF THE OFFERING OF THE INITIAL NOTES AND THE CLOSING OF
THE OFFERING, EXCEPT IN EITHER CASE IN ACCORDANCE WITH REGULATION S
UNDER THE SECURITIES ACT (OR RULE 144A OR TO ACCREDITED INSTITUTIONS
IN TRANSACTIONS THAT ARE EXEMPT FROM THE REGISTRATION REQUIREMENTS OF
THE SECURITIES ACT), AND IN CONNECTION WITH ANY SUBSEQUENT SALE BY YOU
OF THE INITIAL NOTES COVERED HEREBY IN RELIANCE ON REGULATION S DURING
THE PERIOD REFERRED TO ABOVE TO ANY DISTRIBUTOR, DEALER OR PERSON
RECEIVING A SELLING CONCESSION, FEE OR OTHER REMUNERATION, YOU MUST
DELIVER A NOTICE TO SUBSTANTIALLY THE FOREGOING EFFECT. TERMS USED
ABOVE HAVE THE MEANINGS ASSIGNED TO THEM IN REGULATION S."
The Initial Purchasers acknowledge that CAIC, the Company and the
Guarantors, for purposes of the opinions to be delivered to the Initial
Purchasers pursuant to Section 8 hereof, counsel for CAIC, the Company and
the Guarantors and counsel for the Initial Purchasers will
21
rely upon the accuracy and truth of the foregoing representations and
hereby consent to such reliance.
6. Indemnification.
(a) As of the date hereof, CAIC, and as of the Closing Date, each
of the Company and the Guarantors, jointly and severally, agrees to
indemnify and hold harmless (i) each Initial Purchaser, (ii) each person,
if any, who controls the Initial Purchasers within the meaning of Section
15 of the Act or Section 20(a) of the Exchange Act and (iii) the respective
affiliates, officers, directors, partners, employees, representatives and
agents of the Initial Purchasers or any controlling person to the fullest
extent lawful, from and against any and all losses, liabilities, claims,
damages and expenses whatsoever (including but not limited to reasonable
attorneys' fees and reasonable expenses incurred in investigating,
preparing or defending against any investigation or litigation, commenced
or threatened, or any claim whatsoever, and any and all amounts paid in
settlement of any claim or litigation, if such settlement is effected with
the written consent of the Company), joint or several, to which they or any
of them may become subject under the Act, the Exchange Act or otherwise,
insofar as such losses, liabilities, claims, damages or expenses (or
actions in respect thereof) arise out of or are based upon any untrue
statement or alleged untrue statement of a material fact contained in the
Preliminary Offering Memorandum, any Free Writing Offering Document or the
Offering Memorandum, or in any supplement thereto or amendment thereof, or
arise out of or are based upon the omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make
the statements therein, in the light of the circumstances under which they
were made, not misleading; provided, however, that none of CAIC, the
Company or any Guarantor will be liable in any such case to the extent, but
only to the extent, that any such loss, liability, claim, damage or expense
arises out of or is based upon any such untrue statement or alleged untrue
statement or omission or alleged omission made therein in reliance upon and
in conformity with information relating to the Initial Purchasers furnished
to CAIC or the Company in writing by or on behalf of the Initial Purchasers
expressly for use therein. This indemnity agreement will be in addition to
any liability that CAIC, the Company or any Guarantor may otherwise have,
including under this Agreement.
(b) Each Initial Purchaser agrees, severally and not jointly, to
indemnify and hold harmless (i) as of the date hereof, CAIC and, as of the
Closing Date, the Company and each Guarantor (ii) each person, if any, who
controls the Company or any Guarantor within the meaning of Section 15 of
the Act or Section 20(a) of the Exchange Act, and (iii) the officers,
directors, partners, employees, representatives and agents of CAIC as of
the date hereof, and, as of the Closing Date, the Company or any Guarantor,
to the fullest extent lawful, from and against any and all losses,
liabilities, claims, damages and expenses whatsoever (including but not
limited to reasonable attorneys' fees and reasonable expenses incurred in
investigating, preparing or defending against any investigation or
litigation, commenced or threatened, or any claim whatsoever and any and
all amounts paid in settlement of any claim or litigation, if such
settlement is effected with the written consent of such Initial Purchaser),
joint or several, to which they or any of them may become subject under the
Act, the Exchange Act or otherwise, insofar as such losses, liabilities,
claims, damages or expenses (or actions in respect thereof) arise out of or
are based upon any untrue statement or alleged untrue statement of a
material fact contained in the Preliminary Offering Memorandum, any Free
Writing Offering Document or the Offering Memorandum, or in any amendment
thereof or supplement thereto, or arise out of or are based upon the
omission or alleged omission to state therein a material fact required to
be stated therein or necessary to make the statements therein, in the light
of the circumstances under which they were made, not misleading, in each
case to the extent, but only to the extent, that any such loss,
22
liability, claim, damage or expense arises out of or is based upon any
untrue statement or alleged untrue statement or omission or alleged
omission made therein in reliance upon and in conformity with information
relating to the Initial Purchasers furnished to the Company in writing by
or on behalf of such Initial Purchaser expressly for use therein; provided,
however, that in no case shall an Initial Purchaser be liable or
responsible for any amount in excess of the discounts and commissions
received by such Initial Purchaser under this Agreement. This indemnity
will be in addition to any liability that such Initial Purchasers may
otherwise have, including under this Agreement.
(c) Promptly after receipt by an indemnified party under
subsection (a) or (b) above of notice of the commencement of any action,
such indemnified party shall, if a claim in respect thereof is to be made
against the indemnifying party under such subsection, notify each party
against whom indemnification is to be sought in writing of the commencement
thereof (but the failure so to notify an indemnifying party shall not
relieve the indemnifying party from any liability that it may have under
this Section 6 except to the extent that it has been prejudiced in any
material respect by such failure or from any liability that the
indemnifying party may otherwise have). In case any such action is brought
against any indemnified party, and it notifies an indemnifying party of the
commencement thereof, the indemnifying party will be entitled to
participate therein, and to the extent it may elect by written notice
delivered to the indemnified party promptly after receiving the aforesaid
notice from such indemnified party, to assume the defense thereof with
counsel reasonably satisfactory to such indemnified party. Notwithstanding
the foregoing, the indemnified party or parties shall have the right to
employ its or their own counsel in any such case, but the fees and expenses
of such counsel shall be at the expense of such indemnified party or
parties unless (i) the employment of such counsel shall have been
authorized in writing by the indemnifying parties in connection with the
defense of such action, (ii) the indemnifying parties shall not have
employed counsel to take charge of the defense of such action within a
reasonable time after notice of commencement of the action or (iii) such
indemnified party or parties shall have reasonably concluded that there may
be defenses available to it or them that are different from or additional
to those available to one or all of the indemnifying parties (in which case
the indemnifying party or parties shall not have the right to direct the
defense of such action on behalf of the indemnified party or parties), in
any of which events such fees and expenses of counsel shall be borne by the
indemnifying parties; provided, however, that the indemnifying party under
subsection (a) or (b) above shall only be liable for the reasonable legal
expenses of one counsel (in addition to any local counsel) for all
indemnified parties in each jurisdiction in which any claim or action is
brought. Anything in this subsection to the contrary notwithstanding, an
indemnifying party shall not be liable for any settlement of any claim or
action effected without its prior written consent; provided that such
consent was not unreasonably withheld. No indemnifying party shall, without
the prior written consent of the indemnified party, effect any settlement,
compromise or consent to the entry of judgment in any pending or threatened
action, suit or proceeding in respect of which any indemnified party is a
party and indemnity was sought hereunder by such indemnified party, unless
such settlement, compromise or consent includes an unconditional release of
such indemnified party from all liability on claims that are the subject
matter of such action, suit or proceeding and does not include a statement
as to or an admission of fault, culpability or a failure to act by or on
behalf of any indemnified party.
