EXECUTION COPY
K & F INDUSTRIES, INC.
9 5/8% SENIOR SUBORDINATED NOTES DUE 2010
PURCHASE AGREEMENT
December 13, 2002
XXXXXX BROTHERS INC.
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Dear Ladies and Gentlemen:
K & F Industries, Inc., a Delaware corporation (the "Company"), proposes
to issue and sell to you (the "Initial Purchaser") $250.0 million in aggregate
principal amount of its 9 5/8% Senior Subordinated Notes due 2010 (the "Series A
Notes") pursuant to the terms of an indenture (the "Indenture") between the
Company and State Street Bank and Trust Company, as trustee (the "Trustee"),
relating to the Series A Notes. Capitalized terms used but not defined herein
shall have the meanings given to such terms in the Indenture.
The Series A Notes will be offered and sold to you pursuant to an
exemption from the registration requirements under the Securities Act of 1933,
as amended (the "Securities Act"). The Company has prepared a preliminary
offering memorandum dated December 6, 2002 (the "Preliminary Offering
Memorandum") and a final offering memorandum dated December 13, 2002 (the
"Offering Memorandum," and together with the Preliminary Offering Memorandum,
the "Offering Documents"), relating to the Company and the Series A Notes. As
described in the Offering Memorandum, the Company will use all of the net
proceeds from the offering of the Series A Notes to effect the recapitalization
(the "Recapitalization") (as described in the Offering Memorandum) of the
Company.
Upon original issuance thereof, and until such time as the same is no
longer required under the applicable requirements of the Securities Act, the
Series A Notes (and all securities issued in exchange therefor or in
substitution thereof) shall bear the following legend:
"THE NOTES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER THE UNITED
STATES SECURITIES ACT OF 1933 (THE "SECURITIES ACT") AND MAY NOT BE
OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT (A)(1) TO A PERSON
WHOM THE SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER
WITHIN THE MEANING OF RULE 144A UNDER THE SECURITIES ACT PURCHASING FOR
ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER IN A
TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (2) IN AN OFFSHORE
TRANSACTION COMPLYING WITH RULE 903 OR RULE 904 OF REGULATION S
UNDER THE SECURITIES ACT, (3) PURSUANT TO AN EXEMPTION FROM REGISTRATION
UNDER THE SECURITIES ACT PROVIDED BY RULE 144 THEREUNDER (IF AVAILABLE),
(4) TO AN INSTITUTIONAL ACCREDITED INVESTOR IN A TRANSACTION EXEMPT FROM
THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT OR (5) PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND (B) IN
ACCORDANCE WITH ALL APPLICABLE BLUE SKY LAWS OF THE STATES OF THE UNITED
STATES."
You have advised the Company that you will make offers (the "Exempt
Resales") of the Series A Notes purchased by you hereunder on the terms set
forth in the Offering Memorandum, as amended or supplemented, solely to (i)
persons whom you reasonably believe to be "qualified institutional buyers" as
defined in Rule 144A under the Securities Act ("QIBs") and (ii) outside the
United States to persons other than U.S. Persons in offshore transactions in
reliance on Regulation S ("Regulation S") under the Securities Act (such persons
specified in clauses (i) and (ii) being referred to herein as the "Eligible
Purchasers"). As used herein, the terms "offshore transaction," "United States"
and "U.S. person" have the respective meanings given to them in Regulation S.
You will offer the Series A Notes to Eligible Purchasers initially at a price
equal to 100% of the principal amount thereof. Such price may be changed at any
time without notice.
It is understood by the parties hereto that on or as soon as
practicable after the Closing Date (as defined herein) the Company will (i) pay
a $200 million dividend to the holders of its capital stock and pay $9.4 million
to the holders of its common stock options, (ii) repay all of its outstanding
indebtedness under the Existing Credit Agreement (as described in the Offering
Memorandum), and (iii) enter into the New Revolving Credit Facility (the "New
Revolving Credit Facility" as described in the Offering Memorandum under the
caption "Description of Certain Indebtedness - New Credit Facility") with the
Company, as guarantor, the Subsidiaries (as defined herein), and the other
parties thereto and the Company will use the proceeds from the offering of the
Series A Notes, together with borrowings under the New Revolving Credit
Facility, to effect the Recapitalization.
Holders (including subsequent transferees) of the Series A Notes
will have the registration rights set forth in the registration rights agreement
(the "Registration Rights Agreement"), to be dated December 20, 2002 (the
"Closing Date"), in the form of Exhibit A hereto, for so long as such Series A
Notes constitute "Transfer Restricted Securities" (as defined in the
Registration Rights Agreement). Pursuant to the Registration Rights Agreement,
the Company will agree to file with the Securities and Exchange Commission (the
"Commission") under the circumstances set forth therein, (i) a registration
statement under the Securities Act (the "Exchange Offer Registration Statement")
relating to the Company's 9 5/8% Series B Senior Subordinated Notes due 2010
(the "Series B Notes" and, together with the Series A Notes, the "Notes") to be
offered in exchange for the Series A Notes (such offer to exchange being
referred to collectively as the "Registered Exchange Offer") and (ii) a shelf
registration statement pursuant to Rule 415 under the Securities Act (the "Shelf
Registration Statement" and together with the Exchange Offer Registration
Statement, the "Registration Statements") relating to the resale by certain
holders of the Series A Notes, and to use its best efforts to cause such
Registration Statements to be declared effective. This Agreement, the Indenture
and the Registration Rights Agreement are hereinafter referred to collectively
as the "Operative Documents." This is to confirm the agreements concerning the
purchase of the Series A Notes from the Company by you.
1. Representations, Warranties and Agreements of the Company. The
Company represents, warrants and agrees as follows:
(a) The Offering Documents have been prepared by the Company for use
by the Initial Purchaser in connection with the Exempt Resales. No order
or decree preventing the use
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of the Offering Documents, or any order asserting that the transactions
contemplated by this Agreement are subject to the registration
requirements of the Securities Act has been issued and no proceeding for
that purpose has commenced or is pending or, to the knowledge of the
Company, is contemplated.
(b) The Preliminary Offering Memorandum and the Offering Memorandum
as of their respective dates and the Offering Memorandum as of the Closing
Date, did not and will not at any time contain an untrue statement of a
material fact or omit to state a material fact necessary, in order to make
the statements, in light of the circumstances under which they were made,
not misleading, except that this representation and warranty does not
apply to statements in or omissions from the Offering Documents made in
reliance upon and in conformity with information relating to the Initial
Purchaser furnished to the Company in writing by or on behalf of the
Initial Purchaser expressly for use therein.
(c) Each of the Company and its Subsidiaries (as defined below) has
been duly organized and is validly existing and in good standing under the
laws of its respective jurisdiction of incorporation, is duly qualified to
do business as a foreign corporation, and is a corporation in good
standing in each jurisdiction in which its ownership or leasing of its
property or the conduct of its business requires such qualification
(except where the failure to be so qualified and in good standing would
not have a Material Adverse Effect), and has all necessary corporate power
and authority necessary to own or hold its properties and to conduct the
business in which it is engaged. As used herein, "Material Adverse Effect"
means a material adverse effect on the condition (financial or otherwise),
results of operations, business or prospects of the Company and its
Subsidiaries taken as a whole. The term "Subsidiaries" as used herein
shall refer only to Aircraft Braking Systems Corporation ("ABS") and
Engineered Fabrics Corporation ("EFC"). The Subsidiaries are the only
"significant subsidiaries" of the Company within the meaning of Rule
1-02(v) of Regulation S-K.
(d) Assuming (i) that your representations and warranties in Section
2 are true, (ii) compliance by you with your covenants set forth in
Section 2 and (iii) that each of the Eligible Purchasers is a QIB or a
person who is not a "U.S. person" who acquires the Series A Notes outside
the United States in an "offshore transaction" (within the meaning of
Regulation S) (A) registration under the Securities Act of the Notes or
qualification of the Indenture in respect of the Notes under the Trust
Indenture Act of 1939, as amended (the "Trust Indenture Act"), is not
required in connection with the offer and sale of the Notes to the Initial
Purchaser in the manner contemplated by the Offering Memorandum or this
Agreement and (B) initial resales of the Notes by the Initial Purchaser on
the terms and in the manner set forth in the Offering Memorandum and
Section 2 hereof are exempt from the registration requirements of the
Securities Act.
(e) The authorized and outstanding capital stock of the Company at
September 30, 2002 was as set forth in the unaudited balance sheet of the
Company as of September 30, 2002 included in the Offering Memorandum. All
of the shares of capital stock of the Company have been duly authorized
and validly issued and are fully paid and nonassessable.
(f) Except as described in the Offering Memorandum, the Company owns
100% of the outstanding shares of capital stock of its Subsidiaries and
all of such shares of capital stock are duly authorized and validly issued
and are fully paid and nonassessable. Except as described in the Offering
Memorandum, all of the shares of capital stock of the Company's
Subsidiaries are owned by the Company free and clear of any security
interest, claim, lien or encumbrance. Except as described in or expressly
contemplated by the Offering Memorandum, there are no
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outstanding rights, warrants or options to acquire, or instruments
convertible into or exchangeable for, the shares of capital stock of the
Company.
(g) The Company has all requisite power and authority to execute,
deliver and perform its obligations under this Agreement, the Indenture,
the Notes and the Registration Rights Agreement.
(h) This Agreement has been duly and validly authorized, executed
and delivered by the Company and, assuming due authorization, execution
and delivery by the Initial Purchaser, constitutes the valid and binding
agreement of the Company, enforceable against the Company in accordance
with its terms, except that (i) enforcement thereof may be subject to (A)
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium
and other similar laws now or hereafter in effect relating to or affecting
creditors' rights generally and (B) general principles of equity
(regardless of whether enforceability is considered in a proceeding in
equity or at law) and (ii) the enforceability of any indemnification or
contribution provisions hereof may be limited under applicable securities
laws or the public policies underlying such laws.
(i) The Indenture has been duly and validly authorized by the
Company, and upon its execution and delivery and, assuming due
authorization, execution and delivery by the Trustee, will constitute the
valid and binding agreement of the Company, enforceable against the
Company in accordance with its terms, except that (i) enforcement thereof
may be subject to (A) bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and other similar laws now or hereafter in
effect relating to or affecting creditors' rights generally and (B)
general principles of equity (regardless of whether enforceability is
considered in a proceeding in equity or at law) and (ii) the
enforceability of any indemnification or contribution provisions thereof
may be limited under applicable securities laws or the public policies
underlying such laws.
