ACTION PERFORMANCE COMPANIES, INC.
$115,000,000.00 (including $15,000,000.00 over-allotment option)
4 3/4% Convertible Subordinated Notes due 2005
PURCHASE AGREEMENT
dated March 18, 1998
NATIONSBANC XXXXXXXXXX SECURITIES LLC
CIBC OPPENHEIMER CORP.
EVEREN SECURITIES, INC.
XXXXX XXXXXXX INC.
PURCHASE AGREEMENT
March 18, 1998
NATIONSBANC XXXXXXXXXX SECURITIES LLC
CIBC XXXXXXXXXXX CORP.
EVEREN SECURITIES, INC.
XXXXX XXXXXXX INC.
c/o NATIONSBANC XXXXXXXXXX SECURITIES LLC
000 Xxxxxxxxxx Xxxxxx
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Ladies and Gentlemen:
Introductory. Action Performance Companies, Inc., an Arizona
corporation (the "Company), proposes to issue and sell to the several Initial
Purchasers named in Schedule A (the "Initial Purchasers"), acting severally and
not jointly, the respective amounts set forth in such Schedule A of
$100,000,000.00 aggregate principal amount of the Company's 4 3/4% Convertible
Subordinated Notes due 2005 (the "Firm Offered Notes"). The Company also
proposes to issue and sell to the Initial Purchasers not more than an additional
$15,000,000.00 aggregate principal amount of its 4 3/4% Convertible Subordinated
Notes due 2005 (the "Additional Offered Notes," and collectively with the Firm
Offered Notes, the "Notes") if and to the extent that NationsBanc Xxxxxxxxxx
Securities LLC shall have determined to exercise, on behalf of the Initial
Purchasers, the right to purchase such amount granted to the Initial Purchasers
in Section 2 hereof. NationsBanc Xxxxxxxxxx Securities LLC, CIBC Xxxxxxxxxxx
Corp., EVEREN Securities, Inc. and Xxxxx Xxxxxxx Inc. have agreed to act as the
several Initial Purchasers in connection with the offering and sale of the
Notes. The Notes will be convertible into shares of common stock, $.01 par
value, of the Company (the "Underlying Securities" and, together with the Notes,
the "Securities"), as more fully set forth in the Indenture (as defined below).
The Securities will be issued pursuant to an indenture dated as of
March 24, 1998 (the "Indenture") between the Company and First Union National
Bank, as trustee (the "Trustee"). Securities issued in book-entry form will be
issued in the name of Cede & Co., as nominee of The Depository Trust Company
(the "Depositary") pursuant to a DTC Agreement, to be dated as of the First
Closing Date (as defined in Section 2) (the "DTC Agreement"), among the Company,
the Trustee and the Depositary.
The holders of the Securities will be entitled to the benefits of a
registration rights agreement to be dated as of March 24, 1998 (the
"Registration Rights Agreement"), among the Company and the Initial Purchasers,
pursuant to which the Company will agree to file, within 60 days of the First
Closing Date, a registration statement with the Securities and Exchange
Commission (the "Commission") registering the Securities for resale under the
Securities Act of 1933, as amended (the "Securities Act," which term, as used
herein, includes the rules and regulations of the Commission promulgated
thereunder).
The Company understands that the Initial Purchasers propose to make an
offering of the Securities on the terms and in the manner set forth herein and
in the Offering Memorandum (as defined below) and agrees that the Initial
Purchasers may resell, subject to the conditions set forth herein, all or a
portion of the Securities to purchasers (the "Subsequent Purchasers") at any
time after the date of this Agreement. The Securities are to be offered and sold
to or through the Initial Purchasers without being registered with the
Commission under the Securities Act in reliance upon exemptions therefrom. The
terms of the Securities and the Indenture will require that investors that
acquire Securities expressly agree that Securities may only be resold or
otherwise transferred, after the date hereof, if such Securities are registered
for resale under the Securities Act or if an exemption from the registration
requirements of the Securities Act is available (including the exemptions
afforded by Rule 144A ("Rule 144A") or Regulation S ("Regulation S")
thereunder).
The Company has prepared and delivered to each Initial Purchaser copies
of an Offering Memorandum "subject to completion" dated March 4, 1998 (the
"Preliminary Offering Memorandum") and has prepared and will deliver to each
Initial Purchaser, not later than 12:00 p.m. on the second business day after
the date hereof, copies of the Offering Memorandum dated March 18, 1998
describing the terms of the Securities, each for use by such Initial Purchaser
in connection with its solicitation of offers to purchase the Securities. As
used herein, the "Offering Memorandum" shall mean, with respect to any date or
time referred to in this Agreement, the Company's Offering Memorandum dated
March 18, 1998, including amendments or supplements thereto, including any
international supplement thereto, any exhibits thereto, and the Incorporated
Documents (as defined by Section 1(e) below), in the most recent form that has
been prepared and delivered by the Company to the Initial Purchasers in
connection with their solicitation of offers to purchase Securities. Further,
any reference to the Preliminary Offering Memorandum or the Offering Memorandum
shall be deemed to refer to and include any Additional Issuer Information (as
defined in Section 3(g)) furnished by the Company prior to the completion of the
distribution of the Securities.