7. Contribution. In order to provide for contribution in circumstances
in which the indemnification provided for in Section 6 is for any reason
held to be unavailable from an indemnifying party or is insufficient to
hold harmless a party indemnified thereunder, CAIC (as of the date hereof)
and the Company and the Guarantors (as of the Closing Date), on the one
hand, and the Initial Purchasers, on the other hand, shall contribute to
the aggregate losses,
23
liabilities, claims, damages and expenses of the nature contemplated by
such indemnification provision (including any investigation, legal and
other expenses reasonably incurred in connection with, and any amount paid
in settlement of, any action, suit or proceeding or any claims asserted,
but after deducting in the case of losses, liabilities, claims, damages and
expenses suffered by CAIC, the Company and the Guarantors, any contribution
received by CAIC, the Company or the Guarantors from persons, other than
the Initial Purchasers or the Guarantors, who may also be liable for
contribution, including persons who control CAIC, the Company within the
meaning of Section 15 of the Act or Section 20(a) of the Exchange Act) to
which CAIC, the Company and the Initial Purchasers may be subject, in such
proportion as is appropriate to reflect the relative benefits received by
CAIC, the Company and the Guarantors, on the one hand, and the Initial
Purchasers, on the other hand, from the offering of the Initial Notes or,
if such allocation is not permitted by applicable law or indemnification is
not available as a result of the indemnifying party not having received
notice as provided in Section 6, in such proportion as is appropriate to
reflect not only the relative benefits referred to above but also the
relative fault of CAIC, the Company and the Guarantors, on the one hand,
and the Initial Purchasers, on the other hand, in connection with the
statements or omissions that resulted in such losses, liabilities, claims,
damages or expenses, as well as any other relevant equitable
considerations. The relative benefits received by CAIC, the Company and the
Guarantors, on the one hand, and the Initial Purchasers, on the other hand,
shall be deemed to be in the same proportion as (i) the total proceeds from
the offering of Initial Notes (net of discounts but before deducting
expenses) received by CAIC, the Company or any Guarantor and (ii) the
discounts and commissions received by the Initial Purchasers. The relative
fault of CAIC, the Company and the Guarantors, on the one hand, and of the
Initial Purchasers, on the other hand, shall be determined by reference to,
among other things, whether the untrue or alleged untrue statement of a
material fact or the omission or alleged omission to state a material fact
relates to information supplied by CAIC, the Company or the Guarantors or
the Initial Purchasers and the parties' relative intent, knowledge, access
to information and opportunity to correct or prevent such statement or
omission. CAIC, the Company the Guarantors, and the Initial Purchasers
agree that it would not be just and equitable if contribution pursuant to
this Section 7 were determined by pro rata allocation or by any other
method of allocation that does not take into account the equitable
considerations referred to above. Notwithstanding the provisions of this
Section 7, (i) in no case shall an Initial Purchaser be required to
contribute any amount in excess of the amount by which the discounts and
commissions applicable to the Initial Notes purchased by such Initial
Purchaser pursuant to this Agreement exceeds the amount of any damages that
such Initial Purchaser has otherwise been required to pay by reason of any
untrue or alleged untrue statement or omission or alleged omission and (ii)
no person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation. For purposes of
this Section 7, (A) each person, if any, who controls an Initial Purchaser
within the meaning of Section 15 of the Act or Section 20(a) of the
Exchange Act and (B) the respective officers, directors, partners,
employees, representatives and agents of such Initial Purchaser or any
controlling person shall have the same rights to contribution as such
Initial Purchaser, and (A) each person, if any, who controls CAIC, the
Company or any Guarantor within the meaning of Section 15 of the Act or
Section 20(a) of the Exchange Act and (B) the respective affiliates,
officers, directors, partners, employees, representatives and agents of the
Company or any Guarantor shall have the same rights to contribution as
CAIC, the Company and the Guarantors, subject in each case to clauses (i)
and (ii) of this Section 7. Any party entitled to contribution will,
promptly after receipt of notice of commencement of any action, suit or
proceeding against such party in respect of which a claim for contribution
may be made against another party or parties under this Section 7, notify
such party or parties from whom contribution may be sought, but the failure
to so notify such party or parties shall not relieve the party or parties
from whom contribution may be sought from any
24
obligation it or they may have under this Section 7 or otherwise. No party
shall be liable for contribution with respect to any action or claim
settled without its prior written consent; provided that such written
consent was not unreasonably withheld. The Initial Purchasers' obligations
to contribute pursuant to this Section 7 are several in proportion to the
respective principal amount of the Notes purchased by each of the Initial
Purchasers hereunder and are not joint.
8. Conditions of Initial Purchasers' Obligations. The obligations of
the Initial Purchasers to purchase and pay for the Initial Notes, as
provided herein, shall be subject to the satisfaction of the following
conditions:
(a) All of the representations and warranties of CAIC, the
Company and the Guarantors contained in this Agreement shall be true and
correct on the date hereof and on the Closing Date, as applicable, with the
same force and effect as if made on and as of the date hereof and the
Closing Date, as applicable. CAIC, the Company and the Guarantors shall
have performed or complied in all material respects with all of the
agreements contained herein and required to be performed or complied with
by it on or prior to the Closing Date.
(b) The Offering Memorandum shall have been printed and copies
distributed to the Initial Purchasers not later than 10:00 a.m., New York
City time, on the day that is two Business Days following the date of this
Agreement or at such later date and time as to which the Initial Purchasers
may agree.
(c) No stop order suspending the qualification or exemption from
qualification of the Initial Notes or the Guarantees thereof in any
jurisdiction referred to in Section 4(e) shall have been issued and no
proceeding for that purpose shall have been commenced or shall be pending
or threatened.
(d) No action shall have been taken and no statute, rule,
regulation or order shall have been enacted, adopted or issued by any
governmental agency that would, as of the Closing Date, prevent the
issuance of the Initial Notes or the Guarantees thereof; no action, suit,
investigation or proceeding shall have been commenced and be pending
against or affecting or, to the knowledge of the Company, threatened
against, CAIC, the Company, the Target or any of their respective
subsidiaries, before any court or arbitrator or any governmental body,
agency or authority or administrative agency that, if adversely determined,
could reasonably be expected to result in a Material Adverse Effect; and no
stop order shall have been issued preventing the use of the Preliminary
Offering Memorandum, any Free Writing Offering Document, the Offering
Memorandum or any amendment or supplement thereto, or that could reasonably
be expected to have a Material Adverse Effect.
(e) Since the respective dates as of which information is given
in the Disclosure Package, (i) there shall not have been any material
adverse change, or any development that is reasonably likely to result in a
material adverse change, in the capital stock or the long-term debt, or
material increase in the short-term debt, of the Company or any of its
subsidiaries from that set forth in the Disclosure Package and the Offering
Memorandum, (ii) no dividend or distribution of any kind shall have been
declared, paid or made by the Company or any of its subsidiaries on any
class of its capital stock or membership interests, other than as provided
under the Acquisition Agreement, and (iii) neither the Company, the Target
nor any of their respective subsidiaries, shall 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 generally accepted accounting principles
in the United States and are not disclosed on the latest
25
balance sheet or notes thereto included in the Offering Memorandum, nor
entered into any transaction not in the ordinary course of business, in
each case, other than as provided under the Operative Documents and as
disclosed in the Disclosure Package and the Offering Memorandum. Since the
date hereof and since the dates as of which information is given in the
Preliminary Offering Memorandum, there has not occurred any Material
Adverse Effect, or any development that is reasonably likely to result in a
Material Adverse Effect.
(f) The Initial Purchasers shall have received certificates,
dated the Closing Date, signed on behalf of the Company and each Guarantor,
in form and substance reasonably satisfactory to the Initial Purchasers and
counsel for the Initial Purchasers, confirming, as of the Closing Date, the
matters set forth in paragraphs (a), (c), (d) and (e) of this Section 8 and
that, as of the Closing Date, the obligations of the Company and each
Guarantor to be performed hereunder on or prior thereto have been duly
performed in all material respects.
(g) The Initial Purchasers shall have received on the Closing
Date an opinion, dated the Closing Date, in form and substance reasonably
satisfactory to the Initial Purchasers and counsel for the Initial
Purchasers, of Xxxx, Weiss, Rifkind, Xxxxxxx & Xxxxxxxx, LLP counsel for
the Company, substantially to the effect set forth in Exhibit B hereto.
(h) The Initial Purchasers shall have received on the Closing
Date an opinion, dated the Closing Date, in form and substance reasonably
satisfactory to the Initial Purchasers and counsel for the Initial
Purchasers, of the General Counsel of the Company, substantially to the
effect set forth in Exhibit C hereto.
(i) At the time this Agreement is executed and at the Closing
Date, the Initial Purchasers shall have received from
PricewaterhouseCoopers LLP, independent auditors with respect to the
Company and the Guarantors, dated as of the date of this Agreement and as
of the Closing Date, customary comfort letters addressed to the Initial
Purchasers and in form and substance reasonably satisfactory to the Initial
Purchasers and counsel for the Initial Purchasers with respect to the
financial statements and certain financial information contained in the
Preliminary Offering Memorandum and the Offering Memorandum.
(j) The Initial Purchasers shall have received, on the Closing
Date, an opinion, dated the Closing Date, in form and substance reasonably
satisfactory to the Initial Purchasers, of Xxxxxx & Xxxxxxx LLP, counsel
for the Initial Purchasers, covering such matters as are customarily
covered in such opinions.
(k) Prior to the Closing Date, CAIC, the Company and the
Guarantors shall have furnished to the Initial Purchasers and their counsel
such further information, certificates and documents as the Initial
Purchasers or such counsel may reasonably request for the purpose of
enabling them to review or pass upon the matters referred to in this
Section 8 and in order to evidence the accuracy, completeness or
satisfaction in all material respects of any of the representations,
warranties or conditions herein contained.
(l) The Company, the Guarantors and the Trustee shall have
entered into the Indenture, and the Initial Purchasers shall have received
counterparts, conformed as executed, thereof.
(m) The Company, the Guarantors and the Initial Purchasers shall
have entered into the Registration Rights Agreement and the Initial
Purchasers shall have received counterparts, conformed as executed,
thereof.
26
(n) On the Closing Date, the Company, the Guarantors and the
Initial Purchasers shall have entered into the First Amendment and the
Initial Purchasers shall have received counterparts, conformed as executed,
thereof.
(o) The New Senior Credit Facility shall have been entered into
and M&F shall have contributed cash to the common equity capital of CAIC,
each as substantially as described in the Preliminary Offering Memorandum
and the Offering Memorandum, providing proceeds in an amount sufficient,
together with the proceeds from the sale of the Initial Notes, to
consummate the Acquisition.
(p) The Acquisition, in accordance with the terms of the
Acquisition Agreement, and the Merger, shall have been consummated prior
to, or simultaneously with, the purchase of and payment for the Initial
Notes as provided in this Agreement.