(j) The Series A Notes have been duly and validly authorized by the
Company and when duly executed by the Company in accordance with the terms
of the Indenture and, assuming due authentication of the Series A Notes by
the Trustee, upon delivery to the Initial Purchaser against payment
therefor in accordance with the terms hereof, will have been validly
issued and delivered, and will constitute valid and binding obligations of
the Company entitled to the benefits of the Indenture, enforceable against
the Company in accordance with their terms, except that (i) enforcement
thereof may be subject to (A) bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium and other similar laws now or
hereafter in effect relating to or affecting creditors' rights generally
and (B) general principles of equity (regardless of whether enforceability
is considered in a proceeding in equity or at law) and (ii) the
enforceability of any indemnification or contribution provisions thereof
may be limited under applicable securities laws or the public policies
underlying such laws.
(k) The Series B Notes have been duly and validly authorized by the
Company and if and when duly issued and authenticated in accordance with
the terms of the Indenture and delivered in accordance with the Exchange
Offer provided for in the Registration Rights Agreement, will constitute
valid and binding obligations of the Company entitled to the benefits of
the Indenture, enforceable against the Company in accordance with their
terms, except that (i) enforcement thereof may be subject to (A)
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium
and other similar laws now or hereafter in effect relating to or affecting
creditors' rights generally and (B) general principles of equity
(regardless of whether enforceability is considered in a proceeding in
equity or at law) and (ii) the enforceability of any indemnification or
contribution provisions thereof may be limited under applicable securities
laws or the public policies underlying such laws.
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(l) The Registration Rights Agreement has been duly and validly
authorized by the Company and, upon its execution and delivery by the
Company and, assuming due authorization, execution and delivery by the
Initial Purchaser, will constitute the valid and binding agreement of the
Company, enforceable against the Company in accordance with its terms,
except that (i) enforcement thereof may be subject to (A) bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium and other
similar laws now or hereafter in effect relating to or affecting
creditors' rights generally and (B) general principles of equity
(regardless of whether enforceability is considered in a proceeding in
equity or at law) and (ii) the enforceability of any indemnification or
contribution provisions thereof may be limited under applicable securities
laws or the public policies underlying such laws.
(m) Each of the Company and its Subsidiaries, as applicable, has all
requisite corporate power and authority to consummate the Recapitalization
and to enter into and perform its obligations under the New Revolving
Credit Facility.
(n) The New Revolving Credit Facility has been duly and validly
authorized, executed and delivered by the Company and each of the
Subsidiaries, as applicable, and, assuming due authorization, execution
and delivery by the other parties thereto, constitutes the valid and
binding agreement of the Company and each of the Subsidiaries, as
applicable, enforceable against the Company and each of the Subsidiaries,
as applicable, in accordance with its terms, except that (x) enforcement
thereof may be subject to (A) bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium and other similar laws now or
hereafter in effect relating to or affecting creditors' rights generally
and (B) general principles of equity (regardless of whether enforceability
is considered in a proceeding in equity or at law) and (y) the
enforceability of any indemnification or contribution provisions thereof
may be limited under applicable securities laws or the public policies
underlying such laws.
(o) None of the issuance, offer or sale of the Notes, the execution,
delivery or performance by the Company of this Agreement or the other
Operative Documents, compliance by the Company and the Subsidiaries with
the provisions hereof or thereof, as applicable, nor consummation by the
Company of the transactions contemplated hereby or thereby; and none of
the execution, delivery or performance by the Company and the
Subsidiaries, as applicable, of the New Revolving Credit Facility,
compliance by the Company and the Subsidiaries, as applicable, with the
provisions thereof nor consummation by the Company and the Subsidiaries,
as applicable, of the transactions contemplated thereby will conflict with
or result in a breach or violation of any of the terms or provisions of,
or constitute a default under, any indenture, mortgage, deed of trust,
loan or credit agreement or other agreement or instrument to which either
the Company or any of its Subsidiaries is a party or by which the Company
or any of its Subsidiaries is bound or to which any of the properties or
assets of the Company or any of its Subsidiaries are subject, nor will
such actions result in any violation of the provisions of the charter or
by-laws of the Company or any of its Subsidiaries or any statute to which
it or its properties may be subject or any order, rule or regulation of
any court or governmental agency or body having jurisdiction over the
Company or any of its Subsidiaries or any of their properties or assets
(except to the extent any such conflict, breach, violation or default does
not or will not, as the case may be, have a Material Adverse Effect); and
except for such consents, approvals, authorizations, registrations or
qualifications as may be required under applicable state securities and
Blue Sky laws in connection with the purchase and distribution of the
Notes by the Initial Purchaser or as set forth in the Registration Rights
Agreement, no consent, approval, authorization or order of, or filing or
registration with, any such court or governmental agency or body is
required for the execution, delivery and performance of this Agreement,
the Indenture and the Registration Rights Agreement by the Company, the
consummation of the transactions
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contemplated hereby and thereby (including the Recapitalization), and the
issuance and sale of the Notes by the Company.
(p) Neither the Company nor any of its Subsidiaries is in breach or
violation of any of the terms or provisions of any indenture, mortgage,
deed of trust, loan agreement or other agreement or instrument to which
the Company or any of its Subsidiaries is a party or by which the Company
or any of its Subsidiaries is bound or to which any of the properties or
assets of the Company or any of its Subsidiaries are subject, nor is the
Company or any of its Subsidiaries in violation of the provisions of its
respective charter or by-laws or any statute or any judgment, order, rule
or regulation of any court or governmental agency or body having
jurisdiction over the Company, any of its Subsidiaries or any of their
properties or assets (except to the extent any such conflict, breach,
violation or default is cured at or prior to the Closing Date and within
the grace period applicable thereto or would not have a Material Adverse
Effect).
(q) The Notes, the Indenture and the Registration Rights Agreement
conform or will conform, as applicable, in all material respects to the
descriptions thereof contained in the Offering Memorandum.
(r) There are no legal or governmental proceedings pending or, to
the knowledge of the Company or any Subsidiary, threatened, against the
Company or any Subsidiary or to which any of the properties of the Company
or any Subsidiary is subject, that are not disclosed in the Offering
Memorandum and which, if adversely decided, are reasonably likely to cause
a Material Adverse Effect or to materially affect the issuance of the
Notes or the consummation of the other transactions contemplated by the
Operative Documents. The Offering Memorandum contains accurate summaries
of all material agreements, contracts, indentures, leases or other
instruments. The Company is not involved in any strike, job action or
labor dispute with any group of employees, and, to the Company's
knowledge, no such action or dispute is threatened.
(s) Except as described in the Offering Memorandum, there are no
contracts, agreements or understandings between the Company or any of its
Subsidiaries and any person granting such person the right to require the
Company or any of its Subsidiaries to file a registration statement under
the Securities Act with respect to any securities owned or to be owned by
such person or to require the Company or any of its Subsidiaries to
include such securities in the securities registered pursuant to the
Exchange Offer Registration Statement, the Shelf Registration Statement or
in any securities being registered pursuant to any other registration
statement filed by the Company or any of its Subsidiaries under the
Securities Act.
(t) Neither the Company nor any of its Subsidiaries has sustained,
since the date of the latest audited financial statements included in the
Offering Memorandum, any material losses or interferences with its
business from fire, explosion, flood or other calamity, whether or not
covered by insurance, or from any labor dispute or court or governmental
action, order or decree, other than as set forth or contemplated in the
Offering Memorandum; and, since such date, there have not been any
material changes in the capital stock or long-term debt of the Company or
any of its Subsidiaries or any material adverse changes in the condition
(financial or otherwise), results of operations, business or prospects of
the Company or any of its Subsidiaries, taken as a whole (a "Material
Adverse Change"), or any developments that could reasonably be expected to
involve a prospective Material Adverse Change, other than as set forth or
contemplated in the Offering Memorandum.
(u) The consolidated historical and pro forma financial statements,
together with related notes, set forth in the Offering Memorandum comply
as to form in all material respects with the requirements of Regulation
S-X under the Securities Act applicable to registration
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statements on Form S-1 under the Securities Act. Such historical financial
statements fairly present the financial position of the Company at the
respective dates indicated and the results of operations and cash flows
for the respective periods indicated, in accordance with GAAP consistently
applied throughout such periods. Such pro forma financial statements have
been prepared on a basis consistent with such historical statements,
except for the pro forma adjustments specified therein, and give effect to
assumptions made on a reasonable basis and in good faith and present
fairly the historical and proposed transactions contemplated by the
Offering Memorandum and this Agreement. The other financial and
statistical information and data included in the Offering Memorandum,
historical and pro forma, are, in all material respects, accurately
presented and prepared on a basis consistent with such financial
statements and the books and records of the Company.
(v) The accountants, Deloitte & Touche, LLP, who have certified
certain financial statements of the Company, whose report appears in the
Offering Memorandum and who have delivered and will deliver the letters
referred to in Section 7(k) and 7(l) hereof, are independent public
accountants as required by the Securities Act and the rules and
regulations thereunder, were independent accountants as required by the
Securities Act and the rules and regulations thereunder during the periods
covered by the financial statements on which they reported contained in
the Offering Memorandum.
(w) The Company and each of its Subsidiaries has good and marketable
title in fee simple to all real property and good title to all personal
property owned by each of them, in each case free and clear of all liens,
encumbrances and defects except (i) such as are described in the Offering
Memorandum or (ii) such as do not materially affect the value of such
property and do not materially interfere with the use made and proposed to
be made of such property by the Company and its Subsidiaries; and all real
property and buildings held under lease by the Company and its
Subsidiaries are held by them under valid, subsisting and enforceable
leases, with such exceptions as are not material and do not interfere with
the use made and proposed to be made of such property and buildings by the
Company and its Subsidiaries. The Company and its Subsidiaries enjoy
peaceful and undisturbed possession under all leases to which they are
parties as lessee, except for such leases that, singly or in the
aggregate, would not have a Material Adverse Effect. The Company and each
of its Subsidiaries maintains such insurance as may be required by law and
such other insurance, to such extent and against such hazards and
liabilities, as is customarily maintained by companies similarly situated
(which may include self-insurance in the same form as is customarily
maintained by companies similarly situated).
(x) Except as described in the Offering Memorandum, the Company and
its Subsidiaries own or possess adequate rights to use all material
patents, patent applications, trademarks, service marks, tradenames,
trademark registrations, service xxxx registrations, copyrights and
licenses necessary for the conduct of their businesses, and to the
Company's knowledge, the conduct of their businesses will not conflict
with, and neither the Company nor any of its Subsidiaries has received any
notice of any claim of conflict with, any such rights of others (except in
any such case for any conflict that would not have a Material Adverse
Effect).
