STANDBY PURCHASE AGREEMENT
May __, 1997
Xxxxxx Brothers Inc.
3 World Financial Center
16th Floor
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
(000) 000-0000
(000) 000-0000 (fax)
Gentlemen and Ladies:
MagneTek, Inc., a Delaware corporation (the "Company"), proposes to
redeem on June 23, 1997 (the "Redemption Date") $35,000,000 aggregate principal
amount of its outstanding 8% Convertible Subordinated Notes due 2001 (the
"Notes") at 103.56% of the face amount, plus accrued and unpaid interest to and
including the Redemption Date (for an aggregate of $21.78 per each $1,000
principal amount) (the "Redemption Price"). The Notes are convertible into 62.5
shares of Common Stock, $.01 par value per share, of the Company (the "Common
Stock") per each $1,000 principal amount. The right to convert the Notes into
shares of Common Stock will terminate at the close of business (5:00 p.m., New
York City time) on June 16, 1997 (the "Conversion Termination Date").
The Company desires to make arrangements with you (the "Purchaser")
pursuant to which the Purchaser will purchase from the Company the number of
shares of Common Stock necessary to provide the Company with the funds required
to pay the aggregate redemption price of that portion of the $35,000,000
principal amount of the Notes called for redemption that remain outstanding on
the Redemption Date.
The Company wishes to confirm as follows its agreement with the
Purchaser in respect of such arrangement:
1. REPRESENTATIONS AND WARRANTIES. The Company represents and
warrants to, and agrees with, the Purchaser as set forth below in this Section
1. Certain terms used in this Section 1 are defined in paragraph (c) hereof.
(a) The Company meets the requirements for use of Form S-3 under the
Securities Act of 1933, as amended (the "Act"), and has filed with the
Securities and
Exchange Commission (the "Commission") a registration statement on such
Form, including a related Prospectus, for the registration under the Act of
the offering and sale of the Acquired Shares (as defined in Section 2
hereof). The registration statement has become effective (unless the
Execution Time precedes the effectiveness of the Registration Statement, in
which case the representation contained in this sentence shall be deemed
first to have been made upon the effectiveness of this Agreement in
accordance with Section 14 hereof).
(b) To the best of the Company's knowledge, no order preventing or
suspending the use of the Prospectus has been issued by the Commission. On
the Effective Date, the Registration Statement complied in all material
respects with the applicable requirements of the Act and the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and the respective
rules and regulations thereunder. On the Effective Date, the Registration
Statement did not contain any untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary in
order to make the statements therein not misleading, and, at the time of
the filing of the Prospectus pursuant to Rule 424 (or, if no such filing is
required, on the Effective Date), the Prospectus did not include any untrue
statement of a material fact or omit to state a material fact necessary in
order to make the statements therein, in the light of the circumstances
under which they were made, not misleading; PROVIDED, HOWEVER, that the
Company makes no representations or warranties as to the information
contained in or omitted from the Registration Statement, or the Prospectus
(or any supplement thereto) in reliance upon and in conformity with
information furnished in writing to the Company by or on behalf of the
Purchaser specifically for inclusion in or omission from the Registration
Statement of the Prospectus (or any supplement thereto).
(c) The terms which follow, when used in this Agreement, shall have
the meanings indicated. The term the "Effective Date" shall mean the date
that the Registration Statement became effective. "Execution Time" shall
mean the date and time that this Agreement is executed and delivered by the
parties hereto. The "Preliminary Prospectus" shall mean any preliminary
prospectus, including incorporated documents, with respect to the offering
of the Acquired Shares included in the Registration Statement prior to the
Effective Date. "Registration Statement" shall mean the registration
statement referred to in paragraph (a) above, including incorporated
documents, exhibits and financial statements, as amended at the Effective
Date. "Rule 424" refers to such rule under the Act. "Prospectus" shall
mean the form of prospectus, including incorporated documents, relating to
the offering of the Acquired Shares (as defined in Section 2 below) as
first filed with the Commission under Rule 424, or (if no such filing is
required) as included in the Registration Statement. Any reference herein
to the Registration Statement, a Preliminary Prospectus or the Prospectus
shall be deemed to refer to and include the documents (or any portions
thereof) incorporated by reference therein pursuant to Item 12 of Form S-3
which were filed under the Exchange Act on or before the Effective Date of
the Registration Statement or the issue date of the Preliminary Prospectus
or the Prospectus, as the case may be; and any
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reference herein to the terms "amend," "amendment" or "supplement" with
respect to the Registration Statement or the Prospectus shall be deemed to
refer to and include the filing of any document under the Exchange Act
after the Effective Date of the Registration Statement, or the issue date
of the Prospectus, as the case may be, deemed to be incorporated therein by
reference.
(d) All corporate subsidiaries (each of which is referred to herein
as a "subsidiary" and all of which are collectively referred to herein as
the "subsidiaries") of the Company are listed on Schedule I attached
hereto, PROVIDED, that the names of particular subsidiaries may be omitted
from Schedule I if the unnamed subsidiaries, considered in the aggregate as
a single subsidiary, would not constitute a "significant subsidiary" of the
Company within the meaning of Rule 1-02(w) of Regulation S-X.
(e) The Company has been duly incorporated and is validly existing as
a corporation in good standing under the laws of the State of Delaware, and
each subsidiary of the Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of its
jurisdiction of incorporation or organization, as the case may be, and each
has the corporate power and authority to own its properties and conduct its
business as described (if described) in the Prospectus and has been duly
qualified as a foreign corporation and is in good standing under the laws
of each other jurisdiction in which its ownership or leasing of its
properties or its conduct of its material business make such qualification
necessary, except to the extent that any failure to so qualify or be in
good standing would not have a material adverse effect on the condition
(financial or other), earnings, business or properties of the Company and
its subsidiaries, taken as a whole.
