Exhibit 1
EXECUTION COPY
AMERICAN MEDIA OPERATIONS, INC.
$150,000,000
10-1/4% Series B Senior Subordinated Notes due 2009
PURCHASE AGREEMENT
February 11, 2002
X.X. XXXXXX SECURITIES INC.
BEAR, XXXXXXX & CO. INC.
c/o X.X. Xxxxxx Securities Inc.
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Ladies and Gentlemen:
American Media Operations, Inc., a Delaware corporation (the
"Company"), proposes to issue and sell $150,000,000 aggregate principal amount
of its 10-1/4% Series B Senior Subordinated Notes due 2009 (the "Securities"),
which shall have substantially identical terms as the Company's outstanding
10 1/4% Senior Subordinated Notes due 2009 (the "1999 Notes") issued under the
indenture dated as of May 7, 1999 (the "1999 Notes Indenture") in the aggregate
principal amount of $250,000,000, and described in the Company's offering
memorandum dated as of April 30, 1999. The Securities will be issued pursuant to
an Indenture to be dated as of February 14, 2002 (the "Indenture"), among the
Company, the subsidiaries of the Company listed on the signature pages hereof
(the "Guarantors") and JPMorgan Chase Bank, as trustee (the "Trustee"), and will
be guaranteed on an unsecured senior subordinated basis by the Guarantors. The
Company and the Guarantors hereby confirm their agreement with X.X. Xxxxxx
Securities Inc. ("JPMorgan") and Bear, Xxxxxxx & Co. Inc. ("Bear Xxxxxxx" and,
together with JPMorgan, the "Initial Purchasers") concerning the purchase of the
Securities from the Company by the several Initial Purchasers.
The Securities will be offered and sold to the Initial Purchasers
without being registered under the Securities Act of 1933, as amended (the
"Securities Act"), in reliance upon an exemption therefrom. The Company has
prepared a preliminary offering memorandum dated February 5, 2002 (such
preliminary offering memorandum,
including any information incorporated therein by reference, the "Preliminary
Offering Memorandum") and will prepare an offering memorandum dated the date
hereof (such offering memorandum, including any information incorporated therein
by reference, the "Offering Memorandum") setting forth and incorporating by
reference information concerning the Company and the Securities. The Preliminary
Offering Memorandum and the Offering Memorandum will incorporate by reference
the Company's Annual Report on Form 10-K for the year ended March 26, 2001,
filed with the Securities and Exchange Commission (the "Commission") on June 25,
2001, the Company's Quarterly Reports on Form 10-Q for the quarters ended June
25, 2001, September 24, 2001 and December 24, 2001, filed with the Commission on
August 9, 2001, November 8, 2001 and February 5, 2002, respectively, and the
Company's Current Report on Form 8-K filed with the Commission on February 5,
2002 and any amendment or supplemental or additional filings made with the
Commission in the future (collectively, the "SEC Reports"). Copies of the
Preliminary Offering Memorandum have been, and copies of the Offering Memorandum
will be, delivered by the Company to the Initial Purchasers pursuant to the
terms of this Agreement. Any references herein to the Preliminary Offering
Memorandum and the Offering Memorandum shall be deemed to include any amendment
or supplement thereto, and any amendment or supplemental or additional filing
made with the Commission in the future, unless otherwise noted. The Company
hereby confirms that it has authorized the use of the Preliminary Offering
Memorandum and the Offering Memorandum in connection with the offering and
resale of the Securities by the Initial Purchasers in accordance with Section 2.
In connection with the issuance of the Securities, the Company will
obtain an Amendment and Agreement (the "Amendment") to the Company's Credit
Agreement dated as of May 7, 1999, as amended and restated as of November 1,
1999, among American Media, Inc., a Delaware corporation and the Company's
parent company ("Holdings"), the Company, the lenders party thereto and JPMorgan
Chase Bank (formerly known as The Chase Manhattan Bank), as administrative agent
(the "Credit Agreement"). Pursuant to the Amendment, the Company will be
permitted to issue the Securities and incur the indebtedness represented
thereby, will be permitted to use 50% of the gross proceeds thereof to make a
distribution to Holdings to enable Holdings to make a further distribution to
EMP Group L.L.C. ("LLC") and will be permitted to use the remaining net proceeds
from the offering after making such distribution to prepay term loans under the
Credit Agreement.
Holders of the Securities (including the Initial Purchasers and
their direct and indirect transferees) will be entitled to the benefits of an
Exchange and Registration Rights Agreement, substantially in the form attached
hereto as Annex A (the "Registration Rights Agreement"), pursuant to which (a)
the Company will agree to file with the Commission (i) a registration statement
under the Securities Act (the "Exchange Offer Registration Statement")
registering an issue of senior subordinated notes of the Company (the "Exchange
Securities") which are identical in all material respects to the Securities
(except that the Exchange Securities will not contain terms with respect to
transfer restrictions) and (ii) under certain circumstances, a shelf
registration statement pursuant to Rule 415 under the Securities Act (the "Shelf
Registration Statement") and (b) the Company will agree to extend to all holders
of the 1999 Notes an offer to exchange all or a portion of such holders' 1999
Notes, on a par-for-par basis, for Exchange Securities of the same series and
with the same CUSIP number as the Exchange Securities offered to holders of the
Securities and to register such offer under the Exchange Offer Registration
Statement.
Capitalized terms used but not defined herein shall have the
meanings given to such terms in the Offering Memorandum. References to
information or data "contained in", "included in" or "described in" the
Preliminary Offering Memorandum or the Offering Memorandum includes information
incorporated by reference from the SEC Reports.
1. Representations, Warranties and Agreements of the Company. The
Company and each of the Guarantors represent and warrant to, and agree with, the
Initial Purchasers on and as of the date hereof and the Closing Date (as defined
in Section 3) that:
(a) Each of the Preliminary Offering Memorandum (including the SEC
Reports) and the Offering Memorandum (including the SEC Reports), as of
their respective dates, did not, and on the Closing Date the Offering
Memorandum will not, contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary
in order to make the statements therein, in the light of the circumstances
under which they were made, not misleading; provided that the Company and
the Guarantors make no representation or warranty as to information
contained in or omitted from the Preliminary Offering Memorandum or the
Offering Memorandum in reliance upon and in conformity with written
information relating to the Initial Purchasers furnished to the Company by
or on behalf of any Initial Purchaser specifically for use therein (the
"Initial Purchasers' Information").
(b) Each of the Preliminary Offering Memorandum and the Offering
Memorandum, as of its respective date, contains all of the information
that, if requested by a prospective purchaser of the Securities, would be
required to be provided to such prospective purchaser pursuant to Rule
144A(d)(4) under the Securities Act.
(c) Assuming the accuracy of the representations and warranties of
the Initial Purchasers contained in Section 2 and their compliance with
the agreements set forth therein, it is not necessary, in connection with
the issuance and sale of the Securities to the Initial Purchasers and the
offer, resale and delivery of the Securities by the Initial Purchasers in
the manner contemplated by this Agreement and the Offering Memorandum, to
register the Securities under
the Securities Act or to qualify the Indenture under the Trust Indenture
Act of 1939, as amended (the "Trust Indenture Act").
(d) The Company and each of its subsidiaries have been duly
incorporated and are validly existing as corporations in good standing
under the laws of their respective jurisdictions of incorporation, are
duly qualified to do business and are in good standing as foreign
corporations in each jurisdiction in which their respective ownership or
lease of property or the conduct of their respective businesses requires
such qualification, and have all power and authority necessary to own or
hold their respective properties and to conduct the businesses in which
they are engaged, except where the failure to so qualify or have such
power or authority would not, singularly or in the aggregate, have a
material adverse effect on the condition (financial or otherwise), results
of operations or business of the Company and its subsidiaries taken as a
whole (a "Material Adverse Effect").
(e) As of the Closing Date, the Company will have an authorized
capitalization as set forth in the Offering Memorandum under the heading
"Capitalization"; and all of the outstanding shares of capital stock of
Holdings and of the Company have been duly and validly authorized and
issued and are fully paid and non-assessable. All of the outstanding
shares of capital stock of each subsidiary of the Company have been duly
and validly authorized and issued, are fully paid and non-assessable and,
except with respect to Biocide, Inc., a Delaware corporation, 80% of the
capital stock of which is owned by the Company, and as described in the
Offering Memorandum under the caption "Description of Other Indebtedness,"
are owned directly or indirectly by the Company, free and clear of any
lien, charge, encumbrance, security interest, restriction upon voting or
transfer or any other claim of any third party. All the capital stock (i)
of the Company is owned directly by Holdings and (ii) of Holdings is owned
directly by LLC, in each case, except as described in the Offering
Memorandum under the caption "Description of Other Indebtedness," free and
clear of any lien, charge, encumbrance, security interest, restriction
upon voting or transfer or any other claim of any third party. As of the
Closing Date, Evercore Capital Partners L.P. has the power to appoint a
majority of the managers of the Board of Managers of the LLC.
