EXHIBIT 1
AEP INDUSTRIES INC.
$200,000,000
9.875 % Senior Subordinated Notes due 2007
Purchase Agreement
November 14, 1997
X.X. Xxxxxx Securities Inc.
Xxxxxx Xxxxxxx & Co. Incorporated
Salomon Brothers Inc
c/o X.X. Xxxxxx Securities Inc.
00 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Ladies and Gentlemen:
AEP Industries Inc., a Delaware corporation (the "Company"), proposes to
issue and sell to X.X. Xxxxxx Securities Inc., Xxxxxx Xxxxxxx & Co. Incorporated
and Salomon Brothers Inc (the "Initial Purchasers") $200,000,000 aggregate
principal amount of its 9.875% Senior Subordinated Notes due 2007 (the "Notes").
The Notes will be issued pursuant to an Indenture to be dated as of November 19,
1997 (the "Indenture") between the Company and The Bank of New York, as trustee
(the "Trustee").
The offering and sale of the Notes to the Initial Purchasers will be made
without registration under the Securities Act of 1933, as amended (the
"Securities Act"), in reliance upon the exemption therefrom provided by Section
4(2) of the Securities Act. Holders of Notes will have the benefits of a
Registration Rights Agreement to be dated as of November 19, 1997 between the
Company and the Initial Purchasers, substantially in the form attached hereto as
Exhibit A (the "Registration Rights Agreement") pursuant to which the Issuers
will agree to file with the Securities and Exchange Commission (the
"Commission") (i) a registration statement under the Securities Act (the
"Exchange Registration Statement") registering an issue of senior subordinated
notes of the Company (the "Exchange Notes") which are identical in all material
respects to the Notes (except that the Exchange Securities will not contain
terms with respect to transfer restrictions or liquidated damages) and
(ii) under certain limited circumstances, a shelf registration statement with
respect to the resale of the Securities pursuant to Rule 415 under the
Securities Act (the "Shelf Registration Statement"). This Agreement, the
Indenture, the Notes, the Exchange Notes and the Registration Rights Agreement
are collectively referred to herein as the "Offering Agreements."
The Company hereby agrees with the Initial Purchasers as follows:
1. Upon the basis of the representations and warranties herein contained,
the Company agrees to issue and sell the Notes to the Initial Purchasers as
hereinafter provided, and each Initial Purchaser, subject to the conditions
hereinafter stated, agrees to purchase, severally and not jointly, from the
Company the respective
principal amount of Notes set forth opposite such Initial Purchaser's name on
Schedule I hereto at a price (the "Purchase Price") equal to 96.474% of their
principal amount.
2. The Company understands that the Initial Purchasers intend (i) to
offer privately their respective portions of the Notes as soon after this
Agreement has become effective as in the judgment of the Initial Purchasers is
advisable and (ii) initially to offer the Notes upon the terms set forth in the
Offering Memorandum (as defined below).
The Company confirms that it has authorized the Initial Purchasers, subject
to the restrictions set forth below, to distribute copies of the Offering
Memorandum in connection with the offering of the Notes. Each Initial Purchaser
hereby makes to the Company the following representations and agreements:
(a) it is a qualified institutional buyer within the meaning of Rule
144A under the Securities Act; and
(b) (A) it will not solicit offers for, or offer to sell, the Notes
by any form of general solicitation or general advertising (as those terms
are used in Regulation D under the Securities Act ("Regulation D")) or in
any manner involving a public offering within the meaning of Section 4(2)
of the Securities Act and (B) it will solicit offers for the Notes only
from, and will offer the Notes only to, (1) persons whom it reasonably
believes to be "qualified institutional buyers" within the meaning of Rule
144A under the Securities Act or (2) upon the terms and conditions set
forth in Annex I to this Agreement (which Annex is expressly incorporated
into, and made a part of, this Agreement).
3. Payment for the Notes shall be made by wire transfer in immediately
available funds, to the account specified by the Company to the Initial
Purchasers no later than noon on the Business Day (as defined below) prior to
the Closing Date (as defined below), on November 19, 1997, or at such other time
on the same or such other date as the Initial Purchasers and the Company may
agree upon in writing. The time and date of such payment are referred to herein
as the "Closing Date." As used herein, the term "Business Day" means any day
other than a day on which banks are permitted or required to be closed in New
York City.
Payment for the Notes shall be made against delivery to the nominee of The
Depository Trust Company for the account of the Initial Purchasers or such other
persons designated in writing by the Initial Purchasers of one or more global
notes representing the Notes (collectively, the "Global Note"), with any
transfer taxes payable in connection with the transfer to the Initial Purchasers
paid by the Company. The Global Note will be made available for inspection by
the Initial Purchasers at the office of X.X. Xxxxxx Securities Inc. at the
address set forth above, or at such other location as the Company and the
Initial Purchasers agree, not later than 1:00 P.M., New York City time, on the
Business Day prior to the Closing Date.
4. The Company represents and warrants to each Initial Purchaser as
follows:
(a) A preliminary offering memorandum, dated November 3, 1997 (the
"Preliminary Offering Memorandum"), and an offering memorandum, dated
November 14, 1997 (the "Offering Memorandum"), have been prepared in
connection with the offering of the Notes. Any reference to the
Preliminary Offering Memorandum or the Offering Memorandum (or to material
included therein) shall be deemed to refer to and include any material
incorporated by reference therein. The Preliminary Offering Memorandum or
the Offering Memorandum and any amendments or supplements thereto did not,
as of their respective dates, and the Offering Memorandum will not as of
the Closing Date, contain an untrue statement of a material fact or omit to
state a material fact necessary to make the statements
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therein, in the light of the circumstances under which they were made, not
misleading; provided, however, that the foregoing shall not apply to
statements or omissions in the Preliminary Offering Memorandum, the Offering
Memorandum or any amendment or supplement thereto made in reliance upon and
in conformity with written information relating to any Initial Purchaser
furnished to the Company in writing by such Initial Purchaser expressly for
use therein.
(b) The audited and unaudited financial statements, and the related
notes thereto, included or incorporated by reference in the Offering
Memorandum present fairly the consolidated financial position of the
Company and its consolidated subsidiaries as of the dates indicated and the
results of their operations and changes in their consolidated cash flows
and stockholders' equity for the periods specified; said financial
statements have been prepared in conformity with generally accepted
accounting principles applied on a consistent basis and the interim
statements have been prepared on a basis substantially consistent with that
of the audited consolidated financial statements, except for the absence of
year-end adjustments to interim statements. The pro forma financial
statements, and the related notes thereto, and other pro forma financial
information included in the Offering Memorandum have been prepared on a
basis consistent with the historical financial statements included in the
Offering Memorandum, include all material adjustments to the historical
financial statements required by Rule 11-02 of Regulation S-X under the
Securities Act and the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), to reflect the transactions described in the Offering
Memorandum, and are based upon good faith estimates and assumptions
believed by the Company to be reasonable.
(c) The statistical and market-related data included in the Offering
Memorandum are based on or derived from sources, including, without
limitation, internal Company research, surveys or studies, that the Company
believes are reliable and accurate.
