EXECUTION COPY
R.A.B. ENTERPRISES, INC.
$120,000,000
10.5 % Senior Notes due 2005
and
R.A.B. HOLDINGS, INC.
$48,000,000
13% Senior Notes due 2008
PURCHASE AGREEMENT
April 28, 1998
CHASE SECURITIES INC.
000 Xxxx Xxxxxx, 0xx xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Ladies and Gentlemen:
R.A.B. Holdings, Inc., a Delaware corporation ("Holdings"),
proposes to issue and sell $48,000,000 aggregate principal amount of its 13%
Senior Notes due 2008 (the "Holdings Notes") and R.A.B. Enterprises, Inc., a
Delaware corporation and a wholly-owned subsidiary of Holdings (the "Company",
and, together with Holdings, the "Issuers"), proposes to issue and sell
$120,000,000 aggregate principal amount of its 10.5% Senior Notes due 2005 (the
"Company Notes"). The Company Notes will be fully and unconditionally guaranteed
(collectively, the "Guarantees") on a senior unsecured basis by certain of the
Company's direct and indirect, existing subsidiaries (collectively, the
"Guarantors"). The Holdings Notes and the Company Notes are collectively
referred to as the "Securities". The Holdings Notes will be issued pursuant to
an indenture to be dated as of May 1, 1998 (the "Holdings Indenture"), between
Holdings and PNC Bank, National Association, as trustee, and the Company Notes
and the Guarantees will be issued pursuant to an Indenture to be dated as of May
1, 1998 (the "Company Indenture", and together with the Holdings Notes
Indenture, the "Indentures"), among the Company, the Guarantors and PNC Bank,
National Association, as trustee. The Issuers hereby confirm their agreement
with Chase Securities Inc. (the "Initial Purchaser") concerning the purchase of
the Securities from Holdings, the Company and the Guarantors by the Initial
Purchaser.
On the Closing Date (as defined), approximately $17,000,000 of
the net proceeds from the sale of the Holdings Notes (the "Initial Escrow
Amount"), representing funds that will be sufficient to pay interest on the
Holdings Notes for the first six interest payment dates, will be placed into an
escrow account and pledged to the escrow agent named therein for the benefit of
the holders of the Holdings Notes and the trustee under the Holdings Indenture,
pursuant to an escrow agreement (the "Holdings Escrow Agreement") to be dated as
of May 1, 1998 among Holdings, the trustee under the Holdings Indenture and the
escrow agent named xxxxxxx, as escrow agent and collateral agent.
The Securities will be offered and sold to the Initial
Purchaser without being registered under the Securities Act of 1933, as amended
(the "Securities Act"), in reliance upon an exemption therefrom. The Issuers
have prepared a preliminary offering memorandum dated April 15, 1998 (the
"Preliminary Offering Memorandum") and will prepare an offering memorandum dated
the date hereof (the "Offering Memorandum") setting forth information concerning
the Issuers and the Securities. Copies of the Preliminary Offering Memorandum
have been, and copies of the Offering Memorandum will be, delivered by the
Issuers to the Initial Purchaser pursuant to the terms of this Agreement. Any
references herein to the Preliminary Offering Memorandum and the Offering
Memorandum shall be deemed to include all amendments and supplements thereto,
unless otherwise noted. The Issuers hereby confirm that they have authorized the
use of the Preliminary Offering Memorandum and the Offering Memorandum in
connection with the offering and resale of the Securities by the Initial
Purchaser in accordance with Section 2 hereof.
Holders of the Holdings Notes (including the Initial Purchaser
and its direct and indirect transferees) will be entitled to the benefits of an
Exchange and Registration Rights Agreement, substantially in the form attached
hereto as Annex A-1 (the "Holdings Registration Rights Agreement"), pursuant to
which Holdings will agree to file with the Securities and Exchange Commission
(the "Commission") (i) a registration statement under the Securities Act (the
"Holdings Exchange Offer Registration Statement") registering an issue of
Holdings Notes (the "Holdings Exchange Securities") which are identical in all
material respects to the Holdings Notes (except that the Holdings Exchange
Securities will not contain terms with respect to transfer restrictions) and
(ii) under certain circumstances, a shelf registration statement pursuant to
Rule 415 under the Securities Act (the "Holdings Shelf Registration Statement").
Holders of the Company Notes (including the Initial Purchaser
and its direct and indirect transferees) will be entitled to the benefits of an
Exchange and Registration Rights Agreement, substantially in the form attached
hereto as Annex A-2 (the "Company Registration Rights Agreement"), pursuant to
which the Company and the Guarantors will agree to file with the Commission (i)
a registration statement under the Securities Act (the "Company Exchange Offer
Registration Statement") registering an issue of Company Notes (the "Company
Exchange Securities") which are identical in all material respects to the
Company Notes (except that the Company Exchange Securities will not contain
terms with respect
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to transfer restrictions) and (ii) under certain circumstances, a shelf
registration statement pursuant to Rule 415 under the Securities Act (the
"Company Shelf Registration Statement").
On March 3, 1998, the Company entered into a Purchase
Agreement, which has been amended by a First Amendment dated as of April 8, 1998
(the "Manischewitz Purchase Agreement") to acquire (the "Acquisition") all of
the outstanding equity interests of The B. Manischewitz Company, LLC, a Delaware
limited liability company ("Manischewitz"), for approximately $124 million. The
Acquisition will be consummated concurrently with the issuance and sale of the
Securities.
Millbrook Distribution Services Inc., a Delaware corporation
("Millbrook"), and a wholly owned subsidiary of the Company, is party to a
credit agreement dated March 31, 1997 (the "Credit Agreement"). Concurrently
with the closing of the Acquisition, (i) the Credit Agreement will be amended
and restated (the "Amended Credit Agreement") to provide, among other things,
for Millbrook and Manischewitz to be co-borrowers under the Credit Agreement,
(ii) Millbrook will repay approximately $20.4 million of indebtedness under the
revolving credit portion of the Credit Agreement and (iii) Holdings will
contribute to the Company all of the capital stock of Millbrook (the "Stock
Contribution"). The issuance and sale of the Securities and the Guarantees, the
Acquisition, the execution of the Amended Credit Agreement and the Stock
Contribution are collectively referred to as the "Transactions". The issuance
and sale of the Securities and the Guarantees is conditioned upon the concurrent
consummation of the other components of the Transactions.
Capitalized terms used but not defined herein shall have the
meanings given to such terms in the Offering Memorandum.
1. Representations, Warranties and Agreements of the Issuers
and Millbrook. Each of the Issuers and Millbrook, jointly and severally,
represents and warrants to, and agrees with, the Initial Purchaser on and as of
the date hereof and the Closing Date (as defined in Section 3) that:
(a) Each of the Preliminary Offering Memorandum and the
Offering Memorandum, as of its respective date, did not, and on the
Closing Date the Offering Memorandum will not, contain any untrue
statement of a material fact or omit to state a material fact
necessary in order to make the statements therein, in the light of
the circumstances under which they were made, not misleading;
provided that the Issuers and Millbrook make no representation or
warranty as to information contained in or omitted from the
Preliminary Offering Memorandum or the Offering Memorandum in
reliance upon and in conformity with written information relating
to the Initial Purchaser furnished to the Issuers by or on behalf
of the Initial Purchaser specifically for use therein (the "Initial
Purchaser's Information").
(b) Each of the Preliminary Offering Memorandum and the
Offering Memorandum, as of its respective date, contains all of the
information that, if re-
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quested by a prospective purchaser of the Securities, would be
required to be provided to such prospective purchaser pursuant to
Rule 144A(d)(4) under the Securities Act.
(c) Assuming the accuracy of the representations and
warranties of the Initial Purchaser contained in Section 2 and its
compliance with the agreements set forth therein, it is not
necessary, in connection with the issuance and sale of the
Securities to the Initial Purchaser and the offer, resale and
delivery of the Securities by the Initial Purchaser in the manner
contemplated by this Agreement and the Offering Memorandum, to
register the Securities under the Securities Act or to qualify the
Indentures under the Trust Indenture Act of 1939, as amended (the
"Trust Indenture Act").
(d) Each subsidiary of Holdings is listed on Schedule 1 hereto
and each subsidiary of Manischewitz is listed on Schedule 2 hereto.
Holdings and each of its subsidiaries and Manischewitz and each of
its subsidiaries have been duly incorporated or organized, as the
case may be, and are validly existing as corporations, limited
partnerships or limited liability companies, as the case may be, in
good standing under the laws of their respective jurisdictions of
incorporation or organization, as the case may be, are duly
qualified to do business and are in good standing as foreign
corporations, partnerships or limited liability companies, as the
case may be, in each jurisdiction in which their respective
ownership or lease of property or the conduct of their respective
businesses requires such qualification, and have all power and
authority necessary to own or hold their respective properties and
to conduct the businesses in which they are engaged, except where
the failure to so qualify or have such power or authority would
not, singularly or in the aggregate, have a material adverse effect
on the condition (financial or otherwise), results of operations or
business, as presently conducted or currently contemplated, of
Holdings and its subsidiaries taken as a whole after giving effect
to the Acquisition (a "Material Adverse Effect").
(e) Each of Holdings and the Company has the respective
authorized capitalization set forth in the Offering Memorandum
under the heading "Capitalization" on a pro forma basis after
giving effect to the Transactions; all of the outstanding shares of
capital stock of Holdings have been duly and validly authorized and
issued and are fully paid and non-assessable. Except as described
in the Offering Memorandum, (i) all of the outstanding shares of
capital stock or membership interests of each subsidiary of
Holdings and, to the knowledge of the Issuers and Millbrook, of
Manischewitz and each of its subsidiaries have been duly and
validly authorized and issued, and, in the case of such shares of
capital stock, are fully paid and non-assessable and are, or, after
giving effect to the Acquisition, will be, owned directly or
indirectly by Holdings, free and clear of any lien, charge,
encumbrance, security interest, restriction upon voting or transfer
or any other claim of any third party (except that the capital
stock of Millbrook is
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pledged pursuant to the Credit Agreement and will be pledged
pursuant to the Amended Credit Agreement).
(f) Each of the Issuers and Millbrook has, and Xxxxxxxxxxxx
will have on or prior to the Closing Date, full right, power and
authority to execute and deliver this Agreement, the Indentures,
the Registration Rights Agreements, the Securities, the
Manischewitz Purchase Agreement and the Amended Credit Agreement
(collectively, the "Transaction Documents"), in each case, to the
extent, and only to the extent, each is a party thereto, and to
perform its respective obligations hereunder and thereunder, as
applicable; and all corporate action required to be taken for the
due and proper authorization and consummation of the Stock
Contribution and for the due and proper authorization, execution
and delivery of each of the Transaction Documents, to which it is a
party, and the consummation of the Transactions have been duly and
validly taken.
(g) This Agreement has been duly authorized, executed and
delivered by each of the Issuers and Millbrook and constitutes a
valid and legally binding agreement of each of the Issuers and
Millbrook, enforceable against the Issuers and Millbrook, as
applicable, in accordance with its terms, except to the extent that
such enforceability may be limited by applicable bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium and
other similar laws affecting creditors' rights generally and by
general equitable principles (whether considered in a proceeding in
equity or at law).
(h) The Holdings Registration Rights Agreement has been duly
authorized by Holdings and, when duly executed and delivered in
accordance with its terms by each of the parties thereto, will
constitute a valid and legally binding agreement of Holdings
enforceable against Holdings in accordance with its terms, except
to the extent that such enforceability may be limited by applicable
bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and other similar laws affecting creditors' rights
generally and by general equitable principles (whether considered
in a proceeding in equity or at law). The Company Registration
Rights Agreement has been duly authorized by the Company and
Millbrook and when authorized by Xxxxxxxxxxxx and, when duly
executed and delivered in accordance with its terms by each of the
parties thereto, will constitute a valid and legally binding
agreement of each of the Company, Millbrook and Manischewitz
enforceable against the Company, Millbrook and Manischewitz, as
applicable, in accordance with its terms, except to the extent that
such enforceability may be limited by applicable bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium and
other similar laws affecting creditors' rights generally and by
general equitable principles (whether considered in a proceeding in
equity or at law).
