Exhibit 1.1
EXECUTION COPY
THE KANSAS CITY SOUTHERN
RAILWAY COMPANY
7 1/2% SENIOR NOTES DUE 2009
Guaranteed by
THE GUARANTORS NAMED HEREIN
PLACEMENT AGREEMENT
June 5, 2002
Xxxxxx Xxxxxxx & Co. Incorporated
X.X. Xxxxxx Securities Inc.
Deutsche Bank Securities Inc.
Banc One Capital Markets, Inc.
Scotia Capital (USA) Inc.
c/o Morgan Xxxxxxx & Co. Incorporated
0000 Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Dear Sirs and Mesdames:
The Kansas City Southern Railway Company, a Missouri corporation (the
"Company"), proposes to issue and sell to the several purchasers named in
Schedule I hereto (the "Initial Purchasers"):
$200,000,000 principal amount of its 7 1/2% Senior Notes Due 2009 (the
"Notes") to be issued pursuant to the provisions of an Indenture dated as of
June 12, 2002 (the "Indenture") to be entered into among the Company, Kansas
City Southern (the "Parent") and the companies named in Schedule II hereto as
guarantors (collectively, and together with Parent, the "Guarantors") and U.S.
Bank National Association, as Trustee (the "Trustee"), and will be jointly and
severally guaranteed on an unsecured senior basis by the Guarantors (the
"Guarantees" and together with the Notes, the "Securities").
The Securities will be offered without being registered under the
Securities Act of 1933, as amended (the "Securities Act"), or qualification
under state securities or blue sky laws, to qualified institutional buyers in
compliance with the exemption from Securities Act registration provided by Rule
144A under the Securities Act and in offshore transactions in reliance on
Regulation S under the Securities Act ("Regulation S").
The Initial Purchasers and their direct and indirect transferees will be
entitled to the benefits of a Registration Rights Agreement dated the date
hereof among the Company, the Guarantors and the Initial Purchasers (the
"Registration Rights Agreement").
In connection with the sale of the Securities, the Company and the
Guarantors have prepared a preliminary offering memorandum (the "Preliminary
Memorandum") and will prepare a final offering memorandum (the "Final
Memorandum" and, with the Preliminary Memorandum, each a "Memorandum") including
or incorporating by reference a description of the terms of the Securities, the
terms of the offering and a description of the Company and the Guarantors. As
used herein, the term "Memorandum" shall include in each case the documents
incorporated by reference therein. The terms "supplement", "amendment" and
"amend" as used herein with respect to a Memorandum shall include all documents
deemed to be incorporated by reference in the Preliminary Memorandum or Final
Memorandum that are filed subsequent to the date of such Memorandum with the
Securities and Exchange Commission (the "Commission") pursuant to the Securities
Exchange Act of 1934, as amended (the "Exchange Act").
1. Representations and Warranties. (A) Each of the Company and the
Guarantors jointly and severally represents and warrants to, and agrees with,
you that:
(a) (i) Each document, if any, filed or to be filed pursuant to the
Exchange Act and incorporated by reference in either Memorandum complied or
will comply when so filed in all material respects with the Exchange Act
and the applicable rules and regulations of the Commission thereunder and
(ii) the Preliminary Memorandum does not contain and the Final Memorandum,
in the form used by the Initial Purchasers to confirm sales on the Closing
Date (as defined in Section 4), will not contain any untrue statement of a
material fact or omit to state a material fact necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading, except that the representations and warranties set
forth in this paragraph do not apply to statements or omissions in either
Memorandum based upon information relating to any Initial Purchaser
furnished to the Company and the Guarantors in writing by such Initial
Purchaser through you expressly for use therein.
(b) The Company has been duly incorporated, is validly existing as a
corporation in good standing under the laws of Missouri, has the corporate
power and authority to own its property and to conduct its business as
described in each Memorandum and is duly qualified to transact business and
is in good standing in each jurisdiction in which the conduct of its
business or its ownership or leasing of property requires such
qualification, except to the extent that the failure to be so qualified or
be in good standing would not have a material adverse effect on the Company
and its subsidiaries, taken as a whole.
(c) The Parent and each of its subsidiaries (other than the Company)
has been duly organized, is validly existing as a corporation, limited
liability company or limited partnership, as the case may be, in good
standing under the laws of the jurisdiction of its organization, has the
corporate, limited liability company or limited partnership power and
authority, as the case may be, to own its property and to conduct its
business as described in each Memorandum and is duly qualified to transact
business and is in good standing in each jurisdiction in which the conduct
of its business or its ownership or leasing of property requires such
qualification, except to the extent that the failure to be so qualified or
be in good standing would not have a material adverse effect on the Parent
and its subsidiaries, taken as a whole; all of the outstanding shares of
capital stock of the Parent have been duly and validly authorized and
issued and are fully paid and non-assessable, and all of the issued shares
of capital stock, membership interests or partnership interests, as the
case may be, of each subsidiary of the Parent have been duly and validly
authorized and issued, are fully paid and non-assessable and, except as set
forth in exhibit 21.1 to the Parent's Form 10-K for the year ended December
31, 2001, are owned directly or indirectly by the Parent, free and clear of
all liens, encumbrances, equities or claims, except those that arise under
the Credit Agreement dated as of January 11, 2000, as amended through the
date hereof, among the Parent, the Company, the lenders thereto, JPMorgan
Chase Bank (formerly known as The Chase Manhattan Bank), as administrative
agent, collateral agent, issuing bank and swingline lender, the Bank of
Nova Scotia, as syndication agent, and Fleet National Bank, as
documentation agent (the "KCS Credit Facilities") or, upon effectiveness,
the Amended KCS Credit Facilities (as defined below).
(d) This Agreement has been duly authorized, executed and delivered by
the Company and the Guarantors.
(e) The Company and each of the Guarantors have full right, power and
authority to execute and deliver each of this Agreement, the Indenture, the
Registration Rights Agreement and the Securities (collectively, the
"Transaction Documents") to which they are party and perform their
respective obligations thereunder; and all corporate action required to be
taken for the due and proper authorization, execution and delivery of each
of the Transaction Documents and the consummation of the transactions
contemplated thereby have been duly and validly taken.
(f) The Notes have been duly authorized and, when executed and
authenticated in accordance with the provisions of the Indenture and
delivered to and paid for by the Initial Purchasers in accordance with the
terms of this Agreement, will be valid and binding obligations of the
Company, enforceable in accordance with their terms, subject to the effects
of applicable bankruptcy, insolvency, reorganization, receivership,
moratorium and similar laws relating to or affecting creditors' rights
generally and equitable principles of general applicability (whether
applied by a court of law or equity), and will be entitled to the benefits
of the Indenture and the Registration Rights Agreement pursuant to which
such Securities are to be issued.
(g) The Guarantees have been duly authorized and, when executed and
delivered in accordance with the terms of the Indenture and this Agreement,
will have been duly executed, issued and delivered and will constitute
valid and binding obligations of each Guarantor, enforceable against each
Guarantor in accordance with its terms, subject to applicable bankruptcy,
insolvency, reorganization, receivership, moratorium and similar laws
relating to or affecting creditors' rights generally and equitable
principles of general applicability (whether applied by a court of law or
equity), and will be entitled to the benefits of the Indenture and the
Registration Rights Agreement pursuant to which such Securities are to be
issued.
(h) The Indenture has been duly authorized by the Company and the
Guarantors and, when executed and delivered in accordance with its terms by
each of the parties thereto, will be a valid and binding agreement of the
Company and the Guarantors, enforceable in accordance with its terms,
subject to applicable bankruptcy, insolvency, reorganization, receivership,
moratorium and similar laws relating to or affecting creditors' rights
generally and equitable principles of general applicability (whether
applied by a court of law or equity). On the Closing Date, the Indenture
will conform in all material respects to the requirements of the Trust
Indenture Act of 1939, as amended (the "Trust Indenture Act"), and the
rules and regulations of the Commission applicable to an indenture which is
qualified thereunder. The Securities and the Indenture conform in all
material respects to the description thereof contained in each Memorandum
under the heading "Description of the Notes".
(i) The Registration Rights Agreement has been duly authorized,
executed and delivered by, and is a valid and binding agreement of, the
Company and the Guarantors, enforceable in accordance with its terms,
subject to applicable bankruptcy, insolvency, reorganization, receivership,
moratorium and similar laws relating to or affecting creditors' rights
generally and equitable principles of general applicability (whether
applied by a court of law or equity) and except as rights to
indemnification and contribution under the Registration Rights Agreement
may be limited under applicable law.