(y) Except as described in the Offering Documents, the Company and
each of its Subsidiaries owns or has the right to use in accordance with
the terms thereof all necessary franchises, licenses, permits, consents,
approvals or authorizations of any public or governmental agency,
including any permits required by the Department of Defense (the "DOD")
and the Federal Aviation Administration (the "FAA") that are in a material
respect necessary for the ownership, maintenance and operation of its
properties, assets and business operations, and that, if not obtained,
could have a Material Adverse Effect on the Company and its Subsidiaries,
taken as a whole. Each of the foregoing is valid and in full force and
effect and, except as disclosed in
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the Offering Documents, no event has occurred and is continuing which
permits, or after notice or lapse of time or both would permit,
modifications or terminations of the foregoing which, in the aggregate,
would have a Material Adverse Effect. The Company and its Subsidiaries are
presently conducting their respective businesses in substantial compliance
with the rules and regulations of the DOD and the FAA and all other
material applicable laws.
(z) The Company and its Subsidiaries are (i) in compliance with any
and all applicable foreign, federal, state and local laws and regulations
relating to the protection of human health and safety, the environment or
hazardous or toxic substances or wastes, pollutants or contaminants
("Environmental Laws"), (ii) have received all permits, licenses or other
approvals required of them under applicable Environmental Laws to conduct
their respective businesses and (iii) are in compliance with all terms and
conditions of any such permit, license or approval, except where such
noncompliance with Environmental Laws, failure to receive required
permits, licenses or other approvals or failure to comply with the terms
and conditions of such permits, licenses or approvals would not, singly or
in the aggregate, have a Material Adverse Effect.
(aa) In the ordinary course of its business, the Company conducts a
periodic review of the effect of Environmental Laws on the business,
operations and properties of the Company and its Subsidiaries, in the
course of which it identifies and evaluates 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, the Company has reasonably
concluded that such associated costs and liabilities would not, singly or
in the aggregate, have a Material Adverse Effect.
(bb) Except as described in the Offering Memorandum, the Company and
its Subsidiaries are in compliance in all material respects with all
presently applicable provisions of the Employee Retirement Income Security
Act of 1974, as amended, including the regulations and published
interpretations thereunder ("ERISA"); no "reportable event" (as defined in
ERISA) has occurred with respect to any "pension plan" (as defined in
ERISA) for which the Company or any of its Subsidiaries would have any
liability; neither the Company nor any of its Subsidiaries has incurred or
expects to incur liability under (i) Title IV of ERISA with respect to
termination of, or withdrawal from, any "pension plan" or (ii) Section 412
or 4971 of the Internal Revenue Code of 1986, as amended, including the
regulations and published interpretations thereunder (the "Code"); and
each "pension plan" for which the Company and its Subsidiaries would
have any liability that is intended to be qualified under Section 401(a)
of the Code is so qualified in all material respects and nothing has
occurred, whether by action or by failure to act, which would cause the
loss of such qualification.
(cc) The Company and each of its Subsidiaries (i) make and keep
accurate books and records and (ii) maintain internal accounting controls
which provide reasonable assurance that (A) transactions are executed in
accordance with management's general or specific authorization, (B)
transactions are recorded as necessary to permit preparation of their
consolidated financial statements in accordance with GAAP and to maintain
accountability for their assets, (C) access to their assets is permitted
only in accordance with management's general or specific authorization and
(D) the reported accountability for their assets is compared with existing
assets at reasonable intervals and appropriate action is taken with
respect to any differences.
(dd) No relationship, direct or indirect, exists between or among
the Company or any of its Subsidiaries on the one hand, and the directors,
officers, stockholders, customers or suppliers of the Company or any of
its Subsidiaries on the other hand, which would be required
8
by the Securities Act or by the Rules and Regulations to be described in
the Offering Documents, if the Securities Act and the rules and
regulations were applicable thereto, which is not so described.
(ee) Except as described in the Offering Documents, no labor problem
or disturbance with the employees of the Company or any of its
Subsidiaries exists or, to the knowledge of the Company, is threatened
which might reasonably be expected to have a Material Adverse Effect.
(ff) Neither the Company nor any of its Subsidiaries, nor, to the
Company's or any Subsidiary's knowledge, any director, officer, agent,
employee or other Person associated with or acting on behalf of the
Company or any of its Subsidiaries, has used any corporate funds during
the last five years for any unlawful contribution, gift, entertainment or
other unlawful expense relating to political activity; made any unlawful
payment to any foreign or domestic government official or employee from
corporate funds; violated or is in violation of any provision of the
Foreign Corrupt Practices Act of 1977; or made any bribe, rebate, payoff,
influence payment, kickback or other unlawful payment.
(gg) Neither the Company nor any of its Subsidiaries is (i) an
"investment company" within the meaning of the Investment Company Act of
1940, as amended, or (ii) a "holding company" or a "subsidiary company" or
an "affiliate" of a holding company within the meaning of the Public
Utility Holding Company Act of 1935, as amended.
(hh) No securities of the same class (within the meaning of Rule
144A(d)(3) under the Securities Act) as the Notes are listed on any
national securities exchange registered under Section 6 of the Exchange
Act or quoted on an automated inter-dealer quotation system.
(ii) Neither the Company nor any affiliate (as defined in Rule
501(b) of Regulation D ("Regulation D") under the Securities Act) of the
Company has directly, or through any agent (provided that no
representation is made as to the Initial Purchaser or any Person acting on
its behalf), (i) sold, offered for sale, solicited offers to buy or
otherwise negotiated in respect of, any security (as defined in the
Securities Act) which is or could be integrated with the offering and sale
of the Notes in a manner that would require the registration of the Series
A Notes under the Securities Act or (ii) engaged in any form of general
solicitation or general advertising (within the meaning of Regulation D,
including, but not limited to, advertisements, articles, notices or other
communications published in any newspaper, magazine, or similar medium or
broadcast over television or radio, or any seminar or meeting whose
attendees have been invited by any general solicitation or general
advertising) in connection with the offering of the Series A Notes. No
securities of the same class as the Series A Notes have been issued and
sold by the Company within the six-month period immediately prior to the
date hereof.
(jj) Neither the Company nor any of its Subsidiaries has taken, nor
will any of them take, directly or indirectly, any action designed to, or
that could reasonably be expected to, cause or result in stabilization or
manipulation of the price of the Notes to facilitate the sale and resale
of the Notes.
(kk) The Offering Documents and each amendment or supplement
thereto, as of its date, contains the information specified in Rule
144A(d)(4) under the Securities Act.
(ll) Neither the Company nor any of its Subsidiaries has taken, and
none of them will take, any action that might cause this Agreement or the
issuance or sale of the Notes to violate Regulation T, U or X of the Board
of Governors of the Federal Reserve System.
9
(mm) None of the Company or any of its affiliates or any Person
acting on its or their behalf has engaged or will engage in any directed
selling efforts within the meaning of Rule 902(b) of Regulation S with
respect to the Notes, and the Company and its affiliates and all Persons
acting on its of their behalf have complied with and will comply with the
offering restrictions requirements of Regulation S in connection with the
offering of the Notes outside of the United States.
(nn) Any sales of the Series A Notes pursuant to, and in accordance
with, Regulation S are "offshore transactions" and are not part of a plan
or scheme to evade the registration provision of the Securities Act.
2. Representations, Warranties and Agreements of the Initial
Purchaser. The Initial Purchaser represents and warrants with respect to itself
that:
(a) The Initial Purchaser is a QIB with such knowledge and
experience in financial and business matters as are necessary in order to
evaluate the merits and risks of an investment in the Series A Notes.
(b) The Initial Purchaser (i) is not acquiring the Series A Notes
with a view to any distribution thereof or with any present intention of
offering or selling any of the Series A Notes in a transaction that would
violate the Securities Act or the securities laws of any State of the
United States or any other applicable jurisdiction; (ii) in connection
with the Exempt Resales, will solicit offers to buy the Notes only from,
and will offer to sell the Notes only to, the Eligible Purchasers in
accordance with this Agreement and on the terms contemplated by the
Offering Memorandum; and (iii) will not offer or sell the Notes, nor has
it offered or sold the Notes by, or otherwise engaged in, any form of
general solicitation or general advertising (within the meaning of
Regulation D; including, but not limited to, advertisements, articles,
notices or other communications published in any newspaper, magazine, or
similar medium or broadcast over television or radio, or any seminar or
meeting whose attendees have been invited by any general solicitation or
general advertising) in connection with the offering of the Series A
Notes.
(c) The Notes have not been and will not be registered under the
Securities Act and may not be offered or sold within the United States or
to, or for the account or benefit of, U.S. persons except in accordance
with Regulation S under the Securities Act or pursuant to an exemption
from the registration requirements of the Securities Act. The Initial
Purchaser represents that it has not offered, sold or delivered the Notes,
and will not offer, sell or deliver the Notes (i) as part of its
distribution at any time or (ii) otherwise until 40 days after the later
of the commencement of the offering and the Closing Date (such period, the
"Restricted Period"), within the United States or to, or for the account
or benefit of U.S. persons, except in accordance with Rule 144A under the
Securities Act, in transactions that are exempt from the registration
requirements of the Securities Act. Accordingly, the Initial Purchaser
represents and agrees that neither it, its affiliates nor any Persons
acting on its or their behalf has engaged or will engage in any directed
selling efforts within the meaning of Rule 902(b) of Regulation S with
respect to the Notes, and it, its affiliates and all Persons acting on its
behalf have complied and will comply with the offering restrictions
requirements of Regulation S.
(d) The Initial Purchaser agrees that, at or prior to confirmation
of a sale of Notes (other than a sale pursuant to Rule 144A in
transactions that are exempt from the registration requirements of the
Securities Act), 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
substantially to the following effect:
10
"The Notes covered hereby have not been registered under the U.S.
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 their distribution at any
time or (ii) otherwise until 40 days after the later of the
commencement of the offering or the closing date, except in either
case in accordance with Regulation S (or Rule 144A if available)
under the Securities Act. Terms used above have the meanings
assigned to them in Regulation S."
The Initial Purchaser further agrees that it has not entered and
will not enter into any contractual arrangement with respect to the distribution
or delivery of the Notes, except with its affiliates or with the prior written
consent of the Company.
(e) The Initial Purchaser further represents and agrees that (i) it
has not offered or sold and will not offer or sell any Notes to Persons in
the United Kingdom prior to the expiry of the period of six months from
the issue date of the Notes, except to Persons whose ordinary activities
involve them in acquiring, holding, managing or disposing of investments
(as principal or agent) for the purposes of their businesses or otherwise
in circumstances which have not resulted and will not result in an offer
to the public in the United Kingdom within the meaning of the Public
Offers of Securities Regulations 1995, (ii) it has 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 Notes in, from or
otherwise involving the United Kingdom, and (iii) it has only issued or
passed on and will only issue or pass on in the United Kingdom any
document received by it in connection with the issuance of the Notes to a
Person who is of a kind described in Article 11(3) of the Financial
Services Xxx 0000 (Investment Advertisements) (Exemptions) Order 1995 or
is a Person to whom the document may otherwise lawfully be issued or
passed on.