All references in this Agreement to financial statements and schedules
and other information which is "contained," "included" or "stated" in the
Offering Memorandum (or other references of like import) shall be deemed to mean
and include all such financial statements and schedules and other information
which are incorporated by reference in the Offering Memorandum; and all
references in this Agreement to amendments or supplements to the Offering
Memorandum shall be deemed to mean and include the filing of any document under
the Securities Exchange Act of 1934 (the "Exchange Act", which term, as used
herein, includes the rules and regulations of the Commission promulgated
thereunder) which is incorporated or deemed to be incorporated by reference in
the Offering Memorandum.
The Company hereby confirms its agreements with the Initial Purchasers
as follows:
Section 1. Representations and Warranties.
The Company hereby represents, warrants and covenants to each Initial
Purchaser as follows:
(a) No Registration Required. Subject to compliance by the
Initial Purchasers with the representations and warranties set forth in Section
2(e) hereof and with the procedures set forth in Section 7 hereof, it is not
necessary in connection with the offer, sale and delivery of the Securities to
the Initial Purchasers and to each Subsequent Purchaser in the manner
contemplated
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by this Agreement and the Offering Memorandum to register the Securities under
the Securities Act or, until such time as the Securities are registered pursuant
to an effective registration statement, to qualify the Indenture under the Trust
Indenture Act of 1939 (the "Trust Indenture Act", which term, as used herein,
includes the rules and regulations of the Commission promulgated thereunder).
(b) No Integration of Offerings or General Solicitation. The
Company has not, directly or indirectly, solicited any offer to buy or offered
to sell, and will not, directly or indirectly, solicit any offer to buy or offer
to sell, in the United States or to any United States citizen or resident, any
security which is or would be integrated with the sale of the Securities in a
manner that would require the Securities to be registered under the Securities
Act. None of the Company, its affiliates (as such term is defined in Rule 501(b)
under the Securities Act (each, an "Affiliate")), or any person acting on its or
any of their behalf (other than the Initial Purchasers, as to whom the Company
makes no representation or warranty) has engaged or will engage, 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.
With respect to those Securities sold in reliance upon Regulation S, (i) none of
the Company, its Affiliates or any person acting on its or their behalf (other
than the Initial Purchasers, as to whom the Company makes no representation or
warranty) has engaged or will engage in any directed selling efforts within the
meaning of Regulation S and (ii) each of the Company and its affiliates and any
person acting on its or their behalf (other than the Initial Purchasers, as to
whom the Company makes no representation or warranty) has complied and will
comply with the offering restrictions set forth in Regulation S. Notwithstanding
the foregoing, the Company makes no representation or warranty relating to any
actions taken by the Initial Purchasers.
(c) Eligibility for Resale under Rule 144A. The Notes are
eligible for resale pursuant to Rule 144A and will not be, at the First Closing
Date and the Second Closing Date, as the case may be, of the same class as
securities listed on a national securities exchange registered under Section 6
of the Exchange Act or quoted in a U.S. automated interdealer quotation system.
(d) The Offering Memorandum. The Offering Memorandum does not,
and at the First Closing Date and the Second Closing, as the case may be, 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 under which they were made, not misleading; provided that this
representation, warranty and agreement shall not apply to statements in or
omissions from the Offering Memorandum made in reliance upon and in conformity
with information furnished to the Company in writing by any Initial Purchaser
through NationsBanc Xxxxxxxxxx Securities LLC expressly for use in the Offering
Memorandum. Each of the Preliminary Offering Memorandum and the Offering
Memorandum, as of its date, contains all the information specified in, and
meeting the requirements of, Rule 144A(d)(4). The Company has not distributed
and will not distribute, prior to the later of the First Closing Date and the
completion of the Initial Purchasers' distribution of the Securities, any
offering material in connection with the offering and sale of the Securities
other than a preliminary Offering Memorandum or the Offering Memorandum.
(e) Incorporated Documents. The Offering Memorandum as
delivered from time to time shall incorporate by reference the most recent
Annual Report of the Company on Form 10-K filed with the Commission and each
Quarterly Report of the Company on Form 10-Q and each Current Report of the
Company on Form 8-K filed with the Commission since the filing of the end of the
fiscal year to which such Annual Report relates. Subject to amendments to be
filed in accordance with the Commission's comment letter dated February 27, 1998
generally in the form of a draft previously provided to counsel for the Initial
Purchasers, the documents
3
incorporated or deemed to be incorporated by reference in the Offering
Memorandum at the time they were or hereafter are filed with the Commission
(collectively, the "Incorporated Documents") complied and will comply in all
material respects with the requirements of the Exchange Act and, when read
together with the other information in the Offering Memorandum, at the date of
the Offering Memorandum, the First Closing Date and the Second Closing Date, as
the case may be, do not and will not, as of their respective dates, include an
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein, in the light of
the circumstances under which they were made, not misleading.