(f) The statements set forth in the Offering Memorandum by reference
to the 10-K under the captions "Security Ownership of Certain Beneficial
Owners and Management" and "Certain Relationships and Related
Transactions" insofar as they purport to describe the documents referred
to therein constitute a fair summary thereof.
(g) Holdings, the Company and the Guarantors each have full right,
power and authority to execute and deliver, as applicable, this Agreement,
the Indenture, the Registration Rights Agreement, the Securities and the
Amendment
(collectively, the "Transaction Documents") and to perform their
respective obligations hereunder and 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.
(h) This Agreement has been duly authorized, executed and delivered
by the Company and each of the Guarantors and constitutes a valid and
legally binding agreement of the Company and each of the Guarantors.
(i) The Registration Rights Agreement has been duly authorized by
the Company and each of the Guarantors and, when duly executed and
delivered in accordance with its terms by each of the parties thereto,
will constitute a valid and legally binding agreement of the Company and
each of the Guarantors enforceable against the Company and each of the
Guarantors in accordance with its terms, except to the extent that (i)
such enforceability may be limited by (A) applicable bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium and other
similar laws affecting creditors' rights generally and (B) general
equitable principles (whether considered in a proceeding in equity or at
law) and the discretion of the court before which any proceeding therefor
may be brought and (ii) any rights to indemnity or contribution thereunder
may be limited by federal or state securities laws or public policy
considerations.
(j) The Indenture has been duly authorized by the Company and each
of the Guarantors and, when duly executed and delivered in accordance with
its terms by each of the parties thereto, will constitute a valid and
legally binding agreement of the Company and each of the Guarantors
enforceable against the Company and each of the Guarantors in accordance
with its terms, except to the extent that such enforceability may be
limited by (i) applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and other similar laws affecting creditors'
rights generally and (ii) general equitable principles (whether considered
in a proceeding in equity or at law) and the discretion of the court
before which any proceeding therefor may be brought. On the Closing Date,
the Indenture will conform in all material respects to the requirements of
the Trust Indenture Act and the rules and regulations of the Commission
applicable to an indenture which is qualified thereunder.
(k) The Securities have been duly authorized by the Company and each
of the Guarantors and, when duly executed, authenticated, issued and
delivered as provided in the Indenture and paid for as provided herein,
will be duly and validly issued and outstanding and will constitute valid
and legally binding obligations of the Company, as issuer, and each of the
Guarantors, as guarantors, entitled to the benefits of the Indenture and
enforceable against the Company as issuer, and each of the Guarantors, as
guarantors, in accordance with their terms, except to the
extent that such enforceability may be limited by (i) applicable
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium
and other similar laws affecting creditors' rights generally and (ii)
general equitable principles (whether considered in a proceeding in equity
or at law) and the discretion of the court before which any proceeding
therefor may be brought.
(l) The Amendment has been duly authorized, executed and delivered
by Holdings and the Company and constitutes a valid and legally binding
agreement of Holdings and the Company enforceable against Holdings and the
Company in accordance with its terms, except to the extent that such
enforceability may be limited by (i) applicable bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and other similar laws
affecting creditors' rights generally and (ii) general equitable
principles (whether considered in a proceeding in equity or at law) and
the discretion of the court before which any proceeding therefor may be
brought.
(m) Each Transaction Document conforms in all material respects to
the description thereof contained in the Offering Memorandum.
(n) The execution, delivery and performance by the Company and each
of the Guarantors of each of the applicable Transaction Documents to which
each is a party, the issuance, authentication, sale and delivery of the
Securities and compliance by the Company and each of the Guarantors with
the terms thereof and the consummation of the transactions contemplated by
the Transaction Documents will not conflict with or result in a breach or
violation of any of the terms or provisions of, or constitute a default
under, or result in the creation or imposition of any lien, charge or
encumbrance upon any property or assets of the Company or any of its
subsidiaries pursuant to, any indenture, mortgage, deed of trust, loan
agreement or other agreement or instrument to which the Company or any of
its subsidiaries is a party or by which the Company or any of its
subsidiaries is bound or to which any of the property or assets of the
Company or any of its subsidiaries is subject, except where such conflict,
breach or violation would not, singularly or in the aggregate, have a
Material Adverse Effect, nor will such actions result in any violation of
the provisions of the charter or by-laws of the Company or any of its
subsidiaries or any statute or any judgment, order, decree, rule or
regulation of any court or arbitrator or governmental agency or body
having jurisdiction over the Company or any of its subsidiaries or any of
their properties or assets; and no consent, approval, authorization or
order of, or filing or registration with, any such court or arbitrator or
governmental agency or body under any such statute, judgment, order,
decree, rule or regulation is required for the execution, delivery and
performance by the Company and each of the Guarantors of each of the
Transaction Documents to which each is a party, the issuance,
authentication, sale and delivery of the Securities and compliance by the
Company and each of the Guarantors with the terms thereof and the
consummation of the transactions contemplated by the Transaction
Documents, except for such consents, approvals, authorizations, filings,
registrations or qualifications (i) which shall have been obtained or made
prior to the Closing Date, (ii) as may be required to be obtained or made
under the Securities Act and applicable state securities laws as provided
in the Registration Rights Agreement and (iii) the failure to obtain which
would not, singularly or in the aggregate, have a Material Adverse Effect.
(o) Xxxxxx Xxxxxxxx LLP ("Xxxxxx Xxxxxxxx") are independent
certified public accountants with respect to the Company 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 the
Offering Memorandum comply in all material respects with the requirements
applicable to a registration statement on Form S-1 under the Securities
Act (except that 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 the Offering
Memorandum under the headings "Summary -- Summary Historical Financial
Information," "Selected Financial Data," Capitalization" and "Management's
Discussion and Analysis of Financial Condition and Results of Operations"
are derived from the accounting records of the Company and its
subsidiaries and fairly present the information purported to be shown
thereby. The other historical financial and statistical information and
data included in the Offering Memorandum are, in all material respects,
fairly presented.
(p) There are no legal or governmental proceedings pending to which
the Company or any of its subsidiaries is a party or of which any property
or assets of the Company or any of its subsidiaries is the subject which,
(i) singularly or in the aggregate, if determined adversely to the Company
or any of its subsidiaries, could reasonably be expected to have a
Material Adverse Effect or (ii) question the validity or enforceability of
any of the Transaction Documents or any action taken or to be taken
pursuant thereto; and to the best knowledge of the Company, no such
proceedings are threatened or contemplated by governmental authorities or
threatened by others.
(q) 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 Company or any of its subsidiaries which would prevent or suspend the
issuance or sale of the Securities or the use of the Preliminary Offering
Memorandum or the Offering Memorandum in any jurisdiction; no action, suit
or proceeding is pending against or, to the best knowledge of the Company
and each of the Guarantors, threatened against or affecting the Company 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 in any manner draw into question the validity or
enforceability of any of the Transaction Documents or any action taken or
to be taken pursuant thereto; and the Company has complied with any and
all requests by any securities authority in any jurisdiction for
additional information to be included in the Preliminary Offering
Memorandum and the Offering Memorandum.
(r) Neither the Company nor any of its subsidiaries is (i) in
violation of its charter or by-laws, (ii) in default in any 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 (iii) in violation in any 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 (ii) and
(iii), for any such violation or default that would not, singularly or in
the aggregate, have a Material Adverse Effect.
(s) The Company 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 the Offering Memorandum, except
where the failure to possess or make the same would not, singularly or in
the aggregate, have a Material Adverse Effect, and neither the Company 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 the revocation or modification of any such license, certificate,
authorization or permit, or the failure to renew any such license,
certificate, authorization or permit, would not, singularly or in the
aggregate, have a Material Adverse Effect.