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(i) The Holdings Indenture has been duly authorized by
Holdings and, when duly executed and delivered in accordance with
its terms by each of the parties thereto, will constitute a valid
and legally binding agreement of Holdings enforceable against
Holdings in accordance with its terms, except to the extent that
such enforceability may be limited by applicable bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium and
other similar laws affecting creditors' rights generally and by
general equitable principles (whether considered in a proceeding in
equity or at law). The Company Indenture has been, or, in the case
of Manischewitz, will have been on or prior to the Closing Date,
duly authorized by the Company, Millbrook and Manischewitz and,
when duly executed and delivered in accordance with its terms by
each of the parties thereto, will constitute a valid and legally
binding agreement of the Company, Millbrook and Manischewitz
enforceable against the Company, Millbrook and Manischewitz, as
applicable, in accordance with its terms, except to the extent that
such enforceability may be limited by applicable bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium and
other similar laws affecting creditors' rights generally and by
general equitable principles (whether considered in a proceeding in
equity or at law). On the Closing Date, each of the Indentures will
conform in all material respects to the requirements of the Trust
Indenture Act and the rules and regulations of the Commission
applicable to an indenture which is qualified thereunder.
(j) The Holdings Notes have been duly authorized by Holdings
and, when duly executed, authenticated, issued and delivered as
provided in the Holdings Indenture and paid for as provided herein,
will be duly and validly issued and outstanding and will constitute
valid and legally binding obligations of Holdings entitled to the
benefits of the Holdings Indenture and enforceable against Holdings
in accordance with their terms, except to the extent that such
enforceability may be limited by applicable bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and other similar
laws affecting creditors' rights generally and by general equitable
principles (whether considered in a proceeding in equity or at
law). The Company Notes and the Guarantees have been, or, in the
case of Manischewitz, will have been on or prior to the Closing
Date, duly authorized by the Company and Millbrook and
Manischewitz, as the case may be, and, when duly executed,
authenticated, issued and delivered as provided in the Company
Indenture and paid for as provided herein, will be duly and validly
issued and outstanding and will constitute valid and legally
binding obligations of the Company, Millbrook and Manischewitz, as
applicable, entitled to the benefits of the Company Indenture and
enforceable against the Company, Millbrook and Manischewitz, as
applicable, in accordance with their terms, except to the extent
that such enforceability may be limited by applicable bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium and
other similar laws affecting creditors' rights generally and by
general equitable principles (whether considered in a proceeding in
equity or at law).
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(k) The Holdings Escrow Agreement will have been on or prior
to the Closing Date duly authorized by Holdings and, when duly
executed and delivered in accordance with its terms by each of the
parties thereto, will constitute a valid and legally binding
agreement of Holdings enforceable against Holdings in accordance
with its terms, except to the extent that such enforceability may
be limited by applicable bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium and other similar laws
affecting creditors' rights generally and by general equitable
principles (whether considered in a proceeding in equity or at law.
(l) The Manischewitz Purchase Agreement has been duly
authorized, executed and delivered by the Company and, assuming
that the Manischewitz Purchase Agreement has been duly authorized,
executed and delivered by the other parties thereto, constitutes a
valid and legally binding agreement of the Company enforceable
against the Company in accordance with its terms, except to the
extent that such enforceability may be limited by applicable
bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and other similar laws affecting creditors' rights
generally and by general equitable principles (whether considered
in a proceeding in equity or at law).
(m) The Amended Credit Agreement has been duly authorized by
Millbrook and will have been on or prior to the Closing Date duly
authorized by Xxxxxxxxxxxx and when duly executed and delivered in
accordance with its terms by each of the parties thereto will
constitute a valid and legally binding agreement of Millbrook and
Manischewitz enforceable against Millbrook and Manischewitz in
accordance with its terms, except to the extent that such
enforceability may be limited by applicable bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and other similar
laws affecting creditors' rights generally and by general equitable
principles (whether considered in a proceeding in equity or at
law).
(n) The execution, delivery and performance by each of the
Issuers and Millbrook and Manischewitz, to the extent each is a
party thereto, of the Transaction Documents, the issuance,
authentication, sale and delivery of the Holdings Notes by Holdings
and compliance by Holdings with the terms thereof, the issuance,
sale and delivery of the Company Notes and the Guarantees by the
Company and Millbrook and Manischewitz, respectively, and
compliance by the Company and Millbrook and Manischewitz with the
terms thereof and the consummation of the Transactions will not
conflict with or result in a breach or violation of any of the
terms or provisions of, or constitute a default under, or result in
the creation or imposition of any lien, charge or encumbrance upon
any property or assets of any of the Issuers or Millbrook or
Manischewitz or any of their respective subsidiaries pursuant to,
any material indenture, mortgage, deed of trust, loan agreement or
other material agreement or instrument to which any of
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the Issuers or Millbrook or Manischewitz or any of their respective
subsidiaries is a party or by which any Issuer or Millbrook or
Manischewitz or any of their respective is bound or to which any of
the material property or material assets of any of the Issuers or
Millbrook or Manischewitz or any of their respective subsidiaries
is subject, nor will such actions result in any violation of the
provisions of the charter or by-laws or other organizational
document of any of the Issuers or Millbrook or Manischewitz or any
of their respective subsidiaries or any statute or any judgment,
order, decree, rule or regulation of any court or arbitrator or
governmental agency or body having jurisdiction over any of the
Issuers or Millbrook or Manischewitz or any of their respective
subsidiaries or any of their material properties or material
assets; and no consent, approval, authorization or order of, or
filing or registration with, any such court or arbitrator or
governmental agency or body under any such statute, judgment,
order, decree, rule or regulation is required for the execution,
delivery and performance by each of the Issuers and Millbrook and
Manischewitz of each of the Transaction Documents, the issuance,
authentication, sale and delivery of the Securities and compliance
by the respective Issuers and Millbrook and Manischewitz with the
terms thereof and the consummation of the Transactions, except for
such consents, approvals, authorizations, filings, registrations or
qualifications (i) which shall have been obtained or made prior to
the Closing Date, (ii) as may be required to be obtained or made
under the Securities Act and applicable state securities laws as
provided in the Registration Rights Agreements, (iii) as may be
required to be obtained or made under applicable state securities
laws in connection with the purchase and resale of the Securities
by the Initial Purchaser and (iv) the liens contemplated by the
Amended Credit Agreement.
(o) Deloitte & Touche LLP are independent certified public
accountants with respect to Holdings, the Company and Millbrook,
within the meaning of Rule 101 of the Code of Professional Conduct
of the American Institute of Certified Public Accountants ("AICPA")
and its interpretations and rulings thereunder. Except as set forth
in the Offering Memorandum, including, without limitation, under
"Risk Factors--Unaudited Historical Financial Data", the historical
financial statements of Holdings (including the related notes
thereto) contained in the Offering Memorandum, comply in all
material respects with the requirements applicable to a
registration statement on Form S-1 under the Securities Act (except
that certain supporting schedules are omitted); such financial
statements have been prepared in conformity with generally accepted
accounting principles consistently applied throughout the periods
covered thereby and when taken as a whole, present fairly, in all
material respects, the financial position of Holdings at the
respective dates indicated and the results of its operations and
its cash flows for the respective periods indicated; the unaudited
financial data of the Predecessor set forth in the Offering
Memorandum are fair presentations of the information they purport
to show; and the historical financial information contained in the
Offering Memorandum under the headings "Summary--Summary Historical
Xxxxx-
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cial Data--R.A.B. Holdings, Inc.", "Selected Historical Financial
Data--R.A.B. Holdings, Inc.", and "Management's Discussion and
Analysis of Results of Operations and Financial Condition--R.A.B.
Holdings, Inc." is fairly and accurately derived, in all material
respects, from the accounting records of Holdings and its
subsidiaries. Except as set forth in the Offering Memorandum,
including, without limitation, under "Risk Factors--Unaudited Pro
Forma Condensed Consolidated Financial Data" and except for the pro
forma adjustments specified therein, the pro forma financial
information contained in the Offering Memorandum has been prepared
on a basis consistent with the historical financial statements of
Holdings contained in the Offering Memorandum, includes all
material adjustments to the historical financial information
required by Rule 11-02 of Regulation S-X under the Securities Act
to reflect the transactions described in the Offering Memorandum
and gives effect to assumptions made on a reasonable basis. The
other historical financial and statistical information included in
the Offering Memorandum are, in all material respects, a reasonable
presentation of the information they purport to show.
(p) Xxxxxx Xxxxxxxx, LLP are independent certified public
accountants with respect to Manischewitz within the meaning of Rule
101 of the Code of Professional Conduct of the American Institute
of Certified Public Accountants ("AICPA") and its interpretations
and rulings thereunder. The historical combined financial
statements (including the related notes) of MANO Holdings
Corporation, a Delaware corporation ("MANO"), and KBMC Acquisition
Company, L.P., a Delaware limited partnership ("KBMC") contained in
the Offering Memorandum comply in all material respects with the
requirements applicable to a registration statement on Form S-1
under the Securities Act (except that certain supporting schedules
are omitted); such financial statements have been prepared in
conformity with generally accepted accounting principles
consistently applied throughout the periods covered thereby and
when, taken as a whole, present fairly, in all material respects,
the combined financial position of MANO and KBMC at the respective
dates indicated and the combined results of their operations and
their cash flows for the respective periods indicated; and the
historical financial information contained in the Offering
Memorandum under the headings "Summary--Summary Historical Combined
Financial Data--The B. Manischewitz Company, LLC," "Selected
Historical Combined Financial Data--The B. Manischewitz Company,
LLC," and "Management's Discussion and Analysis of Results of
Operations and Financial Condition--The B. Manischewitz Company,
LLC" is fairly and accurately, in all material respects, derived
from the accounting records of Manischewitz (which is the sole
asset of MANO and KBMC).
(q) There are no legal or governmental proceedings pending to
which Holdings or any of its subsidiaries or, to the knowledge of
the Issuers and Millbrook, Manischewitz or any of its subsidiaries
is a party or of which any property or assets of Holdings or any of
its subsidiaries or Manischewitz or any of its sub-
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sidiaries is the subject which, singularly or in the aggregate,
could reasonably be expected to have a Material Adverse Effect; and
to the knowledge of the Issuers and Millbrook, no such proceedings
are threatened or contemplated by governmental authorities or
threatened by others.
(r) To the knowledge of the Issuers and Millbrook, no action
has been taken and no statute, rule, regulation or order has been
enacted, adopted or issued by any governmental agency or body which
prevents the issuance of the Securities or suspends the sale of the
Securities in any jurisdiction; no injunction, restraining order or
order of any nature by any federal or state court of competent
jurisdiction has been issued with respect to any of the Issuers or
Millbrook or Manischewitz or any of their respective subsidiaries
which would prevent or suspend the issuance or sale of the
Securities or the use of the Preliminary Offering Memorandum or the
Offering Memorandum in any jurisdiction; no action, suit or
proceeding is pending against or, to the knowledge of the Issuers
and Millbrook, threatened against or affecting any of the Issuers
or Millbrook, any of their respective subsidiaries or Manischewitz
or any of its subsidiaries before any court or arbitrator or any
governmental agency, body or official, domestic or foreign, which
could reasonably be expected to interfere with or adversely affect
the issuance of the Securities or in any manner draw into question
the validity or enforceability of any of the Transaction Documents
or any action taken or to be taken pursuant thereto; and the
Issuers and Millbrook have and, to the knowledge of the Issuers and
Millbrook, Manischewitz has complied with any and all requests by
any securities authority in any jurisdiction for additional
information to be included in the Preliminary Offering Memorandum
and the Offering Memorandum.
(s) None of Holdings or any of its subsidiaries, and to the
knowledge of the Issuers and Millbrook, none of Manischewitz or any
of its subsidiaries is (i) in violation of its charter or by-laws
or other organizational documents, (ii) in default in any material
respect, and no event has occurred which, with notice or lapse of
time or both, would constitute such a default, in the due
performance or observance of any term, covenant or condition
contained in any material indenture, mortgage, deed of trust, loan
agreement or other material agreement or instrument to which it is
a party or by which it is bound or to which any of its property or
assets is subject, (iii) in violation in any material respect of
any law, ordinance, governmental rule, regulation or court decree
to which it or its property or assets may be subject, except, in
the case of clauses (ii) and (iii), for such violations which would
not, singularly or in the aggregate, have a Material Adverse
Effect.