(q) On or after the date hereof, and prior to the Closing Date
(i) there shall not have occurred any downgrading, suspension or withdrawal
of, nor shall any notice have been given of any potential or intended
downgrading, suspension or withdrawal of, or of any review (or of any
potential or intended review) for a possible change that does not indicate
the direction of the possible change in, any rating of the Company or any
Guarantor or any securities of the Company or any Guarantor (including,
without limitation, the placing of any of the foregoing ratings on credit
watch with negative or developing implications or under review with an
uncertain direction) by any "nationally recognized statistical rating
organization" as such term is defined for purposes of Rule 436(g)(2) under
the Act, (ii) there shall not have occurred any change, nor shall any
notice have been given of any potential or intended change, in the outlook
for any rating of the Company or any Guarantor, or any securities of the
Company or any Guarantor by any such rating organization and (iii) no such
rating organization shall have given notice that it has assigned (or is
considering assigning) a lower rating to the Initial Notes than that on
which the Initial Notes were marketed.
(r) The Initial Notes shall have been approved for trading on
PORTAL.
(s) The Company and the Guarantors shall furnish the Initial
Purchasers with such conformed copies of such opinions, certificates,
letters and other documents as they reasonably request.
9. Initial Purchasers' Information. CAIC, the Company and the
Guarantors acknowledge that the statements with respect to the offering of
the Initial Notes set forth in the second, fifth, seventh and tenth
paragraphs of the "Plan of Distribution" in the Preliminary Offering
Memorandum and the Offering Memorandum constitute the only information
relating to the Initial Purchasers furnished to CAIC, the Company and the
Guarantors in writing by or on behalf of the Initial Purchasers expressly
for use in the Preliminary Offering Memorandum and the Offering Memorandum.
10. Survival of Representations and Agreements. All representations
and warranties, covenants and agreements of the Initial Purchasers and
CAIC, the Company and the Guarantors contained in this Agreement, including
the agreements contained in Sections 4(f) and 11(d), the indemnity
agreements contained in Section 6 and the contribution agreements contained
in Section 7, shall remain operative and in full force and effect
regardless of any investigation made by or on behalf of an Initial
Purchaser, any controlling person thereof, or by or on behalf of the
Company, or any controlling person thereof, and shall survive delivery of
and payment for the Initial Notes to and by the Initial Purchasers. The
representations contained in Section 5 and the
27
agreements contained in Sections 4(f), 6, 7 and 11(d) shall survive the
termination of this Agreement, including any termination pursuant to
Section 11.
11. Effective Date of Agreement; Termination.
(a) This Agreement shall become effective upon execution and
delivery of a counterpart hereof by each of the parties hereto.
(b) The Initial Purchasers shall have the right to terminate this
Agreement at any time prior to the Closing Date by written notice to CAIC
or the Company from the Initial Purchasers, without liability (other than
with respect to Sections 6 and 7) on the Initial Purchasers' part to CAIC,
the Company or the Guarantors if, on or prior to such date, (i) CAIC, the
Company or the Guarantors shall have failed, refused or been unable to
perform in any material respect any agreement on its part to be performed
hereunder, (ii) any other condition to the obligations of the Initial
Purchasers hereunder as provided in Section 8 is not fulfilled when and as
required in any material respect, (iii) in the reasonable judgment of the
Initial Purchasers, there shall not have occurred since the respective
dates as of which information is given in the Offering Memorandum a
Material Adverse Effect, or any development that is reasonably likely to
result in a Material Adverse Effect for the Company, the Target or their
respective subsidiaries, taken as a whole, other than as set forth in the
Disclosure Package and the Offering Memorandum (exclusive of any amendment
or supplement thereto), or (iv)(A) any domestic or international event or
act or occurrence has materially disrupted, or in the opinion of the
Initial Purchasers will in the immediate future materially disrupt, the
market for the Company's securities or for securities in general; or (B)
trading in securities generally on the New York Stock Exchange, the
American Stock Exchange or the Nasdaq National Market shall have been
suspended or materially limited, or minimum or maximum prices for trading
shall have been established, or maximum ranges for prices for securities
shall have been required, on such exchange or the Nasdaq National Market,
or by such exchange or other regulatory body or governmental authority
having jurisdiction; or (C) a banking moratorium shall have been declared
by federal or state authorities, or a moratorium in foreign exchange
trading by major international banks or persons shall have been declared;
or (D) there has occurred an outbreak or escalation of hostilities or acts
of terrorism involving the United States on or after the date hereof, or
there has been a declaration by the United States of a national emergency
or war, the effect of which shall be, in any such case, in the sole
judgment of the Initial Purchasers, to make it inadvisable or impracticable
to proceed with the offering, sale or delivery of the Initial Notes on the
terms and in the manner contemplated in the Preliminary Offering Memorandum
and the Offering Memorandum; or (E) there shall have been such a material
adverse change in general economic, political or financial conditions or if
the effect of international conditions on the financial markets in the
United States shall be such as, in the Initial Purchasers' sole judgment,
makes it inadvisable or impracticable to proceed with the offering, sale or
delivery of the Initial Notes as contemplated hereby.
(c) Any notice of termination pursuant to this Section 11 shall
be by telephone or facsimile and, in either case, confirmed promptly in
writing by letter.
(d) If this Agreement is terminated pursuant to any of the
provisions hereof (other than pursuant to clause (iv) of Section 11(b), in
which case each party will be responsible for its own expenses), or if the
sale of the Initial Notes provided for herein is not consummated because
any condition to the obligations of the Initial Purchasers set forth herein
is not satisfied or because of any refusal, inability or failure on the
part of CAIC, the Company or the Guarantors to perform any agreement herein
or comply with any provision hereof, CAIC, the Company and the Guarantors
shall reimburse the Initial Purchasers for all reasonable out-of-pocket
expenses
28
(including the reasonable fees and expenses of the Initial Purchasers'
counsel), incurred by the Initial Purchasers in connection herewith.
(e) If on the Closing Date any Initial Purchaser shall fail or
refuse to purchase the Initial Notes that it has agreed to purchase
hereunder on such date and the aggregate principal amount of the Initial
Notes that such defaulting Initial Purchaser agreed but failed or refused
to purchase is not more than one-tenth of the aggregate principal amount of
the Initial Notes to be purchased on such date by all Initial Purchasers,
each non-defaulting Initial Purchaser shall be obligated severally, in the
proportion that the principal amount of the Initial Notes set forth
opposite its name in Schedule II bears to the aggregate principal amount of
the Initial Notes that all the non-defaulting Initial Purchasers, as the
case may be, have agreed to purchase, to purchase the Initial Notes that
such defaulting Initial Purchaser agreed but failed or refused to purchase
on such date; provided that in no event shall the aggregate principal
amount of the Initial Notes that any Initial Purchaser has agreed to
purchase pursuant to Section 3 hereof be increased pursuant to this Section
11 by an amount in excess of one-ninth of such principal amount of the
Initial Notes without the written consent of such Initial Purchaser. If on
the Closing Date any Initial Purchaser shall fail or refuse to purchase the
Initial Notes and the aggregate principal amount of the Initial Notes with
respect to which such default occurs is more than one-tenth of the
aggregate principal amount of the Initial Notes to be purchased by all
Initial Purchasers and arrangements satisfactory to the Initial Purchasers
and CAIC for purchase of such Initial 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 and the Company, except that
the provisions of Section 6 and 7 shall at all times be effective and shall
survive such termination. In any such case that does not result in
termination of this Agreement, either Bear Xxxxxxx or CAIC 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.
12. Notice. All communications hereunder, except as may be otherwise
specifically provided herein, shall be in writing and, if sent to the
Initial Purchasers shall be mailed, delivered, telecopied and confirmed in
writing or sent by a nationally recognized overnight courier service
guaranteeing delivery on the next business day to Bear, Xxxxxxx & Co. Inc.,
000 Xxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Corporate Finance
Department, telecopy number: (000) 000-0000, with a copy to Xxxxxx &
Xxxxxxx LLP, 000 Xxxxx Xxxxxx, Xxxxx 0000, Xxx Xxxx, Xxx Xxxx 00000,
Attention: Xxxx X. Xxxxx, facsimile number: (000) 000-0000; and if sent to
the Company, shall be mailed, delivered, telecopied and confirmed in
writing or sent by a nationally recognized overnight courier service
guaranteeing delivery on the next business day to Xxxxxx American Corp.,
00000 Xxxxxxxx Xxxxx, Xxx Xxxxxxx, Xxxxx 00000, Attention: Chief Financial
Officer, facsimile number: (000) 000-0000, with a copy to Xxxx, Weiss,
Rifkind, Xxxxxxx and Xxxxxxxx LLP, 0000 Xxxxxx xx xxx Xxxxxxxx, Xxx Xxxx,
Xxx Xxxx 00000, Attention: Xxxxxxxx X. Wee, facsimile number: (212)
492-0052, and a copy to M&F Worldwide Corp., 00 Xxxx 00xx Xxxxxx, Xxx Xxxx,
Xxx Xxxx 00000, Attention: General Counsel, facsimile number: (212)
572-5056.