(f) The Initial Purchaser agrees not to cause any advertisement of
the Notes to be published in any newspaper or periodical or posted in any
public place and not to issue any circular relating to the Notes, except
such advertisements as include the statements required by Regulation S.
(g) The sale of the Series A Notes pursuant to Regulation S are
"offshore transactions" and are not part of a plan or scheme to evade the
registration provisions of the Securities Act.
(h) The Initial Purchaser understands that the Company and, for
purposes of the opinions to be delivered to you pursuant to Section 7
hereof, counsel to the Company, General Counsel to the Company and counsel
to the Initial Purchaser, will rely upon the accuracy and truth of the
foregoing representations and you hereby consent to such reliance.
The terms used in this Section 2 that have meanings assigned to them
in Regulation S are used herein as so defined.
The Initial Purchaser further agrees that, in connection with the
Exempt Resales, it will solicit offers to buy the Series A Notes only from, and
will offer to sell the Series A Notes only to, the Eligible Purchasers in Exempt
Resales.
3. Purchase of the Notes by the Initial Purchaser. On the basis of
the representations and warranties contained in, and subject to the terms and
conditions of, this Agreement, the Company agrees to sell $250.0 million in
aggregate principal amount of Series A Notes to the Initial Purchaser and the
Initial Purchaser agrees to purchase the aggregate principal amount of the
Series A Notes set opposite that Initial Purchaser's name in Schedule 1 hereto.
The Initial Purchaser will purchase
11
such aggregate principal amount of the Series A Notes at an aggregate purchase
price equal to 97.50% of the principal amount thereof (the "Purchase Price").
The Company shall not be obligated to deliver any of the
Series A Notes to be delivered, except upon payment for all the Series A Notes
to be purchased on such Closing Date as provided herein.
4. Delivery of and Payment.
(a) Delivery to the Initial Purchaser of and payment for the Series
A Notes shall be made at 9:00 a.m., New York City time, on the Closing Date at
the offices of Xxxxxx & Xxxxxxx, 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, or
such other time or place as you and the Company shall designate.
(b) One or more Series A Notes in definitive form, registered in the
name of Cede & Co., as nominee of the Depository Trust Company ("DTC"), or such
other names as the Initial Purchaser may request upon at least one business
days' notice to the Company, having an aggregate principal amount corresponding
to the aggregate principal amount of Series A Notes sold pursuant to Eligible
Resales (collectively, the "Global Note"), shall be delivered by the Company to
the Initial Purchaser, against payment by the Initial Purchaser of the purchase
price thereof by wire transfer of immediately available funds as the Company may
direct by written notice delivered to you two business days prior to the Closing
Date. The Global Note in definitive form shall be made available to you for
inspection not later than 9:30 a.m. on the business day immediately preceding
the Closing Date.
(c) Time shall be of the essence, and delivery at the time and place
specified pursuant to this Agreement is a further condition of the obligation of
each Initial Purchaser hereunder.
5. Further Agreements of the Company. The Company agrees:
(a) To advise you promptly and, if requested by you, to confirm such
advice in writing, of (i) the issuance by any state securities commission
of any stop order suspending the qualification or exemption from
qualification of any Series A Notes for offering or sale in any
jurisdiction, or the initiation of any proceeding for such purpose by the
Commission or any state securities commission or other regulatory
authority, and (ii) the happening of any event that makes any statement of
a material fact made in the Offering Documents untrue or which requires
the making of any additions to or changes in the Offering Documents in
order to make the statements therein, in light of the circumstances under
which they were made, not misleading. The Company shall use its reasonable
best efforts to prevent the issuance of any stop order or order suspending
the qualification or exemption of the Series A Notes under any state
securities or Blue Sky laws and, if at any time any state securities
commission shall issue any stop order suspending the qualification or
exemption of the Series A Notes under any state securities or Blue Sky
laws, the Company shall use every reasonable effort to obtain the
withdrawal or lifting of such order at the earliest possible time.
(b) To furnish to you, without charge, as many copies of the
Offering Documents, and any amendments or supplements thereto, as you may
reasonably request. The Company consents to the use of the Offering
Documents, and any amendments and supplements thereto required pursuant to
this Agreement, by you in connection with the Exempt Resales that are in
compliance with this Agreement.
(c) Prior to making any amendment or supplement to the Offering
Memorandum, the Company shall furnish a copy thereof to the Initial
Purchaser and counsel to the Initial Purchaser and will not effect any
such amendment or supplement to which the Initial Purchaser shall
12
reasonably object by notice to the Company after a reasonable period to
review, which shall not in any case be longer than five business days
after receipt of such copy.
(d) If, at any time prior to completion of the distribution of the
Notes by the Initial Purchaser to eligible purchasers, any event shall
occur or condition exist as a result of which it is necessary, in the
opinion of counsel for the Initial Purchaser or counsel for the Company,
to amend or supplement the Offering Memorandum in order that the Offering
Memorandum will not include an untrue statement of a material fact or omit
to state a material fact necessary in order to make the statements therein
not misleading in light of the circumstances existing at the time it is
delivered to a purchaser, or if it is necessary to amend or supplement the
Offering Memorandum to comply with applicable law, to promptly prepare
such amendment or supplement as may be necessary to correct such untrue
statement or omission or so that the Offering Memorandum, as so amended or
supplemented, will comply with applicable law and to furnish to the
Initial Purchaser such number of copies of such amendment or supplement as
it may reasonably request.
(e) So long as any Notes are outstanding and are "Restricted
Securities" within the meaning of Rule 144(a)(3) under the Securities Act
and during any period in which the Company is not subject to Section 13 or
15(d) of the Exchange Act, to furnish to holders of the Notes and
prospective purchasers of Notes designated by such holders, upon request
of such holders or such prospective purchasers, the information, if any,
required to be delivered pursuant to Rule 144A(d)(4) under the Securities
Act.
(f) So long as the Notes are outstanding, to furnish to the Initial
Purchaser copies of any annual reports, quarterly reports and current
reports filed with the Commission on Forms 10-K, 10-Q and 8-K, or such
other similar forms as may be designated by the Commission, and such other
documents, reports and information as shall be furnished by the Company to
the Trustee or to the holders of the Notes pursuant to the Indenture.
(g) To use its reasonable best efforts to qualify the Notes for sale
under the securities or Blue Sky laws of such jurisdictions as the Initial
Purchaser reasonably designates and to continue such qualifications in
effect so long as reasonably required for the distribution of the Notes.
The Company will also arrange for the determination of the eligibility for
investment of the Notes under the laws of such jurisdictions as the
Initial Purchaser reasonably requests. Notwithstanding the foregoing, the
Company shall not be obligated to qualify as a foreign corporation in any
jurisdiction in which it is not so qualified or to file a general consent
to service of process or to subject itself to taxation in respect of doing
business in any jurisdiction in which it is not otherwise subject.
(h) To use its best efforts to permit the Notes to be designated
Private Offerings, Resales and Trading through Automated Linkages Market
("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 and to permit the Notes to be eligible for
clearance and settlement through DTC.
(i) Not to, and will cause its affiliates not to, sell, offer for
sale or solicit offers to buy or otherwise negotiate in respect of any
security (as defined in the Securities Act) in a transaction that could be
integrated with the sale of the Notes in a manner which would require the
registration under the Securities Act of the Notes.
(j) Except following the effectiveness of any Registration Statement
(as defined in the Registration Rights Agreement) and except for such
offers as may be made as a result of, or subsequent to, filing such
Registration Statement or amendments thereto prior to the effectiveness
13
thereof, not to, and will cause its affiliates not to, solicit any offer
to buy or offer to sell the Notes by means of any form of general
solicitation or general advertising (as those terms are used in Regulation
D under the Securities Act) or in any manner involving a public offering
within the meaning of Section 4(2) of the Securities Act.
(k) To consummate the Recapitalization and to apply the net proceeds
from the sale of the Notes, in each case, as set forth in the Offering
Memorandum.
(l) To take such steps as shall be necessary to ensure that neither
the Company nor any of its Subsidiaries shall become an "investment
company" within the meaning of the Investment Company Act of 1940, as
amended, or (ii) a "holding company" or a "subsidiary company" or an
"affiliate" of a holding company within the meaning of the Public Utility
Holding Company Act of 1935, as amended.
(m) Not to, and will cause its affiliates not to, take any actions
which would require the registration under the Securities Act of the
Notes.
(n) Prior to the consummation of the Exchange Offer or the
effectiveness of an applicable shelf registration statement if, in the
reasonable judgment of the Initial Purchaser, the Initial Purchaser or any
of its affiliates (as such term is defined in the rules and regulations
under the Securities Act) are required to deliver an offering memorandum
in connection with sales of, or marketmaking activities with respect to,
the Notes, (A) to periodically amend or supplement the Offering Documents
so that the information contained in the Offering Documents complies with
the requirements of Rule 144A of the Securities Act, (B) to amend or
supplement the Offering Documents when necessary to reflect any material
changes in the information provided therein so that the Offering Documents
will not contain any untrue statement of a material fact or omit to state
any material fact necessary in order to make the statements therein, in
light of the circumstances existing as of the date the Offering Documents
are so delivered, not misleading and (C) to provide the Initial Purchaser
with copies of each such amended or supplemented Offering Documents, as
the Initial Purchaser may reasonably request.
The Company hereby expressly acknowledges that the indemnification
and contribution provisions of Section 8 hereof are specifically applicable and
relate to each offering memorandum, registration statement, prospectus,
amendment or supplement referred to in this Section 5(n).
(o) To do all things necessary to satisfy the closing conditions set
forth in Section 7 hereof.
(p) Not to voluntarily claim, and to actively resist any attempts to
claim, the benefit of any usury laws against the holders of the Series A
Notes.
(q) For so long as any of the Notes remain outstanding and during
any period in which the Company is not subject to Section 13 or 15(d) of
the Exchange Act, to make available to any registered holder or beneficial
owner of Series A Notes in connection with any sale thereof and any
prospective purchaser of such Series A Notes from such registered holder
or beneficial owner, the information required by Rule 144A(d)(4) under the
Securities Act.