(t) Holdings and each of its subsidiaries and, to the
knowledge of the Issuers and Millbrook, Manischewitz and each of
its subsidiaries possess all material licenses, certificates,
authorizations and permits issued by, and have made all
declarations and filings with, the appropriate federal, state or
foreign regulatory
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agencies or bodies which are necessary or desirable for the
ownership of their respective properties or the conduct of their
respective businesses as described in the Offering Memorandum,
except where the failure to possess or make the same would not,
singularly or in the aggregate, have a Material Adverse Effect, and
neither Holdings nor any of its subsidiaries nor does Holdings or
any of its subsidiaries have knowledge that Manischewitz or any of
its subsidiaries has received notification of any revocation or
modification of any such license, certificate, authorization or
permit or has any reason to believe that any such license,
certificate, authorization or permit will not be renewed in the
ordinary course.
(u) Holdings and each of its subsidiaries and, to the
knowledge of the Issuers and Millbrook, Manischewitz and each of
its subsidiaries have filed all federal, state, local and foreign
income and franchise tax returns required to be filed through the
date hereof and have paid all taxes due thereon, and no tax
deficiency has been determined adversely to Holdings or any of its
subsidiaries or, to the knowledge of the Issuers and Millbrook,
Manischewitz or any of its subsidiaries which has had (nor does
Holdings or any of its subsidiaries have any knowledge of any tax
deficiency which, if determined adversely to Holdings or any of its
subsidiaries or Manischewitz or any of its subsidiaries could
reasonably be expected to have) a Material Adverse Effect.
(v) None of Holdings or any of its subsidiaries is (i) an
"investment company" or a company "controlled by" an investment
company within the meaning of the Investment Company Act of 1940,
as amended (the "Investment Company Act"), and the rules and
regulations of the Commission thereunder or (ii) a "holding
company" or a "subsidiary company" of a holding company or an
"affiliate" thereof within the meaning of the Public Utility
Holding Company Act of 1935, as amended.
(w) Holdings and each of its subsidiaries maintain a system of
internal accounting controls intended to provide reasonable
assurance that (i) transactions are executed in accordance with
management's general or specific authorizations and (ii)
transactions are recorded as necessary to permit preparation of
financial statements in conformity with United States generally
accepted accounting principles.
(x) Holdings and each of its subsidiaries and, to the
knowledge of the Issuers and Millbrook, Manischewitz and any of its
subsidiaries have insurance covering their respective properties,
operations, personnel and businesses, which insurance is in amounts
and insures against such losses and risks as are customary for
similarly situated businesses. None of Holdings and its
subsidiaries, or to the knowledge of the Issuers and Millbrook,
Manischewitz and its subsidiaries has received notice from any
insurer or agent of such insurer that capital improvements
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or other expenditures are required or necessary to be made in order
to continue such insurance.
(y) Holdings and each of its subsidiaries and, to the
knowledge of the Issuers and Millbrook, Manischewitz and each of
its subsidiaries own or possess adequate rights to use all material
patents, patent applications, trademarks, service marks, trade
names, trademark registrations, service mark registrations,
copyrights, licenses and know-how (including trade secrets and
other unpatented and/or unpatentable proprietary or confidential
information, systems or procedures) necessary for the conduct of
their respective businesses as presently conducted; and the conduct
of their respective businesses as presently conducted do not
conflict in any material respect with, and Holdings and its
subsidiaries have not and, to the knowledge of the Issuers and
Millbrook, Manischewitz and its subsidiaries have not received any
notice of any claim of conflict with, any such rights of others.
(z) Holdings and each of its subsidiaries and, to the
knowledge of the Issuers and Millbrook, Manischewitz and each of
its subsidiaries have good title in fee simple to, or have valid
rights to lease or otherwise use, all items of real and personal
property which are material to the business of Holdings, each of
its subsidiaries and Manischewitz and each of its subsidiaries, as
described in the Offering Memorandum, in each case free and clear
of all liens, encumbrances, claims and defects and imperfections of
title except such as (i) do not materially interfere with the use
made and proposed to be made of such property by Holdings and its
subsidiaries or Manischewitz and its subsidiaries, as applicable,
(ii) could not reasonably be expected to have a Material Adverse
Effect or (iii) as described in the Offering Memorandum.
(aa) No labor disturbance by or dispute with the employees of
Holdings or any of its subsidiaries or, to the knowledge of the
Issuers and Millbrook, Manischewitz or any of its subsidiaries
exists or, to the knowledge of the Issuers and Millbrook, is
contemplated or threatened, except as could not reasonably be
expected to have a Material Adverse Effect.
(bb) No "prohibited transaction" (as defined in Section 406 of
the Employee Retirement Income Security Act of 1974, as amended,
including the regulations and published interpretations thereunder
("ERISA"), or Section 4975 of the Internal Revenue Code of 1986, as
amended from time to time (the "Code")) or "accumulated funding
deficiency" (as defined in Section 302 of ERISA) or any of the
events set forth in Section 4043(b) of ERISA (other than events
with respect to which the 30-day notice requirement under Section
4043 of ERISA has been waived) has occurred with respect to any
employee benefit plan of Holdings or any of its subsidiaries or, to
the knowledge of the Issuers and Millbrook, Manischewitz or any of
its subsidiaries which could reasonably be expected to
-12-
have a Material Adverse Effect; each such employee benefit plan of
Holdings and its subsidiaries or, to the knowledge of the Issuers
and Millbrook, Manischewitz and its subsidiaries, is in compliance
in all material respects with applicable law, including ERISA and
the Code; none of Holdings or any of its subsidiaries or, to the
knowledge of the Issuers and Millbrook, Manischewitz or any of its
subsidiaries has incurred liability under Title IV of ERISA with
respect to the termination of, or withdrawal from, any pension plan
for which Holdings or any of its subsidiaries would have any
liability after giving effect to the Acquisition; and each such
pension plan that is intended to be qualified under Section 401(a)
of the Code is so qualified in all material respects and nothing
has occurred, whether by action or by failure to act, which could
reasonably be expected to cause the loss of such qualification.
(cc) There has been no storage, generation, transportation,
handling, treatment, disposal, discharge, emission or other release
of any kind of toxic or other hazardous wastes or other hazardous
substances by, due to or caused by Holdings or any of its
subsidiaries or, to the knowledge of the Issuers and Millbrook,
Manischewitz or any of its subsidiaries (any other entity
(including any predecessor) for whose acts or omissions Holdings or
any of its subsidiaries or, to the knowledge of the Issuers and
Millbrook, Manischewitz or any of its subsidiaries is or could
reasonably be expected to be liable) upon any of the property now
or previously owned or leased by Holdings or any of its
subsidiaries or, to the knowledge of the Issuers and Millbrook,
Manischewitz or any of its subsidiaries, or upon any other
property, in violation of any statute or any ordinance, rule,
regulation, order, judgment, decree or permit or which would, under
any applicable statute or any ordinance, rule, regulation, order,
judgment, decree or permit, give rise to any liability, except for
any violation or liability could not reasonably be expected to
have, singularly or in the aggregate with all such violations and
liabilities, a Material Adverse Effect; and to the knowledge of the
Issuers and Millbrook, there has been no disposal, discharge,
emission or other release of any kind onto such property or into
the environment surrounding such property of any toxic or other
wastes or other hazardous substances with respect to which Holdings
has knowledge, except for any such disposal, discharge, emission or
other release of any kind which could not reasonably be expected to
have, singularly or in the aggregate with all such discharges and
other releases, a Material Adverse Effect.
(dd) Neither Holdings nor, to the knowledge of the Issuers
and Xxxxxxxxx, any director, officer, agent, employee or other
person associated with or acting on behalf of Holdings or any
subsidiary of Holdings (and having authority to act on behalf of
Holdings or any such subsidiary) has (i) used any corporate funds
for any unlawful contribution, gift, entertainment or other
unlawful expense relating to political activity; (ii) made any
direct or indirect unlawful payment to any foreign or domestic
government official or employee from corporate funds;
-13-
(iii) violated or is in violation of any provision of the Foreign
Corrupt Practices Act of 1977; or (iv) made any other unlawful
payment.
(ee) On and immediately after the Closing Date, each of the
Issuers and Xxxxxxxxx and Xxxxxxxxxxxx (after giving effect to the
issuance of the Securities and the Guarantees and to the other
Transactions) will be Solvent. As used in this paragraph, the term
"Solvent" means, with respect to a particular person and date, that
on such date (i) the present fair market value (or present fair
saleable value) of the assets of such person is not less than the
total amount required to pay the probable liabilities of such
person on its total existing debts and liabilities (including
contingent liabilities) as they become absolute and matured in
accordance with their scheduled maturity, (ii) such person is able
to realize upon its assets and pay its debts and other liabilities,
contingent obligations and commitments as they mature and become
due in the normal course of business, (iii) assuming the sale of
the Securities as contemplated by this Agreement and the Offering
Memorandum, such person is not incurring debts or liabilities
beyond its ability to pay as such debts and liabilities mature in
accordance with their scheduled maturity and (iv) such person is
not engaged in any business or transaction, and is not about to
engage in any business or transaction, for which its assets and
property would constitute unreasonably small capital after giving
due consideration to the prevailing practice in the industry in
which such person is engaged. In computing the amount of such
contingent liabilities at any time, it is intended that such
liabilities will be computed at the amount that, in the light of
all the facts and circumstances existing at such time, represents
the amount that can reasonably be expected to become an actual or
matured liability.
(ff) Except for the conversion and other provisions of
Holdings' Series A Preferred Stock, there are no outstanding
subscriptions, rights, warrants, calls or options to acquire, or
instruments convertible into or exchangeable for, or agreements or
understandings with respect to the sale or issuance of, any shares
of capital stock of or other equity or other ownership interest in
Holdings or any of its subsidiaries.
(gg) Neither Holdings nor any of its subsidiaries owns any
"margin securities" as that term is defined in Regulations G and U
of the Board of Governors of the Federal Reserve System (the
"Federal Reserve Board"), and none of the proceeds of the sale of
the Securities will be used, directly or indirectly, for the
purpose of purchasing or carrying any margin security, for the
purpose of reducing or retiring any indebtedness which was
originally incurred to purchase or carry any margin security or for
any other purpose which might cause any of the Securities to be
considered a "purpose credit" within the meanings of Regulation G,
T, U or X of the Federal Reserve Board.
-14-
(hh) None of the Issuers or Millbrook or Manischewitz is a
party to any contract, agreement or understanding with any person
that would give rise to a valid claim against any of the Issuers or
Millbrook or Manischewitz or the Initial Purchaser for a brokerage
commission, finder's fee or like payment in connection with the
offering and sale of the Securities.
(ii) The Securities satisfy the eligibility requirements of
Rule 144A(d)(3) under the Securities Act.
(jj) None of the Issuers or Millbrook or Manischewitz nor any
of their respective affiliates or any person authorized to act on
its or their behalf has engaged or will engage in any directed
selling efforts (as such term is defined in Regulation S under the
Securities Act ("Regulation S")), and all such persons have
complied and will comply with the offering restrictions requirement
of Regulation S to the extent applicable.
(kk) None of the Issuers or Millbrook or Manischewitz nor any
of their respective affiliates has, directly or through any agent,
sold, offered for sale, solicited offers to buy or otherwise
negotiated in respect of, any security (as such term is defined in
the Securities Act), which is or will be integrated with the sale
of the Securities in a manner that would require registration of
the Securities under the Securities Act.
(ll) None of the Issuers or Millbrook or Manischewitz nor any
of their respective affiliates or any other person authorized to
act on its or their behalf has engaged, in connection with the
offering of the Securities, in any form of general solicitation or
general advertising within the meaning of Rule 502(c) under the
Securities Act.
(mm) There are no securities of any of the Issuers or
Millbrook or Manischewitz registered under the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), or listed on a
national securities exchange or quoted in a U.S. automated
inter-dealer quotation system.
(nn) None of the Issuers or Millbrook or Manischewitz has
taken and none will take, directly or indirectly, any action
prohibited by Regulation M under the Exchange Act in connection
with the offering of the Securities.
(oo) No forward-looking statement (within the meaning of
Section 27A of the Securities Act and Section 21E of the Exchange
Act) contained in the Preliminary Offering Memorandum or the
Offering Memorandum has been made or reaffirmed without a
reasonable basis or has been disclosed other than in good faith.