(f) The Purchase Agreement. This Agreement has been duly
authorized, executed and delivered by, and is a valid and binding agreement of,
the Company, enforceable in accordance with its terms, except as rights to
indemnification hereunder may be limited by applicable law and except as the
enforcement hereof may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws relating to or affecting the rights and
remedies of creditors or by general equitable principles.
(g) The Registration Rights Agreement and DTC Agreement. At
the First Closing Date and the Second Closing Date, as the case may be, each of
the Registration Rights Agreement and the DTC Agreement will be duly authorized,
executed and delivered by, and will be a valid and binding agreement of, the
Company, enforceable in accordance with its terms, except as the rights to
indemnification thereunder may be limited by applicable law and except as the
enforcement thereof may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws relating to or affecting the rights and
remedies of creditors or by general equitable principles.
(h) Authorization of the Securities . The Notes to be
purchased by the Initial Purchasers from the Company are in the form
contemplated by the Indenture, have been duly authorized for issuance and sale
pursuant to this Agreement and the Indenture and, at the First Closing Date and
the Second Closing Date, as the case may be, will have been duly executed by the
Company and, when authenticated in the manner provided for in the Indenture and
delivered against payment of the purchase price therefor, will constitute valid
and binding agreements of the Company, enforceable in accordance with their
terms, except as the enforcement thereof may be limited by bankruptcy,
insolvency, reorganization, moratorium or other similar laws relating to or
affecting the rights and remedies of creditors or by general equitable
principles and will be entitled to the benefits of the Indenture.
(i) Underlying Securities. The Underlying Securities reserved
for issuance upon conversion of the Notes have been duly authorized and reserved
and, when issued upon conversion of such Notes in accordance with the terms of
the Indenture, will be validly issued, fully paid, and non-assessable and will
not be subject to preemptive or similar rights.
(j) Authorization of the Indenture. The Indenture has been
duly authorized by the Company and, at the First Closing Date and the Second
Closing Date, as the case may be, will have been duly executed and delivered by
the Company and will constitute a valid and binding agreement of the Company,
enforceable against the Company in accordance with its terms, except as the
enforcement thereof may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws relating to or affecting the rights and
remedies of creditors or by general equitable principles.
4
(k) Description of the Securities and the Indenture. The
Securities and the Indenture will conform in all material respects to the
respective statements relating thereto contained in the Offering Memorandum and
will be in substantially the respective forms previously delivered to the
Initial Purchasers.
(l) No Material Adverse Change. Except as otherwise disclosed
in the Offering Memorandum, subsequent to the respective dates as of which
information is given in the Offering Memorandum: (i) there has been no material
adverse change, or any development that could reasonably be expected to result
in a material adverse change, in the condition, financial or otherwise, or in
the earnings, business, operations or prospects, whether or not arising from
transactions in the ordinary course of business, of the Company and its
subsidiaries, considered as one entity (any such change is called a "Material
Adverse Change"); (ii) the Company and its subsidiaries, considered as one
entity, have not incurred any material liability or obligation, indirect, direct
or contingent, not in the ordinary course of business nor entered into any
material transaction or agreement not in the ordinary course of business; and
(iii) there has been no dividend or distribution of any kind declared, paid or
made by the Company or, except for dividends paid to the Company or other
subsidiaries, any of its subsidiaries on any class of capital stock or
repurchase or redemption by the Company or any of its subsidiaries of any class
of capital stock.
(m) Independent Accountants. Xxxxxx Xxxxxxxx LLP, which has
expressed its opinion with respect to the financial statements (which term as
used in this Agreement includes the related notes thereto) and supporting
schedules filed with the Commission and included in the Offering Memorandum, are
independent public or certified public accountants within the meaning of
Regulation S-X under the Securities Act and the Exchange Act.
(n) Preparation of the Financial Statements. The financial
statements, together with the related schedules and notes, included or
incorporated by reference in the Offering Memorandum present fairly the
consolidated financial position of the Company and its subsidiaries as of and at
the dates indicated and the results of their operations and cash flows for the
periods specified. Such financial statements have been prepared in conformity
with generally accepted accounting principles as applied in the United States
applied on a consistent basis throughout the periods involved, except as may be
expressly stated in the related notes thereto. The financial data set forth in
the Offering Memorandum under the captions "Summary -- Summary Consolidated
Financial Data", "Capitalization" and "Selected Consolidated Financial Data"
fairly present the information set forth therein on a basis consistent with that
of the audited financial statements contained in the Offering Memorandum. The
pro forma financial data and/or statements of the Company and its subsidiaries
and the related notes thereto included under the caption "Unaudited Pro Forma
Condensed Combined Financial Information" and elsewhere in the Offering
Memorandum present fairly the information contained therein, have been prepared
in accordance with the Commission's rules and guidelines with respect to pro
forma financial statements, and have been properly presented 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. The Company's ratios of
earnings to fixed charges set forth in the Offering Memorandum under the
captions "Summary--Summary Consolidated Financial Data", and "Selected
Consolidated Financial Data" have been calculated in compliance with Item 503(d)
of Regulation S-K under the Securities Act.
