NORTH ATLANTIC TRADING ACQUISITION COMPANY, INC
$34,000,000
1,360 Units consisting of 1,000 Shares of
12% Senior PIK Preferred Stock with Warrants to Purchase
44,440 Shares of Common Stock
PURCHASE AGREEMENT
June 18, 1997
NatWest Capital Markets Limited
000 Xxxxxxxxxxx
Xxxxxx, XX0X 0XX
Xxxxxx Xxxxxxx
Ladies and Gentlemen:
North Atlantic Trading Acquisition Company, Inc. a Delaware
corporation (the "Company") hereby confirms its agreement with you (the "Initial
Purchaser"), as set forth below.
1. The Securities. Subject to the terms and conditions herein
contained, the Company proposes to issue and sell to the Initial Purchaser 1,360
units (the "Units") consisting of 1,000 shares of 12% Senior PIK Preferred Stock
(the "Preferred Stock") with Warrants (the "Warrants") to purchase an aggregate
of 44,440 shares of Common Stock of the Company (the "Warrant Shares")
representing 7% of the outstanding Common Stock of the Company on a fully
diluted basis.
The Units will be offered and sold to the Initial Purchaser
without being registered under the Securities Act of 1933, as amended (the
"Act"), in reliance on exemptions therefrom.
In connection with the sale of the Units, the Company has
prepared a preliminary offering memorandum dated June 16, 1997 (the "Preliminary
Memorandum") and will prepare a final offering memorandum dated June 18, 1997
(the "Final Memorandum"; the Preliminary Memorandum and the Final Memorandum
each herein being referred to as a "Memorandum") setting forth or including a
description of the terms of the Units, the Preferred Stock and the Warrants, the
terms of the offering of the Units, a description of the Company and the
Subsidiaries (as defined below) and any material developments relating to the
Company and the Subsidiaries occurring after the date of the most recent
historical financial statements included therein.
The Company and the Initial Purchaser will enter into a
Registration Rights Agreement (the "Preferred Stock Registration Rights
Agreement") prior to or concurrently with the issuance of the Units. Pursuant to
the Preferred Stock Registration Rights Agreement, under the circumstances and
the terms set forth therein, the Company will agree to file with the Securities
and Exchange Commission (the "Commission"): (i) a registration statement (the
"Exchange Offer Registration Statement"), relating to a registered Exchange
Offer (as defined in the Preferred Stock Registration Rights Agreement) for the
Preferred Stock under the Act to offer to the holders of the Preferred Stock the
opportunity to exchange their Preferred Stock for an issue of preferred stock
substantially identical to the Preferred Stock that would be registered under
the Act (the "Exchange Preferred Stock") (except that (a) dividends thereon will
accrue from the last date on which dividends were paid on the Preferred Stock,
or if no such dividends have been paid, from the date of original issuance of
the Preferred Stock, (b) such Preferred Stock will not contain any restrictions
on transfer, and (c) such Preferred Stock will not contain provisions relating
to an increase in the dividend rate for a failure to register the Preferred
Stock pursuant to the Preferred Stock Registration Rights Agreement) or (ii)
alternatively, in the event that applicable interpretations of the Commission do
not permit the Company to effect the Exchange Offer or do not permit any holder
of the Preferred Stock to participate in the Exchange Offer, a shelf
registration statement (the "Shelf Registration Statement") to cover resales of
Preferred Stock by such holders who satisfy certain conditions relating to,
including the provision of information in connection with the Shelf Registration
Statement.
The Company will enter into (i) a Unit Agreement (the "Unit
Agreement") and (ii) a Warrant Agreement with United States Trust Company as
Unit Agent (the "Unit Agent") or Warrant Agent (the "Warrant Agent"), as the
case may be, prior to, or concurrently with, the issuance of the Units (the
"Warrant Agreement").
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2. Representations and Warranties. The Company represents
and warrants to, and agrees with the Initial Purchaser that:
(a) Neither the Preliminary Memorandum as of the date thereof
nor the Final Memorandum nor any amendment or supplement thereto as of
the date thereof and, in the case of the Final Memorandum and any
amendment or supplement thereto, at all times subsequent thereto up to
the Closing Date (as defined in Section 3 below) contained or shall
contain 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,
except that the representations and warranties set forth in this
Section 2(a) do not apply to statements or omissions made in reliance
upon and in conformity with information furnished to the Company in
writing by the Initial Purchaser expressly for use in the Preliminary
Memorandum, the Final Memorandum or any amendment or supplement
thereto.
(b) As of the Closing Date, the Company will have the
capitalization set forth in the Final Memorandum; the Subsidiaries
constitute all of the subsidiaries of the Company; the Company will own
one hundred percent of the issued and outstanding stock (or other
equity securities) of each of the Subsidiaries; all of the outstanding
shares of capital stock of the Company and the Subsidiaries as of the
Closing Date will be duly authorized and validly issued, are fully paid
and nonassessable (except with respect to the Company's stock to the
extent of loans outstanding to executive officers as described in the
Memorandum) and were not issued in violation of any preemptive or
similar rights (except to the extent that SGIC, as defined below,
alleges any such rights to arise out of its interest in LLC, as defined
below); except as set forth in the Final Memorandum or for any claim
that may be asserted by Societe Generale Investment Corporation
("SGIC") with respect to SGIC's interest in NTC Holding, LLC ("LLC") as
described therein, there are no (i) options, warrants or other rights
to purchase from the Company and the Subsidiaries, (ii) agreements or
other obligations of the Company or any of the Subsidiaries to issue or
(iii) other rights to convert any obligation into, or exchange any
securities for, shares of capital stock of, or other equity securities
in, the Company or any of the Subsidiaries outstanding. The entities
listed on Schedule 2 hereto (collectively, the "Subsidiaries") are the
only subsidiaries, direct or indirect, of the Company other than LLC.
Except as disclosed on Schedule 2, the Company does not own, directly
or indirectly, any capital stock or any other equity or long-term debt
securities or have any equity interests in any firm, partnership, joint
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venture, limited liability company or other entity other than LLC in
which it owns all of the membership interests therein other than those
owned by SGIC.
(c) The Company and each of National Tobacco Finance
Corporation and North Atlantic Operating Company, Inc. (the "Corporate
Subsidiaries") has been duly incorporated, is validly existing and is
in good standing as a corporation under the laws of its jurisdiction of
incorporation, with all requisite corporate power and authority to own
its properties and conduct its business as now conducted, and as
described in the Final Memorandum; National Tobacco, L.P. ("National
Tobacco") is a limited partnership duly organized and subsisting under
the laws of the State of Delaware, with the requisite partnership power
and authority to own its properties and conduct its business as now
conducted and as described in the Final Memorandum; LLC is a limited
liability company duly organized and subsisting under the laws of the
State of Delaware, and does not have any assets except those that will
be transferred to the Company; each of the Company and the Subsidiaries
is duly qualified to do business as a foreign corporation in good
standing in all other jurisdictions where the ownership or leasing of
its properties or the conduct of its business requires such
qualification, except where the failure to be so qualified would not,
individually or in the aggregate, have a material adverse effect on the
general affairs, management, business, condition (financial or
otherwise), prospects or results of operations of the Company and the
Subsidiaries, taken as a whole (any such event, a "Material Adverse
Effect").
(d) The Unit Agreement will be duly authorized by the Company
prior to the Closing and, when executed and delivered by the Company
and (assuming the due authorization, execution and delivery by the Unit
Agent) will constitute a valid and legally binding agreement of the
Company, enforceable in accordance with its terms, subject to
applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and similar laws affecting creditors' rights
and remedies generally, and subject, as to enforceability, to general
principles of equity, including principles of commercial
reasonableness, good faith and fair dealing (regardless of whether a
proceeding is sought at law or in equity).
(e) The Units will be duly authorized by the Company prior to
the Closing and, when issued and delivered by the Company against
payment therefor by the Initial Purchaser in accordance with the terms
of this Agreement and (assuming due authentication, execution and
delivery thereof
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by the Unit Agent in accordance with the Unit Agreement) will
constitute a valid and binding obligation of the Company, enforceable
against the Company in accordance with its terms, subject to applicable
bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and similar laws affecting creditors' rights and remedies
generally, and subject, as to enforceability, to general principles of
equity, including principles of commercial reasonableness, good faith
and fair dealing (regardless of whether a proceeding is sought at law
or in equity).
(f) The Warrant Agreement will be duly authorized by the
Company prior to the Closing and, when executed and delivered by the
Company and (assuming the due authorization, execution and delivery
thereof by the Warrant Agent) will constitute a valid and legally
binding agreement of the Company, enforceable in accordance with its
terms, subject to applicable bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium and similar laws affecting
creditors' rights and remedies generally, and subject, as to
enforceability, to general principles of equity, including principles
of commercial reasonableness, good faith and fair dealing (regardless
of whether a proceeding is sought at law or in equity).
(g) The Warrants will be duly authorized by the Company prior
to the Closing and, when issued and delivered by the Company against
payment therefor by the Initial Purchaser in accordance with the terms
of this Agreement (assuming the due authentication thereof by the
Warrant Agent in accordance with the Warrant Agreement) will constitute
valid and legally binding obligations of the Company, enforceable in
accordance with their terms, subject to applicable bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium and
similar laws affecting creditors' rights and remedies generally, and
subject, as to enforceability, to general principles of equity,
including principles of commercial reasonableness, good faith and fair
dealing (regardless of whether a proceeding is sought at law or in
equity).
(h) The Warrant Shares will be duly and validly authorized and
validly reserved for issuance prior to the Closing and when issued and
paid for upon exercise of the Warrants in accordance with the terms
thereof, will be validly issued, fully paid, nonassessable and free of
preemptive or other similar rights.