(f) The issuance and sale of Purchased Shares (as defined in
Section 2 hereof) to be sold by the Company under this Agreement and the
issuance of the Additional Shares (as defined in Section 2 hereof) do not
result in a breach of any of the terms or provisions of, or constitute a
default (or an event which, with notice or lapse of time or both, would
constitute a default) under, (i) the Restated Certificate of Incorporation
or Bylaws of the Company or its subsidiaries, (ii) any material bond,
debenture, note, loan agreement, indenture, mortgage, deed of trust, lease
or other agreement or instrument to which the Company or its subsidiaries
is now a party or by which any of them is bound, or (iii) any order of any
court or governmental agency or authority entered in any proceeding to
which the Company or its subsidiaries was or is now a party or by which
either of them is bound.
(g) Neither the Company, nor any of its subsidiaries has sustained
since the date of the latest audited financial statements included or
incorporated by reference in the Prospectus any material loss to or
interruption with its business from fire, explosion, flood or other
calamity, whether or not covered by insurance, or from any court or
governmental action, order or decree, otherwise than as set forth or
contemplated in the Prospectus; and, since the respective dates as of which
information is given in the Registration Statement and
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the Prospectus, there has not been any material increase in the long-term
debt of the Company and its subsidiaries taken as a whole.
(h) The Company has all requisite corporate power and authority to
enter into this Agreement, to issue, sell and deliver the Purchased Shares,
to issue the Additional Shares upon conversion of the Notes as provided in
the Indenture under which the Notes were issued, and to consummate the
transactions contemplated herein. This Agreement has been duly authorized,
executed and delivered by the Company. Each consent, approval,
authorization, order, declaration or filing by or with any governmental
agency or body necessary for the offer and sale of the Acquired Shares and
the execution, delivery and performance of this Agreement by the Company
and the consummation by the Company of the transactions contemplated
hereby, have been made or obtained, except such as may be necessary (i) to
make the Registration Statement remain effective under the Act, (ii) to
qualify the Acquired Shares for public offering by you under state
securities or Blue Sky laws or (iii) with the National Association of
Securities Dealers, Inc. ("NASD") in connection with the purchase and
distribution of the Acquired Shares by the Purchaser.
(i) The actual and as adjusted capitalization of the Company is as
set forth under the heading "Capitalization" in the Prospectus; the issued
shares of capital stock of the Company conform to the description thereof
in the Prospectus and have been duly authorized and validly issued and are
fully paid and nonassessable; all outstanding shares of capital stock of
each of the subsidiaries have been duly authorized and validly issued, and
are fully paid and nonassessable and are owned directly by the Company or
by another subsidiary of the Company free and clear of any liens,
encumbrances, equities or claims other than those arising under the Credit
Agreement dated as of March 31, 1995, as thereafter amended by the First,
Second, Third and Fourth Amendments thereto, between the Company and the
Lenders named therein, for whom NationsBank of Texas, N.A. is Agent and
CIBC Inc., The First National Bank of Chicago and LTCB Trust Company are
Co-Agents (the "Credit Agreement").
(j) The Purchased Shares to be issued and sold by the Company to the
Purchaser hereunder, and the Additional Shares to be issued to the
Purchaser by the Company, have been duly authorized and, when issued and
paid for as contemplated herein, will be validly issued, fully paid and
nonassessable and will conform to the description thereof in the Prospectus
and will not have been issued in violation of or subject to any preemptive
or other similar rights to subscribe for the Acquired Shares.
(k) Except as described in the Registration Statement or issued after
June 30, 1996 pursuant to stock-based compensation plans described in the
Registration Statement, there are no options, warrants, agreements,
preemptive rights, conversion rights, contracts or other rights in
existence to purchase or acquire from the Company any shares of the capital
stock or securities or obligations convertible into, or any contracts or
commitments to issue or sell shares of capital stock or any such rights or
other securities of the Company.
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(l) There is no pending or, to the best of the Company's knowledge,
threatened action, suit or proceeding before any court or governmental
agency, authority or body or any arbitrator involving the Company or any of
its subsidiaries of a character required to be disclosed in the
Registration Statement which is not adequately disclosed in the Prospectus.
(m) All material agreements to which the Company or any of its
subsidiaries is a party and which are required to be described in the
Registration Statement or the Prospectus are described therein as required
by the Act or the Exchange Act. The Company is not in breach of or in
violation under any of the material terms or provisions of, or in default
under, (i) its Restated Certificate of Incorporation or Bylaws, or (ii)
except as set forth in the Prospectus, (A) any material contract,
indenture, mortgage, deed of trust, permit, license, note agreement or
other material agreement or material instrument to which the company is a
Party or by which any of its properties are bound, or (B) any order,
judgment, statute, rule or regulation of any court or governmental,
administrative or regulatory agency or body having jurisdiction over the
Company or any of its properties.