6. Expenses. The Company agrees that, whether or not the
transactions contemplated by this Agreement are consummated or this Agreement
becomes effective or is terminated, to pay all costs, expenses, fees and taxes
incident to and in connection with: (i) the preparation, printing, filing and
distribution of the Offering Documents (including, without limitation, financial
statements) and all amendments and supplements thereto (but not, however, legal
fees and expenses of your counsel
14
incurred in connection therewith), (ii) the preparation, printing (including,
without limitation, word processing and duplication costs) and delivery of this
Agreement, the Indenture, all Blue Sky Memoranda and all other agreements,
memoranda, correspondence and other documents printed and delivered in
connection herewith and with the Exempt Resales (but not, however, legal fees
and expenses of your counsel incurred in connection with any of the foregoing
other than reasonable fees of such counsel plus reasonable disbursements
incurred in connection with the preparation, printing and delivery of such Blue
Sky Memoranda), (iii) the issuance and delivery by the Company of the Notes,
(iv) the qualification of the Notes for offer and sale under the securities or
Blue Sky laws of the several states (including, without limitation, the
reasonable fees and disbursements of your counsel relating to such registration
or qualification), (v) furnishing such copies of the Offering Documents, and all
amendments and supplements thereto, as may be reasonably requested for use in
connection with the Exempt Resales, (vi) the preparation of certificates for the
Notes (including, without limitation, printing and engraving thereof), (vii) the
fees, disbursements and expenses of the Company's counsel and accountants,
(viii) all expenses and listing fees in connection with the application for
quotation of the Series A Notes in PORTAL, (ix) all fees and expenses (including
fees and expenses of counsel) of the Company in connection with approval of the
Notes by DTC for "book-entry" transfer and (x) the performance by the Company of
their other obligations under this Agreement.
7. Conditions of Initial Purchaser's Obligations. The obligations of
the Initial Purchaser hereunder are subject to the accuracy, when made and again
on the Closing Date (as if made again on and as of such date), of the
representations and warranties of the Company contained herein, to the
performance by the Company of its obligations hereunder, and to each of the
following additional terms and conditions:
(a) The Initial Purchaser shall not have discovered and disclosed to
the Company on or prior to the Closing Date that the Offering Memorandum
or any amendment or supplement thereto contains an untrue statement of a
fact which, in the opinion of Xxxxxx & Xxxxxxx, counsel for the Initial
Purchaser, is material or omits to state a fact which, in the opinion of
such counsel, is material and is necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading.
(b) All of the representations and warranties of the Company
contained in this Agreement shall be true and correct in all material
respects on the date hereof and on the Closing Date with the same force
and effect as if made on and as of the date hereof and the Closing Date,
respectively. The Company shall have performed or complied in all material
respects with all of the agreements herein contained and required to be
performed or complied with by it at or prior to the Closing Date.
(c) The Offering Memorandum shall have been printed and copies
distributed to the Initial Purchaser on the next Business Day following
the date of this Agreement or at such later date and time as to which the
Initial Purchaser may agree, and no stop order suspending the
qualification or exemption from qualification of the Notes in any
jurisdiction referred to in Section 5(g) shall have been issued and no
proceeding for that purpose shall have been commenced or shall be pending
or threatened.
(d) Except as described in the Offering Memorandum, no action shall
have been taken and no statute, rule, regulation or order shall have been
enacted, adopted or issued by any governmental agency which would, as of
the Closing Date, have a Material Adverse Effect; no action, suit or
proceeding shall have been commenced and be pending against or affecting
or, to the Company's knowledge, threatened against, the Company or any of
its Subsidiaries before any court or arbitrator or any governmental body,
agency or official that, if adversely determined, could reasonably be
expected to result in a Material Adverse Effect; and no stop order shall
have
15
been issued by the Commission or any governmental agency of any
jurisdiction referred to in Section 5(g) preventing the use of the
Offering Memorandum, or any amendment or supplement thereto, or which
could reasonably be expected to have a Material Adverse Effect.
(e) Since the dates as of which information is given in the Offering
Memorandum and other than as set forth in the Offering Memorandum, (i)
there shall not have been any Material Adverse Change, or any development
that is reasonably likely to result in a Material Adverse Change, or any
material change in the long-term debt, or material increase in the
short-term debt, from that set forth in the Offering Memorandum; (ii)
except as disclosed in the Offering Memorandum, no dividend or
distribution of any kind shall have been declared, paid or made by the
Company on any class of its capital stock; (iii) the Company and its
Subsidiaries shall not have incurred any liabilities or obligations,
direct or contingent, that are material, individually or in the aggregate,
to the Company and its Subsidiaries, taken as a whole, and that are
required to be disclosed on a balance sheet or notes thereto in accordance
with GAAP and are not disclosed on the latest balance sheet or notes
thereto included in the Offering Memorandum.
(f) The Initial Purchaser shall have received a certificate, dated
the Closing Date, signed on behalf of the Company by (i) Xxxxxxx X.
Xxxxxxxx, President and Chief Operating Officer and (ii) Xxxxxxx Xxxxxxx,
Chief Financial Officer, confirming that (A) such officers have
participated in conferences with other officers and representatives of the
Company, representatives of the independent public accountants of the
Company and representatives of counsel to the Company at which the
contents of the Offering Memorandum and related matters were discussed and
(B) the matters set forth in paragraphs (b), (c), (d) and (e) of this
Section 7 are true and correct as of the Closing Date.
(g) All corporate proceedings and other legal matters incident to
the authorization, form and validity of this Agreement, the Notes, the
Indenture, the Registration Rights Agreement, the Offering Documents, the
New Revolving Credit Facility and all other legal matters relating to this
Agreement and the transactions contemplated hereby (including, without
limitation, the Recapitalization), shall be satisfactory in all material
respects to counsel for the Initial Purchaser, and the Company shall have
furnished to such counsel all documents and information that they may
reasonably request to enable them to pass upon such matters.
(h) Xxxxxxx Xxxx & Xxxxxxxxx, counsel for the Company, shall have
furnished to the Initial Purchaser its written opinion, as counsel to the
Company, addressed to the Initial Purchaser and dated the Closing Date, in
form and substance reasonably satisfactory to the Initial Purchaser, to
the effect that:
(i) The Company and each of its Subsidiaries is validly
existing as a corporation in good standing under the laws of its
jurisdiction of incorporation. Each of ABS and EFC is qualified to
do business and in good standing as a foreign corporation in the
States of Ohio and Georgia, respectively.
(ii) Assuming, without independent investigation, (i) that the
Notes are sold to the Initial Purchaser, and initially resold by the
Initial Purchaser, in accordance with the terms of, and in the
manner contemplated by, this Agreement and the Offering Memorandum,
(ii) the accuracy of the representations, warranties and covenants
of the Company set forth in this Agreement, (iii) the accuracy of
the Initial Purchaser's representations and warranties set forth in
this Agreement, (iv) the due performance by the Company of the
covenants and agreements set forth in this Agreement and the due
performance by the Initial Purchaser of the covenants and agreements
set forth in this Agreement, (v) the Initial Purchaser's compliance
with the offering and transfer
16
procedures and restrictions described in the Offering Memorandum,
(vi) the accuracy of the representations and warranties made in
accordance with this Agreement and the Offering Memorandum by each
purchaser to whom the Initial Purchaser initially resells the Notes
and (vii) that each purchaser to whom the Initial Purchaser
initially resells the Notes receives a copy of the Offering
Memorandum prior to such sale, the offer, issuance, sale and
delivery of the Notes to the Initial Purchaser, and the initial
reoffer, resale and delivery of the Notes by the Initial Purchaser,
as contemplated by this Agreement and the Offering Memorandum, do
not require registration under the Securities Act, or qualification
of the Indenture under the TIA, it being understood that no opinion
is expressed as to any subsequent resale of Notes or any resale of
Notes by any Person other than the Initial Purchaser.
(iii) The Company has the corporate power and authority to
execute and deliver, and to consummate the transactions contemplated
by, this Agreement, the Indenture and the Registration Rights
Agreement; and the Company has the corporate power and authority to
issue, sell and deliver the Notes as contemplated by this Agreement.
(iv) The execution and delivery of this Agreement have been
duly authorized by all requisite corporate action of the Company,
and this Agreement has been duly executed and delivered by the
Company.
(v) The execution and delivery of the Indenture have been duly
authorized by all requisite corporate action of the Company. The
Indenture has been duly executed and delivered by the Company and,
assuming due authorization, execution and delivery by the Trustee,
is a valid and binding agreement of the Company, enforceable against
the Company in accordance with its terms, except that (i)
enforcement thereof may be subject to (A) bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and other similar
laws now or hereafter in effect relating to or affecting creditors'
rights generally and (B) general principles of equity (regardless of
whether enforceability is considered in a proceeding in equity or at
law) and (ii) the enforceability of any indemnification or
contribution provisions thereof may be limited under applicable
securities laws or the public policies underlying such laws.
(vi) The execution and delivery of the Series A Notes have
been duly authorized by all requisite corporate action of the
Company. The Series A Notes have been duly executed and delivered by
the Company and, assuming due authentication by the Trustee, are
valid and binding obligations of the Company, entitled to the
benefits of the Indenture, enforceable against the Company in
accordance with their terms, except that (i) enforcement thereof may
be subject to (A) bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and other similar laws now or hereafter
in effect relating to or affecting creditors' rights generally and
(B) general principles of equity (regardless of whether
enforceability is considered in a proceeding in equity or at law)
and (ii) the enforceability of any indemnification or contribution
provisions thereof may be limited under applicable securities laws
or the public policies underlying such laws.
(vii) The execution and delivery of the Series B Notes have
been duly authorized by all requisite corporate action of the
Company; and, when duly executed and delivered by the Company and
duly authenticated by the Trustee, will be valid and binding
obligations of the Company, entitled to the benefits of the
Indenture, enforceable against the Company in accordance with their
terms, except that (i) enforcement thereof may be subject to (A)
bankruptcy, insolvency, fraudulent conveyance, reorganization,
17
moratorium and other similar laws now or hereafter in effect
relating to or affecting creditors' rights generally and (B) general
principles of equity (regardless of whether enforceability is
considered in a proceeding in equity or at law) and (ii) the
enforceability of any indemnification or contribution provisions
thereof may be limited under applicable securities laws or the
public policies underlying such laws.
(viii) The execution and delivery of the Registration Rights
Agreement have been duly authorized by all requisite corporate
action of the Company. The Registration Rights Agreement has been
duly executed and delivered by the Company and, assuming due
authorization, execution and delivery by the Initial Purchaser, the
Registration Rights Agreement (other than the indemnification and
contribution provisions thereof, as to which such counsel need
express no opinion) is a valid and binding agreement of the Company,
enforceable against the Company in accordance with its terms, except
that (i) enforcement thereof may be subject to (A) bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium and
other similar laws now or hereafter in effect relating to or
affecting creditors' rights generally and (B) general principles of
equity (regardless of whether enforceability is considered in a
proceeding in equity or at law) and (ii) the enforceability of any
indemnification or contribution provisions thereof may be limited
under applicable securities laws or the public policies underlying
such laws.