-15-
(pp) None of Holdings or any of its subsidiaries or, to the
knowledge of the Issuers and Millbrook, Manischewitz or any of its
subsidiaries does business with the government of Cuba or with any
person or affiliate located in Cuba within the meaning of Florida
Statutes Section 517.075.
(qq) Since the date as of which information is given in the
Offering Memorandum, except as otherwise stated therein, (i) there
has been no material adverse change in the condition, financial or
otherwise, or in the earnings, management or business, as presently
conducted or currently contemplated, of Holdings and its
subsidiaries or Manischewitz and its subsidiaries, whether or not
arising in the ordinary course of business, (ii) none of Holdings
and its subsidiaries or Manischewitz and its subsidiaries has
incurred any material liability or obligation, direct or
contingent, other than in the ordinary course of business, (iii)
none of Holdings and its subsidiaries or Manischewitz and its
subsidiaries has entered into any material transaction other than
in the ordinary course of business and (iv) there has not been any
change in the capital stock or long-term debt of Holdings, or any
dividend or distribution of any kind declared, paid or made by
Holdings on any class of its capital stock.
2. Purchase and Resale of the Securities. (a) On the basis of
the representations, warranties and agreements contained in this Agreement, and
subject to the terms and conditions set forth in this Agreement, (i) Holdings
agrees to issue and sell to the Initial Purchaser and the Initial Purchaser
agrees to purchase from Holdings $48,000,000 of Holdings Notes at a purchase
price equal to 97% of the principal amount thereof and (ii) the Company agrees
to issue and sell to the Initial Purchaser and the Initial Purchaser agrees to
purchase from the Company $120,000,000 of Company Notes at a purchase price
equal to 97% of the principal amount thereof. The Issuers shall not be obligated
to deliver any of the Securities except upon payment for all of the Securities
to be purchased as provided herein.
(b) The Initial Purchaser has advised the Issuers that it
proposes to offer the Securities for resale upon the terms and subject to the
conditions set forth herein and in the Offering Memorandum. The Initial
Purchaser represents and warrants to, and agrees with, the Issuers that (i) it
is purchasing the Securities pursuant to a private sale exempt from registration
under the Securities Act, (ii) it has not solicited offers for, or offered or
sold, and will not solicit offers for, or offer or sell, the Securities by means
of any form of general solicitation or general advertising within the meaning of
Rule 502(c) of Regulation D under the Securities Act ("Regulation D") or in any
manner involving a public offering within the meaning of Section 4(2) of the
Securities Act and (iii) it has solicited and will solicit offers for the
Securities only from, and has offered or sold and will offer, sell or deliver
the Securities, as part of its initial offering, only (A) within the United
States to persons whom it reasonably believes to be qualified institutional
buyers ("Qualified Institutional Buyers") as defined in Rule 144A under the
Securities Act, 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 it that each such account is a Qualified Institutional
Buyer to whom notice has been given
-16-
that such sale or delivery is being made in reliance on Rule 144A and in each
case, in transactions in accordance with Rule 144A and (B) outside the United
States to persons other than U.S. persons in compliance with and in reliance on
Regulation S under the Securities Act ("Regulation S").
(c) In connection with the offer and sale of the Securities in
reliance on Regulation S, the Initial Purchaser represents, warrants and agrees
that:
(i) The Securities have not been registered under the
Securities Act and may not be offered or sold within the United
States or to, or for the account or benefit of, U.S. persons except
pursuant to an exemption from, or in transactions not subject to,
the registration requirements of the Securities Act.
(ii) The Initial Purchaser has offered and sold the
Securities, and will offer and sell the Securities, (A) as part of
its distribution at any time and (B) otherwise until 40 days after
the later of the commencement of the offering of the Securities and
the Closing Date, only in accordance with Regulation S or Rule 144A
or any other available exemption from registration under the
Securities Act.
(iii) None of the Initial Purchaser or any of its affiliates
or any other person acting on its or their behalf has engaged or
will engage in any directed selling efforts with respect to the
Securities, and all such persons have complied and will comply with
the offering restrictions requirement of Regulation S.
(iv) The Initial Purchaser (A) has not offered or sold and
prior to the date six months after the Closing Date will not offer
or sell any Securities to persons in the United Kingdom except to
persons whose ordinary activities involve them in acquiring,
holding, managing or disposing of investments (as principal or
agent) for the purposes of their businesses or otherwise in
circumstances which have not resulted and will not result in an
offer to the public in the United Kingdom within the meaning of the
Public Offers of Securities Regulations 1995; (B) has complied and
will comply with all applicable provisions of the Financial
Services Act 1986 and the Public Offers of Securities Regulations
1995 with respect to anything done by it in relation to the
Securities in, from or otherwise involving the United Kingdom and
(C) has only issued or passed on and will only issue or pass on in
the United Kingdom any document received by it in connection with
the issue of Securities to a person who is of a kind described in
Article 11(3) of the Financial Services Act 1986 (Investment
Advertisements) (Exemptions) Order 1996 or is a person to whom such
document may otherwise lawfully be issued or passed on.
-17-
(v) At or prior to the confirmation of sale of any Securities
sold in reliance on Regulation S, it will have sent to each
distributor, dealer or other person receiving a selling concession,
fee or other remuneration that purchase Securities from it during
the restricted period a confirmation or notice to substantially the
following effect:
"The Securities covered hereby have not been registered under
the U.S. Securities Act of 1933, as amended (the "Securities
Act"), and may not be offered or sold within the United States
or to, or for the account or benefit of, U.S. persons (i) as
part of their distribution at any time or (ii) otherwise until
40 days after the later of the commencement of the offering of
the Securities and the date of original issuance of the
Securities, except in accordance with Regulation S or Rule
144A or any other available exemption from registration under
the Securities Act. Terms used above have the meanings given
to them by Regulation S."
(vi) It has not and will not enter into any contractual
arrangement with any distributor with respect to the distribution
of the Securities, except with its affiliates or with the prior
written consent of the Issuers.
Terms used in this Section 2(c) have the meanings given to them by Regulation S.
(d) The Initial Purchaser agrees that, prior to or
simultaneously with the confirmation of sale by the Initial Purchaser to any
purchaser of any of the Securities purchased by the Initial Purchaser from the
Issuers pursuant hereto, the Initial Purchaser shall furnish to that purchaser a
copy of the Offering Memorandum (and any amendment or supplement thereto that
the Company shall have furnished to the Initial Purchaser prior to the date of
such confirmation of sale). In addition to the foregoing, the Initial Purchaser
acknowledges and agrees that the Issuers and, for purposes of the opinions to be
delivered to the Initial Purchaser pursuant to Sections 5(d) and (e), counsel
for the Issuers and for the Initial Purchaser, respectively, may rely upon the
accuracy of the representations and warranties of the Initial Purchaser and its
compliance with the agreements contained in this Section 2, and the Initial
Purchaser hereby consents to such reliance.
(e) The Issuers acknowledge and agree that the Initial
Purchaser may sell Securities to any affiliate of an Initial Purchaser and that
any such affiliate may sell Securities purchased by it to an Initial Purchaser.
3. Delivery of and Payment for the Securities. (a) Delivery of
and payment for the Securities shall be made at the offices of Xxxxxx Xxxxxx
Flattau & Klimpl, LLP, New York, New York, or at such other place as shall be
agreed upon by the Initial Purchaser and the Issuers, at 10:00 A.M., New York
City time, on May 1, 1998, or at such other time or date, not later than seven
full business days thereafter, as shall be agreed upon by the Initial Purchaser
and the Issuers (such date and time of payment and delivery being referred to
herein as the "Closing Date").
-18-
(b) On the Closing Date, payment of the purchase price for the
Securities shall be made to Holdings and the Company, as applicable, by wire or
book-entry transfer of same-day funds to such account or accounts as Holdings
and the Company shall specify prior to the Closing Date or by such other means
as the parties hereto shall agree prior to the Closing Date against delivery to
the Initial Purchaser of the certificates evidencing the Securities. Time shall
be of the essence, and delivery at the time and place specified pursuant to this
Agreement is a further condition of the obligations of the Initial Purchaser
hereunder. Upon delivery, the Securities shall be in global form, registered in
such names and in such denominations as the Initial Purchaser shall have
requested in writing not less than two full business days prior to the Closing
Date. The Issuers agree to make one or more global certificates evidencing the
Securities available for inspection by the Initial Purchaser in New York, New
York at least 24 hours prior to the Closing Date.
4. Further Agreements of the Issuers and Millbrook. Each of
the Issuers and Xxxxxxxxx agrees with the Initial Purchaser:
(a) to advise the Initial Purchaser promptly and, if requested
in writing, confirm such advice in writing, of the happening of any
event which makes any statement of a material fact made in the
Offering Memorandum untrue or which requires the making of any
additions to or changes in the Offering Memorandum (as amended or
supplemented from time to time) in order to make the statements
therein, in the light of the circumstances under which they were
made, not misleading; to advise the Initial Purchaser promptly of
any order preventing or suspending the use of the Preliminary
Offering Memorandum or the Offering Memorandum, of any suspension
of the qualification of the Securities for offering or sale in any
jurisdiction and of the initiation or threatening (of which the
Issuers and Millbrook have knowledge) of any proceeding for any
such purpose; and to use its best efforts to prevent the issuance
of any such order preventing or suspending the use of the
Preliminary Offering Memorandum or the Offering Memorandum or
suspending any such qualification and, if any such suspension is
issued, to obtain the lifting thereof at the earliest possible
time;
(b) to furnish promptly to the Initial Purchaser and counsel
for the Initial Purchaser, without charge, as many copies of the
Preliminary Offering Memorandum and the Offering Memorandum (and
any amendments or supplements thereto) as may be reasonably
requested;
(c) prior to making any amendment or supplement to the
Offering Memorandum, to furnish a copy thereof to the Initial
Purchaser and counsel for the Initial Purchaser and not to effect
any such amendment or supplement to which the Initial Purchaser
shall reasonably object in writing by notice to the Company after a
reasonable period to review, but in no event five (5) business days
after being furnished with a copy of the proposed amendment on
supplement;
-19-
(d) if, at any time prior to completion of the resale of the
Securities by the Initial Purchaser, any event shall occur or
condition exist as a result of which it is necessary, in the
opinion of counsel for the Initial Purchaser or counsel for the
Issuers, to amend or supplement the Offering Memorandum in order
that the Offering Memorandum will not include an untrue statement
of a material fact or omit to state a material fact necessary in
order to make the statements therein, in the light of the
circumstances existing at the time it is delivered to a purchaser,
not misleading, or if it is necessary to amend or supplement the
Offering Memorandum to comply with applicable law, to promptly
prepare such amendment or supplement as may be necessary to correct
such untrue statement or omission or so that the Offering
Memorandum, as so amended or supplemented, will comply with
applicable law;
(e) for so long as any of the Securities are outstanding and
are "restricted securities" within the meaning of Rule 144(a)(3)
under the Securities Act, to furnish to holders of the Securities
and prospective purchasers of the Securities 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 Securities Act, unless the Issuers are
then subject to and in compliance with Section 13 or 15(d) of the
Exchange Act (the foregoing agreement being for the benefit of the
holders from time to time of the Securities and prospective
purchasers of the Securities designated by such holders);
(f) for so long as any of the Holdings Notes or the Company
Notes are outstanding, to furnish to the Initial Purchaser copies
of any annual reports, quarterly reports and current reports filed
by the respective Issuer with the Commission on Forms 10-K, 10-Q
and 8-K, or such other similar forms as may be designated by the
Commission, and such other documents, reports and information as
shall be furnished by the respective Issuer to the trustee under
the applicable Indenture or to the holders of the Securities
pursuant to the applicable Indenture or the Exchange Act or any
rule or regulation of the Commission thereunder;
(g) to promptly take from time to time such actions as the
Initial Purchaser may reasonably request to qualify the Securities
for offering and sale under the securities or Blue Sky laws of such
jurisdictions as the Initial Purchaser may designate and to
continue such qualifications in effect for so long as required for
the resale of the Securities; and to arrange for the determination
of the eligibility for investment of the Securities under the laws
of such jurisdictions as the Initial Purchaser may reasonably
request; provided that Holdings and its subsidiaries shall not be
obligated to qualify as foreign corporations in any jurisdiction in
which they are not so qualified or to file a general consent to
