EXHIBIT 4.6
SCHEIN PHARMACEUTICAL, INC.
$100,000,000
SENIOR FLOATING RATE NOTES DUE 2004
PURCHASE AGREEMENT
December 19, 1997
SOCIETE GENERALE SECURITIES CORPORATION
▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
Schein Pharmaceutical, Inc., a Delaware corporation (the
"Company"), proposes to issue and sell $100,000,000 principal amount of its
Senior Floating Rate Notes Due 2004 (the "Securities"). The Securities are to be
issued pursuant to an Indenture dated as of December 24, 1997 (the "Indenture")
to be entered into between the Company, the subsidiaries listed on the signature
pages hereto (collectively, the "Guarantors") and The Bank of New York, as
trustee (the "Trustee"). This is to confirm the agreement concerning the
purchase of the Securities from the Company by Societe Generale Securities
Corporation (the "Initial Purchaser"). Payment of principal and interest on the
Securities will be unconditionally guaranteed, jointly and severally, on a
senior unsecured basis (the "Subsidiary Guarantees") by the Guarantors.
The Securities will be offered and sold to the Initial
Purchaser without being registered under the Securities Act of 1933, as amended
(the "Securities Act"), in reliance upon an exemption therefrom. The Company has
prepared a preliminary offering memorandum dated December 3, 1997 (the
"Preliminary Offering Memorandum") and will prepare an offering memorandum dated
the date hereof (the "Offering Memorandum") setting forth information concerning
the Company and the Securities. Copies of the Preliminary Offering Memorandum
have been, and copies of the Offering Memorandum will be, delivered by the
Company to the Initial Purchaser pursuant to the terms of this Agreement. Any
references herein to the Preliminary Offering Memorandum and the Offering
Memorandum shall be deemed to include all amendments and supplements thereto,
unless otherwise noted. The Company hereby confirms that it has authorized the
use of the Preliminary Offering Memorandum and the Offering Memorandum in
connection with the offering and resale of the Securities by the Initial
Purchaser in accordance with Section 2.
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Holders of the Securities (including the Initial Purchaser and
its direct and indirect transferees) will be entitled to the benefits of an
Exchange and Registration Rights Agreement, substantially in the form attached
hereto as Annex A (the "Registration Rights Agreement"), pursuant to which the
Company will agree to file with the Securities and Exchange Commission (the
"Commission") (i) a registration statement under the Securities Act (the
"Exchange Offer Registration Statement") registering an issue of notes of the
Company (the "Exchange Securities") which are identical in all material respects
to the Securities (except that the Exchange Securities will not contain terms
with respect to transfer restrictions) and (ii) under certain circumstances, a
shelf registration statement pursuant to Rule 415 under the Securities Act (the
"Shelf Registration Statement").
1. REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF THE COMPANY
AND THE GUARANTORS. The Company and the Guarantors represent and warrant to and
agree, jointly and severally, with the Initial Purchaser that:
(a) Accurate Information Relating to the Securities. Each of
the Preliminary Offering Memorandum and the Offering Memorandum, as of
its respective date, did not, and on the Closing Date (as defined
herein) the Offering Memorandum will not, contain any untrue statement
of a material fact or omit to state a material fact required to be
stated therein or necessary in order to make the statements therein, in
the light of the circumstances under which they were made, not
misleading; provided that neither the Company nor any Guarantor makes
any representation or warranty as to information contained in or
omitted from the Preliminary Offering Memorandum or the Offering
Memorandum in reliance upon and in conformity with written information
relating to the Initial Purchaser furnished to the Company and the
Guarantors by or on behalf of the Initial Purchaser specifically for
use therein (the "Initial Purchaser's Information").
(b) Compliance with Securities Act. Each of the Preliminary
Offering Memorandum and the Offering Memorandum, as of its respective
date, contains all of the information that, if requested by a
prospective purchaser of the Securities, would be required to be
provided to such prospective purchaser pursuant to Rule 144A(d)(4)
under the Securities Act.
(c) Registration Required. Assuming the accuracy of the
representations and warranties of the Initial Purchaser contained in
Section and its compliance with the agreements set forth therein, it is
not necessary, in connection with the issuance and sale of the
Securities to the Initial Purchaser and the offer, resale and delivery
of the Securities by the Initial Purchaser in the manner contemplated
by this Agreement and the Offering Memorandum, to register the
Securities under the Securities Act or to qualify the Indenture under
the Trust Indenture Act of 1939, as amended (the "Trust Indenture
Act").
(d) Corporate Existence; Compliance with Law. The Company and
each of its subsidiaries that is a "Significant Subsidiary" within the
meaning of such term as
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defined in Rule 1-02 of Regulation S-X of the Commission (each a
"Significant Subsidiary") have been duly incorporated and are validly
existing as corporations in good standing under the laws of their
respective jurisdictions of incorporation, are duly qualified to do
business and are in good standing as foreign corporations in each
jurisdiction in which their respective ownership or lease of property
or the conduct of their respective businesses requires such
qualification, and have all power and authority necessary to own or
hold their respective properties and to conduct the businesses in which
they are engaged, except where the failure to so qualify or have such
power or authority would not have, singularly or in the aggregate, a
material adverse effect on the condition (financial or otherwise),
results of operations, business or prospects of the Company and its
subsidiaries taken as a whole (a "Material Adverse Effect").
(e) Corporate Power; Authorization. Each of the Company and
the Guarantors has full right, power and authority to execute and
deliver this Agreement, the Registration Rights Agreement, the
Indenture and the Securities (collectively, the "Transaction
Documents") and to perform its respective obligations hereunder and
thereunder; and all corporate action required to be taken for the due
and proper authorization, execution and delivery of each of the
Transaction Documents and the consummation of the transactions
contemplated by this Agreement and the Indenture have been duly and
validly taken.
(f) Enforceable Obligations. The Indenture, when duly executed
by the proper officers of the Company and each Guarantor and delivered
by the Company and each Guarantor, assuming due authorization,
execution and delivery thereof by the Trustee, will constitute a valid
and binding agreement of the Company and each Guarantor enforceable
against the Company and each Guarantor in accordance with its terms,
subject to the effects of bankruptcy, insolvency, fraudulent
conveyance, fraudulent transfers, reorganization, moratorium and other
similar laws relating to or affecting creditors' rights generally,
general equitable principles (whether considered in a proceeding in
equity or at law) and an implied covenant of good faith and fair
dealing; the Registration Rights Agreement, when duly executed by the
proper officers of the Company and delivered by the Company, assuming
due authorization, execution and delivery thereof by the Initial
Purchaser, will constitute a valid and binding agreement of the Company
enforceable against the Company in accordance with its terms, subject
to the effects of bankruptcy, insolvency, fraudulent conveyance,
fraudulent transfer, reorganization, moratorium and other similar laws
relating to or affecting creditors' rights generally, general equitable
principles (whether considered in a proceeding in equity or at law)
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and an implied covenant of good faith and fair dealing; the Securities,
when duly executed, authenticated, issued and delivered as provided in
the Indenture and upon payment and delivery in accordance with this
Agreement, will be duly and validly issued and outstanding and will
constitute valid and binding obligations of the Company entitled to the
benefits of the Indenture and enforceable against the Company in
accordance with their terms, subject to the effects of bankruptcy,
insolvency, fraudulent conveyance, fraudulent transfer, reorganization,
moratorium and other similar laws relating to or affecting creditors'
rights generally, general equitable principles (whether considered in a
proceeding in equity or at law) and an implied covenant of good faith
and fair dealing; the Subsidiary Guarantees (embodied in the Indenture
and the Securities), when duly executed by the proper officers of each
of the Guarantors, will constitute a valid and binding agreement of
each Guarantor enforceable against each Guarantor in accordance with
its terms, subject to the effects of bankruptcy, insolvency, fraudulent
conveyance, fraudulent transfer, reorganization, moratorium and other
similar laws relating to or affecting creditors' rights generally,
general equitable principles (whether considered in a proceeding in
equity or at law) and an implied covenant of good faith and fair
dealing; and the Indenture, the Registration Rights Agreement and the
Securities conform to the descriptions thereof contained in the
Offering Memorandum.