(o) Incorporation and Good Standing of the Company and its
Subsidiaries. Each of the Company and its subsidiaries has been duly
incorporated and is validly existing as a
5
corporation in good standing under the laws of the jurisdiction of its
incorporation and has corporate power and authority to own, lease and operate
its properties and to conduct its business as described in the Offering
Memorandum and, in the case of the Company, to enter into and perform its
obligations under each of this Agreement, the Registration Rights Agreement, the
DTC Agreement, the Securities, and the Indenture. Each of the Company and each
subsidiary 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 for such jurisdictions where the failure to so
qualify or to be in good standing would not, individually or in the aggregate,
result in a Material Adverse Change. All of the issued and outstanding capital
stock of each subsidiary has been duly authorized and validly issued, is fully
paid and nonassessable and is owned by the Company, directly or through
subsidiaries, free and clear of any security interest, mortgage, pledge, lien,
encumbrance or claim. The Company does not own or control, directly or
indirectly, any corporation, association or other entity other than the
subsidiaries listed on Schedule B hereto.
(p) Capitalization and Other Capital Stock Matters. At
December 31, 1997, on a consolidated basis, after giving pro forma effect to the
issuance and sale of the Securities pursuant hereto, the Company would have an
authorized and outstanding capitalization as set forth in the Offering
Memorandum under the caption "Capitalization" (other than for subsequent
issuances of capital stock, if any, pursuant to employee benefit plans described
in the Offering Memorandum or upon exercise of outstanding options or warrants
described in the Offering Memorandum). The Common Stock conforms in all material
respects to the description thereof set forth in the Offering Memorandum. All of
the outstanding shares of Common Stock have been duly authorized and validly
issued, are fully paid and nonassessable and have been issued in compliance with
federal and state securities laws. None of the outstanding shares of Common
Stock were issued in violation of any preemptive rights, rights of first refusal
or other similar rights to subscribe for or purchase securities of the Company.
There are no authorized or outstanding options, warrants, preemptive rights,
rights of first refusal or other rights to purchase, or equity or debt
securities convertible into or exchangeable or exercisable for, any capital
stock of the Company or any of its subsidiaries other than those accurately
described in the Offering Memorandum. The description of the Company's stock
option, stock bonus and other stock plans or arrangements, and the options or
other rights granted thereunder, set forth in the Offering Memorandum (including
through incorporation by reference) accurately and fairly describes such plans,
arrangements, options and rights.
(q) Stock Exchange Listing. The Common Stock is registered
pursuant to Section 12(g) of the Exchange Act and is listed on the Nasdaq
National Market, and the Company has taken no action designed to, or likely to
have the effect of, terminating the registration of the Common Stock under the
Exchange Act or delisting the Common Stock from the Nasdaq National Market, nor
has the Company received any notification that the Commission or the National
Association of Securities Dealers, Inc. (the "NASD") is contemplating
terminating such registration or listing.
(r) Non-Contravention of Existing Instruments; No Further
Authorizations or Approvals Required. Neither the Company nor any of its
subsidiaries is in violation of its charter or by-laws or is in default (or,
with the giving of notice or lapse of time, would be in default) ("Default")
under any indenture, mortgage, loan or credit agreement, note, contract,
franchise, lease or other instrument to which the Company or any of its
subsidiaries is a party or by which it or any of them may be bound, including,
without limitation, the Company's Credit Facility with First Union National Bank
or the Company's 8.05% Senior Notes due 1999, or to which any of the
6
property or assets of the Company or any of its subsidiaries is subject (each,
an "Existing Instrument"), except for such Defaults as would not, individually
or in the aggregate, result in a Material Adverse Change. The Company's
execution, delivery and performance of this Agreement, the Registration Rights
Agreement, the DTC Agreement, and the Indenture, and the issuance and delivery
of the Securities and consummation of the transactions contemplated hereby and
thereby and by the Offering Memorandum (i) will not result in any violation of
the provisions of the charter or by-laws of the Company or any subsidiary, (ii)
will not conflict with or constitute a breach of, or Default or a Debt Repayment
Triggering Event (as defined below) under, or result in the creation or
imposition of any lien, charge or encumbrance upon any property or assets of the
Company or any of its subsidiaries pursuant to, or require the consent of any
other part to, any Existing Instrument, except for such conflicts, breaches,
Defaults, liens, charges or encumbrances as would not, individually or in the
aggregate, result in a Material Adverse Change and (iii) will not result in any
violation of any law, administrative regulation or administrative or court
decree applicable to the Company or any subsidiary, except for such violations
as would not result in a Material Adverse Change. No consent, approval,
authorization or other order of, or registration or filing with, any court or
other governmental or regulatory authority or agency, is required for the
Company's execution, delivery and performance of this Agreement, the
Registration Rights Agreement, the DTC Agreement or the Indenture, or the
issuance and delivery of the Securities, or consummation of the transactions
contemplated hereby and thereby and by the Offering Memorandum, except such as
have been obtained or made by the Company and are in full force and effect under
the Securities Act, applicable state securities or blue sky laws. As used
herein, a "Debt Repayment Triggering Event" means any event or condition which
gives, or with the giving of notice or lapse of time would give, 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 the Company or any of its
subsidiaries.