(j) The execution and delivery by the Company and the Guarantors of,
and the performance by the Company and the Guarantors of their obligations
under the Transaction Documents will not contravene any provision of
applicable law or the certificate of incorporation or by-laws of the Parent
and its subsidiaries or any agreement or other instrument binding upon the
Parent and its subsidiaries that are material to the Parent and its
subsidiaries, taken as a whole, or any judgment, order or decree of any
governmental body, agency or court having jurisdiction over the Parent and
its subsidiaries, and no consent, approval, authorization or order of, or
qualification with, any governmental body or agency is required for the
performance by the Company or the Guarantors of their obligations under the
Transaction Documents, except such as may be required by the securities or
blue sky laws of the various states in connection with the offer and sale
of the Securities and by federal and state securities and blue sky laws
with respect to the Company's and the Guarantors' obligations under the
Registration Rights Agreement.
(k) KPMG LLP are independent certified public accountants with respect
to the Parent and its subsidiaries within the meaning of Rule 101 of the
Code of Professional Conduct of the American Institute of Certified Public
Accountants ("AICPA") and its interpretations and rulings thereunder. The
historical financial statements (including the related notes) contained in
each Memorandum comply in all material respects with the requirements
applicable to a registration statement on Form S-1 under the Securities Act
(except that disclosure of earnings per share and certain supporting
schedules are omitted); such financial statements have been prepared in
accordance with generally accepted accounting principles consistently
applied throughout the periods covered thereby and fairly present the
financial position of the entities purported to be covered thereby at the
respective dates indicated and the results of their operations and their
cash flows for the respective periods indicated; and the financial
information contained in each Memorandum under the headings
"Summary--Summary Consolidated Financial Information and Other Data",
"Capitalization", "Selected Consolidated Financial Data", "Management's
Discussion and Analysis of Financial Condition and Results of Operations"
and "Management" is derived from the accounting records of the Parent and
its subsidiaries and fairly presents the information purported to be shown
thereby. The other historical financial and statistical information and
data included in each Memorandum are, in all material respects, fairly
presented.
(l) There has not occurred any material adverse change, or any
development involving a prospective material adverse change, in the
condition, financial or otherwise, or in the earnings, business or
operations of the Parent and its subsidiaries, taken as a whole, from that
set forth in the Preliminary Memorandum (including, if applicable, any
amendment or supplement thereto) provided to prospective purchasers of the
Securities.
(m) There are no legal or governmental proceedings pending or, to the
knowledge of the Company and the Guarantors, threatened to which the Parent
or any of its subsidiaries is a party or to which any of the properties of
the Parent or any of its subsidiaries is subject other than proceedings
accurately described in all material respects in each Memorandum and
proceedings that could not reasonably be expected to have a material
adverse effect on the Parent and its subsidiaries, taken as a whole, or on
the power or ability of the Company and the Guarantors to perform their
respective obligations under the Transaction Documents or to consummate the
transactions contemplated by the Final Memorandum.
(n) There are no contracts, documents, pending legal or governmental
actions, suits or proceedings of a character that would be required to be
described in each Memorandum, if it were a prospectus filed as part of a
registration statement under the Securities Act, that are not set forth or
incorporated by reference in each Memorandum. All descriptions in each
Memorandum of such contracts or documents are accurate in all material
respects.
(o) To the knowledge of the Company and the Guarantors, no action has
been taken and no statute, rule, regulation or order has been enacted,
adopted or issued by any governmental agency or body which prevents the
issuance of the Securities or suspends the sale of the Securities in any
jurisdiction; no injunction, restraining order or order of any nature by
any federal or state court of competent jurisdiction has been issued with
respect to the Parent or any of its subsidiaries which would prevent or
suspend the issuance or sale of the Securities or the use of the
Preliminary Memorandum or the Final Memorandum in any jurisdiction; no
action, suit or proceeding is pending against or, to the knowledge of the
Company and each of the Guarantors, threatened against or affecting the
Parent or any of its subsidiaries before any court or arbitrator or any
governmental agency, body or official, domestic or foreign, which could
reasonably be expected to interfere with or adversely affect the issuance
of the Securities or the validity or enforceability of any of the
Transaction Documents or any action taken or to be taken pursuant thereto.
(p) None of the Company or the Guarantors is in violation of its
charter or by-laws and none of the Parent or its subsidiaries is (i) in
default in any material respect, and no event has occurred which, with
notice or lapse of time or both, would constitute such a default, in the
due performance or observance of any term, covenant or condition contained
in any material indenture, mortgage, deed of trust, loan agreement or other
material agreement or instrument to which it is a party or by which it is
bound or to which any of its property or assets is subject or (ii) in
violation in any material respect of any law, ordinance, governmental rule,
regulation or court decree to which it or its property or assets may be
subject, except, in the case of clause (i) and (ii), for any default or
violation that could not be reasonably expected to have a material adverse
effect on the Parent and its subsidiaries, taken as a whole.
(q) The Parent and each of its subsidiaries possess all material
licenses, certificates, authorizations and permits issued by, and have made
all declarations and filings with, the appropriate federal, state or
foreign regulatory agencies or bodies which are necessary or desirable for
the ownership of their respective properties or the conduct of their
respective businesses as described in each Memorandum, except where the
failure to possess or make the same would not, singularly or in the
aggregate, have a material adverse effect on the Parent and its
subsidiaries taken as a whole, and neither the Parent nor any of its
subsidiaries has received notification of any revocation or modification of
any such license, certificate, authorization or permit or has any reason to
believe that any such license, certificate, authorization or permit will
not be renewed in the ordinary course, except where such revocation,
modification or nonrenewal could not reasonably be expected to, singularly
or in the aggregate, have a material adverse effect on the Parent and its
subsidiaries, taken as a whole.
(r) The Parent and each of its subsidiaries have filed all federal,
state, local and foreign income and franchise tax returns required to be
filed through the date hereof and have paid all taxes due thereon, and no
tax deficiency has been determined adversely to the Parent or any of its
subsidiaries which has had (nor does the Company or any of the Guarantors
have any knowledge of any tax deficiency which, if determined adversely to
the Parent or any of its subsidiaries, could reasonably be expected to
have) a material adverse effect on the Parent and its subsidiaries taken as
a whole.
(s) The Parent and its subsidiaries (i) are 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, in each case except as
described in each Memorandum or 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 on the Parent and its subsidiaries, taken as a whole.
(t) In the ordinary course of its business, the Parent conducts a
periodic review of the effect of Environmental Laws on the business,
operations and properties of the Parent and its subsidiaries. On the basis
of such review, the Parent has concluded that, except as described in each
Memorandum, there are no costs or liabilities associated with Environmental
Laws (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) which would, singly or in the aggregate, have a material adverse
effect on the Parent and its subsidiaries, taken as a whole.
(u) The Parent and each of its subsidiaries carry, or are covered by,
insurance covering their respective properties, operations, personnel and
businesses, which insurance is in amounts and insures against such losses
and risks as are adequate to protect the Parent and its subsidiaries and
their respective businesses. Neither the Parent nor any of its subsidiaries
has received notice from any insurer or agent of such insurer that material
capital improvements or other material expenditures are required or
necessary to be made in order to continue such insurance.
(v) The Parent and each of its subsidiaries maintain a system of
internal accounting controls sufficient to provide reasonable assurance
that (i) transactions are executed in accordance with management's general
or specific authorizations; (ii) transactions are recorded as necessary to
permit preparation of financial statements in conformity with generally
accepted accounting principles and to maintain asset accountability; (iii)
access to assets is permitted only in accordance with management's general
or specific authorization; and (iv) the recorded accountability for assets
is compared with the existing assets at reasonable intervals and
appropriate action is taken with respect to any differences, to the extent
necessary.
(w) The Parent and each of its subsidiaries own or possess adequate
rights to use all patents, patent applications, trademarks, service marks,
trade names, trademark registrations, service xxxx registrations,
copyrights, licenses and know-how (including trade secrets and other
unpatented and/or upatentable proprietary or confidential information,
systems or procedures) necessary for the conduct of their respective
businesses, except where the failure to possess such rights could not
reasonably be expected to have a material adverse effect on the Parent and
its subsidiaries taken as a whole, and the conduct of their respective
businesses will not conflict with, and, except as described in each
Memorandum, the Parent and its subsidiaries have not received any notice of
any claim or conflict with, any such rights of others that, if determined
adversely to the Parent or any of its subsidiaries, would, individually or
in the aggregate, have a material adverse effect on the Parent and its
subsidiaries taken as whole.