13. Parties. This Agreement shall inure solely to the benefit of, and
shall be binding upon, the Initial Purchasers, CAIC, and as of and
following the Closing Date, the Company, the Guarantors, and the
controlling persons and agents referred to in Sections 6 and 7, and their
respective successors and assigns, and no other person shall have or be
construed to have any legal or equitable right, remedy or claim under or in
respect of or by virtue of this Agreement or
29
any provision herein contained. The term "successors and assigns" shall not
include a purchaser, in its capacity as such, of Notes from the Initial
Purchasers.
14. Contractual Relationship. CAIC and the Company hereby acknowledge
and agree that (a) the purchase and sale of the Notes pursuant to this
Agreement is an arm's-length commercial transaction between CAIC and the
Company, on the one hand, and the Initial Purchasers, on the other, (b)
each Initial Purchaser is acting solely as a principal and not as the agent
or fiduciary of CAIC or the Company with respect to the sale of the Notes
contemplated hereby, (c) no Initial Purchaser has assumed an advisory or
fiduciary responsibility in favor of CAIC or the Company with respect to
the sale of the Notes contemplated hereby (irrespective of whether such
Initial Purchaser has advised or is currently advising the Company on other
matters, and notwithstanding the fact that an affiliate of X.X. Xxxxxx
Securities Inc. is currently acting as financial advisor to the Target in
connection with the Transactions) and (d) CAIC and the Company have
consulted their own legal and financial advisors to the extent they deem
appropriate. CAIC and the Company agree that they will not claim that any
Initial Purchaser has rendered advisory services of any nature or respect,
or owes a fiduciary or similar duty, to them in connection with the sale of
the Notes contemplated hereby or the process leading thereto. CAIC, the
Company and the Initial Purchasers agree that they are each responsible for
making their own independent judgments with respect to the transactions
contemplated by this Agreement or any matters leading up to such
transactions, and that any opinions or views expressed by the Initial
Purchasers to CAIC or the Company regarding such transactions, including
but not limited to any opinions or views with respect to the price or
market for the Company's securities, do not constitute advice or
recommendations to CAIC or the Company.
15. Partial Unenforceability. The invalidity or unenforceability of
any Section, paragraph or provision of this Agreement shall not affect the
validity or enforceability of any other Section, paragraph or provision
hereof.
16. Construction. THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH
THE INTERNAL LAWS OF THE STATE OF NEW YORK. TIME IS OF THE ESSENCE IN THIS
AGREEMENT.
17. Captions. The captions included in this Agreement are included
solely for convenience of reference and are not to be considered a part of
this Agreement.
18. Counterparts. This Agreement may be executed in various
counterparts, which together shall constitute one and the same instrument.
[Signature page follows]
30
If the foregoing correctly sets forth the understanding among the Initial
Purchasers and the Company, please so indicate in the space provided below for
that purpose, whereupon this letter shall constitute a binding agreement among
us.
Very truly yours,
CA INVESTMENT CORP.
By: /s/ Xxxx X. Xxxxxxx
------------------------------------
Name: Xxxx X. Xxxxxxx
Title: President
Accepted and agreed to as of
the date first above written:
BEAR, XXXXXXX & CO. INC.
By: /s/ Xxxx Xxxxxxxxx
---------------------------------
Name: Xxxx Xxxxxxxxx
Title: Senior Managing Director
X.X. XXXXXX SECURITIES INC.
By: /s/ Xxxxxxx Xxxxxx
---------------------------------
XXXXXXX XXXXXX
MANAGING DIRECTOR
SCHEDULE I
Guarantors
1. Core Skills Inc., a Delaware corporation
2. Xxxxxx American Checks, Inc., a Delaware corporation
3. Checks in the Mail, Inc., a Delaware corporation
4. B(2) Direct, Inc., a Delaware corporation
SCHEDULE II
PRINCIPAL AMOUNT
INITIAL PURCHASER OF NOTES
------------------------------------------------------------- ----------------
Bear, Xxxxxxx & Co. Inc...................................... $122,500,000
X.X. Xxxxxx Securities Inc................................... $ 52,500,000
------------
TOTAL $175,000,000
============
SCHEDULE III
Subsidiaries
1. Core Skills Inc., a Delaware corporation
2. Xxxxxx American Checks, Inc., a Delaware corporation
3. Checks in the Mail, Inc., a Delaware corporation
4. B(2) Direct, Inc., a Delaware corporation
SCHEDULE IV(A)
Pricing Information
ISSUER: XXXXXX AMERICAN CORP.
ISSUE: $175 MILLION 11.750% SENIOR NOTES DUE 12/15/13
MANAGERS: BSC/JPM (Joint Book-Running Managers) INDUSTRY: Services
RATINGS: B2/B-
PRICE: 100.000% YTW: 11.750% SPRD TREAS: + 729bps vs. 4.25% due 11/13
OPTIONAL REDEMPTION: NC 4 (12/15/09)
CALL PRICES: 12/15/09... 105.875%
12/15/10... 102.938%
12/15/11... 100.000%
EQUITY CLAWBACK: 35% Equity Clawback @ 111.750% until 12/15/08
INTEREST PAYMENT DATES: Semi annual interest payments, beginning 6/15/06
TRADE DATE: 12/8/05 SETTLEMENT: 12/15/05 (T+5)
H.Y. TRADER: Xxx Xxxxxxxx
CUSIP: 144A# 181592 AA 4
REG S# U17935 AA 2
ADDITIONAL NOTES: 144A/Reg S.
Debt Incurrence Test
Fixed Charge Coverage Ratio
Change: 2.25x until December 15, 2007, then 2.50x thereafter
Additional Mandatory Debt Reduction Covenant
If the Company's leverage ratio exceeds 3.0x (measured at the end of the most
recent four-quarter reference period for which internal financial statements are
available), the Company's senior secured credit facility (if any) will include
the excess cash flow covenant in the Company's Credit Agreement on the Closing
Date.
ECONOMIC TERMS OF THE COMPANY'S SENIOR SECURED CREDIT FACILITY:
o Applicable margins:
o Term Loan B Eurodollar Loans: 325 bps;
o Term Loan B ABR Loans: 325 bps;
o Revolving Eurodollar Loans: 300 bps; and
o Revolving ABR Loans: 200 bps;
o The Term Loan B will carry soft-call protection of 101.0% for the first
18-months after the closing date and par thereafter;
o The Term Loan B will be offered at an Original Issue Discount of 99.5 at
closing (increasing borrowings under the revolver by approximately $2
million);
o The minimum consolidated interest coverage covenant is being adjusted to a
fixed charge coverage covenant with the following definition: EBITDA/(Cash
Interest + Cash Taxes + Amortization);
o The Term Loan B Amortization schedule has been changed to the following
schedule, which represents a $5 million increase in each of 2008, 2009 and
2010:
2006 2007 2008 2009 2010 2011
------- ------- ------- ------- ------- --------
$15.0MM $20.0MM $30.0MM $35.0MM $40.0MM $300.0MM
CHANGES TO FINANCIAL INFORMATION
Pro Forma Cash Interest Expense: $54.7 million
CAPITALIZATION:
AS OF 09/30/05
CAPITALIZATION PRO FORMA
---------------------------- --------------
Revolver(1) $ 4.2
Term Loan B 437.8
------
TOTAL SENIOR SECURED DEBT $442.0
Senior Unsecured Notes 175.0
Other Debt 6.5
------
TOTAL DEBT $623.5
Common Equity 203.0
------
TOTAL CAPITALIZATION $826.5
======
----------
(1) Facility size of $40 million
The revolver draw on the closing date will increase by $3.0 million from
the amounts indicated above due to estimated post-closing operational cash
needs.
SCHEDULE IV(B)
Disclosure Package
ISSUER: XXXXXX AMERICAN CORP.
ISSUE: $175 MILLION 11.750% SENIOR NOTES DUE 12/15/13
MANAGERS: BSC/JPM (Joint Book-Running Managers) INDUSTRY: Services
RATINGS: B2/B-
PRICE: 100.000% YTW: 11.750% SPRD TREAS: + 729bps vs. 4.25% due 11/13
OPTIONAL REDEMPTION: NC 4 (12/15/09)
CALL PRICES: 12/15/09... 105.875%
12/15/10... 102.938%
12/15/11... 100.000%
EQUITY CLAWBACK: 35% Equity Clawback @ 111.750% until 12/15/08
INTEREST PAYMENT DATES: Semi annual interest payments, beginning 6/15/06
TRADE DATE: 12/8/05 SETTLEMENT: 12/15/05 (T+5)
H.Y. TRADER: Xxx Xxxxxxxx
CUSIP: 144A# 181592 AA 4
REG S# U17935 AA 2
ADDITIONAL NOTES: 144A/Reg S.
Debt Incurrence Test
Fixed Charge Coverage Ratio
Change: 2.25x until December 15, 2007, then 2.50x thereafter
Additional Mandatory Debt Reduction Covenant
If the Company's leverage ratio exceeds 3.0x (measured at the end of the most
recent four-quarter reference period for which internal financial statements are
available), the Company's senior secured credit facility (if any) will include
the excess cash flow covenant in the Company's Credit Agreement on the Closing
Date.