(d) Since the respective dates as of which information is given in
the Offering Memorandum, there has not been any material change in the
capital stock or long-term debt of the Company or any of the Subsidiaries
(as defined below), or any material adverse change, or any development
involving a prospective material adverse change, in or affecting the
general affairs, business, prospects, management, financial position,
stockholders' equity or results of operations of the Company and the
Subsidiaries (as defined below), taken as a whole (a "Material Adverse
Change" or a "Prospective Material Adverse Change," respectively),
otherwise than as set forth in or contemplated by the Offering Memorandum.
Since the respective dates as of which information is given in the Offering
Memorandum, neither the Company nor any of the Subsidiaries has entered
into any transaction or agreement material to the Company and the
Subsidiaries taken as a whole, other than in the ordinary course of
business consistent with past practice.
(e) The Company has been duly incorporated and is validly existing as
a corporation in good standing under the laws of its jurisdiction of
incorporation, with corporate power and authority to own and lease its
properties and conduct its business as described in the Offering
Memorandum, and has been duly qualified as a foreign corporation for the
transaction of business and is in good standing under the laws of each
other jurisdiction in which it owns or leases properties, or conducts any
business, so as to require such qualification, other than where the failure
to be so qualified or in good standing, singly or in the aggregate with all
other such failures, would not have a material adverse effect on the
general affairs, business, prospects, management, financial position,
stockholders' equity or results of operations of the Company and the
Subsidiaries, taken as a whole (a "Material Adverse Effect").
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(f) The Company has, and, as of the Closing Date (prior to the
consummation of the transactions contemplated by the Offering Memorandum),
will have the capitalization set forth in the Offering Memorandum under the
caption "Capitalization." All of the outstanding shares of capital stock
of the Company have been duly authorized and validly issued, are fully paid
and non-assessable and, except as described in the Offering Memorandum, are
not subject to any preemptive or similar rights; and, except as described
in or expressly contemplated by the Offering Memorandum, there are no
outstanding rights (including, without limitation, preemptive rights),
warrants or options to acquire, or instruments convertible into or
exchangeable for, any shares of capital stock or other equity interest in
the Company or any of the Subsidiaries, or any contract, commitment,
agreement, understanding or arrangement of any kind to which the Company or
any of the Subsidiaries is a party relating to the issuance of any capital
stock of the Company or of any such Subsidiary, any such convertible or
exchangeable securities or any such rights, warrants or options.
(g) Each of the subsidiaries of the Company (the "Subsidiaries") that
is a corporation has been duly incorporated and is validly existing as a
corporation under the laws of its jurisdiction of incorporation, with
corporate power and authority to own and lease its properties and conduct
its business as described in the Offering Memorandum, and has been duly
qualified as a foreign corporation for the transaction of business and is
in good standing under the laws of each other jurisdiction in which it owns
or leases properties, or conducts any business, so as to require such
qualification, other than where the failure to be so qualified or in good
standing, singly or in the aggregate with all other such failures, would
not have a Material Adverse Effect. All of the outstanding shares of
capital stock of each Subsidiary have been duly authorized and validly
issued and are fully paid and non-assessable, and (except as otherwise set
forth in the Offering Memorandum) are, and as of the Closing Date, will be
owned by the Company, directly or indirectly, free and clear of all
material liens, encumbrances, security interests or claims.
(h) The Company has all requisite corporate power and authority to
execute each of the Offering Agreements and to perform its obligations
hereunder and thereunder; and all corporate action or action by
stockholders and/or the board of directors, as the case may be, required to
be taken by the Company for the due authorization, execution and delivery
of each of the Offering Agreements and the consummation of the transactions
contemplated thereby have been duly and validly taken.
(i) This Agreement has been duly authorized, executed and delivered
by the Company.
(j) The Registration Rights Agreement has been duly authorized,
executed and delivered by the Company and, when duly authorized, executed
and delivered by the Initial Purchasers, will constitute a valid and
legally binding agreement of the Company, enforceable against the Company
in accordance with its terms except to the extent that (i) the enforcement
thereof may be subject to (A) bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting creditors' rights generally and
(B) general principles of equity and the discretion of the court before
which any proceedings therefor may be brought and (ii) the enforcement of
rights to indemnity and contribution thereunder may be limited by
applicable law.
(k) The Indenture has been duly authorized, executed and delivered by
the Company and, when duly authorized, executed and delivered by the
Trustee, will constitute a valid and legally binding agreement of the
Company, enforceable against the Company in accordance with its terms
except to the extent that the enforcement thereof may be subject to (i)
bankruptcy, insolvency, reorganization,
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moratorium or similar laws affecting creditors' rights generally and (ii)
general principles of equity and the discretion of the court before which
any proceeding therefor may be brought.
(l) The Notes and the Exchange Notes have been duly authorized and,
when executed, issued and delivered pursuant to this Agreement, the
Indenture or the Registration Rights Agreement, as the case may be, will
have been duly executed, authenticated, issued and delivered and will
constitute valid and legally binding obligations of the Company, entitled
to the benefits provided by the Indenture and enforceable against the
Company in accordance with their terms, except to the extent that the
enforcement thereof may be subject to (i) bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting creditors' rights
generally and (ii) general principles of equity and the discretion of the
court before which any proceeding therefor may be brought.
(m) The Notes, the Registration Rights Agreement and the Indenture
conform, in all material respects, to the descriptions thereof contained in
the Offering Memorandum.
(n) None of the transactions contemplated by this Agreement
(including, without limitation, the use of the proceeds from the sale of
the Notes) will violate or result in a violation by the Company of Section
7 of the Exchange Act, or any regulation promulgated thereunder, including,
without limitation, Regulations G, T, U, and X of the Board of Governors of
the Federal Reserve System.
(o) Neither the Company nor any of the Subsidiaries is, (i) in
violation of its charter or by-laws, (ii) in default, and no event has
occurred which, with the giving of notice or lapse of time or both would
be, in violation of or in default under, its organizational documents or
any indenture, mortgage, deed of trust, loan agreement or other agreement
or instrument to which the Company or any of the Subsidiaries is a party or
by which it or any of them or any of their respective properties is
subject, except for any such defaults which would not singly or in the
aggregate have a Material Adverse Effect or (iii) in violation of any law,
ordinance, governmental rule or regulation or any order, judgment or decree
to which it or any of their respective properties is subject, except for
any such violations which would not singly or in the aggregate have a
Material Adverse Effect.
(p) The execution and delivery by the Company of the Offering
Agreements, the issuance and sale of the Notes and the Exchange Notes, the
performance by the Company of all of its obligations under the Offering
Agreements and the consummation of the transactions contemplated thereby do
not and will not (i) conflict with or result in a breach or violation of
any of the terms or provisions of, or constitute a default under, any
indenture, mortgage, deed of trust, loan agreement, franchise agreement or
other agreement or instrument to which the Company or any of the
Subsidiaries is a party or by which the Company or any of the Subsidiaries
is bound or to which any of their respective properties is subject or
(ii) result in any violation of (a) the charter or by-laws or similar
organizational document of the Company or any of the Subsidiaries or
(b) any applicable law or statute or any order, rule or regulation of any
court or governmental agency or body having jurisdiction over the Company,
the Subsidiaries or any of their respective properties, except, in the case
of clauses (i) and (ii)(b), for any such conflicts, breaches, defaults or
violations that, singly or in the aggregate, would not have a Material
Adverse Effect.