(x) The Parent and each of its subsidiaries have good and marketable
title in fee simple to, or have valid rights to lease or otherwise use, all
items of real and personal property which are material to the business of
the Parent and its subsidiaries, in each case free and clear of all liens,
encumbrances, claims and defects and imperfections of title except those
that (i) arise under the KCS Credit Facilities or, upon effectiveness, the
Amended KCS Credit Facilities (as defined below) or (ii) do not materially
interfere with the use made and proposed to be made of such property by the
Parent and its subsidiaries and could not reasonably be expected to have a
material adverse effect on the Parent and its subsidiaries, taken as a
whole.
(y) No labor disturbance by or dispute with the employees of the
Parent or any of its subsidiaries exists or, to the knowledge of the
Company and each of the Guarantors, is threatened that could reasonably be
expected to have a material adverse effect on the Parent and its
subsidiaries, taken as a whole.
(z) No "prohibited transaction" (as defined in Section 406 of the
Employee Retirement Income Security Act of 1974, as amended, including the
regulations and published interpretations thereunder ("ERISA"), or Section
4975 of the Internal Revenue Code of 1986, as amended from time to time
(the "Code")) or "accumulated funding deficiency" (as defined in Section
302 of ERISA) or any of the events set forth in Section 4043(b) of ERISA
(other than events with respect to which the 30-day notice requirement
under Section 4043 of ERISA has been waived) has occurred with respect to
any employee benefit plan of the Parent or any of its subsidiaries which
could reasonably be expected to have a material adverse effect on the
Parent and its subsidiaries taken as a whole, each such employee benefit
plan is in compliance with applicable law, including ERISA and the Code,
except where such noncompliance, individually or in the aggregate, could
not reasonably be expected to have a material adverse effect on the Parent
and its subsidiaries taken as a whole, the Parent and each of its
subsidiaries have not incurred and do not expect to incur liability under
Title IV of ERISA with respect to the termination of, or withdrawal from,
any pension plan for which the Parent or any of its subsidiaries would have
any liability; and each such pension plan that is intended to be qualified
under Section 401(a) of the Code is so qualified in all material respects
and nothing has occurred, whether by action or by failure to act, which
could reasonably be expected to cause the loss of such qualification.
(aa) Except as otherwise disclosed in each Memorandum, there has been
no storage, generation, transportation, handling, treatment, disposal,
discharge, emission or other release of any kind of toxic or other wastes
or other hazardous substances by, due to or caused by the Parent or any of
its subsidiaries (or, to the knowledge of the Company and each of the
Guarantors, any other entity (including any predecessor) for whose acts or
omissions the Parent or any of its subsidiaries is or could reasonably be
expected to be liable) upon any of the property now or previously owned or
leased by the Parent or any of its subsidiaries, or upon any other
property, in violation of any statute or any ordinance, rule, regulation,
order, judgment, decree or permit or which would, under any statute or any
ordinance, rule (including rule of common law), regulation, order,
judgment, decree or permit, give rise to any liability, except for any
violation or liability that could not reasonably be expected to have,
singularly or in the aggregate with all such violations and liabilities, a
material adverse effect, on the Parent and its subsidiaries taken as a
whole; and, except as otherwise disclosed in each Memorandum, there has
been no disposal, discharge, emission or other release of any kind onto
such property or into the environment surrounding such property of any
toxic or other wastes or other hazardous substances with respect to which
the Company or each of the Guarantors has knowledge, except for any such
disposal, discharge, emission or other release of any kind which could not
reasonably be expected to have, singularly or in the aggregate with all
such discharges and other releases, a material adverse effect on the Parent
and its subsidiaries taken as a whole.
(bb) Neither the Parent nor, to the best knowledge of the Company and
each of the Guarantors, any director, officer, agent employee or other
person associated with or acting on behalf of the Parent or any of its
subsidiaries has (i) used any corporate funds for any unlawful
contribution, gift, entertainment or other unlawful expense relating to
political activity; (ii) made any direct or indirect unlawful payment to
any foreign or domestic government official or employee from corporate
funds; (iii) violated or is in violation of any provision of the Foreign
Corrupt Practices Act of 1977; or (iv) made any unlawful bribe, rebate,
payoff, influence payment, kickback or other unlawful payment.
(cc) On and immediately after the Closing Date, the Company (after
giving effect to the issuance of the Securities and to the other
transactions related thereto as described in the Final Memorandum) will be
Solvent. As used in this paragraph, the term "Solvent" means, with respect
to a particular date, that on such date (i) the present fair market value
(or present fair saleable value) of the assets of the Company is not less
than the total amount required to pay the probable liabilities of the
Company on its total existing debts and liabilities (including contingent
liabilities) as they become absolute and matured, (ii) the Company is able
to realize upon its assets and pay its debts and other liabilities,
contingent obligations and commitments as they mature and become due in the
normal course of business, (iii) assuming the sale of the Securities as
contemplated by this Agreement and the Final Memorandum, the Company is not
incurring debts or liabilities beyond its ability to pay as such debts and
liabilities mature and (iv) the Company is not engaged in any business or
transaction, and is not about to engage in any business or transaction, for
which its property would constitute unreasonably small capital after giving
due consideration to the prevailing practice in the industry in which the
Company is engaged. In computing the amount of such contingent liabilities
at any time, it is intended that such liabilities will be computed at the
amount that, in the light of all the facts and circumstances existing at
such time, represents the amount that can reasonably be expected to become
an actual or matured liability.
(dd) None of the proceeds of the sale of the Securities will be used,
directly or indirectly, for the purpose of purchasing or carrying any
"margin security" as that term is defined in Regulation U of the Board of
Governors of the Federal Reserve System (the "Federal Reserve Board"), for
the purpose of reducing or retiring any indebtedness which was originally
incurred to purchase or carry any margin security or for any other purpose
which might cause any of the Securities to be considered a "purpose credit"
within the meanings of Regulation T, U or X of the Federal Reserve Board.
(ee) Except as contemplated hereby, neither the Parent nor any of its
subsidiaries is a party to any contract, agreement or understanding with
any person that would give rise to a valid claim against the Parent, any of
its subsidiaries, or the Initial Purchasers for a brokerage commission,
finder's fee or like payment in connection with the offering and sale of
the Securities.
(ff) The Company and the Guarantors are not, and after giving effect
to the offering and sale of the Securities and the application of the
proceeds thereof as described in the Final Memorandum will not be, required
to register as an "investment company" as such term is defined in the
Investment Company Act of 1940, as amended.
(gg) When the Guarantees are executed and delivered in accordance with
the terms of the Indenture and this Agreement, the Notes will be jointly
and severally guaranteed on an unsecured basis by the Parent and each of
its subsidiaries that guarantees the KCS Credit Facilities or, upon
effectiveness, the Amended KCS Credit Facilities (as defined below)(except
for SCC Holdings Inc., The Kansas City Northern Railway Company, Xxxxx,
Inc. and Caymex Transportation, Inc.) and the Company's 9.5% Senior Notes
due 2008, as more particularly set forth on Schedule II hereto.
(hh) No forward-looking statement (within the meaning of Section 27A
of the Securities Act and Section 21E of the Exchange Act) contained in the
Preliminary Memorandum or the Final Memorandum has been made or reaffirmed
without a reasonable basis or has been disclosed other than in good faith.
(ii) None of the Company, the Guarantors or any affiliate (as defined
in Rule 501(b) of Regulation D under the Securities Act, an "Affiliate") of
the Company or the Guarantors has directly, or through any agent, (i) sold,
offered for sale, solicited offers to buy or otherwise negotiated in
respect of, any security (as defined in the Securities Act) which is or
will be integrated with the sale of the Securities in a manner that would
require the registration under the Securities Act of the Securities or (ii)
offered, solicited offers to buy or sold the Securities by 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.
