Exhibit 10.14
Draft of August 13, 1999
$100,000,000
XxXXXXXXX & CO INC.
% SENIOR NOTES DUE 2004
PURCHASE AGREEMENT
August __, 1999
XXXXXXX XXXXX XXXXXX Inc.
Xxxxxxxxx, Xxxxxx & Xxxxxxxx
Securities Corporation
As Representatives of the
Initial Purchasers
c/o Xxxxxxx Xxxxx Xxxxxx Inc.
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Dear Sirs:
XxXxxxxxx & Co Inc., a Delaware corporation ("LABINC." or the
"ISSUER"), proposes, upon the terms and conditions set forth herein, to issue
and sell to the several parties named in SCHEDULE I hereto (the "INITIAL
PURCHASERS"), for whom you (the "REPRESENTATIVES") are acting as
representatives, $100,000,000 aggregate principal amount of its __% Senior Notes
due 2004 (the "NOTES"). The Notes are to be issued under an indenture, to be
dated as of August __, 1999 (the "INDENTURE"), by and between the Company and
Firstar Bank, N.A., as trustee (the "TRUSTEE"). The Notes have the benefit of a
Registration Rights Agreement (the "REGISTRATION RIGHTS AGREEMENT"), to be dated
as of August , 1999, among the Issuer and the Initial Purchasers, pursuant to
which the Issuer has agreed to register the Notes under the Securities Act
subject to the terms and conditions specified therein. To the extent there are
no additional parties listed on SCHEDULE I other than you, the term
"Representatives" and Initial Purchasers shall mean you as the Initial
Purchasers, and the terms shall mean either the singular or plural as the
context requires. The use of the neuter in this Agreement shall include the
feminine and masculine wherever appropriate.
For purposes of the representations and warranties set forth
in Section 5 and the conditions set forth in Section 7, unless the context
otherwise requires, prior to the consummation of the Reorganization Transactions
(as defined below), references to the "COMPANY" shall be deemed to be references
to XxXxxxxxx & Co., a New York limited partnership ("LABCO."), and after
consummation of the Reorganization Transactions, references to the "COMPANY"
shall be deemed to be references to LaBInc.
It is understood and agreed to by all parties that in
connection with the reorganization of the business of LaBCo. from partnership to
corporate form, a series of transactions that are described in the Offering
Memorandum (as defined below) under the caption "Certain
Transactions--Reorganization and Related Transactions" in the Offering
Memorandum will occur not later than concurrent with the Closing Date (as
defined below). Such transactions are hereinafter referred to as the
"REORGANIZATION TRANSACTIONS"). The award of restricted stock units to
employees, the award of options for common stock to employees on a discretionary
basis and the issuance of common stock to certain individuals and entities in
exchange for their limited partnership interests in LaBCo. or their membership
interests in LaB Investing Co. L.L.C. ("LaBLLC"), as described in the Offering
Memorandum under the heading "Certain Transactions--Reorganization and Related
Transactions", the initial public offering of 11,500,000 shares of common stock
(the "COMMON STOCK") of the Company (with an over-allotment option for an
additional 1,725,000 additional shares), the issuance of $16.4 million of
subordinated indebtedness by LaBInc. and the repayment of $5.0 million of
subordinated indebtedness by LaBCo. are hereinafter referred to as the "RELATED
TRANSACTIONS."
The Company wishes to confirm as follows its agreement with
the Initial Purchasers in connection with the purchase and resale of the Notes.
1. PRELIMINARY OFFERING MEMORANDUM AND OFFERING MEMORANDUM.
The Notes will be offered and sold to the Initial Purchasers without
registration under the Securities Act of 1933, as amended (the "ACT"), in
reliance on an exemption pursuant to Section 4(2) under the Act and the rules
and regulations promulgated thereunder. The Company has prepared a preliminary
offering memorandum, dated July 30, 1999 (the "PRELIMINARY OFFERING
MEMORANDUM"), and an offering memorandum, dated August __, 1999 (the "OFFERING
MEMORANDUM"), setting forth information regarding the Company and the Notes.
Unless stated herein to the contrary, all references herein to the Offering
Memorandum are to the Offering Memorandum at the date thereof and are not meant
to include any supplement or amendment subsequent thereto. The Company hereby
confirms that it has authorized the use of the Preliminary Offering Memorandum
and Offering Memorandum in connection with the offering and resale of the Notes
by the Initial Purchasers on the terms and subject to the conditions set forth
herein.
The Company understands that the Initial Purchasers propose to
make offers and sales ("EXEMPT RESALES") of the Notes purchased by the Initial
Purchasers hereunder only on the terms and in the manner set forth in the
Offering Memorandum and Section 2 hereof, as soon as the Initial Purchasers deem
advisable after this Agreement has been executed and delivered, (i) to persons
in the United States who are, or whom the Initial Purchaser reasonably believe
to be qualified institutional buyers ("QUALIFIED INSTITUTIONAL BUYERS") as
defined in Rule 144A under the Act, as such rule may be amended from time to
time ("RULE 144A"), in transactions under Rule 144A and (ii) outside the United
States to persons other than U.S. persons in reliance upon and in compliance
with Regulation S under the Act, as such regulation may be amended from time to
time ("REGULATION S"). The persons specified in clauses (i) and (ii) are
referred to herein as the "ELIGIBLE PURCHASERS." As used herein, the terms
"UNITED STATES" and "U.S. PERSONS" have the respective meanings given them in
Regulation S.
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It is understood and acknowledged that upon original issuance
thereof, and until such time as the same is no longer required under the
applicable requirements of the Act, each of the Notes (and each note issued in
exchange therefor or in substitution thereof) shall bear the following legend:
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR
SOLD EXCEPT AS SET FORTH BELOW. BY ITS ACQUISITION HEREOF, THE HOLDER
(1) REPRESENTS THAT (A) IT IS A "QUALIFIED INSTITUTIONAL BUYER" (AS
DEFINED IN RULE 144A UNDER THE SECURITIES ACT) OR (B) IT IS NOT A U.S.
PERSON AND IS ACQUIRING THIS SECURITY IN AN OFFSHORE TRANSACTION, (2)
AGREES THAT IT WILL NOT, WITHIN TWO YEARS AFTER THE ORIGINAL ISSUANCE
OF THIS SECURITY, RESELL OR OTHERWISE TRANSFER THIS SECURITY EXCEPT (A)
TO THE COMPANY OR ANY SUBSIDIARY THEREOF, (B) INSIDE THE UNITED STATES
TO A QUALIFIED INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A UNDER
THE SECURITIES ACT, (C) OUTSIDE THE UNITED STATES TO PERSONS OTHER THAN
U.S. PERSONS IN OFFSHORE TRANSACTIONS MEETING THE REQUIREMENTS OF RULE
904 UNDER REGULATION S UNDER THE SECURITIES ACT, (D) PURSUANT TO THE
EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 UNDER THE SECURITIES
ACT (IF AVAILABLE) OR (E) PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE SECURITIES ACT AND (3) AGREES THAT IT WILL GIVE TO
EACH PERSON TO WHOM THIS SECURITY IS TRANSFERRED A NOTICE SUBSTANTIALLY
TO THE EFFECT OF THIS LEGEND. AS USED HEREIN, THE TERMS "OFFSHORE
TRANSACTION," "UNITED STATES" AND "U.S. PERSON" HAVE THE RESPECTIVE
MEANINGS GIVEN TO THEM BY REGULATION S UNDER THE SECURITIES ACT.
2. AGREEMENTS TO SELL, PURCHASE AND RESELL.
(a) Upon the basis of the representations, warranties and
agreements of the Initial Purchasers herein contained and subject to all the
terms and conditions set forth herein, the Company hereby agrees to issue and
sell its Notes to the Initial Purchasers and, upon the basis of the
representations, warranties and agreements of the Company herein contained and
subject to all the terms and conditions set forth herein, each Initial
Purchaser, severally and not jointly, agrees to purchase from the Company that
principal amount of Notes set forth opposite the name of such Initial Purchaser
on SCHEDULE I attached hereto at a purchase price of ___% of the principal
amount thereof.
(b) Each Initial Purchaser represents and warrants to the
Company that it is a Qualified Institutional Buyer with such knowledge and
experience in financial and business
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matters as are necessary to evaluate the merits and risks of an investment in
the Notes, it believes it has received all of the information it considers
necessary or appropriate for deciding whether to make an investment in the
Notes, and has advised the Company that it proposes to offer the Notes for
resale upon the terms and conditions set forth in this Agreement and in the
Offering Memorandum in Exempt Resales. Each Initial Purchaser hereby represents
and warrants to, and agrees with, the Company that it (i) will not solicit
offers for, or offer to sell, the Notes by means of any form of general
solicitation or general advertising or in any manner involving a public offering
within the meaning of Section 4(2) of the Act (including, but not limited to,
(A) any advertisement, article, notice or other communication published in any
newspaper, magazine or similar media or broadcast over television or radio, or
(B) any seminar or meeting whose attendees have been invited by any general
solicitation or general advertising; PROVIDED, HOWEVER, that such limitation
shall not preclude the Initial Purchasers from placing any tombstone
announcement with respect to the resale by the Initial Purchasers of the Notes,
provided that such announcement is not prohibited by (and is in compliance with)
Regulation S), and (ii) will solicit offers for the Notes only from, and will
offer, sell or deliver the Notes as part of its initial offering, only to (A)
persons in the United States whom such Initial Purchaser reasonably believes to
be Qualified Institutional Buyers, or if any such person is buying for one or
more institutional accounts for which such person is acting as fiduciary or
agent, only when such person has represented to such Initial Purchaser that each
such account is a Qualified Institutional Buyer, to whom notice has been given
that such sale or delivery is being made in reliance on Rule 144A, in each case,
in transactions under Rule 144A and (B) outside the United States to persons
other than U.S. persons in reliance on Regulation S. Each Initial Purchaser has
advised the Company that it will offer the Notes to Eligible Purchasers at a
price initially equal to ___% of the principal amount thereof, plus accrued
interest, if any, from ____________.
