EXHIBIT 4.4
VISKASE COMPANIES, INC.
90,000 UNITS
CONSISTING OF
$90,000,000 11-1/2% SENIOR SECURED NOTES DUE 2011
AND 90,000 WARRANTS TO PURCHASE SHARES OF COMMON STOCK
PURCHASE AGREEMENT
June 17, 2004
Xxxxxxxxx & Company, Inc.
00000 Xxxxx Xxxxxx Xxxxxxxxx
00xx Xxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Ladies and Gentlemen:
VISKASE COMPANIES, INC., a Delaware corporation (the "Company") and
Xxxxxxxxx & Company, Inc. (the "Initial Purchaser") agree as follows:
1. ISSUANCE OF NOTES. Subject to the terms and conditions herein
contained, the Company proposes to issue and sell to Initial Purchaser 90,000
units (the "Units"), consisting of $90,000,000 Aggregate Principal Amount of
11-1/2% Senior Secured Notes due 2011 (the "Notes") and 90,000 warrants (the
"Warrants") to purchase an aggregate of 805,270 shares of common stock, par
value $.01 per share, of the Company (the "Common Stock"), at an exercise price
of $0.01 per share, subject to adjustment. The Notes will be issued pursuant to
an indenture (the "Indenture"), to be dated as of the Closing Date, by and among
the Company and LaSalle Bank National Association, as trustee (in such capacity,
the "Trustee") and collateral agent (in such capacity, the "Collateral Agent").
Capitalized terms used, but not defined herein, shall have the meanings set
forth in the Indenture (as hereinafter defined).
The Warrants will be issued pursuant to the provisions of a warrant
agreement (the "Warrant Agreement"), to be dated as of the Closing Date, by and
between the Company and Xxxxx Fargo Bank Minnesota, National Association (or
such other party selected by the Company on or prior to the Closing Date and
reasonably acceptable to the Initial Purchaser), as warrant agent (in such
capacity, the "Warrant Agent"). As used herein, the term "Warrant Shares" shall
mean, collectively, the shares of Common Stock issuable upon exercise of the
Warrants. As used herein, the term "Securities" shall mean, collectively, the
Units, the Notes, the Warrants and the Warrant Shares.
The Units will be offered and sold to the Initial Purchaser pursuant
to an exemption from the registration requirements under the Securities Act of
1933, as amended (the "Act"). Upon original issuance thereof, and until such
time as the same is no longer required under the applicable requirements of the
Act, the Securities shall bear the legends set forth in the final offering
circular, dated the date hereof (the "Final Offering Circular") relating to the
offer and sale of the Units. The Company has prepared a preliminary offering
circular, dated June 2, 2004 (the "Preliminary Offering Circular") for the Notes
and the Final Offering Circular relating to the offer and sale of the Units (the
"Offering"). "Offering Circular" means, as of any date or time referred to in
this Agreement, the most recent offering
circular (whether the Preliminary Offering Circular or the Final Offering
Circular, and any amendment or supplement to either such document), including
exhibits and schedules thereto.
In connection with the sale of the Units, the Company is
concurrently (i) entering into a new senior secured revolving credit facility
between the Company and Xxxxx Fargo Foothill Inc., which will provide for a
revolving loan facility in an amount of up to $20,000,000 (as amended,
supplemented, modified, extended or restated from time to time, the "Credit
Agreement"), and (ii) (A) purchasing (the "8% Notes Repurchase") its 8% Senior
Subordinated Secured Notes due 2008 (the "8% Senior Notes") from holders of
$55.7 million aggregate principal amount of the 8% Senior Notes at a purchase
price equal to 90% of the aggregate principal amount thereof together with
accrued but unpaid interest to the purchase date therefor (collectively, the
"Redeemed 8% Senior Note Holders") and (B) obtaining from such holders consents
(the "Consent Solicitation") to (1) release the liens on the collateral that
secure the 8% Senior Notes, (2) contractually subordinate the Company's
obligations under the 8% Senior Notes to the Company's obligations under certain
of the Company's indebtedness, including the Notes and the Credit Agreement and
(3) eliminate substantially all of the restrictive covenants contained in the
indenture governing the 8% Senior Notes.
2. TERMS OF OFFERING. The Initial Purchaser has advised the
Company, and the Company understands, that the Initial Purchaser will make
offers to sell some or all of the Units purchased by the Initial Purchaser
hereunder on the terms set forth in the Final Offering Circular, as amended or
supplemented, to persons (the "Subsequent Purchasers") whom the Initial
Purchaser (i) reasonably believes to be "qualified institutional buyers"
("QIBs") as defined in Rule 144A under the Act, as such may be amended from time
to time, (ii) reasonably believes (based upon written representations made by
such persons to the Initial Purchaser) to be institutional "accredited
investors" as defined in Rule 501(a)(1), (2), (3) or (7) under the Act
("Accredited Investors") or (iii) reasonably believes to be non-U.S. persons in
reliance upon Regulation S under the Act (any such sales in connection with the
original distribution of the Units, the "Exempt Resales").
Pursuant to the Indenture, all future Domestic Restricted
Subsidiaries of the Company that are not Immaterial Subsidiaries shall fully and
unconditionally guarantee, on a senior secured basis, to each holder of the
Notes and the Trustee, the payment and performance of the Company's obligations
under the Indenture and the Notes (each such subsidiary being referred to herein
as a "Guarantor" and each such guarantee being referred to herein as a
"Guarantee").
Pursuant to the terms of the Collateral Agreements, all of the
obligations under the Notes and the Indenture will be secured by a first
priority lien and security interest in substantially all of the assets of the
Company and such future Domestic Restricted Subsidiaries; provided, that such
lien and security interest will be (i) in the case of assets comprised of
inventory and accounts receivable, contractually subordinated to the liens
securing the Credit Agreement pursuant to the Intercreditor Agreement, (ii) in
the case of collateral comprised of real property, fixtures and improvements
thereon and equipment, be contractually senior to the liens securing the Credit
Agreement pursuant to the Intercreditor Agreement, (iii) in the case of all
other collateral, be contractually pari passu with the liens securing the Credit
Agreement pursuant to the Intercreditor Agreement and (iv) in each such case, be
subject to certain other prior liens.
Holders of the Notes (including Subsequent Purchasers) will have the
registration rights set forth in the registration rights agreement applicable to
the Notes (the "Debt Registration Rights Agreement"), to be executed on and
dated as of the Closing Date. Pursuant to the Debt Registration Rights
Agreement, the Company will agree, among other things, to use reasonable best
efforts to file with the Securities and Exchange Commission (the "SEC") (a) a
registration statement under the Act relating to senior secured notes (the
"Exchange Notes") which shall be substantially identical in all material
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respects to the Notes (except that the Exchange Notes shall have been registered
pursuant to such registration statement and will not be subject to restrictions
on transfer or contain additional interest provisions) to be offered in exchange
for the Notes (such offer to exchange being referred to as the "Exchange
Offer"), and/or (b) under certain circumstances, a shelf registration statement
pursuant to Rule 415 under the Act (the "Shelf Registration Statement") relating
to the resale by certain holders of the Notes. If required under the Debt
Registration Rights Agreement, the Company will issue Exchange Notes to the
Initial Purchaser (the "Private Exchange Notes"). If the Company fails to
satisfy certain of its obligations under the Debt Registration Rights Agreement,
it will be required to pay additional interest to the holders of the Notes under
certain circumstances.
Holders of the Warrants (including Subsequent Purchasers) will have
the registration rights described in the Final Offering Circular, which will be
set forth in the registration rights agreement (the "Equity Registration Rights
Agreement" and, together with the Debt Registration Rights Agreement, the
"Registration Rights Agreements"), to be dated the Closing Date, for so long as
such Warrant Shares constitute Registrable Securities (as defined therein).
Pursuant to the Equity Registration Rights Agreement, the Company
will file a registration statement upon exercise of a demand registration right
by the holders of the Registrable Securities (an "Equity Registration
Statement") covering the resale of the Warrant Shares by the holders thereof and
to use its reasonable best efforts to cause such Equity Registration Statement
to be declared effective, subject to certain exceptions, and to remain effective
for the period specified in the Equity Registration Rights Agreement.
This Agreement, the Indenture, the Collateral Agreements, the
Registration Rights Agreements, the Notes, any Guarantees by future Domestic
Restricted Subsidiaries that are not Immaterial Subsidiaries, the Exchange
Notes, the Private Exchange Notes (if any) the Warrants, the Warrant Shares, and
the Units are collectively referred to herein as the "Documents."
3. PURCHASE, SALE AND DELIVERY. 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 purchase price of $90,000,000. The
Company agrees to pay a commission to Xxxxxxxxx & Company, Inc. in an amount
equal to $1,950,000, which may be deducted by the applicable Initial Purchaser
from the aggregate purchase price of the Units to be paid by such Initial
Purchaser. Delivery to the Initial Purchaser of and payment to the Company for
the Units shall be made at a Closing (the "Closing") to be held at 10:00 a.m.,
New York time, on June 29, 2004 (the "Closing Date") at the New York offices of
Xxxxx, Brown, Xxxx & Maw LLP.
The Company shall deliver to the Initial Purchaser one or more
Global certificates representing the Securities (other than Warrant Shares) in
definitive form, registered in such names and denominations as the Initial
Purchaser may request, against payment by the Initial Purchaser of the purchase
price therefor by immediately available Federal funds bank wire transfer to such
bank account or accounts as the Company shall designate to the Initial Purchaser
at least two business days prior to the Closing. The certificates representing
the Securities (other than Warrant Shares) in definitive form shall be made
available to the Initial Purchaser for inspection at the New York offices of
Mayer, Brown, Xxxx & Maw LLP (or such other place as shall be reasonably
acceptable to the Initial Purchaser) not later than 10:00 a.m. one business day
immediately preceding the Closing Date. Securities (other than Warrant Shares)
to be represented by one or more definitive global securities in book-entry form
will be deposited on the Closing Date, by or on behalf of the Company, with The
Depository Trust Company ("DTC") or its designated custodian, and registered in
the name of Cede & Co.
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4. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company
represents and warrants to the Initial Purchaser that, as of the date hereof:
(a) Neither the Preliminary Offering Circular, the Final Offering Circular,
nor any amendment or supplement thereto, as of the date thereof and at all
times subsequent thereto up to the Closing Date, contained or contains any
untrue statement of a material fact, or omitted or omits to state a
material fact necessary to make the statements therein, in the light of
the circumstances under which they were made, not misleading (other than
with respect to the Preliminary Offering Circular, pricing and other terms
intentionally left blank); provided, however, that the Company makes no
representation or warranty as to the Initial Purchaser Information (as
hereinafter defined). No injunction or order has been issued that either
(i) asserts that any of the transactions contemplated by this Agreement or
any other Document is subject to the registration requirements of the Act
or (ii) would prevent or suspend the issuance or sale of any of the Notes
or the use of the Preliminary Offering Circular, the Final Offering
Circular or any amendment or supplement thereto, in any jurisdiction. Each
of the Preliminary Offering Circular and the Final Offering Circular, as
of their respective dates, contained, and the Final Offering Circular, as
amended or supplemented as of the Closing Date, will contain, all the
information specified in, and meet the requirements of, Rule 144A(d)(4)
under the Act.