ECONOMIC TERMS OF THE COMPANY'S SENIOR SECURED CREDIT FACILITY:
o Applicable margins:
o Term Loan B Eurodollar Loans: 325 bps;
o Term Loan B ABR Loans: 325 bps;
o Revolving Eurodollar Loans: 300 bps; and
o Revolving ABR Loans: 200 bps;
o The Term Loan B will carry soft-call protection of 101.0% for the first
18-months after the closing date and par thereafter;
o The Term Loan B will be offered at an Original Issue Discount of 99.5 at
closing (increasing borrowings under the revolver by approximately $2
million);
o The minimum consolidated interest coverage covenant is being adjusted to a
fixed charge coverage covenant with the following definition: EBITDA/(Cash
Interest + Cash Taxes + Amortization);
o The Term Loan B Amortization schedule has been changed to the following
schedule, which represents a $5 million increase in each of 2008, 2009 and
2010:
2006 2007 2008 2009 2010 2011
------- ------- ------- ------- ------- --------
$15.0MM $20.0MM $30.0MM $35.0MM $40.0MM $300.0MM
CHANGES TO FINANCIAL INFORMATION
Pro Forma Cash Interest Expense: $54.7 million
CAPITALIZATION:
AS OF 09/30/05
CAPITALIZATION PRO FORMA
---------------------------- --------------
Revolver(1) $ 4.2
Term Loan B 437.8
------
TOTAL SENIOR SECURED DEBT $442.0
Senior Unsecured Notes 175.0
Other Debt 6.5
------
TOTAL DEBT $623.5
Common Equity 203.0
------
TOTAL CAPITALIZATION $826.5
======
----------
(1) Facility size of $40 million
The revolver draw on the closing date will increase by $3.0 million from
the amounts indicated above due to estimated post-closing operational cash
needs.
2
SCHEDULE V
The following contracts require consent or give rise to termination or
acceleration rights as a result of the Transactions:
1. Merchandise License Agreement between Those Characters From Cleveland,
Inc. and Xxxxxx American Checks, Inc. dated March 1, 2004 (Care Bears)
2. Non-Exclusive Trademark License Agreement between Children's Miracle
Network and Xxxxxx American Checks, Inc. dated January 1, 2004
3. Non-Exclusive Licensing Agreement between Xxxxxx International, LLC
and Xxxxxx American Checks, Inc. dated August 1, 2002, as amended
4. Limited License Agreement between Redline Sports Marketing, Inc. and
Xxxxxx American Checks, Inc. dated July 24, 2001 and Manufacturer's
Agreement among Redline Sports Manufacturing, Inc. and Xxxx Xxxxx
Xxxxxxxx dated August 20, 2002 and Manufacturer's Agreement between
Redline Sports Marketing, Inc. and WS Packaging dated September 20,
2002 (Xxxxx XxXxxxx)
5. Limited Sublicense Agreement between Xxxxxx Xxxxx Racing, Inc. and
Xxxxxx American Checks, Inc. dated July 1, 2001, as amended (Xxxx
Xxxxxxx)
6. Limited License Agreement between Redline Sports Marketing, Inc. and
Xxxxxx American Checks, Inc. dated July 24, 2001 and Manufacturing
Agreement between Redline Sports Marketing, Inc. and WS Packaging
dated October 7, 2002 and Manufacturing Agreement between Redline
Sports and Marketing, Inc. and Xxxx Xxxxx Xxxxxxxx dated October 11,
2002 (Xxxx Xxxxxxx)
7. Limited License Agreement between JG Motorsports, Inc. and Xxxxxx
American Checks, Inc. dated August 23, 2001, as amended (Xxxx Xxxxxx)
8. Product License #15010-DCSH between DC Comics and Xxxxxx American
Checks, Inc. dated October 27, 2004 (DC Superheros)
9. Product License #14927-HBCL between Warner Bros Consumer Products,
Inc. and Xxxxxx American Checks, Inc. dated August 26, 2004
(Jetsons/Flintstones)
10. Standard UCLA License Agreement between the Regents of the University
of California and Xxxxxx American Checks, Inc. dated April 1, 2004
11. License Agreement between Xxxxxxxx Xxxxxxxxx, Inc. and Xxxxxx American
Checks, Inc. dated January 1, 2002, as amended (Xxxxxx)
12. Product License between Warner Bros. Consumer Products, Inc. and
Xxxxxx American Checks, Inc. dated June 2, 2004 (Xxx and Xxxxx)
13. License Agreement and Approval of Third Party Manufacturer between
Xxxxxx American Checks, Inc. and Warner Bros. Consumer Products, Inc.
dated June 2, 2004 (Xxx and Xxxxx)
14. Warner Bros. Consumer Products, Inc. Letter to Xxxxxx American Checks,
Inc. concerning Approval of Third Party Manufacturer dated June 2,
2004 (Xxx and Xxxxx)
15. License Agreement between General Motors Corporation and Xxxxxx
American Checks, Inc. dated May 19, 2003, as amended (Cruisin)
16. License Agreement between Ford Motor Company and Xxxxxx American
Checks, Inc. dated December 21, 2004 (Cruisin)
17. License Agreement between Springs Licensing Group, Inc. and Springs
Industries, Inc. and Xxxxxx American Checks, Inc. dated March 25, 2004
(Blue Jean Teddy)
18. Merchandise License Agreement between Save the Children Federation,
Inc. and Xxxxxx American Checks, Inc. dated September 7, 2004
19. License Agreement between Those Characters From Cleveland, Inc. and
Checks In The Mail, Inc. dated April 8, 2004 as amended (Care Bears)
20. License Agreement between American Society for the Prevention of
Cruelty to Animals and Checks In The Mail, Inc. dated July 1, 2003
21. License Agreement between Xxxxxx American Checks, Inc. and Smithsonian
Institution dated March 15, 2005, as amended (Visions from Space)
22. Standard Industrial Lease Agreement, dated September 14, 1998, between
Jeffersonville Public Warehouses, Inc. d/b/a America Place, as lessor,
and Xxxxxx American Checks, Inc., as lessee, as amended (Jefferson
Forms Plant)
23. Software License Agreement between Arbor Software Corporation and
Xxxxxx American Checks, Inc. dated December 31, 1995, as amended
24. U.S. Master Client Agreement between Gartner Group, Inc. and Xxxxxx
American Checks, Inc. dated January 1, 1996 (services)
25. Purchase Agreement between RadioShack Corporation and B2Direct, Inc.
dated January 1, 2004
26. Merchandise License Agreement between Checks In The Mail, Inc and
Discovery Licensing, Inc. dated May, 2005 (American Chopper)
27. Merchandise License Agreement between Checks In The Mail, Inc and
Those Characters From Cleveland, Inc. dated May 4,2004 (Strawberry
Shortcake)
28. Order Form and MIPS Based License between Computer Associates
International Inc. and Xxxxxx American Checks, Inc. dated June 20,
1999, as amended
29. Merchandise License Agreement between Checks in the Mail, Inc. and Art
Impressions, Inc. dated December 11, 2001, as amended (Xxxxxx Xxxx
Designs)
30. Standard Retail Product License Agreement between Collegiate Licensing
Company and Xxxxxx American Checks, Inc. dated November 7, 2003, as
amended (various universities)
2
31. License Agreement between Warner Bros. Consumer Products, Inc. and
Checks In The Mail, Inc. dated January 13, 2004 (The Flintstones)
32. License Agreement between Warner Bros. Consumer Products, Inc. and
Checks In The Mail, Inc. dated January 13, 2004 (Xxx and Xxxxx)
33. Merchandise Licensing Agreement between Checks In The Mail, Inc. and
Save the Children Federation, Inc. dated May 31, 2006
34. License Agreement between Marvel Enterprises, Inc., Marvel Characters,
Inc. and Checks In The Mail, Inc. dated November 12, 2002 (Marvel
Comic Book characters)
35. License Agreement between Paper Girls and Checks In The Mail, Inc.
dated April 4, 2005 (Paper People)
36. License and Distribution Agreement between Checks In The Mail, Inc.
and Xxxxxx Xxxx Photography Limited dated April 19, 2004
37. Product License Warner Bros. Consumer Products, Inc. #14734-SCOO
between Warner Bros. Consumer Products, Inc. and Xxxxxx American
Checks, Inc. dated June 2, 2004
38. Xxxxx Xxxxxxx Enterprises, Inc. License Agreement between Xxxxx
Xxxxxxx Enterprises, Inc. and Checks In The Mail, Inc. dated April 20,
2005
39. License Agreement between Good Times Entertainment LLC and Checks In
The Mail, Inc. dated February 4, 2003 (Xxxxx the Cat)
40. License Agreement between The American Society for the Prevention of
Cruelty to Animals, Inc. and Xxxxxx American Checks, Inc. dated July
26, 2001
41. License Agreement between MTV Networks and Xxxxxx American Checks,
Inc, dated July 25, 2003 (Sponge Xxx)
42. License Agreement between MTV Networks and Checks in the Mail, Inc.,
dated May 1, 2003 (Sponge Xxx)
43. Merchandise License Agreement between Art Impressions, Inc., and
Xxxxxx American Checks, Inc., dated March 1, 2001
44. Office Building Lease Agreement, dated July 1, 2004, between Checks in
the Mail, Inc., as lessor, and B2Direct Inc., as lessee (2435 Xxxxxxx
Xxxx, New Braunfels, TX)
45. Agreement entered into between Geddes Group Holdings Limited and
Checks In the Mail, Inc. dated June 1, 2001, as amended (Xxxx Xxxxxx)
46. Xxxxxx American Purchase Agreement entered into between LaSalle Bank
Corporation and Xxxxxx American Checks, Inc. on or about August 1,
2005, including Exhibits A-K, for the provision of Xxxxxx'x products
and services
47. License and Distribution Agreement between Xxxxxxx Xxxx Photography
Limited and Xxxxx American Checks, Inc. dated March 2, 2004
3
48. 2005 Limited License Agreement by and between Xxxxxxxx Xxxxxx
Licensing, LLC and Xxxxxx American Checks, Inc. dated January 1, 2005
49. Agreement for Purchase of Check Printing and Other Services between
Bank of Hawaii and Xxxxxx American Checks, Inc. dated May 11, 2005, as
amended
50. Xxxxxx American Agreement between Comerica Incorporated and Xxxxxx
American Checks, Inc. dated January 1, 2000, as amended (Partner No.