(jj) None of the Company, the Guarantors, their Affiliates or any
person acting on its or their behalf has engaged or will engage in any
directed selling efforts (within the meaning of Regulation S) with respect
to the Securities and the Company, the Guarantors and their Affiliates and
any person acting on its or their behalf have complied and will comply with
the offering restrictions requirement of Regulation S.
(kk) Assuming that your representations and warranties herein are true
and compliance by you with your covenants set forth herein, it is not
necessary in connection with the offer, sale and delivery of the Securities
to the Initial Purchasers in the manner contemplated by this Agreement to
register the Securities under the Securities Act or to qualify the
Indenture under the Trust Indenture Act of 1939, as amended.
(ll) The Securities satisfy the requirements set forth in Rule
144A(d)(3) under the Securities Act.
(B) Each of the Company and the Parent jointly and severally represents and
warrants to and agrees with you that it has received a letter from X.X. Xxxxxx
Securities, Inc. ("X.X. Xxxxxx Securities") to the effect that X.X. Xxxxxx
Securities has received commitments from the necessary lenders under the KCS
Credit Facilities to permit the issuance of the Securities and otherwise amend
and restate the terms of the KCS Credit Facilities in accordance with the term
sheet attached to such letter (the "Amended KCS Credit Facilities"), copies of
such letter having been provided to you on or prior to the date hereof. Such
commitments are subject only to satisfactory review of the documentation
evidencing the Amended KCS Credit Facilities, the form of which is attached
hereto as Exhibit B (the "Amended KCS Credit Facilities Documentation"). Such
Amended KCS Credit Facilities Documentation (A) has been duly authorized by the
Parent, the Company and each other subsidiary of the Parent party thereto and,
when duly executed and delivered on or prior to the Closing Date, will be a
valid and binding agreement of the Parent, the Company and each other subsidiary
of the Parent party thereto enforceable in accordance with its terms, except to
the extent that such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, receivership, moratorium and similar laws relating
to or affecting creditors' rights generally and equitable principles of general
applicability (whether applied by a court of law or equity) and (B) conforms in
all material respects to the description thereof in each Memorandum.
2. Agreements to Sell and Purchase. The Company and the Guarantors,
subject to the conditions hereinafter stated, hereby agree to sell to the
several Initial Purchasers, and each Initial Purchaser, upon the basis of
the representations and warranties herein contained, but subject to the
conditions hereinafter stated, agrees, severally and not jointly, to
purchase from the Company the respective principal amount of Securities set
forth in Schedule I hereto opposite its name at a purchase price of 98.25%
of the principal amount thereof (the "Purchase Price") plus accrued
interest, if any, to the Closing Date.
The Company and the Guarantors hereby agree that, without the prior
written consent of Xxxxxx Xxxxxxx & Co. Incorporated on behalf of the
Initial Purchasers, they will not, during the period beginning on the date
hereof and continuing for a period of 90 days from the date of the Final
Memorandum, offer, sell, contract to sell or otherwise dispose of any debt
of the Company or the Guarantors or warrants to purchase debt of the
Company substantially similar to the Securities (other than the sale of the
Securities under this Agreement).
3. Terms of Offering. You have advised the Company and the Guarantors
that the Initial Purchasers will make an offering of the Securities
purchased by the Initial Purchasers hereunder in accordance with Section 7
hereof on the terms to be described in the Final Memorandum, as soon as
practicable after this Agreement is entered into as in your judgment is
advisable.
4. Payment and Delivery. Payment for the Securities shall be made to
the Company in federal or other funds immediately available in New York
City against delivery of such Securities for the respective accounts of the
several Initial Purchasers at 10:00 a.m., New York City time, on June 12,
2002, or at such other time on the same or such other date, not later than
June 19, 2002, as shall be designated in writing by you. The time and date
of such payment are hereinafter referred to as the "Closing Date".
The Securities shall be in definitive form or global form, as
specified by you, and registered in such names and in such denominations as
you shall request in writing not later than two full business days prior to
the Closing Date. The Securities shall be delivered to you on the Closing
Date for the respective accounts of the several Initial Purchasers, with
any transfer taxes payable in connection with the transfer of the
Securities to the Initial Purchasers duly paid, against payment of the
Purchase Price therefore plus accrued interest, if any, to the date of
payment and delivery.
5. Conditions to the Initial Purchasers' Obligations. The several
obligations of the Initial Purchasers to purchase and pay for the
Securities on the Closing Date are subject to the following conditions:
(a) Subsequent to the execution and delivery of this Agreement
and prior to the Closing Date:
(i) there shall not have occurred any downgrading, nor shall
any notice have been given of any intended or potential
downgrading or of any review for a possible change that does not
indicate the direction of the possible change, in the rating
accorded the Parent, the Company or any of the Parent's or the
Company's securities or in the rating outlook for the Parent or
the Company by any "nationally recognized statistical rating
organization", as such term is defined for purposes of Rule
436(g)(2) under the Securities Act; and
(ii) there shall not have occurred any change, or any
development involving a prospective change, in the condition,
financial or otherwise, or in the earnings, business or
operations of the Parent and its subsidiaries, taken as a whole,
from that set forth in the Preliminary Memorandum (including, if
applicable, any amendment or supplement thereto) provided to
prospective purchasers of the Securities that, in your judgment,
is material and adverse and that makes it, in your judgment,
impracticable to market the Securities on the terms and in the
manner contemplated in the Final Memorandum.
(b) The Initial Purchasers shall have received on the Closing
Date a certificate dated the Closing Date and signed by an executive
officer of the Company and the Parent respectively, to the effect set
forth in Section 5(a)(i). The Initial Purchasers shall have also
received on the Closing Date a certificate, dated the Closing Date and
signed by an executive officer of the Company and each Guarantor,
respectively, to the effect that the representations and warranties of
the Company and the Guarantors contained in this Agreement are true
and correct as of the Closing Date and that the Company and the
Guarantors have complied with all of the agreements and satisfied all
of the conditions on its part to be performed or satisfied hereunder
on or before the Closing Date. The officer signing and delivering such
certificate may rely upon the best of his or her knowledge as to
proceedings threatened.
(c) The Initial Purchasers shall have received on the Closing
Date the opinions of Xxxxxxxxxxxx Xxxx & Xxxxxxxxx, outside
counsel for the Company and the Guarantors, and Xxx X. Xxxxxxx, Esq.,
associate general counsel for the Company and the Guarantors, each
dated the Closing Date, to the effect set forth in Exhibit A. Such
opinions shall be rendered to the Initial Purchasers at the request of
the Company and the Guarantors and shall so state therein. The opinion
of the outside counsel for the Company and the Guarantors shall cover
the matters set forth in clauses (iii), (iv), the first clause of
clause (v) (other than "Business - Legal Matters", and "Part II, Item
1 - Legal Proceedings" of the Parent's Form 10-K and Form 10-Q
referred to therein) and (vi) - (xvi) of Exhibit A. The opinion of the
associate general counsel for the Company and the Guarantors shall
cover the matters set forth in clauses (i), (ii), (v) (other than the
matters covered by the opinion of the outside counsel, as set forth
above), (xi), (xii) and (xvi) of Exhibit A.
(d) The Initial Purchasers shall have received on the Closing
Date an opinion of Shearman & Sterling, counsel for the Initial
Purchasers, dated the Closing Date in form and substance satisfactory
to you.
(e) The Initial Purchasers shall have received on each of the
date hereof and the Closing Date a letter, dated the date hereof or
the Closing Date, as the case may be, in form and substance
satisfactory to the Initial Purchasers, from KPMG LLP, independent
public accountants, with respect to the Parent and its subsidiaries,
containing statements and information of the type ordinarily included
in accountants' "comfort letters" to underwriters with respect to the
financial statements and certain financial information contained in or
incorporated by reference into each Memorandum; provided that the
letter delivered on the Closing Date shall use a "cut-off date" not
earlier than the date hereof.
(f) The Initial Purchasers shall have received on each of the
date hereof and the Closing Date a letter, dated the date hereof or
the Closing Date, as the case may be, in form and substance
satisfactory to the Initial Purchasers from PricewaterhouseCoopers
LLP, independent public accountants, with respect to the Parent and
its subsidiaries, containing statements and information of the type
ordinarily included in accountants' "comfort letters" to underwriters
with respect to the financial statements and certain financial
information contained in or incorporated by reference into each
Memorandum; provided that the letter delivered on the Closing Date
shall use a "cut-off date" not earlier than the date hereof.