(b) Each of the Company's direct and indirect Subsidiaries are listed on
Schedule I attached hereto. Each Subsidiary that is a Foreign Restricted
Subsidiary has an asterisk ("*") next to its name on such schedule.
(c) Each of the Company and its Subsidiaries (i) has been duly organized or
formed, as the case may be, is validly existing and is in good standing
under the laws of its jurisdiction of organization, (ii) has all requisite
power and authority to carry on its business and to own, lease and operate
its properties and assets, and (iii) is duly qualified or licensed to do
business and is in good standing as a foreign corporation, partnership or
other entity as the case may be, authorized to do business in each
jurisdiction in which the nature of such businesses or the ownership or
leasing of such properties requires such qualification, except where the
failure to be so qualified would not, individually or in the aggregate,
have a material adverse effect on (A) the properties, business,
operations, earnings, assets, liabilities or condition (financial or
otherwise) of the Company and its Subsidiaries, taken as a whole, (B) the
ability of the Company to perform its obligations in all material respects
under any Document or (C) the consummation of any of the transactions
contemplated under any of the Documents (each, a "Material Adverse
Effect").
(d) All of the issued and outstanding shares of capital stock of the Company
(i) have been, and the Warrant Shares, when issued in accordance with the
terms and conditions contained in the Warrant Agreements, will be, duly
authorized and validly issued (ii) are, and the Warrant Shares when issued
in accordance with the terms and conditions contained in the Warrant
Agreement will be, fully paid and nonassessable, and (iii) were not, and
the Warrant Shares will not be issued in violation of, or subject to any
preemptive or similar rights. The table under the section captioned
"Capitalization" in the Final Offering Circular (including the footnotes
thereto) sets forth, as of March 31, 2004, the capitalization of the
Company including, (i) the actual cash and cash equivalents and
capitalization of the Company and its Subsidiaries on a consolidated basis
and (ii) the pro forma cash and cash equivalents and capitalization of the
Company and its Subsidiaries, on a consolidated basis, after giving effect
to the offer and sale of the Units and the application of the net proceeds
therefrom as described in the Final Offering Circular under the section
entitled "Use of Proceeds." Except as set forth in such table, immediately
following the Closing, neither the Company nor any of its Subsidiaries
will have any liabilities, whether absolute, accrued, or contingent, other
than (A) liabilities that are reflected in the Financial
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Statements (as hereinafter defined), or (B) liabilities in the ordinary
course of business, consistent with past practice, that would not,
individually or in the aggregate, have a Material Adverse Effect. Except
as disclosed in the Final Offering Circular, all of the outstanding shares
of capital stock or other equity interests of each of the Company's
Subsidiaries are owned, directly or indirectly, by it, free and clear of
all liens, security interests, mortgages, pledges, charges, equities,
claims or restrictions on transferability or encumbrances of any kind
(collectively, "Liens), other than those imposed by the Act and the
securities or "Blue Sky" laws of certain domestic or foreign
jurisdictions. Except as disclosed in the Final Offering Circular, there
are no outstanding (A) options, warrants or other rights to purchase from
the Company or any of its Subsidiaries, (B) agreements, contracts,
arrangements or other obligations of the Company or any of its
Subsidiaries to issue or (C) other rights to convert any obligation into
or exchange any securities for, in the case of each of clauses (A) through
(C), shares of capital stock of or other equity interests in the Company
or any of its Subsidiaries.
(e) No holder of securities of the Company or any of its Subsidiaries will be
entitled to have such securities registered under the registration
statements required to be filed by the Company with respect to the
Exchange Notes or the Private Exchange Notes pursuant to the Debt
Registration Rights Agreement.
(f) The Company has all requisite corporate power and authority to execute,
deliver and perform its respective obligations under the Documents to
which it is a party and to consummate the transactions contemplated
thereby.
(g) This Agreement has been duly and validly authorized, executed and
delivered by the Company. Each of the Indenture and the Collateral
Agreements has been duly and validly authorized by the Company. Each of
the Indenture and the Collateral Agreements, when executed and delivered
by the Company, will constitute a legal, valid and binding obligation of
the Company (assuming such documents will be legal, valid and binding
obligations of the other parties thereto), enforceable against the Company
in accordance with its terms, except that the enforcement thereof may be
subject to (i) bankruptcy, insolvency, reorganization, receivership,
moratorium, fraudulent conveyance or other similar laws now or hereafter
in effect relating to creditors' rights generally and (ii) general
principles of equity (whether applied by a court of law or equity) and the
discretion of the court before which any proceeding therefor may be
brought.
(h) The Registration Rights Agreements have been duly and validly authorized
by the Company. The Registration Rights Agreements, when executed and
delivered by the Company, will constitute legal, valid and binding
obligations of the Company (assuming such documents will be legal, valid
and binding obligations of the other parties thereto), enforceable against
the Company in accordance with their respective terms, except that (A) the
enforcement thereof may be subject to (i) bankruptcy, insolvency,
reorganization, receivership, moratorium, fraudulent conveyance or other
similar laws now or hereafter in effect relating to creditors' rights
generally and (ii) general principles of equity (whether applied by a
court of law or equity) and the discretion of the court before which any
proceeding therefor may be brought and (B) any rights to indemnity or
contribution thereunder may be limited by federal and state securities
laws and public policy considerations.
(i) The Notes, when issued, will be in the form contemplated by the Indenture.
When executed and delivered by the Company, the Indenture will meet the
requirements for qualification under the Trust Indenture Act of 1939, as
amended (the "TIA"). The Notes, Exchange Notes and Private Exchange Notes
have each been duly and validly authorized by each of the Company and, in
the case of the Notes, when delivered to and paid for by the Initial
Purchaser in accordance with the
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terms of this Agreement and the Indenture, will have been duly executed,
issued and delivered and will be legal, valid and binding obligations of
the Company (assuming such documents will be legal, valid and binding
obligations of the other parties thereto), entitled to the benefit of the
Indenture, the Collateral Agreements and the Debt Registration Rights
Agreement, and enforceable against the Company in accordance with their
terms, except that the enforcement thereof may be subject to (i)
bankruptcy, insolvency, reorganization, receivership, moratorium,
fraudulent conveyance or other similar laws now or hereafter in effect
relating to creditors' rights generally and (ii) general principles of
equity (whether applied by a court of law or equity) and the discretion of
the court before which any proceeding therefor may be brought. Upon and
following delivery to the Initial Purchaser, the Notes will rank pari
passu in right of payment with all senior Indebtedness of the Company that
is outstanding on the date hereof or that may be incurred hereafter
(including but not limited to the Indebtedness incurred by the Company
under the Credit Agreement) and senior in right of payment to all
Indebtedness of the Company that by its terms is subordinated to the Notes
whether outstanding on the date hereof or incurred hereafter (including
but not limited to any of the Company's 8% Senior Notes that remain
outstanding following the Offering).
(j) Neither the Company nor any of its Subsidiaries is in violation of its
certificate of incorporation, by-laws or other organizational documents
(the "Charter Documents"). Neither the Company nor any of its Subsidiaries
is (i) in violation of any Federal, state, local or foreign statute, law
(including, without limitation, common law) or ordinance, or any judgment,
decree, rule, regulation or order (collectively, "Applicable Law") of any
federal, state, local and other governmental authority, governmental or
regulatory agency or body, court, arbitrator or self-regulatory
organization, domestic or foreign (each, a "Governmental Authority")
applicable to any of them or any of their respective properties, or (ii)
in breach of or default under any bond, debenture, note or other evidence
of indebtedness, indenture, mortgage, deed of trust, lease or any other
agreement or instrument to which any of them is a party or by which any of
them or their respective property is bound (collectively, "Applicable
Agreements"), except for such violations, breaches or defaults that would
not, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect. All Applicable Agreements are in full force and
effect and are legal, valid and binding obligations (assuming such
Applicable Agreements are legal, valid and binding on the other parties
thereto), except that enforcement thereof may be subject to (i)
bankruptcy, insolvency, reorganization, receivership, moratorium,
fraudulent conveyance or other similar laws now or hereafter in effect
relating to creditors' rights generally and (ii) general principles of
equity (whether applied by a court of law or equity) and the discretion of
the court before which any proceeding therefor may be brought. There
exists no condition that, with the passage of time or otherwise, would (a)
constitute a violation of such Charter Documents, (b) constitute a breach
of or default that would have a Material Adverse Effect under any
Applicable Agreement or any Applicable Law or (c) result in the
acceleration of any indebtedness of the Company and each of its
Subsidiaries party thereto.
(k) Neither the execution, delivery or performance of the Documents nor the
consummation of any transactions contemplated therein will conflict with,
violate, constitute a breach of or a default (with the passage of time or
otherwise) under, result in the imposition of a Lien on any assets of the
Company or any of its Subsidiaries (except for Liens pursuant to the
Collateral Agreements), or result in an acceleration of indebtedness under
or pursuant to (i) the Charter Documents, (ii) any Applicable Agreement,
or (iii) any Applicable Law. Upon consummation of the Offering and
transactions contemplated in the Documents, no Default or Event of Default
will exist.
(l) When executed and delivered, the Documents will conform in all material
respects to the descriptions thereof in the Final Offering Circular.
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(m) No consent, approval, authorization or order of any Governmental
Authority, or third party is required for the issuance and sale by the
Company of the Units, Notes or Warrants to the Initial Purchaser, the
issuance of Warrant Shares upon exercise of Warrants from time to time or
the consummation by the Company of the other transactions contemplated
hereby (other than with respect to any filings with the Securities and
Exchange Commission contemplated by the Registration Rights Agreement),
except such as have been obtained as of the date hereof or that shall be
obtained on or prior to the Closing Date and those that may be required
under state securities or "Blue Sky" laws in connection with the purchase
and resale of the Units by the Initial Purchaser.
(n) There is no action, claim, suit, demand, hearing, notice of violation or
deficiency, or proceeding, domestic or foreign (collectively,
"Proceedings"), pending or, to the knowledge of the Company or any of its
Subsidiaries, threatened, that either (i) seeks to restrain, enjoin,
prevent the consummation of, or otherwise challenge any of the Documents
or any of the transactions contemplated therein, or (ii) is reasonably
expected to, individually or in the aggregate, have a Material Adverse
Effect. Neither the Company nor any of its Subsidiaries is subject to any
judgment, order, decree, rule or regulation of any Governmental Authority
that would, individually or in the aggregate, have a Material Adverse
Effect. No injunction or order has been issued and no Proceeding is
pending or, to the knowledge of the Company or any of its Subsidiaries,
threatened that (i) asserts that the offer, sale and delivery of the Notes
to the Initial Purchaser pursuant to this Agreement or the initial resale
of the Notes by the Initial Purchaser in the manner contemplated by this
Agreement is subject to the registration requirements of the Act, or (ii)
would prevent or suspend the issuance or sale of the Notes, including the
Exempt Resales, or the use of the Preliminary Offering Circular, the Final
Offering Circular, or any amendment or supplement thereto, in any
jurisdiction.