(s) No Material Actions or Proceedings. Except as otherwise
disclosed in the Offering Memorandum, there are no legal or governmental
actions, suits or proceedings pending or, to the best of the Company's
knowledge, threatened (i) against or affecting the Company or any of its
subsidiaries, (ii) which has as the subject thereof any officer or director of,
or property owned or leased by, the Company or any of its subsidiaries or (iii)
relating to environmental or discrimination matters, where in any such case (A)
there is a reasonable possibility that such action, suit or proceeding might be
determined adversely to the Company or such subsidiary and (B) any such action,
suit or proceeding, if so determined adversely, would reasonably be expected to
result in a Material Adverse Change or adversely affect the consummation of the
transactions contemplated by this Agreement. No material labor dispute with the
employees of the Company or any of its subsidiaries exists or, to the best of
the Company's knowledge, is threatened or imminent.
(t) Intellectual Property Rights. The Company and its
subsidiaries own or possess sufficient trademarks, trade names, patent rights,
copyrights, licenses, approvals, trade secrets and other similar rights
(collectively, "Intellectual Property Rights") reasonably necessary to conduct
their businesses as now conducted; and the expected expiration of any of such
Intellectual Property Rights would not result in a Material Adverse Change.
Except as disclosed in the Offering Memorandum, neither the Company nor any of
its subsidiaries has received any notice of infringement or conflict with
asserted Intellectual Property Rights of others, which infringement or conflict,
if the subject of an unfavorable decision, would result in a Material Adverse
Change.
(u) All Necessary Permits, etc. The Company and each
subsidiary possess such valid and current certificates, authorizations or
permits issued by the appropriate state, federal or
7
foreign regulatory agencies or bodies necessary to conduct their respective
businesses, and neither the Company nor any subsidiary has received any notice
of proceedings relating to the revocation or modification of, or non-compliance
with, any such certificate, authorization or permit which, singly or in the
aggregate, if the subject of an unfavorable decision, ruling or finding, could
result in a Material Adverse Change.
(v) Title to Properties. The Company and each of its
subsidiaries has good and marketable title to all the properties and assets
reflected as owned in the financial statements referred to in Section 1(n)
above, in each case free and clear of any security interests, mortgages, liens,
encumbrances, equities, claims and other defects, except such as do not
materially and adversely affect the value of such property and do not materially
interfere with the use made or proposed to be made of such property by the
Company or such subsidiary. The real property, improvements, equipment and
personal property held under lease by the Company or any subsidiary are held
under valid and enforceable leases, with such exceptions as are not material and
do not materially interfere with the use made or proposed to be made of such
real property, improvements, equipment or personal property by the Company or
such subsidiary.
(w) Tax Law Compliance. The Company and its consolidated
subsidiaries have filed all necessary federal, state and foreign income and
franchise tax returns or have properly requested extensions thereof and have
paid all taxes required to be paid by any of them and, if due and payable, any
related or similar assessment, fine or penalty levied against any of them. The
Company has made adequate charges, accruals and reserves in the applicable
financial statements referred to in Section 1(n) above in respect of all
federal, state and foreign income and franchise taxes for all periods as to
which the tax liability of the Company or any of its consolidated subsidiaries
has not been finally determined.
(x) Company Not an "Investment Company". The Company has been
advised of the rules and requirements under the Investment Company Act of 1940,
as amended (the "Investment Company Act"). The Company is not, and after receipt
of payment for the Securities will not be, an "investment company" within the
meaning of Investment Company Act and will conduct its business in a manner so
that it will not become subject to the Investment Company Act.