(t) The Company and each of its subsidiaries have filed all material
federal, state, local and foreign income and franchise tax returns
required to be
filed through the date hereof and have paid all taxes shown to be due
thereon, and no tax deficiency has been determined adversely to the
Company or any of its subsidiaries which has had (nor does the Company or
any of its subsidiaries have any knowledge of any tax deficiency which, if
determined adversely to the Company or any of its subsidiaries, could
reasonably be expected to have) a Material Adverse Effect.
(u) Neither the Company nor any of its subsidiaries is (i) an
"investment company" or a company "controlled by" an investment company
within the meaning of the Investment Company Act of 1940, as amended (the
"Investment Company Act"), and the rules and regulations of the Commission
thereunder or (ii) a "holding company" or a "subsidiary company" of a
holding company or an "affiliate" thereof within the meaning of the Public
Utility Holding Company Act of 1935, as amended.
(v) The Company and each of its subsidiaries have 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 Company and its subsidiaries and their respective
businesses. Neither the Company nor any of its subsidiaries has received
notice from any insurer or agent of such insurer that capital improvements
or other expenditures are required or necessary to be made in order to
continue such insurance.
(w) The Company and each of its subsidiaries own or possess adequate
rights to use all material patents, patent applications, trademarks,
service marks, trade names, trademark registrations, service mark
registrations, copyrights, licenses and know-how (including trade secrets
and other unpatented and/or unpatentable proprietary or confidential
information, systems or procedures) necessary for the conduct of their
respective businesses; and the conduct of their respective businesses will
not conflict in any material respect with, and the Company and its
subsidiaries have not received any notice of any claim of conflict with,
any such rights of others.
(x) The Company 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 Company and its subsidiaries, in each case free and
clear of all liens, encumbrances, claims and defects and imperfections of
title except those (i) described in the Offering Memorandum under the
caption "Description of Other Indebtedness", (ii) which do not materially
interfere with the use made and proposed to be made of such property by
the Company and its subsidiaries or (iii) could not reasonably be expected
to have a Material Adverse Effect.
(y) No labor disturbance by or dispute with the employees of the
Company or any of its subsidiaries exists or, to the best knowledge of the
Company, is contemplated or threatened.
(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 Company or any of its subsidiaries which
could reasonably be expected to have a Material Adverse Effect; each such
employee benefit plan is in compliance in all material respects with
applicable law, including ERISA and the Code; the Company 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 Company 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 disclosed in the Offering Memorandum, there has been
no storage, generation, transportation, handling, treatment, disposal,
discharge, emission or other release of any kind of any toxic, infectious
or hazardous substances or wastes by, due to or caused by the Company or
any of its subsidiaries (or, to the best knowledge of the Company, any
other entity (including any predecessor) for whose acts or omissions the
Company 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 Company 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; and except as disclosed in the Offering
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, infectious or hazardous substances or wastes
with respect to which the Company or any 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.
(bb) Neither the Company 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 Company 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 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 Offering 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 Offering
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) Except as described in the Offering Memorandum, there are no
outstanding subscriptions, rights, warrants, calls or options to acquire,
or instruments convertible into or exchangeable for, or agreements or
understandings with respect to the sale or issuance of, any shares of
capital stock of or other equity or other ownership interest in Holdings,
the Company or any of its subsidiaries other than those listed on Schedule
1 hereto.
(ee) Neither the Company nor any of its subsidiaries owns any
"margin securities" as that term is defined in Regulation U of the Board
of Governors of
the Federal Reserve System (the "Federal Reserve Board"), and 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,
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.
(ff) Except for this Agreement, neither the Company 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 Company or
the Initial Purchasers for a brokerage commission, finder's fee or like
payment in connection with the offering and sale of the Securities.
(gg) The Securities satisfy the eligibility requirements of Rule
144A(d)(3) under the Securities Act.
(hh) None of the Company, any of its affiliates or any person acting
on its or their behalf has engaged or will engage in any directed selling
efforts (as such term is defined in Regulation S under the Securities Act
("Regulation S")), and all such persons have complied and will comply with
the offering restrictions requirement of Regulation S to the extent
applicable.
(ii) Neither the Company nor any of its affiliates has, directly or
through any agent, sold, offered for sale, solicited offers to buy or
otherwise negotiated in respect of, any security (as such term is defined
in the Securities Act), which is or will be integrated with the sale of
the Securities in a manner that would require registration of the
Securities under the Securities Act.
(jj) None of the Company or any of its affiliates or any other
person acting on its or their behalf has engaged, in connection with the
offering of the Securities, in any form of general solicitation or general
advertising within the meaning of Rule 502(c) under the Securities Act.
(kk) There are no securities of the Company or Holdings registered
under the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), or listed on a national securities exchange or quoted in a U.S.
automated inter-dealer quotation system other than the Company's 11 5/8%
Senior Subordinated Notes due 2004, Holdings' Class A common stock and the
1999 Notes.
(ll) None of the Company or any of the Guarantors has taken or will
take, directly or indirectly, any action prohibited by Regulation M under
the Exchange Act in connection with the offering of the Securities.
(mm) 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 Offering Memorandum or the Offering Memorandum has been
made or reaffirmed without a reasonable basis or has been disclosed other
than in good faith.
(nn) Since the date as of which information is given in the Offering
Memorandum, except as otherwise stated therein, (i) there has been no
material adverse change or any development involving a prospective
material adverse change in the condition, financial or otherwise, or in
the earnings, business affairs or management of the Company or any of the
Guarantors, whether or not arising in the ordinary course of business,
(ii) none of the Company or any of the Guarantors has incurred any
material liability or obligation, direct or contingent, other than in the
ordinary course of business, (iii) none of the Company or any of the
Guarantors has entered into any material transaction other than in the
ordinary course of business and (iv) there has not been any change in the
capital stock or long-term debt of the Company or any of the Guarantors,
or any dividend or distribution of any kind declared, paid or made by the
Company or any of the Guarantors on any class of their respective capital
stock.
2. Purchase and Resale of the Securities. (a) On the basis of the
representations, warranties and agreements contained herein, and subject to the
terms and conditions set forth herein, the Company agrees to issue and sell to
each of the Initial Purchasers, severally and not jointly, and each of the
Initial Purchasers agrees to purchase from the Company, severally and not
jointly, the principal amount of Securities set forth opposite the name of such
Initial Purchaser on Schedule 2 hereto at a purchase price equal to 97.74% of
the principal amount thereof. The Company shall not be obligated to deliver any
of the Securities except upon payment for all of the Securities to be purchased
as provided herein.
(b) The Initial Purchasers have advised the Company that they
propose to offer the Securities for resale upon the terms and subject to the
conditions set forth herein and in the Offering Memorandum. Each Initial
Purchaser, severally and not jointly, represents and warrants to and agrees with
the Company and the Guarantors that (i) it is purchasing the Securities pursuant
to a private sale exempt from registration under the Securities Act, (ii) it has
not solicited offers for, or offered or sold, and will not solicit offers for,
or offer or sell, the Securities 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 ("Regulation D") or in any manner involving a public offering
within the meaning of Section 4(2) of the Securities Act and (iii) it has
solicited and will solicit offers for the Securities only from, and has offered
or sold and will offer, sell or deliver the Securities, as part of their initial
offering, only (A) within the United States to persons whom it reasonably
believes to be qualified institutional buyers ("Qualified Institutional
Buyers"), as defined in Rule 144A under the Securities Act ("Rule 144A"), or if
any such
person is buying for one or more institutional accounts for which such
person is acting as fiduciary or agent, only when such person has represented to
it that each such account is a Qualified Institutional Buyer to whom notice has
been given that such sale or delivery is being made in reliance on Rule 144A and
in each case, in transactions in accordance with Rule 144A and (B) outside the
United States to persons other than U.S. persons in reliance on Regulation S
under the Securities Act ("Regulation S").
(c) In connection with the offer and sale of Securities in reliance
on Regulation S, each Initial Purchaser, severally and not jointly, represents,
warrants and agrees that:
(i) it has complied and 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 distributed the
Preliminary Offering Memorandum or the Offering Memorandum;
(ii) 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 pursuant to an exemption
from, or in transactions not subject to, the registration requirements of
the Securities Act;
(iii) such Initial Purchaser has offered and sold 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 of the Securities and the Closing Date, only
in accordance with Regulation S or Rule 144A or any other available
exemption from registration under the Securities Act;
(iv) none of such Initial Purchaser nor any of its affiliates or any
other person acting on its or their behalf has engaged or will engage in
any directed selling efforts with respect to the Securities, and all such
persons have complied and will comply with the offering restriction
requirements of Regulation S;
(v) at or prior to the confirmation of sale of any Securities sold
in reliance on Regulation S, it will have sent to each distributor, dealer
or other person receiving a selling concession, fee or other remuneration
that purchases Securities from it during the distribution compliance
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, as amended (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 (i) as part of
their distribution at any time or (ii) otherwise until 40 days
after the later of the commencement of the offering of the
Securities and the date of
original issuance of the Securities, except in accordance with
Regulation S or Rule 144A or any other available exemption
from registration under the Securities Act. Terms used above
have the meanings given to them by Regulation S"; and
(vi) it has not and will not enter into any contractual arrangement
with any distributor with respect to the distribution of the Securities,
except with its affiliates or with the prior written consent of the
Company.