(c) Each Initial Purchaser represents and warrants that (i) it
has not offered or sold, and will not offer or sell, directly or indirectly, any
of the Notes in the United Kingdom by means of any document, other than to
persons whose ordinary business it is to buy or sell shares or debentures
whether as principal or agent (except in circumstances that do not constitute an
offer to the public within the meaning of the Companies Act 1985), (ii) it has
complied with and will comply with all applicable provisions of the Financial
Services Act 1986 with respect to anything done by such Initial Purchaser in
relation to the Notes in, from or otherwise involving the United Kingdom and
(iii) it has only issued or passed on and will only issue or pass on in or from
the United Kingdom to any persons any document received by such Initial
Purchaser in connection with the issue of the Notes if the recipient is of a
kind described in Article 9(3) of the Financial Services Act 1986 (Investment
Advertisements) (Exemptions) Order 1988, as amended.
(d) Each Initial Purchaser represents and warrants that with
respect to Notes offered and sold or to be offered and sold pursuant to
Regulation S it has offered and sold the Notes and agrees that it will offer and
sell the Notes (i) as part of its initial distribution at any time and (ii)
otherwise until 40 days after the later of the commencement of the offering of
the Notes and the Closing Date (as defined in Section 3 below), only in
accordance with Rule 903 of Regulation S. Accordingly, each Initial Purchaser
represents, warrants and agrees that with respect to Notes offered and sold or
to be offered and sold pursuant to Regulation S none of it, its
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affiliates or any persons acting on its behalf or on behalf of its affiliates
has engaged or will engage in any directed selling efforts in the United States
with respect to the Notes, and it and its affiliates have complied and will
comply with the offering restrictions requirements of Regulation S. Each Initial
Purchaser agrees that, at or prior to confirmation of any sale of Notes pursuant
to Regulation S, it will have sent to each distributor, dealer or person
receiving a selling concession, fee or other remuneration that purchases such
Notes from it during the restricted period a confirmation or notice to
substantially the following effect:
The 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 their initial distribution
at any time or (ii) otherwise until 40 days after the later of the
commencement of the offering and the Closing Date, except in either
case in accordance with Regulation S or Rule 144A under the Securities
Act. Terms used above have the respective meanings given to them in
Regulation S under the Securities Act.
Each Initial Purchaser understands that the Company and, for
the purposes of the opinions to be delivered to the Initial Purchasers pursuant
to Section 7(d) and Section 7(e) hereof, counsel to the Company and counsel to
the Initial Purchasers will rely upon the accuracy and truth of the foregoing
representations and agreements and each Initial Purchaser hereby consents to
such reliance.
3. DELIVERY OF THE NOTES AND PAYMENT THEREFOR. Delivery to the
Initial Purchasers of and payment for the Notes shall be made at the office of
Cleary, Gottlieb, Xxxxx & Xxxxxxxx, Xxx Xxxxxxx Xxxxx, Xxx Xxxx, Xxx Xxxx, 00000
at 9:00 A.M., New York City time, on August __, 1999 (the "CLOSING DATE"). The
place of closing for the Notes and the Closing Date may be varied by agreement
between the Initial Purchasers and the Company.
The Notes will be delivered to the Initial Purchasers against
payment of the purchase price therefor by federal funds certified check or wire
transfer, in each case, of immediately available funds payable in accordance
with written instructions from the Company. The Notes will be evidenced by one
or more global notes (each, a "GLOBAL NOTE") and will be registered in the name
of Cede & Co. as nominee of The Depository Trust Company ("DTC"), and in the
other cases, in such names and in such denominations as the Initial Purchasers
shall request prior to 1:00 p.m., New York City time, on the business day
preceding the Closing Date. The Notes to be delivered to the Initial Purchasers
shall be made available to the Initial Purchasers in New York City for
inspection and packaging not later than 9:30 a.m., New York City time, on the
business day next preceding the Closing Date.
4. AGREEMENTS OF THE COMPANY. The Company agrees with the
Initial Purchasers as follows:
(a) Until the completion of the distribution of the Notes by
the Initial Purchasers to Eligible Purchasers, the Company will advise
the Initial Purchasers
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promptly and, if requested, will confirm such advice in writing, of any
material adverse change in the condition (financial or other),
business, prospects, properties, net worth or results of operations of
the Company, taken as a whole, or of the happening of any event or the
existence of any condition that requires any amendment or supplement to
the Offering Memorandum (as then amended or supplemented) so that the
Offering Memorandum (x) will not contain any untrue statement of a
material fact or omit to state 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, or (y)
will comply with applicable law.
(b) The Company will furnish to the Initial Purchasers,
without charge, such number of copies of the Offering Memorandum, as it
may then be amended or supplemented, as the Initial Purchasers may
reasonably request.
(c) The Company will not make any amendment or supplement to
the Preliminary Offering Memorandum or to the Offering Memorandum of
which the Initial Purchasers shall not previously have been advised or
to which they shall reasonably object in writing after being so advised
unless, in the opinion of counsel to the Company, such amendment or
supplement is necessary to comply with applicable law.
(d) Prior to the execution and delivery of this Agreement, the
Company has delivered or will deliver to the Initial Purchasers,
without charge, in such reasonable quantities as the Initial Purchasers
shall have requested or may hereafter request, copies of the
Preliminary Offering Memorandum. The Company consents to the use, in
accordance with the securities or Blue Sky laws of the jurisdictions in
which the Notes are offered by the Initial Purchasers and by dealers,
prior to the date of the Offering Memorandum, of each Preliminary
Offering Memorandum so furnished by the Company. The Company consents
to the use of the Offering Memorandum (and of any amendment or
supplement thereto prepared in accordance with Section 4(c)) in
accordance with the securities or Blue Sky laws of the jurisdictions in
which the Notes are offered by the Initial Purchasers and by all
dealers to whom Notes may be sold, in connection with the offering and
sale of the Notes.
(e) If, at any time prior to completion of the distribution of
the Notes by the Initial Purchasers to Eligible Purchasers, any event
shall occur or condition shall exist that in the judgment of the
Company or in the opinion of the Initial Purchasers based on advice of
counsel requires any amendment or supplement to the Offering Memorandum
(as then amended or supplemented) so that the Offering Memorandum (x)
will not contain any untrue statement of a material fact or omit to
state 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, or (y) will comply with
applicable law, the Company will, in each such case subject to Section
4(c), forthwith prepare an appropriate supplement or amendment thereto,
and will expeditiously furnish to the Initial Purchasers that number of
copies thereof as they shall reasonably request.
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(f) The Company will cooperate with the Initial Purchasers and
with their counsel in connection with the qualification of the Notes
for offering and sale by the Initial Purchasers and by dealers under
the securities or Blue Sky laws of such jurisdictions as the Initial
Purchasers may designate and will file such consents to service of
process or other documents necessary or appropriate in order to effect
such qualification; PROVIDED that in no event shall the Company be
obligated to qualify to do business in any jurisdiction where it is not
now so qualified or to take any action that would subject it to general
service of process in any jurisdiction where it is not now so subject.
(g) So long as any of the Notes are outstanding, the Company
will furnish to the Initial Purchasers (i) as soon as reasonably
practicable, a copy of each report of the Company filed with the
Securities and Exchange Commission (the "COMMISSION") and (ii) from
time to time such other information concerning the Company as the
Initial Purchasers may reasonably request.
(h) The Company will apply the proceeds from the sale of the
Notes to be sold by them hereunder in accordance with the description
set forth under "Use of Proceeds" in the Offering Memorandum.
(i) The Company has not taken, nor will it 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 the
Notes to facilitate the sale or resale of the Notes. Except as
permitted by the Act, the Company will not distribute any offering
material in connection with the Exempt Resales. Except following the
effectiveness of the Exchange Offer Registration Statement or the Shelf
Registration Statement (each as defined in the Registration Rights
Agreement), the Company will not solicit any offers to buy and will not
offer to sell the Notes by means of any form of general solicitation or
general advertising (within the meaning of Regulation D under the Act)
or by means of any directed selling efforts (as defined under
Regulation S and the Commission's releases related thereto).
(j) The Company will assist the Initial Purchasers in causing
the Notes to be eligible for trading on the PORTAL market.
(k) From and after the Closing Date, so long as any of the
Notes are outstanding and are "restricted Notes" within the meaning of
Rule 144(a)(3) under the Act or, if earlier, until two years after the
Closing Date, and during any period in which the Company is not subject
to Section 13 or 15(d) of the Securities Exchange Act of 1934, as
amended (the "EXCHANGE ACT"), the Company will furnish to holders of
the Notes and prospective purchasers of Notes designated by such
holders, upon request of such holders or such prospective purchasers,
the information required to be delivered pursuant to Rule 144A(d)(4)
under the Act to permit compliance with Rule 144A in connection with
resales of the Notes.
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(l) The Company agrees 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 Notes
in a manner that would require the registration under the Act of the
sale by the Company to the Initial Purchasers or by the Initial
Purchasers to the Eligible Purchasers of the Notes.
(m) The Company agrees to comply with all of the terms and
conditions of the Registration Rights Agreement, and all agreements set
forth in the representation letters of the Company to DTC relating to
the approval of the Notes by DTC for "book entry" transfer.
(n) The Company agrees that not later than any registration of
the Notes pursuant to the Registration Rights Agreement, or at such
earlier time as may be so required, the Company shall use its best
efforts to cause the Indenture to be qualified under the Trust
Indenture Act of 1939 (the "1939 ACT") and will cause to be entered
into any necessary supplemental indentures in connection therewith.
(o) The Company shall not resell any Notes that have been
acquired by it.
(p) Prior to the Closing Date, the Company will furnish to the
Initial Purchasers, as soon as reasonably practicable after they have
been prepared, a copy of any unaudited interim consolidated financial
statements of the Company for any period subsequent to the period
covered by the most recent consolidated financial statements of the
Company appearing in the Offering Memorandum.
