EXECUTION COPY
American Axle & Manufacturing, Inc.
$300,000,000
9 3/4% Senior Subordinated Notes due 2009
PURCHASE AGREEMENT
March 2, 1999
CHASE SECURITIES INC.
XXXXXXXXX, XXXXXX & XXXXXXXX
SECURITIES CORPORATION
XXXXXX XXXXXXX & CO. INCORPORATED
c/o Chase Securities Inc.
000 Xxxx Xxxxxx, 0xx xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Ladies and Gentlemen:
American Axle & Manufacturing, Inc., a Delaware corporation
(the "Issuer") proposes to issue and sell $300,000,000 aggregate principal
amount of its 9 3/4% Senior Subordinated Notes due 2009 (the "Securities"). The
Securities will be issued pursuant to an Indenture to be dated as of March 5,
1999 (the "Indenture"), among the Issuer, American Axle & Manufacturing
Holdings, Inc. ("Holdings") and IBJ Whitehall Bank & Trust Company, a New York
banking corporation, as trustee (the "Trustee"). The Securities will be
guaranteed on an unsecured senior subordinated basis by Holdings. The Issuer
hereby confirms its agreement with Chase Securities Inc. ("CSI"), Xxxxxxxxx,
Xxxxxx & Xxxxxxxx Securities Corporation and Xxxxxx Xxxxxxx & Co. Incorporated
(collectively, the "Initial Purchasers") concerning the purchase of the
Securities from the Issuer 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 Issuer has
prepared a preliminary offering memorandum dated February 17, 1999 (the
"Preliminary Offering Memorandum"), and will prepare an offering memorandum
dated the date hereof (the "Offering Memorandum") setting forth information
concerning Holdings, the Issuer and its subsidiaries and the Securities. Copies
of the Preliminary Offering Memorandum have been, and copies of the Offering
Memorandum will be, delivered by the Issuer 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 all
amendments and supplements thereto, unless otherwise noted. The Issuer 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.
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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 the Issuer will agree to file with the Securities and Exchange Commission
(the "Commission") (i) a registration statement under the Securities Act (the
"Exchange Offer Registration Statement") registering an issue of senior
subordinated notes of the Issuer (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 together with the
Exchange Offer Registration Statement, the "Registration Statements").
The proceeds from the sale of the Securities will be used (i)
to repay indebtedness of the Issuer and its subsidiaries, including indebtedness
outstanding (a) under the Credit Agreement dated as of October 27, 1997, as
amended, among Holdings (formerly known as American Axle & Manufacturing of
Michigan, Inc.), the Issuer, certain financial institutions listed as lenders
therein, Chase Manhattan Bank Delaware, as issuing bank, and The Chase Manhattan
Bank ("Chase"), as administrative agent and collateral agent, and (b) in
connection with the Issuer's receivables facility under the Pooling Agreement
dated as of October 29, 1997, among AAM Receivables Corp., the Issuer and Chase,
as trustee, (ii) for general corporate purposes, including financing
acquisitions and capital expenditures, and (iii) to pay related fees and
expenses.
Capitalized terms used but not defined herein shall have the
meanings given to such terms in the Offering Memorandum.
1. Representations, Warranties and Agreements of the Issuer
and Holdings. The Issuer and Holdings jointly and severally represent and
warrant to, and agree with, the several 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 and the
Offering Memorandum, as of its respective date, 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 Issuer and Holdings 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 Issuer 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 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
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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, prior to the effectiveness
of any Registration Statement, to qualify the Indenture under the Trust
Indenture Act of 1939, as amended (the "Trust Indenture Act").
(d) The accountants who certified the financial statements
included in the Offering Memorandum are independent certified public
accountants with respect to Holdings and its subsidiaries within the
meaning of Rule 101 of the Code of Professional Conduct of the American
Institute of Certified Public Accountants and its interpretations and
rulings thereunder.
(e) The audited financial statements of Holdings and its
consolidated subsidiaries (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), and present fairly in all material respects the financial
position of Holdings and its consolidated subsidiaries at the dates
indicated and the respective statement of income, shareholders' equity
and cash flows of Holdings and its consolidated subsidiaries for the
periods specified; said financial statements have been prepared in
conformity with generally accepted accounting principles ("GAAP")
applied on a consistent basis throughout the periods involved. The
financial information contained in the Offering Memorandum under the
headings "Summary Historical and Adjusted Consolidated Financial Data",
"Capitalization", "Selected Consolidated Financial and Other Data" and
"Management's Discussion and Analysis of Financial Condition and
Results of Operation" present fairly in all material respects the
information shown therein and have been compiled on a basis consistent
with that of the audited financial statements included in the Offering
Memorandum. The as adjusted financial data and the related notes
thereto included in the Offering Memorandum present fairly in all
material respects the information shown therein and have been properly
compiled on the bases described therein, and the assumptions used in
the preparation thereof are reasonable and the adjustments used therein
are appropriate to give effect to the transactions and circumstances
referred to therein.
(f) Since the respective dates as of which information is
given in the Offering Memorandum, except as otherwise stated therein,
(i) there has been no material adverse change in the condition,
financial or otherwise, or in the earnings, business affairs or
business prospects of Holdings and its subsidiaries (taken as a whole),
whether or not arising in the ordinary course of business (a "Material
Adverse Effect"), (ii) there have been no transactions entered into by
Holdings or any of its subsidiaries, other than those in the ordinary
course of business, which are material with respect to Holdings and its
subsidiaries (taken as a whole), and (iii) there has been no dividend
or distribution of any kind declared, paid or made by Holdings or any
of its subsidiaries.
(g) Each of Holdings and the Issuer has been duly organized
and is validly existing as a corporation in good standing under the
laws of the State of Delaware and has the corporate power and authority
to own, lease and operate its properties and to conduct its business as
described in the Offering Memorandum; and each of
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Holdings and the Issuer is duly qualified as a foreign corporation to
transact business and is in good standing in each other jurisdiction in
which such qualification is required, whether by reason of the
ownership or leasing of property or the conduct of business, except
where the failure so to qualify or to be in good standing would not
result in a Material Adverse Effect.