(o) Each of the Company and its Subsidiaries possesses all licenses, permits,
certificates, consents, orders, approvals and other authorizations from,
and has made all declarations and filings with, all Governmental
Authorities, presently required or necessary to own or lease, as the case
may be, and to operate its properties and to carry on its business as now
or proposed to be conducted as set forth in the Final Offering Circular
("Permits"), except where the failure to obtain such Permits would not,
individually or in the aggregate, have a Material Adverse Effect; each of
the Company and its Subsidiaries has fulfilled and performed all of its
obligations with respect to such Permits and no event has occurred which
allows, or after notice or lapse of time would allow, revocation or
termination thereof or results in any other impairment of the rights of
the holder of any such Permit, in each case, except as would not have a
Material Adverse Effect; and none of the Company or any of its
Subsidiaries has received any notice of any proceeding relating to
revocation or modification of any such Permit, except as described in the
Final Offering Circular or except where such revocation or modification
would not, individually or in the aggregate, have a Material Adverse
Effect.
(p) Each of the Company and its Subsidiaries has fee simple title to all real
property owned by it and good title to all tangible and, to the Company's
knowledge, intangible personal property owned by it and good valid
leasehold estates in real and personal property being leased by it and, as
of the Closing Date, will be free and clear of all Liens (other than
Permitted Liens). The Company and its Subsidiaries own or have a right to
use all of the tangible and, to the Company's knowledge, intangible assets
and properties necessary or required in, or otherwise material to, the
conduct of the businesses of each of them as currently conducted, and such
assets are in good working condition, except where the failure of such
assets to be in working condition would not, individually or in the
aggregate, have a Material Adverse Effect.
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(q) All Tax returns required to be filed by the Company and each of its
Subsidiaries have been filed and all such returns are true, complete, and
correct in all material respects. All material Taxes that are due from the
Company and its Subsidiaries have been paid other than those (i) currently
payable without penalty or interest or (ii) being contested in good faith
and by appropriate proceedings and for which adequate reserves have been
established in accordance with generally accepted accounting principles of
the United States, consistently applied ("GAAP"). Except as disclosed in
the Final Offering Circular, there are no actual or to the knowledge of
the Company, after reasonable inquiry, proposed Tax assessments against
the Company or any of its Subsidiaries that would, individually or in the
aggregate, have a Material Adverse Effect. The accruals and reserves on
the books and records of the Company and its Subsidiaries in respect of
any material Tax liability for any period not finally determined are
adequate to meet any assessments of Tax for any such period. For purposes
of this Agreement, the term "Tax" and "Taxes" shall mean all Federal,
state, local and foreign taxes, and other assessments of a similar nature
(whether imposed directly or through withholding), including any interest,
additions to tax, or penalties applicable thereto.
(r) Each of the Company and its Subsidiaries owns, or is licensed under, and
has the right to use, all registered, and to the extent the failure to own
or to have such right of use does not have a Material Adverse Effect,
unregistered, patents, patent rights, licenses, inventions, copyrights,
know-how (including trade secrets and other unpatented and/or unpatentable
proprietary or confidential information, systems or procedures),
trademarks, service marks and trade names (collectively, "Intellectual
Property") necessary for the conduct of its business and, as of the
Closing Date, will be free and clear of all Liens, other than Permitted
Liens. To the knowledge of the Company after reasonable inquiry, no claims
or notices of any potential claim have been asserted by any person
challenging the use of any such Intellectual Property by the Company or
any of its Subsidiaries or questioning the validity or effectiveness of
the Intellectual Property or any license or agreement related thereto
(other than any claims that, if successful, would not, individually or in
the aggregate, have a Material Adverse Effect). The use of registered and,
to the knowledge of the Company after reasonable inquiry, unregistered,
Intellectual Property by the Company or any of its Subsidiaries does not
infringe on the Intellectual Property rights of any other person.
(s) The Company maintains a system of internal accounting controls it believes
in good faith to be sufficient to provide reasonable assurance that (i)
material transactions are executed in accordance with management's general
or specific authorization, (ii) material transactions are recorded as
necessary to permit preparation of financial statements in conformity with
GAAP, 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 material differences.
(t) The audited consolidated financial statements and related notes of the
Company and its Subsidiaries contained in the Final Offering Circular (the
"Financial Statements") present fairly in all material respects the
financial position, results of operations and cash flows of the Company
and its consolidated Subsidiaries, as of the respective dates and for the
respective periods to which they apply and have been prepared in
accordance with GAAP and the requirements of Regulation S-X of the Act.
The financial data set forth under "Summary Historical and Unaudited Pro
Forma Consolidated Financial Data" and "Selected Consolidated Historical
Financial Data" included in the Final Offering Circular has been prepared
on a basis consistent with that of the Financial Statements and present
fairly in all material respects the financial position and results of
operations of the Company and its consolidated Subsidiaries as of the
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respective dates and for the respective periods indicated. The unaudited
pro forma financial information and related notes of the Company contained
in the Final Offering Circular have been prepared in accordance with the
requirements of Regulation S-X and give effect to assumptions used in the
preparation thereof on a reasonable basis and in good faith. All other
financial, statistical, and market and industry-related data included in
the Final Offering Circular are fairly and accurately presented and are
based on or derived from sources that the Company believes to be reliable
and accurate. Xxxxx Xxxxxxxx LLP ("Xxxxx Xxxxxxxx") are independent
registered public accountants with respect to the Company.
(u) Subsequent to the respective dates as of which information is given in the
Final Offering Circular, except as disclosed in the Final Offering
Circular, (i) neither the Company nor any of its Subsidiaries has incurred
any liabilities, direct or contingent, that are material, individually or
in the aggregate, to the Company and its Subsidiaries, taken as a whole,
or has entered into any transactions not in the ordinary course of
business, (ii) there has not been any material decrease in the capital
stock or any material increase in long-term indebtedness or any material
increase in short-term indebtedness of the Company, or any payment of or
declaration to pay any dividends or any other distribution with respect to
the Company, and (iii) there has not been any material adverse change in
the properties, business, operations, earnings, assets, liabilities or
condition (financial or otherwise) of the Company and its Subsidiaries
taken as a whole (each of clauses (i), (ii) and (iii), a "Material Adverse
Change"). To the knowledge of the Company after reasonable inquiry, there
is no event that is reasonably likely to occur, which if it were to occur,
would, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect, other than as disclosed in the Final Offering
Circular.
(v) No "nationally recognized statistical rating organization" (as such term
is defined for purposes of Rule 436(g)(2) under the Act) (i) has imposed
(or has informed the Company that it is considering imposing) any
condition (financial or otherwise) on the Company retaining any rating
assigned to the Company or any of its Subsidiaries or to any securities of
the Company or any of its Subsidiaries, or (ii) except for the indication
by Xxxxx'x Investors Services that it intends to lower the ratings outlook
for the Company to negative from stable because of higher than expected
interest expense resulting from the pricing of the Notes at 11-1/2%, has
indicated to the Company that it is considering (A) the downgrading,
suspension, or withdrawal of, or any review for a possible change that
does not indicate the direction of the possible change in, any rating so
assigned, or (B) any change in the outlook for any rating of the Company
or any of its Subsidiaries or any securities of the Company or any of its
Subsidiaries.
(w) On the Closing Date, after giving pro forma effect to the Offering and the
use of proceeds therefrom as indicated in the "Use of Proceeds" section of
the Offering Circular, the Company (i) will be Solvent, (ii) will have
sufficient capital for carrying on its business and (iii) will be able to
pay its debts as they mature. As used in this paragraph, the term
"Solvent" means, with respect to a particular date and Person, that on
such date (i) the present fair market value (or present fair saleable
value) of the assets of such Person is not less than the total amount
required to pay the liabilities of such Person on its total existing debts
and liabilities (including contingent liabilities) as they become absolute
and matured; (ii) such Person is able to pay its debts and other
liabilities, contingent obligations and commitments as they mature and
become due in the normal course of business; (iii) assuming consummation
of the issuance of the Units as contemplated by this Agreement and the
Offering Circular, such Person is not incurring debts or liabilities
beyond its ability to pay as such debts and liabilities mature; (iv) such
Person is not engaged in any business or transaction, and does not propose
to engage in any business or transaction, for which its property would
constitute unreasonably small capital after giving due consideration to
the
9
prevailing practice in the industry in which such Person is engaged; and
(v) such Person is not otherwise insolvent under the standards set forth
in applicable laws.
(x) The Company has not and, to its knowledge after reasonable inquiry, no one
acting on its behalf has except as disclosed in the Final Offering
Circular, (i) taken, directly or indirectly, any action designed to cause
or to result in, or that has constituted or which might reasonably be
expected to constitute, the stabilization or manipulation of the price of
any security of the Company to facilitate the sale or resale of any of the
Units, Notes or Warrants, (ii) sold, bid for, purchased, or paid anyone
any compensation for soliciting purchases of, any of the Units, Notes or
Warrants, or (iii) paid or agreed to pay to any person any compensation
for soliciting another to purchase any other securities of the Company;
provided that the Company makes no representations or warranty in this
Section 4(x) with respect to the Initial Purchaser.
(y) Without limiting any provision herein, no registration under the Act and
no qualification of the Indenture under the TIA is required for the sale
of the Units to the Initial Purchaser as contemplated hereby or for the
Exempt Resales, assuming (i) that the purchasers in the Exempt Resales are
QIBs or Accredited Investors or non-U.S. persons (as defined under
Regulation S of the Act) and (ii) the accuracy of the Initial Purchaser's
representations contained herein regarding the absence of general
solicitation in connection with the sale of the Units to the Initial
Purchaser and in the Exempt Resales.
(z) The Notes and Units are eligible for resale pursuant to Rule 144A under
the Act and no other securities of the Company are of the same class
(within the meaning of Rule 144A under the Act) as the Notes 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. No securities of
the Company of the same class as the Notes and Units have been offered,
issued or sold by the Company or any of its Affiliates within the
six-month period immediately prior to the date hereof.
(aa) Neither of the Company nor any of its Affiliates or other person acting on
behalf of the Company has offered or sold the Units by means of any
general solicitation or general advertising within the meaning of Rule
502(c) under the Act or, with respect to Units sold outside the United
States to non-U.S. persons (as defined in Rule 902 under the Act), by
means of any directed selling efforts within the meaning of Rule 902 under
the Act, and the Company, any affiliate of the Company and any person
acting on behalf of the Company have complied with and will implement the
"offering restrictions" within the meaning of such Rule 902; provided,
that no representation or warranty is made in this Section 4(aa) with
respect to the Initial Purchaser.