5. REPRESENTATIONS AND WARRANTIES OF COMPANY. The Company
represents and warrants to the Initial Purchasers that:
(a) No order or decree preventing the use of the Preliminary
Offering Memorandum or the Offering Memorandum or any amendment or
supplement thereto, or any order asserting that the transactions
contemplated by this Agreement are subject to the registration
requirements of the Act, has been issued and no proceeding for any such
purpose has been commenced or is pending or, to the knowledge of the
Company, is threatened.
(b) The Preliminary Offering Memorandum and Offering
Memorandum, as of their respective dates, and the Offering Memorandum,
as of the Closing Date, did not or will not contain an untrue statement
of a material fact or omit to state 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,
except that this representation and warranty does not apply to
statements in the Preliminary Offering Memorandum and Offering
Memorandum made in reliance upon and in conformity with information
relating to the Initial Purchasers furnished to the Company in writing
by the Initial Purchasers through Xxxxxxx Xxxxx Xxxxxx Inc. expressly
for use therein.
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(c) As of the Closing Date, the Indenture will have been duly
and validly authorized by the Company and, upon its execution and
delivery by the Company and assuming due authorization, execution and
delivery by the Trustee, will be a valid and binding agreement of the
Company, enforceable in accordance with its terms, except as
enforcement thereof may be limited by bankruptcy, insolvency or other
similar laws affecting the enforcement of creditors' rights generally
and subject to the applicability of general principles of equity; the
Indenture conforms in all material respects to the description thereof
in the Offering Memorandum; and no qualification of the Indenture under
the 1939 Act is required in connection with the offer and sale of the
Notes contemplated hereby or in connection with the Exempt Resales.
(d) As of the Closing Date, the Notes will have been duly
authorized by the Company and, when executed by the Company and
authenticated by the Trustee in accordance with the Indenture and
delivered to the Initial Purchasers against payment therefor in
accordance with the terms hereof, will have been validly issued and
delivered, and will constitute valid and binding obligations of the
Company entitled to the benefits of the Indenture and enforceable in
accordance with their terms, except as enforcement thereof may be
limited by bankruptcy, insolvency or other similar laws affecting the
enforcement of creditors' rights generally and subject to the
applicability of general principles of equity; and the Notes conform in
all material respects to the descriptions thereof in the Offering
Memorandum.
(e) The Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the
jurisdiction in which it is chartered or organized with full corporate
power and authority to own or lease, as the case may be, and to operate
its properties and conduct its business as described in the Offering
Memorandum, and is duly registered and qualified to do business as a
foreign corporation and is in good standing under the laws of each
jurisdiction which requires such registration or qualification, except
where the failure to so register or qualify could not reasonably be
expected to have a material adverse effect on the condition (financial
or other), business, prospects, properties, net worth or results of
operations of the Company and its Subsidiaries, taken as a whole (a
"MATERIAL ADVERSE EFFECT"); each of LaBCo. and LaBLLC has been duly
organized and is validly existing as a limited partnership and a
limited liability company, respectively, in good standing under the
laws of the jurisdiction in which it is organized with the power and
authority to own or lease, as the case may be, its properties and
conduct its business as described in the Offering Memorandum; LaBCo.
and LaBLLC are the only subsidiaries (the "SUBSIDIARIES") of the
Company;
(f) After giving effect to the Reorganization Transactions and
the Related Transactions, the Company has an authorized capitalization
as set forth in the Offering Memorandum, and all of the issued shares
of capital stock of the Company have been duly and validly authorized
and issued, are
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fully paid and non-assessable and conform to the description of the
capital stock contained in the Offering Memorandum; all of the
membership interests in LaBLLC have been duly and validly authorized
and issued, are fully paid and, are non-assessable and, after giving
effect to the Reorganization Transactions and the Related Transactions,
are owned directly or indirectly by the Company, free and clear of all
liens, encumbrances, equities or claims; and all of the partnership
interests in LaBCo. have been duly and validly created and, after
giving effect to the Reorganization Transactions and the Related
Transactions, are owned directly or indirectly by the Company, free and
clear of all liens, encumbrances, equities or claims;
(g) There are no legal or governmental proceedings pending
against the Company or, to the knowledge of the Company, threatened
against it or either of its Subsidiaries or to which the Company or its
Subsidiaries or to which any of the respective properties of the
Company or its Subsidiaries is subject that are not adequately
disclosed in the Offering Memorandum and that, if adversely decided,
would be expected to have a Material Adverse Effect or materially
adversely affect the issuance of the Notes or the consummation of any
of the transactions contemplated by this Agreement, the Indenture, the
Notes or the Registration Rights Agreement (collectively, the
"TRANSACTION DOCUMENTS") or the Reorganization Transactions or the
Related Transactions. There are no agreements, contracts, indentures,
leases or other instruments of the Company or either of its
Subsidiaries that are material to the Company and its Subsidiaries,
taken as a whole, that are not described in the Offering Memorandum.
Except as disclosed in the Offering Memorandum, neither the Company nor
either of its Subsidiaries is involved in any strike, job action or
labor dispute with any group of its employees that would reasonably be
expected to have a Material Adverse Effect, and, to the knowledge of
the Company, no such action or dispute is threatened.
(h) Neither the Company nor any Subsidiary is in violation or
default of, and none of (x) the issuance, offer, sale or delivery of
the Notes, (y) the execution, delivery or performance of the
Transaction Documents and the Related Agreements (as defined below) by
the Company to the extent a party thereto, or (z) the consummation by
the Company of the Transaction Documents, the Reorganization
Transactions, the Related Transactions or the transactions contemplated
hereby or thereby will conflict with or constitute a breach of any of
the terms or provisions of, or a default under, (i) the organizational
documents of the Company or any of its Subsidiaries, or (ii) any
agreement, indenture, lease or other instrument to which any of the
Company or its Subsidiaries is a party or by which any of them or any
of their respective properties may be bound, except as disclosed in the
Offering Memorandum or any such conflicts, breaches or defaults that
individually or in the aggregate could not reasonably be expected to
have a Material Adverse Effect, or (iii) any statute, law, regulation
or judgment, injunction, order or decree applicable to the Company or
either of its Subsidiaries or any of their respective properties,
except any such violations that in the aggregate could not reasonably
be expected to have a Material Adverse Effect; the consummation of the
transactions contemplated in this Agreement, the Reorganization
Transactions and the Related Transactions will not result in the
creation or imposition of any lien, charge or encumbrance upon any
property or assets of any of the Company or its Subsidiaries pursuant
to the terms of any agreement or instrument to which any of
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them is a party or by which any of them may be bound or to which any of
their respective properties or assets is subject, other than liens,
charges and encumbrances disclosed in the Offering Memorandum or which
could not reasonably be expected to have a Material Adverse Effect.
(i) No consent, approval, authorization, filing with or order
of any court or governmental agency or body is required in connection
with the transactions contemplated in the this Agreement or in the
Indenture or the Registration Rights Agreement, except such as will be
obtained under the Act and the Trust Indenture Act and such as may be
required under the blue sky laws of any jurisdiction in connection with
the purchase and distribution of the Securities by the Initial
Purchasers in the manner contemplated herein and in the Offering
Memorandum and the Registration Rights Agreement.
(j) Xxxxxx Xxxxxxxx LLP, who have certified certain financial
statements of the Company and its consolidated Subsidiaries and
delivered their report with respect to the audited consolidated
financial statements and schedules included in the Offering Memorandum,
are independent public accountants with respect to the Company within
the meaning of the Act and the applicable published rules and
regulations thereunder.
(k) Xxxxxxxx & Xxxxxx, P.C., who have certified certain
financial statements of Xxxxxx, Xxxxxxx & Xxxxx LLC ("XXXXXX")
delivered their report with respect to the audited consolidated
financial statements and schedules included in the Offering Memorandum,
are independent public accountants with respect to Xxxxxx within the
meaning of the Act and the applicable published rules and regulations
thereunder.
(l) The consolidated historical financial statements and
schedules of the Company and its consolidated Subsidiaries included in
the Preliminary Offering Memorandum and Offering Memorandum present
fairly in all material respects the financial condition, results of
operations and cash flows of the Company as of the dates and for the
periods indicated, comply as to form with the applicable accounting
requirements of the Act and have been prepared in conformity with
generally accepted accounting principles applied on a consistent basis
throughout the periods involved (except as otherwise noted therein).
The selected financial data set forth under the captions
"Summary--Summary Historical Consolidated Financial Data" and "Selected
Historical Consolidated Financial Data" in the Preliminary Offering
Memorandum and Offering Memorandum fairly present, on the basis stated
in the Preliminary Offering Memorandum and Offering Memorandum, the
information included therein. The pro forma financial statements
included in the Preliminary Offering Memorandum and Offering Memorandum
are based on assumptions that provide a reasonable basis for presenting
the significant effects directly attributable to the transactions and
events described therein, the related pro forma adjustments give
appropriate effect to those assumptions, and the pro forma adjustments
reflect the proper application of those adjustments to the historical
financial statement amounts in the pro forma financial statements
included in the Preliminary Offering Memorandum and Offering
11
Memorandum. The pro forma financial statements included in the
Preliminary Offering Memorandum and Offering Memorandum comply as to
form in all material respects with the applicable accounting
requirements of Regulation S-X under the Act and the pro forma
adjustments have been properly applied to the historical amounts in the
compilation of those statements.
(m) The Company has all the requisite corporate power and
authority to execute, deliver and perform its obligations under this
Agreement and the Registration Rights Agreement; the execution and
delivery of, and the performance by the Company of its obligations
under, this Agreement and the Registration Rights Agreement have been
duly and validly authorized by the Company and each of this Agreement
and, as of the Closing Date, the Registration Rights Agreement will
have been duly executed and delivered by the Company and will
constitute a valid and legally binding agreement, enforceable against
the Company in accordance with its terms, except as the enforcement
hereof and thereof may be limited by bankruptcy, insolvency or other
similar laws affecting the enforcement of creditors' rights generally
and subject to the applicability of general principles of equity, and
except as rights to indemnity and contribution hereunder and thereunder
may be limited by Federal or state securities laws or principles of
public policy.