199)
51. Services and Products Agreement between USAA Federal Savings Bank,
USAA Savings Bank and Xxxxxx American Checks, Inc. dated June 1, 2004
(Partner No. 296)
52. Amended and Restated Master Services Agreement for Check Production
and Fulfillment Services between Bank of America, N.A. and Xxxxxx
American Checks, Inc. dated November 8, 2004, as amended
53. Amended and Restated ServiceLine PlusSM Agreement between Xxxxxx
American Checks, Inc. and Bank of America, N.A. effective September
26, 2005, as amended
54. Master Agreement for the Distribution of Customer Deposit Bags between
Bank of America Technology and Operations, Inc. and Xxxxxx American
Checks, Inc. dated December 1, 1998, as amended
55. Office Building Lease Agreement between N.W.A. Limited Partnership, as
lessor, and Xxxxxx American Checks, Inc., as lessee, dated August 15,
2002, as amended (11550 XX 00 Xxxx, Xxxxx 000 Xxx Xxxxxxx, XX)
The following contracts require notice as a result of the Transactions (but such
agreements do not require consent or give rise to rights of termination as a
result of the Transactions):
1. Master License and Maintenance Services Agreement between Docent, Inc.
and Xxxxxx American Checks, Inc. dated August 27, 2001, as amended
2. Software License Agreement between Vanguard Integrity Professionals
and Xxxxxx American Checks, Inc. dated April 6, 1998, as amended
3. Trust Agreement between Xxxxxx American Checks, Inc. and Frost
National Bank dated February 4, 2000
4
EXHIBIT A
FORM OF FIRST AMENDMENT TO THE PURCHASE AGREEMENT
FIRST AMENDMENT TO THE PURCHASE AGREEMENT (this "AMENDMENT"), dated as of
December 15, 2005, among Xxxxxx American Corp. ("XXXXXX"), Xxxxxx'x subsidiaries
listed on the signature pages hereto (the "GUARANTORS") and Bear, Xxxxxxx & Co.
Inc. and X.X. Xxxxxx Securities Inc. (each, an "INITIAL PURCHASER" and together,
the "INITIAL PURCHASERS").
WITNESSETH
WHEREAS, CA Investment Corp., a Delaware corporation ("CAIC") has
heretofore executed and delivered to the Initial Purchasers the Purchase
Agreement (the "PURCHASE AGREEMENT"), dated as of December 8, 2005, between CAIC
and the Initial Purchasers, providing for the issuance and sale to the Initial
Purchasers by CAIC, the Company and the Guarantors of $175,000,000 in aggregate
principal amount of 11 3/4% Senior Notes due 2013;
WHEREAS, concurrently herewith, Target is being merged with and into CAIC
(the "MERGER"), with CAIC as the surviving company, to be renamed Xxxxxx
American Corp.; and
WHEREAS, the Purchase Agreement provides that Xxxxxx and the Guarantors
will agree to become bound by the Purchase Agreement pursuant to this Amendment;
NOW, THEREFORE, in consideration of the foregoing and for other good and
valuable consideration, the receipt of which is hereby acknowledged, Xxxxxx, the
Guarantors and the Initial Purchasers mutually agree as follows:
1. CAPITALIZED TERMS. Capitalized terms used herein without definition
shall have the meanings assigned to them in the Purchase Agreement.
2. AGREEMENT TO ASSUME. Xxxxxx hereby acknowledges and agrees that,
pursuant to the Merger, it has assumed by operation of law all of the
obligations of CAIC under the Purchase Agreement and hereafter shall be deemed
to be "CAIC"(as defined in the Purchase Agreement) for all purposes under the
Purchase Agreement. Xxxxxx shall succeed to, and be substituted for, and may
exercise every right and power of CAIC under the Purchase Agreement with the
same effect as if Xxxxxx had been named as "CAIC" in the Purchase Agreement.
3. XXXXXX AGREEMENT TO BE BOUND. Xxxxxx hereby agrees that it is a party to
the Purchase Agreement and agrees to be bound by all of the obligations of the
"Company" (as defined in the Purchase Agreement) under the Purchase Agreement.
Xxxxxx hereby acknowledges and agrees to all of the agreements and covenants of
the "Company" contained in the Purchase Agreement and hereby makes all of the
representations and warranties of the "Company" contained in the Purchase
Agreement, in each case as provided in the Purchase Agreement. Xxxxxx may
exercise every right and power of the "Company" under the Purchase Agreement.
4. GUARANTORS AGREEMENT TO BE BOUND. Each Guarantor hereby agrees that it
is a party to the Purchase Agreement and agrees to be bound by all of the
obligations of a "Guarantor" (as defined in the Purchase Agreement) under the
Purchase Agreement. Each Guarantor hereby acknowledges and agrees to all of the
agreements and covenants of a "Guarantor" contained in the Purchase Agreement
and hereby makes all of the representations and warranties of the "Guarantors"
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contained in the Purchase Agreement, in each case as provided in the Purchase
Agreement. Each Guarantor may exercise every right and power of a "Guarantor"
under the Purchase Agreement.
5. CONSTRUCTION. THIS AMENDMENT SHALL BE CONSTRUED IN ACCORDANCE WITH THE
INTERNAL LAWS OF THE STATE OF NEW YORK.
6. COUNTERPARTS. This Amendment may be executed in various counterparts,
which together shall constitute one and the same instrument.
7. CAPTIONS. The captions included in this Amendment are included solely
for convenience of reference and are not to be considered a part of this
Amendment.
8. RATIFICATION OF PURCHASE AGREEMENT. Except as expressly amended hereby,
the Purchase Agreement is in all respects ratified and confirmed and all the
terms, conditions and provisions thereof shall remain in full force and effect.
This Amendment shall form a part of the Purchase Agreement for all purposes.
(Signature pages follow)
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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed as of the date first above written.
XXXXXX AMERICAN CORP.
By:
-------------------------------
Name:
Title:
CORE SKILLS INC.
By:
-------------------------------
Name:
Title:
XXXXXX AMERICAN CHECKS, INC.
By:
-------------------------------
Name:
Title:
CHECKS IN THE MAIL, INC.
By:
-------------------------------
Name:
Title:
B(2)DIRECT, INC.
By:
-------------------------------
Name:
Title:
A-3
EXHIBIT B
FORM OF OPINION OF XXXX, WEISS, RIFKIND, XXXXXXX & XXXXXXXX, LLP
We have acted as special counsel to CA Investment Corp., a Delaware
corporation (the "Company"), into which Novar USA Inc., a Delaware corporation,
will be merged, with the Company as the surviving corporation, to be renamed
"Xxxxxx American Corp." and the Guarantors referred to below in connection with
the Purchase Agreement, dated as of December 8, 2005, among the Company and the
Initial Purchasers named on Schedule II thereof (the "Initial Purchasers"), as
amended on the date hereof by a First Amendment thereto (as amended, the
"Purchase Agreement"), among the Company, the Initial Purchasers and the
guarantors signatory thereto (the "Guarantors"), relating to the purchase today
by the Initial Purchasers of $175,000,000 in aggregate principal amount of 11
3/4% Senior Notes due 2013 (the "Notes") of the Company. The Notes are to be
issued under the Indenture, dated as of the date of this letter (the
"Indenture"), among the Company, the Guarantors and The Bank of New York, as
Trustee (the "Trustee"). This opinion is being furnished at the request of the
Company as contemplated by Section 8(g) of the Purchase Agreement. Capitalized
terms used and not otherwise defined in this letter have the respective meanings
given those terms in the Purchase Agreement.
In connection with the furnishing of this opinion, we have examined
originals, or copies certified or otherwise identified to our satisfaction, of
the following documents:
1. the Purchase Agreement;
2. the Indenture;
3. the Registration Rights Agreement, dated as of the date of this letter
(the "Registration Rights Agreement"), among the Company, the Guarantors and the
Initial Purchasers;
4. the Notes issued on the date of this letter, including the guarantees
endorsed thereon (the "Guarantees");
5. the form of Exchange Note (the "Exchange Note") attached as an Exhibit
to the Indenture, including the form of guarantees to be endorsed thereon (the
"Exchange Guarantees");
6. the Stock Purchase Agreement, dated as of October 31, 2005 (the
"Acquisition Agreement"), by and between M&F Worldwide Corp. and Honeywell
International Inc.;
7. the Credit Agreement, dated as of December 15, 2005 (the "Credit
Agreement"), by and among the Company, CA Acquisition Holdings, Inc., the
guarantors signatory thereto, JPMorgan Chase Bank, as syndication agent, Bear
Xxxxxxx Corporate Lending Inc., as administrative agent, and Bear, Xxxxxxx & Co.