Terms used in this Section 2(c) have the meanings given to them by Regulation S.
(d) Each Initial Purchaser, severally and not jointly, represents,
warrants and agrees that: (i) it has not offered or sold and, prior to the
expiry of the period of six months from the issue date of the Securities, will
not offer or sell any Securities to any person 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
United Kingdom Public Offers of Securities Regulations 1995 (as amended); (ii)
it has communicated or caused to be communicated and will only communicate or
cause to be communicated an invitation or inducement to engage in investment
activity (within the meaning of Section 21 of the United Kingdom Financial
Services and Markets 2000 (the "FMSA")) received by it in connection with the
issue or sale of any Securities in circumstances in which Section 21(1) of the
FMSA does not apply to the Company; and (iii) it has complied and will comply
with all applicable provisions of the FMSA with respect to anything done by it
in relation to the Securities in, from or otherwise involving the United
Kingdom.
(e) Each Initial Purchaser, severally and not jointly, agrees that
prior to or simultaneously with the confirmation of sale by such Initial
Purchaser to any purchaser of any of the Securities purchased by such Initial
Purchaser from the Company pursuant hereto, such Initial Purchaser shall furnish
to that purchaser a copy of the Offering Memorandum (and any amendment or
supplement thereto that the Company shall have furnished to such Initial
Purchaser prior to the date of such confirmation of sale). In addition to the
foregoing, each Initial Purchaser acknowledges and agrees that the Company and,
for purposes of the opinions to be delivered to the Initial Purchasers pursuant
to Sections 5(d) and (e), counsel for the Company and for the Initial
Purchasers, respectively, may rely upon the accuracy of the representations and
warranties of the Initial Purchasers and their compliance with their agreements
contained in this Section 2, and each Initial Purchaser hereby consents to such
reliance.
(f) The Company and each of the Guarantors acknowledge and agree
that the Initial Purchasers may sell Securities to any affiliate of an Initial
Purchaser and that any such affiliate may sell Securities purchased by it to the
Initial Purchasers.
3. Delivery of and Payment for the Securities. (a) Delivery of and
payment for the Securities shall be made at the offices of Cravath, Swaine &
Xxxxx, New York, New York, or at such other place as shall be agreed upon by the
Initial Purchasers and the Company, at 10:00 A.M., New York City time, on
February 14, 2002 or at such other time or date, not later than seven full
business days thereafter, as shall be agreed upon by the Initial Purchasers and
the Company (such date and time of payment and delivery being referred to herein
as the "Closing Date").
(b) On the Closing Date, payment of the purchase price for the
Securities shall be made to the Company by wire or book-entry transfer of
same-day funds to such account or accounts as the Company shall specify prior to
the Closing Date or by such other means as the parties hereto shall agree prior
to the Closing Date against delivery to the Initial Purchasers of the
certificates evidencing the Securities. Time shall be of the essence, and
delivery at the time and place specified pursuant to this Agreement is a further
condition of the obligations of the Initial Purchasers hereunder. Upon delivery,
the Securities shall be in global form, registered in such names and in such
denominations as JPMorgan on behalf of the Initial Purchasers shall have
requested in writing not less than two full business days prior to the Closing
Date. The Company agrees to make one or more global certificates evidencing the
Securities available for inspection by JPMorgan on behalf of the Initial
Purchasers in New York, New York at least 24 hours prior to the Closing Date.
4. Further Agreements of the Company and the Guarantors. The Company
and each of the Guarantors agree with each of the several Initial Purchasers:
(a) to advise the Initial Purchasers promptly and, if requested,
confirm such advice in writing, of the happening of any event which makes
any statement of a material fact made in the Offering Memorandum untrue or
which requires the making of any additions to or changes in the Offering
Memorandum (as amended or supplemented from time to time) in order to make
the statements therein, in the light of the circumstances under which they
were made, not misleading; to advise the Initial Purchasers promptly of
any order preventing or suspending the use of the Preliminary Offering
Memorandum or the Offering Memorandum, of any suspension of the
qualification of the Securities for offering or sale in any jurisdiction
and of the initiation or threatening of any proceeding for any such
purpose; and to use its best efforts to prevent the issuance of any such
order preventing or suspending the use of the Preliminary Offering
Memorandum or the Offering Memorandum or suspending any such qualification
and, if any such suspension is issued, to obtain the lifting thereof at
the earliest possible time;
(b) to furnish promptly to 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;
(c) prior to filing with the Commission any document that would be
incorporated by reference in the Preliminary Offering Memorandum or the
Offering Memorandum prior to the completion of the initial distribution of
Securities and prior to making any amendment or supplement to the Offering
Memorandum, to furnish a copy thereof to the Initial Purchasers and
counsel for the Initial Purchasers and not to effect any such amendment or
supplement to which the Initial Purchasers shall reasonably object by
notice to the Company after a reasonable period to review;
(d) if, at any time prior to completion of the resale of the
Securities by the Initial Purchasers, any event shall occur or condition
exist as a result of which it is necessary, in the opinion of counsel for
the Initial Purchasers or counsel for the Company, to amend or supplement
the Offering Memorandum in order that the Offering Memorandum will not
include an untrue statement of a material fact or omit to state a material
fact necessary in order to make the statements therein, in the light of
the circumstances existing at the time it is delivered to a purchaser, not
misleading, or if it is necessary to amend or supplement the Offering
Memorandum to comply with applicable law, to promptly prepare such
amendment or supplement as may be necessary to correct such untrue
statement or omission or so that the Offering Memorandum, as so amended or
supplemented, will comply with applicable law;
(e) for so long as the Securities are outstanding and are
"restricted securities" within the meaning of Rule 144(a)(3) under the
Securities Act, to furnish to holders of the Securities and prospective
purchasers of the Securities designated by such holders, upon request of
such holders or such prospective purchasers, the information required to
be delivered pursuant to Rule 144A(d)(4) under the Securities Act, unless
the Company is then subject to and in compliance with Section 13 or 15(d)
of the Exchange Act (the foregoing agreement being for the benefit of the
holders from time to time of the Securities and prospective purchasers of
the Securities designated by such holders);
(f) for so long as the Securities are outstanding, to furnish to the
Initial Purchasers copies of any documents, reports and information as
shall be furnished by the Company to the Trustee or to the holders of the
Securities pursuant to the Indenture or the Exchange Act or any rule or
regulation of the Commission thereunder;
(g) to promptly take from time to time such actions as the Initial
Purchasers may reasonably request to qualify the Securities for offering
and sale under the securities or Blue Sky laws of such jurisdictions as
the Initial
Purchasers may designate and to continue such qualifications in effect for
so long as required for the resale of the Securities; and to arrange for
the determination of the eligibility for investment of the Securities
under the laws of such jurisdictions as the Initial Purchasers may
reasonably request; provided that the Company and its subsidiaries shall
not be obligated to qualify as foreign corporations in any jurisdiction in
which they are not so qualified or to take any action which would subject
them to service of process or taxation in any jurisdiction;
(h) to assist the Initial Purchasers in arranging for the Securities
to be designated Private Offerings, Resales and Trading through Automated
Linkages ("PORTAL") Market securities in accordance with the rules and
regulations adopted by the National Association of Securities Dealers,
Inc. ("NASD") relating to trading in the PORTAL Market and for the
Securities to be eligible for clearance and settlement through The
Depository Trust Company ("DTC");
(i) not to, and to cause its affiliates not to, sell, offer for sale
or solicit offers to buy or otherwise negotiate in respect of any security
(as such term is defined in the Securities Act) which could be integrated
with the sale of the Securities in a manner which would require
registration of the Securities under the Securities Act;
(j) except following the effectiveness of the Exchange Offer
Registration Statement or the Shelf Registration Statement, as the case
may be, not to, and to cause its affiliates not to, and not to authorize
or knowingly permit any person acting on their behalf to, solicit any
offer to buy or offer to sell the Securities by means of any form of
general solicitation or general advertising within the meaning of
Regulation D or in any manner involving a public offering within the
meaning of Section 4(2) of the Securities Act; and not to offer, sell,
contract to sell or otherwise dispose of, directly or indirectly, any
securities under circumstances where such offer, sale, contract or