(i) The Certificate of Designation relating to the Preferred
Stock and any additional Preferred Stock issued as dividends in
accordance with the terms of the Certificate of Designation (the "PIK
Preferred Stock") will be
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duly authorized by the Company prior to the Closing. Upon filing of
such Certificate of Designation with the Delaware Secretary of State,
the Preferred Stock and the PIK Preferred Stock will be duly authorized
and, when issued and delivered by the Company against payment therefor
in accordance with the provisions of this Agreement, in the case of the
Preferred Stock and in accordance with the terms of the Certificate of
Designation, in the case of the PIK Preferred Stock, will be validly
issued, fully paid and nonassessable and free of any preemptive or
similar rights; the certificates for the Preferred Stock and the PIK
Preferred Stock will be in due and proper form; and the holders of such
Preferred Stock and PIK Preferred Stock will not be subject to personal
liability by reason of being such holders. Prior to the Closing, the
Company will have reserved for issuance, and duly authorized the
issuance of, the maximum number of Preferred Stock and PIK Preferred
Stock issuable as dividends pursuant to the terms of the Certificate of
Designation. The Certificate of Incorporation of the Company, by virtue
of the filing of the Certificate of Designation, will set forth the
rights, preferences and priorities of the Preferred Stock and the PIK
Preferred Stock. The Exchange Preferred Stock will be duly authorized
prior to the Closing and, when issued and delivered by the Company in
accordance with the provisions of the Exchange Offer contemplated by
the Preferred Stock Registration Rights Agreement, will be validly
issued, fully paid and nonassessable and free of any preemptive or
similar rights.
(j) The Company and each of the Subsidiaries has all requisite
corporate power and authority to execute, deliver and perform its
obligations under the Preferred Stock Registration Rights Agreement.
The Preferred Stock Registration Rights Agreement will be duly and
validly authorized by the Company prior to the Closing and, when
executed and delivered by the Company and each of the Subsidiaries,
will constitute a valid and legally binding obligation of the Company
and each of the Subsidiaries with respect to its obligations
thereunder, enforceable against the Company and each of the
Subsidiaries in accordance with its terms, subject to applicable
bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and similar laws affecting creditors' rights and remedies
generally, and subject, as to enforceability, to general principles of
equity, including principles of commercial reasonableness, good faith
and fair dealing (regardless of whether a proceeding is sought at law
or in equity) and except that rights of indemnification and
contribution thereunder may be limited by Federal or state securities
laws or public policy relating thereto.
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(k) The Company has all requisite corporate power and
authority to execute, deliver and perform its obligations under this
Agreement and to consummate the transactions contemplated hereby. This
Agreement has been duly and validly authorized, executed and delivered
by the Company.
(l) No consent, approval, authorization or order of any court
or governmental agency or body or third party is required for the
execution, delivery or performance of this Agreement by the Company or
the consummation by the Company or any of the Subsidiaries of the
transactions contemplated hereby that are to be completed on or before
the Closing Date, except such as have been obtained or disclosed in the
Final Memorandum and such as may be required under state securities or
"Blue Sky" laws or foreign securities laws in connection with the
purchase and resale of the Preferred Stock by the Initial Purchaser.
None of the Company or any of the Subsidiaries is (i) in violation of
its certificate of incorporation or bylaws (or similar organizational
document), (ii) in breach or violation of any statute, judgment,
decree, order, rule or regulation applicable to any of them or any of
their respective properties or assets, or (iii) in breach of or in
default under (nor has any event occurred which, with notice or passage
of time or both, would constitute a default under) or in violation of
any of the terms or provisions of any indenture, mortgage, deed of
trust, loan agreement, note, lease, license, franchise agreement,
permit, certificate, contract or other agreement or instrument to which
any of them is a party or to which any of them or their respective
properties or assets is subject (collectively, "Contracts") except in
the case of clauses (ii) and (iii) above such violations, breaches or
defaults that would not, individually or in the aggregate, have a
Material Adverse Effect.
(m) The execution, delivery and performance by the Company and
the Subsidiaries of this Agreement, the Unit Agreement, the Warrant
Agreement and the Preferred Stock Registration Rights Agreement and the
consummation by the Company and the Subsidiaries of the transactions
contemplated hereby and thereby, and the fulfillment of the terms
hereof and thereof, will not conflict with or constitute or result in a
breach of or a default under (or an event which with notice or passage
of time or both would constitute a default under) or violation of any
of (i) the terms or provisions of any Contract except such conflicts,
breaches, defaults or violations, that would not, individually or in
the aggregate, have a Material Adverse Effect, (ii) the certificate of
incorporation or by-laws (or similar organizational document) of the
Company or any of the Subsidiaries, or (iii) (assuming compliance with
all applicable state securities or "Blue Sky" laws
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and assuming the accuracy of the representations and warranties of the
Initial Purchaser in Section 8 hereof) any statute, judgment, decree,
order, rule or regulation applicable to the Company or any of the
Subsidiaries or any of their respective properties or assets except
such conflicts, breaches, defaults or violations that would not,
individually or in the aggregate, have a Material Adverse Effect.
(n) The audited consolidated financial statements of the
entities included in the Preliminary Memorandum and the Final
Memorandum present fairly in all material respects the financial
position, results of operations and cash flows of such entities at the
dates and for the periods to which they relate and have been prepared
in accordance with generally accepted accounting principles applied on
a consistent basis except as otherwise stated therein. The summary and
selected financial and statistical data in the Preliminary Memorandum
and the Final Memorandum present fairly in all material respects the
information shown therein and have been prepared and compiled on a
basis consistent with the audited financial statements included
therein, except as otherwise stated therein. Coopers & Xxxxxxx L.L.P.
is an independent public accounting firm within the meaning of the Act
and the rules and regulations promulgated thereunder.
(o) The pro forma financial information included in the
Preliminary Memorandum and the Final Memorandum have been properly
computed on the bases described therein; the assumptions used in the
preparation of the pro forma financial data and other pro forma
financial information included in the Preliminary Memorandum and the
Final Memorandum are reasonable and the adjustments used therein are
appropriate to give effect to the transactions or circumstances
referred to therein.
(p) There is not pending or, to the knowledge of the Company
and the Subsidiaries, threatened any action, suit, proceeding, inquiry,
investigation or legislative mandate to which the Company or any of the
Subsidiaries is a party, or to which the property or assets of the
Company or any of the Subsidiaries are subject, before or brought by
any court, arbitrator or governmental agency or body which are
reasonably likely to, individually or in the aggregate, have a Material
Adverse Effect or which seeks to restrain, enjoin, prevent the
consummation of or otherwise challenge the issuance or sale of the
Units to be sold hereunder or the consummation of the other
transactions described in the Preliminary Memorandum and the Final
Memorandum, including but not limited the transactions described under
the section "The Transactions" (the "Transactions").
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(q) Each of the Company and the Subsidiaries owns or possesses
adequate licenses or other rights to use all material patents,
trademarks, service marks, trade names, copyrights and know-how
necessary to conduct the businesses now or proposed to be operated by
it as described in the Preliminary Memorandum and the Final Memorandum,
except where the failure to own or possess the same would not,
individually or in the aggregate, have a Material Adverse Effect, and
none of the Company nor any of the Subsidiaries has received any notice
of infringement of or conflict with (or knows of any such infringement
of or conflict with) asserted rights of others with respect to any
patents, trademarks, service marks, trade names, copyrights or know-how
which, if such assertion of infringement or conflict were sustained,
would, individually or in the aggregate, have a Material Adverse
Effect.
(r) The Company and each of the Subsidiaries possesses all
licenses, permits, certificates, consents, orders, approvals and other
authorizations from, and has made all declarations and filings with,
all federal, state, local and other governmental authorities, all
self-regulatory organizations and all courts and other tribunals,
presently required or necessary to own or lease, as the case may be,
and to operate its respective properties and to carry on its respective
businesses as now or proposed to be conducted as described in the
Preliminary Memorandum and the Final Memorandum (collectively, the
"Permits"), except where the failure to obtain such Permits would not,
individually or in the aggregate, have a Material Adverse Effect.
(s) Since the date of the most recent financial statements
appearing in the Final Memorandum, except as described therein, (i)
none of the Company nor the Subsidiaries has incurred any liabilities
or obligations, direct or contingent, or entered into or agreed to
enter into any transactions or contracts (written or oral) not in the
ordinary course of business which liabilities, obligations,
transactions or contracts would, individually or in the aggregate, be
material to the general affairs, management, business, condition
(financial or otherwise), prospects or results of operations of the
Company and the Subsidiaries, either individually or taken as a whole
(a "Material Change"), (ii) none of the Company nor the Subsidiaries
has purchased any of its outstanding capital stock, nor declared, paid
or otherwise made any dividend or distribution of any kind on its
capital stock and (iii) other than as described in the Final
Memorandum, there shall not have been any change in the capital stock
or long-term indebtedness of the Company or the Subsidiaries which
would, individually or in the aggregate, constitute a Material Change.
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(t) There has not occurred any material adverse change, or any
development involving a prospective material adverse change, in the
general affairs, management, business, condition, (financial or
otherwise), prospects or results of operations of the Company and the
Subsidiaries, either individually or taken as a whole, from that set
forth in the Preliminary Memorandum and the Final Memorandum.
(u) The Company and each of the Subsidiaries has filed all
necessary federal, state, local and foreign income and franchise tax
returns, and has paid all taxes shown as due thereon; and there is no
tax deficiency that has been asserted against the Company or any of the
Subsidiaries other than tax deficiencies which the Company or any
Subsidiary is contesting in good faith and for which the Company or
such Subsidiary has provided adequate reserves.
(v) The statistical and market-related data included in the
Final Memorandum are based on or derived from sources which the Company
and the Subsidiaries believe to be reliable and accurate.
(w) None of the Company, the Subsidiaries nor any agent acting
on their behalf has taken or will take any action that might cause this
Agreement or the sale of the Units to violate Regulation G, T, U or X
of the Board of Governors of the Federal Reserve System, in each case
as in effect, or as the same may hereafter be in effect, on the Closing
Date.
(x) Each of the Company and the Subsidiaries has good and
marketable title to all real property and good title to all personal
property described in the Preliminary Memorandum and the Final
Memorandum as being owned by it and good and marketable title to any
leasehold estate in the real and personal property described in the
Preliminary Memorandum and the Final Memorandum as being leased by it
free and clear of all liens, charges, encumbrances or restrictions,
except as described in the Preliminary Memorandum and the Final
Memorandum or to the extent the failure to have such title or the
existence of such liens, charges, encumbrances or restrictions would
not, individually or in the aggregate, have a Material Adverse Effect.