(g) Capitalization of the Company. The Company has an
authorized capitalization as set forth in the Offering Memorandum, and
all of the issued shares of capital stock of the Company have been duly
and validly authorized and issued, are fully paid and non-assessable
and conform to the description thereof contained in the Offering
Memorandum.
(h) Capitalization of Subsidiaries. All the outstanding shares
of capital stock of each subsidiary of the Company have been duly
authorized and validly issued, are fully paid and nonassessable and,
except to the extent set forth in the Offering Memorandum, are owned by
the Company directly or indirectly through one or more wholly-owned
subsidiaries, free and clear of any claim, lien, encumbrance, security
interest, restriction upon voting or transfer or any other claim of any
third party.
(i) No Legal Bar. The execution, delivery and performance of
each of the Transaction Documents by the Company and each Guarantor and
the consummation of the transactions contemplated hereby and thereby
will not conflict with or result in a breach or violation of any of the
terms or provisions of, or constitute a default under, any indenture,
mortgage, deed of trust, loan agreement or other agreement or
instrument to which the Company or any of its subsidiaries is a party
or by which the Company or any of its subsidiaries is bound or to which
any of the property or assets of the Company or any of its subsidiaries
is subject, nor will such actions result in any violation of the
provisions of the charter or by-laws of the Company or any of its
subsidiaries or any statute or any order, rule or regulation of any
court or governmental agency or body having jurisdiction over the
Company or any of its subsidiaries or any of their properties or
assets.
(j) No Further Requirements. Except for such consents,
approvals, authorizations, registrations or qualifications (i) which
shall have been obtained or made prior to the Closing Date and (ii) as
may be required to be obtained under the Securities Exchange Act of
1934 (the "Exchange Act") and applicable state securities laws in
connection with the purchase and distribution of the Securities by the
Initial Purchaser, no consent, approval, authorization or order of, or
filing or registration with, any such court or governmental agency or
body is required for the execution, delivery and performance of each of
the Transaction Documents by the Company or
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the Guarantors and the consummation of the transactions contemplated
hereby and thereby.
(k) Financial Statements. BDO ▇▇▇▇▇▇▇ LLP are independent
certified public accountants with respect to the Company and its
subsidiaries within the meaning of Rule 101 of the Code of Professional
Conduct of the American Institute of Certified Public Accountants
("AICPA") and its interpretations and rulings thereunder. The
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historical financial statements (including the related notes) contained
in the Offering Memorandum comply in all material respects with the
requirements applicable to a registration statement on Form S-1 under
the Securities Act (except that certain supporting schedules are
omitted); such financial statements have been prepared in accordance
with generally accepted accounting principles consistently applied
throughout the periods covered thereby and fairly present the financial
position of the entities purported to be covered thereby at the
respective dates indicated and the results of their operations and
their cash flows for the respective periods indicated; and the
financial information contained in the Offering Memorandum under the
headings "Summary--Consolidated Financial Data," "Capitalization,"
"Selected Consolidated Financial Data," "Management's Discussion and
Analysis of Financial Condition and Results of Operations," "Business"
and "Management" are derived from the accounting records of the Company
and its subsidiaries and fairly present the information purported to be
shown thereby. The pro forma financial information contained in the
Offering Memorandum has been prepared on a basis consistent with the
historical financial statements contained in the Offering Memorandum
(except for the pro forma adjustments specified therein), includes all
material adjustments to the historical financial information required
by Rule 11-02 of Regulation S-X under the Securities Act and the
Exchange Act to reflect the transactions described in the Offering
Memorandum, gives effect to assumptions made on a reasonable basis and
fairly presents the historical and proposed transactions contemplated
by the Offering Memorandum and the Transaction Documents. The other
historical financial and statistical information and data included in
the Offering Memorandum are, in all material respects, fairly
presented.
(l) No Material Adverse Change. Neither the Company nor any of
its subsidiaries has sustained, since the date of the latest audited
financial statements included in the Offering Memorandum, any material
(determined with respect to the Company and its subsidiaries taken as a
whole) loss or interference with its business from fire, explosion,
flood or other calamity, whether or not covered by insurance, or from
any labor dispute or court or governmental action, order or decree,
otherwise than as set forth or contemplated in the Offering Memorandum;
and, since such date, there has not been any change in the capital
stock or an increase in long-term debt of the Company or any of its
subsidiaries or any material adverse change, or any development
involving a prospective material adverse change, in or affecting the
business, general affairs, management, financial position,
stockholders' equity or results of operations of the Company and its
subsidiaries taken as a whole, otherwise than as set forth or
contemplated in the Offering Memorandum.
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(m) No Material Litigation. Other than as disclosed in the
Offering Memorandum: there is no legal or governmental proceeding
pending to which the Company or any of its subsidiaries is a party or
of which any property or assets of the Company or any of its
subsidiaries is the subject which, singularly or in the aggregate, if
determined adversely to the Company or any of its subsidiaries, is
reasonably likely to have a Material Adverse Effect; and to the best of
the Company's and the Guarantors' knowledge, no such proceedings are
threatened or contemplated by governmental authorities or threatened by
others.
(n) No Defaults. Neither the Company nor any of its
subsidiaries (i) is in violation of its charter or by-laws, (ii) is in
default in any material respect, and no event has occurred which, with
notice or lapse of time or both, would constitute such a default, in
the due performance or observance of any term, covenant or condition
contained in any material indenture, mortgage, deed of trust, loan
agreement or other agreement or instrument to which it is a party or by
which it is bound or to which any of its property or assets is subject
or (iii) is in violation in any respect of any law, ordinance,
governmental rule, regulation or court decree to which it or its
property or assets may be subject, except any violations or defaults
which, singularly or in the aggregate, would not have a Material
Adverse Effect.
(o) Possession of Licenses and Permits. The Company and each
of its subsidiaries possess all material licenses, certificates,
authorizations and permits issued by, and have made all declarations
and filings with, the appropriate state, federal or foreign regulatory
agencies or bodies which are necessary or desirable for the ownership
of their respective properties or the conduct of their respective
businesses as described in the Offering Memorandum, except where any
failures to possess or make the same, singularly or in the aggregate,
would not have a Material Adverse Effect, and the Company has not
received notification of any revocation or modification of any such
license, authorization or permit and has no reason to believe that any
such license, certificate, authorization or permit will not be renewed.
(p) No Lending Relationships. Except as disclosed in the
Offering Memorandum, the Company (i) does not have any material lending
or other relationship with any bank or lending affiliate of the Initial
Purchaser and (ii) does not intend to use any of the proceeds from the
sale of the Securities hereunder to repay any outstanding debt owed to
any affiliate of the Initial Purchaser.
(q) Investment Company Act. Neither the Company nor any of its
subsidiaries is an "investment company" within the meaning of the
Investment Company Act of 1940, as amended (the "Investment Company
Act"), and the rules and regulations of the Commission thereunder.
(r) No Registration Rights. Except as otherwise disclosed in
the Offering Memorandum, there are no contracts, agreements or
understandings between the Company or any Guarantor and any person
granting such person the right to require the Company or such Guarantor
to file a registration statement under the Securities
7
Act with respect to any securities of the Company or such Guarantor or
to require the Company or such Guarantor to include such securities
with the Securities and Subsidiary Guarantees registered pursuant to
any Exchange Offer Registration Statement or Shelf Registration
Statement.
(s) No Stabilization. Neither the Company, nor to the
Company's or the Guarantors' best knowledge, any of its affiliates, has
taken or may take, directly or indirectly, any action designed to cause
or result in, or which has constituted or which might reasonably be
expected to constitute, the stabilization or manipulation of the price
of the Securities to facilitate the sale or resale of the Securities.
(t) Possession of Intellectual Property. The Company and each
of its subsidiaries own or possess adequate rights to use all material
patents, patent applications, trademarks, service marks, trade names,
trademark registrations, service ▇▇▇▇ registrations, copyrights,
licenses and know-how (including trade secrets and other unpatented
and/or unpatentable proprietary or confidential information, systems or
procedures) necessary for the conduct of their respective businesses,
except where the absence of which would not reasonably be expected to
have a Material Adverse Effect. Neither the Company nor any of its
subsidiaries has reason to believe that the conduct of their respective
businesses will conflict with, and has not received any notice of any
claim of conflict with, any such rights of others.