(n) Except as disclosed in the Offering Memorandum, subsequent
to the date as of which such information is given in the Offering
Memorandum, neither the Company nor either of its Subsidiaries has
incurred any liability or obligation, direct or contingent, or entered
into any transaction, not in the ordinary course of business, that is
material or will be material to the Company, taken as a whole, and
there has not been any material change in the capital stock, or
material increase in the short-term or long-term debt of the Company or
either Subsidiary.
(o) Each of the Company and its Subsidiaries owns or leases
all such properties as are materially necessary to the conduct of its
operations as presently conducted, and all of the property held under
lease by any of the Company or its Subsidiaries is held by it under
valid, subsisting and enforceable leases, except as the enforcement
thereof may be limited by bankruptcy, insolvency, or similar laws
affecting the enforcement of creditors' rights generally and subject to
the applicability of general principles of equity.
(p) Except as permitted by the Act, the Company has not
distributed and, prior to the later to occur of the Closing Date and
completion of the distribution of the Notes, will not distribute any
offering material in connection with the offering and sale of the Notes
other than the Preliminary Offering Memorandum and Offering Memorandum
(and any amendment or supplement thereto in accordance with Section
4(c) hereof).
(q) The Company and its Subsidiaries (i) have such
concessions, permits, licenses, consents, exemptions, franchises,
authorizations, orders, registrations, qualifications and other
approvals (each, an "AUTHORIZATION") of and have made all
12
material filings with and notices to, all Federal, state and foreign
governments, governmental or regulatory authorities and self-regulatory
organizations and all courts and other tribunals, and (ii) are members
in good standing of each Federal, state or foreign exchange, board of
trade, clearing house or association and self-regulatory or similar
organization, in each case, as are necessary to consummate the
Reorganization Transactions and the Related Transactions and to conduct
their respective businesses as described in the Offering Memorandum.
Each such Authorization is valid and in full force and effect and the
Company and each of its Subsidiaries is in material compliance with all
of the terms and conditions thereof; and no event has occurred
(including, without limitation, the receipt of any notice from any
authority or governing body) which allows or, after notice or lapse of
time or both, would allow, revocation, suspension or termination of any
such Authorization or results or, after notice or lapse of time or
both, would result in any other limitation of the rights of the holder
of any such Authorization; and other than as disclosed in the Offering
Memorandum, such Authorizations do not contain net capital or other
requirements which are materially more burdensome than those imposed on
LaBCo. and LaBLLC immediately prior to the consummation of the
Reorganization Transactions and the Related Transactions
(r) All stockholder, partnership and limited liability company
member approvals necessary for the Company and each Subsidiary to
consummate the Reorganization Transactions and the Related Transactions
have been obtained and are in full force and effect.
(s) The Company's authorized equity capitalization is as set
forth in the Offering Memorandum under the heading "Capitalization.".
(t) Neither the Company nor, to the knowledge of the Company,
any employee or agent of the Company has made any payment of funds or
received or retained any funds in violation of any law, rule or
regulation, which violation could reasonably be expected to have a
Material Adverse Effect.
(u) No holder of any security of the Company (other than
holders of the Notes) has any right to request or demand registration
of any security of the Company because of the consummation of the
transactions contemplated by the Transaction Documents.
(v) The Company is not and, upon sale of the Notes to be
issued and sold hereby in accordance herewith and the application of
the net proceeds of such sale as described in the Offering Memorandum
under the caption "Use of Proceeds," will not be an "investment
company" within the meaning of the Investment Company Act of 1940, as
amended.
(w) When the Notes are issued and delivered pursuant to this
Agreement, such Notes will not be of the same class (within the meaning
of Rule 144A(d)(3) under the Act) as any security of the Company that
is listed on a national securities exchange
13
registered under Section 6 of the Exchange Act or that is quoted in a
United States automated interdealer quotation system.
(x) Neither the Company nor any of its affiliates (as defined
in Rule 501(b) of Regulation D under the Act) has directly, or through
any agent (provided that no representation is made as to the Initial
Purchasers or any person acting on their behalf), (i) sold, offered for
sale, solicited offers to buy or otherwise negotiated in respect of,
any security (as defined in the Act) that is or will be integrated with
the offering and sale of the Notes in a manner that would require the
registration of the Notes under the Act or (ii) engaged in any form of
general solicitation or general advertising (within the meaning of
Regulation D under the Act) in connection with the offering of the
Notes.
(y) Assuming (i) the representations and warranties of the
Initial Purchasers in Section 2 hereof are true and correct in all
material respects, (ii) each Initial Purchaser complies with the
covenants set forth in Section 2 hereof, (iii) compliance by each
Initial Purchaser with the offering and transfer procedures and
restrictions described in the Offering Memorandum, (iv) the accuracy of
the representations and warranties deemed to be made in the Offering
Memorandum by purchasers to whom the Initial Purchasers initially
resell Notes and (v) purchasers to whom the Initial Purchasers
initially resell Notes receive a copy of the Offering Memorandum prior
to such sale, the purchase and sale of the Notes pursuant hereto
(including the Initial Purchasers' proposed offering of the Notes on
the terms and in the manner set forth in the Offering Memorandum and
Section 2 hereof) do not require registration under the Act.
(z) Each of the Company and its Subsidiaries and ERISA
Affiliates has fulfilled its obligations, if any, under the minimum
funding standards of Section 302 of the United States Employee
Retirement Income Security Act of 1974, as amended ("ERISA") and
Section 412 of the Internal Revenue Code of 1986, as amended (the
"Code") and the regulations and published interpretations thereunder
with respect to each "plan" (as defined in Section 3(3) of ERISA) for
which the Company or any of its Subsidiaries or ERISA Affiliates have
or may have any liability (contingent or otherwise) and each such plan
is in compliance in all material respects with the applicable
provisions of ERISA and such regulations and published interpretations
thereunder. Neither the Company nor any of its Subsidiaries or ERISA
Affiliates have incurred any unpaid liability to the Pension Benefit
Guaranty Corporation (other than for the payment of premiums in the
ordinary course) or to any such plan under Title IV of ERISA. Neither
the Company nor any of its Subsidiaries has engaged in any non-exempt
"prohibited transaction" under ERISA or the Code. The term "ERISA
AFFILIATE" means each trade or business (whether or not incorporated)
that would be treated as a single employer with the Company under Title
IV of ERISA or Section 412 of the Code.
(aa) Immediately after the consummation of the purchase and
sale of the Notes, the fair value and present fair saleable value of
the assets of the Company will exceed the sum of its stated liabilities
and identified contingent liabilities; the Company is not, nor will it
be, after giving effect to the consummation of such transactions, (i)
left with
14
unreasonably small capital with which to carry on its business as it is
proposed to be conducted, (ii) unable to pay its debts (contingent or
otherwise) as they mature or (iii) otherwise insolvent.
(bb) The statistical and market-related data included in the
Offering Memorandum are based on or derived from sources that the
Company believes to be reliable and accurate.
(cc) The statements set forth under the captions "Management's
Discussion and Analysis of Financial Condition and Results of
Operations--Year 2000" and "Risk Factors--Year 2000 compliance problems
could cause our trading-related communications and data processing
systems to fail, which could result in losses" accurately and fairly
set forth the current state of the Company's efforts to address the
Year 2000 Problem and the risks and costs of the Company relating to
the Year 2000 Problem. The "YEAR 2000 PROBLEM" as used herein means any
significant risk that computer hardware or software used in the
receipt, transmission, processing, manipulation, storage, retrieval,
transmission or other utilization of data or in the operation of
mechanical or electrical systems of any kind will not, in the case of
dates or time periods occurring after December 31, 1999, function at
least as effectively as in the case of dates or time periods occurring
prior to January 1, 2000.
(dd) Each of the stockholders' agreement, each employment
agreement, each noncompetition agreement and each pledge agreement
(each as described in the Offering Memorandum, together the "RELATED
AGREEMENTS"), as of the Closing Date, will have been duly authorized,
executed and delivered and will as of the Closing Date constitute a
valid and legally binding agreement of the Company enforceable against
the Company in accordance with its terms, subject, as to enforcement,
to bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium and similar laws of general applicability relating to or
affecting creditors' rights and to general equity principles; and the
Company will have obtained as of the Closing Date the signature of each
other party to each of the Related Agreements, PROVIDED, HOWEVER, that
the Company, makes no representation or warranty as to the
authorization, execution or delivery of any such agreement by any other
party thereto.
(ee) The Company and each of its Subsidiaries maintain a
system of internal accounting controls sufficient to provide reasonable
assurance that (i) transactions are executed in accordance with
management's general or specific authorizations; (ii) transactions are
recorded as necessary to permit preparation of financial statements in
conformity with generally accepted accounting principles and to
maintain asset accountability; (iii) access to assets is permitted only
in accordance with management's general or specific authorization; and
(iv) the recorded accountability for assets is compared with the
existing assets at reasonable intervals and appropriate action is taken
with respect to any differences.
15
(ff) The Company and its Subsidiaries own, possess, license or
have other rights to use, on reasonable terms, all patents, patent
applications, trade and service marks, trade and service mark
registrations, trade names, copyrights, licenses, inventions, trade
secrets, technology, know-how and other intellectual property
(collectively, the "INTELLECTUAL PROPERTY") necessary for the conduct
of the Company's business as now conducted or as proposed in the
Offering Memorandum to be conducted, except to the extent a failure to
so own, possess, license or have rights to use Intellectual Property
could not reasonably be expected have a Material Adverse Effect.
(gg) LaBCo. is registered as a broker-dealer with the SEC
under the Exchange Act and is a member organization in good standing
with the NYSE. LaBCo. is not required to be registered with the
securities authority of any state.
(hh) LaBCo. is a broker-dealer subject to the provisions of
Regulation T (12 C.F.R. Section .220) of the Board of Governors of the
Federal Reserve System. LaBCo. maintains procedures and internal
controls designed to ensure that it does not extend or maintain credit
to or for its customers other than in accordance with the provisions of
Regulation T, and management officials of the Company regularly
supervise the activities of LaBCo., and the activities of its
employees, to ensure that LaBCo. does not extend or maintain credit to
or for its customers other than in accordance with the provisions of
said Regulation T.