(y) There are no legal or governmental proceedings involving
or affecting the Company or any Subsidiary or any of their respective
properties or assets which would be required to be described in a
prospectus forming part of a registration statement filed with the
Commission pursuant to the Act
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that are not described in the Preliminary Memorandum and the Final
Memorandum.
(z) Except as would not, individually or in the aggregate, be
reasonably expected to have a Material Adverse Effect (A) each of the
Company and the Subsidiaries is in compliance with and not subject to
liability under applicable Environmental Laws (as defined below), (B)
each of the Company and the Subsidiaries has made all filings and
provided all notices required under any applicable Environmental Laws,
and has and is in compliance with all Permits required under any
applicable Environmental Laws and each of them is in full force and
effect, (C) there is no civil, criminal or administrative action, suit,
demand, claim, hearing, notice of violation, investigation, proceeding,
notice or demand letter or request for information pending or, to the
knowledge of the Company or any of the Subsidiaries, threatened against
the Company or any of the Subsidiaries under any Environmental Law, (D)
no lien, charge, encumbrance or restriction has been recorded under any
Environmental Law with respect to any assets, facility or property
owned, operated, leased or controlled by the Company or any of the
Subsidiaries, (E) none of the Company or the Subsidiaries has received
notice that it has been identified as a potentially responsible party
under the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended ("CERCLA") or any comparable state
law, (F) no property or facility of the Company or any of the
Subsidiaries is (i) listed or proposed for listing on the National
Priorities List under CERCLA or is (ii) listed in the Comprehensive
Environmental Response, Compensation, Liability Information System List
promulgated pursuant to CERCLA, or on any comparable list maintained by
any state or local governmental authority.
For purposes of this Agreement, "Environmental Laws" means the
common law and all applicable federal, state and local laws or
regulations, codes, orders, decrees, judgments or injunctions issued,
promulgated, approved or entered thereunder, relating to pollution or
protection of public or employee health and safety or the environment,
including, without limitation, law relating to (i) emissions,
discharges, releases or threatened releases of hazardous materials,
into the environment (including, without limitation, ambient air,
surface water, ground water, land surface or subsurface strata), (ii)
the manufacture, processing, distribution, use, generation, treatment,
storage, disposal, transport or handling of hazardous materials, and
(iii) underground and above ground storage tanks, and related piping,
and emissions, discharges, releases or threatened releases therefrom.
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(aa) There is no strike, labor dispute, slowdown or work
stoppage with the employees of the Company or any of the Subsidiaries
which is pending or, to the knowledge of the Company or any of the
Subsidiaries, threatened.
(ab) Except for the risks described under "Extensive and
Increasing Regulation of Products", "Tobacco Industry Product Liability
Litigation" and "Possible National Settlement of Tobacco Liability
Claims" under the section entitled "Risk Factors" in the Final
Memorandum, each of the Company and the Subsidiaries carries insurance
in such amounts and covering such risks as is adequate for the conduct
of its business and the value of its properties. Neither the Company
nor any of the Subsidiaries has received notice from any insurer or
agent of such insurer that capital improvements or other expenditures
are required or necessary to be made in order to continue such
insurance.
(bb) None of the Company nor the Subsidiaries has any material
liability for any prohibited transaction (within the meaning of Section
4975(c) of the Internal Revenue Code of 1986, as amended (the "Code")
or Part 4 of Title I of the Employee Retirement Income Security Act of
1974, as amended ("ERISA")) (or an accumulated funding deficiency
within the meaning of Section 412 of the Code or Section 302 of ERISA)
or any complete or partial withdrawal liability (within the meaning of
Section 4201 of ERISA) with respect to any pension, profit sharing or
other plan which is subject to ERISA, to which the Company or any of
the Subsidiaries makes or ever has made a contribution and in which any
employee of the Company or of any Subsidiary is or has ever been a
participant. With respect to such plans, the Company and each
Subsidiary is in compliance in all material respects with all
applicable provisions of ERISA.
(cc) The Company and each of the Subsidiaries (i) makes and
keeps accurate books and records and (ii) maintains internal accounting
controls which provide reasonable assurance that (A) transactions are
executed in accordance with management's authorization, (B)
transactions are recorded as necessary to permit preparation of its
financial statements and to maintain accountability for its assets, (C)
access to its assets is permitted only in accordance with management's
authorization and (D) the reported accountability for its assets is
compared with existing assets at reasonable intervals.
(dd) None of the Company or the Subsidiaries will be an
"investment company" or "promoter" or "principal underwriter" for an
"investment
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company," as such terms are defined in the Investment Company Act of
1940, as amended, and the rules and regulations thereunder.
(ee) The Units, the Unit Agreement, the Warrants, the Warrant
Shares, the Warrant Agreement, the Preferred Stock, the Exchange
Preferred Stock, and the Preferred Stock Registration Rights Agreement
will conform in all material respects to the descriptions thereof in
the Final Memorandum.
(ff) No holder of securities of the Company nor any of the
Subsidiaries will be entitled to have such securities registered under
the registration statements required to be filed by the Company
pursuant to the Preferred Stock Registration Rights Agreement other
than as expressly permitted thereby.
(gg) Immediately after the consummation of the transactions
contemplated by this Agreement, the fair value and present fair
saleable value of the assets of each of the Company and the
Subsidiaries (each on a consolidated basis) will exceed the sum of its
stated liabilities and identified contingent liabilities; none of the
Company or the Subsidiaries (each on a consolidated basis) is, nor will
any of the Company or the Subsidiaries (each on a consolidated basis)
be, after giving effect to the execution, delivery and performance of
this Agreement, and the consummation of the transactions contemplated
hereby, (a) left with unreasonably small capital with which to carry on
its business as it is currently or proposed to be conducted, (b) unable
to pay its debts (contingent or otherwise) as they mature or otherwise
become due or (c) otherwise insolvent.
(hh) None of the Company, the Subsidiaries or any of their
respective Affiliates (as defined in Rule 501(b) of Regulation D under
the Act) has directly, or through any agent, (i) sold, offered for
sale, solicited offers to buy or otherwise negotiated in respect of,
any "security" (as defined in the Act) which is or could be integrated
with the sale of the Units in a manner that would require the
registration under the Act of the Units or (ii) engaged in any form of
general solicitation or general advertising (as those terms are used in
Regulation D under the Act) in connection with the offering of the
Units or in any manner involving a public offering within the meaning
of Section 4(2) of the Act. The Company has not distributed and will
not distribute any offering material in connection with the Offering
other than the Final Memorandum and any Preliminary Memorandum. No
securities of the same class as the Preferred Stock or the Warrants
have been issued and sold
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by the Company within the six-month period immediately prior to the
date hereof.
(ii) Assuming the accuracy of the representations and
warranties of the Initial Purchaser in Section 8 hereof, it is not
necessary in connection with the offer, sale and delivery of the Units
to the Initial Purchaser in the manner contemplated by this Agreement
to register the Units, the Preferred Stock, the Warrants or the Warrant
Shares under the Act.
(jj) No securities of the Company or any Subsidiary are of the
same class (within the meaning of Rule 144A as promulgated under the
Act ("Rule 144A")) as the Units, the Warrants, the Warrant Shares or
the Preferred Stock and listed on a national securities exchange
registered under Section 6 of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), or quoted in a U.S. automated
inter-dealer quotation system.
(kk) None of the Company or the Subsidiaries has taken, nor
will any of them take, directly or indirectly, any action designed to,
or that might be reasonably expected to, cause or result in
stabilization or manipulation of the price of the Units, the Warrants
or the Preferred Stock.
(ll) None of the Company or the Subsidiaries, or any person
acting on any of their behalf (other than the Initial Purchaser) has
engaged in any directed selling efforts (as that term is defined in
Regulation S under the Act ("Regulation S")) with respect to the Units,
the Warrants or the Preferred Stock; the Company and its respective
Affiliates and any person acting on any of their behalf (other than the
Initial Purchaser or any Affiliate of the Initial Purchaser) have
complied with the offering restrictions requirement of Regulation S.
(mm) Each of the Preliminary Memorandum and the Final
Memorandum, as of its respective date, contains all of the information
that, if requested by a prospective purchaser of the Units, the
Warrants or the Preferred Stock, would be required to be provided to
such prospective purchaser pursuant to Rule 144A(d)(4) under the Act.
(nn) The Units, the Warrants and the Preferred Stock satisfy
the eligibility requirements of Rule 144A(d)(3) under the Act.
(oo) Neither the Company nor any of the Subsidiaries nor, to
the Company's knowledge, any officer or director purporting to act on
behalf of
-14-
the Company or any of the Subsidiaries has at any time: (i) made any
contributions to any candidate for political office, or failed to
disclose fully any such contributions, in violation of law, (ii) made
any payment of funds to, or received or retained any funds from, any
state, federal or foreign governmental officer or official, or other
person charged with similar public or quasi-public duties, other than
payments required or allowed by applicable law, (iii) violated or is in
violation of any provision of the Foreign Corrupt Practices Act of
1977, (iv) made any bribe, rebate, payoff, influence payment, kickback
or other unlawful payment or (v) engaged in any transaction, maintained
any bank account or used any corporate funds except for transaction,
bank accounts and funds which have been and are reflected in the
normally maintained books and records of the Company and the
Subsidiaries.
(pp) Except as disclosed in any Memorandum, there are no
material outstanding loans or advances or material guarantees of
indebtedness by the Company or any of its Subsidiaries to or for the
benefit of any of the officers or directors of the Company or any of
its Subsidiaries or any of the members of the families of any of them.
(qq) Neither the Company nor any affiliate of the Company 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.