(u) Title to Personal Property. The Company and each of its
subsidiaries have good and marketable title in fee simple to, or have
valid rights to lease or otherwise use, all items of real or personal
property which are material to the business of the Company and its
subsidiaries taken as a whole, in each case free and clear of all
liens, encumbrances, claims and defects that may result in a Material
Adverse Effect.
(v) Title to Real Property. The Company and each of its
subsidiaries have good and marketable title in fee simple to all real
property owned by them, in each case free and clear of all liens,
encumbrances and defects except such as are described in the Offering
Memorandum or such as do not materially affect the value of such
property and do not materially interfere with the use made and proposed
to be made of such property by the Company and its subsidiaries; and
all real property and buildings held under lease by the Company and its
subsidiaries are held by them under valid, subsisting and enforceable
leases, with such exceptions as are not material and do not interfere
with the use made and proposed to be made of such property and
buildings by the Company and its subsidiaries.
(w) No Labor Dispute. No labor disturbance by the employees of
the Company or any of its subsidiaries exists or, to the best of the
Company's knowledge, is imminent which might be expected to have a
Material Adverse Effect.
(x) Employee Benefit Plans. No "prohibited transaction" (as
defined in Section 406 of the Employee Retirement Income Security Act
of 1974, as amended, including the regulations and published
interpretations thereunder ("ERISA"), or
8
Section 4975 of the Internal Revenue Code of 1986, as amended from time
to time (the "Code")) or "accumulated funding deficiency" (as defined
in Section 302 of ERISA) or any of the events set forth in Section
4043(b) of ERISA (other than events with respect to which the 30-day
notice requirement under Section 4043 of ERISA has been waived) has
occurred with respect to any employee benefit plan which could have a
Material Adverse Effect; each employee benefit plan is in compliance in
all material respects with applicable law, including ERISA and the
Code; the Company has not incurred and does not expect to incur
liability under Title IV of ERISA with respect to the termination of,
or withdrawal from, any "pension plan"; and each "pension plan" (as
defined in ERISA) for which the Company would have any liability that
is intended to be qualified under Section 401(a) of the Code is so
qualified in all material respects, and nothing has occurred, whether
by action or by failure to act, which could cause the loss of such
qualification.
(y) No Material Environmental Liabilities. There has been no
storage, generation, transportation, handling, treatment, disposal,
discharge, emission, or other release of any kind of toxic or other
wastes or other hazardous substances by, due to, or caused by the
Company or any of its subsidiaries (or, to the best of the Company's
knowledge, any other entity for whose acts or omissions the Company or
any of its subsidiaries is or may be liable) upon any of the property
now or previously owned or leased by the Company or any of its
subsidiaries, or upon any other property, in violation of any statute
or any ordinance, rule, regulation, order, judgment, decree or permit
or which would, under any statute or any ordinance, rule (including
rule of common law), regulation, order, judgment, decree or permit,
give rise to any liability, except for any violation or liability which
would not have, singularly or in the aggregate with all such violations
and liabilities, a Material Adverse Effect; there has been no disposal,
discharge, emission or other release of any kind onto such property or
into the environment surrounding such property of any toxic or other
wastes or other hazardous substances with respect to which the Company
or any of its subsidiaries have knowledge, except for any such
disposal, discharge, emission, or other release of any kind which would
not have, singularly or in the aggregate with all such discharges and
other releases, a Material Adverse Effect.
(z) Taxes. The Company and its subsidiaries each (i) have
filed all necessary federal, state and foreign income and franchise tax
returns, (ii) have paid all federal, state, local and foreign taxes due
and payable for which it is liable, including, but not limited to,
withholding taxes and amounts payable under the Code, except to the
extent any taxes in question are being contested in good faith through
appropriate proceedings and as to which reserves have been established,
and has furnished all information returns it is required to furnish
pursuant to the Code, (iii) have established adequate reserves for all
such taxes which are not yet due and payable and (iv) do not have any
tax deficiency or claims outstanding or assessed or, to the best of the
Company's knowledge, proposed against it which could reasonably be
expected to have a Material Adverse Effect.
9
(aa) Insurance Policies. The Company and its subsidiaries each
maintain insurance policies and surety bonds, including, but not
limited to, general liability and property insurance, which insures the
Company and each of its subsidiaries and their respective employees
against losses and risks generally insured against by comparable
companies in comparable businesses. Neither the Company nor any of its
subsidiaries (i) has failed to give notice or to present any insurance
claim with respect to any material matter, including, but not limited
to, the Company's or the subsidiaries' respective business, property or
employees under any insurance policy or surety bond in a due and timely
manner, (ii) has any material disputes or claims against any
underwriter of such insurance policies or surety bonds or has failed to
pay any premiums due and payable thereunder or (iii) has failed to
comply with any material conditions contained in such insurance
policies and surety bonds. To the best of the Company's knowledge,
there are no facts or circumstances under any such insurance policy or
surety bond which would relieve any insurer of its obligation to
satisfy in full any valid claim of the Company or any of its
subsidiaries.
(bb) Accounting Controls. The Company and each of its
subsidiaries maintain a system of internal accounting controls
sufficient to provide reasonable assurance that (i) transactions are
executed in accordance with management's general or specific
authorizations; (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with generally
accepted accounting principles and to maintain asset accountability;
(iii) access to assets is permitted only in accordance with
management's general or specific authorization; and (iv) the recorded
accountability for assets is compared with the existing assets at
reasonable intervals and appropriate action is taken with respect to
any differences.
(cc) Minute Books. The minute books of the Company and each of
its Significant Subsidiaries have been made available to the Initial
Purchaser and counsel for the Initial Purchaser, and such books (i)
contain a complete summary of all meetings and actions of the directors
and stockholders of the Company and each of its subsidiaries since the
time of its respective incorporation through the date of the latest
meeting and action (except for certain meetings identified on and
certified by the Secretary of the Company on a certificate of such
Secretary which has previously been provided to the Initial Purchaser),
and (ii) accurately in all material respects reflect all transactions
referred to in such minutes.
(dd) Transactions with Management and Others. No relationship,
direct or indirect, exists between or among the Company or the
Guarantors on the one hand, and the directors, officers, stockholders,
customers or suppliers of the Company or the Guarantors on the other
hand, which is required to be described in the Offering Memorandum and
which is not so described.
(ee) No Outstanding Subscriptions. Except as described in the
Offering Memorandum, there are no outstanding subscriptions, rights,
warrants, calls or options to acquire, or instruments convertible into
or exchangeable for, or agreements or
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understandings with respect to the sale or issuance of, any shares of
capital stock of or other equity or other ownership interest in the
Company or any of its subsidiaries.
(ff) Solvency. On and immediately after the Closing Date, the
Company (after giving effect to the issuance of the Securities and to
the other transactions related thereto as described in the Offering
Memorandum) will be Solvent. As used in this paragraph, the term
"Solvent" means, with respect to a particular date, that on such date
(i) the present fair market value (or present fair saleable value) of
the assets of the Company on a consolidated basis is not less than the
total amount required to pay the probable liabilities of the Company on
a consolidated basis on its total existing debts and liabilities
(including contingent liabilities) as they become absolute and matured,
(ii) the Company is able to realize upon its assets and pay its debts
and other liabilities, contingent obligations and commitments as they
mature and become due in the normal course of business, (iii) assuming
the sale of the Securities as contemplated by this Agreement and the
Offering Memorandum, the Company is not incurring debts or liabilities
beyond its ability to pay as such debts and liabilities mature and (iv)
the Company is not engaged in any business or transaction, and is not
about to engage in any business or transaction, for which its property
would constitute unreasonably small capital after giving due
consideration to the capital needs of the Company, taking into account
the projected capital requirements and the capital available to the
Company. In computing the amount of such contingent liabilities at any
time, it is intended that such liabilities will be computed at the
amount that, in the light of all the facts and circumstances existing
at such time, represents the amount that can reasonably be expected to
become an actual or matured liability.