(q) No consent, approval, authorization, order, license, registration
or qualification of or with any court or governmental agency or body is
required for the execution and delivery by the Company of the Offering
Agreements, the issuance and sale of the Notes and the issuance of the
Exchange Notes, the performance by the Company of its obligations under the
Offering Agreements or the con-
5
summation of the transactions contemplated thereby, except for such
consents, approvals, authorizations, orders, licenses, registrations or
qualifications as (i) have been obtained, (ii) as may be required under
any state securities or Blue Sky Laws in connection with the purchase and
distribution of the Notes by the Initial Purchasers or the issuance of the
Exchange Notes and (iii) in the case of the issuance of the Exchange Notes
or the performance of the Registration Rights Agreement, such as may be
required under the Securities Act and the Trust Indenture Act of 1939, as
amended (the "TIA").
(r) Other than as set forth in the Offering Memorandum, there are no
legal or governmental investigations, actions, suits or proceedings
(collectively, "Proceedings") pending against or affecting the Company or
any of the Subsidiaries or any of their respective properties or of which
the Company or any of the Subsidiaries is or, to its knowledge, may be a
party or of which any property of the Company or any of the Subsidiaries is
or, to its knowledge, may be the subject which, singly or in the aggregate,
could have, or reasonably could be expected to have, a Material Adverse
Effect or which could reasonably be expected to prevent or adversely affect
the issuance of the Notes or the Exchange Notes or challenge the validity
or enforceability of any of the Offering Agreements or any action taken or
to be taken pursuant to the Offering Agreements; and to the Company's best
knowledge, no such Proceedings are threatened or contemplated by
governmental authorities or threatened by others.
(s) The Company and the Subsidiaries have good and marketable title
in fee simple to all items of real property and good and marketable title
to all personal property owned by them, in each case free and clear of all
liens, encumbrances and defects except such as are described or referred to
in the Offering Memorandum and except to the extent as would not, singly or
in the aggregate, have a Material Adverse Effect; and any real property and
buildings held under lease by the Company and the Subsidiaries are held by
them under valid, existing and enforceable leases with such exceptions as
would not, singly or in the aggregate, have a Material Adverse Effect.
(t) The Company is not, nor will it be after giving effect to the
offering and sale of the Notes and the application of the proceeds
therefrom, an "investment company" or an entity "controlled" by an
"investment company" as such terms are defined in the Investment Company
Act of 1940, as amended (the "Investment Company Act").
(u) Xxxxxx Xxxxxxxx LLP, who have certified certain financial
statements in the Offering Memorandum, are independent public accountants
within the meaning of rule 101 of the AICPA's Code of Professional Conduct
and its interpretations and rulings.
(v) The Company and the Subsidiaries have filed all federal, state,
local and foreign tax returns which have been required to be filed and have
paid all taxes shown thereon and all assessments received by them or any of
them to the extent that such taxes have become due and are not being
contested in good faith, except such amounts that are not, singly or in the
aggregate, material to the Company and the Subsidiaries taken as a whole;
and there is no tax deficiency which has been or might reasonably be
expected to be asserted or threatened against the Company or any
Subsidiary, other than such tax deficiencies in such amounts that are not,
singly or in the aggregate, material to the Company and the Subsidiaries
taken as a whole.
(w) Neither the Company, nor any of the Subsidiaries nor any person
acting on its or their behalf has taken or will take, directly or
indirectly, any action designed to, or that might be reasonably expected
to, cause or result in stabilization or manipulation of the price of the
Notes.
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(x) Each of the Company and the Subsidiaries owns, possesses or has
obtained all licenses, franchises, permits, certificates, consents, orders,
approvals and other authorizations (collectively, "Permits") from, and has
made all declarations and filings with, all federal, state, local and other
governmental authorities (including foreign regulatory agencies), all
self-regulatory organizations, all domestic or foreign courts and other
tribunals necessary to own or lease, as the case may be, and to operate its
properties and to carry on its business as conducted as of the date hereof,
except where the failure to obtain any such Permit or make any such
declaration or filing would not, singly or in the aggregate, have a
Material Adverse Effect and neither the Company nor any such Subsidiary has
received any notice of any proceeding relating to revocation or
modification of any such Permit; and each of the Company and the
Subsidiaries is in compliance with all laws and regulations relating to the
conduct of its business as conducted as of the date hereof, except to the
extent that failure to so comply would not, singly or in the aggregate,
have a Material Adverse Effect.
(y) There are no existing or, to the Company's knowledge, threatened
labor disputes with the employees of the Company or any of the Subsidiaries
which, singly or in the aggregate, would have a Material Adverse Effect.
(z) The Company and the Subsidiaries (i) are in compliance with any
and all applicable foreign, federal, state, provincial, local or municipal
laws, rules, regulations, ordinances, codes, policies or rules of common
law and any judicial or administrative interpretation thereof, including
any judicial or administrative order, consent, decree or judgment 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, (iii) are in compliance with all terms and
conditions of any such permit, license or approval and (iv) have not
received any notice of any currently pending or threatened administrative,
regulatory or judicial action, suit, demand, claim, lien, notice of
noncompliance or violation, investigation or proceeding relating in any way
to any Environmental Law, except, in each case, where such noncompliance
with Environmental Laws, failure to receive required permits, licenses or
other approvals or failure to comply with the terms and conditions of such
permits, licenses or approvals would not, singly or in the aggregate, have
a Material Adverse Effect.
(aa) Each employee benefit plan, within the meaning of Section 3(3) of
the Employee Retirement Income Security Act of 1974, as amended ("ERISA"),
that is maintained, administered or contributed to by the Company or any of
its affiliates for employees or former employees of the Company and its
affiliates has been maintained in compliance with its terms and the
requirements of any applicable statutes, orders, rules and regulations,
including but not limited to ERISA and the Internal Revenue Code of 1986,
as amended (the "Code"), except to the extent that any such non-compliance,
singly or in the aggregate, would not have a Material Adverse Effect. No
prohibited transaction, within the meaning of Section 406 of ERISA or
Section 4975 of the Code has occurred with respect to any such plan
excluding transactions effected pursuant to a statutory or administrative
exemption. For each such plan which is subject to the funding rules of
Section 412 of the Code or Section 302 of ERISA no "accumulated funding
deficiency" as defined in Section 412 of the Code has been incurred,
whether or not waived, and the fair market value of the assets of each such
plan (excluding for these purposes accrued but unpaid contributions)
exceeded the present value of all benefits accrued under such plan
determined using reasonable actuarial assumptions.
7
(bb) No forward-looking statement (within the meaning of Section 27A
of the Securities Act and Section 21E of the Exchange Act) contained in the
Offering Memorandum has been made or reaffirmed without a reasonable basis
or has been disclosed other than in good faith.
(cc) Neither the Company nor any affiliate (as defined in Rule 501(b)
of Regulation D under the Securities Act ("Regulation D")) thereof has
directly, or through any agent, 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 Notes
in a manner that would require the registration under the Securities Act of
the offering contemplated by the Offering Memorandum.
(dd) Neither the Company nor any person acting on behalf of the
Company has offered or sold the Notes by means of any general solicitation
or general advertising within the meaning of Rule 502(c) under the
Securities Act or, with respect to Notes sold outside the United States to
non-U.S. persons (as defined in Rule 902 under the Securities Act), by
means of any directed selling efforts within the meaning of Rule 902 under
the Securities Act, and the Company and all persons acting on its behalf
have complied with and will implement the "offering restrictions" within
the meaning of such Rule 902.
