EXHIBIT 1.1
CAF ACQUISITION CORP.
$100,000,000
10% Senior Subordinated Notes due 2007
PURCHASE AGREEMENT
January 29, 1997
BT SECURITIES CORPORATION
Bankers Trust Plaza
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Ladies and Gentlemen:
CAF Holdings, Inc., a Virginia corporation ("Hold-
ings"), and CAF Acquisition Corporation, a Virginia corporation
and a wholly owned subsidiary of Holdings ("CAF," and together
with Holdings, the "Companies"), hereby confirm their agreement
with you (the "Initial Purchaser"), as set forth below.
1. The Securities. Subject to the terms and condi-
tions herein contained, CAF proposes to issue and sell to the
Initial Purchaser $100,000,000 aggregate principal amount of its
10% Senior Subordinated Notes due 2007, Series A (the "Notes").
The Notes are to be issued under an indenture (the "Indenture")
to be dated as of February 6, 1997 by and between CAF and IBJ
Xxxxxxxx Bank & Trust Company, as Trustee (the "Trustee").
The Notes are being issued and sold in connection with
the acquisition (the "Acquisition") of Xxxxxxx & Xxxxxx Floor
Coverings, Inc., a Delaware corporation (the "Company"), by CAF
pursuant to an agreement dated as of December 9, 1996 (the
"Acquisition Agreement"), entered into by and among Holdings,
CAF, the Company, Xxxxxxx & Xxxxxx Products, Co. ("C&A Products")
and Xxxxxxx & Xxxxxx Floor Coverings Group, Inc. (the "Seller").
Simultaneously with the closing of the sale of the Notes (the
"Offering"), CAF will acquire from the Seller all of the
outstanding capital stock of the Company.
Immediately after the consummation of the Acquisition,
CAF will merge (the "Merger") with and into the Company and the
Company shall change its name to Xxxxxxx & Xxxxxx Floorcoverings,
Inc. The time of the consummation of the Merger is referred to
herein as the "Effective Time." At the Effective Time, (i) the
Company and the Trustee will enter into a first supplemental
indenture to the Indenture (the "Supplemental Indenture")
providing for the express assumption by the Company (as survivor
of the Merger) of the covenants, agreements and undertakings of
CAF in the Indenture and under the Notes and (ii) the Company
will execute an agreement in the form attached hereto as Exhibit
A (the "Assumption Agreement") pursuant to which the Company (as
survivor of the Merger) shall expressly assume the obligations of
CAF under this Agreement. References to the Indenture as of or
after the Effective Time will refer to the Indenture as
supplemented by the Supplemental Indenture and references to this
Agreement as of or after the Effective Time will refer to this
Agreement together with the Assumption Agreement.
Financing for the Acquisition will be provided by
(i) $57 million of borrowings under an $85 million Credit
Agreement (the "Credit Agreement") by and among CAF, Holdings,
various lending institutions party thereto and Bankers Trust
Company, as agent (the "Bank Financing"), (ii) $51 million of
capital invested by affiliates of Quad-C, Inc., Paribas Princi-
pal, Inc., management of the Company and certain other investors
in Holdings (the "Equity Financing") and (iii) the proceeds of
the Offering. The Acquisition, the Offering, the Equity
Financing, the Bank Financing and the Merger are collectively
referred to herein as the "Transactions."
The Notes will be offered and sold to the Initial
Purchaser without being registered under the Securities Act of
1933, as amended (the "Act"), in reliance on exemptions
therefrom.
In connection with the sale of the Notes, CAF has
prepared a preliminary offering memorandum dated January 8, 1997
(the "Preliminary Memorandum") and a final offering memorandum
dated the date hereof (the "Final Memorandum"; the Preliminary
Memorandum and the Final Memorandum each herein being referred to
as a "Memorandum"), each setting forth or including descriptions
of the terms of the Notes, the terms of the Offering, the
Acquisition and the transactions contemplated thereby and hereby,
the Company and any material developments relating to the Company
occurring after the date of the most recent historical financial
statements included therein.
The Companies understand that the Initial Purchaser
proposes to make an offering of the Notes only on the terms and
in the manner set forth in the Final Memorandum and Section 8
hereof as soon as the Initial Purchaser deems advisable after
this Agreement has been executed and delivered, to persons in the
United States whom the Initial Purchaser reasonably believes to
be qualified institutional buyers ("Qualified Institutional
Buyers" or "QIBs") as defined in Rule 144A under the Act, as such
rule may be amended from time to time ("Rule 144A"), in
transactions under Rule 144A, to a limited number of other
institutional "accredited investors" ("Accredited Investors") as
defined in Rule 501(a)(1), (2), (3) and (7) under Regulation D of
the Act in private sales exempt from registration under the Act,
and outside the United States to certain persons in reliance on
Regulation S under the Act.
The Initial Purchaser and its direct and indirect
transferees of the Notes will be entitled to the benefits of the
Registration Rights Agreement, substantially in the form attached
hereto as Exhibit B (the "Registration Rights Agreement"), to be
dated the Closing Date (as defined in Section 3 below), pursuant
to which CAF will and, at and as of the Effective Time, the
Company will, agree, among other things, to file a registration
statement (the "Registration Statement") with the Securities and
Exchange Commission (the "Commission") registering the Notes or
the Exchange Notes (as defined in the Registration Rights
Agreement) under the Act.
2. Representations and Warranties of Holdings and
CAF. Holdings and CAF represent and warrant to and agree with
the Initial Purchaser that:
A. Neither the Preliminary Memorandum as of the date
thereof nor the Final Memorandum nor any amendment or supplement
thereto as of the date thereof and 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, except that the representations and warranties set
forth in this Section 2(a) do not apply to statements or
omissions made in reliance upon and in conformity with informa-
tion relating to the Initial Purchaser furnished to CAF in
writing by the Initial Purchaser expressly for use in the Pre-
liminary Memorandum, the Final Memorandum or any amendment or
supplement thereto.
B. As of the Closing Date and after giving effect to
the Transactions, the Company will have the authorized, issued
and outstanding capitalization set forth in the Final Memorandum;
as of the date hereof and upon consummation of the Transactions,
the only subsidiary of the Company will be Xxxxxxx & Xxxxxx
United Kingdom Limited (the "Subsidiary"); except as set forth in
the Final Memorandum, all of the outstanding shares of capital
stock of the Company and the Subsidiary have been, and as of the
Closing Date will be, duly authorized and validly issued, are
fully paid and nonassessable and were not issued in violation of
any preemptive or similar rights; except as set forth in the
Final Memorandum, all of the outstanding shares of capital stock
of the Company and the Subsidiary will be free and clear of all
liens, encumbrances, equities and claims or restrictions on
transferability (other than those imposed by the Act and the
securities or "Blue Sky" laws of certain jurisdictions) or
voting; except as set forth in the Final Memorandum, there are no
(i) options, warrants or other rights to purchase, (ii)
agreements or other obligations to issue or (iii) other rights to
convert any obligation into, or exchange any securities for,
shares of capital stock of or ownership interests in the Company
or the Subsidiary outstanding. Except for the Subsidiary, the
Company does not own, directly or indirectly, any shares of
capital stock or any other equity or long-term debt securities or
have any equity interest in any firm, partnership, joint venture
or other entity.
C. Each of Holdings, CAF and, to the best knowledge of
the Companies after due inquiry, the Company and the Subsidiary
is duly incorporated, validly existing and in good standing under
the laws of its respective jurisdiction of incorporation and has
all requisite corporate power to own its properties and conduct
its business as now conducted and as described in the Final
Memorandum; each of Holdings, CAF and, to the best knowledge of
the Companies after due inquiry, the Company and the Subsidiary
is duly qualified to do business as a foreign corporation in good
standing in all other jurisdictions where the ownership or
leasing of its properties or the conduct of its business requires
such qualification, except where the failure to be so qualified
would not, individually or in the aggregate, have a material
adverse effect on the general affairs, management, business,
condition (financial or otherwise), prospects or results of
operations of the Company and the Subsidiary, taken as a whole
(any such event, a "Material Adverse Effect").