(g) The Initial Purchasers shall have received on each of the
date hereof and the Closing Date a letter, dated the date hereof or
the Closing Date, as the case may be, in form and substance
satisfactory to the Initial Purchasers from PricewaterhouseCoopers
LLP, independent public accountants, with respect to Grupo
Transportacion Fernoviaria Mexicana, S.A. de C.V., containing
statements and information of the type ordinarily included in
accountants' "comfort letters" to underwriters with respect to the
financial statements and certain financial information contained in or
incorporated by reference into each Memorandum; provided that the
letter delivered on the Closing Date shall use a "cut-off date" not
earlier than the date hereof.
(h) The Company and the Parent shall have received, on or before
the Closing Date, written notice from XX Xxxxxx Bank that all
conditions to the effectiveness of the Amended KCS Credit Facilities
Documentation, including the due authorization, execution and delivery
of the Amended KCS Credit Facilities Documentation substantially in
the form attached hereto as Exhibit B (copies of which, along with
copies of such written notice, will be provided to you on or before
the Closing Date), have been satisfied other than the repayment of the
Tranche A term loans and certain of the Tranche B term loans as
required under the Amended KCS Credit Facilities Documentation. On the
Closing Date the Tranche A term loans and certain of the Tranche B
term loans outstanding under the KCS Credit Facilities shall be repaid
as set forth in the Final Memorandum pursuant to the Amended KCS
Credit Facilities Documentation and the Amended KCS Credit Facilities
shall become effective simultaneously with the payment for and
delivery of the Securities pursuant to this Agreement.
6. Covenants of the Company and the Guarantors. In further consideration of
the agreements of the Initial Purchasers contained in this Agreement, each of
the Company and the Guarantors, jointly and severally, covenants with each
Initial Purchaser as follows:
(a) To furnish to you in New York City, without charge, prior to
10:00 a.m. New York City time on the business day next succeeding the
date of this Agreement and during the period mentioned in Section
6(c), as many copies of the Final Memorandum, any documents
incorporated by reference therein and any supplements and amendments
thereto as you may reasonably request.
(b) Before amending or supplementing either Memorandum, to
furnish to you a copy of each such proposed amendment or supplement
and not to use any such proposed amendment or supplement to which you
reasonably object.
(c) If, during such period after the date hereof and prior to the
date on which all of the Securities shall have been sold by the
Initial Purchasers, any event shall occur or condition exist as a
result of which it is necessary to amend or supplement the Final
Memorandum in order to make the statements therein, in the light of
the circumstances when the Final Memorandum is delivered to a
purchaser, not misleading, or if, in the opinion of counsel for the
Initial Purchasers, it is necessary to amend or supplement the Final
Memorandum to comply with applicable law, forthwith to prepare and
furnish, at its own expense, to the Initial Purchasers, either
amendments or supplements to the Final Memorandum so that the
statements in the Final Memorandum as so amended or supplemented will
not, in the light of the circumstances when the Final Memorandum is
delivered to a purchaser, be misleading or so that the Final
Memorandum, as amended or supplemented, will comply with applicable
law.
(d) To endeavor to qualify the Securities for offer and sale
under the securities or blue sky laws of such jurisdictions as you
shall reasonably request; provided that the Parent and its
subsidiaries shall not be obligated to qualify as a Foreign
corporation in any jurisdiction in which they have not so qualified or
to file a general consent to service of process in any jurisdiction.
(e) Whether or not the transactions contemplated in this
Agreement are consummated or this Agreement is terminated, to pay or
cause to be paid all expenses incident to the performance of its
obligations under this Agreement, including: (i) the fees,
disbursements and expenses of the Company's and the Guarantors'
counsel and the Company's and the Guarantors' accountants in
connection with the issuance and sale of the Securities and all other
fees or expenses in connection with the preparation of each Memorandum
and all amendments and supplements thereto, including all printing
costs associated therewith, and the delivering of copies thereof to
the Initial Purchasers, in the quantities herein above specified, (ii)
all costs and expenses related to the transfer and delivery of the
Securities to the Initial Purchasers, including any transfer or other
taxes payable thereon, (iii) the cost of printing or producing any
blue sky or legal investment memorandum in connection with the offer
and sale of the Securities under state securities laws and all
expenses in connection with the qualification of the Securities for
offer and sale under state securities laws as provided in Section 6(d)
hereof, including filing fees and the reasonable fees and
disbursements of counsel for the Initial Purchasers in connection with
such qualification and in connection with the blue sky or legal
investment memorandum, (iv) any fees charged by rating agencies for
the rating of the Securities, (v) the fees and expenses, if any,
incurred in connection with the admission of the Securities for
trading in PORTAL or any appropriate market system, (vi) the costs and
charges of the Trustee and any transfer agent, registrar or
depositary, (vii) the cost of the preparation, issuance and delivery
of the Securities, (viii) one-half of the costs and expenses of the
Company and the Guarantors relating to investor presentations on any
"road show" undertaken in connection with the marketing of the
offering of the Securities, including, without limitation, expenses
associated with the production of road show slides and graphics, fees
and expenses of any consultants engaged in connection with the road
show presentations with the prior approval of the Company and the
Guarantors, travel and lodging expenses of the representatives and
officers of the Company, the Guarantors and any such consultants, and
the cost of any aircraft chartered in connection with the road show,
(ix) all other costs and expenses incident to the performance of the
obligations of the Company and the Guarantors hereunder for which
provision is not otherwise made in this Section. It is understood,
however, that except as provided in this Section, Section 8, and the
last paragraph of Section 10, the Initial Purchasers will pay all of
their costs and expenses, including fees and disbursements of their
counsel, transfer taxes payable on resale of any of the Securities by
them and any advertising expenses connected with any offers they may
make.
(f) Neither the Company, the Guarantors nor any Affiliate will
sell, offer for sale or solicit offers to buy or otherwise negotiate
in respect of any security (as defined in the Securities Act) which
could be integrated with the sale of the Securities in a manner which
would require the registration under the Securities Act of the
Securities.
(g) Not to solicit any offer to buy or offer or sell the
Securities 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.
(h) While any of the Securities remain "restricted securities"
within the meaning of the Securities Act, to make available, upon
request, to any seller of such Securities the information specified in
Rule 144A(d)(4) under the Securities Act, unless the Parent is then
subject to Section 13 or 15(d) of the Exchange Act.
(i) If requested by you, to use its best efforts to permit the
Securities to be designated PORTAL securities in accordance with the
rules and regulations adopted by the National Association of
Securities Dealers, Inc. relating to trading in the PORTAL Market.
(j) None of the Company, the Guarantors, their Affiliates or any
person acting on its or their behalf (other than the Initial
Purchasers) will engage in any directed selling efforts (as that term
is defined in Regulation S) with respect to the Securities, and the
Company, the Guarantors and their Affiliates and each person acting on
its or their behalf (other than the Initial Purchasers) will comply
with the offering restrictions requirement of Regulation S.
(k) During the period of two years after the Closing Date, the
Company and the Guarantors will not, and will not permit any of their
affiliates (as defined in Rule 144 under the Securities Act) to resell
any of the Securities which constitute "restricted securities" under
Rule 144 that have been reacquired by any of them.
(l) Not to take any action prohibited by Regulation M under the
Exchange Act in connection with the distribution of the Securities
contemplated hereby.