(ii) There is no franchise, contract or other document of a
character that would be required to be described in an Offering
Memorandum under the Act, which is not described in the Offering
Memorandum; and the statements set forth in the Offering Memorandum
under the headings "Description of the Capital Stock,"
"Business--Regulatory Matters," "Certain Transactions," "Employment and
Noncompetition Agreements," "Incentive Awards to our Employees,"
"Description of Notes," "Description of Other Indebtedness" and
"Certain United States Federal Income Tax Consequences to Non-U.S.
Taxpayers" fairly summarize the matters described therein.
(jj) The Company and each of its Subsidiaries are insured by
insurers of recognized financial responsibility against such losses and
risks and in such amounts as are prudent and customary in the
businesses in which they are engaged; all policies of insurance and
fidelity or surety bonds insuring the Company or any of its
Subsidiaries or their respective businesses, assets, employees,
officers and directors are in full force and effect; the Company and
its Subsidiaries are in compliance with the terms of such policies and
instruments in all material respects; and there are no claims by the
Company or any of its Subsidiaries under any such policy or instrument
as to which any insurance company is denying liability or defending
under a reservation of rights clause; neither the Company nor any such
Subsidiary has been refused any insurance coverage sought or applied
for; and neither the Company nor any such Subsidiary has any reason to
believe that it will not be able to renew its existing insurance
coverage as and when such coverage expires or to obtain similar
coverage from similar insurers as may be necessary to continue its
business at a cost that would not have a Material Adverse Effect
whether
16
or not arising from transactions in the ordinary course of business,
except as set forth in or contemplated in the Offering Memorandum.
(kk) No Subsidiary of the Company is currently prohibited,
directly or indirectly, from making any distribution in respect of its
membership or partnership interests, as the case may be, from repaying
to the Company any loans or advances to such Subsidiary from the
Company or from transferring any of such Subsidiary's property or
assets to the Company or any other Subsidiary of the Company, except as
described in or contemplated by the Offering Memorandum.
6. INDEMNIFICATION AND CONTRIBUTION.
(a) The Company agrees to indemnify and hold harmless each
Initial Purchaser and each person, if any, who controls an Initial Purchaser
within the meaning of Section 15 of the Act or Section 20 of the Exchange Act
from and against any and all losses, claims, damages, liabilities and
out-of-pocket expenses (including reasonable costs of investigation) incurred by
any such persons arising out of or based upon any untrue statement or alleged
untrue statement of a material fact contained in the Preliminary Offering
Memorandum or Offering Memorandum or in any amendment or supplement thereto, or
arising out of or based upon any 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, except insofar as such losses, claims, damages, liabilities or
expenses arise out of or are based upon any untrue statement or omission or
alleged untrue statement or omission which has been made therein or omitted
therefrom in reliance upon and in conformity with the information relating to an
Initial Purchaser furnished in writing to the Company by an Initial Purchaser,
through Xxxxxxx Xxxxx Xxxxxx Inc., expressly for use in connection therewith;
PROVIDED, HOWEVER, that the indemnification contained in this paragraph (a),
with respect to the Preliminary Offering Memorandum shall not inure to the
benefit of an Initial Purchaser on account of any such loss, claim, damage,
liability or expense arising from the sale of the Notes by such Initial
Purchaser to any person if the untrue statement or alleged untrue statement or
omission or alleged omission of a material fact contained in the Preliminary
Offering Memorandum was corrected in the Offering Memorandum and such Initial
Purchaser sold Notes to that person without sending or giving, at or prior to
the written confirmation of such sale, a copy of the Offering Memorandum (as
then amended or supplemented). The foregoing indemnity agreement shall be in
addition to any liability that the Company may otherwise have.
(b) If any action, suit or proceeding shall be brought against
an Initial Purchaser or any person who controls an Initial Purchaser in respect
of which indemnity may be sought against the Company in accordance with this
Section 6, such Initial Purchaser or any such person who controls such Initial
Purchaser shall promptly notify in writing the Company, and the Company shall
assume the defense thereof, including the employment of counsel reasonably
acceptable to such Initial Purchaser or such person who controls such Initial
Purchaser and payment of all fees and expenses relating to the assumption of the
defense by the Company. An Initial Purchaser or any person who controls an
Initial Purchaser shall have the right to employ
17
separate counsel in any such action, suit or proceeding and to participate in
the defense thereof, but the fees and expenses of such counsel shall be at the
expense of such Initial Purchaser or any such person who controls an Initial
Purchaser unless (i) the Company has agreed in writing to pay such fees and
expenses, (ii) the Company has failed to assume the defense and employ counsel
on a timely basis or (iii) the named parties to any such action, suit or
proceeding (including any impleaded parties) include both such Initial Purchaser
or any such person who controls an Initial Purchaser and the Company and such
Initial Purchaser or any such person who controls an Initial Purchaser shall
have been advised by its counsel that representation of such indemnified party
and the Company by the same counsel would be inappropriate under applicable
standards of professional conduct (whether or not such representation by the
same counsel has been proposed) due to actual or potential differing interests
between them (in which case the Company shall not have the right to assume the
defense of such action, suit or proceeding (a "CONFLICTED ACTION") on behalf of
such Initial Purchaser or any such person who controls an Initial Purchaser). It
is understood, however, that the Company shall, in connection with any such
Conflicted Action, be liable for the reasonable fees and expenses of a single
counsel (in addition to any local counsel) for the Initial Purchasers and each
such person who controls an Initial Purchaser, which firm shall be designated in
writing by Xxxxxxx Xxxxx Xxxxxx Inc., and that all such reasonable fees and
expenses shall be reimbursed as incurred as provided in paragraph (a) hereof.
The Company shall not be liable for any settlement of any such action, suit or
proceeding effected without the written consent of the Company, but if settled
with such written consent, or if there be a final judgment for the plaintiff in
any such action, suit or proceeding, the Company agrees to indemnify and hold
harmless the Initial Purchasers, to the extent provided in paragraph (a), and
any person who controls an Initial Purchaser from and against any loss, claim,
damage, liability or expense by reason of such settlement or judgment.
(c) Each Initial Purchaser, severally and not jointly, agrees
to indemnify and hold harmless the Company, their respective directors and
officers and any person who controls the Company within the meaning of Section
15 of the Act or Section 20 of the Exchange Act to the same extent as the
indemnity from the Company to the Initial Purchasers set forth in paragraph (a)
hereof, but only with respect to information relating to such Initial Purchaser
furnished in writing by such Initial Purchaser through Xxxxxxx Xxxxx Xxxxxx Inc.
expressly for use in the Preliminary Offering Memorandum or Offering Memorandum
or any amendment or supplement thereto. If any action, suit or proceeding shall
be brought against the Company, any of their respective directors or officers or
any such controlling person based on the Preliminary Offering Memorandum or
Offering Memorandum, or any amendment or supplement thereto, and in respect of
which indemnity may be sought against an Initial Purchaser pursuant to this
paragraph (c), such Initial Purchaser shall have the rights and duties given to
the Company by paragraph (b) above (except that if the Company shall have
assumed the defense thereof, such Initial Purchaser shall not be required to do
so, but may employ separate counsel therein and participate in the defense
thereof, but the fees and expenses of such counsel shall be at such Initial
Purchaser's expense), and the Company, its directors and officers and any such
controlling person shall have the rights and duties given to the Initial
Purchasers by paragraph (b) above. The foregoing indemnity agreement shall be in
addition to any liability that an Initial Purchaser may otherwise have.
18
(d) If the indemnification provided for in this Section 6 is
unavailable to an indemnified party under paragraphs (a) or (c) hereof in
respect of any losses, claims, damages, liabilities or expenses referred to
therein, then an indemnifying party, in lieu of indemnifying such indemnified
party, shall contribute to the amount paid or payable by such indemnified party
as a result of such losses, claims, damages, liabilities or expenses (i) in such
proportion as is appropriate to reflect the relative benefits received by the
Company on the one hand and an Initial Purchaser on the other hand from the
offering of the Notes or (ii) if the allocation provided by clause (i) above is
not permitted by applicable law, in such proportion as is appropriate to reflect
not only the relative benefits referred to in clause (i) above but also the
relative fault of the Company on the one hand and an Initial Purchaser on the
other in connection with the statements or omissions that resulted in such
losses, claims, damages, liabilities or expenses, as well as any other relevant
equitable considerations. The relative benefits received by the Company on the
one hand and an Initial Purchaser on the other shall be deemed to be in the same
proportion as the total net proceeds from the offering (before deducting
expenses) received by the Company bear to the total discounts and commissions
received by such Initial Purchaser, in each case as set forth in the table on
the cover page of the Offering Memorandum. The relative fault of the Company on
the one hand and an Initial Purchaser 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 the Company on the one hand or by such
Initial Purchaser on the other hand and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such statement or
omission.
(e) The Company and the Initial Purchasers agree that it would
not be just and equitable if contribution pursuant to this Section 6 were
determined by a pro rata allocation or by any other method of allocation that
does not take account of the equitable considerations referred to in paragraph
(d) above. The amount paid or payable by an indemnified party as a result of the
losses, claims, damages, liabilities and expenses referred to in paragraph (d)
above shall be deemed to include, subject to the limitations set forth above,
any legal or other out-of-pocket expenses reasonably incurred by such
indemnified party in connection with investigating any claim or defending any
such action, suit or proceeding. Notwithstanding the provisions of this Section
6, no Initial Purchaser shall be required to contribute any amount in excess of
the amount by which the total price of the Notes purchased by it and distributed
to the public exceeds the amount of any damages that such Initial Purchaser has
otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Act) shall be
entitled to contribution from any person who was not guilty of such fraudulent
misrepresentation.