(rr) None of the Company nor the Subsidiaries has engaged or
retained any person, other than NatWest Capital Markets Limited
("NatWest"), to act as a financial advisor, underwriter or placement
agent in connection with the issuance of the Units, the Warrants and
the Preferred Stock and, except for the fees and expenses payable in
connection with the issuance of the Units as described in the Final
Memorandum and the advisory fees payable to UBS Securities LLC, no
person has the right to receive a material amount of financial
advisory, underwriting, placement, finder's or similar fees in
connection with, or as a result of, the issuance of the Units and the
purchase of the Units by NatWest or the consummation of the other
transactions contemplated hereby.
3. Purchase, Sale and Delivery of the Units. On the basis of
the representations, warranties, agreements and covenants herein contained and
subject to the terms and conditions herein set forth, the Company agrees to
issue and sell to the Initial Purchaser, and the Initial Purchaser agrees, to
purchase from the Company the Units at a price of $24,117.65 per unit. One or
more certificates in
-15-
definitive form for the Units that the Initial Purchaser has agreed to purchase
hereunder, and in such denomination or denominations and registered in such name
or names as each of the Initial Purchaser requests upon notice to the Company at
least 48 hours prior to the Closing Date, shall be delivered by or on behalf of
the Company to the Initial Purchaser, against payment by or on behalf of such
Initial Purchaser of the purchase price therefor by wire transfer to such
account or accounts as the Company shall specify prior to the Closing Date, or
by such means as the parties hereto shall agree prior to the Closing Date. Such
delivery of and payment for the Units shall be made at the offices of Weil,
Gotshal & Xxxxxx L.L.P., 000 Xxxxx Xxxxxx, Xxx Xxxx, XX at 10:00 A.M., New York
time, on June 25, 1997, or at such other place, time or date as the Initial
Purchaser, on the one hand, and the Company, on the other hand, may agree upon,
such time and date of delivery against payment being herein referred to as the
"Closing Date." The Company will make such certificate or certificates for the
Units available for inspection and packaging by the Initial Purchaser at such
place as designated by the Initial Purchaser at least 24 hours prior to the
Closing Date.
4. Offering by the Initial Purchaser. The Initial Purchaser
proposes to make an offering of the Units at the price and upon the terms set
forth in the Final Memorandum, as soon as practicable after this Agreement is
entered into and as in the judgment of the Initial Purchaser is advisable.
5. Covenants of the Company. The Company covenants and agrees
with the Initial Purchaser that:
(a) The Company will not amend or supplement the Final
Memorandum or any amendment or supplement thereto of which the Initial
Purchaser shall not previously have been advised and furnished a copy
for a reasonable period of time prior to the proposed amendment or
supplement and as to which the Initial Purchaser shall not have
consented. The Company will promptly, upon the reasonable request of
the Initial Purchaser or counsel for the Initial Purchaser, make any
amendments or supplements to the Final Memorandum that may be necessary
or advisable in connection with the resale of the Units by the Initial
Purchaser.
(b) The Company will cooperate with the Initial Purchaser in
arranging for the qualification of the Units for offering and sale
under the securities or "Blue Sky" laws of which jurisdictions as the
Initial Purchaser may designate and will continue such qualifications
in effect for as long as may be necessary to complete the resale of the
Units; provided, however, that in connection therewith, the Company
shall not be required to qualify as a foreign
-16-
corporation or to execute a general consent to service of process in
any jurisdiction or subject itself to taxation in excess of a nominal
dollar amount in any such jurisdiction where it is not then so subject.
(c) If, at any time prior to the completion of the
distribution by the Initial Purchaser of the Units, any event occurs or
information becomes known as a result of which the Final Memorandum as
then amended or supplemented would, in the judgment of the Company or
in the reasonable opinion of counsel for the Initial Purchaser include
any untrue statement of a material fact, or omit to state a material
fact necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading, or if for any
other reason it is necessary at any time to amend or supplement the
Final Memorandum to comply with applicable law, the Company will
promptly notify the Initial Purchaser thereof and will prepare, at the
expense of the Company, an amendment or supplement to the Final
Memorandum that corrects such statement or omission or effects such
compliance.
(d) The Company will, without charge, provide to the Initial
Purchaser and to counsel for the Initial Purchaser as many copies of
the Preliminary Memorandum and the Final Memorandum or any amendment or
supplement thereto as the Initial Purchaser may reasonably request.
(e) The Company will apply the net proceeds from the sale of
the Preferred Stock substantially as set forth under "Use of Proceeds"
in the Final Memorandum.
(f) The Company will furnish to the Initial Purchaser copies
of all reports and other communications (financial or otherwise)
furnished by the Company to the Unit Agent, the Warrant Agent, the
holders of the Warrants, the Warrant Shares or the holders of the
Preferred Stock and, as soon as available, copies of any reports or
financial statements furnished to or filed by the Company with the
Commission or any national securities exchange on which any class of
securities of the Company may be listed.
(g) Prior to the Closing Date, the Company will furnish to the
Initial Purchaser, as soon as they have been prepared, a copy of any
unaudited interim financial statements of the Company and the
Subsidiaries for any period subsequent to the period covered by the
most recent financial statements appearing in the Final Memorandum.
-17-
(h) None of the Company, the Subsidiaries or any of their
Affiliates will sell, offer for sale or solicit offers to buy or
otherwise negotiate in respect of any "security" (as defined in the
Act) which could be integrated with the sale of the Units, the
Warrants, the Warrant Shares or the Preferred Stock in a manner which
would require the registration under the Act of the Units, the Warrants
or the Preferred Stock.
(i) None of the Company nor the Subsidiaries will engage in
any form of "general solicitation" or "general advertising" (as those
terms are used in Regulation D under the Act) in connection with the
offering of the Units or in any manner involving a public offering of
the Units, the Warrants or the Preferred Stock within the meaning of
Section 4(2) of the Act.
(j) None of the Company, the Subsidiaries nor their Affiliates
nor any person acting on its or their behalf to engage, in any directed
selling efforts (as that term is defined in Regulation S) with respect
to the Units, the Warrants or the Preferred Stock, and to comply, and
to have its Affiliates and each person acting on its or their behalf
comply, with the offering restrictions requirements of Regulation S.
(k) For so long as any of the Units, the Warrants or the
Preferred Stock remain outstanding, the Company will make available,
upon request, to any seller of such Preferred Stock the information
specified in Rule 144A(d)(4) under the Act, unless the Company is then
subject to Section 13 or 15(d) of the Exchange Act.
(l) For a period of 180 days from the date of the Final
Memorandum, the Company will not 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 Units, Warrants or Preferred Stock (other than
the Exchange Notes, the Units, the Warrants, the Warrant Shares, the
Preferred Stock and the Exchange Preferred Stock) without the prior
written consent of the Initial Purchaser.
(m) During the period from the Closing Date until two years
after the Closing Date, without the prior written consent of the
Initial Purchaser, the Company will not, and will not permit any of
their affiliates (as defined in Rule 144 under the Act) to, resell any
of the Units, Warrants or the Preferred Stock that have been reacquired
by them, except for Units,
-18-
Warrants or Preferred Stock purchased by the Company or any of its
affiliates and resold in a transaction registered under the Act.
(n) In connection with the offering of the Units, until the
Initial Purchaser shall have notified the Company of the completion of
the resale of the Units, the Company will not, and will cause their
affiliated purchasers (as defined in the Exchange Act) not to, either
alone or 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 dividends, any Units, or attempt to induce any person to
purchase any Units; 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 Units.
(o) Except as contemplated by the Final Memorandum, the
Company will not take any action prior to the execution and delivery of
the Unit Agreements or the Warrant Agreement which, if taken after such
execution and delivery, would have violated any of the covenants
contained in the Unit Agreement or the Warrant Agreement.
(p) The Company will not take any action prior to Closing Date
which would require the Final Memorandum to be amended or supplemented
pursuant to Section 5(c).
(q) Prior to the Closing Date, the Company will not issue any
press release or other communication directly or indirectly or hold any
press conference with respect to the Company, 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 the
Company and of which the Initial Purchaser is notified), without the
prior written consent of the Initial Purchaser, unless in the judgment
of the Company and its counsel, after notification to the Initial
Purchaser, such press release or communication is required by law.
(r) The Company will use its best efforts to (i) permit the
Units, the Warrants, the Warrant Shares and the Preferred Stock to be
designated PORTAL securities in accordance with the rules and
regulations adopted by the NASD relating to trading in the Private
Offerings, Resales and Trading through Automated Linkages market (the
"Portal Market") and (ii) permit the Units, the Warrants, the Warrant
Shares and the Preferred Stock to be
-19-
eligible for clearance and settlement through the Depository Trust
Company ("DTC").
6. Expenses. The Company and the Subsidiaries agree, jointly
and severally to pay all costs and expenses incident to the performance of their
obligations under this Agreement, whether or not the transactions contemplated
herein are consummated or this Agreement is terminated pursuant to Section 11
hereof, including all costs and expenses incident to (i) the printing, word
processing or other production of documents with respect to the transactions
contemplated hereby, including any costs of printing the Preliminary Memorandum
and the Final Memorandum and any amendment or supplement thereto, and any "Blue
Sky" memoranda, (ii) all arrangements relating to the delivery to the Initial
Purchaser of copies of the foregoing documents, (iii) the fees and disbursements
of counsel, accountants and any other experts or advisors retained by the
Company, (iv) preparation (including printing), issuance and delivery to the
Initial Purchaser of the Units, (v) the qualification of the Units under state
securities and "Blue Sky" laws, including filing fees and reasonable fees and
disbursements of counsel for the Initial Purchaser relating thereto, (vi)
expenses in connection with any meetings with prospective investors in the
Units, (vii) fees and expenses of the Unit Agent and the Warrant Agent including
fees and expenses of counsel, (viii) all expenses and listing fees incurred in
connection with the application for quotation of the Units on the PORTAL Market
and the approval of the Units for book-entry transfer by DTC, and (ix) any fees
charged by investment rating agencies for the rating of the Units. If the sale
of the Units provided for herein is not consummated because any condition to the
obligations of the Initial Purchaser set forth in Section 7 hereof is not
satisfied, because this Agreement is terminated or because of any failure,
refusal or inability on the part of the Company to perform all obligations and
satisfy all conditions on their part to be performed or satisfied hereunder
(other than solely by reason of a default by the Initial Purchaser of their
obligations hereunder after all conditions hereunder have been satisfied in
accordance herewith), the Company agrees to promptly reimburse the Initial
Purchaser upon demand for all out-of-pocket expenses (including all reasonable
fees, disbursements and charges of White & Case) that shall have been incurred
by the Initial Purchaser in connection with the proposed purchase and sale of
the Units.