(ix) Each of the Company and the Subsidiaries has all
requisite corporate power and authority to enter into the New
Revolving Credit Facility. The execution and delivery of the New
Revolving Credit Facility have been duly authorized by all requisite
corporate action of the Company and the Subsidiaries; and the New
Revolving Credit Facility has been duly executed and delivered by
the Company and the Subsidiaries and, assuming the due
authorization, execution and delivery by the other parties thereto,
is a valid and binding agreement of the Company and the
Subsidiaries, enforceable against each of them in accordance with
its terms, except that (i) enforcement thereof may be subject to (A)
bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and other similar laws now or hereafter in effect
relating to or affecting creditors' rights generally and (B) general
principles of equity (regardless of whether enforceability is
considered in a proceeding in equity or at law) and (ii) the
enforceability of any indemnification or contribution provisions
thereof may be limited under applicable securities laws or the
public policies underlying such laws.
(x) The execution and delivery by the Company of this
Agreement and the other Operative Documents, the consummation by the
Company of the transactions contemplated hereby or thereby, the
issuance, offer and sale of the Notes by the Company, the
consummation by the Company and the Subsidiaries (as applicable) of
the transactions contemplated by the New Revolving Credit Facility,
the payment of a $200 million dividend to the holders of its capital
stock and the payment of $9.4 million to the holders of common stock
options, will not (A) to the knowledge of such counsel, and subject
to the following paragraph, result in a breach or violation of any
of the terms or provisions of, or constitute a default under, any
agreement or instrument listed on Exhibit A to the opinion or (B)
result in any violation of the provisions of the Certificate of
Incorporation or By-laws of the Company or, to the knowledge of such
counsel, other than with respect to the Federal Securities Laws (as
to which such counsel need express no opinion in this paragraph (x)
and as to which counsel expresses certain opinions in paragraph (ii)
above), any Applicable Law with respect to the Company, except for
such violations that would not, singly or in the aggregate, have a
Material Adverse Effect; and except for such consents, approvals or
authorizations of, or registrations or qualifications with,
Governmental Authorities as may be required under the Securities Act
and the rules
18
and regulations thereunder or applicable states securities or Blue
Sky laws in connection with the purchase and distribution of the
Notes by the Initial Purchaser and as set forth in the Registration
Rights Agreement, no consent, approval, authorization or order of,
or filing or registration with, any Governmental Authority is
required in connection with the execution and delivery by the
Company of this Agreement, the Indenture and the Registration Rights
Agreement, the consummation by the Company of the transactions
contemplated hereby and thereby, and the issuance and sale of the
Notes by the Company; provided, however, that the foregoing opinion
with respect to Governmental Authorities is limited to such
consents, approvals, authorizations, orders and filings which are
actually known to such counsel and which, in such counsel's
experience, are typically applicable to offerings of the type
contemplated by this Agreement. The term "Applicable Laws" means the
Delaware General Corporation Law, those statutes, rules or
regulations of any Governmental Authority of the State of New York
and the United States of America by which the Company is bound and
those judgments, orders or decrees of any such Governmental
Authority specifically naming the Company, in each case, the
existence of which is actually known to such counsel and which, in
such counsel's experience, are typically applicable to offerings of
the type contemplated by this Agreement. The term "Governmental
Authority" means any governmental, legislative, judicial,
administrative or regulatory body of the State of New York or the
United States of America.
(xi) The Indenture, the Notes, and the Registration Rights
Agreement conform in all material respects to the descriptions
thereof contained in the Offering Memorandum.
(xii) To such counsel's knowledge, no legal or governmental
proceedings are pending to which the Company is a party that would
be required under the Securities Act to be described in a
registration statement or a prospectus delivered at the time of the
confirmation of the sale of an offering of securities registered
under the Securities Act and are not described in the Offering
Memorandum, or, to such counsel's knowledge, which seek to restrain,
enjoin, prevent the consummation of or otherwise challenge the
issuance or sale of the Notes to the Initial Purchaser or the
consummation of the transactions described in the Offering
Memorandum under the caption "Use of Proceeds."
(xiii) Neither the Company nor any of its Subsidiaries is (i)
subject to registration and regulation as an "investment company"
within the meaning of the Investment Company Act of 1940, as
amended, or (ii) a "holding company" or a "subsidiary company" or,
to the knowledge of such counsel, an "affiliate" of a holding
company within the meaning of the Public Utility Holding Company Act
of 1935, as amended.
(xiv) When the Notes are issued and delivered pursuant to this
Agreement, such Notes will not be of the same class (within the
meaning of Rule 144A(d)(3) under the Securities Act) as securities
of the Company that are listed on a national securities exchange
registered under Section 6 of the Exchange Act or quoted on an
automated inter-dealer quotation system.
(xv) Assuming the Initial Purchaser purchases the Notes in
accordance with Rule 144A under the Securities Act, neither the
issuance or sale of the Notes nor the application by the Company of
the net proceeds thereof as set forth in the Offering
19
Memorandum will violate Regulation T, U or X of the Board of
Governors of the Federal Reserve System.
(xvi) The statements under the captions "Certain United States
Federal Tax Considerations" and "Description of Certain
Indebtedness" in the Offering Memorandum, insofar as they are
descriptions of contracts, agreements or other legal documents, or
refer to statements of law or legal conclusions, are accurate in all
material respects.
In addition, such counsel shall state that it has participated
in conferences with officers and other representatives of the
Company, representatives of the independent public accountants of
the Company, representatives of the Initial Purchaser and
representatives of counsel for the Initial Purchaser at which the
contents of the Offering Memorandum and related matters were
discussed and, although such counsel has not undertaken to
investigate or verify independently, and does not assume any
responsibility for, the accuracy, completeness or fairness of the
statements contained in the Offering Memorandum, on the basis of the
foregoing (relying as to materiality upon the opinions of officers
and other representatives of the Company) no facts have come to the
attention of such counsel that causes such counsel to believe that
the Offering Memorandum (except as to financial statements,
including the notes thereto, and schedules and other financial,
statistical and accounting data included therein or omitted
therefrom, as to which no belief need be expressed), as of its date
or the Closing Date, contained or contains an untrue statement of a
material fact or omitted or omits 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.
In rendering such opinion, such counsel may state that its
opinion is limited to matters governed by the federal laws of the
United States of America, the laws of the State of New York and the
General Corporation Law of the State of Delaware.
(i) Xxxxxx X. Xxxxxx, General Counsel to the Company, shall have furnished
to the Initial Purchaser his written opinion, as General Counsel to the Company,
addressed to the Initial Purchaser and dated the Closing Date, in form and
substance reasonably satisfactory to the Initial Purchaser, to the effect that:
(i) The Company and each of its Subsidiaries are duly qualified to
do business and in good standing as foreign corporations in each
jurisdiction in which their respective businesses require such
qualification (except where failure to so qualify would not have a
Material Adverse Effect.
(ii) To the knowledge of such counsel, the Company and each of its
Subsidiaries are not in violation of its corporate charter or by-laws, or
in default under any agreement (including loan and credit agreements),
indenture or instrument known to such counsel, which default would have a
Material Adverse Effect; to the knowledge of such counsel, the Company is
not in violation of any law, ordinance, governmental rule or regulation or
court decree to which it may be subject and has obtained each license,
permit, patent, certificate, franchise or other governmental authorization
or permit (collectively, "permits") necessary to the ownership of its
properties or to the conduct of its business as described in the Offering
Memorandum, other than permits being applied for in the ordinary course of
business of the Subsidiaries and other than permits which the violation of
or failure to obtain would not have a Material Adverse Effect; provided,
however, that to the extent of permits that have been applied for, the
ownership of such
20
property and the conduct of such business during the pendency of receipt
of such permits would not, to the knowledge of such counsel, be expected
to have a Material Adverse Effect.
(iii) The execution and delivery by the Company of this Agreement
and the other Operative Documents, the consummation by the Company of the
transactions contemplated hereby or thereby, the issuance, offer and sale
of the Notes by the Company, the consummation by the Company and the
Subsidiaries (as applicable) of the transactions contemplated by the New
Revolving Credit Facility, the payment of a $200 million dividend to the
holders of its capital stock and the payment of $9.4 million to the
holders of common stock options, will not (A) to the knowledge of such
counsel, conflict with or result in a breach or violation of any of the
terms or provisions of, or constitute a default under, any indenture,
mortgage, deed of trust, loan or credit agreement, or other agreement or
instrument known to such counsel to which the Company is a party or by
which the Company or any of its properties are subject, which conflict,
breach, violation or default has or would have a Material Adverse Effect,
except as set forth below, or (B) result in any violation of the
provisions of the charter or bylaws of the Company or, to the knowledge of
such counsel, other than with respect to the Federal Securities Laws (as
to which such counsel need express no opinion), any statute, or any order,
rule or regulation of any court or governmental agency or body having
jurisdiction over the Company or any of its Subsidiaries or any of their
properties or assets, which violation has or would have a Material Adverse
Effect; and, except for such consents, approvals, authorizations,
registrations or qualifications as may be required under applicable state
or Blue Sky securities laws in connection with the purchase and
distribution of the Notes by the Initial Purchaser and as set forth in the
Registration Rights Agreement, no consent, approval, authorization or
order of, or filing or registration with, any court or governmental agency
or body having jurisdiction over the Company or any of its Subsidiaries or
any of their properties or assets is required in connection with the
execution and delivery by the Company of this Agreement, the Indenture and
the Registration Rights Agreement, the consummation by the Company of the
transactions contemplated hereby and thereby, and the issuance and sale of
the Notes by the Company.
(iv) To the knowledge of such counsel, and except as set forth or
referred to in the Offering Memorandum, no legal or governmental
proceedings are pending or threatened against the Company or any of its
Subsidiaries or any property or assets of the Company or any of its
Subsidiaries which would affect the subject matter of this Agreement or
would be required under the Securities Act to be described in a
registration statement or a prospectus delivered at the time of the
confirmation of an offering of securities registered under the Securities
Act and are not described in the Offering Memorandum.
(v) To the knowledge of such counsel, the statements made in the
Offering Memorandum under the headings "Business -- Government Contracts,"
"Business -- Patents and Licenses," "Business -- Legal Proceedings" and
"Business -- Environmental" to the extent they constitute matters of law
or legal conclusions, have been reviewed by such counsel and fairly
present the information disclosed therein.
(j) You shall have received on the Closing Date an opinion of Xxxxxx &
Xxxxxxx, counsel for the Initial Purchaser, dated the Closing Date and addressed
to you, in form and substance reasonably satisfactory to you.
21
(k) No later than December 16, 2002, the Initial Purchaser shall
have received from Deloitte & Touche LLP a letter, dated as of the date
hereof and in form and substance satisfactory to the Initial Purchaser,
addressed to the Initial Purchaser and dated the date hereof (i)
confirming that they are independent public accountants within the meaning
of the Securities Act and are in compliance with the applicable
requirements relating to the qualification of accountants under Rule 2-01
of Regulation S-X of the Commission, (ii) stating, as of the date hereof
(or, with respect to matters involving changes or developments since the
respective dates as of which specified financial information is given in
the Offering Memorandum, as of a date not more than five days prior to the
date hereof), the conclusions and findings of such firm with respect to
the financial information and other matters ordinarily covered by
accountants' "comfort letters" to underwriters in connection with
registered public offerings.