(ee) It is not necessary in connection with the offer, sale and
delivery of the Notes in the manner contemplated by this Agreement and the
Offering Memorandum to register the Notes under the Securities Act or to
qualify an indenture under the TIA.
(ff) The Notes satisfy the requirements set forth in Rule 144A(d)(3)
under the Securities Act.
(gg) None of the Subsidiaries are organized under the laws of any
state of the United States or the District of Columbia.
5. The Company covenants and agrees with each of the Initial Purchasers
as follows:
(a) before distributing any amendment or supplement to the Offering
Memorandum, to furnish to the Initial Purchasers a copy of the proposed
amendment or supplement for review and not to distribute any such proposed
amendment or supplement to which the Initial Purchasers reasonably object;
(b) if, at any time prior to the completion of the Offering (as
defined in the Offering Memorandum), any event shall occur as a result of
which it is necessary to amend or supplement the Offering Memorandum in
order that the Offering Memorandum does not contain an 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 when the Offering
Memorandum is delivered to a purchaser, not misleading, or if it is
necessary to amend or supplement the Offering Memorandum to comply with
law, forthwith to prepare and furnish, at the expense of the Company, to
the Initial Purchasers and to the dealers (whose names and addresses the
Initial Purchasers will furnish to the Company) to which Notes may have
been sold by the Initial Purchasers and to any other dealers upon request,
such amendments or supplements to the Offering Memorandum as may be
necessary so that the Offering Memorandum as so amended or supplemented
will not contain an 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 when the Offering Memorandum is delivered to a purchaser,
misleading or so that the Offering Memorandum will comply with law;
8
(c) the Company will cooperate with the Initial Purchasers and their
counsel in connection with the registration or qualification of the Notes
for offering and sale by the Initial Purchasers and by dealers under the
securities or Blue Sky laws of such jurisdictions as the Initial Purchasers
may designate and will file such documents necessary or appropriate in
order to effect such registration or qualification; provided, however, that
in no event shall the Company be obligated to file a general consent to
service of process in any jurisdiction or to qualify to do business in any
jurisdiction where it is not now so qualified or to take any action that
would subject it to taxation or service of process in suits, other than
those arising out of the offering or sale of the Notes, in any jurisdiction
where it is not now so subject;
(d) for five years from the Closing Date, to furnish to the Initial
Purchasers copies of all reports or other communications (financial or
other) furnished to holders of Notes, and copies of any reports and
financial statements furnished to or filed with the Commission or any
national securities exchange;
(e) during the period beginning on the date hereof and continuing to
and including the Business Day following the Closing Date, not to offer,
sell, contract to sell, or otherwise dispose of any debt securities of or
guaranteed by the Company or any of the Subsidiaries which are
substantially similar to the Notes;
(f) to use the net proceeds received by the Company from the sale of
the Notes pursuant to this Agreement in the manner specified in the
Offering Memorandum under the caption "Use of Proceeds";
(g) to use its best efforts to cause such Notes to be eligible for
the PORTAL trading system ("PORTAL") of the National Association of
Securities Dealers, Inc. and for the Notes to be eligible for clearance and
settlement through the Depository Trust Company;
(h) during the period of two years after the Closing Date, the
Company will not, and will use its reasonable best efforts to cause its
subsidiaries not to, resell any of the Notes which constitute "restricted
securities" under Rule 144 that have been reacquired by any of them;
(i) whether or not the transactions contemplated by this Agreement
are consummated or this Agreement is terminated, to pay or cause to be paid
all costs and expenses incident to the performance of its obligations
hereunder, including without limiting the generality of the foregoing, all
costs and expenses (i) incident to the preparation, issuance, execution,
authentication and delivery of the Notes, including any expenses of the
Trustee, (ii) incident to the preparation, printing and distribution of the
Preliminary Offering Memorandum and the Offering Memorandum (including in
each case all exhibits, amendments and supplements thereto), (iii) incurred
in connection with the registration or qualification and determination of
eligibility for investment of the Notes under the laws of such
jurisdictions as the Initial Purchasers may designate (including reasonable
fees of counsel for the Initial Purchasers and their disbursements in
connection with such activities), (iv) in connection with the listing of
the Notes on any securities exchange or inclusion of the Notes on PORTAL,
(v) in connection with the printing (including word processing and
duplication costs) and delivery of the Preliminary and Supplemental Blue
Sky Memoranda and any Legal Investment Survey and the furnishing to the
Initial Purchasers and dealers of copies of the Preliminary Offering
Memorandum and Offering Memorandum (and any amendments and supplements
thereto), including mailing and shipping, as herein provided,
9
(vi) payable to rating agencies in connection with the rating of the Notes,
and (vii) incurred by the Company in connection with a "road show"
presentation to potential investors;
(j) to take all action that is appropriate or necessary to assure
that offerings of other securities will not be integrated for purposes of
the Securities Act with the offering contemplated hereby;
(k) not to solicit any offer to buy or offer to sell Notes by means
of any form of general solicitation or general advertising within the
meaning of Rule 502(c) of Regulation D under the Securities Act;
(l) while the Notes remain outstanding and are "restricted
securities" within the meaning of Rule 144(a)(3) under the Securities Act,
to, during any period in which the Company is not subject to Section 13 or
15(d) under the Exchange Act, make available to the Initial Purchasers and
any holder of Notes in connection with any sale thereof and any prospective
purchaser of Notes, in each case upon request, the information specified
in, and meeting the requirements of, Rule 144A(d)(4) ("Rule 144A(d)(4)
Information") under the Securities Act (or any successor thereto);
(m) not to take any action prohibited by Regulation M under the
Exchange Act, in connection with the distribution of the Notes contemplated
hereby;
(n) to furnish promptly to each of the Initial Purchasers and counsel
for the Initial Purchasers, without charge, as many copies of the
Preliminary Offering Memorandum and the Offering Memorandum (and any
amendments or supplements thereto) as may be reasonably requested; and
(o) to do and perform all things required to be done and performed by
it under this Agreement and the Registration Rights Agreement that are
within its control prior to or after the Closing Date, and to use its
reasonable best efforts to satisfy all conditions precedent on its part to
the delivery of the Notes.
6. The several obligations of the Initial Purchasers hereunder to
purchase the Notes on the Closing Date are subject to the performance by the
Company of its obligations hereunder and to the following additional conditions:
(a) The representations and warranties of the Company contained
herein shall be true and correct, in all material respects, on and as of
the Closing Date as if made on and as of the Closing Date and the Company
shall have complied, in all material respects, with all agreements and all
conditions on their part to be performed or satisfied hereunder at or prior
to the Closing Date.
(b) Subsequent to the execution and delivery of this Agreement and
prior to the Closing Date, there shall not have occurred any downgrading,
nor shall any notice have been given of (i) any downgrading, (ii) any
intended or potential downgrading or (iii) any review or possible change
that does not indicate an improvement, in the rating accorded any debt of
or guaranteed by the Company or any of the Subsidiaries by any "nationally
recognized statistical rating organization", as such term is defined for
purposes of Rule 436(g)(2) under the Securities Act, if, in the case of the
securities of any Subsidiary, the event described in clauses (i), (ii) or
(iii) above would have a Material Adverse Effect.