(y) Insurance. Each of the Company and its subsidiaries are
insured by recognized, financially sound institutions with policies in such
amounts and with such deductibles and covering such risks as are generally
deemed adequate and customary for their businessess including, but not limited
to, policies covering real and personal property owned or leased by the Company
and its subsidiaries against theft, damage, destruction, acts of vandalism and
earthquakes. The Company has no reason to believe that it or any subsidiary will
not be able (i) to renew its existing insurance coverage as and when such
policies expire or (ii) to obtain comparable coverage from similiar institutions
as may be necessary or appropriate to conduct its business as now conducted and
at a cost that would not result in a Material Adverse Change. Neither of the
Company nor any subsidiary has been denied any insurance coverage which it has
sought or for which it has applied.
(z) No Price Stabilization or Manipulation. The Company has
not taken and will not take, directly or indirectly, any action designed to or
that might be reasonably expected to cause or result in stabilization or
manipulation of the price of any security of the Company to facilitate the sale
or resale of the Securities.
8
(aa) No Unlawful Contributions or Other Payments. Neither the
Company nor any of its subsidiaries nor, to the best of the Company's knowledge,
any employee or agent of the Company or any subsidiary, has made any
contribution or other payment to any official of, or candidate for, any federal,
state or foreign office in violation of any law or of the character necessary to
be disclosed in the Offering Memorandum in order to make the statements therein
not misleading.
(bb) Company's Accounting System. The Company maintains a
system of accounting controls sufficient to provide reasonable assurances that
(i) transactions are executed in accordance with management's general or
specific authorization; (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with generally accepted
accounting principles and to maintain accountability for assets; (iii) access to
assets is permitted only in accordance with management's general or specific
authorization; and (iv) the recorded accountability for assets is compared with
existing assets at reasonable intervals and appropriate action is taken with
respect to any differences.
(cc) Compliance with Environmental Laws. Except as disclosed
in the Offering Memorandum or as otherwise would not, individually or in the
aggregate, result in a Material Adverse Change (i) to the best of the Company's
knowledge, neither the Company nor any of its subsidiaries is in violation of
any federal, state, local or foreign law or regulation relating to pollution or
protection of human health or 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
emissions, discharges, releases or threatened releases of chemicals, pollutants,
contaminants, wastes, toxic substances, hazardous substances, petroleum and
petroleum products (collectively, "Materials of Environmental Concern"), or
otherwise relating to the manufacture, processing, distribution, use, treatment,
storage, disposal, transport or handling of Materials of Environment Concern
(collectively, "Environmental Laws"), which violation includes, but is not
limited to, noncompliance with any permits or other governmental authorizations
required for the operation of the business of the Company or its subsidiaries
under applicable Environmental Laws, or noncompliance with the terms and
conditions thereof, nor has the Company or any of its subsidiaries received any
written communication, whether from a governmental authority, citizens group,
employee or otherwise, that alleges that the Company or any of its subsidiaries
is in violation of any Environmental Law; (ii) there is no claim, action or
cause of action filed with a court or governmental authority, no investigation
with respect to which the Company has received written notice, and no written
notice by any person or entity alleging potential liability for investigatory
costs, cleanup costs, governmental responses costs, natural resources damages,
property damages, personal injuries, attorneys' fees or penalties arising out
of, based on or resulting from the presence, or release into the environment, of
any Material of Environmental Concern at any location owned, leased or operated
by the Company or any of its subsidiaries, now or in the past (collectively,
"Environmental Claims"), pending or, to the best of the Company's knowledge,
threatened against the Company or any of its subsidiaries or any person or
entity whose liability for any Environmental Claim the Company or any of its
subsidiaries has retained or assumed either contractually or by operation of
law; and (iii) to the best of the Company's knowledge, there are no past or
present actions, activities, circumstances, conditions, events or incidents,
including, without limitation, the release, emission, discharge, presence or
disposal of any Material of Environmental Concern, that reasonably could result
in a violation of any Environmental Law or form the basis of a potential
Environmental Claim against the Company or any of its subsidiaries or against
any person or entity whose liability for any Environmental Claim the Company or
any of its subsidiaries has retained or assumed either contractually or by
9
operation of law.
(dd) ERISA Compliance. The Company and its subsidiaries and
any "employee benefit plan" (as defined under the Employee Retirement Income
Security Act of 1974, as amended, and the regulations and published
interpretations thereunder (collectively, "ERISA")) established or maintained by
the Company, its subsidiaries or their "ERISA Affiliates" (as defined below) are
in compliance in all material respects with ERISA. "ERISA Affiliate" means, with
respect to the Company or a subsidiary, any member of any group of organizations
described in Sections 414(b), (c), (m) or (o) of the Internal Revenue Code of
1986, as amended, and the regulations and published interpretations thereunder
(the "Code") of which the Company or such subsidiary is a member. No "reportable
event" (as defined under ERISA) has occurred or is reasonably expected to occur
with respect to any "employee benefit plan" established or maintained by the
Company, its subsidiaries or any of their ERISA Affiliates. No "employee benefit
plan" established or maintained by the Company, its subsidiaries or any of their
ERISA Affiliates, if such "employee benefit plan" were terminated, would have
any "amount of unfunded benefit liabilities" (as defined under ERISA). Neither
the Company, its subsidiaries nor any of their ERISA Affiliates has incurred or
reasonably expects to incur any liability under (i) Title IV of ERISA with
respect to termination of, or withdrawal from, any "employee benefit plan" or
(ii) Sections 412, 4971, 4975 or 4980B of the Code. Each "employee benefit plan"
established or maintained by the Company, its subsidiaries or any of their ERISA
Affiliates that is intended to be qualified under Section 401(a) of the Code is
so qualified and nothing has occurred, whether by action or failure to act,
which would cause the loss of such qualification.