(l) With respect to the letter of Deloitte & Touche LLP referred to
in Section 7(k) to be delivered to the Initial Purchaser concurrently with
the execution of this Agreement (the "initial letter"), the Company shall
have furnished to the Initial Purchaser a letter (as used in this
paragraph, the "bring-down letter") of such accountant, addressed to the
Initial Purchaser and dated the Closing Date (i) confirming that it is an
independent public accountant under the Securities Act, (ii) stating, as
of the date of the bring-down letter (or, with respect to matters
involving changes or developments since the respective dates as of which
specified financial information is given in the Offering Memorandum, as of
a date not more than two days prior to the date of the bring-down letter),
the conclusions and findings of such firm with respect to the financial
information and other matters covered by the initial letter and (iii)
confirming in all material respects the conclusions and findings set forth
in the initial letter.
(m) The Company and the Trustee shall have entered into the
Indenture and the Initial Purchaser shall have received counterparts,
conformed as executed, thereof.
(n) The Company and the Initial Purchaser shall have entered into
the Registration Rights Agreement and the Initial Purchaser shall have
received counterparts, conformed as executed, thereof.
(o) Simultaneously with or as soon as practicable after the closing
of the transactions contemplated by the Operative Documents, the Company
shall have closed the transactions contemplated by the Recapitalization,
including, without limitation, the closing of the New Revolving Credit
Facility, the repayment of all indebtedness under the Existing Credit
Agreement, the payment of a $200 million dividend to the holders of its
capital stock and the payment of $9.4 million to the holders of common
stock options.
(p) Xxxxxx & Xxxxxxx shall have been furnished with executed copies
of the New Revolving Credit Facility and such other documents and
opinions, in addition to those set forth above, as they may reasonably
require for the purpose of enabling them to review or pass upon the
matters referred to in this Agreement and in order to evidence the
accuracy, completeness or satisfaction in all material respects of any of
the representations, warranties or conditions herein contained.
(q) The Company shall have furnished to the Initial Purchaser a
certificate, dated such Closing Date, of its Chief Financial Officer as to
the solvency of the Company following consummation of the transactions
contemplated hereby.
(r) (i) Neither the Company nor its Subsidiaries shall have
sustained since the date of the latest audited financial statements
included in the Offering Memorandum losses or interferences with their
businesses, taken as a whole, from fire, explosion, flood or other
22
calamity, whether or not covered by insurance, or from any labor dispute
or court or governmental action, order or decree, otherwise than as set
forth or contemplated in the Offering Memorandum or (ii) since such date
there shall not have been any change in the capital stock or long-term
debt of the Company or any of its Subsidiaries or any change, or any
development involving a prospective change, in or affecting the general
affairs, management, financial position, stockholders' equity or results
of operations of the Company or its Subsidiaries, taken as a whole,
otherwise than as set forth or contemplated in the Offering Memorandum,
the effect of which, in any such case described in clause (i) or (ii), is,
in the reasonable judgment of the Initial Purchaser, so material and
adverse as to make it impracticable or inadvisable to proceed with the
offering or the delivery of the Notes being delivered on the Closing Date
on the terms and in the manner contemplated herein and in the Offering
Memorandum.
(s) Subsequent to the execution and delivery of this Agreement there
shall not have occurred any of the following: (i) trading in securities
generally on the New York Stock Exchange or the American Stock Exchange or
in the over-the-counter market, or trading in any securities of the
Company on any exchange or in the over-the-counter market, shall have been
suspended or materially limited or the settlement of such trading shall
have been materially disrupted or minimum prices shall have been
established on any such exchange or such market by the Commission, by such
exchange or by any other regulatory body or governmental authority having
jurisdiction; (ii) a banking moratorium shall have been declared by
Federal or state authorities; (iii) the United States shall have become
engaged in hostilities, there shall have been an escalation in hostilities
involving the United States or there shall have been a declaration of a
national emergency or war by the United States; or (iv) there shall have
occurred such a material adverse change in general economic, political or
financial conditions (or the effect of international conditions on the
financial markets in the United States shall be such), including, without
limitation, as a result of terrorist activities after the date hereof, or
any other calamity or crisis as to make it, in the reasonable judgment of
the Initial Purchaser, impracticable or inadvisable to proceed with the
offering or delivery of the Notes being delivered on the Closing Date or
which, in the reasonable judgment of Xxxxxx Brothers Inc. would materially
and adversely affect the financial markets or the markets for the Notes
and other debt securities.
(t) Subsequent to the execution and delivery of this Agreement, (i)
no downgrading shall have occurred in the rating accorded the Notes or any
other Indebtedness of the Company by a nationally recognized statistical
rating organization, as that term is defined by the Commission for
purposes of Rule 436(g)(2) under the Securities Act, and (ii) no such
organization shall have publicly announced that it has under surveillance
or review, with possible negative implications, its rating of any of the
Notes or any other Indebtedness of the Company.
(u) There shall exist at and as of the Closing Date no conditions
that would constitute a default (or an event that with notice or the lapse
of time, or both, would constitute a default) under the New Revolving
Credit Facility. On the Closing Date, the New Revolving Credit Facility
shall be in full force and effect and shall not have been modified.
(v) Prior to the Closing Date, the Company shall have furnished to
the Initial Purchaser such further information, certificates and documents
as the Initial Purchaser may reasonably request.
All opinions, letters, evidence and certificates mentioned above or
elsewhere in this Agreement shall be deemed to be in compliance with the
provisions hereof only if they are in form and substance reasonably satisfactory
to counsel for the Initial Purchaser.
23
8. Indemnification and Contribution.
(a) The Company agrees to indemnify and hold harmless the Initial
Purchaser, its directors, officers and employees and each Person, if any, who
controls the Initial Purchaser within the meaning of the Securities Act, from
and against any loss, claim, damage or liability, joint or several, or any
action in respect thereof (including, but not limited to, any loss, claim,
damage, liability or action relating to purchases and sales of Notes), to which
the Initial Purchaser, its directors, officers and employees or any such
controlling person may become subject, under the Securities Act or otherwise,
insofar as such loss, claim, damage, liability or action arises out of, or is
based upon, (i) any untrue statement or alleged untrue statement of a material
fact contained in (A) the Offering Documents or in any amendment or supplement
thereto or (B) in any blue sky application or other document prepared or
executed by the Company (or based upon any written information furnished by the
Company) specifically for the purpose of qualifying any or all of the Series A
Notes under the securities laws of any state or other jurisdiction (any such
application, document or information being hereinafter called a "Blue Sky
Application"), (ii) the omission or alleged omission to state in any Offering
Documents, or in any amendment or supplement thereto or in any Blue Sky
Application a material fact required to be stated therein or necessary to make
the statements therein not misleading, or (iii) any act or failure to act or any
alleged act or failure to act by the Initial Purchaser in connection with, or
relating in any manner to, the Notes or the offering contemplated hereby, and
which is included as part of or referred to in any loss, claim, damage,
liability or action arising out of or based upon matters covered by clause (i)
or (ii) above (provided that the Company shall not be liable under this clause
(iii) to the extent that it is determined in a final judgment by a court of
competent jurisdiction that such loss, claim, damage, liability or action
resulted directly from any such acts or failures to act undertaken or omitted to
be taken by the Initial Purchaser through its gross negligence or willful
misconduct), and shall reimburse the Initial Purchaser and each such director,
officer, employee or controlling person on a quarterly basis promptly upon
demand for any legal or other expenses reasonably incurred by the Initial
Purchaser or director, officer, employee or controlling person in connection
with investigating or defending or preparing to defend against any such loss,
claim, damage, liability or action as such expenses are incurred; provided,
however, that the Company shall not be liable to an Initial Purchaser, director,
officer, employee or controlling person of the Initial Purchaser in any such
case to the extent that any such loss, claim, damage, liability or action arises
out of, or is based upon, any untrue statement or alleged untrue statement or
omission or alleged omission made in the Offering Documents or in any such
amendment or supplement in reliance upon and in conformity with written
information furnished to the Company by or on behalf of the Initial Purchaser
specifically for inclusion therein which information is limited to the
information set forth in Section 8(e); and provided further that with respect to
any such untrue statement or omission made in the Preliminary Offering
Memorandum, the indemnity agreement contained in this Section 8(a) shall not
inure to the benefit of the Initial Purchaser from whom the Person asserting any
such losses, claims, damages, liabilities, judgments, actions or expenses
purchased Notes, or any controlling person of the Initial Purchaser, if a copy
of the Offering Memorandum was not sent or given by or on behalf of the Initial
Purchaser to such Person at or prior to the written confirmation of the sale of
Notes to such Person, and the Offering Memorandum cured the defect giving rise
to such losses, claims, damages, liabilities, judgments, actions or expenses,
unless, such failure to deliver the Offering Memorandum was a result of
non-compliance by the Company with Section 5(d) hereof. The foregoing indemnity
agreement is in addition to any liability which the Company may otherwise have
to the Initial Purchaser or to any director, officer, employee or controlling
person of the Initial Purchaser.
(b) The Initial Purchaser shall indemnify and hold harmless the
Company, its respective directors, employees, officers and each Person, if any,
who controls the Company within the meaning of the Securities Act, from and
against any loss, claim, damage or liability, joint or several, or any action in
respect thereof, to which the Company or any such director, employee, officer,
or controlling person may become subject, under the Securities Act or otherwise,
insofar as such loss, claim, damage, liability or action arises out of, or is
based upon, (i) any untrue statement or alleged untrue
24
statement of a material fact contained in the Offering Documents, or in any
amendment or supplement thereto, or in any Blue Sky Application or (ii) the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading, but
in each case only to the extent that the untrue statement or alleged untrue
statement or omission or alleged omission was made in reliance upon and in
conformity with written information furnished to the Company by or on behalf of
the Initial Purchaser specifically for inclusion therein, which information is
limited to the information set forth in Section 8(e), and shall reimburse the
Company and any such director, employee, officer or controlling person on a
quarterly basis, promptly upon demand, for any legal or other expenses
reasonably incurred by the Company or any such director, employee, officer or
controlling person in connection with investigating or defending or preparing to
defend against any such loss, claim, damage, liability or action as such
expenses are incurred. The foregoing indemnity agreement is in addition to any
liability which the Initial Purchaser may otherwise have to the Company or any
such director, employee, officer or controlling person.