(m) The Securities (and all securities issued in exchange
therefore or in substitution thereof) shall bear the following legend
until, in our judgment, such legend shall no longer be necessary or
advisable because such Securities are no longer subject to the
restrictions on transfer described therein:
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"), AND ACCORDINGLY, MAY NOT BE OFFERED OR SOLD
WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT FOR BENEFIT OF, U.S. PERSONS
EXCEPT AS SET FORTH IN THE FOLLOWING SENTENCE. BY ITS ACQUISITION HEREOF, THE
HOLDER (1) REPRESENTS THAT (A) IT IS A "QUALIFIED INSTITUTIONAL BUYER" (AS
DEFINED IN RULE 144A UNDER THE SECURITIES ACT) OR (B) IT IS AN "INSTITUTIONAL
ACCREDITED INVESTOR" (AS DEFINED IN RULE 501(a)(1), (2), (3) OR (7) OF
REGULATION D UNDER THE SECURITIES ACT) (AN "INSTITUTIONAL ACCREDITED INVESTOR")
OR (C) IT IS NOT A U.S. PERSON AND IS ACQUIRING THIS NOTE IN AN OFFSHORE
TRANSACTION IN COMPLIANCE WITH REGULATION S UNDER THE SECURITIES ACT, (2) AGREES
THAT IT WILL NOT, WITHIN THE TIME PERIOD REFERRED TO IN RULE 144(k) UNDER THE
SECURITIES ACT AS IN EFFECT ON THE DATE OF THE TRANSFER OF THIS NOTE, RESELL OR
OTHERWISE TRANSFER THIS NOTE EXCEPT (A) TO THE ISSUER OR ANY OF ITS
SUBSIDIARIES, (B) TO A QUALIFIED INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE
144A UNDER THE SECURITIES ACT, (C) INSIDE THE UNITED STATES TO AN INSTITUTIONAL
ACCREDITED INVESTOR THAT, PRIOR TO SUCH TRANSFER, FURNISHES TO THE TRUSTEE A
SIGNED LETTER CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS RELATING TO THE
RESTRICTIONS ON TRANSFER OF THIS NOTE (THE FORM OF WHICH LETTER CAN BE OBTAINED
FROM THE TRUSTEE) AND, IF SUCH TRANSFER IS IN RESPECT OF AN AGGREGATE PRINCIPAL
AMOUNT OF NOTES OF LESS THAN $100,000, AN OPINION OF COUNSEL ACCEPTABLE TO THE
ISSUER THAT SUCH TRANSFER IS IN COMPLIANCE WITH THE SECURITIES ACT, (D) OUTSIDE
THE UNITED STATES IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH RULE 904 UNDER
THE SECURITIES ACT, (E) PURSUANT TO THE EXEMPTION FROM REGISTRATION PROVIDED BY
RULE 144 UNDER THE SECURITIES ACT (IF AVAILABLE) OR (F) PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND (3) AGREES THAT IT WILL
DELIVER TO EACH PERSON TO WHOM THIS NOTE IS TRANSFERRED A NOTICE SUBSTANTIALLY
TO THE EFFECT OF THIS LEGEND. IN CONNECTION WITH ANY TRANSFER OF THIS NOTE
WITHIN THE TIME PERIOD REFERRED TO IN RULE 144(k) UNDER THE SECURITIES ACT AFTER
THE ORIGINAL ISSUANCE OF THE NOTES, THE HOLDER MUST TRANSFER AND SUBMIT THIS
CERTIFICATE TO THE TRUSTEE. IF THE PROPOSED TRANSFEREE IS AN INSTITUTIONAL
ACCREDITED INVESTOR OR NON-U.S. PERSON, THE HOLDER MUST, PRIOR TO SUCH TRANSFER,
FURNISH TO THE TRUSTEE AND THE ISSUER SUCH CERTIFICATIONS, LEGAL OPINIONS OR
OTHER INFORMATION AS EITHER OF THEM MAY REASONABLY REQUIRE TO CONFIRM THAT SUCH
TRANSFER IS BEING MADE PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT
SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT. AS USED HEREIN,
THE TERMS "OFFSHORE TRANSACTION," "UNITED STATES" AND "U.S. PERSON" HAVE THE
MEANINGS GIVEN TO THEM BY REGULATION S UNDER THE SECURITIES ACT. THE INDENTURE
CONTAINS PROVISIONS REQUIRING THE TRUSTEE TO REFUSE TO REGISTER ANY TRANSFER OF
THIS NOTE IN VIOLATION OF THE FOREGOING RESTRICTION.
7. Offering of Securities; Restrictions on Transfer. (a) Each Initial
Purchaser, severally and not jointly, represents and warrants that such Initial
Purchaser is a qualified institutional buyer as defined in Rule 144A under the
Securities Act (a "QIB"). Each Initial Purchaser, severally and not jointly,
agrees with the Company and the Guarantors that (i) it will not solicit offers
for, or offer or sell, such Securities by 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 and (ii) it will solicit offers for such
Securities only from, and will offer such Securities only to, persons that it
reasonably believes to be (A) in the case of offers inside the United States,
QIBs and (B) in the case of offers outside the United States, to persons other
than U.S. persons ("foreign purchasers", which term shall include dealers or
other professional fiduciaries in the United States acting on a discretionary
basis for foreign beneficial owners (other than an estate or trust)) in reliance
upon Regulation S under the Securities Act that, in each case, in purchasing
such Securities are deemed to have represented and agreed as provided in the
Final Memorandum under the caption "Transfer Restrictions".
(b) Each Initial Purchaser, severally and not jointly, represents,
warrants, and agrees with respect to offers and sales outside the United
States that:
(i) such Initial Purchaser understands that no action has been
or will be taken in any jurisdiction by the Company and the Guarantors
that would permit a public offering of the Securities, or possession
or distribution of either Memorandum or any other offering or
publicity material relating to the Securities, in any country or
jurisdiction where action for that purpose is required;
(ii) such Initial Purchaser will comply with all applicable laws
and regulations in each jurisdiction in which it acquires, offers,
sells or delivers Securities or has in its possession or distributes
either Memorandum or any such other material, in all cases at its own
expense;
(iii) the Securities have not been 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 Rule 144A or Regulation S under the Securities Act or
pursuant to another exemption from the registration requirements of
the Securities Act; (iv) such Initial Purchaser has offered the
Securities and will offer and sell the Securities (A) as part of their
distribution at any time and (B) otherwise until 40 days after the
later of the commencement of the offering and the Closing Date, only
in accordance with Rule 903 of Regulation S or as otherwise permitted
in Section 7(a); accordingly, neither such Initial Purchaser, its
Affiliates nor any persons acting on its or their behalf have engaged
or will engage in any directed selling efforts (within the meaning of
Regulation S) with respect to the Securities, and any such Initial
Purchaser, its Affiliates and any such persons have complied and will
comply with the offering restrictions requirement of Regulation S;
(v) such Initial Purchaser (A) has not offered or sold and, prior
to the date six months after the Closing Date, will not offer or sell
any Securities to persons in the United Kingdom 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; (B) has complied and will comply with all applicable
provisions of the Financial Services and Markets Xxx 0000 (the "FSMA")
with respect of anything done by it in relation to the Securities in,
from or otherwise involving the United Kingdom, and (C) will only
communicate or cause to be communicated any invitation or inducement
to engage in investment activity (within the meaning of section 21 of
the FSMA) received by it in connection with the issue or sale of the
Securities in circumstances in which section 21(1) of the FSMA does
not apply to the Company and the Guarantors;
(vi) such Initial Purchaser understands that the Securities have
not been and will not be registered under the Securities and Exchange
Law of Japan, and represents that it has not offered or sold, and
agrees not to offer or sell, directly or indirectly, any Securities in
Japan or for the account of any resident thereof except pursuant to
any exemption from the registration requirements of the Securities and
Exchange Law of Japan and otherwise in compliance with applicable
provisions of Japanese law; and
(vii) such Initial Purchaser agrees that, at or prior to
confirmation of sales of the Securities, it will have sent to each
distributor, dealer or person receiving a selling concession, fee or
other remuneration that purchases Securities from it during the
restricted period a confirmation or notice to substantially the
following effect:
"The Securities 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 and 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 meaning given to them by Regulation S."
Terms used in this Section 7(b) have the meanings given to them by Regulation S.
8. Indemnity and Contribution. (a) The Company and the Guarantors, jointly
and severally, agree to indemnify and hold harmless each Initial Purchaser, each
person, if any, who controls any Initial Purchaser within the meaning of either
Section 15 of the Securities Act or Section 20 of the Exchange Act, and each
affiliate of any Initial Purchaser within the meaning of Rule 405 under the
Securities Act from and against any and all losses, claims, damages and
liabilities (including, without limitation, any legal or other expenses
reasonably incurred in connection with defending or investigating any such
action or claim) caused by any untrue statement or alleged untrue statement of a
material fact contained in either Memorandum (as amended or supplemented if the
Company and the Guarantors shall have furnished any amendments or supplements
thereto), or caused by any omission or alleged omission to state therein a
material fact necessary to make the statements therein in the light of the
circumstances under which they were made not misleading, except (i) insofar as
such losses, claims, damages or liabilities are caused by any such untrue
statement or omission or alleged untrue statement or omission based upon
information relating to any Initial Purchaser furnished to the Company and the
Guarantors in writing by such Initial Purchaser through any of you expressly for
use therein and (ii) insofar as the sale to the person asserting any such
losses, claims, damages or liabilities was an initial resale by such Initial
Purchaser and any such losses, claims, damages or liabilities of or with respect
to such Initial Purchaser results from the fact that both (A) to the extent
required by applicable law, the Company and the Guarantors have sustained the
burden of proving that a copy of the Offering Memorandum was not sent or given
to such person at or prior to the written confirmation of the sale of such
Securities to such person and (B) the untrue statement in or omission from the
Preliminary Memorandum was corrected in the Final Memorandum unless, in either
case, such failure to deliver the Final Memorandum was a result of the Company's
and the Guarantors' failure to provide copies of the corrected Final Memorandum
to such Initial Purchaser prior to the written confirmation of the sale of such
Securities.