service of process in any jurisdiction;
-20-
(h) to assist the Initial Purchaser in arranging for the
Securities to be designated for trading in The Portal Market in
accordance with the rules and regulations adopted by the National
Association of Securities Dealers, Inc. ("NASD") relating to
trading in The Portal Market and for the Securities to be eligible
for clearance and settlement through The Depository Trust Company
("DTC");
(i) not to, and to cause its affiliates not to, sell, offer
for sale or solicit offers to buy or otherwise negotiate in respect
of any security (as such term is defined in the Securities Act)
which could be integrated with the sale of the Securities in a
manner which would require registration of the Securities under the
Securities Act;
(j) except following the effectiveness of the Holdings
Exchange Offer Registration Statement, the Holdings Shelf
Registration Statement, the Company Exchange Offer Registration
Statement or the Company Shelf Registration Statement, as the case
may be, not to, and to cause its affiliates not to, and not to
authorize or knowingly permit any person authorized to act on their
behalf to, solicit any offer to buy or offer to sell the Securities
by means of any form of general solicitation or general advertising
within the meaning of Regulation D or in any manner involving a
public offering within the meaning of Section 4(2) of the
Securities Act; and not to offer, sell, contract to sell or
otherwise dispose of, directly or indirectly, any securities under
circumstances where such offer, sale, contract or disposition would
cause the exemption afforded by Section 4(2) of the Securities Act
to cease to be applicable to the offering and sale of the
Securities as contemplated by this Agreement and the Offering
Memorandum;
(k) for a period of 180 days from the date of the Offering
Memorandum, not to offer for sale, sell, contract to sell or
otherwise dispose of, directly or indirectly, or file a
registration statement for, or announce any offer, sale, contract
for sale of or other disposition of any debt securities issued or
guaranteed by any of the Issuers or any of their respective
subsidiaries (other than the Securities) without the prior written
consent of the Initial Purchaser;
(l) during the period from the Closing Date until three years
after the Closing Date, without the prior written consent of the
Initial Purchaser, not to, and not permit any of its affiliates (as
defined in Rule 144 under the Securities Act) to, resell any of the
Securities that have been reacquired by them, except for Securities
purchased by the Company or any of its affiliates and resold in a
transaction registered under the Securities Act;
(m) not to, for so long as the Securities are outstanding, be
or become, or be or become owned by, an open-end investment
company, unit investment trust or face-amount certificate company
that is or is required to be registered un-
-21-
der Section 8 of the Investment Company Act, and to not be or
become, or be or become owned by, a closed-end investment company
required to be registered, but not registered thereunder;
(n) in connection with the offering of the Securities, until
the Initial Purchaser shall have notified the Issuers of the
completion of the resale of the Securities, not to, and to cause
its affiliated purchasers (as defined in Regulation M under the
Exchange Act) not to, either alone or in association with one or
more other persons, bid for or purchase, for any account in which
it or any of its affiliated purchasers has a beneficial interest,
any Securities, or attempt to induce any person to purchase any
Securities; and not to, and to cause its affiliated purchasers not
to, make bids or purchase for the purpose of creating actual, or
apparent, active trading in or of raising the price of the
Securities;
(o) in connection with the offering of the Securities, to make
its officers, employees, independent accountants and legal counsel
reasonably available upon request by the Initial Purchaser;
(p) to furnish to the Initial Purchaser on the date hereof a
copy of the independent auditors' reports included in the Offering
Memorandum signed by the accountants rendering such report;
(q) to do and perform all things required to be done and
performed by it under this Agreement that are within its control
prior to or after the Closing Date, and to use its best efforts to
satisfy all conditions precedent on its part to the delivery of the
Securities;
(r) to not take any action prior to the execution and delivery
of the Indentures which, if taken after such execution and
delivery, would have violated any of the covenants contained in the
Indentures;
(s) to not take any action prior to the Closing Date which
would require the Offering Memorandum to be amended or supplemented
pursuant to Section 4(d);
(t) prior to the Closing Date, not to issue any press release
or other communication directly or indirectly or hold any press
conference with respect to any Issuer, its condition, financial or
otherwise, or earnings, business affairs or business prospects
(except for routine oral marketing communications in the ordinary
course of business and consistent with the past practices of such
Issuer and of which the Initial Purchaser is notified), without the
prior written consent of the Initial Purchaser, unless in the
judgment of such Issuer and its counsel, and after notification to
the Initial Purchaser, such press release or communication is
required by law rule or regulation; and
-22-
(u) to apply the net proceeds from the sale of the Securities
as set forth in the Offering Memorandum under the heading "Use of
Proceeds".
5. Conditions of Initial Purchaser's Obligations. The
obligations of the Initial Purchaser hereunder are subject to the accuracy, on
and as of the date hereof and the Closing Date, of the representations and
warranties of each of the Issuers and Millbrook contained herein, to the
accuracy of the statements of each of the Issuers and Xxxxxxxxx and their
respective officers made in any written certificates delivered pursuant hereto,
to the performance by each of the Issuers and Xxxxxxxxx of their respective
obligations hereunder, and to each of the following additional terms and
conditions:
(a) The Offering Memorandum (and any amendments or supplements
thereto) shall have been printed and copies distributed to the
Initial Purchaser as promptly as practicable on or following the
date of this Agreement or at such other date and time as to which
the Initial Purchaser may agree; and no stop order suspending the
sale of the Securities in any jurisdiction by any governmental
authority or regulatory body shall have been issued and no
proceeding for that purpose shall have been commenced or shall be
pending or threatened in writing.
(b) The Initial Purchaser shall not have discovered and
disclosed to Holdings or the Company on or prior to the Closing
Date that the Offering Memorandum or any amendment or supplement
thereto contains an untrue statement of a fact which, in the
opinion of counsel for the Initial Purchaser, is material or omits
to state any fact which, in the opinion of such counsel, is
material and is required to be stated therein or is necessary to
make the statements therein not misleading.
(c) All corporate proceedings and other legal matters incident
to the authorization, form and validity of each of the Transaction
Documents and the Offering Memorandum, and all other legal matters
relating to the Transaction Documents and the transactions
contemplated thereby, shall be satisfactory in all material
respects to the Initial Purchaser, and the Issuers shall have
furnished to the Initial Purchaser all documents and information
that they or their counsel may reasonably request to enable them to
pass upon such matters.
(d) Xxxxxx Xxxxxx Flattau & Klimpl, LLP shall have furnished
to the Initial Purchaser a written opinion, as counsel to the
Issuers, addressed to the Initial Purchaser and dated the Closing
Date, in form and substance reasonably satisfactory to the Initial
Purchaser, substantially to the effect set forth in Annex B hereto.
In addition such opinion letter shall include appropriate opinions
with respect to the Holdings Escrow Agreement and the security
interests granted thereunder.
(e) The Initial Purchaser shall have received from Xxxxxx
Xxxxxx & Xxxxxxx (a partnership including a professional
corporation), counsel for the Initial
-23-
Purchaser, such opinion or opinions, dated the Closing Date, with
respect to such matters as the Initial Purchaser may reasonably
require, and the Issuers shall have furnished to such counsel such
documents and information as they request for the purpose of
enabling them to pass upon such matters.
(f) Holdings shall cause to be furnished to the Initial
Purchaser (i) a "comfort" letter of Xxxxxx Xxxxxxxx, LLP, addressed
to the Initial Purchaser and dated the date hereof, in form and
substance satisfactory to the Initial Purchaser, substantially to
the effect set forth in Annex C hereto and (ii) a "bring-down"
letter of Xxxxxx Xxxxxxxx, LLP, addressed to the Initial Purchaser
and dated the Closing Date (A) confirming that they are independent
accountants with respect to Manischewitz and its subsidiaries
within the meaning of Rule 101 of the Code of Professional Conduct
of the AICPA and its interpretations and rulings thereunder, (B)
stating, as of the date of the bring-down letter (or, with respect
to matters involving changes or developments since the respective
dates as of which specified financial information is given in the
Offering Memorandum, as of a date not more than three business days
prior to the date of the bring-down letter), that the conclusions
and findings of such auditors with respect to the financial
information and other matters covered by the initial "comfort"
letter are accurate and (C) confirming in all material respects the
conclusions and findings set forth in their initial "comfort"
letter.
(g) Holdings shall cause to be furnished to the Initial
Purchaser (i) a "comfort" letter of Deloitte & Touche, LLP,
addressed to the Initial Purchaser and dated the date hereof, in
form and substance satisfactory to the Initial Purchaser,
substantially to the effect set forth in Annex D hereto and (ii) a
"bring-down" letter of Deloitte & Touche, LLP, addressed to the
Initial Purchaser and dated the Closing Date (A) confirming that
they are independent auditors with respect to Holdings and its
subsidiaries within the meaning of Rule 101 of the Code of
Professional Conduct of the AICPA and its interpretations and
rulings thereunder, (B) stating, as of the date of the bring-down
letter (or, with respect to matters involving changes or
developments since the respective dates as of which specified
financial information is given in the Offering Memorandum, as of a
date not more than three business days prior to the date of the
bring-down letter), that the conclusions and findings of such
auditors with respect to the financial information and other
matters covered by the initial "comfort" letter are accurate and
(C) confirming in all material respects the conclusions and
findings set forth in their initial "comfort" letter.
(h) Each of the Issuers shall have furnished to the Initial
Purchaser a certificate, dated the Closing Date, of its chief
executive officer and its chief financial officer stating that (A)
such officers have carefully examined the Offering Memorandum, (B)
in their opinion, the Offering Memorandum, as of its date, did not
include any untrue statement of a material fact and did not omit to
state a ma-
-24-
terial fact necessary in order to make the statements therein, in
the light of the circumstances under which they were made, not
misleading, and since the date of the Offering Memorandum, no event
has occurred which should have been set forth in a supplement or
amendment to the Offering Memorandum so that the Offering
Memorandum (as so amended or supplemented) would not include any
untrue statement of a material fact and would not omit to state a
material fact or necessary in order to make the statements therein,
in the light of the circumstances under which they were made, not
misleading and (C) as of the Closing Date, the representations and
warranties made by Holdings and its subsidiaries in this Agreement
are true and correct in all material respects (except to the extent
any such representation or warranty applied to a specific date),
Holdings has complied or has caused each of its subsidiaries to
comply with all agreements and satisfied all conditions on their
part to be performed or satisfied hereunder on or prior to the
Closing Date, and subsequent to the date of the most recent
financial statements contained in the Offering Memorandum, there
has been no material adverse change in the financial position or
results of operation of Holdings or any of its subsidiaries or, to
the knowledge of the Issuers and Millbrook, Manischewitz or any of
its subsidiaries, or any change in or affecting the condition
(financial or otherwise), results of operations or business, as
presently conducted or currently contemplated, of the Company and
its subsidiaries taken as a whole or Manischewitz and its
subsidiaries taken as a whole, except as set forth in the Offering
Memorandum.
(i) The Initial Purchaser shall have received a counterpart of
each of the Holdings Registration Rights Agreement and the Company
Registration Rights Agreement which shall have been executed and
delivered by duly authorized officers of each of the Issuers and
Millbrook and Xxxxxxxxxxxx, to the extent each is a party thereto.
(j) The Indentures shall have been duly executed and delivered
by each of the Issuers and Xxxxxxxxx and Xxxxxxxxxxxx, to the
extent each is a party thereto, and by the trustee, and the
Securities shall have been duly executed and delivered by each of
the Issuers and Millbrook and Xxxxxxxxxxxx, as applicable, and duly
authenticated by the trustee.
(k) The Securities shall have been approved by the NASD for
trading in The Portal Market.
(l) If any event shall have occurred that requires the Issuers
under Section 4(d) to prepare an amendment or supplement to the
Offering Memorandum, such amendment or supplement shall have been
prepared, the Initial Purchaser shall have been given a reasonable
opportunity to comment thereon, and copies thereof shall have been
delivered to the Initial Purchaser reasonably in advance of the
Closing Date.
-25-
(m) There shall not have occurred any invalidation of Rule
144A under the Securities Act by any court or any withdrawal or
proposed withdrawal of any rule or regulation under the Securities
Act or the Exchange Act by the Commission or any amendment or
proposed amendment thereof by the Commission which in the judgment
of the Initial Purchaser would materially impair the ability of the
Initial Purchaser to purchase, hold or effect resales of the
Securities as contemplated hereby.