D. CAF has and, immediately following the Effective
Time, the Company will have all requisite corporate power to
execute, deliver and perform each of its obligations under the
Notes and the Exchange Notes and the Private Exchange Notes (each
as defined in the Registration Rights Agreement). The Notes,
when issued, will be in the form contemplated by the Indenture.
The Notes, the Exchange Notes and the Private Exchange Notes have
each been duly and validly authorized by CAF and, immediately
following the Effective Time, the Company and, when executed by
CAF and the Company, as the case may be, and authenticated by the
Trustee in accordance with the provisions of the Indenture and,
in the case of the Notes, when delivered to and paid for by the
Initial Purchaser in accordance with the terms of this Agreement,
will constitute valid and legally binding obligations of CAF and,
immediately following the Effective Time, the Company, as the
case may be, entitled to the benefits of the Indenture, and
enforceable against CAF and the Company, as the case may be, in
accordance with their terms, except that the enforcement thereof
may be subject to (i) bankruptcy, fraudulent conveyance,
insolvency, reorganization, moratorium or other similar laws now
or hereafter in effect relating to creditors' rights generally,
and (ii) general principles of equity and the discretion of the
court before which any proceeding therefor may be brought.
E. CAF has and, immediately following the Effective
Time, the Company will have all requisite corporate power and
authority to execute, deliver and perform its obligations under
the Indenture. The Indenture meets the requirements for quali-
fication under the Trust Indenture Act of 1939, as amended (the
"TIA"). The Indenture has been duly and validly authorized by
CAF. The Supplemental Indenture will, immediately following the
Effective Time, have been duly and validly authorized by the
Company. Assuming the due authorization, execution and delivery
of the Indenture and the Supplemental Indenture by the Trustee,
each of the Indenture and the Supplemental Indenture will
constitute valid and legally binding agreements of CAF and,
immediately following the Effective Time, the Company,
enforceable against CAF and, at and as of the Effective Time, the
Company in accordance with its terms, except that the enforcement
thereof may be subject to (i) bankruptcy, fraudulent conveyance,
insolvency, reorganization, moratorium or other similar laws now
or hereafter in effect relating to creditors' rights generally
and (ii) general principles of equity and the discretion of the
court before which any proceeding therefor may be brought.
F. CAF has and, immediately following the Effective
Time, the Company will have all requisite corporate power and
authority to execute, deliver and perform its obligations under
the Registration Rights Agreement. The Registration Rights
Agreement has been duly and validly authorized by CAF and,
immediately following the Effective Time, by the Company and,
when executed and delivered by CAF and the Company, will con-
stitute a valid and legally binding agreement of CAF and, imme-
diately following the Effective Time, the Company enforceable
against CAF and, immediately following the Effective Time, the
Company in accordance with its terms, except that (A) the
enforcement thereof may be subject to (i) bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or hereafter
in effect relating to creditors' rights generally and
(ii) general principles of 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.
G. CAF has and, at and as of the Effective Time, the
Company will have all requisite corporate power and authority to
execute, deliver and perform its obligations under this Agreement
and to consummate the transactions contemplated hereby. This
Agreement and the consummation by CAF and the Company of the
transactions contemplated hereby have been duly and validly
authorized by CAF and, at and as of the Effective Time, the
Company. This Agreement has been duly executed and delivered by
CAF.
H. No consent, approval, authorization or order of any
court or governmental agency or body, or third party is required
for the issuance and sale by CAF of the Notes to the Initial
Purchaser or the consummation by CAF and the Company of the other
transactions contemplated hereby, except such as have been
obtained and such as may be required under state securities or
"Blue Sky" laws in connection with the purchase and resale of the
Notes by the Initial Purchaser. None of CAF or Holdings or to
the best knowledge of the Companies after due inquiry, the
Company or the Subsidiary is (i) in violation of its certificate
or articles of incorporation or bylaws (or similar organizational
documents), (ii) in breach or violation of any statute, judgment,
decree, order, rule or regulation applicable to any of them or
any of their respective properties or assets, except for any such
breach or violation which would not, individually or in the
aggregate, have a Material Adverse Effect, or (iii) in breach of
or default under (nor has any event occurred which, with notice
or passage of time or both, would constitute a default under) or
in violation of any of the terms or provisions of any indenture,
mortgage, deed of trust, loan agreement, note, lease, license,
franchise agreement, permit, certificate, contract or other
agreement or instrument to which any of them is a party or to
which any of them or their respective properties or assets is
subject (collectively, "Contracts"), except for any such breach,
default, violation or event which would not, individually or in
the aggregate, have a Material Adverse Effect.
I. The execution, delivery and performance by Holdings,
CAF and, immediately following the Effective Time, the Company of
this Agreement, the Indenture and the Registration Rights
Agreement, as the case may be, and the consummation by Holdings,
CAF and, immediately following the Effective Time, the Company of
the transactions contemplated hereby and thereby (including,
without limitation, the issuance and sale of the Notes to the
Initial Purchaser) will not conflict with or constitute or result
in a breach of or a default under (or an event which with notice
or passage of time or both would constitute a default under) or
violation of any of (i) the terms or provisions of any Contract,
except for any such conflict, breach, violation, default or event
which would not, individually or in the aggregate, have a
Material Adverse Effect, (ii) the certificate or articles of
incorporation or bylaws (or similar organizational documents) of
CAF, Holdings, the Company or the Subsidiary, or (iii) (assuming
compliance with all applicable state securities or "Blue Sky"
laws and assuming the accuracy of the representations and
warranties of the Initial Purchaser in Section 8 hereof) any
statute, judgment, decree, order, rule or regulation applicable
to CAF, Holdings the Company or the Subsidiary or any of their
respective properties or assets, except for any such conflict,
breach or violation which would not, individually or in the
aggregate, have a Material Adverse Effect.
J. The audited consolidated financial statements of the
Company and the Subsidiary included in the Final Memorandum
present fairly in all material respects the consolidated xxxxx-
cial position, results of operations and cash flows of the Com-
pany and the Subsidiary at the dates and for the periods to which
they relate and have been prepared in accordance with generally
accepted accounting principles applied on a consistent basis,
except as otherwise stated therein. The summary and selected
financial and statistical data in the Final Memorandum present
fairly in all material respects the information shown therein
and have been prepared and compiled on a basis consistent with
the audited financial statements included therein, except as
otherwise stated therein. Xxxxxx Xxxxxxxx, LLP (the "Independent
Accountants") is an independent public accounting firm within the
meaning of the Act and the rules and regulations promulgated
thereunder.
K. The pro forma financial statements (including the
notes thereto) and the other pro forma financial information
included in the Final Memorandum (i) comply as to form in all
material respects with the applicable requirements of Regulation
S-X promulgated under the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), (ii) have been prepared in
accordance with the Commission's rules and guidelines with
respect to pro forma financial statements, and (iii) have been
properly computed on the basis described therein. The assump-
tions used in the preparation of the pro forma financial data and
other pro forma financial information included in the Final
Memorandum are reasonable and the adjustments used therein are
appropriate to give effect to the transactions or circumstances
referred to therein.
L. There is not pending or, to the best knowledge of
the Companies after due inquiry, threatened any action, suit,
proceeding, inquiry or investigation to which the Companies or,
immediately following the Effective Time, the Company or the
Subsidiary is a party, or to which the property or assets of the
Companies or, immediately following the Effective Time, the
Company or the Subsidiary are subject, before or brought by any
court, arbitrator or governmental agency or body which, if
determined adversely to the Companies or, at and as of the
Effective Time, the Company or the Subsidiary, would, (taking
into account the indemnification required under the Acquisition
Agreement) individually or in the aggregate, have a Material
Adverse Effect or which seeks to restrain, enjoin, prevent the
consummation of or otherwise challenge the issuance or sale of
the Notes to be sold hereunder or the consummation of the other
transactions described in the Final Memorandum.