(gg) Material Agreements or Instruments. Except as set forth
on Annex 2 to the opinion to be delivered by Proskauer Rose LLP,
pursuant to Section 5(d) hereof, there are no other material documents
or instruments to which the Company or any of its Significant
Subsidiaries is bound or to which the properties or assets of the
Company or its Significant Subsidiaries is subject.
(hh) No Margin Securities. None of the proceeds of the sale of
the Securities will be used, directly or indirectly, for the purpose of
purchasing or carrying any "margin securities" as that term is defined
in Regulations G and U of the Board of Governors of the Federal Reserve
System (the "Federal Reserve Board"), for the purpose of reducing or
retiring any indebtedness which was originally incurred to purchase or
carry any margin security or for any other purpose which might cause
any of the Securities to be considered a "purpose credit" within the
meanings of Regulation G, T, U or X of the Federal Reserve Board.
(ii) No Brokerage Fees. Neither the Company nor any of its
subsidiaries is a party to any contract, agreement or understanding
with any person that would give rise to a valid claim by such person
(other than the Initial Purchaser) against the Company or the Initial
Purchaser for a brokerage commission, finder's fee or like payment in
connection with the offering and sale of the Securities.
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(jj) Compliance with 144A(d)(3). The Securities satisfy the
eligibility requirements of Rule 144A(d)(3) under the Securities Act.
(kk) No Offers to Buy. Neither the Company nor any of its
affiliates has, directly or through any agent, sold, offered for sale,
solicited offers to buy or otherwise negotiated in respect of, any
security (as such term is defined in the Securities Act), which is or
will be integrated with the sale of the Securities in a manner that
would require registration of the Securities under the Securities Act.
(ll) No General Solicitation. None of the Company or any of
its affiliates or any other person acting on its or their behalf has
engaged, in connection with the offering of the Securities, in any form
of general solicitation or general advertising within the meaning of
Rule 502(c) under the Securities Act.
(mm) No Registered Securities. There are no securities of the
Company registered under the Exchange Act or listed on a national
securities exchange or quoted in a U.S. automated inter-dealer
quotation system.
(nn) Compliance with Regulation M. The Company has not taken
and will not take, directly or indirectly, any action prohibited by
Regulation M under the Exchange Act in connection with the offering of
the Securities.
(oo) No Forward-Looking Statement. No forward-looking
statement (within the meaning of Section 27A of the Securities Act and
Section 21E of the Exchange Act) contained in the Preliminary Offering
Memorandum or the Offering Memorandum has been made or reaffirmed
without a reasonable basis or has been disclosed other than in good
faith.
(pp) No Commerce with Cuba. None of the Company or any of its
subsidiaries does business with the government of Cuba or with any
person or affiliate located in Cuba within the meaning of Florida
Statutes Section 517.075.
2. PURCHASE AND RESALE OF THE SECURITIES. (a) On the basis of
the representations, warranties and agreements contained herein, and subject to
the terms and conditions set forth herein, the Company agrees to issue and sell
to the Initial Purchaser, and the Initial Purchaser agrees to purchase from the
Company, $100,000,000 principal amount of Securities. The Initial Purchaser
shall pay for such Securities by paying in full the outstanding indebtedness
under the Senior Subordinated Loan Agreement dated as of December 20, 1996, as
amended (the "Senior Subordinated Loan Agreement"), among the Company, the
several banks and financial institutions from time to time parties thereto and
Societe Generale (after giving effect to the Company's required payments under
the Senior Subordinated Loan Agreement of accrued interest through December 24,
1997 of $1,666,026.80 and a breakage fee of $1,464.88), and the Initial
Purchaser will cause Societe Generale to deliver evidence of such payment in
full of such indebtedness to the Company on the Closing Date. The Company shall
not be obligated to deliver any of the Securities except upon payment for all
the Securities to be purchased as provided herein. The Company has agreed to pay
the Initial
12
Purchaser $3,750,000, representing the sum of (i) a commission in the amount of
$3,000,000 and (ii) $750,000 representing a fee for financial advisory service
rendered to the Company. Such fees are in lieu of the fees agreed to in the
third paragraph of the Commitment Letter dated November 12, 1997, among the
Company, the Initial Purchaser and Societe Generale.
(b) The Initial Purchaser has advised the Company that it
proposes to offer the Securities for resale upon the terms and subject to the
conditions set forth herein and in the Offering Memorandum. The Initial
Purchaser represents and warrants to, and agrees with, the Company that (i) it
is purchasing the Securities pursuant to a private sale exempt from registration
under the Securities Act, (ii) it has not solicited offers for, or offered or
sold, and will not solicit offers for, or offer or sell, the Securities by means
of any form of general solicitation or general advertising within the meaning of
Rule 502(c) of Regulation D under the Securities Act ("Regulation D") or in any
manner involving a public offering within the meaning of Section 4(2) of the
Securities Act and (iii) it has solicited and will solicit offers for the
Securities only from, and has offered or sold and will offer, sell or deliver
the Securities, as part of its initial offering, only to (A) persons whom it
reasonably believes to be qualified institutional buyers ("Qualified
Institutional Buyers") as defined in Rule 144A under the Securities Act, or if
any such person is buying for one or more institutional accounts for which such
person is acting as fiduciary or agent, only when such person has represented to
it that each such account is a Qualified Institutional Buyer to whom notice has
been given that such sale or delivery is being made in reliance on Rule 144A and
in each case, in transactions in accordance with Rule 144A and (B) a limited
number of other accredited investors ("Accredited Investors") as defined in Rule
501(a)(1), (2), (3) or (7) under Regulation D that are institutional investors
in private sales exempt from registration under the Securities Act. The Initial
Purchaser agrees that, prior to or simultaneously with the confirmation of sale
by the Initial Purchaser to any purchaser of any of the Securities purchased by
the Initial Purchaser from the Company pursuant hereto, the Initial Purchaser
shall furnish to that purchaser a copy of the Offering Memorandum (and any
amendment or supplement thereto that the Company shall have furnished to the
Initial Purchaser prior to the date of such confirmation of sale). In addition
to the foregoing, the Initial Purchaser acknowledges and agrees that the Company
and, for purposes of the opinions to be delivered to the Initial Purchaser
pursuant to Sections 5(d) and (e), counsel for the Company and for the Initial
Purchaser, respectively, may rely upon the accuracy of the representations and
warranties of the Initial Purchaser and its compliance with its agreements
contained in this Section , and the Initial Purchaser hereby consents to such
reliance.
(c) The Company acknowledges and agrees that the Initial
Purchaser may sell Securities to any affiliate of the Initial Purchaser and that
any such affiliate may sell Securities purchased by it to the Initial Purchaser.
3. DELIVERY OF AND PAYMENT FOR THE SECURITIES. Delivery of and
payment for the Securities shall be made at the offices of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ &
▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇, or at such other place as shall be
agreed upon by the Initial Purchaser and the Company, at 10:00 A.M., New York
City time, on December 24, 1997, or at such other date or time, not later than
seven full business days thereafter, as shall be agreed
13
upon by the Initial Purchaser and the Company (such date and time being referred
to herein as the "Closing Date").
The Securities to be purchased by the Initial Purchaser
hereunder and sold to Qualified Institutional Buyers shall be represented by one
or more global securities in book-entry form which will be deposited by or on
behalf of the Company with The Depository Trust Company or its designated
custodian. Securities to be resold to Accredited Investors shall be delivered in
physical, certificated form to such Accredited Investors. On the Closing Date,
the Company shall deliver or cause to be delivered the Securities to the Initial
Purchaser against payment to or upon the order of the Company of the purchase
price by causing The Depository Trust Company to credit the Securities to the
account of the Initial Purchaser at The Depository Trust Company.
Time shall be of the essence, and delivery at the time and
place specified pursuant to this Agreement is a further condition of the
obligation of the InitialPurchaser hereunder. The Company shall make the
certificates representing the Securities available for inspection by the Initial
Purchaser and for delivery to The Depository Trust Company or its designated
custodian in New York, New York, not later than two business days prior to the
Closing Date.