(h) Each "significant subsidiary" of the Issuer (as such term
is defined in Rule 1-02 of Regulation S-X) (each a "Subsidiary" and,
collectively, the "Subsidiaries") has been duly organized and is
validly existing as a corporation in good standing under the laws of
the jurisdiction of its incorporation, has the corporate power and
authority to own, lease and operate its properties and to conduct its
business as described in the Offering Memorandum and is duly qualified
as a foreign corporation to transact business and is in good standing
in each jurisdiction in which such qualification is required, whether
by reason of the ownership or leasing of property or the conduct of
business, except where the failure so to qualify or to be in good
standing would not result in a Material Adverse Effect; except as
otherwise disclosed in the Offering Memorandum, all of the issued and
outstanding capital stock of each such Subsidiary has been duly
authorized and validly issued, is fully paid and non-assessable and is
owned by the Issuer, directly or through subsidiaries, free and clear
of any security interest, mortgage, pledge, lien, encumbrance, claim or
equity; none of the outstanding shares of capital stock of any
Subsidiary was issued in violation of the preemptive or similar rights
of any securityholder of such Subsidiary.
(i) The authorized, issued and outstanding capital stock (as
stated to be adjusted for the initial public offering of Holdings'
common stock) of Holdings and its consolidated subsidiaries is as set
forth in the Offering Memorandum under the caption "Capitalization"
(except for subsequent issuances, if any, pursuant to reservations,
agreements or employee benefit plans referred to in the Offering
Memorandum or pursuant to the exercise of convertible securities or
options referred to in the Offering Memorandum), and Holdings owns 100%
of the issued and outstanding capital stock of the Issuer and has no
material operations or assets other than such capital stock. The shares
of issued and outstanding capital stock of Holdings and the Issuer have
been duly authorized and validly issued and are fully paid and
non-assessable; none of the outstanding shares of capital stock was
issued in violation of the preemptive or other similar rights of any
securityholder of Holdings or the Issuer.
(j) The Registration Rights Agreement has been duly authorized
by the Issuer and Holdings 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 Issuer and
Holdings enforceable against the Issuer and Holdings in accordance with
its terms, except to the extent that such enforceability may be limited
by applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and other similar laws affecting creditors'
rights generally and by general equitable principles (whether
considered in a proceeding in equity or at law).
(k) The Indenture has been duly authorized by the Issuer and
Holdings (and Holdings has duly authorized its guarantee of the
Securities made thereunder) 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 Issuer and
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Holdings enforceable against the Issuer and Holdings in accordance with
its terms, except to the extent that such enforceability may be limited
by applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and other similar laws affecting creditors'
rights generally and by general equitable principles (whether
considered in a proceeding in equity or at law). 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 that is qualified thereunder.
(l) This Agreement has been duly authorized, executed and
delivered by the Issuer and Holdings and constitutes a valid and
legally binding agreement of the Issuer and Holdings.
(m) The Securities to be purchased by the Initial Purchasers
from the Issuer have been duly authorized by the Issuer for issuance
and sale to the Initial Purchasers pursuant to this Agreement and, when
duly executed, authenticated, issued and delivered by the Issuer
pursuant to the Indenture and this Agreement against payment of the
consideration set forth herein, will be duly and validly issued and
outstanding and will constitute valid and legally binding obligations
of the Issuer, as issuer, and of Holdings as a guarantor, entitled to
the benefits of the Indenture and enforceable against the Issuer, as
issuer, and Holdings as a guarantor, in accordance with their terms,
except to the extent that such enforceability may be limited by
applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and other similar laws affecting creditors'
rights generally and by general equitable principles (whether
considered in a proceeding in equity or at law).
(n) Neither Holdings nor any of its subsidiaries is (i) in
violation of its charter or by-laws or in default, (ii) to Holdings'
knowledge, alleged by any other party to be in default, in the
performance or observance of any obligation, agreement, covenant or
condition contained in any contract, indenture, mortgage, deed of
trust, loan or credit agreement, note, lease or other agreement or
instrument to which Holdings or any of its subsidiaries is a party or
by which it or any of them may be bound, or to which any of the
property or assets of Holdings or any of its subsidiaries is subject
(collectively, "Agreements and Instruments") 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,
other than, in the case of clauses (ii) or (iii), such defaults or
violations that would not, singularly or in the aggregate, reasonably
be expected to have a Material Adverse Effect; Holdings and the Issuer
each have full right, power and authority to execute and deliver this
Agreement, the Indenture, the Registration Rights Agreement and the
Securities (collectively, the "Transaction Documents") and to perform
their respective obligations hereunder and thereunder, and the
execution, delivery and performance of the Transaction Documents and
consummation of the transactions contemplated herein and therein and
the use of the proceeds from the sale of the Securities as described in
the Offering Memorandum under the caption "Use of Proceeds" and
compliance by Holdings and the Issuer with their respective obligations
under the Transaction Documents have been duly authorized by all
necessary corporate action and do not and will not, whether with or
without the giving of notice or passage of time or both, conflict with
or constitute a breach of, or default or Repayment Event (as defined
below) under, or result in the creation or imposition of any lien,
charge or encumbrance upon any property or assets of Holdings or any of
its subsidiaries
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pursuant to, the Agreements and Instruments (except for such conflicts,
breaches or defaults or liens, charges or encumbrances that would not
result in a Material Adverse Effect), nor will such action result in
any violation of the provisions of the charter or by-laws of Holdings
or any of its subsidiaries or any applicable law, statute, rule,
regulation, judgment, order, writ or decree of any government,
government instrumentality or court, domestic or foreign, having
jurisdiction over Holdings or any of its subsidiaries or any of their
assets, properties or operations. As used herein, a "Repayment Event"
means any event or condition which gives the holder of any note,
debenture or other evidence of indebtedness (or any person acting on
such holder's behalf) the right to require the repurchase, redemption
or repayment of all or a portion of such indebtedness by Holdings or
any of its subsidiaries.
(o) Each Transaction Document conforms in all material
respects to the description thereof contained in the Offering
Memorandum.
(p) No labor dispute with the employees of Holdings or any of
its subsidiaries exists or, to the knowledge of Holdings, is imminent,
and Holdings is not aware of any existing or imminent labor disturbance
by the employees of any of its or any subsidiary's principal suppliers,
manufacturers, customers or contractors, which, in either case, may
reasonably be expected to result in a Material Adverse Effect.