M. To the best knowledge of the Companies after due
inquiry, the Company and the Subsidiary possess, and as of the
Effective Time will possess, all licenses, permits, certificates,
consents, orders, approvals and other authorizations from, and
has made all declarations and filings with, all federal, state,
local and other governmental authorities, all self-regulatory
organizations and all courts and other tribunals, presently
required or necessary to own or lease, as the case may be, and
to operate its respective properties and to carry on its
respective businesses as now or proposed to be conducted as set
forth in the Final Memorandum ("Permits"), except where the
failure to obtain such Permits would not, individually or in the
aggregate, have a Material Adverse Effect; to the best knowledge
of the Companies after due inquiry, at and as of the Effective
Time, each of the Company and the Subsidiary will have fulfilled
and performed all of its respective 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 material impairment of the rights
of the holder of any such Permit; and none of the Companies or to
the best knowledge of the Companies after due inquiry, the
Company or the Subsidiary has received any notice of any
proceeding relating to revocation or modification of any such
Permit, except as described in the Final Memorandum and except
where such revocation or modification would not, individually or
in the aggregate, have a Material Adverse Effect.
N. Since the date of the most recent financial
statements appearing in the Final Memorandum, except as described
therein, (i) none of the Companies, the Company or the Subsidiary
has incurred any liabilities or obligations, direct or
contingent, or entered into or agreed to enter into any
transactions or contracts (written or oral) not in the ordinary
course of business which liabilities, obligations, transactions
or contracts would, individually or in the aggregate, be material
to the general affairs, management, business, condition
(financial or otherwise), prospects or results of operations of
the Company and the Subsidiary, taken as a whole and (ii) there
shall not have been any material change in the capital stock or
long-term indebtedness of CAF, Holdings, the Company or the
Subsidiary.
O. Each of the Companies and, to the best knowledge of
the Companies after due inquiry, the Company and the Subsidiary
has filed all necessary federal, state and foreign income and
franchise tax returns, except where the failure to so file such
returns would not, individually or in the aggregate, have a
Material Adverse Effect, and has paid all taxes shown as due
thereon; and other than tax deficiencies which the Company or the
Subsidiary is contesting in good faith and for which the Company
or the Subsidiary has provided adequate reserves, there is no tax
deficiency that has been asserted against the Company or any of
the Subsidiary that would have, individually or in the aggregate,
a Material Adverse Effect.
P. The statistical and market-related data included in
the Final Memorandum are based on or derived from sources which
the Companies, after due inquiry, believe to be reliable and
accurate.
Q. None of the Companies or, to the best knowledge of
the Companies after due inquiry, the Company, the Subsidiary or
any agent acting on their behalf has taken or will take any
action that might cause this Agreement or the sale of the Notes
to violate Regulation G, T, U or X of the Board of Governors of
the Federal Reserve System, in each case as in effect, or as the
same may hereafter be in effect, on the Closing Date.
R. To the best knowledge of the Companies after due
inquiry, each of the Company and the Subsidiary has and, at and
as of the Effective Time, will have good and marketable title to
all real property and good title to all personal property
described in the Final Memorandum as being owned by it and good
and marketable title to a leasehold estate in the real and per-
xxxxx property described in the Final Memorandum as being leased
by it free and clear of all liens, charges, encumbrances or
restrictions, except as described in the Final Memorandum or to
the extent the failure to have such title or the existence of
such liens, charges, encumbrances or restrictions would not,
individually or in the aggregate, have a Material Adverse Effect.
All leases, contracts and agreements to which the Companies are
or, to the best knowledge of the Companies after due inquiry, at
and as of the Effective Time, the Company or the Subsidiary will
be a party or by which any of them is or will be bound are valid
and enforceable against the Companies, the Company or the
Subsidiary, and are valid and enforceable against the other party
or parties thereto and are in full force and effect with only
such exceptions as would not, individually or in the aggregate,
have a Material Adverse Effect. At and as of the Effective Time,
to the best knowledge of the Companies after due inquiry, the
Company and the Subsidiary own or possess adequate licenses or
other rights to use all patents, trademarks, service marks, trade
names, copyrights and know-how necessary to conduct the
businesses now or proposed to be operated by them as described in
the Final Memorandum, and none of the Company or the Subsidiary
has received any notice of infringement of or conflict with (or
knows of any such infringement of or conflict with) asserted
rights of others with respect to any patents, trademarks, service
marks, trade names, copyrights or know-how which, if such
assertion of infringement or conflict were sustained, would have
a Material Adverse Effect.
S. To the best knowledge of the Companies after due
inquiry, there are no legal or governmental proceedings involving
or affecting the Company or the Subsidiary or any of their
respective properties or assets which would be required to be
described in a prospectus pursuant to the Act that are not
described in the Final Memorandum, nor are there any material
contracts or other documents which would be required to be
described in a prospectus pursuant to the Act that are not
described in the Final Memorandum.
i) Except as described in the Final Memorandum or except
as would not, individually or in the aggregate, have a Material
Adverse Effect, to the best knowledge of the Companies after due
inquiry, (A) each of the Company and the Subsidiary, immediately
following the Effective Time, will be in compliance with and not
subject to liability under applicable Environmental Laws (as
defined below), (B) each of the Company and the Subsidiary, at
and as of the Effective Time, will have made all filings and
provided all notices required under any applicable Environmental
Law, and is in compliance with all Permits required under any
applicable Environmental Laws and each of them is in full force
and effect, (C) there is no civil, criminal or administrative
action, suit, demand, claim, hearing, notice of violation,
investigation, proceeding, notice or demand letter or request for
information pending or threatened against the Company or the
Subsidiary under any Environmental Law, (D) no lien, charge,
encumbrance or restriction will be recorded under any
Environmental Law with respect to any assets, facility or
property owned, operated, leased or controlled by the Company or
the Subsidiary, (E) none of the Companies, the Company or the
Subsidiary has received notice that it has been identified as a
potentially responsible party under the Comprehensive
Environmental Response, Compensation and Liability Act of 1980,
as amended ("CERCLA") or any comparable state law, (F) no
property or facility of the Companies, the Company or the
Subsidiary is (i) listed or proposed for listing on the National
Priorities List under CERCLA or is (ii) listed in the
Comprehensive Environmental Response, Compensation, Liability
Information System List promulgated pursuant to CERCLA, or on any
comparable list maintained by any state or local governmental
authority.
For purposes of this Agreement, "Environmental Laws"
means the common law and all applicable federal, state and local
laws or regulations, codes, orders, decrees, judgments or
injunctions issued, promulgated, approved or entered thereunder,
relating to pollution or protection of public or employee health
and safety or the environment, including, without limitation,
laws relating to (i) emissions, discharges, releases or
threatened releases of hazardous materials into the environment
(including, without limitation, ambient air, surface water,
ground water, land surface or subsurface strata), (ii) the
manufacture, processing, distribution, use, generation, treat-
ment, storage, disposal, transport or handling of hazardous
materials, and (iii) underground and above ground storage tanks
and related piping, and emissions, discharges, releases or
threatened releases therefrom.
T. None of the Companies or, to the best knowledge of
the Companies after due inquiry, the Company or the Subsidiary
has or, immediately following the Effective Time, will have any
liability for any prohibited transaction or funding deficiency or
any complete or partial withdrawal liability with respect to any
pension, profit sharing or other plan which is subject to the
Employee Retirement Income Security Act of 1974, as amended
("ERISA"), to which it makes or ever has made a contribution and
in which any employee of it is or has ever been a participant.