(n) Subsequent to the execution and delivery of this Agreement
or, if earlier, the dates as of which information is given in the
Offering Memorandum (exclusive of any amendment or supplement
thereto), there shall not have been any change in the capital stock
or long-term debt (except as described in the Offering Memorandum)
or any change, or any development involving a prospective change,
in or affecting the condition (financial or otherwise), results of
operations or business, as presently conducted or currently
contemplated, of the Company and its subsidiaries taken as a whole,
or any development involving a prospective change in or affecting
the condition (financial or otherwise), results of operations or
business, as presently conducted or currently contemplated, of
Manischewitz and its subsidiaries, the effect of which, in any such
case described above, is, in the reasonable judgment of the Initial
Purchaser, so material and adverse as to make it impracticable or
inadvisable to proceed with the sale or delivery of the Securities
on the terms and in the manner contemplated by this Agreement and
the Offering Memorandum (exclusive of any amendment or supplement
thereto).
(o) No action shall have been taken and no statute, rule,
regulation or order shall have been enacted, adopted or issued by
any governmental agency or body which would, as of the Closing
Date, prevent the issuance or sale of any of the Securities; and no
injunction, restraining order or order of any other nature by any
federal or state court of competent jurisdiction shall have been
issued as of the Closing Date which would prevent the issuance or
sale of the Securities.
(p) Subsequent to the execution and delivery of this Agreement
(i) no downgrading shall have occurred in the rating accorded the
Securities or any of the Issuers' other debt securities or
preferred stock by any "nationally recognized statistical rating
organization", as such term is defined by the Commission for
purposes of Rule 436(g)(2) of the rules and regulations of the
Commission under the Securities Act and (ii) no such organization
shall have publicly announced that it has under surveillance or
review (other than an announcement with positive implications of a
possible upgrading), its rating of the Securities or any of the
Issuers' other debt securities or preferred stock.
(q) Subsequent to the execution and delivery of this Agreement
there shall not have occurred any of the following: (i) trading in
securities generally on the New York Stock Exchange, the American
Stock Exchange or the over-the-
-26-
counter market shall have been suspended or limited, or minimum
prices shall have been established on any such exchange or market
by the Commission, by any such exchange or by any other regulatory
body or governmental authority having jurisdiction, or trading in
any securities of the Issuers on any exchange or in the
over-the-counter market shall have been suspended or (ii) any
general moratorium on commercial banking activities shall have been
declared by federal or New York state authorities or (iii) an
outbreak or escalation of hostilities or a declaration by the
United States of a national emergency or war or (iv) a material
adverse change in general economic, political or financial
conditions (or the effect of international conditions on the
financial markets in the United States shall be such) the effect of
which, in the case of this clause (iv), is, in the reasonable
judgment of the Initial Purchaser, so material and adverse as to
make it impracticable or inadvisable to proceed with the sale or
the delivery of the Securities on the terms and in the manner
contemplated by this Agreement and in the Offering Memorandum
(exclusive of any amendment or supplement thereto).
(r) The Amended Credit Agreement shall have been duly executed
and delivered by each party thereto. There shall exist at and as of
the Closing Date (after giving effect to the Transactions) no
condition that would constitute a default (or an event that with
notice, a lapse of time, or both, would constitute a default) under
the Amended Credit Agreement.
(s) The Stock Contribution shall have been duly consummated.
(t) The Acquisition shall have been consummated concurrently
with the issuance and sale of the Securities and the Guarantees by
the Issuers and Millbrook and Manischewitz, as the case may be. The
Initial Purchaser shall have received conformed counterparts of all
documents and agreements entered into or received in connection
with the consummation of the Acquisition.
All opinions, letters, evidence and certificates mentioned
above or elsewhere in this Agreement shall be deemed to be in compliance with
the provisions hereof only if they are in form and substance reasonably
satisfactory to counsel for the Initial Purchaser.
6. Termination. The obligations of the Initial Purchaser
hereunder may be terminated by the Initial Purchaser, in its absolute
discretion, by notice given to and received by the Issuers prior to delivery of
and payment for the Securities if, prior to that time, any of the events
described in Section 5(m), (n), (o), (p) or (q) shall have occurred and be
continuing.
7. Reimbursement of Initial Purchaser's Expenses. If (a) this
Agreement shall have been terminated pursuant to Section 6, (b) the Issuers
shall fail to tender the Securities for delivery to the Initial Purchaser or (c)
the Initial Purchaser shall decline to purchase the Securities for any reason
permitted under this Agreement, the Issuers, jointly and severally, shall
reimburse the Initial Purchaser for such reasonable out-of-pocket expenses
(including reasonable fees and disbursements of counsel) as shall have been
reasonably incurred
-27-
by the Initial Purchaser in connection with this Agreement and the proposed
purchase and resale of the Securities.
8. Indemnification. (a) Each of the Issuers and Millbrook,
jointly and severally, shall indemnify and hold harmless the Initial Purchaser,
its affiliates, their respective officers, directors, employees, representatives
and agents, and each person, if any, who controls the Initial Purchaser within
the meaning of the Securities Act or the Exchange Act (collectively referred to
for purposes of this Section 8(a) and Section 9 as an "Initial Purchaser"), from
and against any loss, claim, damage or liability, joint or several, or any
action in respect thereof (including, without limitation, any loss, claim,
damage, liability or action relating to purchases and sales of the Securities),
to which the Initial Purchaser may become subject, whether commenced or
threatened, under the Securities Act, the Exchange Act, any other federal or
state statutory law or regulation, at common law or otherwise, insofar as such
loss, claim, damage, liability or action arises out of, or is based upon, (i)
any untrue statement or alleged untrue statement of a material fact contained in
the Preliminary Offering Memorandum or the Offering Memorandum or in any
amendment or supplement thereto or in any information provided by the Issuers
pursuant to Section 4(e) or (ii) the omission or alleged omission to state
therein a material fact necessary in order to make the statements therein, in
the light of the circumstances under which they were made, not misleading, and
shall reimburse the Initial Purchaser promptly upon demand for any reasonable
legal or other reasonable expenses incurred by the Initial Purchaser in
connection with investigating or defending or preparing to defend against or
appearing as a third party witness in connection with any such loss, claim,
damage, liability or action as such expenses are incurred; provided, however,
that the Issuers and Millbrook shall not be liable in any such case to the
extent that any such loss, claim, damage, liability or action arises out of, or
is based upon, an untrue statement or alleged untrue statement in or omission or
alleged omission from any of such documents in reliance upon and in conformity
with any Initial Purchaser's Information; and provided, further, that with
respect to any such untrue statement in or omission from the Preliminary
Offering Memorandum, the indemnity agreement contained in this Section 8(a)
shall not inure to the benefit of the Initial Purchaser to the extent that the
sale to the person asserting any such loss, claim, damage, liability or action
was an initial resale by the Initial Purchaser and any such loss, claim, damage,
liability or action of or with respect to the Initial Purchaser results from the
fact that both (A) to the extent required by applicable law, a copy of the
Offering Memorandum was not sent or given to such person at or prior to the
written confirmation of the sale of such Securities to such person and (B) the
untrue statement in or omission from the Preliminary Offering Memorandum was
corrected in the Offering Memorandum unless, in either case, such failure to
deliver the Offering Memorandum was a result of non-compliance by the Issuers
with Section 4(b).
(b) The Initial Purchaser shall indemnify and hold harmless
each of the Issuers and Millbrook, their respective affiliates, their respective
officers, directors, employees, representatives and agents, and each person, if
any, who controls any Issuer within the meaning of the Securities Act or the
Exchange Act (collectively referred to for purposes of this Section 8(b) and
Section 9 as the "Issuers"), from and against any loss, claim, damage or li-
-28-
ability, joint or several, or any action in respect thereof, to which the
Issuers may become subject, whether commenced or threatened, under the
Securities Act, the Exchange Act, any other federal or state statutory law or
regulation, at common law or otherwise, insofar as such loss, claim, damage,
liability or action arises out of, or is based upon, (i) any untrue statement or
alleged untrue statement of a material fact contained in the Preliminary
Offering Memorandum or the Offering Memorandum or in any amendment or supplement
thereto or (ii) the omission or alleged omission to state therein 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, but in each case only to the extent that the untrue statement or
alleged untrue statement or omission or alleged omission was made in reliance
upon and in conformity with any Initial Purchaser's Information, and shall
reimburse each Issuer for any legal or other expenses reasonably incurred by
such Issuer in connection with investigating or defending or preparing to defend
against or appearing as a third party witness in connection with any such loss,
claim, damage, liability or action as such expenses are incurred.
(c) Promptly after receipt by an indemnified party under this
Section 8 of notice of any claim or the commencement of any action, the
indemnified party shall, if a claim in respect thereof is to be made against the
indemnifying party pursuant to Section 8(a) or 8(b), notify the indemnifying
party in writing of the claim or the commencement of that action; provided,
however, that the failure to notify the indemnifying party shall not relieve it
from any liability which it may have under this Section 8 except to the extent
that it has been materially prejudiced (through the forfeiture of substantive
rights or defenses) by such failure; and, provided, further, that the failure to
notify the indemnifying party shall not relieve it from any liability which it
may have to an indemnified party otherwise than under this Section 8. If any
such claim or action shall be brought against an indemnified party, and it shall
notify the indemnifying party thereof, the indemnifying party shall be entitled
to participate therein and, to the extent that it wishes, jointly with any other
similarly notified indemnifying party, to assume the defense thereof with
counsel reasonably satisfactory to the indemnified party. After notice from the
indemnifying party to the indemnified party of its election to assume the
defense of such claim or action, the indemnifying party shall not be liable to
the indemnified party under this Section 8 for any legal or other expenses
subsequently incurred by the indemnified party in connection with the defense
thereof other than reasonable costs of investigation; provided, however, that an
indemnified party shall have the right to employ its own counsel in any such
action, but the fees, expenses and other charges of such counsel for the
indemnified party will be at the expense of such indemnified party unless (1)
the employment of counsel by the indemnified party has been authorized in
writing by the indemnifying party, (2) the indemnified party has reasonably
concluded (based upon the written advice of counsel to the indemnified party)
that there may be legal defenses available to it that are different from or in
addition to those available to the indemnifying party, (3) a conflict exists
(based upon the written advice of counsel to the indemnified party) between the
indemnified party and the indemnifying party (in which case the indemnifying
party will not have the right to direct the defense of such action on behalf of
the indemnified party) or (4) the indemnifying party has not in fact employed
counsel reasonably satisfactory to the indemnified party to assume the
-29-
defense of such action within a reasonable time after receiving notice of the
commencement of the action, in each of which cases the reasonable fees,
disbursements and other charges of counsel will be at the expense of the
indemnifying party or parties. It is understood that the indemnifying party or
parties shall not, in connection with any proceeding or related proceedings in
the same jurisdiction, be liable for the reasonable fees, disbursements and
other charges of more than one separate firm of attorneys (in addition to any
local counsel) at any one time for all such indemnified party or parties. Each
indemnified party, as a condition of the indemnity agreements contained in
Sections 8(a) and 8(b), shall use all reasonable efforts to cooperate with the
indemnifying party in the defense of any such action or claim. No indemnifying
party shall be liable for any settlement of any such action effected without its
written consent (which consent shall not be unreasonably withheld), but if
settled with its written consent or if there be a final judgment for the
plaintiff in any such action, the indemnifying party agrees to indemnify and
hold harmless any indemnified party from and against any loss or liability by
reason of such settlement or judgment. No indemnifying party shall, without the
prior written consent of the indemnified party (which consent shall not be
unreasonably withheld), effect any settlement of any pending or threatened
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
proceeding.
The obligations of the Issuers, Millbrook and the Initial
Purchaser in this Section 8 and in Section 9 are in addition to any other
liability that the Issuers, Millbrook or the Initial Purchaser, as the case may
be, may otherwise have, including in respect of any breaches of representations,
warranties and agreements made herein by any such party.