(q) There is no action, suit, proceeding, inquiry or
investigation before or brought by any court or governmental agency or
body, domestic or foreign, now pending, or, to the knowledge of
Holdings, threatened, against or affecting Holdings or any of its
subsidiaries, which (A) might reasonably be expected to result in a
Material Adverse Effect, (B) prevents or suspends the issuance of the
Securities, or prevents or suspends the use of the Preliminary Offering
Memorandum or the Offering Memorandum or the sale of the Securities in
any jurisdiction, or (C) might reasonably be expected to materially and
adversely affect the properties or assets thereof or the consummation
of the transactions contemplated by the Transaction Documents or the
performance by Holdings and the Issuer of their respective obligations
hereunder and thereunder; the aggregate of all pending legal or
governmental proceedings to which Holdings or any of its subsidiaries
is a party or of which any of their respective property or assets is
the subject which are not described in the Offering Memorandum,
including ordinary routine litigation incidental to the business, could
not reasonably be expected to result in a Material Adverse Effect.
(r) Holdings and its subsidiaries own or possess, or can
acquire on reasonable terms, adequate patents, patent rights, licenses,
inventions, copyrights, know-how (including trade secrets and other
unpatented and/or unpatentable proprietary or confidential information,
systems or procedures), trademarks, service marks, trade names or other
intellectual property (collectively, "Intellectual Property") necessary
to carry on the business now operated by them, and neither Holdings nor
any of its subsidiaries has received any notice or is otherwise aware
of any infringement of or conflict with asserted rights of others with
respect to any Intellectual Property or of any facts or circumstances
which would render any Intellectual Property invalid or inadequate to
protect the interest of Holdings or any of its subsidiaries therein,
and which infringement or conflict (if the subject of any
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unfavorable decision, ruling or finding) or invalidity or inadequacy,
singly or in the aggregate, would result in a Material Adverse Effect.
(s) No filing with, or authorization, approval, consent,
license, order, registration, qualification or decree of, any court or
governmental authority or agency is necessary or required for the
performance by Holdings or the Issuer of their respective obligations
under the Transaction Documents, in connection with the offering,
issuance or sale of the Securities hereunder or the consummation of the
transactions contemplated by the Transaction Documents, except for such
filings, approvals, authorizations, consents, licenses, orders,
registrations, qualifications or decrees (i) which shall have been
obtained or made prior to the Closing Date or (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.
(t) Holdings and its subsidiaries possess such permits,
licenses, approvals, consents and other authorizations (collectively,
"Governmental Licenses") issued by the appropriate federal, state,
local or foreign regulatory agencies or bodies necessary to conduct the
business now operated by them, except where the failure to possess
would not, singly or in the aggregate, have a Material Adverse Effect;
Holdings and its subsidiaries are in compliance with the terms and
conditions of all such Governmental Licenses, except where the failure
so to comply would not, singly or in the aggregate, have a Material
Adverse Effect; all of the Governmental Licenses are valid and in full
force and effect, except when the invalidity of such Governmental
Licenses or the failure of such Governmental Licenses to be in full
force and effect would not have a Material Adverse Effect; and neither
Holdings nor any of its subsidiaries has received any notice of
proceedings relating to the revocation or modification of any such
Governmental Licenses which, singly or in the aggregate, if the subject
of an unfavorable decision, ruling or finding, would result in a
Material Adverse Effect.
(u) Holdings and its subsidiaries have good and marketable
title to all real property owned by Holdings and its subsidiaries and
good title to all other properties owned by them, in each case, free
and clear of all mortgages, pledges, liens, security interests, claims,
restrictions or encumbrances of any kind except such as (a) are
described in the Offering Memorandum or (b) do not, singly or in the
aggregate, materially affect the value of such property and do not
interfere with the use made and proposed to be made of such property by
Holdings or any of its subsidiaries; and all of the leases and
subleases material to the business of Holdings and its subsidiaries,
considered as one enterprise, and under which Holdings or any of its
subsidiaries hold properties described in the Offering Memorandum, are
in full force and effect, and neither Holdings nor any subsidiary has
any notice of any material claim of any sort that has been asserted by
anyone adverse to the rights of Holdings or any subsidiary under any of
the leases or subleases mentioned above, or affecting or questioning
the rights of Holdings or such subsidiary to the continued possession
of the leased or subleased premises under any such lease or sublease.
(v) None of Holdings or any of its subsidiaries is, nor upon
the issuance and sale of the Securities as herein contemplated and the
application of the net proceeds therefrom as described in the Offering
Memorandum will be, an "investment company" or an entity "controlled"
by an "investment company" as such terms are defined in the Investment
Company Act of 1940, as amended (the "1940 Act").
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(w) Except as described in the Offering Memorandum and except
as would not, singly or in the aggregate, result in a Material Adverse
Effect, (A) neither Holdings nor any of its subsidiaries is in
violation of any federal, state, local or foreign statute, law, rule,
regulation, ordinance, code, legally binding policy or rule of common
law or any judicial or legally binding administrative interpretation
thereof, including any judicial or legally binding administrative
order, consent, decree or judgment, relating to pollution or protection
of human health, the environment (including, without limitation,
ambient air, surface water, groundwater, land surface or subsurface
strata) or wildlife, including, without limitation, laws and
regulations relating to the release or threatened release of chemicals,
pollutants, contaminants, wastes, toxic substances, hazardous
substances, petroleum or petroleum products (collectively, "Hazardous
Materials") or to the manufacture, processing, distribution, use,
treatment, storage, disposal, transport or handling of Hazardous
Materials (collectively, "Environmental Law"), (B) Holdings and its
subsidiaries have all permits, authorizations and approvals required
under any applicable Environmental Laws (except for such permits,
authorizations and approvals the absence of which would not result in a
Material Adverse Effect) and are each in compliance with their
requirements, (C) there are no pending or, to the knowledge of the
Issuer, threatened administrative, regulatory or judicial actions,
suits, demands, demand letters, claims, liens, notices of noncompliance
or violation, investigation or proceedings relating to any
Environmental Law against Holdings or any of its subsidiaries and (D)
there are no events or circumstances that might reasonably be expected
to form the basis of an order for clean-up or remediation, or an
action, suit or proceeding by any private party or governmental body or
agency, against or affecting Holdings or any of its subsidiaries
relating to Hazardous Materials or any Environmental Laws.
(x) Holdings and each of its subsidiaries have filed all
necessary federal, state, local and foreign income, payroll, franchise
and other tax returns (after giving effect to extensions) and have paid
all taxes shown as due thereon or with respect to any of its
properties, except for taxes being contested in good faith for which
adequate reserves have been provided, and there is no tax deficiency
that has been, or to the knowledge of Holdings is likely to be,
asserted against Holdings, any of its subsidiaries or any of their
properties or assets that would result in a Material Adverse Effect.