disposition would cause the exemption afforded by Section 4(2) of the
Securities Act to cease to be applicable to the offering and sale of the
Securities as contemplated by this Agreement and the Offering Memorandum;
(k) for a period of 90 days from the date of the Offering
Memorandum, not to offer for sale, sell, contract to sell or otherwise
dispose of, directly or indirectly, or file a registration statement
(other than the Exchange Offer Statement or the Shelf Registration
Statement) for, or announce any offer, sale, contract for sale of or other
disposition of any debt securities issued or guaranteed by the Company or
any of its subsidiaries (other than the Securities) without the prior
written consent of the Initial Purchasers;
(l) during the period from the Closing Date until two years after
the Closing Date, without the prior written consent of the Initial
Purchasers, not to, and not permit any of its affiliates (as defined in
Rule 144 under the Securities
Act) to, resell any of the Securities that have been reacquired by them,
except for Securities purchased by the Company or any of its affiliates
and resold in a transaction registered under the Securities Act;
(m) not to, for so long as the Securities are outstanding, be or
become, or be or become owned by, an open-end investment company, unit
investment trust or face-amount certificate company that is or is required
to be registered under Section 8 of the Investment Company Act, and to not
be or become, or be or become owned by, a closed-end investment company
required to be registered, but not registered thereunder;
(n) in connection with the offering of the Securities, until
JPMorgan on behalf of the Initial Purchasers shall have notified the
Company of the completion of the resale of the Securities, not to, and to
cause its affiliated purchasers (as defined in Regulation M under the
Exchange Act) not to, either alone or with one or more other persons, bid
for or purchase, for any account in which it or any of its affiliated
purchasers has a beneficial interest, any Securities, or attempt to induce
any person to purchase any Securities; and not to, and to cause its
affiliated purchasers not to, make bids or purchase for the purpose of
creating actual, or apparent, active trading in or of raising the price of
the Securities;
(o) in connection with the offering of the Securities, to make its
officers, employees, independent accountants and legal counsel reasonably
available upon request by the Initial Purchasers;
(p) to do and perform all things required to be done and performed
by it under this 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 Securities;
(q) except as contemplated by the Offering Memorandum, to not take
any action prior to the execution and delivery of the Indenture which, if
taken after such execution and delivery, would have violated any of the
covenants contained in the Indenture;
(r) to not take any action prior to the Closing Date which would
require the Offering Memorandum to be amended or supplemented pursuant to
Section 4(d);
(s) prior to the Closing Date, not to issue any press release or
other communication directly or indirectly or hold any press conference
with respect to the Company, its condition, financial or otherwise, or
earnings or business affairs (except for routine oral marketing
communications in the ordinary course of business and consistent with the
past practices of the Company and of which the
Initial Purchasers are notified), without the prior written consent of the
Initial Purchasers, which consent shall not be unreasonably withheld,
unless in the judgment of the Company and its counsel, and after
notification to the Initial Purchasers, such press release or
communication is required by law; and
(t) to apply the net proceeds from the sale of the Securities as set
forth in the Offering Memorandum under the heading "Use of Proceeds".
5. Conditions of Initial Purchasers' Obligations. The respective
obligations of the several Initial Purchasers hereunder are subject to the
accuracy, on and as of the date hereof and the Closing Date, of the
representations and warranties of the Company and each of the Guarantors
contained herein, to the accuracy of the statements of the Company and each of
the Guarantors and their respective officers made in any certificates delivered
pursuant hereto, to the performance by the Company and each of the Guarantors of
their respective obligations hereunder, and to each of the following additional
terms and conditions:
(a) The Offering Memorandum (and any amendments or supplements
thereto) shall have been printed and copies distributed to the Initial
Purchasers as promptly as practicable on or following the date of this
Agreement or at such other date and time as to which the Initial
Purchasers may agree; and no stop order suspending the sale of the
Securities in any jurisdiction shall have been issued and no proceeding
for that purpose shall have been commenced or shall be pending or
threatened.
(b) 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 and is required to be stated therein or is
necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading.
(c) All corporate proceedings and other legal matters incident to
the authorization, form and validity of each of the Transaction Documents
and the Offering Memorandum, and all other legal matters relating to the
Transaction Documents and the transactions contemplated thereby, shall be
satisfactory in all material respects to the Initial Purchasers, and the
Company shall have furnished to the Initial Purchasers all documents and
information that they or their counsel may reasonably request to enable
them to pass upon such matters.
(d) Xxxxxxx Xxxxxxx & Xxxxxxxx, special counsel to the Company,
Xxxxxxx Xxxxxx, General Counsel of the Company, and Xxxxx Xxxxx, Corporate
Counsel to the Company, shall have furnished to the Initial Purchasers
their respective
written opinions, addressed to the Initial Purchasers and dated the
Closing Date, in form and substance reasonably satisfactory to the Initial
Purchasers, substantially to the effect set forth in Annexes B-1, B-2 and
B-3 hereto.
(e) The Initial Purchasers shall have received from Cravath, Swaine
& Xxxxx, counsel for the Initial Purchasers, such opinion or opinions,
dated the Closing Date, with respect to such matters as the Initial
Purchasers may reasonably require, and the Company shall have furnished to
such counsel such documents and information as they request for the
purpose of enabling them to pass upon such matters.
(f) The Company shall have furnished to the Initial Purchasers a
letter (the "Initial Letter") of Xxxxxx Xxxxxxxx, addressed to the Initial
Purchasers and dated the date hereof, in form and substance satisfactory
to the Initial Purchasers, substantially to the effect set forth in Annex
C hereto.
(g) The Company shall have furnished to the Initial Purchasers a
letter (the "Bring-Down Letter") of Xxxxxx Xxxxxxxx, addressed to the
Initial Purchasers and dated the Closing Date (i) confirming that they are
independent public accountants with respect to the Company and its
subsidiaries within the meaning of Rule 101 of the Code of Professional
Conduct of the AICPA and its interpretations and rulings thereunder, (ii)
stating, as of the date of the Bring-Down Letter (or, with respect to
matters involving changes or developments since the respective dates as of
which specified financial information is given in the Offering Memorandum,
as of a date not more than three business days prior to the date of the
Bring-Down Letter), that the conclusions and findings of such accountants
with respect to the financial information and other matters covered by the
Initial Letter are accurate and (iii) confirming in all material respects
the conclusions and findings set forth in the Initial Letter.
(h) The Company and each of the Guarantors shall have furnished to
the Initial Purchasers a certificate, dated the Closing Date, of their
respective chief executive officers and their respective chief financial
officers stating that (i) such officers have carefully examined the
Offering Memorandum, (ii) in their opinion, the Offering Memorandum, as of
its date, did not include any untrue statement of a material fact and did
not omit to state a material fact required to be stated therein or
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading, and since the
date of the Offering Memorandum, no event has occurred which should have
been set forth in a supplement or amendment to the Offering Memorandum so
that the Offering Memorandum (as so amended or supplemented) would not
include any untrue statement of a material fact and would not omit to
state a material fact required to be stated therein or necessary in order
to make the statements therein, in the light of the circumstances under
which they were made, not misleading,
(iii) as of the Closing Date, the representations and warranties of the
Company or the particular Guarantor, as applicable, in this Agreement are
true and correct in all material respects, the Company or the particular
Guarantor, as applicable, has complied with all agreements and satisfied
all conditions on its part to be performed or satisfied hereunder on or
prior to the Closing Date, and (iv) there has been no material adverse
change in the financial position or results of operation of the Company or
any of its subsidiaries, or any change, or any development involving a
prospective change, in or affecting the condition (financial or
otherwise), results of operations or business of the Company and its
subsidiaries taken as a whole.
(i) The Initial Purchasers shall have received a counterpart of the
Registration Rights Agreement which shall have been executed and delivered
by a duly authorized officer of the Company.
(j) The Indenture shall have been duly executed and delivered by the
Company, the Guarantors and the Trustee, and the Securities shall have
been duly executed and delivered by the Company and duly authenticated by
the Trustee.