Any certificate signed by an officer of the Company and delivered to
the Initial Purchasers or to counsel for the Initial Purchasers shall be deemed
to be a representation and warranty by the Company to each Initial Purchaser as
to the matters set forth therein.
Section 2. Purchase, Sale and Delivery of the Securities.
(a) The Firm Offered Notes. The Company agrees to issue and
sell to the several Initial Purchasers, severally and not jointly, all of the
Firm Offered Notes upon the terms herein set forth. On the basis of the
representations, warranties and agreements herein contained, and upon the terms
but subject to the conditions herein set forth, the Initial Purchasers agree,
severally and not jointly, to purchase from the Company the aggregate principal
amount of Firm Offered Notes set forth opposite their names on Schedule A, at a
discounted purchase price of 4 3/4% of the principal amount thereof payable on
the First Closing Date.
(b) The First Closing Date. Delivery of certificates for the
Firm Offered Notes in definitive form to be purchased by the Initial Purchasers
and payment therefor shall be made at the offices of NationsBanc Xxxxxxxxxx
Securities LLC, 000 Xxxxxxxxxx Xxxxxx, Xxx Xxxxxxxxx, Xxxxxxxxxx (or such other
place as may be agreed to by the Company and the Initial Purchasers) at 6:00
a.m. San Francisco time, on March 24, 1998, or such other time and date not
later than 10:30 a.m., San Francisco time, on April 2, 1998 as the Initial
Purchasers shall designate by notice to the Company (the time and date of such
closing are called the "First Closing Date"). Delivery of other closing
documents shall be made at the offices of X'Xxxxxx, Xxxxxxxx, Xxxxxxxx,
Xxxxxxxxxxxxx & Xxxxxxxx, P.A., Xxx Xxxx Xxxxxxxxx Xxxx, Xxxxxxx, Xxxxxxx on the
First Closing Date.
(c) Delivery of the Firm Offered Notes. The Company shall
deliver, or cause to be delivered, to NationsBanc Xxxxxxxxxx Securities LLC for
the accounts of the several Initial
10
Purchasers certificates for the Firm Offered Notes at the First Closing Date
against the irrevocable release of a wire transfer of immediately available
funds for the amount of the purchase price therefor. The certificates for the
Firm Offered Notes shall be in such denominations ($1,000 or integral multiples
thereof) and registered in the name of Cede & Co., as nominee of the Depositary,
pursuant to the DTC Agreement and shall be made available for inspection on the
business day preceding the First Closing Date at a location in New York City as
the Initial Purchasers may designate, provided that certificated Securities
originally purchased by or transferred to institutional "accredited investors"
(as defined in Rule 501(a)(1), (2), (3) or (7) under the Securities Act) who are
also not "qualified institutional buyers" (as defined in Rule 144A under the
Securities Act) will be issued in minimum denominations of $250,000. Time shall
be of the essence, and delivery at the time and place specified in this
Agreement is a further condition to the obligations of the Initial Purchasers.
(d) Delivery of Offering Memorandum to the Initial Purchasers.
Not later than 12:00 p.m. on the second business day following the date of this
Agreement, the Company shall deliver or cause to be delivered copies of the
Offering Memorandum in such quantities and at such places as the Initial
Purchasers shall reasonably request.
(e) Initial Purchasers as Qualified Institutional Buyers. Each
Initial Purchaser severally and not jointly represents and warrants to, and
agrees with, the Company that it is a "qualified institutional buyer" within the
meaning of Rule 144A (a "Qualified Institutional Buyer") and an "accredited
investor" within the meaning of Rule 501(a) under the Securities Act (an
"Accredited Investor").