(c) Promptly after receipt by an indemnified party under this
Section 8 of notice of any claim or the commencement of any action, the
indemnified party shall, if a claim in respect thereof is to be made against the
indemnifying party under this Section 8, notify the indemnifying party in
writing of the claim or the commencement of that action; provided, however, that
the failure to notify the indemnifying party shall not relieve it from any
liability which it may have under this Section 8 except to the extent it has
been materially prejudiced by such failure and, provided further, that the
failure to notify the indemnifying party pursuant to this Section 8 shall not
relieve it from any liability which it may have to an indemnified party
otherwise than under this Section 8. If any such claim or action shall be
brought against an indemnified party, and it shall notify the indemnifying party
thereof, the indemnifying party shall be entitled to participate therein and, to
the extent that it wishes, jointly with any other similarly notified
indemnifying party, to assume the defense thereof with counsel reasonably
satisfactory to the indemnified party. After notice from the indemnifying party
to the indemnified party of its election to assume the defense of such claim or
action, the indemnifying party shall not be liable to the indemnified party
under this Section 8 for any legal or other expenses subsequently incurred by
the indemnified party in connection with the defense thereof other than
reasonable costs of investigation; provided, however, that any indemnified party
shall have the right to employ separate counsel in any such action and to
participate in the defense thereof but the fees and expenses of such counsel
shall be at the expense of such indemnified party unless (i) the employment
thereof has been specifically authorized by the indemnifying party in writing,
(ii) such indemnified party shall have been advised by such counsel that there
may be one or more legal defenses available to it which are different from or
additional to those available to the indemnifying party and in the reasonable
judgment of such counsel it is advisable for such indemnified party to employ
separate counsel or (iii) the indemnifying party has failed to assume the
defense of such action and employ counsel reasonably satisfactory to the
indemnified party, in which case, if such indemnified party notifies the
indemnifying party in writing that it elects to employ separate counsel at the
expense of the indemnifying party, the indemnifying party shall not have the
right to assume the defense of such action on behalf of such indemnified party,
it being understood, however, that the indemnifying party shall not, in
connection with any one such action or separate but substantially similar or
related actions in the same jurisdiction arising out of the same general
allegations or circumstances, be liable for the reasonable fees and expenses of
more than one separate firm of attorneys at any time for all such indemnified
parties, which firm shall be designated in writing by the Initial Purchaser, if
the indemnified parties under this Section 8 consist of the Initial Purchaser or
any of its controlling persons, or by the Company, if the indemnified parties
under this Section 8 consist of the Company or any of its respective directors,
employees, officers or controlling persons. Each indemnified party, as a
condition of the indemnity agreements contained in Sections 8(a) and 8(b), shall
use its reasonable best efforts to cooperate with the indemnifying party in the
defense of any such action or claim. No indemnifying party shall be liable for
any settlement of any such action effected without its written consent (which
consent shall not be unreasonably withheld), but if settled with its written
consent or if there be a final judgment
25
for the plaintiff in any such action, the indemnifying party agrees to indemnify
and hold harmless any indemnified party from and against any loss or liability
by reason of such settlement or judgment.
(d) If the indemnification provided for in this Section 8 shall for
any reason be unavailable to or insufficient to hold harmless an indemnified
party under Section 8(a) or 8(b) in respect of any loss, claim, damage or
liability, or any action in respect thereof, referred to therein, then each
indemnifying party shall, in lieu of indemnifying such indemnified party,
contribute to the amount paid or payable by such indemnified party as a result
of such loss, claim, damage or liability, or action in respect thereof, (i) in
such proportion as shall be appropriate to reflect the relative benefits
received by the Company on the one hand and the Initial Purchaser on the other
hand from the offering of the Notes or (ii) if the allocation provided by clause
(i) above is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred to in clause (i)
above but also the relative fault of the Company on the one hand and the Initial
Purchaser on the other hand with respect to the statements or omissions which
resulted in such loss, claim, damage or liability, or action in respect thereof,
as well as any other relevant equitable considerations. The relative benefits
received by the Company on the one hand and the Initial Purchaser on the other
hand with respect to such offering shall be deemed to be in the same proportion
as the total net proceeds from the offering of the Notes purchased under this
Agreement (before deducting expenses) received by the Company, on the one hand,
and the total discounts and commissions received by the Initial Purchaser with
respect to the Notes purchased under this Agreement, on the other hand, bear to
the total gross proceeds from the offering of the Notes under this Agreement, in
each case as set forth in the table on the cover page of the Offering
Memorandum. The relative fault shall be determined by reference to whether the
untrue or alleged untrue statement of a material fact or 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 hand, the
intent of the parties and their relative knowledge, access to information and
opportunity to correct or prevent such statement or omission. The Company and
the Initial Purchaser agree that it would not be just and equitable if
contributions pursuant to this Section 8(d) were to be determined by pro rata
allocation or by any other method of allocation which does not take into account
the equitable considerations referred to herein. The amount paid or payable by
an indemnified party as a result of the loss, claim, damage or liability, or
action in respect thereof, referred to above in this Section 8(d) shall be
deemed to include, for purposes of this Section 8(d), any legal or other
expenses reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim. Notwithstanding the
provisions of this Section 8(d), the Initial Purchaser shall not be required to
contribute any amount in excess of the amount by which the total discounts and
commissions with respect to the Notes purchased by it and distributed to the
public exceeds the amount of any damages which the Initial Purchaser has
otherwise paid or become liable to pay by reason of any untrue or alleged untrue
statement or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any Person who was not guilty of such
fraudulent misrepresentation.
(e) The Initial Purchaser confirms and the Company acknowledges that
the statements with respect to the offering of the Notes by the Initial
Purchaser set forth in the second to last paragraph on the front cover of the
Offering Memorandum, the last paragraph after the Table of Contents and before
Industry and Market Data on page (ii) of the Offering Memorandum and the fifth,
sixth and eighth paragraphs under "Plan of Distribution" in the Offering
Memorandum are correct and constitute the only information concerning the
Initial Purchaser furnished in writing to the Company by or on behalf of the
Initial Purchaser specifically for inclusion in the Offering Memorandum.
9. Termination. The obligations of the Initial Purchaser hereunder
may be terminated by Xxxxxx Brothers Inc. by notice given to the Company prior
to delivery of and payment for the Series A Notes if, prior to that time, any of
the events described in Sections 7(r), 7(s) and 7(t), shall have occurred or if
the Initial Purchaser shall decline to purchase the Series A Notes for any
reason permitted under this Agreement.
26
10. Reimbursement of Initial Purchaser's Expenses. If the Company
shall fail to tender the Series A Notes for delivery to the Initial Purchaser by
reason of any failure, refusal or inability on the part of the Company to
perform any agreement on its part to be performed, or because any other
condition of the Initial Purchaser's obligations hereunder required to be
fulfilled by the Company is not fulfilled, the Company will reimburse the
Initial Purchaser for all reasonable out-of-pocket expenses (including the fees
and disbursements of its counsel) incurred by the Initial Purchaser in
connection with this Agreement and the proposed purchase of the Series A Notes
and upon demand the Company shall pay the full amount thereof to Xxxxxx Brothers
Inc.
11. Notices, etc. All statements, requests, notices and agreements
hereunder shall be in writing, and:
(a) if to the Initial Purchaser, shall be delivered or sent by mail,
telex or facsimile transmission to Xxxxxx Brothers Inc., 000 Xxxxxxx
Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Xxxxx Xxxxx (Fax:
000-000-0000), with a copy to Xxxxxx & Xxxxxxx, 000 Xxxxx Xxxxxx, Xxx
Xxxx, Xxx Xxxx 00000, Attention: Xxxxxxx X. Xxxxxx (Fax: 000-000-0000);
(b) if to the Company, shall be delivered or sent by mail, telex or
facsimile transmission to the address of the Company set forth in the
Offering Memorandum, Attention: Xxxxxxx X. Xxxxxxxx (Fax: 000-000-0000),
with a copy to Xxxxxxx Xxxx & Xxxxxxxxx, 000 Xxxxxxx Xxxxxx, Xxx Xxxx, Xxx
Xxxx 00000, Attention: Xxxx Xxxxxxxx, Esq. (Fax: 000-000-0000);
Any such statements, requests, notices or agreements shall take
effect at the time of receipt thereof. The Company shall be entitled to act and
rely upon any request, consent, notice or agreement given or made on behalf of
the Initial Purchaser by Xxxxxx Brothers Inc.
12. Persons Entitled to Benefit of Agreement. This Agreement shall
inure to the benefit of and be binding upon the Initial Purchaser, the Company
and their respective successors. This Agreement and the terms and provisions
hereof are for the sole benefit of only those Persons, except that (A) the
representations, warranties, indemnities and agreements of the Company contained
in this Agreement shall also be deemed to be for the benefit of the Person or
Persons, if any, who control the Initial Purchaser within the meaning of Section
15 of the Securities Act, and the directors, officers and employees of the
Initial Purchaser and their respective heirs, executors, administrators,
successors and assigns and (B) the indemnity agreement of the Initial Purchaser
contained in Section 8(b) of this Agreement shall be deemed to be for the
benefit of the directors, officers and employees of the Company and their
respective heirs, executors, administrators, successors and assigns. Nothing in
this Agreement is intended or shall be construed to give any Person, other than
the Persons referred to in this Section 12, any legal or equitable right, remedy
or claim under or in respect of this Agreement or any provision contained
herein.
13. Survival. The respective indemnities, representations,
warranties and agreements of the Company and the Initial Purchaser contained in
this Agreement or made by or on behalf on them, respectively, pursuant to this
Agreement, shall survive the delivery of and payment for the Notes and shall
remain in full force and effect, regardless of any investigation made by or on
behalf of any of them or any Person controlling any of them.
14. Definition of the Term "Business Day." For purposes of this
Agreement, "business day" means any day on which the New York Stock Exchange,
Inc. is open for trading.
15. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF NEW YORK.
27
16. Counterparts. This Agreement may be executed in one or more
counterparts and, if executed in more than one counterpart, the executed
counterparts shall each be deemed to be an original but all such counterparts
shall together constitute one and the same instrument.
17. Headings. The headings herein are inserted for convenience of
reference only and are not intended to be part of, or to affect the meaning or
interpretation of, this Agreement.
[signature pages follow]
28
If the foregoing correctly sets forth the agreement between
the Company and the Initial Purchaser, please indicate your acceptance in the
space provided for that purpose below.
Very truly yours,
K & F INDUSTRIES, INC.
By: /s/ Xxxxxx X. Xxxxxx
------------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Secretary and General Counsel
Accepted:
XXXXXX BROTHERS INC.
By: /s/ Xxxxxxx Xxxxxxxxxx
---------------------------------------
Name: Xxxxxxx Xxxxxxxxxx
Title: Managing Director
29
SCHEDULE 1
Principal Amount
Initial Purchaser of Notes
----------------- --------
Xxxxxx Brothers Inc..................................... $250,000,000
------------
Total.............................................. $250,000,000
============
1
EXHIBIT A
Registration Rights Agreement
A-1