9. Contribution. If the indemnification provided for in
Section 8 is unavailable or insufficient to hold harmless an indemnified party
under Section 8(a) or 8(b), then each indemnifying party shall, in lieu of
indemnifying such indemnified party, contribute to the amount paid or payable by
such indemnified party as a result of such loss, claim, damage or liability, or
action in respect thereof, (i) in such proportion as shall be appropriate to
reflect the relative benefits received by the Issuers, on the one hand, and the
Initial Purchaser, on the other hand, from the offering of the Securities 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 Issuers, on the one hand, and the Initial Purchaser, on the other hand, with
respect to the statements or omissions that resulted in such loss, claim, damage
or liability, or action in respect thereof, as well as any other relevant
equitable considerations. The relative benefits received by the Issuers, on the
one hand, and the Initial Purchaser, on the other hand, with respect to such
offering shall be deemed to be in the same proportion as the total net proceeds
from the offering of the Securities purchased under this Agreement (before
deducting expenses) received by or on behalf of the Issuers, on the one hand,
and the total discounts and commissions received by the Initial Purchaser with
respect to the Securities purchased under this Agreement, on the other hand,
bear to the total gross proceeds from the sale of the Securities
-30-
under this Agreement, in each case as set forth in the table on the cover page
of the Offering Memorandum. The relative fault shall be determined by reference
to, 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 the Issuers or information supplied by the Issuers, on the one hand,
or to any Initial Purchaser's Information, on the other hand, the intent of the
parties and their relative knowledge, access to information and opportunity to
correct or prevent such untrue statement or omission. The Issuers and the
Initial Purchaser agree that it would not be just and equitable if contributions
pursuant to this Section 9 were to be determined by pro rata allocation or by
any other method of allocation that does not take into account the equitable
considerations referred to herein. The amount paid or payable by an indemnified
party as a result of the loss, claim, damage or liability, or action in respect
thereof, referred to above in this Section 9 shall be deemed to include, for
purposes of this Section 9, any legal or other expenses reasonably incurred by
such indemnified party in connection with investigating or defending or
preparing to defend any such action or claim. Notwithstanding the provisions of
this Section 9, the Initial Purchaser shall not be required to contribute any
amount in excess of the amount by which the total discounts and commissions
received by the Initial Purchaser with respect to the Securities purchased by it
under this Agreement exceeds the amount of any damages which the Initial
Purchaser has otherwise paid or become liable to pay by reason of any untrue or
alleged untrue statement or omission or alleged omission. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation.
10. Persons Entitled to Benefit of Agreement. This Agreement
shall inure to the benefit of and be binding upon the Initial Purchaser, the
Issuers, Xxxxxxxxx and their respective successors. This Agreement and the terms
and provisions hereof are for the sole benefit of only those persons, except as
provided in Sections 8 and 9 with respect to affiliates, officers, directors,
employees, representatives, agents and controlling persons of the Issuers,
Millbrook and the Initial Purchaser and in Section 4(e) with respect to holders
and prospective purchasers of the Securities. Nothing in this Agreement is
intended or shall be construed to give any person, other than the persons
referred to in this Section 10, any legal or equitable right, remedy or claim
under or in respect of this Agreement or any provision contained herein.
11. Expenses. The Issuers and Millbrook, jointly and
severally, agree with the Initial Purchaser to pay (a) the costs incident to the
authorization, issuance, sale, preparation and delivery of the Securities and
any taxes payable in that connection (other than income taxes of the Initial
Purchaser); (b) the costs incident to the preparation, printing and distribution
of the Preliminary Offering Memorandum, the Offering Memorandum and any
amendments or supplements thereto; (c) the costs of reproducing and distributing
each of the Transaction Documents; (d) the costs incident to the preparation,
printing and delivery of the certificates evidencing the Securities, including
stamp duties and transfer taxes, if any, payable upon the initial issuance of
the Securities; (e) the fees and expenses of the Issuers' counsel; (f) the fees
and expenses of the independent auditors referred to in Section 5(f) and 5(g);
(g) the
-31-
fees and expenses of qualifying the Securities under the securities laws of the
several jurisdictions as provided in Section 4(h) and of preparing, printing and
distributing Blue Sky Memoranda; (h) any fees charged by rating agencies for
rating the Securities; (i) the fees and expenses of the trustee and any paying
agent (including related fees and expenses of any counsel to such parties); (j)
all expenses and application fees incurred in connection with the application
for the inclusion of the Securities on The Portal Market and the approval of the
Securities for book-entry transfer by DTC; and (k) all other costs and expenses
incident to the performance of the obligations of the Issuers and Millbrook
under this Agreement which are not otherwise specifically provided for in this
Section 11; provided, however, that except as provided in this Section 11 and
Section 7, the Initial Purchaser shall pay its own costs and expenses.
12. Survival. The respective indemnities, rights of
contribution, representations, warranties and agreements of the Issuers,
Millbrook and the Initial Purchaser contained in this Agreement or made by or on
behalf of the Issuers, Millbrook or the Initial Purchaser pursuant to this
Agreement or any certificate delivered pursuant hereto shall survive the
delivery of and payment for the Securities and shall remain in full force and
effect, regardless of any termination or cancellation of this Agreement or any
investigation made by or on behalf of any of them or any of their respective
affiliates, officers, directors, employees, representatives, agents or
controlling persons.
13. Notices, etc. All statements, requests, notices and
agreements hereunder shall be in writing, and:
(a) if to the Initial Purchaser, shall be delivered or sent by
mail or telecopy transmission to Chase Securities Inc., 000 Xxxx
Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Xxxxx Xxxxx
(telecopier no.: (000) 000-0000); or
(b) if to the Issuers or Millbrook, shall be delivered or sent
by mail or telecopy transmission to the address of the Company set
forth in the Offering Memorandum, Attention: Xx. Xxxxxxx X.
Xxxxxxxxx and Xxxxx X. Xxxxx, Esq. (telecopier no.: (212)
888-5025), with a copy to Xxxxxx Xxxxxx Flattau & Klimpl, LLP, 0000
Xxxxxx xx xxx Xxxxxxxx, Xxx Xxxx, XX 00000 Attention: Xxxxxx Xxxx
Xxxxxxxx, Esq. (telecopier no.: (000) 000-0000).
Any such statements, requests, notices or agreements shall
take effect at the time of receipt thereof by the intended recipient.
14. Definition of Terms. For purposes of this Agreement, (a)
the term "business day" means any day on which the New York Stock Exchange, Inc.
is open for trading, (b) the term "subsidiary" has the meaning set forth in Rule
405 under the Securities Act and (c) except where otherwise expressly provided,
the term "affiliate" has the meaning set forth in Rule 405 under the Securities
Act.
15. Initial Purchaser's Information. The parties hereto
acknowledge and agree that, for all purposes of this Agreement, the Initial
Purchaser's Information consists
-32-
solely of the following information in the Preliminary Offering Memorandum and
the Offering Memorandum: (i) the last paragraph on the front cover page
concerning the terms of the offering by the Initial Purchaser; (ii) the legend
on page ii concerning over-allotment and trading activities by the Initial
Purchaser; and (iii) the statements concerning the Initial Purchaser contained
in the third, twelfth and thirteenth paragraphs under the heading "Plan of
Distribution".
16. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York without reference
to conflicts of laws principles.
17. Counterparts. This Agreement may be executed in one or
more counterparts (which may include counterparts delivered by telecopier) and,
if executed in more than one counterpart, the executed counterparts shall each
be deemed to be an original, but all such counterparts shall together constitute
one and the same instrument.
18. Amendments. No amendment or waiver of any provision of
this Agreement, nor any consent or approval to any departure therefrom, shall in
any event be effective unless the same shall be in writing and signed by each of
the parties hereto.
19. Headings. The headings herein are inserted for convenience
of reference only and are not intended to be part of, or to affect the meaning
or interpretation of, this Agreement.
20. No Waiver; No Third Party Beneficiaries. Nothing contained
in this Agreement shall be deemed to be, or construed as, a waiver of any claim
or other right of the Company under the Manischewitz Purchase Agreement. Except
as provided in Sections 8, 9 and 11, and only to the extent specified therein,
there are no third party beneficiaries of this Agreement, other than the
purchasers of the Securities from the Initial Purchaser and no rights are
conveyed to any person not a party hereto, other than such purchasers.
[Remainder of page intentionally left blank]
-33-
If the foregoing is in accordance with your understanding of
our agreement, kindly sign and return to us a counterpart hereof, whereupon this
instrument will become a binding agreement between the Issuers, Millbrook and
the Initial Purchaser in accordance with its terms.
Very truly yours,
R.A.B. HOLDINGS, INC.
By:
----------------------------------
Name:
Title:
R.A.B. ENTERPRISES, INC.
By:
----------------------------------
Name:
Title:
MILLBROOK DISTRIBUTION SERVICES INC.
By:
----------------------------------
Name:
Title:
S-1
Agreed and Accepted by:
CHASE SECURITIES INC.
By:
----------------------------------
Name:
Title:
S-2
SCHEDULE 1
Subsidiaries of R.A.B. Holdings, Inc.
R.A.B. Enterprises, Inc.
Millbrook Distribution Services Inc.
SCHEDULE 2
Subsidiaries of The B. Manischewitz Company, LLC
ANNEX A-1
[Form of Holdings Registration Rights Agreement]
ANNEX A-2
[Form of Company Registration Rights Agreement]
ANNEX B
[Form of Opinion of Counsel for the Issuers]
Xxxxxx Xxxxxx Flattau & Klimpl, LLP shall have furnished to
the Initial Purchaser their written opinion, as counsel to the Issuers,
addressed to the Initial Purchaser and dated the Closing Date, in form and
substance reasonably satisfactory to the Initial Purchaser, substantially to the
effect set forth below:
1. Holdings and each of its subsidiaries has been duly
incorporated and or organized, as the case may be, is validly existing as a
corporation, limited partnership or limited liability company, as the case may
be, in good standing under its jurisdiction of formation, is duly qualified to
do business and is in good standing as a foreign corporation, partnership or
limited liability company, as the case may be, in each jurisdiction in which its
ownership or lease of property or the conduct of its businesses requires such
qualification, and has all power and authority necessary to own or hold its
properties and to conduct the businesses in which it is engaged (except where
the failure to so qualify or have such power or authority would not, singularly
or in the aggregate, have a Material Adverse Effect);
2. each of Holdings and the Company has the authorized
capitalization set forth in the Offering Memorandum, and all of the outstanding
shares of capital stock of Holdings have been duly and validly authorized and
issued and are fully paid and non-assessable; all of the outstanding shares of
capital stock or membership interests of each subsidiary of Holdings have been
duly and validly authorized and issued, are fully paid and non-assessable and
are owned directly or indirectly by Holdings, free and clear of any lien,
charge, encumbrance, security interest, restriction upon voting or transfer or
any other claim of any third party (except that the capital stock of Millbrook
is pledged pursuant to the Credit Agreement and will be pledged pursuant to the
Amended Credit Agreement);
3. the descriptions in the Offering Memorandum of statutes,
legal and governmental proceedings and contracts and other documents are
accurate in all material respects; the statements in the Offering Memorandum
under the heading "Certain U.S. Federal Income Tax Considerations", to the
extent that they constitute summaries of matters of law or regulation or legal
conclusions, have been reviewed by such counsel and fairly summarize the matters
described therein in all material respects; and such counsel does not have
actual knowledge of any current or pending legal or governmental actions, suits
or proceedings which would be required to be described in the Offering
Memorandum if the Offering Memorandum were a prospectus included in a
registration statement on Form S-1 which are not described as so required;
4. each Indenture conforms in all material respects with the
requirements of the Trust Indenture Act and the rules and regulations of the
Commission applicable to an indenture which is qualified thereunder;
5. each of the Issuers has full right, power and authority to
execute and deliver each of the Transaction Documents, to the extent each is a
party thereto, and to perform its obligations thereunder; and all corporate
action required to be taken for the due and proper authorization, execution and
delivery of each of the Transaction Documents and the consummation of the
transactions contemplated thereby have been duly and validly taken;
6. each of the Purchase Agreement, the Holdings Registration
Rights Agreement and the Company Registration Rights Agreement has been duly
authorized, executed and delivered by each of the Issuers and constitutes a
valid and legally binding agreement of each of the Issuers enforceable against
each of the Issuers in accordance with its terms, except to the extent that such
enforceability may be limited by applicable bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium and other similar laws affecting
creditors' rights generally and by general equitable principles (whether
considered in a proceeding in equity or at law) and except to the extent that
the indemnification provisions thereof may be unenforceable;
7. each Indenture has been duly authorized, executed and
delivered by each of the Issuers party thereto and, assuming due authorization,
execution and delivery thereof by the trustee, constitutes a valid and legally
binding agreement of each of such Issuers enforceable against each of such
Issuers in accordance with its terms, except to the extent that such
enforceability may be limited by applicable bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium and other similar laws affecting
creditors' rights generally and by general equitable principles (whether
considered in a proceeding in equity or at law);
8. the Securities have been duly authorized and issued by each
of the Issuers, as applicable, and, assuming due authentication thereof by the
trustee and upon payment and delivery in accordance with the Purchase Agreement,
will constitute valid and legally binding obligations of each of the applicable