(y) Holdings and each of its subsidiaries is insured by
insurers of recognized financial responsibility against such losses and
risks and in such amounts as is reasonably prudent in the business in
which it is engaged or proposed to engage after giving effect to the
transactions described in the Offering Memorandum; and Holdings does
not have any reason to believe that it will not be able to renew its
existing insurance coverage as and when such coverage expires or to
obtain similar coverage from similar insurers as may be necessary to
continue its business at a cost that would not result in a Material
Adverse Effect.
(z) Neither Holdings or any of its subsidiaries nor, to the
knowledge of Holdings or the Issuer, any director, officer, agent,
employee or other person associated with or acting on behalf of
Holdings 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
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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.
(aa) On and immediately after the Closing Date, the Issuer
(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
Issuer is not less than the total amount required to pay the probable
liabilities of the Issuer on its total existing debts and liabilities
(including contingent liabilities) as they become absolute and matured,
(ii) the Issuer 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 Issuer is not incurring debts or liabilities
beyond its ability to pay as such debts and liabilities mature and (iv)
the Issuer 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
Issuer 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.
(bb) 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 or any of its subsidiaries.
(cc) Neither Holdings 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.
(dd) The Securities satisfy the eligibility requirements of
Rule 144A(d)(3) under the Securities Act.
(ee) Neither the Issuer nor 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.
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(ff) Neither the Issuer 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.
(gg) Neither Holdings nor any of its affiliates or any 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.
(hh) Except for Holdings' common stock, there are no
securities of Holdings or any of its subsidiaries 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.
(ii) Neither the Issuer nor any of its affiliates 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.
(jj) 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.
(kk) Holdings and its subsidiaries have implemented a
comprehensive, detailed program to analyze and address the risk that
the computer hardware and software used by them may be unable to
recognize and properly execute date-sensitive functions involving
certain dates prior to and any dates after December 31, 1999 (the "Year
2000 Problem"), and have determined that such risk will be remedied on
a timely basis without material expense and will not have a material
adverse effect upon the financial condition and results of operations
of Holdings and its subsidiaries, taken as a whole; and Holdings and
the Issuer believe, after due inquiry, that each supplier, vendor,
customer or financial service organization used or serviced by Holdings
and its subsidiaries has remedied or will remedy on a timely basis the
Year 2000 Problem, except to the extent that a failure to remedy by any
such supplier, vendor, customer or financial service organization would
not have a Material Adverse Effect.
(ll) 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
Holdings 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; Holdings and each of its subsidiaries have not
incurred and do not expect to incur liability under Title IV of ERISA
with
11
respect to the termination of, or withdrawal from, any pension plan for
which Holdings 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 has
received a favorable determination letter with respect thereto from the
Internal Revenue Service and to the knowledge of Holdings, nothing has
occurred, whether by action or by failure to act, which could
reasonably be expected to have a material adverse effect on such
favorable determination.
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 Issuer agrees to issue and sell
to each of the Initial Purchasers, severally and not jointly, and each of the
Initial Purchasers, severally and not jointly, agrees to purchase from the
Issuer, the principal amount of Securities set forth opposite the name of such
Initial Purchaser on Schedule I hereto at a purchase price equal to 96.690% of
the principal amount thereof. The Issuer 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 Issuer 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 Issuer 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 and warrants to and agrees with the Issuer that:
(i) 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;
(ii) 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
12
and the Closing Date, only in accordance with Regulation S or Rule 144A
or any other available exemption from registration under the Securities
Act;
(iii) none of such Initial Purchaser or 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;
(iv) 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
restricted period a confirmation or notice to substantially the
following effect:
"The Securities covered hereby have not been registered under
the U.S. Securities Act of 1933, 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
(v) 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 Issuer.
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 and warrants to and agrees with the Issuer that (i) it has not
offered or sold and prior to the date six months after the Closing Date will not
offer or sell any Securities to persons in the United Kingdom except to persons
whose ordinary activities involve them in acquiring, holding, managing or
disposing of investments (as principal or agent) for the purposes of their
businesses or otherwise in circumstances which have not resulted and will not
result in an offer to the public in the United Kingdom within the meaning of the
Public Offers of Securities Regulations 1995; (ii) it has complied and will
comply with all applicable provisions of the Financial Services Act 1986 and the
Public Offers of Securities Regulations 1995 with respect to anything done by it
in relation to the Securities in, from or otherwise involving the United
Kingdom; and (iii) it has only issued or passed on and will only issue or pass
on in the United Kingdom any document received by it in connection with the
issue of the Securities to a person who is of a kind described in Article 11(3)
of the Financial Services Act 1986 (Investment Advertisements) (Exemptions)
Order 1996 or is a person to whom such document may otherwise lawfully be issued
or passed on.
(e) Each Initial Purchaser, severally and not jointly, agrees
with the Issuer 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 Issuer pursuant hereto, such Initial Purchaser
shall furnish to that purchaser a copy of the Offering Memorandum (and any
amendment or supplement thereto that the Issuer shall have
13
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 Issuer and, for purposes of the opinions to be delivered to the
Initial Purchasers pursuant to Sections 5(d) and (e), counsel for the Issuer 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 Issuer and Holdings 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 an Initial
Purchaser.