(c) Since the respective dates as of which information is given in
the Offering Memorandum, there shall not have been any material change in
the capital stock or long-term debt of the Com-
10
pany or any of the Subsidiaries or any Material Adverse Change, or any
development involving a Prospective Material Adverse Change, otherwise than
as set forth or contemplated in the Offering Memorandum, the effect of which
in the sole judgment of the Initial Purchasers makes it impracticable or
inadvisable to proceed with the offering or the delivery of the Notes on the
Closing Date on the terms and in the manner contemplated in the Offering
Memorandum. Neither the Company nor any of the Subsidiaries has sustained
since the date of the latest audited financial statements included in the
Offering Memorandum any material loss or interference with its business
from fire, explosion, flood or other calamity, whether or not covered by
insurance, or from any labor dispute or court or governmental action,
order or decree, otherwise than as set forth or contemplated in the
Offering Memorandum.
(d) The Initial Purchasers shall have received on and as of the
Closing Date a certificate of the chief financial officer of the Company,
satisfactory to the Initial Purchasers to the effect set forth in
subsections (a) through (c) of this Section and to the further effect that
(i) the audited and unaudited financial statements of the Company included
or incorporated by reference in the Offering Memorandum have been prepared
in conformity with generally accepted accounting principles applied on a
consistent basis, (ii) the interim statements have been prepared on a basis
substantially consistent with that of the audited consolidated financial
statements, except for the absence of year-end adjustments to interim
statements and (iii) such officer has notified the Company's independent
public accountants as to the foregoing.
(e) Bachner, Tally, Xxxxxxx & Xxxxxx LLP, counsel for the Company,
shall have furnished to the Initial Purchasers their written opinion, dated
the Closing Date, in form and substance satisfactory to the Initial
Purchasers, to the effect that:
(i) the Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of Delaware
with corporate power and authority to own and lease its properties and
conduct its business as described in the Offering Memorandum;
(ii) other than as set forth in the Offering Memorandum, to such
counsel's knowledge, there are no Proceedings pending against or
affecting the Company or any of the Subsidiaries or any of their
respective properties or of which the Company or any of the
Subsidiaries is or may be a party or of which any property of the
Company or any of the Subsidiaries is or may be the subject which,
singly or in the aggregate, could have, or reasonably could be
expected to have, a Material Adverse Effect or which could reasonably
be expected to prevent or adversely affect the issuance of the Notes
or the Exchange Notes or challenge the validity or enforceability of
any of the Offering Agreements or any action taken or to be taken
pursuant to the Offering Agreements; and to the best knowledge of such
counsel, no such Proceedings are threatened or contemplated by
governmental authorities or threatened by others;
(iii) this Agreement has been duly authorized, executed and
delivered by the Company;
(iv) the Registration Rights Agreement has been duly authorized,
executed and delivered by the Company and, when duly authorized,
executed and delivered by the Initial Purchasers, will constitute a
valid and legally binding agreement of the Company, enforceable
against the Company in accordance with its terms except, to the extent
that the enforcement thereof may be subject to (i) bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting
creditors' rights generally, (ii) general principles of equity and
the discretion of
11
the court before which any proceeding therefor may be brought and (iii)
with respect to rights of indemnification and contribution, principles
of public policy or federal or state securities laws relating thereto.
The Company has all requisite corporate power and authority to execute
each of the Offering Agreements and to perform its obligations
hereunder and thereunder; and all corporate action or action by
stockholders and/or the board of directors, as the case may be,
required to be taken by the Company for the due authorization,
execution and delivery of each of the Offering Agreements and the
consummation of the transactions contemplated thereby have been duly
and validly taken;
(v) the Indenture has been duly authorized, executed and
delivered by the Company and, when duly authorized, executed and
delivered by the Trustee, will constitute a valid and legally binding
agreement of the Company, enforceable against the Company in accordance
with its terms except to the extent that the enforcement thereof may be
subject to (i) bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting creditors' rights generally and (ii) general
principles of equity and the discretion of the court before which any
proceeding therefor may be brought;
(vi) the Notes and the Exchange Notes have been duly authorized
and, when executed, issued and delivered pursuant to this Agreement,
the Indenture or the Registration Rights Agreement, as the case may
be, will have been duly executed, authenticated, issued and delivered
and will constitute valid and legally binding obligations of the
Company, entitled to the benefits provided by the Indenture and
enforceable against the Company in accordance with their terms, except
to the extent that the enforcement thereof may be subject to
(i) bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting creditors' rights generally and (ii) general principles of
equity and the discretion of the court before which any proceeding
therefor may be brought; and the Notes were not, when issued, of the
same class as securities known to such counsel (after due inquiry) to
be listed on a national securities exchange registered under Section 6
of the Securities Exchange Act of 1934, as amended (the "Exchange
Act") or quoted in a U.S. automated inter-dealer quotation system;
(vii) the execution and delivery by the Company of the Offering
Agreements, the issuance and sale of the Notes and the Exchange Notes,
the performance by the Company of all of its obligations under the
Offering Agreements and the consummation of the transactions
contemplated thereby do not and will not (i) conflict with or result
in a breach or violation of any of the terms or provisions of, or
constitute a default under, any indenture, mortgage, deed of trust,
loan agreement, franchise agreement or other agreement or instrument,
in each case, identified to such counsel as material in a certificate
of the Company or filed by the Company under the Securities Act or the
Exchange Act as a material agreement, to which the Company or any of
the Subsidiaries is a party or by which the Company or any of the
Subsidiaries is bound or to which any of their respective properties
is subject or (ii) result in any violation of (a) the charter or
by-laws of the Company or (b) any existing obligation of or
restriction on the Company under any order, judgment or decree of any
Delaware, New York or federal court or governmental authority binding
on the Company and identified to such counsel in a certificate of the
Company or violate any material Delaware, New York or federal statute
or regulation that such counsel has, in the exercise of customary
professional diligence, recognized as directly applicable to the
Company or to transactions of the type contemplated by the Offering
Agreements, except, in the case of clauses (i) and (ii)(b), for any
such conflicts, breaches, defaults or violations that, singly or in
the aggregate, would not have a Material Adverse Effect;
12
(viii) no consent, approval, authorization, order, license,
registration or qualification of or with any Delaware, New York or
federal court or governmental agency or body is required for the
issuance and sale of the Notes and the issuance of the Exchange Notes
or the consummation of the other transactions contemplated by the
Offering Agreements, except for such consents, approvals,
authorizations, orders, licenses, registrations or qualifications as
(i) have been obtained, (ii) as may be required under state securities
or Blue Sky laws in connection with the purchase and distribution of
the Notes by the Initial Purchasers and (iii) in the case of the
performance of the Registration Rights Agreement, such as may be
required under the Securities Act and the TIA;
(ix) the Company is not, nor will it be after giving effect to
the offering and sale of the Notes and the application of the proceeds
therefrom (as described in the Offering Memorandum under the caption
"Use of Proceeds"), an "investment company" or an entity "controlled"
by an "investment company" as such terms are defined in the Investment
Company Act;
(x) the summaries of the agreements or documents to which the
Company is a party (including the Notes, the Registration Rights
Agreement and the Indenture) included under the headings "Description
of Credit Facilities -- Credit Agreement" and "Description of Notes"
in the Offering Memorandum, insofar as such statements purport to
constitute summary of legal documents or instruments, fairly summarize
and present in all material respects the information required to be
presented therein;
(xi) no registration under the Securities Act of the Notes is
required in connection with the sale of the Notes to the Initial
Purchasers as contemplated by this Agreement and the Offering
Memorandum or in connection with the initial resale of the Notes by
the Initial Purchasers in accordance with Section 2 (including
Annex I) of this Agreement, and prior to the commencement of the
Exchange Offer (as defined in the Registration Rights Agreement) or
the effectiveness of the Shelf Registration Statement (as defined in
the Registration Rights Agreement), the Indenture is not required to
be qualified under the TIA, in each case assuming (i) that the
purchasers who buy the Notes in the initial resales are Qualified
Institutional Buyers or non-U.S. Persons (as defined in Rule 902 under
the Act), (ii) the accuracy of the Company's representations contained
in this Agreement regarding the absence of a general solicitation in
connection with the sale of the Notes to the Initial Purchasers and
the initial resales thereof and the accuracy of the Initial
Purchasers' representations contained in this Agreement and (iii) the
compliance by the Initial Purchasers, any other seller of the Notes or
any person acting on their behalf with the provisions of Rule
144A(d)(2) of the Securities Act; and
(xii) such counsel has no reason to believe that the Offering
Memorandum (other than the financial statements and other financial
information included therein as to which such counsel need express no
belief) or any amendment or supplement thereto contained as of its
date or contains as of the Closing Date any untrue statement of a
material fact or omitted as of its date or omits as of the Closing
Date 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.