4. FURTHER AGREEMENTS OF THE COMPANY AND THE GUARANTORS. The
Company and the Guarantors agree with the Initial Purchaser:
(a) to advise the Initial Purchaser promptly and, if
requested, confirm such advice in writing, of the happening of any
event which makes any statement of a material fact made in the Offering
Memorandum untrue or which requires the making of any additions to or
changes in the Offering Memorandum (as amended or supplemented from
time to time) in order to make the statements therein, in the light of
the circumstances under which they were made, not misleading; to advise
the Initial Purchaser promptly of any order preventing or suspending
the use of the Preliminary Offering Memorandum or the Offering
Memorandum, of any suspension of the qualification of the Securities
for offering or sale in any jurisdiction and of the initiation or
threatening of any proceeding for any such purpose; and to use its best
efforts to prevent the issuance of any such order preventing or
suspending the use of the Preliminary Offering Memorandum or the
Offering Memorandum or suspending any such qualification and, if any
such suspension is issued, to obtain the lifting thereof at the
earliest possible time;
(b) to furnish promptly to the Initial Purchaser and counsel
for the Initial Purchaser, without charge, as many copies of the
Preliminary Offering Memorandum and the Offering Memorandum (and any
amendments or supplements thereto) as may be reasonably requested;
(c) prior to making any amendment or supplement to the
Offering Memorandum, to furnish a copy thereof to the Initial Purchaser
and counsel for the Initial Purchaser and not to effect any such
amendment or supplement to which the
14
Initial Purchaser shall reasonably object by notice to the Company
after a reasonable period to review;
(d) if, at any time prior to completion of the resale of the
Securities by the Initial Purchaser, any event shall occur or condition
exist as a result of which it is necessary, in the opinion of counsel
for the Initial Purchaser or counsel for the Company, to amend or
supplement the Offering Memorandum in order that the Offering
Memorandum will not include an untrue statement of a material fact or
omit to state a material fact necessary in order to make the statements
therein, in the light of the circumstances existing at the time it is
delivered to a purchaser, not misleading, or if it is necessary to
amend or supplement the Offering Memorandum to comply with applicable
law, to promptly prepare such amendment or supplement as may be
necessary to correct such untrue statement or omission or so that the
Offering Memorandum, as so amended or supplemented, will comply with
applicable law;
(e) for so long as the Securities are outstanding and are
"restricted securities" within the meaning of Rule 144(a)(3) under the
Securities Act, to furnish to holders of the Securities and prospective
purchasers of the Securities designated by such holders, upon request
of such holders or such prospective purchasers, the information
required to be delivered pursuant to Rule 144A(d)(4) under the
Securities Act, unless the Company is then subject to and in compliance
with Section 13 or 15(d) of the Exchange Act (the foregoing agreement
being for the benefit of the holders from time to time of the
Securities and prospective purchasers of the Securities designated by
such holders);
(f) for so long as the Securities are outstanding, to furnish
to the Initial Purchaser copies of any annual reports, quarterly
reports and current reports filed by the Company with the Commission on
Forms 10-K, 10-Q and 8-K, or such other similar forms as may be
designated by the Commission, and such other documents, reports and
information as shall be furnished by the Company to the Trustee or to
the holders of the Securities pursuant to the Indenture or the Exchange
Act or any rule or regulation of the Commission thereunder;
(g) to promptly take from time to time such actions as the
Initial Purchaser may reasonably request to qualify the Securities for
offering and sale under the securities or Blue Sky laws of such
jurisdictions as the Initial Purchaser may designate and to continue
such qualifications in effect for so long as required for the resale of
the Securities; and to arrange for the determination of the eligibility
for investment of the Securities under the laws of such jurisdictions
as the Initial Purchaser may reasonably request; provided that the
Company and its subsidiaries shall not be obligated to qualify as
foreign corporations in any jurisdiction in which they are not so
qualified or to file a general consent to service of process in any
jurisdiction;
(h) to assist the Initial Purchaser in arranging for the
Securities to be designated Private Offerings, Resales and Trading
through Automated Linkages (PORTAL) Market securities in accordance
with the rules and regulations adopted by the National
15
Association of Securities Dealers, Inc. ("NASD") relating to trading in
the PORTAL Market and for the Securities to be eligible for clearance
and settlement through The Depository Trust Company ("DTC");
(i) not to, and to cause its affiliates not to, sell, offer
for sale or solicit offers to buy or otherwise negotiate in respect of
any security (as such term is defined in the Securities Act) which
could be integrated with the sale of the Securities in a manner which
would require registration of the Securities under the Securities Act;
(j) except following the effectiveness of the Exchange Offer
Registration Statement or the Shelf Registration Statement, as the case
may be, not to, and to cause its affiliates not to, and not to
authorize or knowingly permit any person acting on their behalf to,
solicit any offer to buy or offer to sell the Securities by means of
any form of general solicitation or general advertising within the
meaning of Regulation D or in any manner involving a public offering
within the meaning of Section 4(2) of the Securities Act; and not to
offer, sell, contract to sell or otherwise dispose of, directly or
indirectly, any securities under circumstances where such offer, sale,
contract or disposition would cause the exemption afforded by Section
4(2) of the Securities Act to cease to be applicable to the offering
and sale of the Securities as contemplated by this Agreement and the
Offering Memorandum;
(k) During the period beginning from the date hereof and
continuing to, and including, the Closing Date or such earlier time as
the Initial Purchaser may notify the Company, not to offer for sale,
sell, contract to sell or otherwise dispose of, directly or indirectly,
or file a registration statement for, or announce any offering of, any
securities of the Company that are substantially similar to the
Securities.
(l) during the period from the Closing Date until two years
after the Closing Date, without the prior written consent of the
Initial Purchaser, not to, and not permit any of its affiliates (as
defined in Rule 144 under the Securities Act) to, resell any of the
Securities that have been reacquired by them, except for Securities
purchased by the Company or any of its affiliates and resold in a
transaction registered under the Securities Act;
(m) not to, for so long as the Securities are outstanding, be
or become, or be or become owned by, an open-end investment company,
unit investment trust or face-amount certificate company that is or is
required to be registered under Section 8 of the Investment Company
Act, and not to be or become, or be or become owned by, a closed-end
investment company required to be registered, but not registered
thereunder;
(n) in connection with the offering of the Securities, until
the Initial Purchaser shall have notified the Company of the completion
of the resale of the Securities, not to, and to cause its affiliated
purchasers (as defined in Regulation M under the Exchange Act) not to,
either alone or with one or more other persons, bid for or purchase,
for any account in which it or any of its affiliated purchasers has a
beneficial interest, any
16
Securities, or attempt to induce any person to purchase any Securities;
and not to, and to cause its affiliated purchasers not to, make bids or
purchase for the purpose of creating actual, or apparent, active
trading in or of raising the price of the Securities;
(o) in connection with the offering of the Securities, to make
its officers, employees, independent accountants and legal counsel
reasonably available upon request by the Initial Purchaser;
(p) to furnish to the Initial Purchaser on the date hereof a
copy of the independent accountants' report included in the Offering
Memorandum signed by the accountants rendering such report;
(q) to do and perform all things required to be done and
performed by it under this Agreement that are within its control prior
to or after the Closing Date, and to use its best efforts to satisfy
all conditions precedent on its part to the delivery of the Securities;
(r) not to take any action prior to the execution and delivery
of the Indenture which, if taken after such execution and delivery,
would violate any of the covenants contained in the Indenture;
(s) not to take any action prior to the Closing Date which
would require the Offering Memorandum to be amended or supplemented
pursuant to Section 4(d);
(t) prior to the Closing Date, not to issue any press release
or other communication directly or indirectly or hold any press
conference with respect to 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, and after notification to the Initial Purchaser, such
press release or communication is required by law; and
(u) to apply the net proceeds from the sale of the Securities
as set forth in the Offering Memorandum under the heading "Use of
Proceeds."
5. CONDITIONS OF INITIAL PURCHASER'S OBLIGATIONS. The
obligations of the Initial Purchaser hereunder are subject to the accuracy, when
made, of the representations and warranties of the Company and the Guarantors
contained herein, to the accuracy of the statements of the Company and the
Guarantors made in any certificates pursuant to the provisions hereof, to the
performance by the Company and the Guarantors of their obligations hereunder,
and to each of the following additional terms and conditions:
(a) All corporate proceedings and other legal matters incident
to the authorization, form and validity of each of the Transaction
Documents and all other legal matters relating to the Transaction
Documents and the transactions contemplated
17
hereby shall be reasonably satisfactory in all material respects to
counsel for the Initial Purchaser, and the Company shall have furnished
to such counsel all documents and information that they may reasonably
request to enable them to pass upon such matters.