(n) The Company has obtained the agreement of each of the Company's
directors and executive officers and each entity believed by the Company to
own beneficially more than 5% of its outstanding shares of Common Stock
(the "Principal Shareholders") that, in the event the number of Purchased
Shares (as hereinafter defined) is greater than _______, such persons will
not, for a period of [___] days following the date of this Agreement, offer
to sell, contract to sell or otherwise sell (including without limitation
in a short sale), grant any option to purchase, or dispose of any shares of
any equity stock of the Company, any options or warrants to purchase any
shares of any equity stock of the Company, or any securities convertible
into or exchangeable for shares of any equity stock of the Company, without
the prior written consent of the Purchaser; EXCEPT THAT the Company may
issue securities to such persons pursuant to the Company's retirement
savings, stock option or other benefit or incentive plans maintained for
its officers, directors or employees, PROVIDED that the Company may only
issue up to 100,000 shares to such persons pursuant to such benefit or
incentive plans, and PROVIDED, FURTHER, that the Company will place such
appropriate restriction on any securities issued pursuant to any such
benefit or incentive plans so that they may not be resold during such [__]
day period.
(o) The Company has not taken and will not take any action designed
to stabilize or manipulate the price of any security of the Company, or
which caused or resulted in, or which might in the future reasonably be
expected to cause or result in, stabilization or manipulation of the price
of any security of the Company.
(p) Ernst & Young LLP, who have certified certain financial
statements of the Company and its subsidiaries, are independent public
accountants as required by the Act and the Exchange Act and the rules and
regulations of the Commission thereunder.
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(q) The consolidated financial statements of the Company (including
the related notes and supporting schedules) filed as part of the
Registration Statement or included or incorporated by reference in the
Prospectus present fairly in all material respects the consolidated
financial position and the consolidated results of operations of the
Company, at the dates and for the periods indicated, and have been prepared
in conformity with generally accepted accounting principles except to the
extent that certain footnote disclosures regarding the unaudited financial
statements have been omitted in accordance with the applicable rules of the
Commission. The amounts included in the Registration Statement and the
amounts in the Prospectus under the caption "Selected Financial and
Operating Data" have been derived from and are consistent with the
financial statements included or incorporated by reference in the
Registration Statement.
2. AGREEMENT TO SELL AND PURCHASE.
(a) On the basis of the representations and warranties herein
contained, but subject to all the terms and conditions herein set forth,
the Purchaser will purchase from the Company at $16.92 per share (the
"Purchase Price") the number of shares of Common Stock necessary to provide
the Company with the funds required to pay the aggregate redemption price
of that portion of the $35,000,000 principal amount of the Notes called for
redemption that remain outstanding on the Redemption Date. Shares acquired
by the Purchaser pursuant to this Section 2(a) are referred to herein as
"Purchased Shares." The Purchaser shall pay the Company for the Purchased
Shares in same day funds on June 23, 1997 (the "Closing Date").
(b) Until 5:00 p.m. New York City time on the Conversion Termination
Date, the Purchaser may (but shall have no obligation to) purchase Notes
("Acquired Notes") and Common Stock in the open market or otherwise in such
amounts and at such prices as the Purchaser may deem advisable. The
Purchaser agrees to surrender for conversion not later than 5:00 p.m. New
York City time on the Conversion Termination Date any Notes owned by the
Purchaser on such date. Purchased Shares and shares of Common Stock issued
to the Purchaser upon conversion of Acquired Notes may be sold by the
Purchaser at any time or from time to time pursuant to the Registration
Statement or an applicable exemption under the Act. Shares of Common Stock
acquired by the Purchaser upon conversion of Acquired Notes are referred to
herein as "Additional Shares." Purchased Shares and Additional Shares are
referred to in this Agreement as "Acquired Shares."
(c) As compensation to the Purchaser for its commitment hereunder,
the Company will pay to the Purchaser, in same day funds, (i) at the
Execution Time, a standby fee of $92,519, and (ii) on the Closing Date, an
amount equal to $0.125 per Acquired Share (the "Takeup Fee").
(d) Prior to the Closing Date, the Purchaser and the Company will
enter into an equity swap agreement (the "Swap") in substantially the form
attached hereto as Exhibit A.
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(e) The Purchaser agrees to inform the Company when all Acquired
Shares have been sold or if any offering of Acquired Shares is otherwise
terminated.
(f) The Purchaser agrees that it will not solicit conversions of
Notes by the holders of Notes.
3. OFFERING BY PURCHASER. It is understood that the Purchaser
proposes to offer the Acquired Shares for sale to the public as set forth in the
Prospectus.
4. AGREEMENTS. The Company agrees with the Purchaser that:
(a) Prior to the termination of the offering of the Acquired Shares,
the Company will not file any amendment to the Registration Statement or
supplement to the Prospectus without your prior consent, which consent
shall not be unreasonably withheld. The Company will promptly advise the
Purchaser (i) when any amendment to the Registration Statement shall have
been filed or become effective, (ii) when the Prospectus (if not included
in the Registration Statement), and any supplement thereto, shall have been
filed with the Commission pursuant to the Act, (iii) of any request by the
Commission for any amendment to the Registration Statement or supplement to
the Prospectus or for any additional information, (iv) of the issuance by
the Commission of any stop order suspending the effectiveness of the
Registration Statement or the institution or threatening of any proceeding
for that purpose, (v) of the receipt by the Company of any notification
with respect to the suspension of the qualification of the Acquired Shares
for sale in any jurisdiction or of the initiation or threatening of any
proceeding for such purpose, (vi) when an appropriate application for
additional listing has been filed with the New York Stock Exchange and
(vii) of the receipt of any notification or other communication from the
New York Stock Exchange with respect to such application for additional
listing. The Company will use its best efforts to prevent the issuance of
any such stop order and, if issued, to obtain as soon as possible the
withdrawal thereof.