With respect to subparagraph (xiii) above, Bachner, Tally, Xxxxxxx &
Xxxxxx LLP may state that such counsel has participated in conferences with
directors, officers and other representatives of the
13
Company and representatives of the independent public accountants for the
Company, at which conferences the contents of the Offering Memorandum and
related matters were discussed, and, although such counsel has not
independently verified and is not passing upon and assumes no responsibility
for the accuracy, completeness or fairness of the statements contained in
the Offering Memorandum, except as specified.
In rendering such opinions, such counsel may rely (A) as to matters
involving the application of laws other than the laws of the United States
and the State of New York and the General Corporation Law of the State of
Delaware, to the extent such counsel deems proper and to the extent
specified in such opinion, if at all, upon an opinion or opinions (in form
and substance reasonably satisfactory to the Initial Purchasers' counsel)
of other counsel, reasonably acceptable to the Initial Purchasers' counsel,
familiar with the applicable laws and (B) as to matters of fact, to the
extent such counsel deems proper, on certificates of responsible officers
of the Company and certificates or other written statements of officials of
jurisdictions having custody of documents respecting the corporate
existence or good standing of the Company.
The opinion of Bachner, Tally, Xxxxxxx & Xxxxxx LLP described above
shall be rendered to the Initial Purchasers at the request of the Company
and shall so state therein.
(f) The Initial Purchasers shall have received on and as of the
Closing Date an opinion of Xxxxxx Xxxxxx & Xxxxxxx, counsel to the Initial
Purchasers, with respect to such matters as the Initial Purchasers may
reasonably request, and such counsel shall have received such papers and
information as they may reasonably request to enable them to pass upon such
matters.
(g) On the date of the issuance of the Offering Memorandum and also
on the Closing Date, Xxxxxx Xxxxxxxx LLP shall have furnished to the
Initial Purchasers letters, dated the respective dates of delivery thereof,
in form and substance satisfactory to the Initial Purchasers, containing
statements and information of the type customarily included in accountants'
"comfort letters" with respect to the financial statements and certain
financial information contained in the Offering Memorandum.
(h) The Company shall have executed and delivered the Registration
Rights Agreement.
(i) On or prior to the Closing Date, the Company shall have furnished
to the Initial Purchasers such further certificates and documents as the
Initial Purchasers shall reasonably request.
(j) None of the Initial Purchasers shall have discovered and
disclosed to the Company on or prior to the Closing Date that the Offering
Memorandum or any amendment or supplement thereto contains an untrue
statement of a fact which, in the opinion of counsel for the Initial
Purchasers, is material or omits to state any fact which, in the opinion of
such counsel, is material or is necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading.
7. (a) The Company agrees to indemnify and hold harmless each Initial
Purchaser, each affiliate of any Initial Purchaser which assists such Initial
Purchaser in the distribution of the Notes, and each person, if any, that
controls any Initial Purchaser within the meaning of either Section 15 of the
Securities Act or Section 20 of the Exchange Act, from and against any and all
losses, claims, damages and liabilities (including, without limitation, the
reasonable legal fees and other expenses incurred in connection with any suit,
action or proceeding or any claim asserted) caused by any untrue statement or
alleged untrue statement of a material fact contained in the Offering
Memorandum, any preliminary offering memorandum or any amendment or supplement
14
thereto, or caused by any omission or alleged omission to state therein a
material fact necessary to make the statements therein not misleading, except
insofar as such losses, claims, damages or liabilities are caused by any untrue
statement or omission or alleged untrue statement or omission made in reliance
upon and in conformity with information relating to any Initial Purchaser
furnished to the Company in writing by such Initial Purchaser expressly for use
therein; provided, however, that the foregoing indemnity agreement with respect
to any preliminary offering memorandum shall not inure to the benefit of any
Initial Purchaser from whom the person asserting any such losses, claims,
damages, liabilities or judgments purchased Notes, or any person controlling
such Initial Purchaser, if a copy of the Offering Memorandum (as then amended or
supplemented if the Company shall have furnished any amendments or supplements
thereto) was not sent or given by or on behalf of such Initial Purchaser to such
person, if required by law so to have been delivered, at or prior to the written
confirmation of the sale of the Notes to such person, and if the Offering
Memorandum (as so amended or supplemented) would have cured the defect giving
rise to such losses, claims, liabilities; unless such failure to furnish was a
result of non-compliance by the Company with Section 5(n).
(b) Each Initial Purchaser agrees, severally and not jointly, to indemnify
and hold harmless the Company, the Company's directors and executive officers
and each person that controls the Company within the meaning of Section 15 of
the Securities Act and Section 20 of the Exchange Act, to the same extent as the
foregoing indemnity from the Company to each Initial Purchaser, but only with
respect to information relating to such Initial Purchaser furnished to the
Company in writing by such Initial Purchaser expressly for use in the Offering
Memorandum, any preliminary offering memorandum or any amendment or supplement
thereto.