Inc. and X.X. Xxxxxx Securities, Inc., as joint lead arrangers and joint book
running managers and the other banks and other financial institutions or
entities party thereto;
8. the Preliminary Offering Memorandum regarding the Notes, dated November
25, 2005 (the "Preliminary Memorandum"); and
9. the Offering Memorandum regarding the Notes, dated December 8, 2005 (the
"Final Memorandum").
In addition, we have examined: (i) such corporate records of the
Company and the Guarantors that we have considered appropriate, including the
certificate of incorporation, as amended, and by-laws, as amended, of the
Company and each Guarantor certified by the Company or Guarantors as in effect
on the date of this letter (collectively, the "Charter Documents") and copies of
resolutions of the board of directors of the Company and of each Guarantor and
the Pricing Committee of the board of directors of the Company relating to the
issuance of the Notes and the Guarantees, each certified by the relevant entity;
and (ii) such other certificates, agreements and documents that we deemed
relevant and necessary as a basis for the opinions and beliefs expressed below.
We have also relied upon oral and written statements of officers and
representatives of the Company and the Guarantors, the factual matters contained
in the representations and warranties of the Company and the Guarantors made in
the Purchase Agreement and upon certificates of public officials and the
officers of the Company and the Guarantors.
In our examination of the documents referred to above, we have
assumed, without independent investigation, the genuineness of all signatures,
the legal capacity of all individuals who have executed any of the documents
reviewed by us, the authenticity of all documents submitted to us as originals,
the conformity to the originals of all documents submitted to us as certified,
photostatic, reproduced or conformed copies of valid existing agreements or
other documents, the authenticity of the latter documents and that the
statements regarding matters of fact in the certificates, records, agreements,
instruments and documents that we have examined are accurate and complete. We
have also assumed that you have complied with all of your obligations and
agreements arising under the Registration Rights Agreement and that the
Registration Rights Agreement represents a valid and legally binding obligation
of yours, that the Indenture has been duly authorized and executed by, and
represents a valid and legally binding obligation of, the Trustee and the due
authentication of the Notes by the Trustee in the manner described in the
certificate of the Trustee delivered to you today.
Whenever we indicate that our opinion is based upon our knowledge or
words of similar import, our opinion is based solely on the actual knowledge of
the attorneys in this firm who are representing the Company and the Guarantors
in connection with the Transactions.
Based upon the above, and subject to the stated assumptions,
exceptions and qualifications stated below, we are of the opinion that:
1. The Company and each Guarantor have been duly incorporated and
are validly existing and in good standing under the laws of the State of
Delaware. Each of the Company and the Guarantors is duly qualified to carry on
business and is in good standing as a foreign corporation, in the respective
jurisdictions indicated in Schedule A to this opinion.
2. Each of the Company and the Guarantors has all necessary
corporate power and authority to execute, deliver and perform its obligations
under the Purchase Agreement, the Registration Rights Agreement, the Indenture,
the Notes and the Guarantees (in each case, to the extent it is a party thereto)
and to own and hold its properties and conduct its business as described in the
Final Memorandum.
3. The Notes have been duly authorized by the Company. The Notes,
when duly executed, issued and delivered by the Company against payment as
provided in the Purchase Agreement, will constitute valid and legally binding
obligations of the Company entitled to the benefits of the
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Indenture and enforceable against the Company in accordance with their terms,
except that enforceability of the Notes may be subject to bankruptcy,
insolvency, reorganization, fraudulent conveyance or transfer, moratorium or
similar laws affecting creditors' rights generally and subject to general
principles of equity (regardless of whether enforceability is considered in a
proceeding in equity or at law); and the Notes, when issued and delivered, will
conform in all material respects to the description contained in the Final
Memorandum under the caption "Description of Notes."
4. The Indenture has been duly authorized, executed and delivered
by the Company and each Guarantor. The Indenture is a valid and legally binding
obligation of the Company and each Guarantor, enforceable against the Company
and each Guarantor in accordance with its terms, except that enforceability of
the Indenture may be subject to bankruptcy, insolvency, reorganization,
fraudulent conveyance or transfer, moratorium or similar laws affecting
creditors' rights generally and subject to general principles of equity
(regardless of whether enforceability is considered in a proceeding in equity or
at law); and the Indenture conforms in all material respects to its description
contained in the Final Memorandum under the caption "Description of Notes." The
Indenture conforms in all material respects with the requirements of the Trust
Indenture Act and the rules and regulations of the Commission applicable to an
indenture which is qualified under that Act.
5. The Purchase Agreement has been duly authorized, executed and
delivered by the Company and each Guarantor.
6. The Registration Rights Agreement has been duly authorized,
executed and delivered by the Company and each Guarantor. The Registration
Rights Agreement is a valid and legally binding obligation of the Company and
each Guarantor, enforceable against the Company and each Guarantor in accordance
with its terms, except that enforceability of the Registration Rights Agreement
may be subject to bankruptcy, insolvency, reorganization, fraudulent conveyance
or transfer, moratorium or similar laws affecting creditors' rights generally
and subject to general principles of equity (regardless of whether
enforceability is considered in a proceeding in equity or at law) and except to
the extent that the indemnification and contribution provisions of the
Registration Rights Agreement may be unenforceable. The Registration Rights
Agreement conforms in all material respects to its description contained in the
Final Memorandum under the caption "Description of Notes."
7. Each Guarantor has duly authorized its guarantee of the Notes
(each, a "Guarantee"). When the Notes are duly issued and delivered by the
Company against payment as provided in the Purchase Agreement, the Guarantee of
each Guarantor will be a valid and legally binding obligation of such Guarantor,
enforceable against it in accordance with its terms, except that enforceability
of the Guarantees may be subject to bankruptcy, insolvency, reorganization,
fraudulent conveyance or transfer, moratorium or similar laws affecting
creditors' rights generally and subject to general principles of equity
(regardless of whether enforceability is considered in a proceeding in equity or
at law). The Guarantees conform in all material respects to their description
contained in the Final Memorandum under the caption "Description of Notes."
8. The Exchange Notes, when duly executed, issued and delivered
by the Company against payment as provided in the Indenture and the Registration
Rights Agreement, will constitute valid and legally binding obligations of the
Company entitled to the benefits of the Indenture and enforceable against the
Company in accordance with their terms, except that enforceability of the
Exchange Notes may be subject to bankruptcy, insolvency, reorganization,
fraudulent conveyance or transfer, moratorium or similar laws affecting
creditors' rights generally and subject to general principles of equity
(regardless of whether enforceability is considered in a proceeding in equity or
at law). The Exchange Notes conform in all material respects to their
description contained in the Final Memorandum under the caption
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"Description of Notes."
9. When the Exchange Notes are duly executed, issued and
delivered by the Company against payment as provided in the Indenture and the
Registration Rights Agreement, the guarantee of the Exchange Notes (each, an
"Exchange Guarantee") of each Guarantor will be a valid and legally binding
obligation of such Guarantor, enforceable against it in accordance with its
terms, except that enforceability of the Exchange Guarantee may be subject to
bankruptcy, insolvency, reorganization, fraudulent conveyance or transfer,
moratorium or similar laws affecting creditors' rights generally and subject to
general principles of equity (regardless of whether enforceability is considered
in a proceeding in equity or at law).
10. The statements in the Final Memorandum under the captions
"Notice to Investors," and "Plan of Distribution," to the extent that they
constitute summaries of United States federal statutes, rules and regulations,
or portions of them are accurate in all material respects. The statements in the
Final Memorandum under the heading "Certain United States Federal Income Tax
Considerations," to the extent that they constitute summaries of United States
federal law or regulation or legal conclusions, have been reviewed by us and
fairly summarize the matters described under that heading in all material
respects.
11. The Final Memorandum, as of its date, was appropriately
responsive in all material respects to the requirements of Rule 144A(d)(4) under
the Act, except for the financial statements, financial statement schedules and
other financial data included in or omitted from the Final Memorandum, as to
which we express no opinion.
12. Based upon the representations, warranties and agreements of
the Company and the Guarantors in Section 4 and Section 5(a) of the Purchase
Agreement and of the Initial Purchasers in Section 2 and Section 5(b) of the
Purchase Agreement, it is not necessary in connection with the offer, sale and
delivery of the Notes (including the Guarantees) to the Initial Purchasers under
the Purchase Agreement or in connection with the initial resale of the Notes
(including the Guarantees) by the Initial Purchasers in accordance with Section
2 and Section 3 of the Purchase Agreement to register the Notes or the
Guarantees under the Act or to qualify the Indenture under the Trust Indenture
Act of 1939, as amended, it being understood that we express no opinion as to
any subsequent resale of the Notes.