(b) If, at any time when a prospectus relating to the Acquired Shares
is required to be delivered under the Act, any event occurs as a result of
which the Prospectus as then supplemented would include any untrue
statement of a material fact or omit to state any material act necessary to
make the statements therein, in the light of the circumstances under which
they were made, not misleading, or if it shall be necessary to amend the
Registration Statement or supplement the Prospectus to comply with the Act
or the Exchange Act or the respective rules thereunder, the Company
promptly will prepare and file with the Commission, subject to the first
sentence of paragraph (a) of this Section 4, an amendment or supplement
which will correct such statement or omission or effect such compliance.
(c) As soon as practicable, the Company will make generally available
to its security holders and to the Purchaser an earnings statement or
statements of the Company
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and its subsidiaries which will satisfy the provisions of Section 11(a) of
the Act and Rule 158 under the Act.
(d) The Company will furnish to the Purchaser and counsel for the
Purchaser, without charge, a signed copy of the Registration Statement
(including exhibits thereto) and, so long as delivery of a prospectus by
the Purchaser or dealer may be required by the Act, as many copies of each
Prospectus and any supplement thereto as the Purchaser may reasonably
request. The Company will pay the expenses of printing or other production
of all documents relating to the offering.
(e) The Company will take such actions as the Purchaser may request
to qualify the Acquired Shares for sale under the laws of such
jurisdictions as the Purchaser may designate, will maintain such
qualifications in effect so long as required for the distribution of the
Acquired Shares; PROVIDED, HOWEVER, that the Company shall not be required
to qualify to do business in any jurisdiction where it is not now qualified
or to file a general consent to service of process in any jurisdiction.
The Company will pay the fee of the NASD in connection with its review of
the offering, if any.
(f) In the event the number of Purchased Shares is greater than
[_________] the Company will not, for a period of [___] days following the
Execution Time, without the prior written consent of the Purchaser, offer,
sell or contract to sell, or otherwise dispose of, directly or indirectly,
or announce the offering of, any other shares of equity securities or any
securities convertible into, or exchangeable for, shares of equity
securities; EXCEPT THAT the Company may issue equity securities (i)
pursuant to this Agreement and (ii) pursuant to any stock option,
retirement savings or other benefit or incentive plans maintained for the
Company's officers, directors or employees, PROVIDED that the Company may
sell up to 100,000 shares pursuant to such benefit or incentive plans, and
PROVIDED, FURTHER, that the Company will place such appropriate restriction
on any securities issued pursuant to any such benefit or incentive plans so
that they may not be resold during such [__] day period.
(g) The Company will mail or cause to be mailed a notice of
redemption of $35,000,000 principal amount of Notes, by first class mail on
the effective date of the Registration Statement, to all holders of record
of Notes at the close of business on such date, such notice of redemption
to be in the form heretofore submitted to the Purchaser. The Company will
furnish to the Purchaser such number of copies of the notice of redemption
as the Purchaser reasonably may request.
(h) The Company will direct the depositary for the Notes to be
redeemed to advise the Purchaser daily of the aggregate principal amount of
Notes (i) surrendered for conversion into Common Stock and (ii) surrendered
for redemption, in each case through the close of business on the
immediately preceding business day.
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5. CONDITIONS TO THE OBLIGATIONS OF THE PURCHASER. The obligations
of the Purchaser to purchase the Purchased Shares and to surrender for
conversion any Acquired Notes owned by it shall be subject to the accuracy of
the representations and warranties on the part of the Company contained herein
as of the Execution Time and the Closing Date, to the accuracy of the statements
of the Company made in any certificates pursuant to the provisions hereof, to
the performance by the Company of its obligations hereunder and to the following
additional conditions:
(a) If filing of the Prospectus, or any supplement thereto, is
required pursuant to the Act, the Prospectus, and any such supplement, will
be filed in the manner and within the time period required by the Act; and
no stop order suspending the effectiveness of the Registration Statement
shall have been issued and no proceedings for that purpose shall have been
instituted or threatened.
(b) The Purchaser and the Company shall have entered into the Swap.