With respect to such plans, the Companies or, to the best
knowledge of the Companies, after due inquiry, the Company and
each Subsidiary is or will be, as the case may be, in compliance
in all material respects with all applicable provisions of ERISA.
U. None of the Companies and, to the best knowledge of
the Companies after due inquiry, the Company or the Subsidiary
will be an "investment company" or "promoter" or "principal
underwriter" for an "investment company," as such terms are
defined in the Investment Company Act of 1940, as amended, and
the rules and regulations thereunder.
V. The Notes, the Exchange Notes, the Indenture, the
Registration Rights Agreement, the Acquisition Agreement and this
Agreement will conform in all material respects to the
descriptions thereof in the Final Memorandum.
W. No holder of securities of Holdings, CAF, the
Company or the Subsidiary will be entitled to have such securi-
ties registered under the registration statements required to be
filed by the Company pursuant to the Registration Rights
Agreement other than as expressly permitted thereby.
X. Immediately after the consummation of the Trans-
actions, the fair value and present fair saleable value of the
assets of the Company and the Subsidiary (on a consolidated
basis) will exceed the sum of its stated liabilities and iden-
tified contingent liabilities; the Company and the Subsidiary (on
a consolidated basis) will not, nor will it be, after giving
effect to the execution, delivery and performance of this
Agreement and the consummation of the Transactions, (a) left with
unreasonably small capital with which to carry on its business as
it is proposed to be conducted, (b) unable to pay its debts
(contingent or otherwise) as they mature or (c) otherwise
insolvent.
Y. None of the Companies or, to the best knowledge of
the Companies after due inquiry, the Company, the Subsidiary or
any of their respective Affiliates (as defined in Rule 501(b) of
Regulation D under the Act) has directly, or through any agent,
(i) sold, offered for sale, solicited offers to buy or otherwise
negotiated in respect of, any "security" (as defined in the Act)
which is or could be integrated with the sale of the Notes in a
manner that would require the registration under the Act of the
Notes or (ii) engaged in any form of general solicitation or
general advertising (as those terms are used in Regulation D
under the Act) in connection with the offering of the Notes or in
any manner involving a public offering within the meaning of
Section 4(2) of the Act. Assuming (i) the accuracy of the
representations and warranties of the Initial Purchaser in
Section 8 hereof, (ii) compliance by the Initial Purchaser with
the offering and transfer restrictions described in the Final
Memorandum and (iii) the accuracy of the representations,
warranties and agreements of each of the purchasers to whom the
Initial Purchaser initially resales the Notes in compliance with
Section 8 hereof and, as to any Accredited Investors, as
reflected in Exhibit A to the Final Memorandum, it is not
necessary in connection with the offer, sale and delivery of the
Notes to the Initial Purchaser in the manner contemplated by this
Agreement to register any of the Notes under the Act or to
qualify the Indenture under the TIA.
Z. No 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 Exchange Act, or quoted in a U.S. automated
inter-dealer quotation system.
AA. None of the Companies and, to the best knowledge of
the Companies after due inquiry, the Company or the Subsidiary
has taken, nor will any of them take, directly or indirectly, any
action designed to, or that might be reasonably expected to,
cause or result in stabilization or manipulation of the price of
the Notes.
Any certificate signed by any officer of the Company
or the Subsidiary and delivered to the Initial Purchaser or to
counsel for the Initial Purchaser shall be deemed a joint and
several representation and warranty by the Companies, the Company
and the Subsidiary to the Initial Purchaser as to the matters
covered thereby.
3. Purchase, Sale and Delivery of the Notes. On the
basis of the representations, warranties, agreements and
covenants herein contained and subject to the terms and condi-
tions herein set forth, CAF agrees to issue and sell to the
Initial Purchaser, and the Initial Purchaser agrees to purchase
from the Company, the Notes at 97% of their principal amount.
One or more certificates in definitive form for the Notes that
the Initial Purchaser has agreed to purchase hereunder, and in
such denomination or denominations and registered in such name or
names as the Initial Purchaser requests upon notice to CAF at
least 36 hours prior to the Closing Date, shall be delivered by
or on behalf of CAF to the Initial Purchaser, against payment by
or on behalf of the Initial Purchaser of the purchase price
therefor by wire transfer (immediately available funds), to such
account or accounts as CAF shall specify prior to the Closing
Date, or by such means as the parties hereto shall agree prior to
the Closing Date. Such delivery of and payment for the Notes
shall be made at the offices of White & Case, 0000 Xxxxxx xx xxx
Xxxxxxxx, Xxx Xxxx, Xxx Xxxx at 10:00 A.M., New York time, on
February 6, 1997, or at such other place, time or date as the
Initial Purchaser, on the one hand, and CAF, on the other hand,
may agree upon, such time and date of delivery against payment
being herein referred to as the "Closing Date." CAF will make
such certificate or certificates for the Notes available for
checking and packaging by the Initial Purchaser at the offices of
BT Securities Corporation in New York, New York, or at such other
place as BT Securities Corporation may designate, at least 24
hours prior to the Closing Date.
4. Offering by the Initial Purchaser. The Initial
Purchaser proposes to make an offering of the Notes at the price
and upon the terms set forth in the Final Memorandum, as soon as
practicable after this Agreement is entered into and as in the
judgment of the Initial Purchaser is advisable.
5. Covenants of Holdings and CAF. Holdings and CAF
covenant and agree with the Initial Purchaser that:
A. Holdings and CAF will not and, at and after the
Effective Time, the Company will not amend or supplement the
Final Memorandum or any amendment or supplement thereto of which
the Initial Purchaser shall not previously have been advised and
furnished a copy for a reasonable period of time prior to the
proposed amendment or supplement and as to which the Initial
Purchaser shall not have given its consent. Holdings and CAF
will, and at and after the Effective Time, the Company will,
promptly, upon the reasonable request of the Initial Purchaser or
counsel for the Initial Purchaser, make any amendments or
supplements to the Preliminary Memorandum or the Final Memorandum
that may be necessary or advisable in connection with the resale
of the Notes by the Initial Purchaser.
B. Holdings and CAF will and, at and after the Closing
Date, the Company will cooperate with the Initial Purchaser in
arranging for the qualification of the Notes for offering and
sale under the securities or "Blue Sky" laws of which
jurisdictions as the Initial Purchaser may designate and will
continue such qualifications in effect for as long as may be
necessary to complete the resale of the Notes; provided, however,
that in connection therewith, Holdings, CAF and the Company shall
not be required to qualify as a foreign corporation or to execute
a general consent to service of process in any jurisdiction or
subject itself to taxation in excess of a nominal dollar amount
in any such jurisdiction where it is not then so subject.
C. If, at any time prior to the completion of the
distribution by the Initial Purchaser of the Notes or the Private
Exchange Notes, any event occurs or information becomes known as
a result of which the Final Memorandum as then amended or
supplemented would include any untrue statement of a material
fact, or omit to state a material fact necessary to make the
statements therein, in the light of the circumstances under which
they were made, not misleading, or if for any other reason it is
necessary at any time to amend or supplement the Final Memorandum
to comply with applicable law, Holdings and CAF will, and at and
after the Closing Date, the Company will promptly notify the
Initial Purchaser thereof and will prepare, at their own expense,
an amendment or supplement to the Final Memorandum that corrects
such statement or omission or effects such compliance.
D. Holdings and CAF will and, at and after the
Effective Time, the Company will, without charge, provide to the
Initial Purchaser and to counsel for the Initial Purchaser as
many copies of the Preliminary Memorandum and the Final
Memorandum or any amendment or supplement thereto as the Initial
Purchaser may reasonably request.
E. Holdings and CAF will apply the net proceeds from
the sale of the Notes as set forth under "Use of Proceeds" in the
Final Memorandum.