(bb) Except as disclosed in the Final Offering Circular, each of the Company,
its Subsidiaries, and each ERISA Affiliate has fulfilled, in all material
respects, its obligations, if any, under the minimum funding standards of
Section 302 of the United States Employee Retirement Income Security Act
of 1974, as amended ("ERISA") with respect to each "pension plan" (as
defined in Section 3(2) of ERISA), subject to Section 302 of ERISA which
the Company, any of its Subsidiaries, or any ERISA Affiliate sponsors or
maintains, or with respect to which it has (or within the last three years
had) any obligation to make contributions, and each such plan is in
compliance in all material respects with the presently applicable
provisions of ERISA and the Internal Revenue Code of 1986, as amended (the
"Code"). Neither the Company, any of its Subsidiaries, nor any ERISA
Affiliate has incurred any unpaid liability to the Pension Benefit
Guaranty Corporation (other than for the payment of premiums in the
ordinary course) or to any such plan under Title IV of ERISA. "ERISA
Affiliate" means a corporation, trade or business that is, along with the
Company or any Subsidiary, a member of a controlled group of
10
corporations or a controlled group of trades or businesses, as described
in Section 414 of the Code or Section 4001 of ERISA.
(cc) (i) Other than a collective bargaining agreement, dated September 2, 2001,
between the Company's Loudon, Tennessee plant and the International
Association of Machinists and Aerospace Workers, AFL-CIO Local Lodge 2544,
the Company is not a party to or bound by any collective bargaining
agreement with any labor organization; (ii) to the knowledge of the
Company, after reasonable inquiry, there is no union representation
question existing with respect to the employees of the Company, and, to
the knowledge of the Company after reasonable inquiry, no union organizing
activities are taking place that, would reasonably be expected to,
individually or in the aggregate, have a Material Adverse Effect; (iii) to
the Company's knowledge, no union organizing or decertification efforts
are underway or threatened against the Company; (iv) no labor strike, work
stoppage, slowdown, or other material labor dispute is pending against the
Company, or, to the knowledge of the Company, after reasonable inquiry,
threatened against the Company; (v) there is no worker's compensation
liability, experience or matter that would be reasonably expected to have
a Material Adverse Effect; (vi) to the knowledge of the Company, after
reasonable inquiry, there is no threatened or pending liability against
the Company pursuant to the Worker Adjustment Retraining and Notification
Act of 1988, as amended ("WARN"), or any similar state or local law; (vii)
to the knowledge of the Company, after reasonable inquiry, there is no
employment-related charge, complaint, grievance, investigation, unfair
labor practice claim, or inquiry of any kind, pending against the Company
that would reasonably be expected to, individually or in the aggregate,
have a Material Adverse Effect; (viii) to the knowledge of the Company,
after reasonable inquiry, no employee or agent of the Company or the
Guarantors has committed any act or omission giving rise to liability for
any violation identified in subsection (vi) and (vii) above, other than
such acts or omissions that would not, individually or in the aggregate,
have a Material Adverse Effect; and (ix) no term or condition of
employment exists through arbitration awards, settlement agreements, or
side agreement that is contrary to the express terms of any applicable
collective bargaining agreement.
(dd) None of the transactions contemplated in the Documents or the application
by the Company or any of its Subsidiaries of the proceeds of the Notes
will violate or result in a violation of Section 7 of the Exchange Act or
any other Applicable Law (including, without limitation, Regulation T (12
C.F.R. Part 220), Regulation U (12 C.F.R. Part 221) or Regulation X (12
C.F.R. Part 224) of the Board of Governors of the Federal Reserve System).
(ee) Neither the Company nor any of its Subsidiaries is 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 United States
Investment Company Act of 1940, as amended (the "Investment Company Act");
and neither the Company nor any of its Subsidiaries, after giving effect
to the offering and sale of the Notes and the application of the proceeds
thereof as described in the Final Offering Circular, will be an
"investment company" as defined in the Investment Company Act.
(ff) The Company has not engaged any broker, finder or commission agent (other
than the Initial Purchaser) in connection with the Offering or any of the
transactions contemplated in the Documents, and the Company is not under
any obligation to pay any broker's fee or commission in connection with
such transactions (other than commissions or fees to the Initial
Purchaser).
(gg) Except as disclosed under the caption "Risk Factors" and "Business-Legal
Matters" in the Final Offering Circular, each of the Company and its
Subsidiaries is (i) in compliance with any and all applicable foreign,
federal, state and local laws and regulations relating to the protection
of the environment or hazardous or toxic substances of wastes, pollutants
or contaminants
11
("Environmental Laws"), (ii) has received and is in compliance with all
permits, licenses or other approvals required of them under applicable
Environmental Laws to conduct its business and (iii) has not received
notice of any actual or potential liability for the investigation or
remediation of any disposal or release of hazardous or toxic substances or
wastes, pollutants or contaminants, in each case except where such
non-compliance with Environmental Laws, failure to receive and comply with
required permits, licenses or other approvals, or liability would not,
individually or in the aggregate, have a Material Adverse Effect, whether
or not arising from transactions in the ordinary course of business.
Neither the Company nor any of its Subsidiaries has been named as a
"potentially responsible party" under the Comprehensive Environmental
Response, Compensation, and Liability Act of 1980, as amended.
In the ordinary course of its business, the Company periodically reviews
the effects of Environmental Laws on the business, operations and
properties of the Company and its Subsidiaries, in the course of which it
seeks to identify and evaluate associated costs and liabilities
(including, without limitation, any capital or operating expenditures
required for clean-up, closure of properties or compliance with
Environmental Laws, or any permit, license or approval, any related
constraints on operating activities and any potential liabilities to third
parties). On the basis of such review, except as disclosed under the
caption "Risk Factors" and "Business-Legal Matters" in the Final Offering
Circular, the Company has reasonably concluded that such associated costs
would not have a Material Adverse Effect.
(hh) As of the Closing Date, except as imposed by Applicable Law or by any of
the Documents or as disclosed in the Final Offering Circular, there will
be no encumbrances or restrictions on the ability of any Subsidiary of the
Company (x) to pay dividends or make other distributions on such
Subsidiary's capital stock or other equity interests or to pay any
indebtedness to the Company or any other Subsidiary of the Company, (y) to
make loans or advances or pay any indebtedness to, or investments in, the
Company or any other Subsidiary of the Company or (z) to transfer any of
its property or assets to the Company or any other Subsidiary of the
Company.
(ii) (a) Upon:
(i) execution and delivery of the Collateral Agreements by the
Company and the Guarantors parties thereto and the Collateral
Agent and compliance by the Company and the Guarantors with
their respective obligations thereunder; and
(ii) (A) delivery to, and the continued possession by, the
Collateral Agent, for the benefit of itself as
Collateral Agent, the Trustee and the holders of the
Notes (collectively, the "Secured Parties") and as
representative (as defined in Section 1-201(35) of the
Uniform Commercial Code as in effect in the State of New
York (the "New York UCC")) for the Administrative Agent
and the Lenders (in such capacity, the "Shared
Collateral Sub-Agent"), in the State of New York of the
certificates evidencing all of the shares of Pledged
Interests (as defined in the Security Agreement)
described in Schedule A to the Security Agreement (the
"Pledged Shares"), together with stock powers or other
powers of transfer related thereto and executed in blank
and assuming the Shared Collateral Sub-Agent has no
notice of any adverse claim to the Pledged Shares, the
Shared Collateral Sub-Agent will have the status of a
"protected purchaser" for the benefit of the Secured
Parties, the Administrative Agent and the Lenders with
respect to the Pledged Shares under (and as defined in)
Section 8-303(a) of the New York UCC;
12
(B) the crediting of any financial assets (as defined in the
New York UCC) to a Securities Account (as defined in the
Security Agreement) that is the subject of a Control
Agreement (as defined in the Security Agreement) that
has been executed and delivered by the Company or the
applicable Guarantor, as the case may be, the securities
intermediary identified therein and the Shared
Collateral Sub-Agent, for the benefit of the Secured
Parties, the Administrative Agent and the Lenders, will
have "control" (as defined in Section 8-106 of the New
York UCC) over such Securities Account and in the
financial assets contained therein. No recordation or
filing need be made, and no other action need be taken,
in order to perfect the Shared Collateral Sub-Agent's
security interest in such Securities Account or such
financial assets;
(C) the execution and delivery of each Control Agreement (as
defined in the Security Agreement) relating to any
Deposit Account (as defined in the Security Agreement)
of the Company or any Guarantor by the Company or such
Guarantor, as the case may be, the depositary identified
therein and the Administrative Agent, for the benefit of
itself and the Lenders and as representative (as defined
in Section 1-201(35) of the New York UCC for the Secured
Parties (in such capacity, the "RCF Priority Collateral
Sub-Agent"), the RCF Priority Collateral Sub-Agent, for
the benefit of the Secured Parties, the Administrative
Agent and the Lenders, will have "control" (as defined
in Section 9-104(a) of the New York UCC) over such
Deposit Account and all cash, checks, drafts, notes,
bills of exchange, money orders and other like
instruments held therein. No recordation or filing need
be made, and no other action need be taken, in order to
perfect the RCF Priority Collateral Sub-Agent's security
interest in such Deposit Accounts;
(D) in the case of motor vehicles, the recordation or
notation of the Shared Collateral Sub-Agent's security
interest on the certificates of title or ownership in
respect of such motor vehicles and the filing of the
Uniform Commercial Code financing statements delivered
by the Company or any Guarantor, as the case may be,
having an interest in such motor vehicles to the Shared
Collateral Sub-Agent with respect to such motor
vehicles, the security interest of the Shared Collateral
Sub-Agent, for the benefit of the Secured Parties, the
Administrative Agent and the Lenders, in such motor
vehicles will be a valid and enforceable perfected
security interest that is superior to and prior to the
rights of all third persons; and
(E) the filing or recording of the Collateral Agreements or
appropriate financing statements with the appropriate
filing, records, registry, or other public office,
together with the payment of the requisite filing or
recordation fees related thereto, the security interest
of the Collateral Agent for the benefit of the Secured
Parties in all other Collateral (as defined in the
Collateral Agreements) will be a valid and enforceable
perfected security interest, which security interests
will be superior to and prior to the rights of all third
persons other than holders of Permitted Liens.
13
the security interest of the Collateral Agent in the Collateral (as
defined in the Collateral Agreements) will be a valid and
enforceable perfected security interest, which security interests
will be superior to and prior to the rights of all third persons
other than holders of Permitted Liens.
(b) As of the Closing Date, except with respect to Permitted Liens,
there will be no currently effective financing statement, security
agreement, chattel mortgage, real estate mortgage or other document
filed or recorded with any filing records, registry, or other public
office, that purports to cover, affect or give notice of any present
or possible future Lien on, or security interest in, any assets or
property of the Company or any Guarantor or any rights thereunder.