(k) The Securities shall have been approved by the NASD for trading
in the PORTAL Market.
(l) If any event shall have occurred that requires the Company under
Section 4(d) to prepare an amendment or supplement to the Offering
Memorandum, such amendment or supplement shall have been prepared, the
Initial Purchasers shall have been given a reasonable opportunity to
comment thereon, and copies thereof shall have been delivered to the
Initial Purchasers reasonably in advance of the Closing Date.
(m) There shall not have occurred any invalidation of Rule 144A
under the Securities Act by any court or any withdrawal or proposed
withdrawal of any rule or regulation under the Securities Act or the
Exchange Act by the Commission or any amendment or proposed amendment
thereof by the Commission which in the judgment of the Initial Purchasers
would materially impair the ability of the Initial Purchasers to purchase,
hold or effect resales of the Securities as contemplated hereby.
(n) Subsequent to the execution and delivery of this Agreement or,
if earlier, the dates as of which information is given in the Offering
Memorandum (exclusive of any amendment or supplement thereto), there shall
not have been any change in the capital stock or long-term debt or any
change, or any development involving a prospective change, in or affecting
the condition (financial or otherwise), results of operations or business
of the Company and its subsidiaries taken as a whole, the effect of which,
in any such case described
above, is, in the judgment of the Initial Purchasers, so material and
adverse as to make it impracticable or inadvisable to proceed with the
sale or delivery of the Securities on the terms and in the manner
contemplated by this Agreement and the Offering Memorandum (exclusive of
any amendment or supplement thereto).
(o) No action shall have been taken and no statute, rule, regulation
or order shall have been enacted, adopted or issued by any governmental
agency or body which would, as of the Closing Date, prevent the issuance
or sale of the Securities; and no injunction, restraining order or order
of any other nature by any federal or state court of competent
jurisdiction shall have been issued as of the Closing Date which would
prevent the issuance or sale of the Securities.
(p) Subsequent to the execution and delivery of this Agreement (i)
no downgrading shall have occurred in the rating accorded the Securities
or any of the Company's other debt securities or preferred stock by any
"nationally recognized statistical rating organization", as such term is
defined by the Commission for purposes of Rule 436(g)(2) of the rules and
regulations of the Commission under the Securities Act and (ii) no such
organization shall have publicly announced that it has under surveillance
or review (other than an announcement with positive implications of a
possible upgrading), its rating of the Securities or any of the Company's
other debt securities or preferred stock.
(q) Subsequent to the execution and delivery of this Agreement there
shall not have occurred any of the following: (i) trading generally shall
have been suspended or materially limited on the New York Stock Exchange
or the over-the-counter market; (ii) trading of any securities issued or
guaranteed by the Company or any of the Guarantors shall have been
suspended on any exchange or in any over-the-counter market; (iii) a
general moratorium on commercial banking activities shall have been
declared by federal or New York State authorities; or (iv) any outbreak or
escalation of hostilities or any change in financial markets or any
calamity or crisis, either within or outside the United States, that in
the judgment of the Initial Purchasers is material and adverse and makes
it impracticable or inadvisable to proceed with the offering, sale or
delivery of the Securities on the terms and in the manner contemplated by
this Agreement and the Offering Memorandum (exclusive of any amendment or
supplement thereto or any document incorporated by reference therein filed
with the Commission after the date hereof).
(r) The Initial Purchasers shall have received an executed copy of
the Amendment, substantially in the form of the draft previously disclosed
to the Initial Purchasers, which Amendment shall be in full force and
effect.
All opinions, letters, evidence and certificates mentioned above or
elsewhere in this Agreement shall be deemed to be in compliance with the
provisions hereof only if
they are in form and substance reasonably satisfactory to counsel for the
Initial Purchasers.
6. Termination. The obligations of the Initial Purchasers hereunder
may be terminated by the Initial Purchasers, in their absolute discretion, by
notice given to and received by the Company prior to delivery of and payment for
the Securities if, prior to that time, any of the events described in Section
5(m), (n), (o), (p) or (q) shall have occurred and be continuing.
7. Reimbursement of Initial Purchasers' Expenses. If (a) this
Agreement shall have been terminated pursuant to Section 6 (other than pursuant
to Section 5(q)), (b) the Company shall fail to tender the Securities for
delivery to the Initial Purchasers for any reason permitted under this Agreement
(other than by reason of any failure by the Initial Purchasers to comply with
any of its material covenants under this Agreement) or (c) the Initial
Purchasers shall decline to purchase the Securities for any reason permitted
under this Agreement (other than pursuant to the failure to satisfy a condition
specified in Section 5(q)), the Company and the Guarantors shall reimburse the
Initial Purchasers for such out-of-pocket expenses (including reasonable fees
and disbursements of counsel) as shall have been reasonably incurred by the
Initial Purchasers in connection with this Agreement and the proposed purchase
and resale of the Securities.
8. Indemnification. (a) The Company and each of the Guarantors shall
jointly and severally indemnify and hold harmless each Initial Purchaser, its
affiliates, their respective officers, directors, employees, representatives and
agents, and each person, if any, who controls any Initial Purchaser within the
meaning of the Securities Act or the Exchange Act (collectively referred to for
purposes of this Section 8(a) and Section 9 as an Initial Purchaser), from and
against any loss, claim, damage or liability, joint or several, or any action in
respect thereof (including, without limitation, any loss, claim, damage,
liability or action relating to purchases and sales of the Securities), to which
that Initial Purchaser may become subject, whether commenced or threatened,
under the Securities Act, the Exchange Act, any other federal or state statutory
law or regulation, at common law or otherwise, insofar as such loss, claim,
damage, liability or action arises out of, or is based upon, (i) any untrue
statement or alleged untrue statement of a material fact contained in the
Preliminary Offering Memorandum or the Offering Memorandum or in any amendment
or supplement thereto or in any information provided by the Company pursuant to
Section 4(e) or (ii) the omission or alleged omission to state therein a
material fact required to be stated therein or necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading, and shall reimburse each Initial Purchaser promptly upon
demand for any legal or other expenses reasonably incurred by that Initial
Purchaser in connection with investigating or defending or preparing to defend
against or appearing as a third party witness in connection with any such loss,
claim, damage, liability or action as such expenses are incurred; provided,
however, that none of the Company and the Guarantors shall be liable in any such
case to the extent that any such loss, claim, damage, liability
or action arises out of, or is based upon, an untrue statement or alleged untrue
statement in or omission or alleged omission from any of such documents in
reliance upon and in conformity with any Initial Purchasers' Information; and
provided, further, that with respect to any such untrue statement in or omission
from the Preliminary Offering Memorandum, the indemnity agreement contained in
this Section 8(a) shall not inure to the benefit of any such Initial Purchaser
to the extent that the sale to the person asserting any such loss, claim,
damage, liability or action was an initial resale by such Initial Purchaser and
any such loss, claim, damage, liability or action of or with respect to such
Initial Purchaser results from the fact that both (A) to the extent required by
applicable law, a copy of the Offering Memorandum (excluding the documents
incorporated by reference therein) 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 Offering
Memorandum was corrected in the Offering Memorandum unless, in either case, such
failure to deliver the Offering Memorandum was a result of non-compliance by the
Company with Section 4(b).
(b) Each Initial Purchaser, severally and not jointly, shall
indemnify and hold harmless the Company, the Guarantors, their affiliates, their
respective officers, directors, employees, representatives and agents, and each
person, if any, who controls the Company or any Guarantor within the meaning of
the Securities Act or the Exchange Act (collectively referred to for purposes of
this Section 8(b) and Section 9 as the Company), from and against any loss,
claim, damage or liability, joint or several, or any action in respect thereof,
to which the Company may become subject, whether commenced or threatened, under
the Securities Act, the Exchange Act, any other federal or state statutory law
or regulation, at common law or otherwise, insofar as such loss, claim, damage,
liability or action arises out of, or is based upon, (i) any untrue statement or
alleged untrue statement of a material fact contained in the Preliminary
Offering Memorandum or the Offering Memorandum or in any amendment or supplement
thereto or (ii) the omission or alleged omission to state therein a material
fact required to be stated therein or necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading, but in each case only to the extent that the untrue statement or
alleged untrue statement or omission or alleged omission was made in reliance
upon and in conformity with any Initial Purchasers' Information, and shall
reimburse the Company for any legal or other expenses reasonably incurred by the
Company in connection with investigating or defending or preparing to defend
against or appearing as a third party witness in connection with any such loss,
claim, damage, liability or action as such expenses are incurred.