(c) If any suit, action, proceeding (including any governmental or
regulatory investigation), claim or demand shall be brought or asserted against
any person in respect of which indemnity may be sought pursuant to either of the
two preceding paragraphs, such person (the "Indemnified Person") shall promptly
notify the person against whom such indemnity may be sought (the "Indemnifying
Person") in writing, and the Indemnifying Person, upon request of the
Indemnified Person, shall retain counsel reasonably satisfactory to the
Indemnified Person to represent the Indemnified Person and any others the
Indemnifying Person may designate in such proceeding and shall pay the
reasonable fees and expenses of such counsel related to such proceeding;
provided, however, that the failure to so notify the Indemnifying Person shall
not relieve it of any obligation or liability which it may have hereunder or
otherwise (unless and only to the extent that such failure directly results in
the loss or compromise of any material rights or defenses). In any such
proceeding, any Indemnified Person 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 Person unless (i) the Indemnifying Person and the Indemnified
Person shall have mutually agreed to the contrary, (ii) the Indemnifying Person
has failed within a reasonable time to retain counsel reasonably satisfactory to
the Indemnified Person or (iii) the named parties in any such proceeding
(including any impleaded parties) include both the Indemnifying Person and the
Indemnified Person 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 Person shall not, in connection with any
proceeding or related proceeding in the same jurisdiction, be liable for the
reasonable fees and expenses of more than one separate firm (in addition to any
local counsel) for all Indemnified Persons, and that all such fees and expenses
shall be reimbursed as they are incurred. Any such separate firm for the
Initial Purchasers, each affiliate of any Initial Purchaser which assists such
Initial Purchaser in the distribution of the Securities and such control persons
of Initial Purchasers shall be designated in writing by X.X. Xxxxxx Securities
Inc. and any such separate firm for the Company, its directors, its executive
officers and such control persons of the Company shall be designated in writing
by the Company. The Indemnifying Person 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
Person agrees to indemnify any Indemnified Person from and against any loss or
liability by reason of such settlement or judgment. Notwithstanding the
foregoing sentence, if at any time an Indemnified Person shall have
15
requested an Indemnifying Person to reimburse the Indemnified Person for fees
and expenses of counsel as contemplated by the second and third sentences of
this clause (c), the Indemnifying Person agrees that it shall be liable for any
settlement of any proceeding or claim effected without its written consent if
(i) such settlement is entered into more than 30 days after receipt by such
Indemnifying Person of the aforesaid request and (ii) such Indemnifying Person
shall not have reimbursed the Indemnified Person in accordance with such request
prior to the date of such settlement. No Indemnifying Person shall, without the
prior written consent of the Indemnified Person, effect any settlement of any
pending or threatened proceeding in respect of which any Indemnified Person is
or could have been a party and indemnity could have been sought hereunder by
such Indemnified Person, unless such settlement includes an unconditional
release of such Indemnified Person from all liability on claims that are the
subject matter of such proceeding.
For purposes of this Section 7, the only written information furnished by
the Initial Purchasers to the Company expressly for use in the Offering
Memorandum is the information in the last paragraph of the cover page of the
Offering Memorandum, and the last paragraph on page 2 of the Offering Memorandum
and the second and third sentences of the third paragraph, the sixth paragraph,
the eighth paragraph and the tenth paragraph, all under the caption "Plan of
Distribution" in the Offering Memorandum.
(d) If the indemnification provided for in paragraphs (a) and (b) of this
Section 7 is unavailable to an Indemnified Person in respect of any losses,
claims, damages or liabilities referred to therein, then each Indemnifying
Person under such paragraph, in lieu of indemnifying such Indemnified Person
thereunder, shall contribute to the amount paid or payable by such Indemnified
Person 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 on the one hand and the Initial Purchasers on the other hand from the
offering of the Notes or (ii) if the allocation provided by clause (i) above is
not permitted by applicable law, in such proportion as is appropriate to reflect
not only the relative benefits referred to in clause (i) above but also the
relative fault of the Company on the one hand and the Initial 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 on the one hand
and the Initial Purchasers on the other shall be deemed to be in the same
respective proportions as the net proceeds from the offering (before deducting
expenses) received by the Company and the total discounts and commissions
received by the Initial Purchasers, in each case as set forth in the table on
the cover of the Offering Memorandum, bear to the aggregate offering price of
the Notes. The relative fault of the Company on the one hand and 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 or by the Initial Purchasers and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission.
(e) The Company and the Initial Purchasers agree that it would not be just
and equitable if contribution pursuant to this Section 7 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 the immediately preceding paragraph.
The amount paid or payable by an Indemnified Person as a result of the losses,
claims, damages and liabilities referred to in the immediately preceding
paragraph shall be deemed to include, subject to the limitations set forth
above, any reasonable legal or other expenses incurred by such Indemnified
Person in connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this Section 7, in no event shall an Initial
Purchaser be required to contribute any amount in excess of the amount by which
the total price at which the Notes purchased by it were offered 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
16
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 Initial Purchasers'
obligations to contribute pursuant to this Section 7 are several in
proportion to the respective principal amount of Notes set forth opposite
their names in Schedule I hereto, and not joint.
The remedies provided for in this Section 7 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.
The indemnity and contribution agreements contained in this Section 7 and
the representations and warranties of the Company set forth in this Agreement
shall remain operative and in full force and effect regardless of (i) any
termination of this Agreement, (ii) any investigation made by or on behalf of
any Initial Purchaser or any person controlling any Initial Purchaser or by
or on behalf of the Company, the Company's officers or directors or any other
person controlling the Company and (iii) acceptance of and payment for any of
the Notes.
8. Notwithstanding anything herein contained, this Agreement may be
terminated in the absolute discretion of the Initial Purchasers, by notice
given to the Company, if after the execution and delivery of this Agreement
and prior to the Closing Date any of the following has occurred: (i) since
the respective dates as of which information is given in the Offering
Memorandum, any material adverse change or development involving a
prospective material adverse change in the condition, financial or otherwise,
of the Company, or the earnings, affairs, or business prospects of the
Company, whether or not arising in the ordinary course of business, which
would, in your judgment, make it impracticable to market the Notes on the
terms and in the manner contemplated in the Offering Memorandum, (ii) any
outbreak or escalation of hostilities or other national or international
calamity or crisis or material change in economic conditions, if the effect
of such outbreak, escalation, calamity, crisis or change on the financial
markets of the United States or elsewhere would, in your judgment, make it
impracticable to market the Notes on the terms and in the manner contemplated
in the Offering Memorandum, (iii) the suspension or material limitation of
trading in securities on the New York Stock Exchange, the American Stock
Exchange or the NASDAQ National Market or limitation on prices for securities
on any such exchange or National Market, (iv) trading of any securities of
the Company shall have been suspended on any exchange, (v) the enactment,
publication, decree or other promulgation of any federal or state statute,
regulation, rule or order of any court or other governmental authority which
in your judgment materially and adversely affects, or will materially and
adversely affect, the business or operations of the Company, (vi) the
declaration of a banking moratorium by either federal or New York State
authorities or (vii) the taking of any action by any federal, state or local
government or agency in respect of its monetary or fiscal affairs which in
your judgment has a material adverse effect on the financial markets in the
United States.
9. This Agreement shall become effective upon the execution and
delivery hereof by the parties hereto.
10. If on the Closing Date, any one or more of the Initial Purchasers
shall fail or refuse to purchase Notes which it or they have agreed to
purchase hereunder, and the aggregate number of Notes which such defaulting
Initial Purchaser or Initial Purchasers agreed but failed or refused to
purchase is not more than one-tenth of the aggregate number of Notes to be
purchased on such date, the other Initial Purchasers shall be obligated
severally in the proportions that the number of Notes set forth opposite
their respective names in Schedule I bears to the aggregate number of Notes
set forth opposite the names of all such non-defaulting Initial Purchasers,
or in such other proportions as the Initial Purchasers may specify, to
purchase the Notes which such defaulting Initial Purchaser or Initial
Purchasers agreed but failed or refused to purchase on such date; provided,
however, that in no event shall the number of Notes that any Initial
Purchaser has agreed to purchase pursuant to Section 1 be increased pursuant
to this Section 9 by an amount in excess of one-ninth of such number of Notes
without the
17
written consent of such Initial Purchaser. If on the Closing Date, any
Initial Purchaser or Initial Purchasers shall fail or refuse to purchase
Notes which it or they have agreed to purchase hereunder, and the aggregate
number of Notes with respect to which such default occurs is more than
one-tenth of the aggregate number of Notes to be purchased, and arrangements
satisfactory to the remaining Initial Purchasers and the Company for the
purchase of such Notes 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 the Company. In any such case either the remaining
Initial Purchasers 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 Offering 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 or
the offering contemplated hereunder.