(jj) Each certificate signed by any officer of the Company, or any Subsidiary
thereof, delivered to the Initial Purchaser shall be deemed a
representation and warranty by the Company or any such Subsidiary thereof
(and not individually by such officer) to the Initial Purchaser with
respect to the matters covered thereby.
(kk) Each of the Company and its Subsidiaries are insured by insurers of
recognized financial responsibility against such losses and risks and in
such amounts as are, in the good faith judgment of the Company, prudent
and customary in the businesses in which they are engaged. All policies of
insurance insuring the Company or any of its Subsidiaries or their
respective businesses, assets, employees, officers and directors are in
full force and effect. Each of the Company and its Subsidiaries are in
compliance with the terms of such policies and instruments in all material
respects, and there are no claims by the Company or any of its
Subsidiaries under any such policy or instrument as to which any insurance
company is denying liability or defending under a reservation of rights
clause. Neither the Company nor any such Subsidiary has been refused any
insurance coverage sought or applied for, and neither the Company nor any
such Subsidiary has any reason to believe that it will not be able to
renew its existing insurance coverage as and when such coverage expires or
to obtain similar coverage from similar insurers as may be necessary to
continue its business at a cost that would not, individually or in the
aggregate, have a Material Adverse Effect.
(ll) The Warrants, when issued, will be in the form contemplated by the Warrant
Agreement. The Warrants have been duly authorized by the Company and when
executed and delivered by the Company, delivered to and paid for by the
Initial Purchaser and authenticated by the Warrant Agent, in accordance
with the terms of this Agreement and the Warrant Agreement, the Warrants
will have been duly executed, issued and delivered by the Company and will
constitute legal, valid and binding obligations of Company (assuming such
documents will be legal, valid and binding obligations of the other
parties thereto), entitled to the benefit of the Warrant Agreement and the
Equity Registration Rights Agreement, and enforceable against the Company
in accordance with their terms, except that the enforcement thereof may be
subject to (i) bankruptcy, insolvency, reorganization, receivership,
moratorium, fraudulent conveyance or other similar laws now or hereafter
in effect relating to creditors' rights generally and (ii) general
principles of equity (whether applied by a court of law or equity) and the
discretion of the court before which any proceeding therefor may be
brought.
(mm) The Warrant Agreement has been duly and validly authorized by the Company.
The Warrant Agreement, when executed and delivered by the Company will be
validly executed and delivered and (assuming due authorization, execution
and delivery by the Warrant Agent and the other parties thereto) will
constitute the legal, valid and binding obligation of the Company
(assuming such documents will be legal, valid and binding obligations of
the other parties thereto),
14
enforceable against the Company in accordance with its terms, except that
the enforcement thereof may be subject to (i) bankruptcy, insolvency,
reorganization, receivership, moratorium, fraudulent conveyance or other
similar laws now or hereafter in effect relating to creditors' rights
generally and (ii) general principles of equity (whether applied by a
court of law or equity) and the discretion of the court before which any
proceeding therefor may be brought.
(nn) The Company has duly authorized the issuance of the Notes and the Warrants
as a Unit.
(oo) There is and has been no failure on the part of the Company or any of its
Subsidiaries or any of the officers and directors of the Company or any of
its Subsidiaries, in their capacities as such, to comply in all material
respects with the applicable provisions of The Xxxxxxxx-Xxxxx Act of 2002
and the rules and regulations in connection therewith.
5. COVENANTS OF THE COMPANY. The Company agrees:
(a) Prior to completion of Exempt Resales with respect to all of the Units (or
underlying Notes or Warrants), to (i) advise the Initial Purchaser
promptly after obtaining knowledge (and, if requested by the Initial
Purchaser, confirm such advice in writing) of (A) the issuance by any
state securities commission of any stop order suspending the qualification
or exemption from qualification of any of the Securities for offer or sale
in any jurisdiction, or the initiation of any proceeding for such purpose
by any state securities commission or other regulatory authority, or (B)
the happening of any event that makes any statement of a material fact
made in the Final Offering Circular untrue or that requires the making of
any additions to or changes in the Final Offering Circular in order to
make the statements therein, in the light of the circumstances under which
they were made, not misleading, (ii) use its reasonable best efforts to
prevent the issuance of any stop order or order suspending the
qualification or exemption from qualification of any of the Securities
under any state securities or Blue Sky laws, and (iii) if, at any time,
any state securities commission or other regulatory authority shall issue
an order suspending the qualification or exemption from qualification of
any of the Securities under any such laws, use its reasonable best efforts
to obtain the withdrawal or lifting of such order at the earliest possible
time.
(b) To (i) furnish the Initial Purchaser, without charge, as many copies of
the Final Offering Circular, and any amendments or supplements thereto, as
the Initial Purchaser may reasonably request, and (ii) promptly prepare,
upon the Initial Purchaser's reasonable request, any amendment or
supplement to the Offering Circular that the Initial Purchaser, upon
advice of legal counsel, determines may be necessary in connection with
Exempt Resales (and the Company hereby consents to the use of the
Preliminary Offering Circular and the Final Offering Circular, and any
amendments and supplements thereto, by the Initial Purchaser in connection
with Exempt Resales).
(c) Not to amend or supplement the Offering Circular prior to the Closing
Date, or at any time prior to the completion of the resale by the Initial
Purchaser of all the Units purchased by the Initial Purchaser, unless the
Initial Purchaser shall previously have been advised thereof and shall
have provided its written consent thereto, which consent shall not be
unreasonably withheld, conditioned or delayed.
(d) Prior to completion of Exempt Resales with respect to all of the Units (or
underlying Notes or Warrants), (i) if in the reasonable judgment of the
Company or the Initial Purchaser, it becomes necessary or advisable to
amend or supplement the Final Offering Circular in order to make the
statements therein, in the light of the circumstances under which they
were made, not misleading,
15
or if it is necessary to amend or supplement the Final Offering Circular
to comply with Applicable Law, to prepare, at the expense of the Company,
an appropriate amendment or supplement to the Final Offering Circular (in
form and substance reasonably satisfactory to the Initial Purchaser) so
that (A) as so amended or supplemented, the Final Offering Circular will
not include an untrue statement of material fact or omit to state a
material fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading, and
(B) the Final Offering Circular will comply with Applicable Law and (ii)
if, in the reasonable judgment of the Company or the Initial Purchaser, it
becomes necessary or advisable to amend or supplement the Final Offering
Circular so that the Final Offering Circular will contain all of the
information specified in, and meet the requirements of, Rule 144A(d)(4) of
the Act, to prepare an appropriate amendment or supplement to the Final
Offering Circular (in form and substance reasonably satisfactory to the
Initial Purchaser) so that the Final Offering Circular, as so amended or
supplemented, will contain the information specified in, and meet the
requirements of, such Rule.
(e) To cooperate with the Initial Purchaser and the Initial Purchaser's
counsel in connection with the qualification of the Notes under the
securities or Blue Sky laws of such jurisdictions as the Initial Purchaser
may reasonably request and continue such qualification in effect so long
as reasonably required for Exempt Resales; provided that the Company shall
not be required to qualify as a foreign corporation in any jurisdiction in
which it is not currently qualified, to take any action that would subject
it to general service of process in any jurisdiction where it is not
currently so subject, or to subject itself to taxation in any jurisdiction
where it is not currently so subject.
(f) Whether or not any of the Offering or the transactions contemplated under
the Documents are consummated or this Agreement is terminated, to pay (i)
all reasonable costs, expenses, fees and taxes incidental to and in
connection with: (A) the preparation, printing and distribution of the
Preliminary Offering Circular and the Final Offering Circular and all
amendments and supplements thereto (including, without limitation,
financial statements and exhibits), and all other agreements, memoranda,
correspondence and other documents prepared and delivered in connection
herewith, (B) the negotiation, printing, processing and distribution
(including, without limitation, word processing and duplication costs) and
delivery of, each of the Documents, (C) the preparation, issuance and
delivery of the Units, (D) the qualification of the Notes for offer and
sale under the securities or Blue Sky laws of the several states
(including, without limitation, the fees and disbursements of the Initial
Purchaser's counsel relating to such registration or qualification), (E)
furnishing such copies of the Preliminary Offering Circular and the Final
Offering Circular, and all amendments and supplements thereto, as may
reasonably be requested for use by the Initial Purchaser and (F) the
performance of the obligations of the Company under the Debt Registration
Rights Agreements, including but not limited to the Exchange Offer, the
Exchange Offer Registration Statement and any Shelf Registration
Statement, (ii) all fees and expenses of the counsel, accountants and any
other experts or advisors retained by the Company, (iii) all expenses and
listing fees in connection with the application for quotation of the
Units, the Notes and the Warrants on the Private Offerings, Resales and
Trading Automated Linkages ("PORTAL") market, (iv) all fees and expenses
(including fees and expenses of counsel) of the Company in connection with
approval of the Securities by DTC for "book-entry" transfer, (v) all fees
charged by rating agencies in connection with the rating of the Notes,
(vi) all reasonable fees and expenses (including reasonable fees and
expenses of counsel) of the Trustee, the Collateral Agent and all other
collateral agents, and (vii) all costs and expenses in connection with the
creation and perfection of Liens created under the Collateral Agreements
(including without limitation, filing and recording fees, search fees,
taxes and costs of title policies); provided, however, that in no event
shall the Company be responsible for any fees, disbursements and
out-of-pocket expenses incurred by the Initial Purchaser in connection
with its services to be
16
rendered hereunder (including, without limitation, the fees and
disbursements of Xxxxx, Xxxxx, Xxxx & Maw LLP, special counsel to the
Initial Purchaser, travel and lodging expenses, word processing charges,
messenger and duplicating services, facsimile expenses and other
expenditures). Notwithstanding the foregoing, the Company and the Initial
Purchaser shall each pay 50% of the aggregate out-of-pocket expenses
incurred by them collectively prior to Closing relating to roadshow
presentations in connection with the marketing of the Notes to prospective
investors; provided that if the Closing does not occur, the Company shall
pay all of such out-of-pocket expenses.
(g) To use the proceeds of the Offering in the manner described in the Final
Offering Circular under the caption "Use of Proceeds."
(h) To do and perform all things required to be done and performed under the
Documents to which the Initial Purchaser is a party prior to and after the
Closing Date.
(i) Not to, and to use its reasonable best efforts to ensure that no affiliate
(as defined in Rule 501(b) of the Act) of the Company will, sell, offer
for sale or solicit offers to buy or otherwise negotiate in respect of any
"security" (as defined in the Act) that would be integrated with the sale
of the Units in a manner that would require the registration under the Act
of the sale to the Initial Purchaser or to the Subsequent Purchasers of
the Units.