(b) Each Initial Purchaser agrees, severally and not jointly, to
indemnify and hold harmless the Company and the Guarantors, their
directors, their officers and each person, if any, who controls the Company
or the Guarantors within the meaning of either Section 15 of the Securities
Act or Section 20 of the Exchange Act to the same extent as the foregoing
indemnity from the Company and each of the Guarantors to such Initial
Purchaser, but only with reference to information relating to such Initial
Purchaser furnished to the Company and the Guarantors in writing by such
Initial Purchaser through any of you expressly for use in either Memorandum
or any amendments or supplements thereto.
(c) In case any proceeding (including any governmental investigation)
shall be instituted involving any person in respect of which indemnity may
be sought pursuant to Section 8(a) or 8(b), such person (the "indemnified
party") shall promptly notify the person against whom such indemnity may be
sought (the "indemnifying party") in writing and the indemnifying party,
upon request of the indemnified party, shall retain counsel reasonably
satisfactory to the indemnified party to represent the indemnified party
and any others the indemnifying party may designate in such proceeding and
shall pay the fees and disbursements of such counsel related to such
proceeding. In any such proceeding, any indemnified party shall have the
right to retain its own counsel, but the fees and expenses of such counsel
shall be at the expense of such indemnified party unless (i) the
indemnifying party and the indemnified party shall have mutually agreed to
the retention of such counsel or (ii) the named parties to any such
proceeding (including any impleaded parties) include both the indemnifying
party and the indemnified party and representation of both parties by the
same counsel would be inappropriate due to actual or potential differing
interests between them. It is understood that the indemnifying party shall
not, in respect of the legal expenses of any indemnified party in
connection with any proceeding or related proceedings in the same
jurisdiction, be liable for the fees and expenses of more than one separate
firm (in addition to any local counsel) for all such indemnified parties
and that all such fees and expenses shall be reimbursed as they are
incurred. Such firm shall be designated in writing by Xxxxxx Xxxxxxx & Co.
Incorporated, in the case of parties indemnified pursuant to Section 8(a),
and by the Company and the Guarantors, in the case of parties indemnified
pursuant to Section 8(b). The indemnifying party shall not be liable for
any settlement of any proceeding effected without its written consent, but
if settled with such consent or if there be a final judgment for the
plaintiff, the indemnifying party agrees to indemnify the indemnified party
from and against any loss or liability by reason of such settlement or
judgment. No indemnifying party shall, without the prior written consent of
the indemnified party, effect any settlement of any pending or threatened
proceeding in respect of which any indemnified party is or could have been
a party and indemnity could have been sought hereunder by such indemnified
party, unless such settlement includes an unconditional release of such
indemnified party from all liability on claims that are the subject matter
of such proceeding.
(d) To the extent the indemnification provided for in Section 8(a) or
8(b) is unavailable to an indemnified party or insufficient in respect of
any losses, claims, damages or liabilities referred to therein, then each
indemnifying party under such paragraph, in lieu of indemnifying such
indemnified party thereunder, shall contribute to the amount paid or
payable by such indemnified party as a result of such losses, claims,
damages or liabilities (i) in such proportion as is appropriate to reflect
the relative benefits received by the Company and the Guarantors on the one
hand and the Initial Purchasers on the other hand from the offering of the
Securities or (ii) if the allocation provided by clause 8(d)(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 8(d)(i) above
but also the relative fault of the Company and the Guarantors on the one
hand and of the Initial Purchasers on the other hand in connection with the
statements or omissions that resulted in such losses, claims, damages or
liabilities, as well as any other relevant equitable considerations. The
relative benefits received by the Company and the Guarantors on the one
hand and the Initial Purchasers on the other hand in connection with the
offering of the Securities shall be deemed to be in the same respective
proportions as the net proceeds from the offering of the Securities (before
deducting expenses) received by the Company and the Guarantors and the
total discounts and commissions received by the Initial Purchasers, in each
case as set forth in the Final Memorandum, bear to the aggregate offering
price of the Securities. The relative fault of the Company and the
Guarantors on the one hand and of the Initial Purchasers on the other hand
shall be determined by reference to, among other things, whether the untrue
or alleged untrue statement of a material fact or the omission or alleged
omission to state a material fact relates to information supplied by the
Company and the Guarantors or by the Initial Purchasers and the parties'
relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission. The Initial Purchasers'
respective obligations to contribute pursuant to this Section 8 are several
in proportion to the respective principal amount of Securities they have
purchased hereunder, and not joint.
(e) The Company, the Guarantors and the Initial Purchasers agree that
it would not be just or equitable if contribution pursuant to this Section
8 were determined by pro rata allocation (even if the Initial Purchasers
were treated as one entity for such purpose) or by any other method of
allocation that does not take account of the equitable considerations
referred to in Section 8(d). The amount paid or payable by an indemnified
party as a result of the losses, claims, damages and liabilities referred
to in Section 8(d) shall be deemed to include, subject to the limitations
set forth above, 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, no
Initial Purchaser shall be required to contribute any amount in excess of
the amount by which the total price at which the Securities resold by it in
the initial placement of such Securities were offered to investors exceeds
the amount of any damages that such Initial Purchaser has otherwise been
required to pay by reason of such untrue or alleged untrue statement or
omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities
Act) shall be entitled to contribution from any person who was not guilty
of such fraudulent misrepresentation. The remedies provided for in this
Section 8 are not exclusive and shall not limit any rights or remedies
which may otherwise be available to any indemnified party at law or in
equity.
(f) The indemnity and contribution provisions contained in this
Section 8 and the representations, warranties and other statements of the
Company and the Guarantors contained in this Agreement shall remain
operative and in full force and effect regardless of any termination of
this Agreement, (ii) any investigation made by or on behalf of (i) any
Initial Purchaser, any person controlling any Initial Purchaser or any
affiliate of any Initial Purchaser or by or on behalf of the Company and
the Guarantors, their officers or directors or any person controlling the
Company and the Guarantors and (iii) acceptance of and payment for any of
the Securities.
9. Termination. The Initial Purchasers may terminate this Agreement by
notice given by you to the Company and the Guarantors, if, after the execution
and delivery of this Agreement and prior to the Closing Date (i) trading
generally shall have been suspended or materially limited on, or by, as the case
may be, any of the New York Stock Exchange, the American Stock Exchange, the
Nasdaq National Market, the Chicago Board of Options Exchange, the Chicago
Mercantile Exchange or the Chicago Board of Trade, (ii) trading of any
securities of the Parent or the Company shall have been suspended on any
exchange or in any over-the-counter market, (iii) a material disruption in
securities settlement, payment or clearance services in the United States shall
have occurred, (iv) any moratorium on commercial banking activities shall have
been declared by federal or New York State authorities or (v) there shall have
occurred any outbreak or escalation of hostilities, or any change in financial
markets or any calamity or crisis that, in your judgment, is material and
adverse and which, singly or together with any other event specified in this
clause (v), makes it, in your judgment, impracticable or inadvisable to proceed
with the offer, sale or delivery of the Securities on the terms and in the
manner contemplated in the Final Memorandum.
10. Effectiveness; Defaulting Initial Purchasers. This Agreement shall
become effective upon the execution and delivery hereof by the parties hereto.