11. 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 to
comply with the terms or to fulfill any of the conditions of this Agreement
in any material respect, or if for any reason the Company shall be unable to
perform its obligations under this Agreement in any material respect or any
condition of the Initial Purchasers' obligations cannot be fulfilled in any
material respect, the Company agrees to 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
reasonable fees and expenses of their counsel) reasonably incurred by such
Initial Purchasers in connection with this Agreement or the offering
contemplated hereunder.
12. This Agreement shall inure to the benefit of and be binding upon the
Company, the Initial Purchasers, any affiliate of any Initial Purchaser which
assists such Initial Purchaser in the distribution of the Notes, any
controlling persons referred to herein and their respective successors and
assigns. Nothing expressed or mentioned in this Agreement is intended or
shall be construed to give any other person, firm or corporation any legal or
equitable right, remedy or claim under or in respect of this Agreement or any
provision herein contained. No purchaser of Notes from any Initial Purchaser
shall be deemed to be a successor by reason merely of such purchase.
13. Any action by the Initial Purchasers hereunder may be taken by X.X.
Xxxxxx Securities Inc. alone on behalf of the Initial Purchasers, and any
such action taken by X.X. Xxxxxx Securities Inc. alone shall be binding upon
the Initial Purchasers. All notices and other communications hereunder shall
be in writing and shall be deemed to have been duly given if mailed or
transmitted by any standard form of telecommunication. Notices to the
Initial Purchasers shall be given to the Initial Purchasers c/o X.X. Xxxxxx
Securities Inc., 00 Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000 (telecopy:
212/648-5121 or 212/648-5951); Attention: Syndicate Department. Notices to
the Company shall be given at Corporate Headquarters, 000 Xxxxxxxx Xxxxxx,
Xxxxx Xxxxxxxxxx, Xxx Xxxxxx 00000, (telecopy 201/807-2849), Attention: EVP
- Finance.
14. This Agreement may be signed in counterparts, each of which shall be
an original and all of which together shall constitute one and the same
instrument.
15. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF NEW YORK, AS APPLIED TO CONTRACTS MADE AND PERFORMED
WITHIN THE STATE OF NEW YORK, WITHOUT REGARD TO THE PRINCIPLES OF CONFLICTS
OF LAW. EACH OF THE PARTIES HERETO AGREES TO SUBMIT TO THE JURISDICTION OF
THE COURTS OF THE STATE OF NEW YORK IN ANY ACTION OR PROCEEDING ARISING OUT
OF OR RELATING TO THIS AGREEMENT.
18
[Remainder of Page Intentionally Left Blank.]
19
If the foregoing is in accordance with your understanding, please sign
and return four counterparts hereof.
Very truly yours,
AEP INDUSTRIES INC.
By: ______________________________
Name:
Title:
Accepted as of the date
first above written:
X.X. XXXXXX SECURITIES INC.
By: ______________________________
Name:
Title:
XXXXXX XXXXXXX & CO. INCORPORATED
By: ______________________________
Name:
Title:
SALOMON BROTHERS INC
By: ______________________________
Name:
Title:
20
ANNEX I
(A) The Notes have not been and will not be registered under the
Securities Act and may not be offered or sold within the United States or to, or
for the account or benefit of, U.S. persons except in accordance with Regulation
S under the Securities Act or pursuant to an exemption from the registration
requirements of the Securities Act. Each Initial Purchaser represents that it
has offered and sold the Notes and will offer and sell the Notes (i) as part of
their distribution at any time and (ii) otherwise until 40 days after the later
of the commencement of the offering and the date of closing thereof, only in
accordance with Rule 903 of Regulation S or Rule 144A under the Securities Act
or pursuant to paragraph B of this Annex. Accordingly, each Initial Purchaser
agrees that none of it, its affiliates or any persons acting on its or their
behalf has engaged or will engage in any directed selling efforts with respect
to the Notes and it and they have complied and will comply with the offering
restrictions requirement of Regulation S. Each Initial Purchaser agrees that,
at or prior to confirmation of sale of Notes (other than a sale pursuant to Rule
144A or paragraph B of this Annex), it will have sent to each distributor,
dealer or person receiving a selling concession, fee or other remuneration that
purchases Notes from it during the restricted period a confirmation or notice to
substantially the following effect:
"The Notes covered hereby have not been registered under the U.S.
Securities Act of 1933 (the "Securities Act") and may not be offered and
sold within the United States or to, or for the account or benefit of, U.S.
persons (i) as part of their distribution at any time or (ii) otherwise
until 40 days after the later of the commencement of the offering 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 paragraph have the meanings given to them by Regulation S.
Each Initial Purchaser further agrees that it has not entered and will not
enter into any contractual arrangement with respect to the distribution or
delivery of the Notes, except with its affiliates or with the prior written
consent of the Company.
(B) Notwithstanding the foregoing, Notes in registered form may be
offered, sold and delivered by the Initial Purchasers in the United States and
to U.S. persons pursuant to Section 2 of this Agreement without delivery of the
written statement required by paragraph (A) above.
(C) Each Initial Purchaser further represents and agrees that (i) it has
not offered or sold, and will not offer or sell, in the United Kingdom by means
of any document, any Notes other than to persons whose ordinary activities
involve them in acquiring, holding, managing or disposing of investments (as
principal or agent) for the purposes of their business or which it is reasonable
to expect will so do, or in circumstances which do not otherwise constitute an
offer to the public within the meaning of the Public Offers of Securities
Regulations 1995 of Great Britain, (ii) it has complied, and will comply, with
all applicable provisions of the Financial Services Xxx 0000 and any regulation
promulgated thereto of Great Britain with respect to anything done by it in
relation to the Notes in, from or otherwise involving the United Kingdom, and
(iii) it has only issued or passed on, and will only issue or pass on, in the
United Kingdom, any document received by it in connection with the issuance of
the Notes to a person who is of a kind described in Article 11(3) of the
Financial Services Xxx 0000 (Investment Advertisements) (Exemptions) Order 1995
of Great Britain or is a person to whom the document may otherwise lawfully be
issued or passed on.
(D) Each Initial Purchaser agrees that it will not offer, sell or deliver
any of the Notes in any jurisdiction except under circumstances that will result
in compliance with the applicable laws thereof, and that it will take at its own
expense whatever action is required to permit its purchase and resale of the
Notes in such jurisdictions. Each Initial Purchaser understands that no action
has been taken to permit a public offering in any jurisdiction where action
would be required for such purposes. Each Initial Purchaser agrees not to cause
any advertisement of the Notes to be published in any newspaper or periodical or
posted in any public place and not to issue any circular relating to the Notes.
22
SCHEDULE I
Principal
Amount of
Notes To Be
Initial Purchaser Purchased
----------------- --------------
X.X. Xxxxxx Securities Inc. ....................... $120,000,000
Xxxxxx Xxxxxxx & Co. Incorporated ................. 40,000,000
Salomon Brothers Inc. ............................. 40,000,000
--------------
Total ................................... $200,000,000
==============