(j) For so long as any of the Securities remain outstanding, during any period
in which the Company is not subject to Section 13 or 15(d) of the Exchange
Act, to make available, upon request, to any owner of the Securities in
connection with any sale thereof and any prospective Subsequent Purchasers
of such Securities from such owner, the information required by Rule
144A(d)(4) under the Act.
(k) To use its reasonable best efforts to comply with the representation
letter of the Company to DTC relating to the approval of the Securities by
DTC for "book entry" transfer.
(l) To use its reasonable best efforts to effect the inclusion of the Units,
Notes and Warrants in Private Offerings, Resales and Trading through
Automated Linkages Market.
(m) For so long as any of the Securities remain outstanding, to furnish to the
Initial Purchaser copies of all reports and other written communications
(financial or otherwise) furnished by the Company to the Trustee, the
Warrant Agent or all of the holders of any of the Securities and, as soon
as available (unless available on XXXXX), copies of any reports or
financial statements furnished to or filed by the Company with the SEC or
any national securities exchange on which any class of securities of the
Company may be listed.
(n) Except in connection with the Exchange Offer or the filing of the Shelf
Registration Statement or in accordance with the Equity Registration
Statement, not to, and not to authorize or permit any person acting on its
behalf to, (i) distribute any offering material in connection with the
offer and sale of any of the Securities other than the Preliminary
Offering Circular and the Final Offering Circular and any amendments and
supplements to the Final Offering Circular prepared in compliance with
this Agreement, or (ii) solicit any offer to buy or offer to sell any of
the Securities by means of any form of general solicitation or general
advertising (including, without limitation, as such 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.
17
(o) During the two year period after the Closing Date (or such shorter period
as may be provided for in Rule 144(k) under the Act, as the same may be in
effect from time to time), to not, and to not permit any current or future
Subsidiaries of either the Company or any other affiliates (as defined in
Rule 144A under the Act) controlled by the Company to, resell any of the
Securities which constitute "restricted securities" under Rule 144 that
have been reacquired by the Company, any current or future Subsidiaries or
any other "affiliates" (as defined in Rule 144A under the Act) controlled
by the Company, except pursuant to an effective registration statement
under the Act.
(p) To pay all stamp, documentary and transfer taxes and other duties, if any,
which may be imposed by the United States or any political subdivision
thereof or taxing authority thereof or therein with respect to the
issuance of the Notes or the sale thereof to the Initial Purchaser.
(q) To use its reasonable best efforts to complete on or prior to the Closing
Date (or such other specified date contemplated by Collateral Agreements)
all filings and other similar actions required in connection with the
perfection of security interests as and to the extent contemplated by the
Collateral Agreements.
6. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE INITIAL
PURCHASER. The Initial Purchaser represents, warrants, covenants and agrees
that:
(a) It is a QIB as defined in Rule 144A under the Act and it will offer the
Units for resale only upon the terms and conditions set forth in this
Agreement and in the Final Offering Circular.
(b) It is not acquiring the Units with a view to any distribution thereof that
would violate the Act or the securities laws of any state of the United
States or any other applicable jurisdiction. In connection with the Exempt
Resales, it will solicit offers to buy the Units only from, and will offer
and sell the Units only to, (A) persons reasonably believed by the Initial
Purchaser to be QIBs or (B) persons reasonably believed by the Initial
Purchaser to be Accredited Investors or (C) non-U.S. persons reasonably
believed by the Initial Purchaser to be a purchaser referred to in
Regulation S under the Act; provided, however, that in purchasing such
Notes, such persons are deemed to have represented and agreed as provided
under the caption "Notice to Investors" contained in the Final Offering
Circular.
(c) No form of general solicitation or general advertising in violation of the
Act has been or will be used nor will any offers in any manner involving a
public offering within the meaning of Section 4(2) of the Act or, with
respect to Units to be sold in reliance on Regulation S, by means of any
directed selling efforts be made by the Initial Purchaser or any of its
representatives in connection with the offer and sale of any of the Units.
(d) The Initial Purchaser will deliver to each Subsequent Purchaser of the
Units, prior to or in connection with its consummation of Exempt Resales,
a copy of the Final Offering Circular, as amended and supplemented as of
the date of such delivery.
7. CONDITIONS. The obligations of the Initial Purchaser to
purchase the Units under this Agreement are several and subject to the
satisfaction by the Company or waiver by the Initial Purchaser of each of the
following conditions:
(a) All the representations and warranties of each of the Company and its
Subsidiaries contained in this Agreement and in each of the Documents to
which the Company or any of its Subsidiaries is a party shall be true and
correct as of the date hereof and at the Closing Date. On or prior to the
Closing Date, the Company, each of its Subsidiaries that is a party
thereto and each other party to
18
the Documents (other than the Initial Purchaser) shall have performed or
complied with, in all material respects, all of the agreements and
satisfied all conditions on their respective parts to be performed,
complied with or satisfied on or prior to the Closing Date pursuant to the
Documents (other than conditions to be satisfied by such other parties,
which the failure to so satisfy would not, individually or in the
aggregate, have a Material Adverse Effect).
(b) No injunction, restraining order or order of any nature by a Governmental
Authority shall have been issued as of the Closing Date that would prevent
or materially interfere with the consummation of the Offering or any of
the transactions contemplated under the Documents; and no stop order
suspending the qualification or exemption from qualification of any of the
Securities in any jurisdiction shall have been issued and no Proceeding
for that purpose shall have been commenced or, to the knowledge of the
Company after reasonable inquiry, be pending or contemplated as of the
Closing Date.
(c) No action shall have been taken and no Applicable Law shall have been
enacted, adopted or issued that, as of the Closing Date, prevents the
consummation of the Offering or any of the transactions contemplated under
the Documents. No Proceeding shall be pending or, to the knowledge of the
Company after reasonable inquiry, threatened other than Proceedings that
(A) if adversely determined would not, individually or in the aggregate,
adversely affect the issuance or marketability of the Units, and (B) would
not, individually or in the aggregate, have a Material Adverse Effect.
(d) Subsequent to the respective dates as of which data and information is
given in the Final Offering Circular, there shall not have been any
Material Adverse Change.
(e) The Units, Notes and Warrants shall have been designated PORTAL securities
in accordance with the rules and regulations adopted by the National
Association of Securities Dealers, Inc. relating to trading in the PORTAL
market.
(f) On or after the date hereof, (i) there shall not have occurred any
downgrading, suspension or withdrawal of, nor shall any notice have been
given of any potential or intended downgrading, suspension or withdrawal
of, or of any review (or of any potential or intended review) for a
possible change that does not indicate the direction of the possible
change in, any rating of the Company or any securities of the Company
(including, without limitation, the placing of any of the foregoing
ratings on credit watch with negative or developing implications or under
review with an uncertain direction) by any "nationally recognized
statistical rating organization" as such term is defined for purposes of
Rule 436(g)(2) under the Act, (ii) there shall not have occurred any
change, nor shall any notice have been given of any potential or intended
change, in the outlook for any rating of the Company or any securities of
the Company by any such rating organization and (iii) no such rating
organization shall have given notice that it has assigned (or is
considering assigning) a lower rating to the Notes than that on which the
Notes were marketed.
(g) The Initial Purchaser shall have received on the Closing Date:
(i) certificates dated the Closing Date, signed by (1) the Chief
Executive Officer and (2) the principal financial or accounting
officer of the Company, on behalf of the Company, to the effect that
(a) the representations and warranties set forth in Section 4
hereof, in each of the Documents and the Perfection Certificate are
true and correct in all material respects with the same force and
effect as though expressly made at and as of the Closing Date, (b)
the Company has performed and complied with all agreements and
satisfied all conditions in all material respects on its part to be
performed or satisfied at or
19
prior to the Closing Date, (c) at the Closing Date, since the date
hereof or since the date of the most recent financial statements in
the Final Offering Circular (exclusive of any amendment or
supplement thereto after the date hereof), no event or events have
occurred, no information has become known to the Company nor, except
as disclosed in the Final Offering Circular, does any condition
exist that, individually or in the aggregate, would have a Material
Adverse Effect, (d) since the date of the most recent financial
statements in the Final Offering Circular (exclusive of any
amendment or supplement thereto after the date hereof), other than
as disclosed in the Final Offering Circular or contemplated hereby
and thereby, neither the Company nor any Subsidiary of the Company
has incurred any liabilities or obligations, direct or contingent,
not in the ordinary course of business, that are material to the
Company and its Subsidiaries, taken as a whole, or entered into any
transactions not in the ordinary course of business that are
material the properties, business, operations, earnings, assets,
liabilities or condition (financial or otherwise) of the Company and
its Subsidiaries, taken as a whole, and there has not been any
change in the capital stock or long-term indebtedness of the Company
or any Subsidiary of the Company that is material to the properties,
business, operations, earnings, assets, liabilities or condition
(financial or otherwise) of the Company and its Subsidiaries, taken
as a whole, and (e) the sale of the Notes has not been enjoined
(temporarily or permanently),
(ii) a certificate, dated the Closing Date, executed by the Secretary of
the Company, certifying such matters as the Initial Purchaser may
reasonably request, including the approval by 80% of the authorized
number of directors constituting the Board of Directors of the
issuance of the Warrants and the Warrant Shares,
(iii) a certificate of solvency, dated the Closing Date, executed by the
principal financial or accounting officer of the Company
substantially in the form previously approved and provided to the
Company by the Initial Purchaser or its counsel,
(iv) the opinion of Xxxxxx & Block LLP, counsel to the Company and the
Guarantors, dated the Closing Date, in form and substance reasonably
satisfactory to the Initial Purchaser,
(v) an opinion of each of the local counsel to any of the Company listed
on Schedule III hereto shall have furnished to the Initial
Purchaser, at the request of the Company or such Guarantor, its
written opinion, dated the Closing Date and addressed to the Initial
Purchaser, in form and substance reasonably satisfactory to the
Initial Purchaser,
(vi) an opinion, dated the Closing Date, of Xxxxx, Xxxxx, Xxxx & Maw LLP,
special counsel to the Initial Purchaser, in form satisfactory to
the Initial Purchaser covering such matters as are customarily
covered in such opinions, and
(vii) a representation and warranty certificate addressing collateral
matters certified by an officer of the Company in form and substance
reasonably satisfactory to the Initial Purchaser.
(h) The Initial Purchaser shall have received from Xxxxx Xxxxxxxx, with
respect to the Company, (i) a customary comfort letter, dated the date of
the Final Offering Circular, in form and substance reasonably satisfactory
to the Initial Purchaser and its counsel, with respect to the financial
statements and certain financial information contained in the Final
Offering Circular, and (ii) a customary comfort letter, dated the Closing
Date, in form and substance reasonably satisfactory
20
to the Initial Purchaser and its counsel, to the effect that Xxxxx
Xxxxxxxx reaffirms the statements made in its letter furnished pursuant to
clause (i).