(c) Promptly after receipt by an indemnified party under this
Section 8 of notice of any claim or the commencement of any action, the
indemnified party shall, if a claim in respect thereof is to be made against the
indemnifying party pursuant to Section 8(a) or 8(b), notify the indemnifying
party in writing of the claim or the commencement of that action; provided,
however, that the failure to notify the indemnifying party shall not relieve it
from any liability which it may have under this Section 8 except to the
extent that it has been materially prejudiced (through the forfeiture of
substantive rights or defenses) by such failure; and, provided, further, that
the failure to notify the indemnifying party shall not relieve it from any
liability which it may have to an indemnified party otherwise than under this
Section 8. If any such claim or action shall be brought against an indemnified
party, and it shall notify the indemnifying party thereof, the indemnifying
party shall be entitled to participate therein and, to the extent that it
wishes, jointly with any other similarly notified indemnifying party, to assume
the defense thereof with counsel reasonably satisfactory to the indemnified
party. After notice from the indemnifying party to the indemnified party of its
election to assume the defense of such claim or action, the indemnifying party
shall not be liable to the indemnified party under this Section 8 for any legal
or other expenses subsequently incurred by the indemnified party in connection
with the defense thereof other than reasonable costs of investigation; provided,
however, that an indemnified party shall have the right to employ its own
counsel in any such action, but the fees, expenses and other charges of such
counsel for the indemnified party will be at the expense of such indemnified
party unless (i) the employment of counsel by the indemnified party has been
authorized in writing by the indemnifying party, (ii) the indemnified party has
reasonably concluded (based upon advice of counsel to the indemnified party)
that there may be legal defenses available to it or other indemnified parties
that are different from or in addition to those available to the indemnifying
party, (iii) a conflict or potential conflict exists (based upon advice of
counsel to the indemnified party) between the indemnified party and the
indemnifying party (in which case the indemnifying party will not have the right
to direct the defense of such action on behalf of the indemnified party) or (iv)
the indemnifying party has not in fact employed counsel reasonably satisfactory
to the indemnified party to assume the defense of such action within a
reasonable time after receiving notice of the commencement of the action, in
each of which cases the reasonable fees, disbursements and other charges of
counsel will be at the expense of the indemnifying party or parties. It is
understood that the indemnifying party or parties shall not, in connection with
any proceeding or related proceedings in the same jurisdiction, be liable for
the reasonable fees, disbursements and other charges of more than one separate
firm of attorneys (in addition to any local counsel) at any one time for all
such indemnified party or parties. Each indemnified party, as a condition of the
indemnity agreements contained in Sections 8(a) and 8(b), shall use all
reasonable efforts to cooperate with the indemnifying party in the defense of
any such action or claim. No indemnifying party shall be liable for any
settlement of any such action effected without its written consent (which
consent shall not be unreasonably withheld), but if settled with its written
consent or if there be a final judgment for the plaintiff in any such action,
the indemnifying party agrees to indemnify and hold harmless any indemnified
party from and against any loss or liability by reason of such settlement or
judgment. No indemnifying party shall, without the prior written consent of the
indemnified party (which consent shall not be unreasonably withheld), 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.
The obligations of the Company, the Guarantors and the Initial
Purchasers in this Section 8 and in Section 9 are in addition to any other
liability that the Company, the Guarantors or the Initial Purchasers, as the
case may be, may otherwise have, including in respect of any breaches of
representations, warranties and agreements made herein by any such party.
9. Contribution. If the indemnification provided for in Section 8 is
unavailable or insufficient to hold harmless an indemnified party under Section
8(a) or 8(b), then each indemnifying party shall, in lieu of indemnifying such
indemnified party, contribute to the amount paid or payable by such indemnified
party as a result of such loss, claim, damage or liability, or action in respect
thereof, (i) in such proportion as shall be appropriate to reflect the relative
benefits received by the Company and the Guarantors on the one hand and the
Initial Purchasers on the other from the offering of the Securities 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 and
the Guarantors on the one hand and the Initial Purchasers on the other with
respect to the statements or omissions that resulted in such loss, claim, damage
or liability, or action in respect thereof, as well as any other relevant
equitable considerations. The relative benefits received by the Company and the
Guarantors on the one hand and the Initial Purchasers on the other with respect
to such offering shall be deemed to be in the same proportion as the total net
proceeds from the offering of the Securities purchased under this Agreement
(before deducting expenses) received by or on behalf of the Company and the
Guarantors, on the one hand, and the total discounts and commissions received by
the Initial Purchasers with respect to the Securities purchased under this
Agreement, on the other, bear to the total gross proceeds from the sale of the
Securities under this Agreement. The relative fault 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 the Company or information supplied by the Company and the Guarantors
on the one hand or to any Initial Purchasers' Information on the other, the
intent of the parties and their relative knowledge, access to information and
opportunity to correct or prevent such untrue statement or omission. The
Company, the Guarantors and the Initial Purchasers agree that it would not be
just and equitable if contributions pursuant to this Section 9 were to be
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 into account the equitable considerations referred to herein. The
amount paid or payable by an indemnified party as a result of the loss, claim,
damage or liability, or action in respect thereof, referred to above in this
Section 9 shall be deemed to include, for purposes of this Section 9, any legal
or other expenses reasonably incurred by such indemnified party in connection
with investigating or defending or preparing to defend any such action or claim.
Notwithstanding the provisions of this Section 9, no Initial Purchaser shall be
required to contribute any amount in excess of the amount by which the total
discounts and commissions received by such Initial Purchaser with respect to the
Securities purchased by it under this Agreement exceeds the amount of any
damages which such Initial Purchaser has otherwise paid or become liable to pay
by reason of any untrue or alleged untrue statement or omission or alleged
omission. No person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the Securities Act) shall be entitled to contribution from
any person who was not guilty of such fraudulent misrepresentation.
10. Persons Entitled to Benefit of Agreement. This Agreement shall
inure to the benefit of and be binding upon the Initial Purchasers, the Company,
the Guarantors and their respective successors. This Agreement and the terms and
provisions hereof are for the sole benefit of only those persons, except as
provided in Sections 8 and 9 with respect to affiliates, officers, directors,
employees, representatives, agents and controlling persons of the Company, the
Guarantors and the Initial Purchasers and in Section 4(e) with respect to
holders and prospective purchasers of the Securities. Nothing in this Agreement
is intended or shall be construed to give any person, other than the persons
referred to in this Section 10, any legal or equitable right, remedy or claim
under or in respect of this Agreement or any provision contained herein.
11. Expenses. The Company and the Guarantors agree with the Initial
Purchasers to pay (a) the costs incident to the authorization, issuance, sale,
preparation and delivery of the Securities and any taxes payable in that
connection; (b) the costs incident to the preparation, printing and distribution
of the Preliminary Offering Memorandum, the Offering Memorandum and any
amendments or supplements thereto; (c) the costs of reproducing and distributing
each of the Transaction Documents; (d) the costs incident to the preparation,
printing and delivery of the certificates evidencing the Securities, including
stamp duties and transfer taxes, if any, payable upon issuance of the
Securities; (e) the fees and expenses of the Company's counsel and independent
accountants; (f) the fees and expenses of qualifying the Securities under the
securities laws of the several jurisdictions as provided in Section 4(h) and of
preparing, printing and distributing Blue Sky Memoranda (including reasonable
related fees and expenses of counsel for the Initial Purchasers); (g) any fees
charged by rating agencies for rating the Securities; (h) all expenses and
application fees incurred in connection with the application for the inclusion
of the Securities on the PORTAL Market and the approval of the Securities for
book-entry transfer by DTC; and (i) all other costs and expenses incident to the
performance of the obligations of the Company under this Agreement which are not
otherwise specifically provided for in this Section 11; provided, however, that
except as provided in this Section 11 and Section 7, the Initial Purchasers
shall pay their own costs and expenses and provided, further, that the Initial
Purchasers and the Company shall each pay 50% of the costs of the airplane and
any helicopter used for the "road show."
12. Survival. The respective indemnities, rights of contribution,
representations, warranties and agreements of the Company, the Guarantors and
the Initial Purchasers contained in this Agreement or made by or on behalf of
the Company, the Guarantors or the Initial Purchasers pursuant to this Agreement
or any certificate delivered pursuant hereto shall survive the delivery of and
payment for the Securities and shall remain in full force and effect, regardless
of any termination or cancelation of this Agreement or any investigation made by
or on behalf of any of them or any of their respective affiliates, officers,
directors, employees, representatives, agents or controlling persons.