F. For so long as any of the Notes remain outstanding,
CAF will and, at and after the Closing Date, the Company will
furnish to the Initial Purchaser copies of all reports and other
communications (financial or otherwise) furnished by CAF and, at
and after the Closing Date, the Company to the Trustee or to the
holders of the Notes and, as soon as available, copies of any
reports or financial statements furnished to or filed by the
Company with the Commission or any national securities exchange
on which any class of securities of the Company may be listed.
G. None of Holdings, CAF and, at and after the
Effective Time, the Company or any of their respective affiliates
will sell, offer for sale or solicit offers to buy or otherwise
negotiate in respect of any "security" (as defined in the Act)
which could be integrated with the sale of the Notes in a manner
which would require the registration under the Act of the Notes.
H. Holdings and CAF and, at and after the Effective
Time, the Company will not, and will not permit the Subsidiary
to, engage in any form of general solicitation or general
advertising (as those terms are used in Regulation D under the
Act) in connection with the offering of the Notes or in any
manner involving a public offering within the meaning of Section
4(2) of the Act.
I. For so long as any of the Notes remain outstanding,
the Company will make available at its expense, upon request, to
any holder of such Notes and any prospective purchasers thereof
the information specified in Rule 144A(d)(4) under the Act,
unless the Company is then subject to Section 13 or 15(d) of the
Exchange Act.
J. Each of CAF and, at and after the Effective Time,
the Company will use its best efforts to (i) permit the Notes to
be designated PORTAL securities in accordance with the rules and
regulations adopted by the NASD relating to trading in the
Private Offerings, Resales and Trading through Automated Linkages
market (the "Portal Market") and (ii) permit the Notes to be
eligible for clearance and settlement through The Depository
Trust Company.
K. In connection with Notes offered and sold in an
offshore transaction (as defined in Regulation S), CAF and, at
and after the Effective Time, the Company will not register any
transfer of such Notes not made in accordance with the provisions
of Regulation S and will not, except in accordance with the
provisions of Regulation S, if applicable, issue any such Notes
in the form of definitive securities.
6. Expenses. Holdings and CAF agree, jointly and
severally, to pay, and Holdings will cause the Company to pay all
costs and expenses incident to the performance of their
obligations under this Agreement, whether or not the transactions
contemplated herein are consummated or this Agreement is
terminated pursuant to Section 11 hereof, including all costs and
expenses incident to (i) the costs of printing the Preliminary
Memorandum and the Final Memorandum and any amendment or
supplement thereto, and any "Blue Sky" memoranda, (ii) all
arrangements relating to the delivery to the Initial Purchasers
of copies of the foregoing documents, (iii) the fees and dis-
bursements of counsel, the accountants and any other experts or
advisors retained by the Company, (iv) preparation (including
printing), issuance and delivery to the Initial Purchaser of the
Notes, (v) the qualification of the Notes under state securities
and "Blue Sky" laws, including filing fees and fees and
disbursements of counsel for the Initial Purchaser relating
thereto, (vi) expenses in connection with any meetings with
prospective investors in the Notes, (vii) fees and expenses of
the Trustee including fees and expenses of its counsel,
(viii) all expenses and listing fees incurred in connection with
the application for quotation of the Notes on the PORTAL Market
and (ix) any fees charged by investment rating agencies for the
rating of the Notes. If the sale of the Notes provided for
herein is not consummated because any condition to the
obligations of the Initial Purchaser set forth in Section 7
hereof is not satisfied, because this Agreement is terminated or
because of any failure, refusal or inability on the part of
Holdings, CAF or the Company to perform all obligations and
satisfy all conditions on their part to be performed or satisfied
hereunder (other than solely by reason of a default by the
Initial Purchaser of its obligations hereunder after all
conditions hereunder have been satisfied in accordance herewith),
Holdings and CAF agree to promptly reimburse the Initial
Purchaser upon demand for all out-of-pocket expenses (including
fees, disbursements and charges of Xxxxxx Xxxxxx & Xxxxxxx,
counsel for the Initial Purchaser) that shall have been incurred
by the Initial Purchaser in connection with the proposed purchase
and sale of the Notes.
7. Conditions of the Initial Purchaser's Obliga-
tions. The obligation of the Initial Purchaser to purchase and
pay for the Notes shall, in its sole discretion, be subject to
the satisfaction or waiver of the following conditions on or
prior to the Closing Date:
A. On the Closing Date, the Initial Purchaser shall
have received the opinion, dated as of the Closing
Date and addressed to the Initial Purchaser, of
McGuire, Woods, Battle & Booth, L.L.P., counsel for
the Company, substantially in the form of Exhibits B-1
and B-2 hereto.
B. On the Closing Date, the Initial Purchaser shall
have received the opinion, in form and substance
satisfactory to the Initial Purchaser, dated as of the
Closing Date and addressed to the Initial Purchaser,
of Xxxxxx Xxxxxx & Xxxxxxx, counsel for the Initial
Purchaser, with respect to certain legal matters
relating to this Agreement and such other related
matters as the Initial Purchaser may reasonably
request. In rendering such opinion, Xxxxxx Xxxxxx &
Xxxxxxx shall have received and may rely upon such
certificates and other documents and information as it
may reasonably request to pass upon such matters.
C. The Initial Purchaser shall have received from the
Independent Accountants a comfort letter or letters
dated the date hereof and the Closing Date, in form
and substance reasonably satisfactory to counsel for
the Initial Purchaser.
D. The representations and warranties of Holdings and
CAF contained in this Agreement shall be true and cor-
rect in all material respects on and as of the date
hereof and on and as of the Closing Date as if made on
and as of the Closing Date; the statements of the
officers of Holdings, CAF and the Company made
pursuant to any certificate delivered in accordance
with the provisions hereof shall be true and correct
on and as of the date made and on and as of the
Closing Date; Holdings, CAF and the Company shall
have performed all covenants and agreements and sat-
isfied all conditions on their part to be performed or
satisfied hereunder at or prior to the Closing Date;
and, except as described in the Final Memorandum
(exclusive of any amendment or supplement thereto
after the date hereof), subsequent to the date of the
most recent financial statements in such Final
Memorandum, there shall have been no event or
development, and no information shall have become
known, that, individually or in the aggregate, has or
would be reasonably likely to have a Material Adverse
Effect.
E. The sale of the Notes hereunder shall not be
enjoined (temporarily or permanently) on the Closing
Date.
F. Subsequent to the date of the most recent financial
statements in the Final Memorandum (exclusive of any
amendment or supplement thereto after the date
hereof), none of Holdings, CAF, the Company or the
Subsidiary shall have sustained any loss or
interference with respect to its business or
properties from fire, flood, hurricane, accident or
other calamity, whether or not covered by insurance,
or from any strike, labor dispute, slow down or work
stoppage or from any legal or governmental proceeding,
order or decree, which loss or interference, individ-
ually or in the aggregate, has or would be reasonably
likely to have a Material Adverse Effect.
G. The Initial Purchaser shall have received a cer-
tificate of CAF, dated the Closing Date, signed on
behalf of CAF by its Chairman of the Board, President
or any Senior Vice President and the Chief Financial
Officer, to the effect that:
1. The representations and warranties of Holdings and CAF contained in this
Agreement are true and correct on and as of the date hereof and on and as of
the Closing Date, and Holdings and CAF have performed all covenants
and agreements and satisfied all conditions on their part to
be performed or satisfied hereunder at or prior to the
Closing Date;
2. At the Closing Date, since the date hereof
or since the date of the most recent financial statements in
the Final Memorandum (exclusive of any amendment or supplement
thereto after the date hereof), no event or development has
occurred, and no information has become known, that,
individually or in the aggregate, has or would be reasonably
likely to have a Material Adverse Effect; and
3. The sale of the Notes hereunder has not been
enjoined (temporarily or permanently).
H. On the Closing Date, the Initial Purchaser
shall have received the Registration Rights Agreement
executed by CAF and such agreement shall be in full force
and effect at all times from and after the Closing Date.