(i) Each of the Documents shall have been executed and delivered by all
parties thereto, and the Initial Purchaser shall have received a fully
executed original of each Document.
(j) The Initial Purchaser shall have received copies of all opinions,
certificates, letters and other documents delivered or required to be
delivered under or in connection with the Offering, the Documents or any
transaction contemplated in the Documents.
(k) The Initial Purchaser shall have received the Final Offering Circular, and
the terms of each Document shall conform in all material respects to the
description thereof in the Final Offering Circular.
(l) The Collateral Agent shall have received (with a copy for the Initial
Purchaser) on the Closing Date:
(i) the Pledged Shares, together with stock powers or other powers of
transfer related thereto and executed in blank;
(ii) fully executed Control Agreements (in form and substance reasonably
satisfactory to the Initial Purchaser and its counsel) with respect
to (A) each Securities Account (as defined in the Security
Agreement) of each of the Company and the Guarantors that contains
cash, cash equivalents and Investment Property (as defined in the
Security Agreement) in an aggregate amount in excess of $250,000 as
of the end of the most recently ended calendar month or at the
Closing Date and (B) each Deposit Account (as defined in the
Security Agreement) of each of the Company and the Guarantors that
has a balance in excess of $250,000 as of the end of such month or
at the Closing Date (other than xxxxx cash, payroll and zero-balance
accounts with respect to which the average aggregate amount on
deposit in all such accounts at the close of business for the five
business days immediately preceding the Closing Date did not exceed
$1,000,000);
(iii) appropriately completed copies of Uniform Commercial Code financing
statements naming the Company and each Guarantor as a debtor and the
Collateral Agent as the secured party, or other similar instruments
or documents to be filed under the UCC of all jurisdictions as may
be necessary or, in the reasonable opinion of the Initial Purchaser
and its counsel, desirable to perfect the security interests of the
Collateral Agent pursuant to the Security Agreement;
(iv) appropriately completed copies of Uniform Commercial Code Form UCC-3
termination statements, if any, necessary to release all Liens
(other than Permitted Liens) of any Person in any collateral
described in any security agreement previously granted by any Person
(including the Liens securing the 8% Notes);
(v) certified copies of Uniform Commercial Code Requests for Information
or Copies (Form UCC-11), or a similar search report certified by a
party acceptable to the Initial Purchaser and its counsel, dated a
date reasonably near to the Closing Date, listing all effective
financing statements which name the Company or any Guarantor (under
its present name and any previous names) as the debtor, together
with copies of such financing statements (none of which shall cover
any collateral described in any Collateral Agreement, other than
such financing statements that evidence Permitted Liens);
21
(vi) copies of the policies of insurance (or binders or insurance
certificates in respect thereof), as are required by the terms of
the Security Agreement; and
(vii) such other approvals, opinions, or documents as the Initial
Purchaser or the Collateral Agent may reasonably request in form and
substance reasonably satisfactory to the Initial Purchaser or the
Collateral Agent, as case may be.
The Initial Purchaser and its counsel shall be satisfied that (A) the Lien
granted to the Collateral Agent, for the benefit of the Secured Parties in
the Collateral is perfected and of the priority described in the Final
Offering Circular; and (B) no Lien exists on any of the Collateral other
than the Lien created in favor of the Collateral Agent, for the benefit of
the Secured Parties, pursuant to a Collateral Agreement, in each case
subject to the Permitted Liens.
(m) The Initial Purchaser and its counsel shall be satisfied that all
arrangements necessary for the filing of all Uniform Commercial Code
financing statements or other similar financing statements and Uniform
Commercial Code Form UCC-3 termination statements required pursuant to
clause (l)(i) and (ii) above (collectively, the "Filing Statements") by CT
Corporation System (or another similar filing service company acceptable
to the Initial Purchaser or its counsel) in the appropriate filing offices
within 10 days of the Closing Date have been made.
(n) The Company shall have delivered the following documents and instruments
with regard to each of the Premises prior to or contemporaneously with the
Closing:
(i) to the Collateral Agent, as mortgagee, fully executed
counterparts of Mortgages, each dated as of the Closing Date,
duly executed by the Company, together with evidence of the
completion (or satisfactory arrangements for the completion),
of all recordings and filings of such Mortgage as may be
necessary to create a valid, perfected Lien, subject to
Permitted Liens, against the properties to be covered thereby;
(ii) to the Collateral Agent, mortgagee's title insurance policies
in favor of the Collateral Agent, as mortgagee for the ratable
benefit of the Collateral Agent and the Secured Parties, in an
amount equal to 100% of the Fair Market Value of the Premises
purported to be covered by the related Mortgage, insuring that
title to such property is marketable and that the interests
created by the Mortgages constitute valid Liens thereon free
and clear of all Liens, defects and encumbrances other than
Permitted Liens, and such policies shall also include, to the
extent available, a revolving credit endorsement and such
other endorsements as the Collateral Agent shall reasonably
request and shall have the standard exceptions thereto deleted
(other than the survey exception to the extent required in
Section 7(n)(iii) below) and shall be accompanied by evidence
of the payment in full of all premiums thereon; and
(iii) to the Collateral Agent, with respect to each of the covered
Premises, the most recent survey of such Premises and, solely
to the extent that the title company insuring the Lien of the
respective Mortgages shall deem such survey acceptable to
remove the standard survey exception from the applicable title
policy and/or to issue a survey endorsement with respect
thereto, the Company shall have such survey exception deleted
and such survey endorsement delivered to the Collateral Agent.
22
(o) The Initial Purchaser shall have received substantially contemporaneously
with the Closing a copy of the receipt of a payoff letter or lien release
letter from each of the institutions listed on Schedule II attached
hereto.
(p) The Initial Purchaser shall have received (i) evidence reasonably
satisfactory to it that $55.7 million aggregate principal amount of 8%
Senior Notes will be paid contemporaneously with Closing to the Redeemed
8% Senior Note Holders, and (ii) an executed copy of a supplemental
indenture to the Indenture, dated as of April 8, 2003, between the Company
and Xxxxx Fargo Bank Minnesota, National Association, as trustee, which
supplemental indenture (including the amendments and lien release
contained therein) shall be in full force and effect and in form and
substance reasonably satisfactory to the Initial Purchaser and its
counsel.
8. INDEMNIFICATION AND CONTRIBUTION.
(a) The Company agrees to indemnify and hold harmless the Initial Purchaser,
and 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,
against any losses, claims, damages or liabilities of any kind to which
the Initial Purchaser or such controlling 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:
(i) any untrue statement or alleged untrue statement of any material
fact contained in the Preliminary Offering Circular, the Final
Offering Circular or any amendment or supplement thereto; or
(ii) the omission or alleged omission to state, in the Preliminary
Offering Circular, the Final Offering Circular or any amendment or
supplement thereto, 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;
and, subject to the provisions hereof, will reimburse, as incurred, the
Initial Purchaser and each such controlling person for any legal or other
expenses reasonably incurred by the Initial Purchaser or such controlling
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 in respect thereof; provided, however, that the
Company and the Guarantors will not be liable in any such case to the
extent (but only to the extent) that any such loss, claim, damage or
liability is finally judicially determined by a court of competent
jurisdiction in a final, unappealable judgment, to have resulted from any
untrue statement or alleged untrue statement or omission or alleged
omission made in any Offering Circular or any amendment or supplement
thereto in reliance upon and in conformity with written information
concerning the Initial Purchaser Information and furnished to the Company
by the Initial Purchaser specifically for use therein. This indemnity
agreement will be in addition to any liability that the Company may
otherwise have to the indemnified parties. This indemnity, as to the
Preliminary Offering Circular, shall not inure to the benefit of the
Initial Purchaser (or any person controlling the Initial Purchaser) on
account of any loss, claim, damage or liability arising from the sale of
Units to any person by the Initial Purchaser if it shall have been finally
judicially determined by a court of competent jurisdiction in a final,
nonappealable judgment that (1) the Initial Purchaser failed to send or
give to such person, at or prior to the written confirmation of the sale
of Units to such person, a copy of the Final Offering Circular (as then
amended or supplemented in compliance with Section 5(c) hereof) if
required by law to have so delivered it, (2) the Company had previously
furnished copies of the corrected Offering Circular to the Initial
Purchaser within a
23
reasonable period of time prior to such written confirmation, and (3) the
untrue statement or alleged untrue statement or omission or alleged
omission of a material fact in such Preliminary Offering Circular was
corrected in the Final Offering Circular (as then amended or supplemented
in accordance with Section 5(c) hereof).
(b) The Initial Purchaser agrees to indemnify and hold harmless each of the
Company, each of the Guarantors and their respective directors, 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 of any kind 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 and to the extent such
losses, claims, damages or liabilities (or actions in respect thereof) are
finally judicially determined by a court of competent jurisdiction in a
final, unappealable judgment, to have resulted from (i) any untrue
statement or alleged untrue statement of any material fact contained in
any Offering Circular or any amendment or supplement thereto or (ii) the
omission or the alleged omission to state therein a material fact required
to be stated in any Offering Circular or any amendment or supplement
thereto 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
concerning the Initial Purchaser Information and furnished to the Company
by the Initial Purchaser specifically for use therein; and, subject to the
limitation set forth immediately preceding this clause, will reimburse, as
incurred, any legal or other expenses incurred by the Company, each of the
Guarantors or any such director, officer or controlling person 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 such
indemnified parties.
(c) Promptly after receipt by an indemnified party under this Section 8 of
notice of the commencement of any action for which such indemnified party
is entitled to indemnification under this Section 8, such indemnified
party will, if a claim in respect thereof is to be made against the
indemnifying party under this Section 8, notify the indemnifying party of
the commencement thereof in writing; but the omission to so notify the
indemnifying party (i) will not relieve such indemnifying party from any
liability under paragraph (a) or (b) above unless and only to the extent
it is materially prejudiced as a result thereof 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 determine, 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 an actual conflict of interest, (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 in writing
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 at the expense of the indemnifying party.
After
24
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 8 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 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 or related actions (unless
such claims are not 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 8 or the Company in the case
of paragraph (b) of this Section 8, 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 (which consent shall not be unreasonably withheld),
unless such indemnified party waived in writing its rights under this
Section 8, in which case the indemnified party may effect such a
settlement without such consent.
(d) No indemnifying party shall be liable under this Section 8 for any
settlement of any claim or action (or threatened claim or action covered
thereby) effected without its written consent, which shall not be
unreasonably withheld, but if such claim or action is settled with its
written consent, or if there be a final judgment for the plaintiff with
respect to any such claim or action, each indemnifying party jointly and
severally agrees, subject to the exceptions and limitations set forth
above, to indemnify and hold harmless each indemnified party from and
against any and all losses, claims, damages or liabilities (and legal and
other expenses as set forth above) incurred by reason of such settlement
or judgment. No indemnifying party shall, without the prior written
consent of the indemnified party (which consent shall not be unreasonably
withheld, conditioned or delayed), effect any settlement or compromise of
any pending or threatened proceeding in respect of which the indemnified
party is or could have been a party, or indemnity could have been sought
hereunder by the indemnified party, unless such settlement (A) includes an
unconditional written release of the indemnified party, in form and
substance reasonably satisfactory to the indemnified party, from all
liability on the 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 indemnified party.