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 Issuer, at 10:00 A.M., New York City time, on March
5, 1999, 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 Issuer
(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 Issuer by wire or book-entry transfer of
same-day funds to such account or accounts as the Issuer 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 CSI on behalf of the Initial Purchasers shall have requested in
writing not less than two full business days prior to the Closing Date. The
Issuer agrees to make one or more global certificates evidencing the Securities
available for inspection by CSI 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 Issuer and Holdings. The Issuer
and Holdings 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 during the period prior to the completion of the resale of the
Securities by the Initial Purchasers 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 reasonable 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
14
and, if any such suspension is issued, to obtain the lifting thereof at
the earliest possible time;
(b) during the period prior to the completion of the resale of
the Securities by the Initial Purchasers, to furnish promptly to each
of the Initial Purchasers and counsel for the Initial Purchasers,
without charge, as many copies of the Preliminary Offering Memorandum
and the Offering Memorandum (and any amendments or supplements thereto)
as may be reasonably requested;
(c) prior to making any amendment or supplement to the
Offering Memorandum, to furnish a copy thereof to each of 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 Issuer 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 Issuer, 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 Issuer 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 a period of two years following the Closing Date, to
furnish to the Initial Purchasers copies of any annual reports,
quarterly reports and current reports filed by Holdings or the Issuer
with the Commission on Forms 10-K, 10-Q and 8-K, or such other similar
forms as may be designated by the Commission, and such other documents,
reports and information as shall be furnished by Holdings or the Issuer
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
15
Purchasers may reasonably request; provided that, Holdings and its
subsidiaries shall not be obligated to qualify as foreign corporations
in any jurisdiction in which they are not so qualified or to file a
general consent to service of process 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) that
could be integrated with the sale of the Securities in a manner that
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
for, or announce any offer, sale, contract for sale of or other
disposition of any debt securities issued or guaranteed by Holdings or
any of its subsidiaries (other than the Securities) without written
prior 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 Issuer or any of its affiliates and resold in a
transaction registered under the Securities Act;
(m) not to, until the consummation of the Exchange Offer, 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;
16
(n) in connection with the offering of the Securities, until
CSI on behalf of the Initial Purchasers shall have notified the Issuer
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 furnish to each of the Initial Purchasers on the date
hereof a copy of the independent accountants' report included in the
Offering Memorandum signed by the accountants rendering such report;
(q) to do and perform all things required to be done and
performed by it under this Agreement that are within its control prior
to, on or after the Closing Date, and to use its best efforts to
satisfy all conditions precedent on its part to the delivery of the
Securities;
(r) 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 Issuer and Holdings contained herein, to
the accuracy of the statements of the Issuer and Holdings and their respective
officers made in any certificates delivered pursuant hereto, to the performance
by the Issuer and Holdings 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 Issuer on or prior to the Closing Date that the
Offering Memorandum or any amendment or supplement thereto contains an
untrue statement of a fact that, 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 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
17
Offering Memorandum, and all other legal matters relating to the
Transaction Documents and the transactions contemplated thereby, shall
be reasonably satisfactory in all material respects to the Initial
Purchasers, and the Issuer and Holdings shall have furnished to the
Initial Purchasers and their counsel all documents and information that
they or their counsel may reasonably request to enable them to pass
upon such matters.
(d) Xxxxxxx Xxxxxxx & Xxxxxxxx shall have furnished to the
Initial Purchasers their written opinion, as counsel to the Issuer and
Holdings, and Xxxxxxx X. Xxxxxxxxx, Esq., as General Counsel for the
Issuer, shall have furnished to the Initial Purchasers his written
opinion, in each case addressed to the Initial Purchasers and dated the
Closing Date, in form and substance reasonably satisfactory to the
Initial Purchasers and substantially to the effect set forth in Annexes
C-1 and C-2 hereto, respectively.
(e) The Initial Purchasers shall have received from Cravath,
Swaine & Xxxxx and Xxxxx, Xxxxx & Xxxxx, each 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 Issuer shall have furnished to such counsel such
documents and information as they reasonably request for the purpose of
enabling them to pass upon such matters.
(f) The Issuer shall have furnished to the Initial Purchasers
(i) a letter of Deloitte & Touche LLP ("D&T") (the "D&T Initial
Letter") and (ii) a letter of Xxxxx & Young LLP (the "E&Y Initial
Letter" and, together with the D&T Initial Letter, the "Initial
Letters"), 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 B-1 and B-2,
respectively, hereto.
(g) The Issuer shall have furnished to the Initial Purchasers
a letter (the "D&T Bring-Down Letter") of D&T addressed to the Initial
Purchasers and dated the Closing Date confirming that they are
independent public accountants with respect to Holdings and its
subsidiaries within the meaning of Rule 101 of the Code of Professional
Conduct of the AICPA and its interpretations and rulings thereunder,
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 furnished by D&T are accurate and
confirming in all material respects the conclusions and findings set
forth in such Initial Letter.
(h) Each of the Issuer and Holdings shall have furnished to
the Initial Purchasers a certificate or certificates, dated the Closing
Date, of its chief financial officer and another authorized officer
stating that (A) such officers have carefully examined the Offering
Memorandum, (B) 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 that should have
been set forth in a supplement or amendment
18
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, (C) as of the Closing Date, the representations and
warranties of the Issuer or Holdings, as applicable, in this Agreement
are true and correct in all material respects; the Issuer or Holdings,
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 (D) subsequent to the date of the most
recent financial statements contained in the Offering Memorandum, there
has been no material adverse change in the condition, financial or
otherwise, or in the earnings, business affairs or business prospects
of Holdings and its subsidiaries whether or not arising in the ordinary
course of business.
(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 Issuer and Holdings.
(j) The Indenture shall have been duly executed and delivered
by the Issuer, Holdings and the Trustee, and the Securities shall have
been duly executed and delivered by the Issuer 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 Issuer
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 that in the reasonable 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, or in the
earnings, business affairs or business prospects of Holdings and its
subsidiaries whether or not arising in the ordinary course of business,
the effect of which, in any such case described above, is, in the
reasonable 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
19
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 that 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 Issuer'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 Issuer'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 in
securities generally on the New York Stock Exchange, the American Stock
Exchange or the over-the-counter market shall have been suspended or
limited, or minimum prices shall have been established on any such
exchange or market by the Commission, by any such exchange or by any
other regulatory body or governmental authority having jurisdiction, or
trading in any securities of the Issuer on any exchange or in the
over-the-counter market shall have been suspended or (ii) any
moratorium on commercial banking activities shall have been declared by
federal or New York state authorities or (iii) an outbreak or
escalation of hostilities involving the U.S. or a declaration by the
United States of a national emergency or war or (iv) a material adverse
change in general economic, political or financial conditions (or the
effect of international conditions on the financial markets in the
United States shall be such) the effect of which, in the case of this
clause (iv) 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 the delivery of the Securities on the terms and in the
manner contemplated by this Agreement and in the Offering Memorandum
(exclusive of any amendment or supplement thereto).