I. The Indenture shall have been duly
executed and delivered by CAF and the Trustee, and the Notes
shall have been duly executed and delivered by CAF and duly
authenticated by the Trustee.
J. The Initial Purchaser shall have received
a true and correct copy of the Credit Agreement, dated the
Closing Date, and there shall have been no material amend-
ments, alterations, modifications or waivers of any provi-
sions of the Credit Agreement, and there exists as of the
date hereof and on and as of the Closing Date (after giving
effect to the transactions contemplated by this Agreement
and the application of the proceeds received by CAF from the
sale of the Notes) no condition that would constitute a
Default or an Event of Default (each as defined in the
Credit Agreement) under the Credit Agreement.
K. The Initial Purchaser shall have received
a true and correct copy of the Acquisition Agreement and any
amendments thereto, and there shall have been no material
amendments, alterations, modifications or waivers of any
provisions of the Acquisition Agreement since the date of
this Agreement; all conditions to effect the Acquisition set
forth in the Acquisition Agreement shall have been satisfied
without waiver.
L. Holdings, shall have received, and shall
have contributed to CAF as equity, at least $51 million from
the Equity Financing as contemplated by the Final
Memorandum.
M. On the Closing Date, the Initial Purchaser
shall have received an opinion from Valuation Research
Corporation, in form and substance satisfactory to the
Initial Purchaser, regarding the solvency of Holdings, CAF
and, at and as of the Effective Time, Holdings and the
Company immediately after the consummation of the
Acquisition, the relating financings and the other
transactions contemplated hereby and by the Acquisition
Agreement.
N. The Certificate of Merger with respect to
the Merger shall have been filed with the Secretary of State
of Delaware and the Clerk of the State Corporation Commis-
sion of the Commonwealth of Virginia and shall have become
effective.
On or before the Closing Date, the Initial Purchaser
and counsel for the Initial Purchaser shall have received such
further documents, opinions, certificates, letters and schedules
or instruments relating to the business, corporate, legal and
financial affairs of Holdings, CAF, the Company and the
Subsidiary as they shall have heretofore reasonably requested.
All such documents, opinions, certificates, letters,
schedules or instruments delivered pursuant to this Agreement
will comply with the provisions hereof only if they are reason-
ably satisfactory in all material respects to the Initial Pur-
chaser and counsel for the Initial Purchaser. Holdings, CAF and
the Company shall furnish to the Initial Purchaser such conformed
copies of such documents, opinions, certificates, letters,
schedules and instruments in such quantities as the Initial
Purchaser shall reasonably request.
8. Offering of Notes; Restrictions on Transfer. (a)
The Initial Purchaser represents and warrants that it is a QIB.
The Initial Purchaser agrees that (i) it has not and will not
solicit offers for, or offer or sell, the Notes by any form of
general solicitation or general advertising (as those terms are
used in Regulation D under the Act) or in any manner involving a
public offering within the meaning of Section 4(2) of the Act;
and (ii) it has and will solicit offers for the Notes only from,
and will offer the Notes only to (A) in the case of offers inside
the United States, (x) persons whom the Initial Purchaser
reasonably believes to be QIBs or, if any such person is buying
for one or more institutional accounts for which such person is
acting as fiduciary or agent, only when such person has
represented to the Initial Purchaser that each such account is a
QIB, to whom notice has been given that such sale or delivery is
being made in reliance on Rule 144A, and, in each case, in
transactions under Rule 144A or (y) a limited number of other
institutional investors reasonably believed by the Initial
Purchaser to be Accredited Investors that, prior to their
purchase of the Notes, deliver to the Initial Purchaser a letter
containing the representations and agreements set forth in
Appendix A to the Final Memorandum and (B) in the case of offers
outside the United States, to persons other than U.S. persons
("foreign purchasers," which term shall include dealers or other
professional fiduciaries in the United States acting on a
discretionary basis for foreign beneficial owners (other than an
estate or trust)); provided, however, that, in the case of this
clause (B), in purchasing such Notes such foreign purchasers are
deemed to have represented and agreed as provided under the
caption "Transfer Restrictions" contained in the Final Memorandum
(or, if the Final Memorandum is not in existence, in the most
recent Memorandum).
(b) The Initial Purchaser represents and warrants
with respect to offers and sales outside the United States that
(i) it has and will comply with all applicable laws and regula-
tions in each jurisdiction in which it acquires, offers, sells or
delivers Notes or has in its possession or distributes any
Memorandum or any such other material, in all cases at its own
expense; (ii) the Notes have not been and will not be offered or
sold within the United States or to, or for the account or
benefit of, U.S. persons except in accordance with Regulation S
under the Act or pursuant to an exemption from the registration
requirements of the Act; (iii) it has offered the Notes and will
offer and sell the Notes (A) as part of its distribution at any
time and (B) otherwise until 40 days after the later of the
commencement of the offering and the Closing Date, only in
accordance with Rule 903 of Regulation S and, accordingly, nei-
ther it nor any persons acting on its behalf have engaged or will
engage in any directed selling efforts (within the meaning of
Regulation S) with respect to the Notes, and any such persons
have complied and will comply with the offering restrictions
requirement of Regulation S; (iv) it has (1) not offered or sold
and will not offer or sell in the United Kingdom, by means of any
document, any Securities other than to persons whose ordinary
business it is to buy and sell shares or debentures, whether as a
principal or agent, or in circumstances which do not constitute
an offer to the public within the meaning of the Companies Xxx
0000, as amended, (2) complied and will comply with all
applicable provisions of the Financial Services Xxx 0000 with
respect to anything done by it in relation to the Securities in,
from or otherwise involving the United Kingdom, and (3) only
issued or passed on and will only issue and pass on to any
persons in the United Kingdom any document received by it in
connection with the issue of the Securities if that person is of
a kind described in Article 9(3) of the Financial Services Xxx
0000 (Investment Advertisements) (Exemptions) Order 1988 or is a
person to whom the document may otherwise lawfully be issued or
passed on; (v) it understands that the Securities have not been
and will not be registered under the Securities and Exchange Law
of Japan, and represents that it has not offered or sold, and
agrees that it will not offer or sell, any Securities, directly
or indirectly in Japan or to or from any resident of Japan except
(i) pursuant to an exemption from the registration requirements
of the Securities and Exchange Law of Japan and (ii) in
compliance with any other applicable requirements of Japanese
law; and (vi) it agrees that, at or prior to confirmation of
sales of the Notes, it will have sent to each distributor, dealer
or person receiving a selling concession, fee or other
remuneration that purchases Notes from it during the restricted
period a confirmation or notice to substantially the following
effect:
"The Securities covered hereby have not been reg-
istered under the United States Securities Act of
1933 (the "Securities Act") and may not be offered
and sold within the United States or to, or for the
account or benefit of, U.S. persons (i) as part of
the distribution of the Securities at any time or
(ii) otherwise until 40 days after the later of the
commencement of the offering and the closing date
of the offering, except in either case in
accordance with Regulation S (or Rule 144A if
available) under the Securities Act. Terms used
above have the meaning given to them in Regulation
S."
Terms used in this Section 8 and not defined in this Agreement
have the meanings given to them in Regulation S.