If, on the Closing Date, any one or more of the Initial Purchasers shall
fail or refuse to purchase Securities that it or they have agreed to purchase
hereunder on such date, and the aggregate principal amount of Securities which
such defaulting Initial Purchaser or Initial Purchasers agreed but failed or
refused to purchase is not more than one-tenth of the aggregate principal amount
of Securities to be purchased on such date, the other Initial Purchasers shall
be obligated severally in the proportions that the principal amount of
Securities set forth opposite their respective names in Schedule I bears to the
aggregate principal amount of Securities set forth opposite the names of all
such non-defaulting Initial Purchasers, or in such other proportions as you may
specify, to purchase the Securities which such defaulting Initial Purchaser or
Initial Purchasers agreed but failed or refused to purchase on such date;
provided that in no event shall the principal amount of Securities that any
Initial Purchaser has agreed to purchase pursuant to this Agreement be increased
pursuant to this Section 10 by an amount in excess of one-ninth of such
principal amount of Securities without the written consent of such Initial
Purchaser. If, on the Closing Date any Initial Purchaser or Initial Purchasers
shall fail or refuse to purchase Securities which it or they have agreed to
purchase hereunder on such date and the aggregate principal amount of Securities
with respect to which such default occurs is more than one-tenth of the
aggregate principal amount of Securities to be purchased on such date, and
arrangements satisfactory to you and the Company for the purchase of such
Securities are not made within 36 hours after such default, this Agreement shall
terminate without liability on the part of any non-defaulting Initial Purchaser
or of the Company. In any such case either you or the Company shall have the
right to postpone the Closing Date, but in no event for longer than seven days,
in order that the required changes, if any, in the Final Memorandum or in any
other documents or arrangements may be effected. Any action taken under this
paragraph shall not relieve any defaulting Initial Purchaser from liability in
respect of any default of such Initial Purchaser under this Agreement.
If this Agreement shall be terminated by the Initial Purchasers, or any of
them, because of any failure or refusal on the part of the Company or the
Guarantors to comply with the terms or to fulfill any of the conditions of this
Agreement, or if for any reason the Company or the Guarantors shall be unable to
perform their obligations under this Agreement, the Company and the Guarantors
will reimburse the Initial Purchasers or such Initial Purchasers as have so
terminated this Agreement with respect to themselves, severally, for all
out-of-pocket expenses (including the fees and disbursements of their counsel)
reasonably incurred by such Initial Purchasers in connection with this Agreement
or the offering contemplated hereunder. If this Agreement is terminated by
reason of the default of one or more of the Initial Purchasers, the Company and
the Guarantors shall not be obligated to reimburse each such defaulting Initial
Purchaser on account of such expenses.
11. Notices, etc. All statements requests, notices and agreements hereunder
shall be in writing, and:
(A) If to the Initial Purchasers shall be delivered or sent by mail,
telex or facsimile transmission to Xxxxx Xxxxxxx & Co. Incorporated,
0000 Xxxxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Equity Capital Markets
Syndicate Desk (Fax: 000-000-0000), with a copy to Shearman & Sterling,
000 Xxxxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Xxxx Xxxxxxxxx,
Esq. (Fax: 000-000-0000); and
(B) If to the Company or any Guarantor, shall be delivered or sent by
mail, telex or facsimile transmission to The Kansas City Southern Railway
Company, 000 Xxxx 00xx Xxxxxx, Xxxxxx Xxxx, Xxxxxxxx 00000, Attention:
Chief Financial Officer (Fax: 000-000-0000), with a copy to the
Xxxxxxxxxxxx Xxxx & Xxxxxxxxx, 0000 Xxxx Xxxxxx, Xxxxx 0000, Xxxxxx
Xxxx, Xxxxxxxx 00000, Attention: Xxxx Xxxxxx, Esq. (Fax: 000-000-0000).
12. Parties. This Agreement shall inure to the benefit of and be binding
upon the Company, the Guarantors, the Initial Purchasers and their respective
successors and assigns. This Agreement and the terms and provisions hereof are
for the sole benefit of only those persons, except that (i) the representations,
warranties, indemnities and agreements of the Company and the Guarantors
contained in this Agreement shall also be deemed to be for the benefit of the
person or persons, if any, who control any Initial Purchaser within the meaning
of either Section 15 of the Securities Act or Section 20 of the Exchange Act,
and each affiliate of any Initial Purchaser within the meaning of Rule 405 under
the Securities Act and (ii) the representations, warranties, indemnities and
agreements of the Initial Purchasers contained in this Agreement shall also be
deemed to be for the benefit of officers and directors of the Company and each
Guarantor and any person who controls the Company or the Guarantors within the
meaning of either Section 15 of the Securities Act and Section 20 of the
Exchange Act. 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. Amendments. No amendment or waiver of any provision of this Agreement,
nor any consent or approval to any departure therefrom, shall in any event be
effective unless the same is in writing and signed by the partied hereto.
14. Counterparts. This Agreement may be signed in any number of
counterparts, each of which shall be an original, with the same effect as if the
signatures thereto and hereto were upon the same instrument.
15. Applicable Law. This Agreement shall be governed by and construed in
accordance with the internal laws of the State of New York.
Headings. The headings of the sections of this Agreement have been inserted for
convenience of reference only and shall not be deemed a part of this Agreement.
Very truly yours,
Kansas City Southern
By: /s/ Xxxxxx X. Xxxxx
----------------------------------------
Name: Xxxxxx X. Xxxxx
Title: Senior Vice President & CFO
The Kansas City Southern Railway Company
By: /s/ Xxxxxx X. Xxxxx
----------------------------------------
Name: Xxxxxx X. Xxxxx
Title: Senior Vice President & CFO
Gateway Eastern Railway Company
By: /s/ Xxx X. Xxxxxxx
----------------------------------------
Name: Xxx X. Xxxxxxx
Title: Vice President
Mid-South Microwave, Inc.
By: /s/ Xxxxxx X. Xxxxx
----------------------------------------
Name: Xxxxxx X. Xxxxx
Title: Vice President & Treasurer
PABTEX GP, LLC
By: /s/ Xxxxxx X. Xxxxx
----------------------------------------
Name: Xxxxxx X. Xxxxx
Title: Authorized Representative
PABTEX L.P.
By: PABTEX GP, LLC
By: /s/ Xxxxxx X. Xxxxx
----------------------------------------
Name: Xxxxxx X. Xxxxx
Title: Authorized Representative
Xxxx-Xxxxxx Corporation
By: /s/ Xxxxxx X. Xxxxx
----------------------------------------
Name: Xxxxxx X. Xxxxx
Title: Vice President & Treasurer
SIS Bulk Holding, Inc.
By: /s/ Xxxxxx X. Xxxxx
----------------------------------------
Name: Xxxxxx X. Xxxxx
Title: Vice President & Treasurer
Southern Development Company
By: /s/ Xxxxxx X. Xxxxx
----------------------------------------
Name: Xxxxxx X. Xxxxx
Title: Vice President & Treasurer
Southern Industrial Services, Inc.
By: /s/ Xxxxxx X. Xxxxx
----------------------------------------
Name: Xxxxxx X. Xxxxx
Title: Vice President & Treasurer
Trans-Serve, Inc.
By: /s/ Xxxxxx X. Xxxxx
----------------------------------------
Name: Xxxxxx X. Xxxxx
Title: Vice President & Treasurer
Accepted as of the date hereof
Xxxxxx Xxxxxxx & Co. Incorporated
X.X. Xxxxxx Securities Inc.
Deutsche Bank Securities Inc.
Banc One Capital Markets, Inc.
Scotia Capital (USA) Inc.
Acting severally on behalf of themselves and the several Initial Purchasers
named in Schedule I hereto.
By: Xxxxxx Xxxxxxx & Co. Incorporated
By: /s/ Xxxxx Xxxxxxxxxxx
----------------------------
Name: Xxxxx Xxxxxxxxxxx
Title: Executive Director
SCHEDULE I
Initial Purchaser Principal Amount of
Securities to Be Purchased
Xxxxxx Xxxxxxx & Co., Incorporated............... $130,000,000
X.X. Xxxxxx Securities Inc....................... 30,000,000
Deutsche Bank Securities Inc..................... 24,000,000
Banc One Capital Markets, Inc.................... 8,000,000
Scotia Capital (USA) Inc......................... 8,000,000
------------
Total................................... $200,000,000
============
SCHEDULE II
Gateway Eastern Railway Company
Mid-South Microwave, Inc.
PABTEX GP, LLC
PABTEX X.X.
Xxxx-Xxxxxx Corporation
SIS Bulk Holding, Inc.
Southern Development Company
Southern Industrial Services, Inc.
Trans-Serve, Inc.