7. Conditions of the Initial Purchaser's Obligations. The
obligation of the Initial Purchaser to purchase and pay for the Units shall, in
its sole discretion, be subject to the satisfaction or waiver of the following
conditions on or prior to the Closing Date:
-20-
(a) On the Closing Date, the Initial Purchaser shall have
received the opinion, dated as of the Closing Date and addressed to the Initial
Purchaser, of Weil, Gotshal & Xxxxxx LLP, counsel for the Company, in form and
substance satisfactory for counsel to the Initial Purchaser, dated the Closing
Date, substantially to the effect that:
(i) the Company is a corporation duly incorporated,
validly existing and in good standing under the laws of the State of
Delaware. Each of the Corporate Subsidiaries is a corporation duly
incorporated, validly existing and in good standing under the laws of
the State of Delaware. National Tobacco is a limited partnership duly
organized and subsisting under the laws of the State of Delaware. Each
of the Company and the Corporate Subsidiaries has all requisite
corporate power and authority to own its properties and to conduct its
business as described in the Final Memorandum. National Tobacco has all
requisite partnership power and authority to own its property and to
conduct its business as described in the Final Memorandum;
(ii) all of the outstanding shares of capital stock
of the Company and each of the Corporate Subsidiaries and the
partnership interests in National Tobacco are duly authorized, validly
issued, fully paid and nonassessable (except, with respect to the
Company, to the extent of loans outstanding to executive officers as
described in the Final Memorandum) and were not issued in violation of
any preemptive or similar rights, other than any rights of SGIC with
respect to or arising out of SGIC's interest in LLC as to which no
opinion is expressed. Except as set forth in the Final Memorandum, all
of the outstanding shares of capital stock of each of the Corporate
Subsidiaries and the partnership interests in National Tobacco are
owned of record and, to such counsel's knowledge, beneficially, by the
Company or, in the case of National Tobacco, a Subsidiary, free and
clear, to our knowledge, of all liens, security interests, encumbrances
or claims;
(iii) Except as set forth in the Final Memorandum,
(A) no options, warrants or other rights to purchase from the Company
or any Subsidiary shares of capital stock or equity interests in the
Company or any Subsidiary are outstanding, (B) no agreements or other
obligations of the Company or any Subsidiary to issue, or other rights
to cause the Company or any Subsidiary to convert, any obligation into,
or exchange any securities for, shares of capital stock or ownership
interests in the Company or any Subsidiary are outstanding and (C) no
holder of securities of the Company or any Subsidiary is entitled to
have such securities registered under a registration statement filed by
the Company and the Subsidiary pursuant to
-21-
the Preferred Stock Registration Rights Agreement in each case other
than rights of SGIC with respect to or arising out of its interest in
LLC, as to which no opinion is expressed;
(iv) the Unit Agreement has been duly authorized by
the Company and, when executed and delivered by the Company (assuming
the due authorization, execution and delivery thereof by the Unit
Agent), will constitute the legal, valid and binding obligation of the
Company with respect to its obligations thereunder, enforceable against
the Company in accordance with its terms, subject to applicable
bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and similar laws affecting creditors' rights and remedies
generally, and subject, as to enforceability, to general principles of
equity, including principles of commercial reasonableness, good faith
and fair dealing (regardless of whether a proceeding is sought at law
or in equity); the Units have been duly authorized by the Company and,
when issued and delivered against payment therefor by the Initial
Purchaser (and assuming the due authorization, execution and delivery
of the Unit Agreement by the Unit Agent and the execution and delivery
of the Units in the manner prescribed by the Unit Agreement by one of
the Unit Agent's duly authorized officers), will be duly executed,
authenticated, issued and delivered and will constitute valid and
legally binding obligations of the Company enforceable in accordance
with their terms, subject to applicable bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and similar laws
affecting creditors' rights and remedies generally and subject, as to
enforceability, to general principles of equity, including principles
of commercial reasonableness, good faith and fair dealing (regardless
of whether a proceeding is sought at law or in equity);
(v) the Warrant Agreement has been duly authorized by
the Company and, when executed and delivered by the Company (assuming
the due authorization, execution and delivery thereof by the Warrant
Agent), will constitute the legal, valid and binding obligation of the
Company with respect to its obligations thereunder, enforceable against
the Company in accordance with its terms, subject to applicable
bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and similar laws affecting creditors' rights and remedies
generally, and subject, as to enforceability, to general principles of
equity, including principles of commercial reasonableness, good faith
and fair dealing (regardless of whether a proceeding is sought at law
or in equity); the Warrants have been duly authorized by the Company
and, when issued and delivered against payment for the Units by the
Initial Purchaser (and assuming the due authorization, execution and
delivery of the
-22-
Warrant Agreement by the Warrant Agent and the execution and delivery
of certificates of authentication of the Warrants in the manner
prescribed by the Warrant Agreement by one of the Warrant Agent's duly
authorized officers), will be duly executed, authenticated, issued and
delivered and will constitute valid and legally binding obligations of
the Company enforceable in accordance with their terms, subject to
applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and similar laws affecting creditors' rights
and remedies generally and subject, as to enforceability, to general
principles of equity, including principles of commercial
reasonableness, good faith and fair dealing (regardless of whether a
proceeding is sought at law or in equity);
(vi) The Certificate of Designation has been duly
adopted by the Company, has been duly executed and acknowledged in
accordance with the General Corporation Law of the State of Delaware by
authorized officers of the Company and has been filed with the
Secretary of State of the State of Delaware;
(vii) Each of the Preferred Stock and the Exchange
Preferred Stock have been duly and validly authorized by the Company
and, when issued and paid for by the purchasers thereof or issued in
payment of dividends, as the case may be, will be fully paid and
nonassessable and free of preemptive or other similar rights contained
in the Company's certificate of incorporation and the certificates
evidencing the Preferred Stock comply as to matters of form with the
General Corporation Law of the State of Delaware (assuming the due
execution and delivery of Preferred Stock issued subsequent to the date
hereof);
(viii) The Warrant Shares issuable upon the exercise
of the Warrants have been duly authorized and validly reserved for
issuance and when issued and paid for upon the exercise of the Warrants
in accordance with the terms thereof, will be validly issued, fully
paid, nonassessable;
(ix) the Preferred Stock Registration Rights
Agreement has been duly authorized by the Company and, when validly
executed and delivered by the Company, will constitute a valid and
legally binding obligation of the Company with respect to its
obligations thereunder and will be enforceable against it in accordance
with its terms, subject to applicable bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and similar laws
affecting creditors' rights and remedies generally, and subject, as to
enforceability, to general principles of equity, including
-23-
principles of commercial reasonableness, good faith and fair dealing
(regardless of whether a proceeding is sought at law or in equity) and
except that rights of indemnification and contribution thereunder may
be limited by federal or state securities laws or public policy
relating thereto;
(x) the Company has all requisite corporate power and
authority to execute and deliver this Agreement and to perform its
obligations thereunder; the execution, delivery and performance of this
Agreement by the Company and the consummation by the Company of the
transactions contemplated thereby have been duly authorized by all
necessary corporate action on the part of the Company; this Agreement
has been duly authorized, executed and delivered by the Company;
(xi) the statements in the Final Memorandum under the
caption "Description of Capital Stock", "Description of Senior PIK
Preferred Stock", "Description of Warrants" and "Senior PIK Preferred
Stock Registration Rights Agreement" insofar as they describe the
provisions of the documents and instruments therein described,
constitute fair summaries thereof accurate in all material respects;
(xii) to the knowledge of such counsel, there is no
action, suit or proceeding pending before or threatened by any court or
public governmental authority or arbitrator involving the Company or
any of its subsidiaries of a character required to be disclosed in the
Final Memorandum which is not adequately disclosed or incorporated by
reference in the Final Memorandum or which seeks to restrain, enjoin,
prevent the consummation of or otherwise challenge the issuance or sale
of the Units to be sold hereunder or the consummation of the other
transactions described in the Final Memorandum under the caption "Use
of Proceeds", except that no opinion is expressed with respect to any
threatened action by SGIC with respect to or arising out of its
interest in LLC.
(xiii) neither the Company nor any of the
Subsidiaries is or immediately after the sale of the Preferred Stock to
be sold hereunder and the application of the proceeds from such sale
(as described in the Final Memorandum under the caption "Use of
Proceeds") will be an "investment company" within the meaning of, and
is not registered or otherwise required to be registered under, the
Investment Company Act of 1940, as amended;
(xiv) no consent, approval, waiver, license, permit,
authorization or other action by or filing with any Xxx Xxxx, Xxxxxxxx
-00-
xxxxxxxxx xx Xxxxxx Xxxxxx governmental authority is required in
connection with the issuance and sale by the Company to the Initial
Purchaser on the Closing Date of the Units, the Warrants, the Warrant
Shares or the Preferred Stock, the consummation by the Company of the
transactions contemplated by this Agreement, the Unit Agreement, the
Warrant Agreement or the Preferred Stock Registration Rights Agreement,
except for (i) state securities or "blue sky" laws, rules or
regulations, (ii) with respect to the Preferred Stock Registration
Rights Agreement only, filings and other actions required pursuant to
the Securities Act, the Exchange Act, and the rules and regulations of
the Commission promulgated thereunder, and (iii) filings with the
Bureau of Alcohol, Tobacco and Firearms, as to all of which we express
no opinion, and those consents, approvals, waivers, licenses, permits
or authorizations which have heretofore been obtained;
(xv) neither the issuance and sale by the Company of
the Units, the Warrants, the Warrant Shares or the Preferred Stock
pursuant to this Agreement, the execution and delivery of this
Agreement, the Unit Agreement, the Warrant Agreement or the Preferred
Stock Registration Rights Agreement, the compliance by the Company with
the terms and provisions thereof, or the consummation by the Company or
the Subsidiaries of any of the transactions contemplated thereby, will
conflict with, constitute a default under, or violate (i) any of the
terms, conditions or provisions of the certificate of incorporation or
by-laws of the Company or any of the Subsidiaries, (ii) any New York,
Delaware corporate or United States federal law or regulation (other
than United States federal and state securities or "blue sky" laws,
rules and regulations or laws, rules and regulations administered by
the Bureau of Alcohol, Tobacco and Firearms, as to which such counsel
need not express any opinion in this paragraph), or (iii) any judgment,
writ, injunction, decree or order of any court or governmental
authority binding on the Company or any of the Subsidiaries of which
such counsel is aware;
(xvi) No registration under the Act of the Units is
required in connection with the sale of the Units to the Initial
Purchaser or the resale of the Units by the Initial Purchaser in the
manner contemplated by this Agreement and the Final Memorandum.