(b) The Offering Memorandum (and any amendments or supplements
thereto) shall have been printed and copies distributed to the Initial
Purchaser as promptly as practicable on or following the date of this
Agreement or at such other date and time as to which the Initial
Purchaser may agree; and no stop order suspending the sale of the
Securities in any jurisdiction shall have been issued and no proceeding
for that purpose shall have been commenced or shall be pending or
threatened.
(c) The Initial Purchaser shall not have discovered and
disclosed to the Company on or prior to the Closing Date that the
Offering Memorandum or any amendment or supplement thereto contains an
untrue statement of a fact which, in the opinion of counsel for the
Initial Purchaser, is material or omits to state any fact which, in the
opinion of such counsel, is material and is required to be stated
therein or is necessary to make the statements therein not misleading.
(d) Proskauer Rose LLP shall have furnished to the Initial
Purchaser such counsel's written opinion and Rule 10b-5 statement, as
counsel to the Company, each addressed to the Initial Purchaser and
dated the Closing Date, in form and substance reasonably satisfactory
to the Initial Purchaser, to the effect set forth in Annex B-1 and B-2
hereto, respectively, with any further modifications which may be
satisfactory to counsel for the Initial Purchaser.
(e) King & Spalding shall have furnished to the Initial
Purchaser such counsel's written opinion, as special regulatory counsel
to the Company, addressed to the Initial Purchaser and dated the
Closing Date, in form and substance reasonably satisfactory to the
Initial Purchaser, to the effect set forth in Annex C hereto, with any
further modifications which may be satisfactory to counsel for the
Initial Purchaser.
(f) The Initial Purchaser shall have received from ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, counsel for the Initial Purchaser, such opinion or
opinions, dated the Closing Date, with respect to such matters as the
Initial Purchaser may reasonably require, and the Company shall have
furnished to such counsel such documents as they request for enabling
them to pass upon such matters.
(g) At the time of the execution of this Agreement, the
Initial Purchaser shall have received from BDO ▇▇▇▇▇▇▇ LLP a letter,
addressed to the Initial Purchaser and dated such date, in form and
substance satisfactory to the Initial Purchaser (i) confirming that
they are independent certified public accountants with respect to the
Company and its subsidiaries within the meaning of the Securities Act
and the applicable published rules and regulations thereunder and (ii)
stating the conclusions and findings of such firm with respect to the
financial statements and certain financial
18
information contained in the Preliminary Offering Memorandum or the
Offering Memorandum.
References to the Offering Memorandum in this paragraph (g)
and in paragraph (h) below include any supplement thereto at the date
of the letter.
(h) On the Closing Date, the Initial Purchaser shall have
received a letter (the "bring-down letter") from BDO ▇▇▇▇▇▇▇ LLP
addressed to the Initial Purchaser and dated the Closing Date
confirming, as of the date of the bring-down letter (or, with respect
to matters involving changes or developments since the respective dates
as of which specified financial information is given in the Offering
Memorandum, as of a date not more than three business days prior to the
date of the bring-down letter), the conclusions and findings of such
firm with respect to the financial information and other matters
covered by its letter delivered to the Initial Purchaser concurrently
with the execution of this Agreement pursuant to Section 5(g) above
(the "initial letters").
(i) The Company shall have furnished to the Initial Purchaser
a certificate, dated the Closing Date, of its Chairman of the Board,
its President, any executive vice president, senior vice president or
its chief financial officer stating that (i) such officer has carefully
examined the Offering Memorandum (ii) in his opinion, the Offering
Memorandum, as of its date, did not include any untrue statement of a
material fact and did not omit to state a material fact required to be
stated therein or necessary to make the statements therein not
misleading, and since the date of the Offering Memorandum, no event has
occurred which should have been set forth in a supplement or amendment
to the Offering Memorandum and (iii) to the best of his knowledge after
reasonable investigation, as of the Closing Date, the Company and each
Guarantor have complied with all agreements and satisfied all
conditions on their part to be performed or satisfied hereunder at or
prior to the Closing Date.
(j) The Initial Purchaser shall have received a counterpart of
the Registration Rights Agreement which shall have been executed and
delivered by a duly authorized officer of the Company.
(k) The Indenture shall have been duly executed and delivered
by the Company, the Guarantors and the Trustee, the Securities shall
have been duly executed and delivered by the Company and duly
authenticated by the Trustee and the form of Subsidiary Guarantees
endorsed on the Securities shall have been duly executed and delivered
by the Guarantors.
(l) The Securities shall have been approved by the NASD for
trading in the PORTAL Market.
(m) If any event shall have occurred that requires the Company
under Section 4(d) to prepare an amendment or supplement to the
Offering Memorandum, such amendment or supplement shall have been
prepared, the Initial Purchaser shall
19
have been given a reasonable opportunity to comment thereon, and copies
thereof shall have been delivered to the Initial Purchaser reasonably
in advance of the Closing Date.
(n) There shall not have occurred any invalidation of Rule
144A under the Securities Act by any court or any withdrawal or
proposed withdrawal of any rule or regulation under the Securities Act
or the Exchange Act by the Commission or any amendment or proposed
amendment thereof by the Commission which in the judgment of the
Initial Purchaser would materially impair the ability of the Initial
Purchaser to purchase, hold or effect resales of the Securities as
contemplated hereby.
(o) No action shall have been taken and no statute, rule,
regulation or order shall have been enacted, adopted or issued by any
governmental agency or body which would, as of the Closing Date,
prevent the issuance or sale of the Securities; and no injunction,
restraining order or order of any other nature by any federal or state
court of competent jurisdiction shall have been issued as of the
Closing Date which would prevent the issuance or sale of the
Securities.
All opinions, letters, evidence and certificates mentioned
above or elsewhere in this Agreement shall be deemed to be in compliance with
the provisions hereof only if they are in form and substance reasonably
satisfactory to counsel for the Initial Purchaser.
6. REPRESENTATIONS OF THE INITIAL PURCHASER. The Initial
Purchaser represents to and agree, jointly and severally, with the Company and
each of the Guarantors:
(a) Corporate Power; Authorization. The Initial Purchaser has
full right, power and authority to execute and deliver this Agreement
and the Registration Rights Agreement and to perform its respective
obligations hereunder and thereunder; and all corporate action required
to be taken for the due and proper authorization, execution and
delivery of each of this Agreement and the Registration Rights
Agreement and the consummation of the transactions contemplated by this
Agreement have been duly and validly taken.
(b) Enforceable Obligations. The Registration Rights
Agreement, when duly executed by the proper officers of the Initial
Purchaser and delivered by the Initial Purchaser, assuming due
authorization, execution and delivery thereof by the Company, will
constitute a valid and binding agreement of the Initial Purchaser
enforceable against the Initial Purchaser in accordance with its terms,
subject to the effects of bankruptcy, insolvency, fraudulent
conveyance, fraudulent transfer, reorganization, moratorium and other
similar laws relating to or affecting creditors' rights generally,
general equitable principles (whether considered in a proceeding in
equity or at law) and an implied covenant of good faith and fair
dealing.
7. REIMBURSEMENT OF INITIAL PURCHASER'S EXPENSES. If (a) the
Company shall fail to tender the Securities for delivery to the Initial
Purchaser for any reason permitted under this Agreement, (b) the Initial
Purchaser shall decline to purchase the Securities for any reason permitted
under this Agreement or (c) the Initial Purchaser shall purchase the Securities
20
pursuant to this Agreement, the Company shall reimburse the Initial Purchaser
for the fees and expenses of their counsel and for such other out-of-pocket
expenses as shall have been reasonably incurred by them in connection with this
Agreement and the proposed purchase and resale of the Securities, and upon
demand the Company shall pay the full amount thereof to the Initial Purchaser.