9. Indemnification and Contribution. Holdings and
CAF, jointly and severally, agree 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 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:
1. any untrue statement or alleged untrue
statement of any material fact contained in any Memorandum
or any amendment or supplement thereto or any application
or other document, or any amendment or supplement thereto,
executed by Holdings, CAF or the Company or based upon
written information furnished by or on behalf of Holdings,
CAF or the Company filed in any jurisdiction in order to
qualify the Notes under the securities or "Blue Sky" laws
thereof or filed with any securities association or secu-
rities exchange (each an "Application"); or
2. the omission or alleged omission to state, in
any Memorandum or any amendment or supplement thereto or any
Application, a material fact required to be stated therein
or necessary to make the statements therein not misleading,
and will reimburse, as incurred, the Initial Purchaser and each
such controlling person for any reasonable legal or other
expenses 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; provided, however,
Holdings and CAF will not be liable in any such case to the
extent that any such loss, claim, damage, or liability arises out
of or is based upon any untrue statement or alleged untrue
statement or omission or alleged omission made in any Memorandum
or any amendment or supplement thereto or any Application in
reliance upon and in conformity with written information
concerning the Initial Purchaser furnished to Holdings and CAF by
the Initial Purchaser specifically for use therein provided,
further, that such indemnity agreement with respect to any untrue
statement or omission or alleged untrue statement or omission in
any Preliminary Memorandum shall not enure to the benefit of the
Initial Purchaser, or such controlling person, if (i) Holdings
and CAF notify the Initial Purchaser in writing of any change to
be made in the Final Memorandum and (ii) the person asserting a
claim giving rise to liability hereunder did not receive a copy
of the Final Memorandum at or prior to the closing of the sale of
the Notes to such person and the untrue statement or omission or
alleged untrue statement or omission contained in such
Preliminary Memorandum was corrected in the Final Memorandum
unless such failure to deliver the Final Memorandum was the
result of noncompliance by Holdings and CAF with Section 5(d).
This indemnity agreement will be in addition to any liability
that Holdings and CAF may otherwise have to the indemnified
parties. Holdings and CAF shall not be liable under this
Section 9 for any settlement of any claim or action effected
without their prior written consent, which shall not be
unreasonably withheld.
B. The Initial Purchaser agrees to indemnify and hold
harmless Holdings and CAF, their respective directors, its
officers and each person, if any, who controls Holdings or CAF
within the meaning of Section 15 of the Act or Section 20 of the
Exchange Act against any losses, claims, damages or liabilities
to which Holdings or CAF or any such director, officer or
controlling person may become subject under the Act, the Exchange
Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are
based upon (i) any untrue statement or alleged untrue statement
of any material fact contained in any Memorandum or any amendment
or supplement thereto or any Application, or (ii) the omission or
the alleged omission to state therein a material fact required to
be stated in any Memorandum or any amendment or supplement
thereto or any Application, or necessary to make the statements
therein not misleading, in each case to the extent, but only to
the extent, that such untrue statement or alleged untrue
statement or omission or alleged omission was made in reliance
upon and in conformity with written information concerning such
Initial Purchaser, furnished to Holdings or CAF 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
Holdings or CAF or any such director, officer or controlling
person in connection with investigating or defending against or
appearing as a third party witness in connection with any such
loss, claim, damage, liability or action in respect thereof.
This indemnity agreement will be in addition to any liability
that the Initial Purchaser may otherwise have to the indemnified
parties. The Initial Purchaser shall not be liable under this
Section 9 for any settlement of any claim or action effected
without its consent, which shall not be unreasonably withheld.
Holdings, CAF and the Company shall not, without the prior
written consent of the Initial Purchaser, effect any settlement
or compromise of any pending or threatened proceeding in respect
of which the Initial Purchaser is or could have been a party, or
indemnity could have been sought hereunder by the Initial
Purchaser, unless such settlement (A) includes an unconditional
written release of the Initial Purchaser, in form and substance
reasonably satisfactory to the Initial Purchaser, from all
liability on claims that are the subject matter of such
proceeding and (B) does not include any statement as to an
admission of fault, culpability or failure to act by or on
behalf of the Initial Purchaser.
C. Promptly after receipt by an indemnified party under
this Section 9 of notice of the commencement of any action for
which such indemnified party is entitled to indemnification under
this Section 9, such indemnified party will, if a claim in
respect thereof is to be made against the indemnifying party
under this Section 9, notify the indemnifying party of the
commencement thereof in writing; but the omission to so notify
the indemnifying party (i) will not relieve it from any liability
under paragraph (a) or (b) above unless and to the extent such
failure results in the forfeiture by the indemnifying party of
substantial rights and defenses and (ii) will not, in any event,
relieve the indemnifying party from any obligations to any
indemnified party other than the indemnification obligation
provided in paragraphs (a) and (b) above. In case any such
action is brought against any indemnified party, and it notifies
the indemnifying party of the commencement thereof, the
indemnifying party will be entitled to participate therein and,
to the extent that it may wish, jointly with any other
indemnifying party similarly notified, to assume the defense
thereof, with counsel reasonably satisfactory to such indemnified
party; provided, however, that if (i) the use of counsel chosen
by the indemnifying party to represent the indemnified party
would present such counsel with a conflict of 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 that there may be one or more legal
defenses available to it and/or other indemnified parties that
are different from or additional to those available to the
indemnifying party, or (iii) the indemnifying party shall not
have employed counsel reasonably satisfactory to the indemnified
party to represent the indemnified party within a reasonable time
after receipt by the indemnifying party of notice of the
institution of such action, then, in each such case, the
indemnifying party shall not have the right to direct the defense
of such action on behalf of such indemnified party or parties and
such indemnified party or parties shall have the right to select
separate counsel to defend such action on behalf of such
indemnified party or parties. After notice from the indemnifying
party to such indemnified party of its election so to assume the
defense thereof and approval by such indemnified party of counsel
appointed to defend such action, the indemnifying party will not
be liable to such indemnified party under this Section 9 for any
legal or other expenses, other than reasonable costs of
investigation, subsequently incurred by such indemnified party
in connection with the defense thereof, unless (i) the
indemnified party shall have employed separate counsel in
accordance with the proviso to the immediately preceding sentence
(it being understood, however, that in connection with such
action the indemnifying party shall not be liable for the
expenses of more than one separate counsel (in addition to local
counsel) in any one action or separate but substantially similar
actions in the same jurisdiction arising out of the same general
allegations or circumstances, designated by the Initial Purchaser
in the case of paragraph (a) of this Section 9 or Holdings and
CAF in the case of paragraph (b) of this Section 9, representing
the indemnified parties under such paragraph (a) or para-
graph (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 9, in which case the indemnified party may effect such a
settlement without such consent.
D. In circumstances in which the indemnity agreement
provided for in the preceding paragraphs of this Section 9 is
unavailable to, or insufficient to hold harmless, an indemnified
party in respect of any losses, claims, damages or liabilities
(or actions in respect thereof), each indemnifying party, in
order to provide for just and equitable contribution, shall
contribute to the amount paid or payable by such indemnified
party as a result of such losses, claims, damages or liabilities
(or actions in respect thereof) in such proportion as is
appropriate to reflect (i) the relative benefits received by the
indemnifying party or parties on the one hand and the indemnified
party on the other from the offering of the Notes 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
Holdings, CAF and the Company on the one hand and the Initial
Purchaser on the other shall be deemed to be in the same
proportion as the total net proceeds from the Offering (before
deducting expenses) received by CAF bear to the total discounts
and commissions received by the Initial Purchaser. The relative
fault of the parties shall be determined by reference to, among
other things, whether the untrue or alleged untrue statement of a
material fact or the omission or alleged omission to state a
material fact relates to information supplied by Holdings, CAF
and the Company on the one hand, or the Initial Purchaser on the
other, the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement
or omission or alleged statement or omission, and any other
equitable considerations appropriate in the circumstances. The
parties agree that it would not be equitable if the amount of
such contribution 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 this paragraph (d). Notwithstanding any other
provision of this paragraph (d), the Initial Purchaser shall not
be obligated to make contributions hereunder that in the
aggregate exceed the total discounts, commissions and other
compensation received by the Initial Purchaser under this
Agreement, less the aggregate amount of any damages that the
Initial Purchaser has otherwise been required to pay by reason of
the untrue or alleged untrue statements or the omissions or
alleged omissions to state a material fact, and no person guilty
of fraudulent misrepresentation (within the meaning of
Section 11(f) of the Act) shall be entitled to contribution from
any person who was not guilty of such fraudulent
misrepresentation. For purposes of this paragraph (d), each
person, if any, who controls the Initial Purchaser within the
meaning of Section 15 of the Act or Section 20 of the Exchange
Act shall have the same rights to contribution as the Initial
Purchaser, and each director of Holdings, CAF or the Company,
each officer of Holdings, CAF or the Company and each person, if
any, who controls Holdings, CAF or the Company within the meaning
of Section 15 of the Act or Section 20 of the Exchange Act, shall
have the same rights to contribution as Holdings, CAF or the
Company.