In rendering such opinion, such counsel may rely (A) as to
matters involving the application of laws of any jurisdiction other than the
State of New York or the United States or the corporation law of the State of
Delaware, to the extent they deem proper and specified in such opinion, upon the
opinion of other
-25-
counsel of good standing whom they believe to be reliable and who are
satisfactory to counsel for the Purchasers and (B) as to matters of fact, to the
extent they deem proper, on certificates of responsible officers of the Company
and public officials.
In addition to the foregoing, such counsel shall state that is
has participated in conferences with directors, executive officers and other
representatives of the Company, representatives of the Company's independent
public accountants, at which conferences the contents of the Final Memorandum
and relating matters were discussed, and although such counsel has not
independently verified and has not passed upon or assumed any responsibility for
the accuracy, completeness or fairness of the statements contained in such
documents, no facts have come to such counsel's attention to lead it to believe
that the Final Memorandum and any further amendments or supplements thereto as
of their respective dates and on the date of such opinion letter contained or
contains an untrue statement of a material fact or omitted or omits to state a
material fact required to be stated therein, or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading (it being understood that such counsel need not express any view with
respect to the financial statements and related notes, the financial statement
schedules and the other financial, statistical and accounting data included in
the Final Memorandum).The opinion of Xxxx Xxxxxxx & Xxxxxx LLP described in this
Section shall be rendered to the Initial Purchaser at the request of the Company
and shall so state therein.
References to the Final Memorandum in this subsection (a) shall include
any amendment or supplement thereto prepared in accordance with the provisions
of this Agreement on or before the Closing Date.
(b) On the Closing Date, the Initial Purchaser shall have received the
opinion, in form and substance satisfactory to the Initial Purchaser, dated as
of the Closing Date and addressed to the Initial Purchaser, of White & Case
counsel for the Initial Purchaser, with respect to certain legal matters
relating to this Agreement and such other related matters as the Initial
Purchaser may reasonably require. In rendering such opinion, White & Case shall
have received and may rely upon such certificates and other documents and
information as it may reasonably request to pass upon such matters.
(c) The Initial Purchaser shall have received from Coopers & Xxxxxxx
L.L.P. comfort letters dated the date hereof and the Closing Date, in form and
substance satisfactory to counsel for the Initial Purchaser.
-26-
(d) The representations and warranties of the Company and the
Subsidiaries contained in this Agreement shall be true and correct on and as of
the date hereof and on and as of the Closing Date as if made on and as of the
Closing Date; the statements of the Company's or any Subsidiaries' officers made
pursuant to any certificate delivered in accordance with the provisions hereof
shall be true and correct on and as of the date made and on and as of the
Closing Date; the Company and the Subsidiaries shall have performed all
covenants and agreements and satisfied all conditions on their part to be
performed or satisfied hereunder at or prior to the Closing Date; and, except as
described in the Final Memorandum (exclusive of any amendment or supplement
thereto after the date hereof), subsequent to the date of the most recent
financial statements in such Final Memorandum, there shall have been no event or
development that, individually or in the aggregate, has had, or would be
reasonably likely to have, a Material Adverse Effect.
(e) The sale of the Units hereunder shall not be enjoined (temporarily
or permanently) on the Closing Date.
(f) The Units shall have been approved by the NASD for trading in the
PORTAL Market.
(g) There shall not have occurred any invalidation of Rule 144A under
the Act by any court or any withdrawal or proposed withdrawal of any rule or
regulation under the 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 Units as contemplated hereby.
(h) There shall not have occurred any change, or any development
involving a prospective change, in the general business affairs, condition
(financial or otherwise), prospects or results of operations, of the Company and
the Subsidiaries, taken as a whole, from that set forth in the Final Memorandum
that constitutes a Material Adverse Effect and that makes it, in the Initial
Purchaser' judgment, impracticable to market the Units on the terms and in the
manner contemplated in the Final Memorandum.
(i) Subsequent to the date of the most recent financial statements in
the Final Memorandum (exclusive of any amendment or supplement thereto after the
date hereof), the conduct of the business and operations of the Company and the
Subsidiary shall not have been interfered with by strike, fire, flood,
hurricane, accident or other calamity (whether or not insured) or by any court
or governmental action, order or decree, and, except as otherwise stated
therein, the properties of the
-27-
Company and the Subsidiaries shall not have sustained any loss or damage
(whether or not insured) as a result of any such occurrence, except any such
interference, loss or damage which would not, individually or in the aggregate,
have a Material Adverse Effect.
(j) No securities of the Company or any Subsidiary shall have been
downgraded or placed on any "watch list" for possible downgrading by any
nationally recognized statistical rating organization.
(k) The Initial Purchaser shall have received certificates of the
Company, dated the Closing Date, signed by its President and the Chief Financial
Officer, to the effect that:
(i) The representations and warranties of the
Company contained in this Agreement are true and correct as of the date
hereof and as of the Closing Date, and the Company has performed all
covenants and agreements and satisfied all conditions on their part to
be performed or satisfied hereunder at or prior to the Closing Date;
(ii) At the Closing Date, since the date
hereof or since the date of the most recent financial statements in the
Final Memorandum (exclusive of any amendment or supplement thereto
after the date hereof), no event or events have occurred, no
information has become known nor does any condition exist that,
individually or in the aggregate, has had, or could be reasonably be
expected to have, a Material Adverse Effect;
(iii) The sale of the Units hereunder has not
been enjoined (temporarily or permanently);
(iv) The transactions described in the Final
Memorandum entitled "The Transactions" have been consummated on
substantially the terms described in the Final Memorandum; and
(v) Such other information as the Initial
Purchaser may reasonably request.
(l) On the Closing Date, the Initial Purchaser shall have received the
Preferred Stock Registration Rights Agreement executed by the Company and such
agreement shall be in full force and effect pursuant to its terms.
-28-
(m) On the Closing Date, the Initial Purchaser shall have received the
Common Stock Registration Rights and Stockholder Agreement, dated the date
hereof, executed by the Company, the Initial Purchaser and certain stockholders
of the Company, and such agreement shall be in full force and effect pursuant to
its terms.
(n) On the Closing Date, each of the transactions described in the
section of the Memorandum entitled "The Transactions" shall have been
consummated on a basis satisfactory to the Initial Purchaser.
(o) On the Closing Date, the Distribution Agreements (as such term is
defined in the Memorandum) shall be in full force and effect and no party
thereto shall have been in breach thereof.
(p) On the Closing Date, the Lancaster Agreement (as such term is
defined in the Memorandum) shall be in full force and effect and no party
thereto will be in breach thereof.
(q) The conditions to the purchase and sale of the Company's 11% Senior
Notes due 2004 by the Initial Purchaser and CIBC Wood Gundy Securities Corp.
("CIBC") as set forth in the Purchase Agreement dated the date hereof between
the Company and certain of its subsidiaries, the Initial Purchaser and CIBC
shall have been satisfied and such Agreement shall not have been terminated.
On or before the Closing Date, the Initial Purchaser and
counsel for the Initial Purchaser shall have received such further documents,
opinions, certificates, letters and schedules or instruments relating to the
business, corporate, legal and financial affairs of the Company and the
Subsidiaries as they shall have heretofore reasonably requested from the Company
and the Subsidiaries.
All such documents, opinions, certificates, letters, schedules
or instruments delivered pursuant to this Agreement will comply with the
provisions hereof only if they are reasonably satisfactory in all material
respects to the Initial Purchaser and counsel for the Initial Purchaser. The
Company and the Subsidiaries shall furnish to the Initial Purchaser such
conformed copies of such documents, opinions, certificates, letters, schedules
and instruments in such quantities as the Initial Purchaser shall reasonably
request.
8. Offering of Units; Restrictions on Transfer. The Initial
Purchaser agrees with the Company that (i) it has not and will not solicit
offers for, or offer or sell, the Units by any form of general solicitation or
general advertising (as those
-29-
terms are used in Regulation D under the Act) or in any manner involving a
public offering within the meaning of Section 4(2) of the Act; and (ii) they
have and will solicit offers for the Units only from, and will offer the Units
only to (A) in the case of offers inside the United States, (x) persons whom the
Initial Purchaser reasonably believe to be QIBs 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 the Initial
Purchaser that each such account is a QIB, to whom notice has been given that
such sale or delivery is being made in reliance on Rule 144A, and, in each case,
in transactions under Rule 144A or (y) a limited number of other institutional
investors reasonably believed by the Initial Purchaser to be Accredited
Investors that, prior to their purchase of the Units, deliver to the Initial
Purchaser a letter containing the representations and agreements set forth in
Appendix B to the Final Memorandum and (B) in the case of offers outside the
United States, to persons other than U.S. persons ("foreign purchasers," which
term shall include dealers or other professional fiduciaries in the United
States acting on a discretionary basis for foreign beneficial owners (other than
an estate or trust)); provided, however, that, in the case of this clause (B),
in purchasing such Units such persons are deemed to have represented and agreed
as provided under the caption "Transfer Restrictions on the Units" contained in
the Final Memorandum.