(f) Any losses, claims, damages, liabilities or expenses for
which an indemnified party is entitled to indemnification or contribution under
this Section 6 shall be paid by the indemnifying party to the indemnified party
as such losses, claims, damages, liabilities or expenses are incurred. The
indemnity and contribution agreements contained in this Section 6 and the
representations and warranties of the Company set forth in this Agreement shall
remain operative and in full force and effect, regardless of (i) any
investigation made by or on behalf of an Initial Purchaser or any person who
controls an Initial Purchaser, the Company, its directors
19
or officers or any person controlling the Company, (ii) acceptance of any Notes
and payment therefor hereunder and (iii) any termination of this Agreement. A
successor to an Initial Purchaser or any person who controls an Initial
Purchaser, the Company, its directors or officers or any person controlling the
Company, shall be entitled to the benefits of the indemnity, contribution and
reimbursement agreements contained in this Section 6.
(g) No indemnifying party shall, without the prior written
consent of the indemnified party, effect any settlement of any pending or
threatened action, suit or proceeding in respect of which any indemnified party
is or could have been a party and indemnity could have been sought hereunder by
such indemnified party, unless such settlement includes an unconditional release
of such indemnified party from all liability on claims that are the subject
matter of such action, suit or proceeding.
7. CONDITIONS OF THE INITIAL PURCHASERS' OBLIGATIONS. The
obligations of each Initial Purchaser to purchase and pay for the Notes to be
purchased by it on the Closing Date hereunder are subject to the fulfillment, in
such Initial Purchaser's sole discretion, of the following conditions:
(a) At the time of execution of this Agreement and on the
Closing Date, no order or decree preventing the use of the Offering
Memorandum or any amendment or supplement thereto, or any order
asserting that the transactions contemplated by this Agreement are
subject to the registration requirements of the Act shall have been
issued and no proceedings for those purposes shall have been commenced
or shall be pending or, to the knowledge of the Company, threatened. No
order suspending the sale of the Notes in any jurisdiction shall have
been issued and no proceedings for that purpose shall have been
commenced or shall be pending or, to the knowledge of the Company,
threatened.
(b) At the Closing Date, the Reorganization Transactions and
the Related Transactions shall have been consummated; and the Company
shall have provided to the Initial Purchasers or counsel for the
Initial Purchasers copies of all closing documents delivered to the
parties to the Reorganization Transactions and the Related
Transactions.
(c) Subsequent to the date hereof, (i) except as disclosed or
contemplated in the Offering Memorandum, there shall not have occurred
any material adverse change in the condition (financial or other),
business, prospects, properties, assets, net worth or results of
operations of the Company, taken as a whole, which, in the opinion of
the Initial Purchasers, would materially adversely affect the market
for the Notes, or (ii) the Offering Memorandum shall not contain any
untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary in order to make the
statements therein, in the light of the circumstances under which they
were made, not misleading, if amending or supplementing the Offering
Memorandum to correct any such misstatement or omission could, in the
sole judgment of the Initial Purchasers, materially adversely affect
the marketability of the Notes.
20
(d) The Initial Purchasers shall have received on the Closing
Date an opinion of Xxxxxxxxx & Xxxxxxxx LLP, counsel for the Company,
dated the Closing Date and addressed to the Initial Purchasers,
substantially in the form of EXHIBIT A hereto.
(e) The Initial Purchasers shall have received on the Closing
Date an opinion of Xxxxxx, Xxxxxxxx, Xxxxx & Xxxxxxxx, counsel for the
Initial Purchasers, dated the Closing Date and addressed to the Initial
Purchasers, with respect to such matters as the Initial Purchasers may
request.
(f) The Initial Purchasers shall have received a "cold
comfort" letter addressed to the Initial Purchasers, and dated the date
hereof and the Closing Date, from each of Xxxxxx Xxxxxxxx LLP and
Xxxxxxxx & Xxxxxx, P.C., substantially to the effect set forth in
EXHIBIT B hereto.
(g) (i) There shall not have been any material change in the
capital stock of the Company or any Subsidiary nor any material
increase in the short-term or long-term debt of the Company or any
Subsidiary from that set forth or contemplated in the Offering
Memorandum; (ii) except as disclosed or contemplated by the Offering
Memorandum, the Company and the Subsidiaries shall not have any
liabilities or obligations, direct or contingent (whether or not in the
ordinary course of business), that are material to the Company and the
Subsidiaries, taken as a whole; (iii) all the representations and
warranties of the Company contained in this Agreement shall be true and
correct in all material respects on and as of the date hereof and on
and as of the Closing Date as if made on and as of the Closing Date;
and (iv) the Initial Purchasers shall have received a certificate,
dated the Closing Date and signed by the Chairman and Chief Executive
Officer and the chief accounting officer of the Company (or such other
officers as are reasonably acceptable to the Initial Purchasers), to
the effect set forth in this Section 7(g) and in Section 7(h) hereof.
(h) The Company shall not have failed at or prior to the
Closing Date to have performed or complied with any of their respective
agreements herein contained and required to be performed or complied
with by them hereunder at or prior to the Closing Date.
(i) There shall not have been any announcement by any
"nationally recognized statistical rating organization," as defined for
purposes of Rule 436(g) under the Act, that (i) it is downgrading its
rating assigned to any class of Notes of the Company (including the
Notes), or (ii) it is reviewing its ratings assigned to any class of
Notes of the Company (including the Notes) with a view to possible
downgrading, with negative implications or direction not determined.
(j) The Notes shall have been approved for trading on PORTAL.
21
(k) The Company shall have furnished or caused to be furnished
to the Initial Purchasers such further certificates and customary
closing documents as the Initial Purchasers shall have reasonably
requested.
All such opinions, certificates, letters and other documents
will be in compliance with the provisions hereof only if they are reasonably
satisfactory in form and substance to the Initial Purchasers.
Any certificate or document signed by any officer of the
Company and delivered to the Initial Purchasers, or to counsel for the Initial
Purchasers, shall be deemed a representation and warranty by the Company to the
Initial Purchasers as to the statements made therein.
8. EXPENSES.
(a) Whether or not the purchase and sale of the Notes
hereunder is consummated or this Agreement is terminated pursuant to Section 9
hereof, the Company agrees to pay the following costs and expenses and all other
costs and expenses incident to the performance by them of their obligations
hereunder: (i) the printing or reproduction of the Preliminary Offering
Memorandum and Offering Memorandum (including financial statements thereto), and
each amendment or supplement to any of them, this Agreement, the Registration
Rights Agreement and the Indenture; (ii) the delivery (including postage, air
freight charges and charges for counting and packaging) of such copies of the
Offering Memorandum, the Preliminary Offering Memorandum and all amendments or
supplements thereto as may be reasonably requested for use in connection with
the offering and sale of the Notes; (iii) the printing, authentication, issuance
and delivery of certificates for the Notes, including any stamp taxes in
connection with the original issuance and sale of the Notes; (iv) the printing
(or reproduction) and delivery of the preliminary and supplemental Blue Sky
Memoranda and all other agreements and documents printed (or reproduced) and
delivered in connection with the offering of the Notes; (v) the application for
quotation of the Notes on PORTAL; (vi) the qualification of the Notes for offer
and sale under the securities or Blue Sky laws of the several states as provided
in Section 4(f) hereof (including the reasonable fees, expenses and
disbursements of counsel for the Initial Purchasers relating to the preparation,
printing or reproduction, and delivery of the preliminary and supplemental Blue
Sky Memoranda and such qualification); and (vii) the fees and expenses of the
Company's accountants and the fees and expenses of counsel (including local and
special counsel) for the Company.
(b) If the purchase and sale of the Notes hereunder is not
consummated because any condition to the obligations of the Initial Purchaser
set forth in Section 7 hereof is not satisfied, because this Agreement is
terminated because of any failure, refusal or inability on the part of the
Company to perform all obligations and satisfy all conditions on their part to
be performed or satisfied hereunder other than by reason of a default by an
Initial Purchaser in payment for the Notes on the Closing Date, the Company
shall reimburse the Initial Purchasers promptly upon demand for all reasonable
out-of-pocket expenses (including reasonable fees and disbursements of counsel)
that shall have been incurred by them in connection with the proposed purchase
and sale of the Notes and the other transactions contemplated hereby; PROVIDED
that the
22
defaulting Initial Purchaser shall reimburse the Company upon demand for all
reasonable out-of-pocket expenses (including reasonable fees and expenses for
law and accounting services and printing costs) that shall have been incurred by
it in connection with the proposed purchase and sale of the Notes and the
transactions contemplated hereby.
9. TERMINATION OF AGREEMENT. (a) This Agreement shall be
subject to termination in the absolute discretion of the Initial Purchasers,
without liability on the part of the Initial Purchasers to the Company, by
notice to the Company, if prior to the Closing Date, (i) trading in securities
generally on the New York Stock Exchange, American Stock Exchange or the Nasdaq
National Market shall have been suspended or materially limited, (ii) a general
moratorium on commercial banking activities in New York shall have been declared
by either Federal or New York state authorities or (iii) there shall have
occurred any outbreak or escalation of hostilities or other international or
domestic calamity, crisis or change in political, financial or economic
conditions, the effect of which on the financial markets of the United States or
the market for the Notes is such as to make it, in the sole judgment of the
Initial Purchasers, impracticable or inadvisable to commence or continue the
offering of the Notes on the terms set forth on the cover page of the Offering
Memorandum (or if not yet in existence then the Preliminary Offering Memorandum)
or to enforce contracts for the resale of the Notes by the Initial Purchasers.
Notice of such termination may be given to the Company by telegram, telecopy or
telephone and shall be subsequently confirmed by letter.