8. INDEMNIFICATION OF THE INITIAL PURCHASER AND THE COMPANY.
(a) Indemnification of the Initial Purchaser. The Company and each Guarantor,
jointly and severally, shall indemnify and hold harmless the Initial Purchaser
and each person, if any, who controls the Initial Purchaser within the meaning
of the Securities Act (collectively referred to for the purposes of this Section
8 as the Initial Purchaser) against any loss, claim, damage or liability, joint
or several, or any action in respect thereof, to which the Initial Purchaser may
become subject, under the Securities Act or otherwise, insofar as such loss,
claim, damage, liability or action arises out of or is based upon (i) any untrue
statement or alleged untrue statement of a material fact contained in the
Preliminary Offering Memorandum or the Offering Memorandum or in any amendment
or supplement thereto or (ii) the omission or alleged omission to state in the
Preliminary Offering Memorandum or the Offering Memorandum or in any amendment
or supplement thereto a material fact required to be stated therein or necessary
to make the statements therein not misleading, and shall reimburse the Initial
Purchaser for any legal or other expenses reasonably incurred by the Initial
Purchaser in connection with investigating or preparing to defend or defending
against or appearing as a third party witness in connection with any such loss,
claim, damage, liability or action as such expenses are incurred; provided,
however, that the foregoing indemnification agreement with respect to the
Preliminary Offering Memorandum shall not inure to the benefit of the Initial
Purchaser if (i) a copy of the Offering Memorandum (as then amended or
supplemented) was required by law to be delivered to the person asserting any
such loss, claim, damage or liability at or prior to the written confirmation of
the sale of Securities to such person, (ii) a copy of the Offering Memorandum
(as then amended or supplemented) was not sent or given to such person by or on
behalf of the Initial Purchaser and (iii) the Offering Memorandum (as so amended
or supplemented) would have cured the defect giving rise to such loss, claim,
damage or liability; and further provided, however, that the Company and the
Guarantors shall not be liable in any such case to the extent that any such
loss, claim, damage, liability or action arises out of or is based upon (i) an
untrue statement or alleged untrue statement in or omission or alleged omission
from the Preliminary Offering Memorandum or the Offering Memorandum or any such
amendment or supplement in reliance upon and in conformity with written
information furnished to the Company and the Guarantors through the Initial
Purchaser specifically for use therein, which information the parties hereto
agree is limited to the Initial Purchaser's Information.
(b) Indemnification of Company, Directors and Officers. The
Initial Purchaser shall indemnify and hold harmless the Company and each
Guarantor, their respective directors and officers, and each person, if any, who
controls the Company or Guarantor within the meaning of the Securities Act
(collectively referred to for the purposes of this Section 8 as the Company),
against any loss, claim, damage or liability, joint or several, or any action in
respect thereof, to which the Company or any Guarantor may become subject, under
the Securities Act or otherwise, insofar as such loss, claim, damage, liability
or action arises out
21
of or is based upon (i) any untrue statement or alleged untrue statement of a
material fact contained in the Preliminary Offering Memorandum or the Offering
Memorandum or in any amendment or supplement thereto or (ii) the omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading, but in each case
only to the extent that the untrue statement or alleged untrue statement or
omission or alleged omission was made in reliance upon and in conformity with
written information furnished to the Company through the Initial Purchaser by or
on behalf of the Initial Purchaser specifically for use therein, and shall
reimburse the Company or such Guarantor for any legal or other expenses
reasonably incurred by the Company or such Guarantor in connection with
investigating or preparing to defend or defending against or appearing as third
party witness in connection with any such loss, claim, damage, liability or
action as such expenses are incurred; provided that the parties hereto hereby
agree that such written information provided by the Initial Purchaser consists
solely of the Initial Purchaser's Information.
(c) Actions; Notification. Promptly after receipt by an
indemnified party under this Section 8 of notice of any claim or the
commencement of any action, the indemnified party shall, if a claim in respect
thereof is to be made against the indemnifying party under this Section 8,
notify the indemnifying party in writing of the claim or the commencement of
that action; provided, however, that the failure to notify the indemnifying
party shall not relieve it from any liability which it may have under this
Section 8 except to the extent it has been materially prejudiced by such
failure; and, provided, further, that the failure to notify the indemnifying
party shall not relieve it from any liability which it may have to an
indemnified party otherwise than under this Section 8. If any such claim or
action shall be brought against an indemnified party, and it shall notify the
indemnifying party thereof, the indemnifying party shall be entitled to
participate therein and, to the extent that it wishes, jointly with any other
similarly notified indemnifying party, to assume the defense thereof with
counsel reasonably satisfactory to the indemnified party. After notice from the
indemnifying party to the indemnified party of its election to assume the
defense of such claim or action, the indemnifying party shall not be liable to
the indemnified party under this Section 8 for any legal or other expenses
subsequently incurred by the indemnified party in connection with the defense
thereof other than reasonable costs of investigation; provided, however, that
any indemnified party shall have the right to employ separate counsel in any
such action and to participate in the defense thereof, but the fees and expenses
of such counsel shall be at the expense of such indemnified party unless (i) the
employment thereof has been specifically authorized by the indemnifying party in
writing, (ii) such indemnified party shall have been advised in writing (a copy
of which shall be provided to the indemnifying party) by such counsel that there
may be one or more legal defenses available to it which are different from or
additional to those available to the indemnifying party and in the reasonable
judgment of such counsel it is advisable for such indemnified party to employ
separate counsel or (ii) the indemnifying party has failed to assume the defense
of such action and employ counsel reasonably satisfactory to the indemnified
party, in which case, if such indemnified party notifies the indemnifying party
in writing that it elects to employ separate counsel at the expense of the
indemnifying party, the indemnifying party shall not have the right to assume
the defense of such action on behalf of such indemnified party, it being
understood, however, that the indemnifying party shall not, in connection with
any one such action or
22
separate but substantially similar or related actions in the same jurisdiction
arising out of the same general allegations or circumstances, be liable for the
reasonable fees and expenses of more than one separate firm of attorneys at any
time for all such indemnified parties, which firm shall be designated in writing
by the Initial Purchaser (without giving effect to the first parenthetical
contained in Section 8(a)), if the indemnified parties under this Section 8
consist of the Initial Purchaser or any of its officers, employees or
controlling persons, or by the Company (without giving effect to the
parenthetical contained in Section 8(b)), if the indemnified parties under this
Section 8 consist of the Company or any of the Company's directors, officers,
employees or controlling persons. Each indemnified party, as a condition of the
indemnity agreements contained in Sections 8(a) and 8(b), shall use all
reasonable efforts to cooperate with the indemnifying party in the defense of
any such action or claim. Subject to the provisions of Section 8(d) below, no
indemnifying party shall be liable for any settlement of any such action
effected without its written consent (which consent shall not be unreasonably
withheld), but if settled with its written consent or if there be a final
judgment for the plaintiff in any such action, the indemnifying party agrees to
indemnify and hold harmless any indemnified party from and against any loss or
liability by reason of such settlement or judgment.
(d) Settlement without Consent if Failure to Reimburse. If at
any time an indemnified party shall have requested that an indemnifying party
reimburse the indemnified party for fees and expenses of counsel, such
indemnifying party agrees that it shall be liable for any settlement of the
nature contemplated by this Section 8 effected without its written consent if
(i) such settlement is entered into more than 45 days after receipt by such
indemnifying party of the request for reimbursement, (ii) such indemnifying
party shall have received notice of the terms of such settlement at least 30
days prior to such settlement being entered into and (iii) such indemnifying
party shall not have reimbursed such indemnified party in accordance with such
request prior to the date of such settlement.