(c) At the Execution Time and on the Closing Date, the Company shall
have furnished to the Purchaser the opinion of Xxxxxx X. Miley, Esq., Vice
President, General Counsel and Secretary for the Company, dated the date of
this Agreement or the Closing Date, as the case may be, to the effect that:
(i) each of the Company and its subsidiaries has been duly
incorporated and is validly existing as a corporation in good standing
under the laws of the jurisdiction in which it is chartered or
organized with full corporate power and authority to own its
properties and conduct its business as described in the Prospectus,
and is duly qualified to do business as a foreign corporation and is
in good standing under the laws of each jurisdiction in which its
ownership or leasing of its material properties or its conduct of its
material business makes such qualification necessary, except to the
extent the failure, individually or in the aggregate to be so
qualified or in good standing could not have a material adverse effect
on the condition (financial or other), earnings, business or
properties of the Company and its subsidiaries, taken as a whole;
(ii) all the outstanding shares of capital stock of the
subsidiaries have been duly and validly authorized and issued and are
fully paid and nonassessable, and, except as otherwise set forth in
the Prospectus, all outstanding shares of capital stock of the
subsidiaries are owned by the Company either directly or through
wholly owned subsidiaries free and clear of any perfected security
interest and, to the knowledge of such counsel, any other security
interests, claims, liens or encumbrances other than those arising
under the Credit Agreement;
(iii) the Company's authorized equity capitalization is as set
forth in the Prospectus; the description of the capital stock of the
Company contained in the Prospectus fairly summarizes the matters
referred to therein; all of the outstanding
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shares of capital stock have been duly authorized and validly issued
and are fully paid and nonassessable and were not issued in violation
of or subject to any preemptive or other rights to subscribe for the
capital stock, the Acquired Shares have been duly authorized, and,
when issued and delivered to and paid for by the Purchasers pursuant
to this Agreement, will be validly issued, fully paid and
nonassessable; the Acquired Shares are duly authorized for trading on
the New York Stock Exchange; the certificates for the Acquired Shares
are in valid and sufficient form; and, except as otherwise set forth
in the Prospectus, the holders of outstanding shares of capital stock
of the Company are not entitled to preemptive or similar rights to
subscribe for the Acquired Shares;
(iv) to the best knowledge of such counsel, there is no pending
or overtly threatened action, suit or proceeding before any court or
governmental agency, authority or body or any arbitrator involving the
Company or any of its subsidiaries of a character required to be
disclosed in the Registration Statement which is not adequately
disclosed in the Prospectus, and there is no contract, agreement,
lease, instrument, license or other document of a character required
to be described in the Registration Statement or the Prospectus, or to
be filed as an exhibit, which is not described or filed as required;
and the statements in the Company's most recently filed Form 10-K and
10-Q incorporated in the Registration Statement by reference under the
heading "Legal Proceedings" fairly summarize the matters therein
described;
(v) such counsel has no reason to believe that, at the
Effective Date, the Registration Statement contained any untrue
statement of a material fact or omitted to state any material fact
required to be stated therein or necessary to make the statements
therein not misleading or that the Prospectus includes any untrue
statement of a material fact or omits to state a material fact
necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading:
(vi) this Agreement has been duly authorized, executed and
delivered by the Company;
(vii) no consent, approval, authorization, or order or any court
or governmental agency or body is required for the consummation of the
transactions contemplated herein and the distribution of the Acquired
Shares by the Purchaser, except such as have been obtained under the
Act and such as may be required under the blue sky or foreign laws of
any jurisdiction in connection with the purchase and distribution of
the Acquired Shares by the Purchaser, and such other approvals
(specified in such opinion) as have been obtained;
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(viii) neither the issuance, sale or delivery of the Purchased
Shares, nor the conversion of the Acquired Notes into Additional
Shares, nor the issuance or delivery of the Additional Shares, nor the
consummation of any other of the transactions herein contemplated nor
the fulfillment of the terms hereof will conflict with, result in a
breach or violation of, or constitute a default under any law, rule or
regulation or the Restated Certificate of Incorporation or Bylaws of
the Company or the terms of any material indenture or other agreement
or instrument known to such counsel and to which the Company or any of
its subsidiaries is a party or bound or any judgment, order, or decree
known to such counsel to be applicable to the Company or any of its
subsidiaries of any court, regulatory body, administrative agency,
governmental body or arbitrator having jurisdiction over the Company
or any of its subsidiaries;
(ix) no holders of securities of the Company have rights to the
registration of such securities under the Registration Statement; and
(x) (A) (in the opinion rendered at the Execution Time)
assuming that the notice of redemption is mailed by first class
mail on the effective date of the Registration Statement to all
holders of record of Notes at the close of business on such date,
and
(B) (in the opinion rendered on the Closing Date)
based upon the mailing of a notice of redemption by first class
mail on the effective date of the Registration Statement to all
holders of record of Notes at the close of business on such date
(as to which such counsel may rely upon an appropriate
certificate of mailing),
$35,000,000 aggregate principal amount of the outstanding Notes will
have been duly called for redemption on the Redemption Date.
References to the Prospectus in this paragraph (c) include any supplements
thereto at the Closing Date.
(d) At the Execution Time and on the Closing Date, the Company shall
have furnished to the Purchaser the opinion of Xxxxxx, Xxxx & Xxxxxxxx LLP,
counsel for the Company, dated the date of this Agreement or the Closing
Date, as the case may be, to the effect that:
(i) the Registration Statement has become effective under the
Act (which specific opinion may be omitted from the opinion letter to
be rendered at the Execution Time if the Execution Time precedes the
effectiveness of the Registration Statement and thereafter provided
separately on the Effective Date); any filing of the Prospectus and
any supplements thereto required to be made pursuant to Rule 424
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promulgated under the Act has been made in the manner and within the
time period required by that Rule; to the best knowledge of such
counsel, no stop order suspending the effectiveness of the
Registration Statement has been issued, no proceedings for that
purpose have been instituted or threatened and the Registration
Statement and the Prospectus (other than the financial statements and
other financial and statistical information contained therein as to
which such counsel need express no opinion) comply as to form in all
material respects with the applicable requirements of Form S-3, the
Act and the Exchange Act and the respective rules and regulations
thereunder; and such counsel has no reason to believe that, at the
Effective Date, the Registration Statement contained any untrue
statement of a material fact or omitted to state any material fact
required to be stated therein or necessary to make the statements
therein not misleading or that the Prospectus includes any untrue
statement of a material fact or omits to state a material fact
necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading;
(ii) no consent, approval, authorization or order of any court
or governmental agency or body is required for the consummation or the
transactions contemplated herein, except such as have been obtained
under the Act and such as may be required under the blue sky or
foreign laws of any jurisdiction in connection with the purchase and
distribution of the Acquired Shares by the Purchaser, and such other
approvals (specified in such opinion) as have been obtained;
(iii) (A) (in the opinion rendered at the Execution Time)
assuming that the notice of redemption is mailed by first class
mail on the effective date of the Registration Statement to all
holders of record of Notes at the close of business on such date,
and
(B) (in the opinion rendered on the Closing Date) based
upon the mailing of a notice of redemption by first class mail on
the effective date of the Registration Statement to all holders
of record of Notes at the close of business on such date (as to
which such counsel may rely upon an appropriate certificate of
mailing),
$35,000,000 aggregate principal amount of the outstanding Notes will
have been duly called for redemption on the Redemption Date; and
(iv) neither the issuance, sale or delivery or the Purchased
Shares, nor the conversion of the Notes into Additional Shares, nor
the issuance or delivery of the Additional Shares, nor the
consummation of any other of the transactions herein contemplated nor
the fulfillment of the terms hereof will conflict with, result in a
breach or violation of, or constitute a default under (A) any law,
rule or regulation, or (B) the Restated Certificate of Incorporation
or Bylaws of the Company, or (C) the
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terms of any indenture or other agreement or instrument specified in
or in an exhibit to such counsel's opinion and known to such counsel,
after inquiry only of the President and the Chief Financial Officer of
the Company, to be material and to which the Company or any of its
subsidiaries is a party or bound, or (D) any judgment, order or decree
known to such counsel to be applicable to the Company or any of its
subsidiaries of any court, regulatory body, administrative agency,
governmental body or arbitrator having jurisdiction over the Company
or any of its subsidiaries.