10. Survival Clause. The respective representations,
warranties, agreements, covenants, indemnities and other
statements of the Companies and the Company, their officers and
the Initial Purchaser set forth in this Agreement or made by or
on behalf of them pursuant to this Agreement shall remain in full
force and effect, regardless of (i) any investigation made by or
on behalf of the Companies, the Company, any of their respective
officers or directors, the Initial Purchaser or any controlling
person referred to in Section 9 hereof and (ii) delivery of and
payment for the Notes. The respective agreements, covenants,
indemnities and other statements set forth in Sections 6, 9 and
15 hereof shall remain in full force and effect, regardless of
any termination or cancellation of this Agreement.
11. Termination. This Agreement may be terminated in
the sole discretion of the Initial Purchaser by notice to
Holdings and CAF given prior to the Closing Date in the event
that Holdings, CAF or the Company shall have failed, refused or
been unable to perform all obligations and satisfy all conditions
on its part to be performed or satisfied hereunder at or prior
thereto or, if at or prior to the Closing Date:
1. any of the Company or the Subsidiary shall
have sustained any loss or interference with respect to its
businesses or properties from fire, flood, hurricane,
accident or other calamity, whether or not covered by
insurance, or from any strike, labor dispute, slow down or
work stoppage or any legal or governmental proceeding, which
loss or interference, in the sole judgment of the Initial
Purchaser, has had or has a Material Adverse Effect, or
there shall have been, in the sole judgment of the Initial
Purchaser, any event or development that, individually or in
the aggregate, has or could be reasonably likely to have a
Material Adverse Effect (including without limitation a
change in control of the Company or the Subsidiary), except
in each case as described in the Final Memorandum (exclusive
of any amendment or supplement thereto);
2. trading in securities of the Company or in
securities generally on the New York Stock Exchange,
American Stock Exchange or the NASDAQ National Market shall
have been suspended or minimum or maximum prices shall have
been established on any such exchange or market;
3. a banking moratorium shall have been declared
by New York or United States authorities;
4. there shall have been (A) an outbreak or
escalation of hostilities between the United States and any
foreign power, or (B) an outbreak or escalation of any other
insurrection or armed conflict involving the United States
or any other national or international calamity or emer-
gency, or (C) any material change in the financial markets
of the United States which, in the case of (A), (B) or (C)
above and in the sole judgment of the Initial Purchaser,
makes it impracticable or inadvisable to proceed with the
offering or the delivery of the Notes as contemplated by the
Final Memorandum; or
5. 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.
B. Termination of this Agreement pursuant to this
Section 11 shall be without liability of any party to any other
party except as provided in Section 10 hereof.
12. Information Supplied by the Initial Purchaser.
The statements set forth in the last paragraph on the front cover
page and in the second and third sentences of the third paragraph
under the heading "Private Placement" in the Final Memorandum (to
the extent such statements relate to the Initial Purchaser)
constitute the only information furnished by the Initial
Purchaser to the Company for the purposes of Sections 2(a) and 9
hereof.
13. Notices. All communications hereunder shall be
in writing and, if sent to the Initial Purchaser, shall be mailed
or delivered to BT Securities Corporation, 000 Xxxxxxx Xxxxxx,
Xxx Xxxx, Xxx Xxxx 00000, Attention: Corporate Finance
Department; if sent to Holdings or CAF, shall be mailed or
delivered to Holdings or CAF at 000 Xxxx Xxxx Xxxxxx,
Xxxxxxxxxxxxxxx, Xxxxxxxx 00000, Attention: Xxxxxxx X. Xxxxx, or
if sent to the Company, shall be mailed or delivered to the
Company at 000 Xxxxx Xxxxxxxxxx Xxxxxxxxx, Xxxxxx, Xxxxxxx 00000,
Attention: President, in either case, with a copy to McGuire,
Woods, Battle & Xxxxxx, L.L.P., 000 X. Xxxx Xxxxxx, 0 Xxxxx
Xxxxxx, Xxxxxxxx, XX 00000, Attention: Xxxxxx X. Xxxxxxx, Esq.
All such notices and communications shall be deemed to
have been duly given: when delivered by hand, if personally
delivered; five business days after being deposited in the mail,
postage prepaid, if mailed; and one business day after being
timely delivered to a next-day air courier.
14. Successors. This Agreement shall inure to the
benefit of and be binding upon the Initial Purchaser, Holdings,
CAF, the Company and their respective successors and legal
representatives, and nothing expressed or mentioned in this
Agreement is intended or shall be construed to give any other
person any legal or equitable right, remedy or claim under or in
respect of this Agreement, or any provisions herein contained;
this Agreement and all conditions and provisions hereof being
intended to be and being for the sole and exclusive benefit of
such persons and for the benefit of no other person except that
(i) the indemnities of the Companies and the Company contained in
Section 9 of this Agreement shall also be for the benefit of any
person or persons who control the Initial Purchaser within the
meaning of Section 15 of the Act or Section 20 of the Exchange
Act and (ii) the indemnities of the Initial Purchaser contained
in Section 9 of this Agreement shall also be for the benefit of
the directors of the Company, its officers and any person or
persons who control the Company within the meaning of Section 15
of the Act or Section 20 of the Exchange Act. No purchaser of
Notes from the Initial Purchaser will be deemed a successor
because of such purchase.
15.
15. APPLICABLE LAW. THE VALIDITY AND INTERPRETATION
OF THIS AGREEMENT, AND THE TERMS AND CONDITIONS SET FORTH HEREIN
SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF
THE STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE AND TO BE
PERFORMED WHOLLY THEREIN, WITHOUT GIVING EFFECT TO ANY PROVISIONS
THEREOF RELATING TO CONFLICTS OF LAW.
16. Counterparts. This Agreement may be executed in
two or more counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the
same instrument.
17.
If the foregoing correctly sets forth our understand-
ing, please indicate your acceptance thereof in the space pro-
vided below for that purpose, whereupon this letter shall con-
stitute a binding agreement among Holdings, CAF and the Initial
Purchaser.
Very truly yours,
CAF HOLDINGS, INC.
By: /s/ Xxxxxxx X. Xxxxx
Name:
Title: President
CAF ACQUISITION CORPORATION
By: /s/ Xxxxxxx X. Xxxxx
Name:
Title: President
The foregoing Agreement is
hereby confirmed and accepted
as of the date first above
written.
BT SECURITIES CORPORATION
By: /s/ Xxxxx Xxxxxxx
__________________________
Name:
Title: Vice President
EXHIBIT A
ASSUMPTION AGREEMENT
Xxxxxxx & Xxxxxx Floorcoverings, Inc. (the "Company"), the surviving
corporation of the merger of the Company and CAF Acquisition Corporation
("CAF"), hereby expressly assumes all obligations and liabilities of CAF under
the Purchase Agreement, dated January 29, 1997 (the "Purchase Agreement"), by
and among CAF, CAF Holdings, Inc. and BT Securities Corporation (a copy of which
is attached hereto as Exhibit A).
IN WITNESS WHEREOF, the Company has caused its duly authorized officer to
execute and deliver this Assumption Agreement as of February 6, 1997, which is
the date of the merger.
XXXXXXX & XXXXXX FLOORCOVERINGS, INC.
By:
Name:
Title:
-19-