(e) Contribution. If the indemnification provided for in this
Section 8 is unavailable or insufficient to hold harmless an indemnified party
under Section 8(a) or (b), then each indemnifying party shall, in lieu of
indemnifying such indemnified party, contribute to the amount paid or payable by
such indemnified party as a result of such loss, claim, damage or liability, or
action in respect thereof, (i) in such proportion as shall be appropriate to
reflect the relative benefits received by the Company and the Guarantors on the
one hand and the Initial Purchaser on the other from the offering of the
Securities or (ii) if the allocation provided by clause (i) above is not
permitted by applicable law, in such proportion as is appropriate to reflect not
only the relative benefits referred to in clause (i) above but also the relative
fault of the Company and the Guarantors on the one hand and the Initial
Purchaser on the other with respect to the statements or omissions which
resulted in such loss, claim, damage or liability, or action in respect thereof,
as well as any other relevant equitable considerations. The relative benefits
received by the Company and the Guarantors on the one hand and the Initial
Purchaser on the other with respect to such offering shall be deemed to be in
the same proportion as the total net proceeds from the offering of the
Securities purchased under this Agreement (before deducting expenses) received
by the Company and the Guarantors bear to the total underwriting discounts and
commissions received by the Initial Purchaser with respect to the Securities
purchased under this Agreement, in each case
23
as set forth in the Offering Memorandum. The relative fault shall be determined
by reference to, among other things, whether the untrue or alleged untrue
statement of a material fact or the omission or alleged omission to state a
material fact relates to information supplied by the Company and the Guarantors
on the one hand or the Initial Purchaser on the other, the intent of the parties
and their relative knowledge, access to information and opportunity to correct
or prevent such untrue statement or omission; provided that the parties hereto
agree that the written information furnished to the Company by the Initial
Purchaser for use in the Preliminary Offering Memorandum, or the Offering
Memorandum consists solely of the Initial Purchaser's Information. The Company
and the Initial Purchaser agree that it would not be just and equitable if
contributions pursuant to this Section 8(e) were to be determined by pro rata
allocation or by any other method of allocation which does not take into account
the equitable considerations referred to herein. The amount paid or payable by
an indemnified party as a result of the loss, claim, damage or liability, or
action in respect thereof, referred to above in this Section 8(e) shall be
deemed to include, for purposes of this Section 8(e), any legal or other
expenses reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim. Notwithstanding the
provisions of this Section 8(e), the Initial Purchaser shall not be required to
contribute any amount in excess of the amount by which the total price at which
the Securities underwritten by it and distributed to the public were offered to
the public less the amount of any damages which the Initial Purchaser has
otherwise paid or become liable to pay by reason of any untrue or alleged untrue
statement or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation.
The obligations of the Company, the Guarantors and the Initial
Purchaser in this Section 8 are in addition to any other liability which the
Company, the Guarantors or the Initial Purchaser, as the case may be, may
otherwise have.
9. PERSONS ENTITLED TO BENEFIT OF AGREEMENT. This Agreement
shall inure to the benefit of and be binding upon the Initial Purchaser, the
Company, the Guarantors and their respective successors. Nothing expressed or
mentioned in this Agreement is intended or shall be construed to give any
person, firm or corporation, other than the Initial Purchaser, the Company, the
Guarantors and their respective successors and the controlling persons and
officers and directors referred to in Section 8 and their heirs and legal
representatives, any legal or equitable right, remedy or claim under or in
respect of this Agreement or any provision contained herein.
10. EXPENSES. In addition to the Company's obligations under
Section 7, the Company and the Guarantors agree with the Initial Purchaser to
pay (a) the costs incident to the authorization, issuance, sale, preparation and
delivery of the Securities and any taxes payable in that connection; (b) the
costs incident to the preparation, printing and distribution of the Preliminary
Offering Memorandum, the Offering Memorandum and any amendments and exhibits
thereto and the costs of printing, reproducing and distributing the applicable
Transaction Documents by mail, telex or other means of communications; (c) all
expenses and listing fees incurred in connection with the application for
quotation of the Securities on the PORTAL Market and the approval of the
Securities for book-entry transfer by The
24
Depository Trust Company; (d) any applicable listing or other fees; (e) the fees
and expenses of qualifying the Securities under the securities laws of the
several jurisdictions as provided in Section 4(g) and of preparing, printing and
distributing Blue Sky Memoranda and Legal Investment Surveys (including related
fees and expenses of counsel to the Initial Purchaser); (f) any fees charged by
securities rating services for rating the Securities; (g) all fees and expenses
of the Trustee and any agent thereof; and (h) all other costs and expenses
incident to the performance of the obligations of the Company under this
Agreement (including, without limitation, the fees and expenses of counsel to
the Company and the fees and expenses of BDO ▇▇▇▇▇▇▇ LLP).
11. SURVIVAL. The respective indemnities, rights of
contribution, representations, warranties and agreements of the Company, the
Guarantors and the Initial Purchaser contained in this Agreement or made by or
on behalf on them, respectively, pursuant to this Agreement, shall survive the
delivery of and payment for the Securities and shall remain in full force and
effect, regardless of any termination or cancellation of this Agreement or any
investigation made by or on behalf of any of them or any person controlling any
of them.
12. NOTICES, ETC. All statements, requests, notices and
agreements hereunder shall be in writing, and:
(a) if to the Initial Purchaser, shall be delivered or
sent by mail, telex or facsimile transmission to Societe Generale
Securities Corporation, ▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇
▇▇▇▇▇, Attention: High Yield Capital Markets, Telephone: (212) 278-
5423, Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇; and
(b) if to the Company or the Guarantors, shall be
delivered or sent by mail, telex or facsimile transmission to the
address of the Company set forth in the Offering Memorandum, Attention:
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, Telephone: (▇▇▇) ▇▇▇-▇▇▇▇, Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇.
13. DEFINITIONS OF CERTAIN TERMS. For purposes of this
Agreement, (a) "business day" means any day on which the New York Stock
Exchange, Inc. is open for trading and (b) "subsidiary" has the meaning set
forth in Rule 405 of the Rules and Regulations of the Securities Act.
14. INITIAL PURCHASER'S INFORMATION. The parties hereto
acknowledge and agree that, for all purposes of this Agreement, the Initial
Purchaser's Information consists solely of the following information in the
Offering Memorandum: (i) the last paragraph on the front cover page concerning
the terms of the offering by the Initial Purchaser; (ii) the first paragraph on
page i concerning over-allotment and trading activities by the Initial
Purchaser; and (iii) the statements concerning the Initial Purchaser contained
in the fourth sentence of the second paragraph and the third sentence of the
fifth paragraph under the heading "Plan of Distribution."
25
15. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
16. JOINT AND SEVERAL LIABILITY. Each of the Guarantors, by
its execution and delivery of a counterpart to this Agreement, agrees that it
shall be joint and severally liable for all obligations and liabilities of the
Company.
17. COUNTERPARTS. This Agreement may be executed in any number
of counterparts, each of which shall be deemed to be an original, but all such
counterparts shall together constitute one and the same instrument.
18. HEADINGS. The headings herein are inserted for
convenience of reference only and are not intended to be part of, or to affect
the meaning or interpretation of, this Agreement.
26
If the foregoing is in accordance with your understanding of
the agreement between the Company, the Guarantors and the Initial Purchaser,
kindly indicate your acceptance in the space provided for that purpose below.
Very truly yours,
SCHEIN PHARMACEUTICAL, INC.
By
---------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: Executive Vice President and
Chief Financial Officer
SCHEIN PHARMACEUTICAL
INTERNATIONAL, INC.
By:
---------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: President
SCHEIN PHARMACEUTICAL PA, INC.
By:
---------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: Chairman of the Board and
Chief Executive Officer
SCHEIN PHARMACEUTICAL SERVICE
COMPANY, INC.
By:
---------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: President
STERIS LABORATORIES, INC.
By:
---------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: Chairman of the Board and
Chief Executive Officer
MARSAM PHARMACEUTICALS INC.
By:
---------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: Assistant Secretary
DANBURY PHARMACAL, INC.
By:
---------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: Chairman of the Board and
Chief Executive Officer
DANBURY PHARMACAL PUERTO RICO,
INC.
By:
---------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: Chairman of the Board and
Chief Executive Officer
Accepted and agreed to as of the date first above written:
SOCIETE GENERALE SECURITIES CORPORATION
By
---------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Managing Director
Annex A
[Form of Exchange and Registration Rights Agreement]
Annex B-1
[Form of Proskauer Rose LLP Opinion Letter]
Annex B-2
[Form of Proskauer Rose LLP Rule 10b-5 Letter]
Annex C
[Form of King & Spalding Opinion Letter]