Issuers, entitled to the benefits of the applicable Indenture and enforceable
against each of such Issuers in accordance with their terms, except to the
extent that such enforceability may be limited by applicable bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium and other similar
laws affecting creditors' rights generally and by general equitable principles
(whether considered in a proceeding in equity or at law);
9. the Manischewitz Purchase Agreement has been duly
authorized, executed and delivered by the Company and constitutes a valid and
legally binding agreement of the Company enforceable against the Company in
accordance with its terms, except to the extent that such enforceability may be
limited by applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and other similar laws affecting creditors' rights
generally and by general equitable principles (whether considered in a
proceeding in equity or at law);
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10. the Amended Credit Agreement has been duly authorized,
executed and delivered by each of the Issuers party thereto and constitutes a
valid and legally binding agreement of each of such Issuers enforceable against
each of such Issuers in accordance with its terms, except to the extent that
such enforceability may be limited by applicable bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and other similar laws
affecting creditors' rights generally and by general equitable principles
(whether considered in a proceeding in equity or at law);
11. the Stock Contribution has been duly authorized and
consummated;
12. each Transaction Document conforms in all material
respects to the description thereof contained in the Offering Memorandum;
13. the execution, delivery and performance by each of the
Issuers of each of the Transaction Documents, the issuance, authentication, sale
and delivery of the Securities and compliance by each of the Issuers with the
applicable terms thereof and the consummation of the transactions contemplated
by the Transaction Documents will not conflict with or result in a breach or
violation of any of the terms or provisions of, or constitute a default under,
or result in the creation or imposition of any lien, charge or encumbrance upon
any property or assets of any of the Issuers or any of their respective
subsidiaries pursuant to, any material indenture, mortgage, deed of trust, loan
agreement or other material agreement or instrument to which any of the Issuers
or any of their respective subsidiaries is a party or by which any of the
Issuers or any of their respective subsidiaries is bound or to which any of the
property or assets of any of the Issuers or any of their respective subsidiaries
is subject, nor will such actions result in any violation of the provisions of
the charter or by-laws of any of the Issuers or any of their respective
subsidiaries or any statute or any judgment, order, decree, rule or regulation
of any court or arbitrator or governmental agency or body having jurisdiction
over any of the Issuers or any of their respective subsidiaries or any of their
properties or assets; and no consent, approval, authorization or order of, or
filing or registration with, any such court or arbitrator or governmental agency
or body under any such statute, judgment, order, decree, rule or regulation is
required for the execution, delivery and performance by the Issuers of each of
the Transaction Documents, the issuance, authentication, sale and delivery of
the Securities and compliance by the Issuers with the applicable terms thereof
and the consummation of the transactions contemplated by the Transaction
Documents, except for such consents, approvals, authorizations, filings,
registrations or qualifications (i) which have been obtained or made prior to
the Closing Date and (ii) as may be required to be obtained or made under the
Securities Act and applicable state securities laws as provided in the
Registration Rights Agreements;
14. to the best knowledge of such counsel, there are no
pending actions or suits or judicial, arbitral, rule-making, administrative or
other proceedings to which Holdings or any of its subsidiaries is a party or of
which any property or assets of Holdings or any of its subsidiaries is the
subject which (A) singularly or in the aggregate, if determined adversely to
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Holdings or any of its subsidiaries, could reasonably be expected to have a
Material Adverse Effect or (B) questions the validity or enforceability of any
of the Transaction Documents or any action taken or to be taken pursuant
thereto; and to the best knowledge of such counsel, no such proceedings are
threatened or contemplated by governmental authorities or threatened by others;
15. neither Holdings nor any of its subsidiaries is (A) in
violation of its charter or by-laws, (B) in default in any material respect, and
no event has occurred which, with notice or lapse of time or both, would
constitute such a default, in the due performance or observance of any term,
covenant or condition contained in any material indenture, mortgage, deed of
trust, loan agreement or other material agreement or instrument to which it is a
party or by which it is bound or to which any of its property or assets is
subject or (C) in violation in any material respect of any law, ordinance,
governmental rule, regulation or court decree to which it or its property or
assets may be subject;
16. neither Holdings nor any of its subsidiaries is (A) an
"investment company" or a company "controlled by" an investment company within
the meaning of the Investment Company Act and the rules and regulations of the
Commission thereunder, without taking account of any exemption under the
Investment Company Act arising out of the number of holders of Holding's
securities or (B) a "holding company" or a "subsidiary company" of a holding
company or an "affiliate" thereof within the meaning of the Public Utility
Holding Company Act of 1935, as amended;
17. neither the consummation of the transactions contemplated
by this Agreement nor the sale, issuance, execution or delivery of the
Securities will violate Regulation G, T, U or X of the Federal Reserve Board;
and
18. assuming the accuracy of the representations, warranties
and agreements of the Issuers and of the Initial Purchaser contained in the
Purchase Agreement, no registration of the Securities under the Securities Act
or qualification of the Indentures under the Trust Indenture Act is required in
connection with the issuance and sale of the Securities by the Issuers and the
offer, resale and delivery of the Securities by the Initial Purchaser in the
manner contemplated by the Purchase Agreement and the Offering Memorandum.
Such counsel shall also state that they have participated in
conferences with representatives of Holdings, the Company, Millbrook and
Manischewitz, representatives of their independent accountants and counsel and
representatives of the Initial Purchaser and its counsel at which conferences
the contents of the Preliminary Offering Memorandum and the Offering Memorandum
and any amendment and supplement thereto and related matters were discussed and,
although such counsel assumes no responsibility for the accuracy, completeness
or fairness of the Offering Memorandum or any amendment or supplement thereto
(except as expressly provided in paragraph 3 above), nothing has come to the
attention of such counsel to cause such counsel to believe that the Offering
Memorandum or any amendment or supplement thereto (other than the financial
statements and other financial and statistical data derived from the fi-
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nancial statements, as to which such counsel need express no belief), as of the
date thereof and as of the Closing Date, contained or contains any untrue
statement of a material fact or omitted or omits to state a material fact
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading.
In rendering such opinion, such counsel may rely as to matters
of fact, to the extent such counsel deems proper, on certificates of responsible
officers of the Company and public officials which are furnished to the Initial
Purchaser.
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ANNEX C
[Form of Xxxxxx Xxxxxxxx Comfort Letter]
Holdings shall have furnished to the Initial Purchaser a
letter of Xxxxxx Xxxxxxxx, LLP, addressed to the Initial Purchaser and dated the
date of the Purchase Agreement, in form and substance satisfactory to the
Initial Purchaser, substantially to the effect set forth below:
1. they are independent certified auditors with respect to
Manischewitz within the meaning of Rule 101 of the Code of Professional Conduct
of the AICPA and its interpretations and rulings;
2. based upon a reading of the latest unaudited financial
statements made available by Xxxxxxxxxxxx, the procedures of the AICPA for a
review of interim financial information as described in Statement of Auditing
Standards No. 71, reading of minutes and inquiries of certain officials of
Xxxxxxxxxxxx who have responsibility for financial and accounting matters and
certain other limited procedures requested by the Initial Purchaser and
described in detail in such letter, nothing has come to their attention that
causes 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, (B) any material modifications should be
made to the unaudited financial statements included in the Offering Memorandum
for them to be 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 or (C) the information included
under the headings "Summary--Summary Historical Combined Financial Data--The B.
Manischewitz Company, LLC", "Selected Historical Combined Financial Data--The B.
Manischewitz Company, LLC", and "Management's Discussion and Analysis of Results
of Operations and Financial Condition--The B. Manischewitz Company, LLC" is not
in conformity with the disclosure requirements of Regulation S-K that would
apply to the Offering Memorandum if the Offering Memorandum were a prospectus
included in a registration statement on Form S-1 under the Securities Act;
3. based upon the procedures detailed in such letter with
respect to the period subsequent to the date of the last available balance
sheet, including reading of minutes and inquiries of certain officials of
Manischewitz who have responsibility for financial and accounting matters,
nothing has come to their attention that causes them to believe that (A) at a
specified date not more than three business days prior to the date of such
letter, there was any change in capital stock, increase in long-term debt or
decrease in net current assets as compared with the amounts shown in the January
31, 1998 unaudited balance sheet included in the Offering Memorandum or (B) for
the period from February 1, 1998 to a specified date not more than three
business days prior to the date of such letter, there were any decreases, as
compared with the corresponding period in the preceding year, in net sales,
income from operations, EBITDA or net income, except in all instances for
changes, increases or decreases that the Offering Memorandum
discloses have occurred or which are set forth in such letter, in which case the
letter shall be accompanied by an explanation by Holdings and the Company as to
the significance thereof unless said explanation is not deemed necessary by the
Initial Purchaser; and
4. 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
Manischewitz) set forth in the Offering Memorandum agrees with the accounting
records of Xxxxxxxxxxxx, excluding any questions of legal interpretation.
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ANNEX D
[Form of Deloitte & Touche Comfort Letter]
The Company shall have furnished to the Initial Purchaser a
letter of Deloitte & Touche, LLP, addressed to the Initial Purchaser and dated
the date of the Purchase Agreement, in form and substance satisfactory to the
Initial Purchaser, substantially to the effect set forth below:
1. they are independent certified auditors with respect to
Holdings within the meaning of Rule 101 of the Code of Professional Conduct of
the AICPA and its interpretations and rulings;
2. based upon a reading of the latest unaudited financial
statements made available by the Company, the procedures of the AICPA for a
review of interim financial information as described in Statement of Auditing
Standards No. 71, reading of minutes and inquiries of certain officials of the
Company who have responsibility for financial and accounting matters and certain
other limited procedures requested by the Initial Purchaser and described in
detail in such letter, nothing has come to their attention that causes 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, (B) any material modifications should be made to the
unaudited financial statements included in the Offering Memorandum for them to
be 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 or (C) the information included under the
headings "Summary--Summary Pro Forma Financial Data--R.A.B. Holdings, Inc.,"
"Selected Historical Financial Data----R.A.B. Holdings, Inc." and "Management's
Discussion and Analysis of Results of Operations and Financial Condition--R.A.B.
Holdings, Inc." is not in conformity with the disclosure requirements of
Regulation S-K that would apply to the Offering Memorandum if the Offering
Memorandum were a prospectus included in a registration statement on Form S-1
under the Securities Act;
3. based upon the procedures detailed in such letter with
respect to the period subsequent to the date of the last available balance
sheet, including reading of minutes and inquiries of certain officials of the
Company who have responsibility for financial and accounting matters, nothing
has come to their attention that causes them to believe that (A) at a specified
date not more than three business days prior to the date of such letter, there
was any change in capital stock, increase in long-term debt or decrease in net
current assets as compared with the amounts shown in the December 31, 1997
audited balance sheet included in the Offering Memorandum or (B) for the period
from January 1, 1998 to a specified date not more than three business days prior
to the date of such letter, there were any decreases, as compared with the
corresponding period in the preceding year, in net sales, income from
operations, EBITDA or net in-
come, except in all instances for changes, increases or decreases that the
Offering Memorandum discloses have occurred or which are set forth in such
letter, in which case the letter shall be accompanied by an explanation by
Holdings and the Company as to the significance thereof unless said explanation
is not deemed necessary by the Initial Purchaser;
4. 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) set forth in the Offering Memorandum agrees with the accounting records
of the Company, excluding any questions of legal interpretation; and
5. on the basis of a reading of the unaudited pro forma
financial information included in the Offering Memorandum, carrying out certain
specified procedures, reading of minutes and inquiries of certain officials of
the Company who have responsibility for financial and accounting matters and
proving the arithmetic accuracy of the application of the pro forma adjustments
to the historical amounts in the pro forma financial information, nothing came
to their attention which caused them to believe that the pro forma financial
information does not comply in form in all material respects with the applicable
accounting requirements of Rule 11-02 of Regulation S-X or that the pro forma
adjustments have not been properly applied to the historical amounts in the
compilation of such information.
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