The Initial Purchaser represents and warrants that it is a
QIB, with such knowledge and experience in financial and business matters as are
necessary in order to evaluate the merits and risks of an investment in the
Units. The Initial Purchaser agrees to comply with the applicable provisions of
Rule 144A and Regulation S under the Act. The Initial Purchaser hereby
acknowledges that the Company and, for purposes of the opinions to be delivered
to the Initial Purchaser pursuant to Section 7(a) hereof, counsel to the Company
will rely upon the accuracy and truth of the representations contained in this
Section 8 and the Initial Purchaser hereby consents to such reliance.
9. Indemnification and Contribution. (a) The Company agrees to
indemnify and hold harmless the Initial Purchaser and its respective affiliates,
directors, officers, agents, representatives general partners and employees of
such Initial Purchaser or its affiliates, and each other person, if any, who
controls the Initial Purchaser or its affiliates within the meaning of Section
15 of the Act or Section 20 of the Exchange Act, to the full extent lawful
against any losses, claims, damages, expenses or liabilities (or actions in
respect thereof, including, without, limitation, shareholder derivative actions
and arbitration proceedings) to which any Initial Purchaser or such other person
may become subject under the Act, the Exchange Act or otherwise, insofar as any
such losses, claims, damages or liabilities (or actions in respect thereof)
arise out of or are based upon:
-30-
(i) any untrue statement or alleged untrue statement of any
material fact contained in any Memorandum or any amendment or
supplement thereto or any application or other document, or any
amendment or supplement thereto, executed by the Company or based upon
written information furnished by or on behalf of the Company filed in
any jurisdiction in order to qualify the Units under the securities or
"Blue Sky" laws thereof or filed with any securities association or
securities exchange (each an "Application");
(ii) the omission or alleged omission to state, in any
Memorandum or any amendment or supplement thereto or any Application, a
material fact required to be stated therein or necessary to make the
statements therein not misleading; or
(iii) any breach of any of the representations and warranties of
the Company set forth in this Agreement the Unit Agreement, the Warrant
Agreement or the Preferred Stock Registration Rights Agreement,
and will reimburse, as incurred, the Initial Purchaser and each such other
person for any reasonable legal or other expenses incurred by the Initial
Purchaser or such other person in connection with investigating, defending
against or appearing as a third-party witness in connection with any such loss,
claim, damage, liability or action; provided, however, the Company will not be
liable in any such case to the extent that any such loss, claim, damage, or
liability arises out of or is based upon any untrue statement or alleged untrue
statement or omission or alleged omission made in any Memorandum or any
amendment or supplement thereto or any Application in reliance upon and in
conformity with written information furnished to the Company by the Initial
Purchaser specifically for use therein and, provided, further, that with respect
to any untrue statement or alleged untrue statement in or omission or alleged
omission from the Preliminary Memorandum, the indemnity agreement contained in
this subsection (a) shall not inure to the benefit of any Initial Purchaser that
sold the Units to the person asserting any such losses, claims, damages or
liabilities, to the extent that such sale was an initial resale by such Initial
Purchaser and any such loss, claim, damage or liability of such Initial
Purchaser results from the fact that there was not sent or given to such person,
at or prior to the written confirmation of the sale of such Units to such
person, a copy of the Final Memorandum (exclusive of any material included
therein but not attached thereto) if the Company had previously furnished copies
thereof to such Initial Purchaser. This indemnity agreement will be in addition
to any liabilities or obligations that the Company may otherwise have to the
indemnified parties. Subject to Section 9(c), the Company shall not be liable
under this Section 9 for any settlement of any claim
-31-
or action effected without their prior consent, which shall not be unreasonably
withheld. The Initial Purchaser shall not, without prior written consent of the
Company and the Subsidiaries, effect any settlement or compromise of any pending
or threatened proceeding in respect of which the Initial Purchaser is or could
have been a party, or indemnity could have been sought hereunder by the Initial
Purchaser, unless such settlement (A) includes an unconditional written release
of the Company and the Subsidiaries, in form and substance reasonably
satisfactory to the Company, from all liability on claims that are the subject
matter of such proceeding and (B) does not include any statement as to an
admission of fault, culpability or failure to act by or on behalf of the Company
or any of the Subsidiaries.
(b) The Initial Purchaser agrees to indemnify and hold
harmless the Company, their directors, their officers and each person, if any,
who controls the Company within the meaning of Section 15 of the Act or Section
20 of the Exchange Act against any losses, claims, damages or liabilities to
which the Company or any such director, officer or controlling person may become
subject under the Act, the Exchange Act or otherwise, insofar as such losses,
claims, damages or liabilities (or actions in respect thereof) arise out of or
are based upon (i) any untrue statement or alleged untrue statement of any
material fact contained in any Memorandum or any amendment or supplement thereto
or any Application, or (ii) the omission or the alleged omission to state
therein a material fact required to be stated in any Memorandum or any amendment
or supplement thereto or any Application, or necessary to make the statements
therein not misleading, in each case to the extent, but only to the extent, that
such untrue statement or alleged untrue statement or omission or alleged
omission was made in reliance upon and in conformity with written information
furnished to the Company or the Subsidiaries by the Initial Purchaser
specifically for use therein; and subject to the limitation set forth
immediately preceding this clause, will reimburse, as incurred, any reasonable
legal or other expenses incurred by the Company, or any such director, officer
or controlling person in connection with investigating or defending against or
appearing as a third party witness in connection with any such loss, claim,
damage, liability or action in respect thereof. This indemnity agreement will be
in addition to any liability that the Initial Purchaser may otherwise have to
the indemnified parties. Subject to Section 9(c), the Initial Purchaser shall
not be liable under this Section 9 for any settlement of any claim or action
effected without their written consent, which shall not be unreasonably
withheld. The Company and the Subsidiaries shall not, without the prior written
consent of the Initial Purchaser, effect any settlement or compromise of any
pending or threatened proceeding in respect of which the Initial Purchaser is or
could have been a party, or indemnity could have been sought hereunder by any
Initial Purchaser, unless such settlement (A) includes an uncondi-
-32-
tional written release of the Initial Purchaser, in form and substance
reasonably satisfactory to the Initial Purchaser, from all liability on claims
that are the subject matter of such proceeding and (B) does not include any
statement as to an admission of fault, culpability or failure to act by or on
behalf of the Initial Purchaser.
(c) Promptly after receipt by an indemnified party under this
Section 9 of notice of the commencement of any action for which such indemnified
party is entitled to indemnification under this Section 9, such indemnified
party will, if a claim in respect thereof is to be made against the indemnifying
party under this Section 9, notify the indemnifying party of the commencement
thereof in writing; but the omission to so notify the indemnifying party (i)
will not relieve it from any liability under paragraph (a) or (b) above unless
and to the extent such failure results in the forfeiture by the indemnifying
party of substantial rights and defenses and (ii) will not, in any event,
relieve the indemnifying party from any obligations to any indemnified party
other than the indemnification obligation provided in paragraphs (a) and (b)
above. In case any such action is brought against any indemnified party, and it
notifies the indemnifying party of the commencement thereof, the indemnifying
party will be entitled to participate therein and, to the extent that it may
wish, jointly with any other indemnifying party similarly notified, to assume
the defense thereof, with counsel reasonably satisfactory to such indemnified
party; provided, however, that if (i) the use of counsel chosen by the
indemnifying party to represent the indemnified party would present such counsel
with a conflict of dividends, (ii) the defendants in any such action include
both the indemnified party and the indemnifying party and the indemnified party
shall have been advised by counsel that there may be one or more legal defenses
available to it and/or other indemnified parties that are different from or
additional to those available to the indemnifying party, or (iii) the
indemnifying party shall not have employed counsel reasonably satisfactory to
the indemnified party to represent the indemnified party within a reasonable
time after receipt by the indemnifying party of notice of the institution of
such action, then, in each such case, the indemnifying party shall not have the
right to direct the defense of such action on behalf of such indemnified party
or parties and such indemnified party or parties shall have the right to select
separate counsel to defend such action on behalf of such indemnified party or
parties. After notice from the indemnifying party to such indemnified party of
its election so to assume the defense thereof and approval by such indemnified
party of counsel appointed to defend such action, the indemnifying party will
not be liable to such indemnified party under this Section 9 for any legal or
other expenses, other than reasonable costs of investigation, subsequently
incurred by such indemnified party in connection with the defense thereof,
unless (i) the indemnified party shall have employed separate counsel in
accordance with the proviso to the immediately preceding sentence (it being
understood, however, that in connection with such action the
-33-
indemnifying party shall not be liable for the expenses of more than one
separate counsel (in addition to local counsel) in any one action or separate
but substantially similar actions in the same jurisdiction arising out of the
same general allegations or circumstances designated by the Initial Purchaser in
the case of paragraph (a) of this Section 9 or either the Company or any of the
Subsidiaries in the case of paragraph (b) of this Section 9, representing the
indemnified parties under such paragraph (a) or paragraph (b), as the case may
be, who are parties to such action or actions) or (ii) the indemnifying party
has authorized in writing the employment of counsel for the indemnified party at
the expense of the indemnifying party. After such notice from the indemnifying
party to such indemnified party, the indemnifying party will not be liable for
the costs and expenses of any settlement of such action effected by such
indemnified party without the prior written consent of the indemnifying party,
unless such indemnified party waived in writing its rights under this Section 9,
in which case the indemnified party may effect such a settlement without such
consent.