(e) In circumstances in which the indemnity agreement provided for in the
preceding paragraphs of this Section 8 is unavailable to, or insufficient
to hold harmless, an indemnified party in respect of any losses, claims,
damages or liabilities (or actions in respect thereof) covered thereby,
each indemnifying party, in order to provide for just and equitable
contributions, 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) covered thereby, 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 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 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
25
be deemed to be in the same proportion as the total net proceeds from the
Offering (before deducting expenses) received by the Company bear to the
total discounts, commissions and fees 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 omissions, and any other equitable
considerations appropriate in the circumstances.
(f) The Company and the Initial Purchaser agree that it would not be equitable
if the amount of such contribution determined pursuant to the immediately
preceding paragraph (e) were determined 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
the immediately preceding paragraph (e). Notwithstanding any other
provision of this Section 8, the Initial Purchaser shall not be obligated
to make contributions hereunder that in the aggregate exceed the total
discounts, commissions and fees 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 (and for which it was
entitled to indemnification hereunder) by reason of the untrue or alleged
untrue statements or the omissions or alleged omissions to state a
material fact. 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 the immediately preceding paragraph (e), 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
and the Guarantors, each officer of the Company and the Guarantors and
each person, if any, who controls either of the Company or the Guarantors
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 and the
Guarantors.
9. TERMINATION. The Initial Purchaser may terminate this
Agreement in its sole discretion at any time prior to the Closing Date by
written notice to the Company if any of the following has occurred:
(a) since the date hereof, any Material Adverse Effect or development
reasonably expected to result in a Material Adverse Effect (in each case
except as disclosed in the Final Offering Circular) that would, in the
Initial Purchaser's reasonable judgment, be expected to (i) make it
impracticable or inadvisable to proceed with the offering or delivery of
the Units on the terms and in the manner contemplated in the Final
Offering Circular, or (ii) materially impair the investment quality of any
of the Notes;
(b) the failure of the Company to satisfy the conditions contained in Section
7 hereof on or prior to the Closing Date;
(c) any outbreak or escalation of hostilities or other national or
international calamity or crisis, including acts of terrorism, or material
adverse change or disruption in economic conditions in, or in the
financial markets of, the United States (it being understood that any such
change or disruption shall be relative to such conditions and markets as
in effect on the date hereof), if the effect of such outbreak, escalation,
calamity, crisis, act or material adverse change in the economic
conditions in, or in the financial markets of, the United States would be
reasonably expected to make it, in the Initial Purchaser's sole judgment,
impracticable or inadvisable to
26
market or proceed with the offering or delivery of the Units on the terms
and in the manner contemplated in the Final Offering Circular or to
enforce contracts for the sale of any of the Units;
(d) trading in the Company's common stock shall have been suspended by the SEC
or the American Stock Exchange or the suspension or limitation of trading
generally in securities on the New York Stock Exchange, the American Stock
Exchange or the NASDAQ National Market or any setting of limitations on
prices for securities on any such exchange or NASDAQ National Market;
(e) the enactment, publication, decree or other promulgation after the date
hereof of any Applicable Law that in the Initial Purchaser's counsel's
reasonable opinion would reasonably be expected to have a Material Adverse
Effect;
(f) any securities of the Company shall have been downgraded or placed on any
"watch list" for possible downgrading by any "nationally recognized
statistical rating organization," as such term is defined for purposes of
Rule 436(g)(2) under the Act; or
(g) the declaration of a banking moratorium by any Governmental Authority; or
the taking of any action by any Governmental Authority after the date
hereof in respect of its monetary or fiscal affairs that in the Initial
Purchaser's opinion would reasonably be expected to have a material
adverse effect on the financial markets in the United States or elsewhere.
10. SURVIVAL OF REPRESENTATIONS AND INDEMNITIES. The
representations and warranties, covenants, indemnities and contribution and
expense reimbursement provisions and other agreements, representations and
warranties of the Company and the Initial Purchaser set forth in or made
pursuant to this Agreement shall remain operative and in full force and effect,
and will survive, regardless of (i) any investigation, or statement as to the
results thereof, made by or on behalf of the Company or the Initial Purchaser,
and (ii) acceptance of the Notes, and payment for them hereunder. The provisions
of Sections 5(f), 8 and 10 hereof shall survive the termination or cancellation
of this Agreement.
11. BREACH BY THE INITIAL PURCHASER. If the Initial Purchaser
shall breach any of its several obligations to purchase the Units that it has
agreed to purchase hereunder on the Closing Date and arrangements satisfactory
to the Company for the purchase of such Units are not made within 36 hours after
such default, this Agreement shall terminate with respect to the Initial
Purchaser without liability on the part of the Company. Nothing contained in
this Section 11 shall relieve the Initial Purchaser from liability for its
breach.
12. INFORMATION SUPPLIED BY THE INITIAL PURCHASER. The only
information furnished by the Initial Purchaser to the Company and its
Subsidiaries for the purposes of Sections 4(a) and 8 hereof are (a) the name of
the Initial Purchaser set forth on the front and back cover and under the
heading "Plan of Distribution" of the Offering Circular, (b) the statements set
forth in the last sentence under the heading "Certain Relationships and Related
Transactions" of the Offering Circular, and (c) (i) the first sentence of the
third paragraph, and (ii) the first and second sentences of the sixth paragraph
under the heading "Plan of Distribution" of the Offering Circular, in each case,
to the extent such statements relate to the Initial Purchaser (collectively, the
"Initial Purchaser Information").
13. MISCELLANEOUS.
(a) Notices given pursuant to any provision of this Agreement shall be
addressed as follows: (i) if to the Company, to: Viskase Companies, Inc.,
000 Xxxxxxxxxxx Xxxxxx Xxxxxxx, Xxxxxxxxxxx, Xxxxxxxx 00000, Attention:
Xxxxxx Xxxxxxx, with a copy to: Jenner & Block, 000 X. Xxxxxx,
27
Chicago, Illinois 60611, Attention: Xxxxxx X. Xxxxxx, Esq., and (ii) if to
the Initial Purchaser, to: Xxxxxxxxx & Company, Inc., 00000 Xxxxx Xxxxxx
Xxxxxxxxx, 00xx Xxxxx, Xxx Xxxxxxx, Xxxxxxxxxx 00000, Attention: Xxxxx X.
Xxxxxx, Esq., with a copy to: Mayer, Brown, Xxxx & Maw LLP, 0000 Xxxxxxxx,
Xxx Xxxx, Xxx Xxxx 00000-0000, Attention: Xxxxxx X. Xxxxx, Esq. (or in any
case to such other address as the person to be notified may have requested
in writing).
(b) All such notices and communication shall be deemed to have been duly
given: when delivered by hand, if personally delivered; five business days
after being deposited in the United States mail, postage prepaid, if
mailed; one business day after being timely delivered to a next day air
courier, and when receipt is electronically acknowledged by the addressee,
if telecopied.
(c) This Agreement has been and is made solely for the benefit of and shall be
binding upon the Company, the Initial Purchaser and, to the extent
provided in Section 8 hereof, the controlling persons, officers,
directors, partners, employees, representatives and agents referred to in
Section 8, and their respective heirs, executors, administrators,
successors and assigns, all as and to the extent provided in this
Agreement, and no other person shall acquire or have any right under or by
virtue of this Agreement. The term "successors and assigns" shall not
include a purchaser of any of the Units from the Initial Purchaser merely
because of such purchase. Notwithstanding the foregoing, it is expressly
understood and agreed that each purchaser who purchases Units from the
Initial Purchaser is intended to be a beneficiary of the covenants of the
Company contained in the Debt Registration Rights Agreement to the same
extent as if the Units were sold and those covenants were made directly to
such purchaser by the Company, and each such purchaser shall have the
right to take action against the Company to enforce, and obtain damages
for any breach of, those covenants.
(d) 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 REGARD TO PRINCIPLES OF
CONFLICTS OF LAW.
(e) EACH OF THE PARTIES HEREBY EXPRESSLY AND IRREVOCABLY (I) SUBMITS TO THE
NON-EXCLUSIVE JURISDICTION OF THE FEDERAL AND STATE COURTS SITTING IN THE
BOROUGH OF MANHATTAN IN THE CITY OF NEW YORK IN ANY SUIT OR PROCEEDING
ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS
CONTEMPLATED THEREBY; AND (II) WAIVES (A) ITS RIGHT TO A TRIAL BY JURY IN
ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT, THE
TRANSACTIONS CONTEMPLATED HEREBY, OR ANY COURSE OF CONDUCT, COURSE OF
DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF THE OTHER
PARTY HERETO AND FOR ANY COUNTERCLAIM RELATED TO ANY OF THE FOREGOING AND
(B) ANY OBLIGATION WHICH IT MAY HAVE OR HEREAFTER MAY HAVE TO THE LAYING
OF VENUE OF ANY SUCH LITIGATION BROUGHT IN ANY SUCH COURT REFERRED TO
ABOVE AND ANY CLAIM THAT ANY SUCH LITIGATION HAS BEEN BROUGHT IN AN
INCONVENIENT FORUM.
(f) This Agreement may be signed in various counterparts, which together shall
constitute one and the same instrument.
(g) The headings in this Agreement are for convenience of reference only and
shall not limit or otherwise affect the meaning hereof.
28
(h) If any term, provision, covenant or restriction of this Agreement is held
by a court of competent jurisdiction to be invalid, illegal, void or
unenforceable, the remainder of the terms, provisions, covenants and
restrictions set forth herein shall remain in full force and effect and
shall in no way be affected, impaired or invalidated, and the parties
hereto shall use their best efforts to find and employ an alternative
means to achieve the same or substantially the same result as that
contemplated by such term, provision, covenant or restriction. It is
hereby stipulated and declared to be the intention of the parties that
they would have executed the remaining terms, provisions, covenants and
restrictions without including any of such that may be hereafter declared
invalid, illegal, void or unenforceable.
(i) This Agreement may be amended, modified or supplemented, and waivers or
consents to departures from the provisions hereof may be given, provided
that the same are in writing and signed by all of the signatories hereto.
29
Please confirm that the foregoing correctly sets forth the agreement
between the Company and the Initial Purchaser.
Very truly yours,
VISKASE COMPANIES, INC.
By: /s/ Xxxxxx X. Xxxxxxx
Name: Xxxxxx X. Xxxxxxx
Title: Vice President
Accepted and Agreed to:
XXXXXXXXX & COMPANY, INC.
By:_/s/ Xxxxxx Xxxxxxxxx
Name: Xxxxxx Xxxxxxxxx
Title: Vice Chairman