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 Issuer 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. Defaulting Initial Purchasers. (a) If, on the Closing Date,
any Initial Purchaser defaults in the performance of its obligations under this
Agreement, the
20
non-defaulting Initial Purchasers may make arrangements for the purchase of the
Securities (the "Unpurchased Securities") which such defaulting Initial
Purchaser agreed but failed to purchase by other persons satisfactory to the
Issuer and the non-defaulting Initial Purchasers, but if no such arrangements
are made within 36 hours after such default, then (i) if the principal amount of
the Unpurchased Securities does not exceed 10% of the principal amount of
Securities to be purchased on such date, the non-defaulting Initial Purchasers
shall be obligated to purchase on a pro rata basis the full amount thereof, or
(ii) if the principal amount of the Unpurchased Securities exceeds 10% of the
Securities to be purchased on such date, the Issuer shall be entitled to a
further period of 36 hours within which to procure another party or parties
reasonably satisfactory to the non-defaulting Initial Purchasers to purchase
such Unpurchased Securities upon the terms herein set forth. If, however, the
Issuer has not completed such arrangements within 72 hours after such default
and the principal amount of Unpurchased Securities exceeds 10% of the principal
amount of Securities to be purchased on such date, then this Agreement shall
terminate without liability on the part of the non-defaulting Initial Purchasers
or the Issuer, except that the Issuer and Holdings will continue to be liable
for the payment of expenses to the extent set forth in Sections 8 and 12 and
except that the provisions of Sections 9 and 10 shall not terminate and shall
remain in effect. As used in this Agreement, the term "Initial Purchasers"
includes, for all purposes of this Agreement unless the context otherwise
requires, any party not listed in Schedule I hereto that, pursuant to this
Section 7, purchases Securities which a defaulting Initial Purchaser agreed but
failed to purchase.
(b) Nothing contained herein shall relieve a defaulting
Initial Purchaser of any liability it may have to the Issuer or any
non-defaulting Initial Purchaser for damages caused by its default. If other
persons are obligated or agree to purchase the Securities of a defaulting
Initial Purchaser, either the non-defaulting Initial Purchasers or the Issuer
may postpone the Closing Date for up to seven full business days in order to
effect any changes that in the opinion of counsel for the Issuer or counsel for
the Initial Purchasers may be necessary in the Offering Memorandum or in any
other document or arrangement, and the Issuer agrees promptly to prepare any
amendment or supplement to the Offering Memorandum that effects any such
changes.
8. Reimbursement of Initial Purchasers' Expenses. If (a) this
Agreement shall have been terminated in accordance with Section 6 or 7, (b) the
Issuer shall fail to tender the Securities for delivery to the Initial
Purchasers for any reason permitted under this Agreement or (c) the Initial
Purchasers shall decline to purchase the Securities for any reason permitted
under this Agreement, the Issuer and Holdings shall reimburse the Initial
Purchasers (except a defaulting Initial Purchaser) 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. If this
Agreement is terminated pursuant to Section 7 by reason of the default of one or
more of the Initial Purchasers, neither the Issuer nor Holdings shall be
obligated to reimburse any defaulting Initial Purchaser on account of such
expenses.
9. Indemnification. (a) The Issuer and Holdings 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 9(a) and Section 10 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
21
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 Issuer or Holdings 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 the Issuer and
Holdings shall not 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 9(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 of Securities 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 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 such failure to deliver the
Offering Memorandum was a result of non-compliance by the Issuer and Holdings
with Section 4(b).
(b) Each Initial Purchaser, severally and not jointly, shall
indemnify and hold harmless Holdings, the Issuer, their respective affiliates,
officers, directors, employees, representatives and agents, and each person, if
any, who controls Holdings or the Issuer within the meaning of the Securities
Act or the Exchange Act (collectively referred to for purposes of this Section
9(b) and Section 10 as Holdings), from and against any loss, claim, damage or
liability, joint or several, or any action in respect thereof, to which Holdings
or the Issuer 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 Holdings and the Issuer for any legal or other expenses reasonably
incurred by Holdings or the Issuer 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.
22
(c) Promptly after receipt by an indemnified party under this
Section 9 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 9(a) or 9(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 that it may have under this Section 9 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 that it
may have to an indemnified party otherwise than under this Section 9. 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 9 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 (1)
the employment of counsel by the indemnified party has been authorized in
writing by the indemnifying party, (2) 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, (3)
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 (4) 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 9(a) and 9(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
reasonably 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.
23
The obligations of each of the Issuer, Holdings and the
Initial Purchasers in this Section 9 and in Section 10 are in addition to any
other liability that the Issuer, Holdings 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.
10. Contribution. If the indemnification provided for in
Section 9 is unavailable or insufficient to hold harmless an indemnified party
under Section 9(a) or 9(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 Issuer and Holdings 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 Issuer and Holdings 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 Issuer and
Holdings 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 Issuer and Holdings,
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
Issuer or Holdings or information supplied by the Issuer or Holdings, 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 Issuer, Holdings and
the Initial Purchasers agree that it would not be just and equitable if
contributions pursuant to this Section 10 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 10 shall be deemed
to include, for purposes of this Section 10, 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 10, 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. The Initial Purchasers'
obligations to contribute as provided in this Section 10 are several in
proportion to their respective purchase obligations and not joint.
11. Persons Entitled to Benefit of Agreement. This Agreement
shall inure to the benefit of and be binding upon the Initial Purchasers, the
Issuer, Holdings and their
24
respective successors. This Agreement and the terms and provisions hereof are
for the sole benefit of only those persons, except as provided in Sections 9 and
10 with respect to affiliates, officers, directors, employees, representatives,
agents and controlling persons of the Issuer, Holdings 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
11, any legal or equitable right, remedy or claim under or in respect of this
Agreement or any provision contained herein.
12. Expenses. The Issuer and Holdings agree with the Initial
Purchasers to pay (a) the costs incident to the authorization, issuance, sale,
preparation and delivery of the Securities to the Initial Purchasers 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 to the Initial Purchasers; (e) the fees
and expenses of the Issuer's counsel and the independent accountants; (f) any
fees charged by rating agencies for rating the Securities; (g) the fees and
expenses of the Trustee and any paying agent (including related fees and
expenses of any counsel to such parties); (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 Issuer and Holdings under this Agreement which are not
otherwise specifically provided for in this Section 12; provided, however, that
except as provided in this Section 12 and Section 8, the Initial Purchasers
shall pay their own costs and expenses.
13. Survival. The respective indemnities, rights of
contribution, representations, warranties and agreements of the Issuer, Holdings
and the Initial Purchasers contained in this Agreement or made by or on behalf
of the Issuer, Holdings 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.
14. 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 Chase Securities Inc., 000 Xxxx Xxxxxx, Xxx
Xxxx, Xxx Xxxx 00000, Attention: Legal Department (telecopier no.: (212)
270-0994); or
(b) if to the Issuer or Holdings, shall be delivered or sent
by mail or telecopy transmission to the address of the Issuer set forth in the
Offering Memorandum, Attention: Xx. Xxxxxxx X. Xxxxxxxxx (telecopier no.: (313)
974-3204 with a copy to Xx. Xxxx X. Xxxxxxxx, The Blackstone Group L.P., 000
Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000 (telecopier no.: (000) 000-0000);
25
provided that any notice to an Initial Purchaser pursuant to Section 9(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 Issuer shall be
entitled to act and rely upon any request, consent, notice or agreement given or
made on behalf of the Initial Purchasers by CSI.