(b) If any Initial Purchaser shall fail to purchase and pay
for any of the Notes agreed to be purchased by such Initial Purchaser hereunder
and such failure to purchase shall constitute a default in the performance of
its obligations under this Agreement, the remaining Initial Purchaser shall be
obligated to take up and pay for the Notes which the defaulting Initial
Purchaser agreed but failed to purchase; PROVIDED, HOWEVER, that in the event
that the aggregate principal amount of Notes which the defaulting Initial
Purchaser agreed but failed to purchase shall exceed 10% of the aggregate
principal amount of Notes set forth in Schedule I hereto, the remaining Initial
Purchaser shall have the right to purchase all, but shall not be under any
obligation to purchase any, of the Notes, and if such non-defaulting Initial
Purchaser does not purchase all the Notes, this Agreement will terminate without
liability to the non-defaulting Initial Purchaser or the Company. In the event
of a default by any Initial Purchaser as set forth in this Section 9(b), the
Closing Date shall be postponed for such period, not exceeding seven days, as
the non-defaulting Initial Purchaser shall determine in order that the required
changes in the Offering Memorandum or in any other documents or arrangements may
be effected. Nothing contained in this Agreement shall relieve any defaulting
Initial Purchaser of its liability, if any, to the Company or the non-defaulting
Initial Purchaser for damages occasioned by its default hereunder.
10. INFORMATION FURNISHED BY THE INITIAL PURCHASERS. The
statements set forth in the stabilization legend on the inside front cover, the
last paragraph on the cover page and in the second paragraph under the caption
"Plan of Distribution" in the Preliminary Offering Memorandum and Offering
Memorandum, constitute the only information furnished by the Initial Purchasers
as such information is referred to in Sections 5(b) and 6 hereof.
23
11. MISCELLANEOUS. Except as otherwise provided herein, notice
given pursuant to any provision of this Agreement shall be in writing and shall
be delivered (i) if to the Company, at XxXxxxxxx & Co Inc., Xxx Xxxxxxxx Xxxxx,
Xxx Xxxx, Xxx Xxxx, 00000, Attention: [ ] or (ii) if to the Initial Purchasers,
to Xxxxxxx Xxxxx Xxxxxx Inc., 000 Xxxxxxxxx Xxxxxx, Xxx Xxxx, XX 00000,
Attention: Manager, Investment Banking Division.
This Agreement has been and is made solely for the benefit of
the Initial Purchasers, the Company, and its respective directors, officers and
the controlling persons referred to in Section 6 hereof and their respective
successors and assigns, to the extent provided herein, and no other person shall
acquire or have any right under or by virtue of this Agreement. Neither the term
"successor" nor the terms "successors and assigns" as used in this Agreement
shall include a purchaser from an Initial Purchaser of any of the Notes in its
status as such purchaser.
12. APPLICABLE LAW; COUNTERPARTS. This Agreement shall be
governed by and construed in accordance with the laws of the State of New York
applicable to contracts made and to be performed within the State of New York
without regard to principles of conflicts of law.
This Agreement may be signed in various counterparts which
together constitute one and the same instrument.
[Rest of Page intentionally left blank]
24
Please confirm that the foregoing correctly sets forth the
agreement between the Company and the Initial Purchasers.
Very truly yours,
XxXXXXXXX & CO INC.
By:
--------------------------------
Name:
Title:
Confirmed as of the date first above mentioned.
XXXXXXX XXXXX XXXXXX INC.
XXXXXXXXX, XXXXXX & XXXXXXXX
SECURITIES CORPORATION
By: XXXXXXX XXXXX XXXXXX INC.
By:
-------------------------------------------
Name:
Title:
EXHIBIT A
Form of Opinion of Fulbright & Xxxxxxxx LLP
1. The Company has the requisite corporate power and authority
to execute, deliver and perform its obligations under the Indenture; the
execution and delivery of, and the performance by the Company of its obligations
under the Indenture have been duly and validly authorized by the Company; and
the Indenture has been duly executed and delivered by the Company and, assuming
due authorization, execution and delivery by the Trustee, constitutes the valid
and legally binding agreement of the Company, enforceable against the Company in
accordance with its terms, except as enforcement thereof may be limited by
bankruptcy, insolvency or other similar laws affecting the enforcement of
creditors' rights generally and subject to the applicability of general
principles of equity.
2. No qualification of the Indenture under the 1939 Act is
required in connection with the offer and sale of the Notes as contemplated by
the Purchase Agreement.
3. The Notes have been duly authorized by the Company and,
when authenticated by the Trustee in accordance with the Indenture and delivered
to the Initial Purchasers against payment therefor in accordance with the terms
of the Purchase Agreement, will have been validly issued and delivered, and will
constitute valid and binding obligations of the Company entitled to the benefits
of the Indenture and enforceable in accordance with their terms, except as
enforcement thereof may be limited by bankruptcy, insolvency or other similar
laws affecting the enforcement of creditors' rights generally and subject to the
applicability of general principles of equity.
4. All the outstanding shares of capital stock of the Company
have been duly authorized and validly issued, are fully paid and nonassessable.
5. The Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the jurisdiction in
which it is chartered or organized, with full corporate power and authority to
own, lease and operate its properties and to conduct its business as described
in the Offering Memorandum, and is duly registered and qualified to do business
as a foreign corporation and is in good standing under the laws of each
jurisdiction which requires such registration or qualification, except where the
failure to so register or qualify could not reasonably be expected to have a
Material Adverse Effect.
6. Each of LaBCo. and LaBLLC has been duly organized and is
validly existing as a limited partnership and a limited liability company,
respectively, in good standing under the laws of its jurisdiction of
organization; and the partnership interests in LaBCo. and the membership
interests in LaBLLC have been duly and validly authorized and issued and are
fully paid and nonassessable and are owned of record directly or indirectly by
the Company, to the knowledge of such counsel, to the knowledge of such counsel,
free and clear of all liens, encumbrances, equities or claims.
A-1
7. The Company's authorized equity capitalization is as set
forth in the Offering Memorandum under the heading "Capitalization."
8. (x) The issuance, offer, sale or delivery of the Notes,
(y) the execution, delivery or performance of the Transaction Documents by the
Company, or (z) the consummation by the Company or any Subsidiary of any of the
transactions contemplated by the Transaction Documents, the Reorganization
Transactions or the Related Transactions, will not conflict with or constitute a
breach of any of the terms or provisions of, or a default under, (i) the
organizational documents of the Company or any Subsidiary, (ii) any agreement,
indenture, lease or other document described in the Offering Memorandum under
the headings "Certain Transactions--Reorganization and Related Transactions--
Reorganization" and "--Interest on Indebtedness" or filed as an Exhibit to the
Company's Registration Statement on Form S-1 (No. 333-80791) relating to the
initial public offering of its Common Stock (together with the amended and
restated limited partnership agreement of LaBCo., dated August __, 1999 and the
amended and restated limited liability company operating agreement of LaBLLC,
dated August __, 1999, to be hereinafter referred to as the "MATERIAL
Contracts"), or (iii) any statute, law, ordinance or administrative,
governmental or self-regulatory organization rule or regulation known to us to
be applicable to the Company or any Subsidiary or any of their respective
properties, or any filing or judgment, injunction, order or decree known to us
of any court or governmental agency or body as having jurisdiction over the
Company or any Subsidiary, except any which individually or in the aggregate
could not reasonably be expected to have a Material Adverse Effect; and the
consummation of the transactions contemplated by the Transaction Documents, the
Reorganization Transactions and the Related Transactions will not result in the
creation or imposition of any lien, charge or encumbrance upon any property or
assets of the Company or any Subsidiary pursuant to the terms of any Material
Contract, other than as disclosed in the Offering Memorandum; PROVIDED, HOWEVER,
that, for the purposes of this paragraph 8 insofar as the consummation of the
Reorganization Transactions and Related Transactions are concerned, such counsel
need not express any opinion with respect to Federal or state securities laws,
other antifraud laws, and fraudulent transfer laws, or as to bankruptcy,
insolvency, reorganization, moratorium and similar laws of general applicability
relating to or affecting creditors' rights.
9. No consent, approval, authorization, filing with or order
of any court or governmental agency or body is required in connection with the
transactions contemplated in the Purchase Agreement or in the Indenture or the
Registration Rights Agreement, except such as will be obtained under the Act and
the Trust Indenture Act and such as may be required under the blue sky laws of
any jurisdiction in connection with the purchase and distribution of the
Securities by the Initial Purchasers in the manner contemplated herein and in
the Offering Memorandum and the Registration Rights Agreement.
10. The Company has the requisite corporate power and
authority to execute, deliver and perform its obligations under the Purchase
Agreement and the Registration Rights Agreement; the execution and delivery of,
and the performance by the Company of its obligations under, the Purchase
Agreement and the Registration Rights Agreement have been duly and validly
authorized by the Company, and each of the Purchase Agreement and the
Registration Rights Agreement has been duly executed and delivered by the
Company. The Registration Rights Agreement constitutes the valid and legally
binding agreement of the
A-2
Company, enforceable against the Company in accordance with its terms, except as
the enforcement thereof may be limited by bankruptcy, insolvency or other
similar laws affecting the enforcement of creditors' rights generally and
subject to the applicability of general principles of equity, and except as
rights to indemnity and contribution thereunder may be limited by Federal or
state securities laws or principles of public policy.
11. Each of the Related Agreements has been duly authorized,
executed and delivered by the Company and constitutes a valid and binding
obligation of the Company enforceable in accordance with its terms, subject, as
to enforcement, to bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium and similar laws of general applicability relating to or affecting
creditors' rights and to general equity principles.
12. All stockholder, partnership and limited liability company
member approvals necessary for LaBInc., LaBCo. and LaBLLC to consummate the
Reorganization Transactions and the Related Transactions have been obtained and
are in full force and effect.
13. The Company and its Subsidiaries (i) have such
Authorizations of, and have made all filings with and notices to, the courts and
the governmental agencies or bodies of the United States of America and the
State of New York and all applicable self-regulatory organizations and (ii) are
members in good standing of each Federal, state or foreign exchange, board of
trade, clearing house or association and self-regulatory or similar
organization, in each case, as are necessary to consummate the Reorganization
Transactions and the Related Transactions. Each such Authorization is valid and
in full force and effect; and, to the best of such counsel's knowledge, no event
has occurred that would reasonably be expected to result in the revocation,
suspension or termination of any such Authorization; and other than as disclosed
in the Offering Memorandum, such Authorizations contain no net capital or other
requirements or conditions that are materially more burdensome than those
imposed on LaBCo. or LaBLLC immediately prior to the consummation of the
Reorganization Transactions.