(d) In circumstances in which the indemnity agreement provided
for in the preceding paragraphs of this Section 9 is unavailable to an
indemnified party in respect of any losses, claims, damages or liabilities (or
actions in respect thereof), each indemnifying party, in order to provide for
just and equitable contribution, shall contribute to the amount paid or payable
by such indemnified party as a result of such losses, claims, damages or
liabilities (or actions in respect thereof) in such proportion as is appropriate
to reflect (i) the relative benefits received by the indemnifying party or
parties on the one hand and the indemnified party on the other from the offering
of the Units or (ii) if the allocation provided by the foregoing clause (i) is
not permitted by applicable law, not only such relative benefits but also the
relative fault of the indemnifying party or parties on the one hand and the
indemnified party on the other in connection with the statements or omissions or
alleged statements or omissions or breaches that resulted in such losses,
claims, damages or liabilities (or actions in respect thereof). The relative
benefits received by the Company on the one hand and the Initial Purchaser on
the other shall be deemed to be in the same proportion as the total proceeds
from the offering (net of commissions and before deducting expenses) received by
the Company bears to the total discounts and commissions received by the Initial
Purchaser. The relative fault of the parties shall be determined by reference
to, among other things, whether the untrue or alleged untrue statement of a
material fact or the omission or alleged omission to state a material fact
relates to information supplied by the Company on the one hand, or the Initial
Purchaser on the other, the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission or
alleged statement or omission, and any other equitable considerations
appropriate in the circumstances. The Company and the Initial Purchaser agree
that it would not be equitable if the amount of such contribution were deter-
-34-
mined by pro rata or per capita allocation or by any other method of allocation
that does not take into account the equitable considerations referred to in the
first sentence of this paragraph (d). Notwithstanding any other provision of
this paragraph (d), the Initial Purchaser shall not be obligated to make
contributions hereunder that in the aggregate exceed the total discounts,
commissions and other compensation received by the Initial Purchaser under this
Agreement, less the aggregate amount of any damages that the Initial Purchaser
has otherwise been required to pay by reason of the untrue or alleged untrue
statements or the omissions or alleged omissions to state a material fact, and
no person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation. For purposes of this paragraph (d),
each person, if any, who controls the Initial Purchaser within the meaning of
Section 15 of the Act or Section 20 of the Exchange Act shall have the same
rights to contribution as the Initial Purchaser, and each director of the
Company, each officer of the Company and each person, if any, who controls the
Company within the meaning of Section 15 of the Act or Section 20 of the
Exchange Act, shall have the same rights to contribution as the Company.
10. Survival Clause. The respective representations,
warranties, agreements, covenants, indemnities and other statements of the
Company, the Subsidiaries, their respective officers and the Initial Purchaser
set forth in this Agreement or made by or on behalf of them pursuant to this
Agreement shall remain in full force and effect, regardless of (i) any
investigation made by or on behalf of the Company, the Subsidiaries, any of
their respective officers or directors, the Initial Purchaser or any other
person referred to in Section 9 hereof and (ii) delivery of and payment for the
Units. The respective agreements, covenants, indemnities and other statements
set forth in Sections 6, 9 and 15 hereof shall remain in full force and effect,
regardless of any termination or cancellation of this Agreement.
11. Termination. (a) This Agreement may be terminated in the
sole discretion of the Initial Purchaser by notice to the Company given prior to
the Closing Date in the event that the Company shall have failed, refused or
been unable to perform all obligations and satisfy all conditions on their
respective part to be performed or satisfied hereunder at or prior thereto or,
if at or prior to the Closing Date any of the following shall have occurred:
(i) any of the Company or the Subsidiaries shall have
sustained any loss or interference with respect to its businesses or
properties from fire, flood, earthquakes, hurricane, accident or other
calamity, whether or not covered by insurance, or from any strike,
labor dispute, slow down or work stoppage or any legal or governmental
proceeding, which loss or interference
-35-
has had or could be reasonably likely to have a Material Adverse
Effect, or there shall have been, in the sole judgment of the Initial
Purchaser, any other event or development that, individually or in the
aggregate, has or could be reasonably likely to have a Material Adverse
Effect (including without limitation a change in control of the Company
or the Subsidiaries), except in each case as described in the Final
Memorandum (exclusive of any amendment or supplement thereto);
(ii) there shall have occurred any change, or any development
involving a prospective change, in the condition, financial or
otherwise, or in the earnings, business or operations, of the Company
and the Subsidiaries, taken as a whole, from that set forth in the
Final Memorandum that is material and adverse and that makes it, in the
Initial Purchaser' sole judgment, impracticable to market the Units,
the Warrants or the Preferred Stock on the terms and in the manner
contemplated in the Final Memorandum;
(iii) trading generally shall have been suspended or materially
limited on or by, as the case may be, either of the New York Stock
Exchange or the National Association of Securities Dealers, Inc. or the
setting of minimum prices for trading on such exchange or market shall
have occurred or trading of any securities of the Company or the
Subsidiaries shall have been suspended on any exchange or in any
over-the-counter market;
(iv) a banking moratorium shall have been declared by New York
or United States authorities;
(v) there shall have been (A) an outbreak or escalation of
hostilities between the United States and any foreign power, (B) an
outbreak or escalation of any other insurrection or armed conflict
involving the United States, (C) any material change in the financial
markets of the United States or (D) any other national or international
calamity or emergency which, in the case of (A), (B), (C) or (D) above
and in the sole judgment of the Initial Purchaser, makes it
impracticable or inadvisable to proceed with the offering or the
delivery of the Units as contemplated by the Final Memorandum;
(vi) the taking of any action by any federal, state or local
government or agency in respect of its monetary or fiscal affairs that
has a material adverse effect on the financial markets in the United
States, and would, in the sole judgment of the Initial Purchaser, make
it impracticable or inadvisable to market the Units;
-36-
(vii) the proposal, enactment, publication, decree, or other
promulgation of any federal or state statute, regulation, rule order of
any court or other governmental authority which, in the sole judgment
of the Initial Purchaser, would have a Material Adverse Effect;
(viii) any securities of the Company or any Subsidiary shall have
been downgraded or placed on any "watch list" for possible downgrading
by any nationally recognized statistical rating organization.
(b) Termination of this Agreement pursuant to this Section 11
shall be without liability of any party to any other party except as provided in
Section 10 hereof.
If this Agreement shall be terminated by the Initial Purchaser
because of any failure or refusal on the part of the Company to comply with the
terms or to fulfill any of the conditions of this Agreement, or if for any
reason the Company shall be unable to perform its obligations under this
Agreement or any condition of the purchasers, obligations cannot be fulfilled,
the Company agrees to reimburse the Initial Purchaser for all out-of-pocket
expenses (including the fees and expenses of their counsel) reasonably incurred
by such Initial Purchaser in connection with this Agreement or the offering
contemplated hereunder; provided, however, that the Company shall have no
obligation under the Section if this Agreement is terminated by reason of (i)
the non-fulfillment of any condition arising out of any event described in this
Section 11 (ii) the failure of Initial Purchaser's counsel to deliver the
opinion referred to in Section 7(b).
12. Information Supplied by the Initial Purchaser. The
statements set forth in the last paragraph on the cover page of the Final
Memorandum and paragraphs 5, 6 and 7 under the heading "Units Plan of
Distribution" in the Final Memorandum (to the extent such statements relate to
the Initial Purchaser) constitute the only information furnished by the Initial
Purchaser to the Company for the purposes of Sections 2(a) and 9 hereof.
13. Notices. All communications hereunder shall be in writing
and, if sent to the Initial Purchaser, shall be mailed or delivered to (i)
NatWest Capital Markets Limited, 000 Xxxxxxxxxxx, Xxxxxx, Xxxxxxx, with a copy
to White & Case, 0000 Xxxxxx xx xxx Xxxxxxxx, Xxx Xxxx, Xxx Xxxx 00000,
Attention: Xxxxxxx X. Xxxxxxx, Esq.; if sent to the Company, shall be mailed or
delivered to the Company at National Tobacco Company, 000 Xxxx Xxxxxx Xxxxx, 0xx
Xxxxx, Xxx Xxxx, Xxx Xxxx 00000 with a copy to, Weil, Gotshal & Xxxxxx, 000 0xx
Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Xxxxx X. Xxxxxxx, Esq.
-37-
All such notices and communications shall be deemed to have
been duly given: when delivered by hand, if personally delivered; five business
days after being deposited in the mail, postage prepaid, if mailed; and one
business day after being timely delivered to a next-day air courier.
14. Successors. This Agreement shall inure to the benefit of
and be binding upon the Initial Purchaser, the Company, the Subsidiaries and
their respective successors and legal representatives, and nothing expressed or
mentioned in this Agreement is intended or shall be construed to give any other
person any legal or equitable right, remedy or claim under or in respect of this
Agreement, or any provisions herein contained; this Agreement and all conditions
and provisions hereof being intended to be and being for the sole and exclusive
benefit of such persons and for the benefit of no other person except that (i)
the indemnities of the Company and the Subsidiaries contained in Section 9 of
this Agreement shall also be for the benefit of any person or persons who
control the Initial Purchaser within the meaning of Section 15 of the Act or
Section 20 of the Exchange Act and (ii) the indemnities of the Initial Purchaser
contained in Section 9 of this Agreement shall also be for the benefit of the
directors of the Company and officers and any person or persons who control the
Company within the meaning of Section 15 of the Act or Section 20 of the
Exchange Act. No purchaser of Units from the Initial Purchaser will be deemed a
successor because of such purchase.
15. APPLICABLE LAW. THE VALIDITY AND INTERPRETATION OF THIS
AGREEMENT, AND THE TERMS AND CONDITIONS SET FORTH HEREIN, SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO
CONTRACTS MADE AND TO BE PERFORMED WHOLLY THEREIN, WITHOUT GIVING EFFECT TO ANY
PROVISIONS THEREOF RELATING TO CONFLICTS OF LAW.
16. Counterparts. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
-38-
If the foregoing correctly sets forth our understanding,
please indicate your acceptance thereof in the space provided below for that
purpose, whereupon this letter shall constitute a binding agreement between the
Company and the Initial Purchaser.
Very truly yours,
NORTH ATLANTIC TRADING
ACQUISITION COMPANY, INC.
By: /s/ Xxxxxx X. Xxxxx, Xx.
------------------------
Name: Xxxxxx X. Xxxxx
Title: Chairman, President and CEO
The foregoing Agreement is
hereby confirmed and accepted
as of the date first above
written.
NATWEST CAPITAL MARKETS LIMITED
By: /s/ Xxxx X. Xxxxx
------------------
Name: Xxxx X. Xxxxx
Title: Managing Director
-39-