References to the Prospectus in this paragraph (d) include any supplements
thereto at the Closing Date.
(e) At the Execution Time and on the Closing Date, the Purchaser
shall have received from Xxxxxx, Xxxxx & Bockius LLP, counsel for the
Purchaser, such opinion or opinions, dated the date hereof, with respect to
the issuance and sale of the Acquired Shares, the Registration Statement,
the Prospectus (together with any supplement thereto) and other related
matters as the Purchaser may reasonably require, and the Company shall have
furnished to such counsel such documents as they request for the purpose of
enabling them to pass upon such matters.
(f) At the Execution Time and prior to the Closing Date, the Company
shall have furnished to the Purchaser a certificate of the Company, signed
by the President or the Chief Financial Officer of the Company, dated the
date of this Agreement or the Closing Date, as the case may be, to the
effect that the signer of such certificate has carefully examined the
Registration Statement, the Prospectus, any supplement to the Prospectus
and this Agreement and that:
(i) the representations and warranties of the Company in this
Agreement are true and correct in all material respects on and as of
the date of this Agreement or the Closing Date, as the case may be,
with the same effect as if made on the date of this Agreement or on
the Closing Date, as the case may be, and the Company has complied
with all the agreements and satisfied all the conditions on its part
to be performed or satisfied at or prior to the Execution Time or the
Closing Date, as the case may be, pursuant to this Agreement;
(ii) no stop order suspending the effectiveness or the
Registration Statement has been issued and no proceedings for that
purpose have been instituted or, to the Company's knowledge,
threatened; and
(iii) since the date of the most recent financial statements
included in the Prospectus (exclusive of any supplement thereto),
there has been no material adverse change in the condition (financial
or other), earnings, business or properties of the Company and its
subsidiaries, taken as a whole, whether or not arising from
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transactions in the ordinary course of business, except as set forth
in or contemplated in the Prospectus (exclusive of any supplement
thereto).
(g) At the Execution Time and on the Closing Date, Ernst & Young LLP
shall have furnished to the Purchaser a letter or letters, dated the date
of this Agreement or the Closing Date, as the case may be, in form and
substance satisfactory to the Purchaser.
(h) Subsequent to the Execution Time or, if earlier, the dates as of
which information is given in the Registration Statement (exclusive of any
amendment thereof) and the Prospectus (exclusive of any supplement
thereto), there shall not have been any change, or any development
involving a prospective change, in or affecting the business or properties
or the Company and its subsidiaries, taken as a whole, the effect of which
is, in the judgment of the Purchaser, so material and adverse as to make it
impractical or inadvisable to proceed with the offering or delivery of the
Acquired Shares as contemplated by the Registration Statement (exclusive of
any amendment thereof) and the Prospectus (exclusive of any supplement
thereto).
(i) Prior to the Execution Time, the Company shall have furnished to
the Purchaser a letter substantially in the form of Exhibit B hereto, from
each executive officer, director and the Principal Shareholders, addressed
to the Purchaser, in which, in the event the number of Purchased Shares is
greater than [_________], each such person agrees not to offer, sell or
contract to sell, or otherwise dispose of, directly or indirectly, or
announce an offering of, any shares of Company equity securities
beneficially owned by such person or any securities convertible into, or
exchangeable for, shares of Company equity securities for a period of [___]
days following the Execution Time without the prior consent of the
Purchaser.
(j) The Company shall have furnished to the Purchaser such further
information, certificates and documents as the Purchaser may reasonably
request.
If any of the conditions specified in this Section 5 shall not have
been fulfilled in all material respects when and as provided in this Agreement,
or if any of the opinions and certificates mentioned above or elsewhere in this
Agreement shall not be in all material respects reasonably satisfactory in form
and substance to the Purchaser and counsel for the Purchaser, this statement
and all obligations of the Purchaser hereunder may be canceled at, or at any
time prior to, the Closing Date by the Purchaser. Notice of such cancellation
shall be given to the Secretary of the Company in writing or by telephone or
telegraph confirmed in writing.