13. Based upon the representations, warranties and agreements of
the Company and the Guarantors in Section 4 and Section 5(a) of the Purchase
Agreement and of the Initial Purchasers in Section 2 and Section 5(b) of the
Purchase Agreement, (A) the compliance by the Company and each Guarantor with
all of the provisions of the Purchase Agreement, the Registration Rights
Agreement, the Credit Agreement and the Indenture and the performance of their
respective obligations thereunder, (B) the compliance, in all material respects,
by the Company with all of the provisions of the Acquisition Agreement required
to be complied with by it on or before the closing date of the Acquisition, (C)
the merger of Novar USA Inc. with and into the Company and (D) the issuance and
sale of the Notes by the Company and the issuance of the Guarantees by the
Guarantors and the use of proceeds therefrom as set forth in the Final
Memorandum will not (i) result in a violation of the Charter Documents, (ii)
except as set forth on Schedule B to this opinion, breach or result in a default
under any agreement, indenture or instrument listed in Schedule B to this
opinion to which the Company or any of its subsidiaries is a party or is bound
or to which any of the properties or assets of the Company or any subsidiary is
subject or (iii) violate Applicable Law or any judgment, order or decree of any
court or arbitrator known to us, except, in the case of clauses (ii) or (iii)
above, where the breach, default or violation could not reasonably be expected
to have a material adverse effect on the Company and its subsidiaries, taken as
a whole. For purposes of this letter, the term "Applicable Law" means the
General Corporation Law of the
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State of Delaware (the "GCL") and those laws, rules and regulations of the
United States of America and the State of New York, in each case, which in our
experience are normally applicable to the transactions of the type contemplated
by the Purchase Agreement, except that "Applicable Law" does not include the
securities laws of any applicable jurisdiction.
14. Based upon the representations, warranties and agreements of
the Company and the Guarantors in Section 4 and Section 5(a) of the Purchase
Agreement and of the Initial Purchasers in Section 2 and Section 5(b) of the
Purchase Agreement, no consent, approval, authorization or order of, or filing,
registration or qualification with, any Governmental Authority, which has not
been obtained, taken or made is required by the Company and the Guarantors under
any Applicable Law for (A) the issuance or sale of the Notes by the Company and
of the Guarantees by the Guarantors and the use of proceeds therefrom as set
forth in the Final Memorandum, (B) the performance by the Company and the
Guarantors of their obligations under the Purchase Agreement, the Registration
Rights Agreement, the Indenture and the Credit Agreement or (C) the compliance,
in all material respects, by the Company with all of the provisions of the
Acquisition Agreement required to be complied with by it on or before the
closing date of the Acquisition, (i) except as may be required in connection
with the registration of the Notes (including the Guarantees) and the Exchange
Notes (including the Exchange Guarantees) under the Registration Rights
Agreement, (ii) except for such consents as have been or will be obtained or
made on or prior to the closing date of the Acquisition, (iii) except for such
filings and recordings required to perfect liens under the documents executed in
connection with the Credit Agreement and (iv) except where failure to obtain
such consent, approval, authorization, order, filing, registration or
qualification could not be reasonably expected to have a material adverse effect
on the Company and its subsidiaries taken as a whole. For purposes of this
opinion, the term "Governmental Authority" means any executive, legislative,
judicial, administrative or regulatory body of the State of New York, the State
of Delaware or the United States of America.
15. The Company is not, and, after giving effect to the offering
and sale of the Notes and the application of their proceeds as described in the
Final Memorandum under the heading "Use of Proceeds," the Company will not be,
required to be registered as an investment company under the Investment Company
Act of 1940, as amended, and the rules and regulations of the Commission
promulgated thereunder.
We have participated in the preparation of the Final Memorandum and
the Preliminary Memorandum and, although the limitations inherent in the
independent verification of factual matters and in the role of outside counsel
are such that we have not undertaken to verify independently, and do not assume
responsibility for, the accuracy, completeness or fairness of the statements
contained in the Final Memorandum or the Preliminary Memorandum (other than as
explicitly stated in paragraphs 3, 4, 6, 7, 8 and 10 above), based upon such
participation (and relying as to materiality to the extent we deemed reasonable
on officers, employees and other representatives of the Company and its
subsidiaries), no facts have come to our attention that led us to believe that
(i) the Preliminary Memorandum, as of 5:00 p.m. New York City time on December
8, 2005 (the "Pricing Time"), when taken together with the Pricing Information
(except for the financial statements, financial statement schedules and other
financial data included in or omitted from the Preliminary Memorandum or
included in or omitted from the Pricing Information, in each case, as to which
we express no belief), included an untrue statement of a material fact or
omitted to state a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading; or (ii) the Final Memorandum (except for the financial statements,
financial statement schedules and other financial data included in or omitted
from the Final Memorandum, as to which we express no such belief), at the time
the Final Memorandum was issued or on the date of this letter, included or
includes 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
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circumstances under which they were made, not misleading. For purposes of this
opinion, the term "Pricing Information" means, to the extent determined at the
Pricing Time, (a) the economic terms (including, without limitation, the
principal amount, interest rate, maturity date, mandatory prepayment provisions,
optional redemption provisions, offering price to investors, original issue
discount and other similar terms) of the Notes being offered for sale pursuant
to the Preliminary Memorandum, (b) the economic terms (including, without
limitation, the principal amount, interest rate, maturity date, agent fees,
commitment fees, consent fees, mandatory prepayment provisions, optional
prepayment provisions, prepayment penalties, offering price to investors,
discounts to principal amount at maturity and other similar terms) of the
indebtedness to be incurred under the Credit Agreement, and (c) all information
derived from or calculated on the basis of such economic terms described in (a)
and (b) above.
The opinions expressed above are limited to the laws of the federal
laws of the United States, the laws of the State of New York and the GCL. Our
opinions are rendered only with respect to the laws, and the rules, regulations
and orders under those laws, that are currently in effect. Please be advised
that no member of this firm is admitted to practice in the State of Delaware.
B-6
EXHIBIT C
FORM OF OPINION OF GENERAL COUNSEL
Reference is made to the purchase agreement dated December 8, 2005 between CA
Investment Corp. (into which Novar USA Inc. will be merged, with CA Investment
Corp. as the surviving corporation, to be renamed Xxxxxx American Corp.), and
Bear, Xxxxxxx & Co. Inc. and X.X. Xxxxxx Securities Inc. (the "Initial
Purchasers") as amended by the first amendment thereto, dated the date hereof
among Xxxxxx American Corp. (the "Company"), certain guarantors and the Initial
Purchasers (as so amended, the "Purchase Agreement") This opinion is being
delivered pursuant to Section 8(h) of the Purchase Agreement. Capitalized terms
used herein and not defined shall have the meanings set out in the Purchase
Agreement.
1. Each of Novar USA Inc. and its subsidiaries (collectively "Novar") is not and
as a result of the consummation of the Transactions will not be, (a) in
violation of its charter or bylaws or other organizational documents, (b) in
default in the performance of any bond, debenture, note, indenture, mortgage,
deed of trust or other agreement or instrument to which it is a party or by
which it is bound or to which any of its properties is subject or (c) in
violation of any local, state, federal or foreign law, statute, ordinance, rule,
regulation, requirement, judgment or court decree (including, without
limitation, environmental laws, statutes, ordinances, rules, regulations,
requirements, judgments or court decrees) applicable to it or any of its assets
or properties (whether owned or leased), that, individually or in the aggregate,
could reasonably be expected to have a Material Adverse Effect.
2. There is (a) no action, suit, investigation or proceeding before or by any
court, arbitrator or governmental agency, body or authority or administrative
agency, domestic or foreign, now pending or, to my knowledge, threatened or
contemplated, to which Novar is or may be a party or to which the business or
property of Novar is or may be subject, (b) no statute, rule, regulation or
order that has been enacted, adopted or issued by any governmental agency or
that to my knowledge has been proposed by any governmental agency, body or
authority or administrative agency, and (c) no injunction, restraining order or
order of any nature by a federal or state court or foreign court of competent
jurisdiction to which the Novar is or may be subject or to which the business,
assets, or property of Novar is or may be subject, that, in the case of clauses
(a), (b) and (c) above, (1) is required to be disclosed in the Offering
Memorandum and that is not disclosed, or (2) could reasonably be expected,
individually or in the aggregate, to have a Material Adverse Effect.
3. All of the outstanding shares of capital stock of each subsidiary of Novar
USA Inc. are owned, directly or indirectly, by Novar USA Inc., free and clear of
any security interest, claim, lien, limitation on voting rights or encumbrance;
and all such securities have been duly authorized, validly issued and are fully
paid and nonassessable and were not issued in violation of any preemptive or
similar rights.
4. There are not currently any outstanding subscriptions, rights, warrants,
calls, commitments of sale or options to acquire, or instruments convertible
into or exchangeable for, any capital stock, membership interests or other
equity interests of Novar.
5. There are no holders of securities of Novar who, by reason of the execution
by the Company and the Guarantors of the Purchase Agreement or any other
Operative Document to which it is a party or the consummation by the Company or
any of the Guarantors of the transactions contemplated thereby, have the right
to request or demand that the Company or any of its subsidiaries register under
the Act or analogous foreign laws and regulations securities held by them other
than pursuant to the Registration Rights Agreement.
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The foregoing opinions are subject to the following qualifications and
limitations:
A. The opinions expressed herein are based on and limited to the laws of the
State of New York and the General Corporate Law of the State of Delaware, and no
opinion is expressed with respect to the laws of any other state or
jurisdiction.
B. The opinions expressed herein are based upon the facts in existence and the
laws in effect on the date hereof, and I expressly disclaim any obligation to
update such opinions, regardless of whether changes in such facts or law come to
my attention after the delivery hereof.
C. I express only those opinions directly stated herein, and any opinions by
implication or inference are expressly disclaimed.
D. This opinion is solely for the benefit of the addressees hereof and may not
be relied upon by any other person.
E. This opinion is rendered by the undersigned on behalf of, and solely in his
capacity as an officer of, Novar.
F. Such counsel is not admitted to practice in the State of Delaware.
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