15. 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.
16. 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: (i) the last two
bullet points on the front cover page concerning the terms of the offering of
the Securities by the Initial Purchasers and (ii) the statements concerning the
Initial Purchasers contained in the third, fourth, fifth, seventh, ninth,
twelfth and thirteenth paragraphs under the heading "Plan of Distribution".
17. GOVERNING LAW. THIS AGREEMENT SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF
THE STATE OF NEW YORK.
18. 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.
19. 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.
20. 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.
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 Issuer, Holdings and the
several Initial Purchasers in accordance with its terms.
Very truly yours,
AMERICAN AXLE & MANUFACTURING, INC.
By /s/ Xxxx X. Xxxxxxx
-------------------------------
Name:
Title:
AMERICAN AXLE & MANUFACTURING
HOLDINGS, INC.
By /s/ Xxxxxxx X. Xxxxxxxxx
-------------------------------
Name:
Title:
Accepted:
CHASE SECURITIES INC.,
By /s/ Xxx Xxxxxxxx
--------------------------
Authorized Signatory
Address for notices pursuant to Section 9(c):
0 Xxxxx Xxxxx, 00xx xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Legal Department
XXXXXXXXX, XXXXXX & XXXXXXXX
SECURITIES CORPORATION,
By /s/ Xxxxxxx X. X. Xxxxxx
--------------------------
Authorized Signatory
Address for notices pursuant to Section 9(c):
000 Xxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Attention: Legal Department
XXXXXX XXXXXXX & CO.
INCORPORATED,
By /s/ Xxxxx X. Xxxxxx
-------------------------
Authorized Signatory
Address for notices pursuant to Section 9(c):
0000 Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Legal Department
XXXXXX XXXXXXX & CO.
INCORPORATED,
By /s/ Xxxxx X. Xxxxxx
--------------------------
Authorized Signatory
Address for notices pursuant to Section 9(c):
0000 Xxxxxxxx
Xxx Xxxx, XX 00000
Attention: Legal Department
SCHEDULE I
Principal Amount
Initial Purchasers of Securities
------------------ ----------------
Chase Securities Inc. $ 195,000,000
Xxxxxxxxx, Xxxxxx & Xxxxxxxx Securities
Corporation 52,500,000
Xxxxxx Xxxxxxx & Co. Incorporated 52,500,000
------------
Total $300,000,000
ANNEX A
[Form of Exchange and Registration Rights Agreement]
ANNEX B-1
FORM OF D&T COMFORT LETTER
The Issuer shall have furnished to the Initial Purchasers a
letter of Deloitte & Touche LLP, 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 Holdings and its subsidiaries 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 and
pro forma financial information included 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 Holdings and the Issuer, 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 Holdings and the Issuer 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 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 in the Offering Memorandum for them to be in conformity with
generally accepted accounting principles applied on a basis
substantially consistent with that of the audited financial statements
included in the Offering Memorandum or (C) the information included
under the headings, "Summary--Summary Historical and Adjusted
Consolidated Financial Data", "Capitalization", "Selected Consolidated
Financial and Other Data" 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 Holdings and the Issuer 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 of Holdings as compared with the amounts shown in the
December 31, 1998 unaudited balance sheet included in the Offering
Memorandum or (B) for the period from January 1, 1999, to a specified
date not more than three business days prior to the date of such
letter, there were any decreases, as compared with the corresponding
period in the preceding
2
year, in net sales, income from operations, EBITDA or net income of
Holdings and its consolidated subsidiaries, 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 Holdings as to the
significance thereof unless said explanation is not deemed necessary by
the Initial Purchasers;
(v) based upon the procedures detailed in such letter with
respect to the period subsequent to December 31, 1998, including
reading of minutes and inquiries of certain officials of Holdings and
the Issuer 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 of
Holdings as compared with the amounts shown in the December 31, 1998
audited balance sheet included in the Offering Memorandum or (B) for
the period from January 1, 1999, to a specified date not more than
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, EBITDA or net income of
Holdings and its consolidated subsidiaries, 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 Holdings as to the
significance thereof unless said explanation is not deemed necessary by
the Initial Purchasers;
(vi) 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 Holdings and its subsidiaries) set forth
in the Offering Memorandum agrees with the accounting records of
Holdings and its subsidiaries, excluding any questions of legal
interpretation; and
(vii) on the basis of a reading of the unaudited pro forma
financial information included in the Offering Memorandum, carrying out
certain specified procedures, reading of minutes and inquiries of
certain officials of Holdings and the Issuer who have responsibility
for financial and accounting matters and proving the arithmetic
accuracy of the application of the pro forma adjustments to the
historical amounts in the pro forma financial information, nothing came
to their attention which caused them to believe that the pro forma
financial information does not comply in form in all material respects
with the applicable accounting requirements of Rule 11-02 of Regulation
S-X or that the pro forma adjustments have not been properly applied to
the historical amounts in the compilation of such information.
ANNEX B-2
FORM OF E&Y COMFORT LETTER
The Issuer shall have furnished to the Initial Purchasers a
letter of Xxxxxx & Xxxxx LLP, 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 Service America and its subsidiaries 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 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 Holdings, 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 Holdings 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 the
information included under the headings "Summary--Summary Financial
Data", "Selected Financial and Other Data" 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; and
(iv) 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 Holdings and its subsidiaries) set forth
in the Offering Memorandum agrees with the accounting records of
Holdings and its subsidiaries, excluding any questions of legal
interpretation.