14. Assuming (i) the representations and warranties of the
Company in Section 5 of the Purchase Agreement are true and correct, (ii) the
representations and warranties of the Initial Purchasers in Section 2 of the
Purchase Agreement are true and correct, (iii) the Company complies with the
covenants set forth in Section 4 of the Purchase Agreement, (iv) the Initial
Purchasers comply with the covenants set forth in Section 2 of the Purchase
Agreement, (v) the Initial Purchasers comply with the offering and transfer
procedures and restrictions described in the Offering Memorandum, (vi) the
representations and warranties deemed to be made in the Offering Memorandum by
purchasers to whom the Initial Purchasers initially resell Notes are true and
correct and (vii) purchasers to whom the Initial Purchasers initially resell
Notes receive a copy of the Offering Memorandum prior to such sale, the purchase
and sale of the Notes pursuant to the Purchase Agreement (including the Initial
Purchasers' offering and sale of the Notes on the terms and in the manner set
forth in the Offering Memorandum and Section 2 of the Purchase Agreement) do not
require registration under the Act.
15. The Indenture, the Notes and the Registration Rights
Agreement conform in all material respects to the descriptions thereof contained
in the Offering Memorandum.
16. To our knowledge, there is no pending or threatened
action, suit or
A-3
proceeding by or before any court or governmental agency, authority or body or
any arbitrator involving the Company or any of its Subsidiaries or its or their
property of a character which would be required to be disclosed in a prospectus
pursuant to the Act which is not adequately disclosed in the Offering
Memorandum, and there is no franchise, contract or other document of a character
which would be required to be described in a prospectus pursuant to the Act
which is not described in the Offering Memorandum. The statements included in
the Offering Memorandum under the headings "Description of Capital Stock,"
"Business--Regulatory Matters," "Certain Transactions," "Employment and
Noncompetition Agreements," Incentive Awards to Our Employees," "Description of
Notes," "Description of Certain Other Indebtedness" and "Certain United States
Federal Income Tax Consequences to Non-U.S. Persons" fairly summarize the
matters therein described.
17. The Company is not, nor immediately after the sale of the
Notes to be sold under the Purchase Agreement and the application of the
proceeds from such sale (as described in the Offering Memorandum under the
caption "Use of Proceeds") will it be an "investment company" as such term is
defined in the Investment Company Act of 1940, as amended.
18. The Material Contracts do not contain any provisions that
prohibit any Subsidiary of the Company, directly or indirectly, from making any
distribution in respect of its membership or partnership interests, as the case
may be, from repaying to the Company any loans or advances to such Subsidiary
from the Company or from transferring any of such Subsidiary's property or
assets to the Company or any other Subsidiary of the Company, except as
described in or contemplated by the Offering Memorandum.
19. It is not necessary in connection with the grant,
issuance, offer, sale and delivery of the securities to be issued by the Company
pursuant to the Reorganization Transactions and the Related Transactions, to
register any such securities under the Act, or to qualify any indenture under
the 1939 Act.
20. LaBCo. is registered as a broker-dealer with the SEC under
the Exchange Act and is a member organization in good standing with the NYSE.
LaBCo. is not required to be registered with the securities authority of any
state.
21. Neither the consummation of the transactions contemplated
by the Purchase Agreement nor the sale, issuance, execution or delivery of the
Notes will violate Regulation T, U or X of the Board of Governors of the Federal
Reserve system.
We have participated in conferences with officers and other
representatives of the Company, representatives of the independent public
accountants for the Company, representatives of the Initial Purchasers and
counsel for the Initial Purchasers at which conferences the contents of the
Offering Memorandum and related matters were discussed, and, although we have
not independently verified and are not passing upon and assume no responsibility
for the accuracy, completeness or fairness of the statements contained in the
Offering Memorandum (except to the extent specified in paragraph 16), and that
our judgment as to materiality is, to the extent we deem proper, based in part
upon the views of appropriate officers and other representatives of the Company,
nothing has come to our attention that leads us to believe that the Offering
Memorandum, as of its date or as of the date hereof, contained or
A-4
contains an untrue statement of a material fact or omitted or omits to state a
material fact required to be stated therein or necessary to make the statements
contained therein, in the light of the circumstances under which they were made,
not misleading (it being understood that we express no opinion with respect to
the financial statements and related notes thereto and the other financial,
statistical and accounting data included in the Offering Memorandum).
A-5
EXHIBIT B
ACCOUNTANTS' COMFORT LETTERS
1. The Company shall have requested and caused Xxxxxx Xxxxxxxx LLP to
have furnished to the Representatives, at the Execution Time and at the Closing
Date, letters, dated respectively as of the Execution Time and as of the Closing
Date, in form and substance satisfactory to the Representatives, confirming that
they are independent accountants within the meaning of the Act and the
applicable rules and regulations adopted by the Commission thereunder and that
they have performed a review of the unaudited interim financial information of
the Company for the six-month period ended June 30, 1999, and as at June 30,
1999, in accordance with Statement on Auditing Standards No. 71 and stating in
effect that:
(i) in their opinion the audited financial statements,
financial statement schedules and pro forma financial statements
included in the Offering Memorandum and reported on by them comply as
to form in all material respects with the applicable accounting
requirements of the Exchange Act and the related rules and regulations
adopted by the Commission;
(ii) on the basis of a reading of the latest unaudited
financial statements made available by the Company and its
Subsidiaries; their limited review, in accordance with standards
established under Statement on Auditing Standards No. 71, of the
unaudited interim financial information for the six-month period
ended June 30, 1999, and as at June 30, 1999, as indicated in their
report dated , 1999; carrying out certain specified
procedures (but not an examination in accordance with generally
accepted auditing standards) which would not necessarily reveal
matters of significance with respect to the comments set forth in
such letter; a reading of the minutes of the meetings of the
stockholders, directors and the Managing Committee of LaBLLC; and
inquiries of certain officials of the Company who have
responsibility for financial and accounting matters of the Company
and its Subsidiaries as to transactions and events subsequent to
June 30, 1999, nothing came to their attention which caused them to
believe that:
(A) any unaudited financial statements
included in the Offering Memorandum do not comply as
to form in all material respects with applicable
accounting requirements of the Exchange Act and with
the related rules and regulations adopted by the
Commission; and said unaudited financial statements
are not in conformity with generally accepted
accounting principles applied on a basis
substantially consistent with that of the audited
financial statements included in the Offering
Memorandum;
(B) with respect to the period subsequent to
June 30, 1999, there were any changes, at a specified
date not more than five days prior to the date of the
letter, in the long-term indebtedness of the Company
and its Subsidiaries or capital stock of the Company
or decreases in the members'
B-1
capital/stockholders' equity of the Company as
compared with the amounts shown on the June 30, 1999
consolidated balance sheet included in the Offering
Memorandum, or for the period from July 1, 1999 to
such specified date there were any decreases, as
compared with the corresponding period for the prior
fiscal year in total revenues, income before managing
directors' compensation, limited partners' interest
in earnings of subsidiary and provision for income
taxes or income before limited partners' interest in
earnings of subsidiary and provision for income taxes
except in all instances for changes or decreases set
forth in such letter, in which case the letter shall
be accompanied by an explanation by the Company as to
the significance thereof unless said explanation is
not deemed necessary by the Representatives;
(C) the information included in the Offering
under the headings "Summary--Summary Historical
Consolidated Financial Data" and "Selected Historical
Consolidated Financial Data" is not in conformity
with the applicable disclosure requirements of
Regulation S-K; and
(iii) they have performed certain other specified procedures
as a result of which they determined that certain information of an
accounting, financial or statistical nature (which is limited to
accounting, financial or statistical information derived from the
general accounting records of the Company and its Subsidiaries) set
forth in the Offering Memorandum, including the information set forth
under the captions "Summary--Summary Selected Historical Consolidated
Financial Data," "Capitalization," "Selected Historical Consolidated
Financial Data" and "Management Discussion and Analysis of Financial
Condition and Results of Operations" in the Offering Memorandum, agrees
with the accounting records of the Company and its Subsidiaries,
excluding any questions of legal interpretation.
References to the Offering Memorandum in this paragraph (1) include any
supplement thereto at the date of the letter.
The Company shall have received from Xxxxxx Xxxxxxxx LLP (and furnished
to the Representatives) a review report with respect to Management's Discussion
and Analysis of Financial Condition and Results of Operations of the Company for
the three fiscal years ending December 31, 1998, and with respect to
Management's Discussion and Analysis of Financial Condition and Results of
Operations of the Company for the six-month period ending June 30, 1999, in
respect of which a Statement on Auditing Standards No. 71 review has been
performed and the corresponding period for the prior fiscal year, each in
accordance with Statement on Standards for Attestation Engagements No. 8 issued
by the Auditing Standards Board of the American Institute of Certified Public
Accountants, and such report shall be included in the Offering Memorandum.
2. The Company shall have caused Xxxxxxxx & Xxxxxx, P.C. to have
furnished to the Representatives letters, dated respectively as of the Execution
Time and as of the Closing Date, in form and substance reasonably satisfactory
to the Representatives, confirming that they are independent accountants within
the meaning of the Act and the applicable published rules and
B-2
regulations adopted by the Commission thereunder and stating in effect that, in
their opinion, the audited financial statements and financial statement
schedules included in the Offering Memorandum and reported on by them comply in
form in all material respects with the applicable accounting requirements of the
Act and the related published rules and regulations.
References to the Offering Memorandum in this paragraph 2 include any
supplement thereto at the date of the letter.
B-3
SCHEDULE I
----------
Principal Amount
of Notes
Initial Purchasers To Be Purchased
------------------ ---------------
Xxxxxxx Xxxxx Xxxxxx Inc.................................. $[ ]
Xxxxxxxxx, Xxxxxx & Xxxxxxxx Securities Corporation....... [ ]
------------
Total $[ ]
------------
------------