13. 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
or telecopy transmission to: (1) X.X. Xxxxxx Securities Inc., 000 Xxxx
Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Xxxxxxxxxxx Xxxxx (telecopier
no.: (000) 000-0000) and (2) Bear, Xxxxxxx & Co. Inc., 000 Xxxx Xxxxxx,
Xxx Xxxx, Xxx Xxxx 00000, Attention: Xxxxx Xxxxx, (telecopier no.: (212)
881-9502); or
(b) if to the Company, shall be delivered or sent by mail or
telecopy transmission to the address of the Company set forth in the
Offering Memorandum, Attention: Chief Financial Officer (telecopier no.:
(000) 000-0000);
provided that any notice to an Initial Purchaser pursuant to Section 8(c) shall
also be delivered or sent by mail to such Initial Purchaser at its address set
forth on the signature page hereof. Any such statements, requests, notices or
agreements shall take effect at the time of receipt thereof. The Company shall
be entitled to act and rely upon any request, consent, notice or agreement given
or made on behalf of the Initial Purchasers by JPMorgan.
14. Definition of Terms. For purposes of this Agreement, (a) the
term "business day" means any day on which the New York Stock Exchange, Inc. is
open for trading, (b) the term "subsidiary" has the meaning set forth in Rule
405 under the Securities Act and (c) except where otherwise expressly provided,
the term "affiliate" has the meaning set forth in Rule 405 under the Securities
Act.
15. Initial Purchasers' Information. The parties hereto acknowledge
and agree that, for all purposes of this Agreement, the Initial Purchasers'
Information consists solely of the following information in the Preliminary
Offering Memorandum and the Offering Memorandum: (a) the last two paragraphs on
the front cover page concerning the terms of the offering by the Initial
Purchasers, and (b) the statements concerning the Initial Purchasers contained
in the third, ninth, tenth, eleventh and twelfth paragraphs under the heading
"Plan of Distribution."
16. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT GIVING EFFECT TO
THE CONFLICTS OF LAWS PRINCIPLES THEREOF.
17. Counterparts. This Agreement may be executed in one or more
counterparts (which may include counterparts delivered by telecopier) and, if
executed in more than one counterpart, the executed counterparts shall each be
deemed to be an original, but all such counterparts shall together constitute
one and the same instrument.
18. 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 shall be in writing and signed by the parties
hereto.
19. Headings. The headings herein are inserted for convenience of
reference only and are not intended to be part of, or to affect the meaning or
interpretation of, this Agreement.
31
If the foregoing is in accordance with your understanding of our
agreement, kindly sign and return to us a counterpart hereof, whereupon this
instrument will become a binding agreement between the Company, the Guarantors
and the Initial Purchasers in accordance with its terms.
Very truly yours,
On behalf of
AMERICAN MEDIA OPERATIONS, INC.,
NATIONAL ENQUIRER, INC.,
GLOBE EDITORIAL, INC.,
GLOBE COMMUNICATIONS, CORP.
STAR EDITORIAL, INC.,
NATIONAL EXAMINER, INC.,
MIRA! EDITORIAL, INC.,
AM AUTO WORLD WEEKLY, INC.,
AMERICAN MEDIA CONSUMER
AMERICAN MEDIA CONSUMER MAGAZINE
AMERICAN MEDIA NEWSPAPER GROUP, INC.
COUNTRY MUSIC MEDIA GROUP, INC.,
AMERICAN MEDIA MINI MAGS, INC.,
DISTRIBUTION SERVICES, INC.,
AMERICAN MEDIA DISTRIBUTION &
AMERICAN MEDIA PROPERTY GROUP, INC.
NDSI, INC.,
By_______________________________
Name:
Title:
32
Accepted:
X.X. XXXXXX SECURITIES INC.,
For itself and on behalf of the several
Initial Purchasers listed on Schedule 2
hereto.
By___________________________
Authorized Signatory
Address for notices pursuant to Section 9(c):
0 Xxxxx Xxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Legal Department
33
SCHEDULE 1
Amended and Restated Limited Liability Company Agreement and Investors Rights
Agreement of EMP Group L.L.C., dated as of February 16, 1999, by and among
Evercore Capital Partners, L.P., Circulation, LLC, Chase Equity Associates,
L.P., Tandem Journalism Investments, L.P., BG Media Investors, L.P., Xxxxx X.
Xxxxxx, Xxxxx Xxxxxx and Holdings, and Aetna Life Insurance Company and Capital
Communications CDPQ Inc., each as guarantors.
34
SCHEDULE 2
Initial Purchasers of Securities Principal Amount
-------------------------------- ----------------
X.X. Xxxxxx Securities Inc. $120,000,000
Bear, Xxxxxxx & Co. Inc. $ 30,000,000
Total $150,000,000
============
35
ANNEX B-1
Form of Opinion of Xxxxxxx Xxxxxxx & Xxxxxxxx
See attached.
36
ANNEX B-2
Form of Opinion of General Counsel for the Company
See attached.
37
ANNEX B-3
Form of Opinion of Corporate Counsel for the Company
See attached.
38
ANNEX C
Form of Initial Comfort Letter
The Company shall have furnished to the Initial Purchasers a letter
of Xxxxxx Xxxxxxxx, addressed to the Initial Purchasers and dated the date of
the Purchase Agreement, in form and substance satisfactory to the Initial
Purchasers, substantially to the effect set forth below:
(i) they are independent certified public accountants with respect
to the Company within the meaning of Rule 101 of the Code of Professional
Conduct of the AICPA and its interpretations and rulings;
(ii) in their opinion, the audited financial statements included or
incorporated by reference in the Offering Memorandum and reported on by
them comply in form in all material respects with the accounting
requirements of the Exchange Act and the related published rules and
regulations of the Commission thereunder that would apply to the Offering
Memorandum if the Offering Memorandum were a prospectus included in a
registration statement on Form S-1 under the Securities Act (except that
certain supporting schedules are omitted);
(iii) based upon a reading of the latest unaudited financial
statements made available by the Company, the procedures of the AICPA for
a review of interim financial information as described in Statement of
Auditing Standards No. 71, reading of minutes and inquiries of certain
officials of the Company who have responsibility for financial and
accounting matters and certain other limited procedures requested by the
Initial Purchasers and described in detail in such letter, nothing has
come to their attention that causes them to believe that (A) any unaudited
financial statements included or incorporated by reference in the Offering
Memorandum do not comply as to form in all material respects with
applicable accounting requirements, (B) any material modifications should
be made to the unaudited financial statements included or incorporated by
reference in the Offering Memorandum for them to be in conformity with
generally accepted accounting principles applied on a basis substantially
consistent with that of any audited financial statements included or
incorporated by reference in the Offering Memorandum or (C) the
information included under the headings "Summary -- Summary Historical
Financial Information," "Capitalization" and "Management's Discussion and
Analysis of Financial Condition and Results of Operations" is not in
conformity with the disclosure requirements of Regulation S-K that would
apply to the Offering Memorandum if the Offering Memorandum were a
prospectus included in a registration statement on Form S-1 under the
Securities Act;
(iv) based upon the procedures detailed in such letter with respect
to the period subsequent to the date of the last available balance sheet,
including reading of minutes and inquiries of certain officials of the
Company who have responsibility for financial and accounting matters,
nothing has come to their attention that causes them to believe that (A)
at a specified date not more than three business days prior to the date of
such letter, there was any change in capital stock, increase in long-term
debt or decrease in net current assets as compared with the amounts shown
in the December 24, 2001 unaudited balance sheet included or incorporated
by reference in the Offering Memorandum or (B) for the period from
December 24, 2001 to a specified date not more than
39
three business days prior to the date of such letter, there were any
decreases, as compared with the corresponding period in the preceding
year, in net sales, income from operations, except in all instances for
changes, increases or decreases that the Offering Memorandum discloses
have occurred or which are set forth in such letter, in which case the
letter shall be accompanied by an explanation by the Company as to the
significance thereof unless said explanation is not deemed necessary by
the Initial Purchasers; and
(v) they have performed certain other specified procedures as a
result of which they determined that certain information of an accounting,
financial or statistical nature (which is limited to accounting, financial
or statistical information derived from the general accounting records of
the Company) set forth in the Offering Memorandum agrees with the
accounting records of the Company, excluding any questions of legal
interpretation.