The documents required to be delivered by this Section 5 shall be
delivered at the office of Xxxxxx, Xxxxx & Xxxxxxx LLP, counsel for the
Purchaser, at 000 X. Xxxxx Xxxxxx, Xxx Xxxxxxx, Xxxxxxxxxx, on the Closing Date.
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6. REIMBURSEMENT OF PURCHASER'S EXPENSES. The Company will reimburse
the Purchaser on the Closing Date for all reasonable out-of-pocket expenses
(including reasonable fees and disbursements of counsel in connection with the
transactions contemplated by this Agreement and with the tender offer for the
Company's 10-3/4% Senior Subordinated Debentures due 1998, up to a maximum
reimbursement for such fees and disbursements of counsel of $100,000 in the
aggregate) incurred by the Purchaser in connection with the proposed purchase
and/or conversion and sale of the Acquired Shares.
7. INDEMNIFICATION AND CONTRIBUTION.
(a) The Company agrees to indemnify and hold harmless the Purchaser,
the directors, officers, employees and agents of the Purchaser and each
person who controls the Purchaser against all losses, claims, damages or
liabilities, joint or several, to which they or any of them may become
subject under the Act, the Exchange Act or other federal or state statutory
law or regulation, at common law or otherwise, insofar as such losses,
claims, damages or liabilities (or actions in respect thereof) arise out of
or are based upon any untrue statement or alleged untrue statement of a
material fact contained in the Registration Statement for the registration
of the Acquired Shares as originally filed or in any amendment thereof, or
in any Preliminary Prospectus or in the Prospectus, or in any amendment
thereof or supplement thereto, or arise out of or are based upon 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, and agrees to reimburse each such indemnified party, as
incurred, for any legal or other expenses (not including the expenses of
in-house counsel for the Purchaser) reasonably incurred by them in
connection with investigating or defending any such loss, claim, damage,
liability or action; PROVIDED, HOWEVER, that the Company will not be liable
in any such case to the extent that any such loss, claim, damage or
liability arises out of or is based upon any such untrue statement or
alleged untrue statement or omission or alleged omission made therein in
reliance upon and in conformity with written information furnished to the
Company by or on behalf of the Purchaser specifically for inclusion
therein. This indemnity agreement will be in addition to any liability
which the Company may otherwise have.
(b) The Purchaser agrees to indemnify and hold harmless the Company,
the Company's directors, each of the Company's officers who signs the
Registration Statement, and each person who controls the Company within the
meaning of either the Act or the Exchange Act, to the same extent as the
foregoing indemnity from the Company to the Purchaser, but only with
reference to written information relating to the Purchaser furnished to the
Company by or on behalf of the Purchaser specifically for inclusion in the
documents referred to in the foregoing indemnity, it being understood that,
for purposes of this Agreement, the only such information furnished to the
Company by or on behalf of the Purchaser consists of the following
information in the Prospectus:
(i) the sixth paragraph on the cover page of the Prospectus;
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(ii) the legend at the top of page 2 of the Prospectus, which
precedes the caption "Prospectus Summary;"
(iii) the fourth paragraph under the caption "Standby Arrangement
and Swap Agreement" on page 10 of the Prospectus; and
(iv) the fifth paragraph under the caption "Standby Arrangement
and Swap Agreement" on pages 10-11 of the Prospectus.
This indemnity agreement will be in addition to any liability which the
Purchaser may otherwise have.
(c) Promptly after receipt by an indemnified party, under this
Section 7, of notice of the commencement of any action, such indemnified
party will, if a claim in respect thereof is to be made against the
indemnifying party under this Section 7, notify the indemnifying party in
writing of the commencement thereof; but the failure so to notify the
indemnifying party (i) will not relieve it from liability under paragraph
(a) or (b) above unless and to the extent it did not otherwise learn of
such action and the indemnifying party has been prejudiced in any material
respect by such failure and (ii) will not, in any event, relieve the
indemnifying party from any obligations to any indemnified party other than
the indemnification obligation provided in paragraph (a) or (b) above. The
indemnifying party shall be entitled to appoint counsel of the indemnifying
party's choice at the indemnifying party's expense to represent the
indemnified party in any action for which indemnification is sought (in
which case the indemnifying party shall not thereafter be responsible for
the fees and expenses of separate counsel retained by the indemnified party
or parties; except as set forth below); PROVIDED, HOWEVER, that such
counsel shall be satisfactory to the indemnified party. Notwithstanding
the indemnifying party's election to appoint counsel to represent the
indemnified party in an action, the indemnified party shall bear the right
to employ separate counsel (including local counsel), and the indemnifying
party shall bear the reasonable fees, costs and expenses or such separate
counsel if (i) the use of counsel chosen by the indemnifying party to
represent the indemnified party would present such counsel with a conflict
of interest, (ii) the actual or potential defendants in, or targets of any
such action include both the indemnified party and the indemnifying party
and the indemnified party shall have reasonably concluded that there may be
legal defenses available to it and/or other indemnified parties which are
different from or additional to those available to the indemnifying party,
(iii) the indemnifying party shall not have employed counsel satisfactory
to the indemnified party to represent the indemnified party within a
reasonable time after notice of the institution of such action or (iv) the
indemnifying party shall authorize the indemnified party to employ separate
counsel at the expense of the indemnifying party. An indemnifying party
will not, without the prior written consent of the indemnified parties,
settle or compromise or consent to the entry of any judgment with respect
to any pending or threatened claim, action, suit or proceeding in respect
of which indemnification or
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contribution may be sought hereunder (whether or not the indemnified
parties are actual or potential parties to such claim or action) unless
such settlement, compromise or consent includes an unconditional release of
each indemnified party from all liability arising out of such claim,
action, suit or proceeding.