ANNEX C
Form of Opinion of Counsel for the Issuer
Xxxxxxx, Xxxxxxx & Xxxxxxxx shall have furnished to the
Initial Purchasers their written opinion, as counsel to the Issuer, 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 below:
(i) Holdings 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
respective 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),
(ii) Holdings has an authorized capitalization as set forth in
the Offering Memorandum, and all of the outstanding shares of capital
stock of Holdings have been duly and validly authorized and issued and
are fully paid and non-assessable; and the capital stock of Holdings
conforms in all material respects to the description thereof contained
in the Offering Memorandum;
(iii) the descriptions in the Offering Memorandum of statutes,
legal and governmental proceedings and contracts and other documents
are accurate in all material respects; the statements in the Offering
Memorandum under the heading "Certain Federal Income Tax
Considerations", to the extent that they constitute summaries of
matters of law or regulation or legal conclusions, have been reviewed
by such counsel and fairly summarize the matters described therein in
all material respects; and such counsel does not have actual knowledge
of any current or pending legal or governmental actions, suits or
proceedings which would be required to be described in the Offering
Memorandum if the Offering Memorandum were a prospectus included in a
registration statement on Form S-1 which are not described as so
required;
(iv) the Indenture conforms in all material respects with the
requirements of the Trust Indenture Act and the rules and regulations
of the Commission applicable to an indenture which is qualified
thereunder;
(v) Holdings and the Issuer have full right, power and
authority to execute and deliver each of the Transaction Documents to
which they are a party and to perform their respective obligations
thereunder; and all corporate action required to be taken for the due
and proper authorization, execution and delivery of each of the
Transaction Documents and the consummation of the transactions
contemplated thereby have been duly and validly taken;
(vi) each of the Purchase Agreement and the Registration
Rights Agreement has been duly authorized, executed and delivered by
the Issuer and Holdings and constitutes a valid and legally binding
agreement of the Issuer and Holdings enforceable against the Issuer and
Holdings in accordance with its terms, except to the extent that such
enforceability may be limited by applicable bankruptcy,
2
insolvency, fraudulent conveyance, reorganization, moratorium and other
similar laws affecting creditors' rights generally and by general
equitable principles (whether considered in a proceeding in equity or
at law) and except to the extent that the indemnification provisions
thereof may be unenforceable;
(vii) the Indenture has been duly authorized, executed and
delivered by the Issuer and Holdings and, assuming due authorization,
execution and delivery thereof by the Trustee, constitutes a valid and
legally binding agreement of the Issuer enforceable against the Issuer
and Holdings in accordance with its terms, except to the extent that
such enforceability may be limited by applicable bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium and other
similar laws affecting creditors' rights generally and by general
equitable principles (whether considered in a proceeding in equity or
at law);
(viii) the Securities have been duly authorized and issued by
the Issuer and, assuming due authentication thereof by the Trustee and
upon payment and delivery in accordance with the Purchase Agreement,
will constitute valid and legally binding obligations of the Issuer as
issuer, and Holdings, as guarantor, entitled to the benefits of the
Indenture and enforceable against the Issuer as issuer, and Holdings,
as guarantor, in accordance with their terms, except to the extent that
such enforceability may be limited by applicable bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium and other
similar laws affecting creditors' rights generally and by general
equitable principles (whether considered in a proceeding in equity or
at law);
(ix) each Transaction Document conforms in all material
respects to the description thereof contained in the Offering
Memorandum;
(x) the execution, delivery and performance by the Issuer and
Holdings 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 Issuer and Holdings 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 Issuer or any of its subsidiaries
pursuant to, any material indenture, mortgage, deed of trust, loan
agreement or other material agreement or instrument to which the Issuer
or any of its subsidiaries is a party or by which the Issuer or any of
its subsidiaries is bound or to which any of the property or assets of
the Issuer or any of its subsidiaries is subject, nor will such actions
result in any violation of the provisions of the charter or by-laws of
the Issuer 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 Issuer 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 Issuer and
Holdings 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 Issuer and Holdings with the terms thereof and the
consummation of the transactions contemplated by the Transaction
Documents, except for such consents,
3
approvals, authorizations, filings, registrations or qualifications (i)
which have been obtained or made prior to the Closing Date and (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;
(xi) to the best knowledge of such counsel, there are no
pending actions or suits or judicial, arbitral, rule-making,
administrative or other proceedings to which the Issuer or any of its
subsidiaries is a party or of which any property or assets of the
Issuer or any of its subsidiaries is the subject which (A) singularly
or in the aggregate, if determined adversely to the Issuer or any of
its subsidiaries, could reasonably be expected to have a Material
Adverse Effect or (B) questions 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 such counsel, no such
proceedings are threatened or contemplated by governmental authorities
or threatened by others.
(xii) neither Holdings nor any of its subsidiaries is (A) in
violation of its charter or by-laws, (B) in default in any material
respect, and no event has occurred which, with notice or lapse of time
or both, would constitute such a default, in the due performance or
observance of any term, covenant or condition contained in any material
indenture, mortgage, deed of trust, loan agreement or other material
agreement or instrument to which it is a party or by which it is bound
or to which any of its property or assets is subject or (C) in
violation in any material respect of any law, ordinance, governmental
rule, regulation or court decree to which it or its property or assets
may be subject;
(xiii) neither Holdings nor any of its subsidiaries is (A) an
"investment company" or a company "controlled by" an investment company
within the meaning of the Investment Company Act and the rules and
regulations of the Commission thereunder, without taking account of any
exemption under the Investment Company Act arising out of the number of
holders of Holdings' securities or (B) 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;
(xiv) neither the consummation of the transactions
contemplated by this Agreement nor the sale, issuance, execution or
delivery of the Securities will violate Regulation T, U or X of the
Federal Reserve Board; and
(xv) assuming the accuracy of the representations, warranties
and agreements of the Issuer, Holdings and of the Initial Purchasers
contained in the Purchase Agreement, no registration of the Securities
under the Securities Act or qualification of the Indenture under the
Trust Indenture Act is required in connection with the issuance and
sale of the Securities by the Issuer and the offer, resale and delivery
of the Securities by the Initial Purchasers in the manner contemplated
by the Purchase Agreement and the Offering.
Such counsel shall also state that they have participated in
conferences with representatives of the Issuer, representatives of its
independent accountants and counsel and representatives of the Initial
Purchasers and their counsel at which conferences the contents of the
Preliminary Offering Memorandum and the Offering Memorandum and any amendment
and supplement thereto and related matters were discussed and, although such
4
counsel assumes no responsibility for the accuracy, completeness or fairness of
the Offering Memorandum or any amendment or supplement thereto (except as
expressly provided above), nothing has come to the attention of such counsel to
cause such counsel to believe that the Offering Memorandum or any amendment or
supplement thereto (other than the financial statements and other financial and
statistical information contained therein, as to which such counsel need express
no belief), as of the date thereof and as of the Closing Date, contained or
contains any untrue statement of a material fact or omitted or omits to state a
material fact necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
In rendering such opinion, such counsel may rely as to matters
of fact, to the extent such counsel deems proper, on certificates of responsible
officers of the Issuer and Holdings and public officials which are furnished to
the Initial Purchasers.