(d) In the event that the indemnity provided in paragraph (a) or (b)
of this Section 7 is unavailable to or insufficient to hold harmless an
indemnified party for any reason, the Company and the Purchaser agree to
contribute to the aggregate losses, claims, damages and liabilities
(including legal or other expenses reasonably incurred in connection with
investigating or defending same) (collectively "Losses") to which the
Company and the Purchaser may be subject in such proportion as is
appropriate to reflect the relative benefits received by the Company on the
one hand and by the Purchaser on the other from the offering of the
Acquired Shares; PROVIDED, HOWEVER, that in no case shall the Purchaser be
responsible for any amount in excess of the aggregate fees and expenses
payable pursuant to Section 2(c) hereof. If the allocation provided by the
immediately preceding sentence is unavailable for any reason, the Company
and the Purchaser shall contribute in such proportion as is appropriate to
reflect not only such relative benefits but also the relative fault of the
Company on the one hand and of the Purchaser on the other in connection
with the statements or omissions which resulted in such Losses as well as
any other relevant equitable considerations. Benefits received by the
Company shall be deemed to be equal to (i) the product of the Purchase
Price multiplied by the number of Acquired Shares (ii) minus the aggregate
fees and expenses payable pursuant to Section 2(c), and benefits received
by the Purchaser shall be deemed to be equal to the aggregate fees and
expenses payable pursuant to Section 2(c). Relative fault shall be
determined by reference to whether any alleged untrue statement or omission
relates to information provided by the Company or the Purchaser. The
Company and the Purchaser agree that it would not be just and equitable if
contribution were determined by pro rata allocation or any other method of
allocation which does not take account of the equitable considerations
referred to above. Notwithstanding the provisions of this paragraph (d), no
person guilty of fraudulent misrepresentation (within the meaning of
Section ll(f) of the Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation. For purposes of
this Section 7, each person who controls the Purchaser within the meaning
of either the Act or the Exchange Act and each director, officer, employee
and agent of the Purchaser shall have the same rights to contribution as
the Purchaser, and each person who controls the Company within the meaning
of either the Act or the Exchange Act, each officer of the Company who
shall have signed the Registration Statement and each director of the
Company shall have the same rights to contribution as the Company, subject
in each case to the applicable terms and conditions of this paragraph (d).
8. TERMINATION. This Agreement shall be subject to termination in
the absolute discretion of the Purchaser, by notice given to the Company prior
to delivery of any payment for the Acquired Shares, if prior to such time (i)
trading in the Common Stock or trading in securities generally on the New York
Stock Exchange or the Nasdaq National Market (or on the principal
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exchange or market on which the Common Stock is then traded) shall have been
suspended or limited or minimum prices shall have been established on either of
such exchange or market, (ii) a banking moratorium shall have been declared
either by federal or New York State authorities or (iii) there shall have
occurred any outbreak or escalation of hostilities, declaration by the United
States of a national emergency or war or other calamity or crisis the effect of
which on financial markets is such as to make it, in the judgment of the
Purchaser, impracticable or inadvisable to proceed with the offering or delivery
of the Acquired Shares as contemplated by the Prospectus (exclusive of any
supplement thereto).
9. REPRESENTATIONS AND INDEMNITIES TO SURVIVE. The respective
agreements, representations, warranties, indemnities and other statements of the
Company or its officers and of the Purchaser set forth in or made pursuant to
this Agreement will remain in full force and effect, regardless of any
investigation made by or on behalf of the Purchaser or the Company or any of the
officers, directors or controlling persons referred to in Section 7 hereof, and
will survive delivery of and payment for the Acquired Shares. The provisions of
Sections 6 and 7 hereof shall survive the termination or cancellation of this
Agreement.
10. NOTICES. All communications hereunder will be in writing and
effective only on receipt, and, if sent to the Purchaser, will be mailed,
delivered or telegraphed and confirmed to it, at the address set forth in this
Standby Purchase Agreement; or, if sent to the Company, will be mailed,
delivered, or telegraphed and confirmed to it at 00 Xxxxxxx Xxxxxxxxx, X.X. Xxx
000000, Xxxxxxxxx, Xxxxxxxxx 00000-0000, Attention: Xxxxxx X. Miley, Esq.
11. SUCCESSORS. This Agreement will inure to the benefit of and be
binding upon the parties hereto and their respective successors and the officers
and directors and controlling persons referred to in Section 7 hereof, and no
other person will have any right or obligation hereunder.
12. APPLICABLE LAW. This Agreement will be governed by and construed
with the laws of the State of New York, without regard to the principles of
conflicts of laws.
13. COUNTERPARTS. This Agreement may be executed in more than one
counterpart each of which shall be deemed an original and each of which shall
constitute one and the same instrument.
14. EFFECTIVENESS. This Agreement shall become effective upon the
later of (a) the Execution Time and (b) the release of notification of the
effectiveness of the Registration Statement by the Commission.
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If the foregoing is in accordance with your understanding of our
agreement, please so indicate in the space provided below, whereupon this letter
and your acceptance shall represent a binding agreement among the Company and
you.
Very truly yours,
MAGNETEK, INC.
By: ______________________________
Name:
Title:
The foregoing Agreement is hereby confirmed and accepted as of the date first
above written.
XXXXXX BROTHERS INC.
By: _________________________________
Name:
Title:
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