(f) Additional Offered Notes; The Second Closing Date. In
addition, on the basis of the representations, warranties and agreements herein
contained, but subject to the terms and conditions herein set forth, the Company
hereby grants an option to the several Initial Purchasers to purchase, severally
and not jointly, up to an aggregate principal amount of $15,000,000.00 of
Additional Offered Notes at the purchase price per dollar of original principal
amount to be paid for the Firm Offered Notes, for use solely by the Initial
Purchasers in covering any over-allotments in connection with the sale and
distribution of the Firm Offered Notes. The option granted hereunder may be
exercised at any time (but not more than once) within 30 days after the date of
this Agreement, upon notice by NationsBanc Xxxxxxxxxx Securities LLC to the
Company setting forth the aggregate principal amount of Additional Offered Notes
as to which the Initial Purchasers are exercising the option, the names and
denominations in which the certificates for such notes are to be registered, and
the time and place at which such certificates will be delivered. Such time of
delivery (which may not be earlier than the First Closing Date), being herein
referred to as the "Second Closing Date," shall be determined by NationsBanc
Xxxxxxxxxx Securities LLC, but if at any time other than the First Closing Date
shall not be earlier than three nor later than five full business days after
receipt by the Company of such notice of exercise. The aggregate principal
amount of Additional Offered Notes to be purchased by each Initial Purchaser
shall be determined by multiplying the aggregate principal amount of Additional
Offered Notes to be sold by the Company pursuant to such notice of exercise by a
fraction, the numerator of which is the aggregate principal amount of Firm
Offered Notes to be purchased by such Initial Purchaser as set forth opposite
its name in Schedule A and the denominator of which is $100,000,000 (subject to
such adjustments to eliminate any fractional note purchases as NationsBanc
Xxxxxxxxxx Securities LLC in its discretion may make). Certificates for the
Additional Offered Notes will be made available for inspection on the business
day preceding the Second Closing Date at a location in New York, New York, as
may be designated by NationsBanc
11
Xxxxxxxxxx Securities LLC. The manner of payment for and delivery of the
Additional Offered Notes shall be the same as for the Firm Offered Notes
purchased from the Company as specified in the preceding paragraphs of this
Section 2. At any time before lapse of the option, NationsBanc Xxxxxxxxxx
Securities LLC may cancel such option by giving written notice of such
cancellation to the Company.
Section 3. Additional Covenants.
The Company further covenants and agrees with each Initial Purchaser as
follows:
(a) Initial Purchasers' Review of Proposed Amendments and
Supplements. Prior to amending or supplementing the Offering Memorandum
(including any amendment or supplement through incorporation by reference of any
report filed under the Exchange Act prior to the First Closing Date and the
Second Closing Date, as the case may be), the Company shall furnish to the
Initial Purchasers for review a copy of each such proposed amendment or
supplement, and the Company shall not make or file any such proposed amendment
or supplement to which the Initial Purchasers reasonably object.
(b) Amendments and Supplements to the Offering Memorandum and
Other Securities Act Matters. If, prior to the completion of the placement of
the Securities by the Initial Purchasers with the Subsequent Purchasers (as
evidenced by a notice in writing from the Initial Purchasers to the Company),
any event shall occur or condition exist as a result of which it is necessary to
amend or supplement the Offering Memorandum in order to make the statements
therein, in the light of the circumstances when the Offering Memorandum is
delivered to a purchaser, not misleading, or if in the opinion of the Initial
Purchasers it is otherwise necessary to amend or supplement the Offering
Memorandum to comply with law, the Company agrees to promptly prepare (subject
to Section 3(a) hereof), and furnish at its own expense to the Initial
Purchasers, amendments or supplements to the Offering Memorandum so that the
statements in the Offering Memorandum as so amended or supplemented will not, in
the light of the circumstances when the Offering Memorandum is delivered to a
purchaser, be misleading or so that the Offering Memorandum, as amended or
supplemented, will comply with law.
Following the effectiveness of an applicable shelf registration
statement and for so long as the Securities are outstanding if, in the
reasonable judgment of the Initial Purchasers, the Initial Purchasers or any of
their affiliates (as such term is defined in the rules and regulations under the
Securities Act) are required to deliver a prospectus in connection with sales
of, or market-making activities with respect to, such securities, (A) to
periodically amend the applicable registration statement so that the information
contained therein complies with the requirements of Section 10(a) of the
Securities Act, (B) to amend the applicable registration statement or to
supplement the related prospectus or the documents incorporated therein when
necessary to reflect any material changes in the information provided therein so
that the registration statement and the prospectus will not contain any untrue
statement of a material fact or omit to state any material fact necessary in
order to make the statements therein, in the light of the circumstances existing
as of the date the prospectus is so delivered, not misleading, and (C) to
provide the Initial Purchasers with copies of each amendment or supplement filed
and such other documents as the Initial Purchasers may reasonably request.
The Company hereby expressly acknowledges that the indemnification and
contribution provisions of Sections 8 and 9 hereof are specifically applicable
and relate to each offering memorandum, registration statement, prospectus,
amendment or supplement referred to in this
12
Section 3(b).
(c) Copies of the Offering Memorandum. The Company agrees to
furnish the Initial Purchasers, without charge, as many copies of the Offering
Memorandum and any amendments and supplements thereto as they shall have
reasonably requested.
(d) Blue Sky Compliance. The Company shall cooperate with the
Initial Purchasers and counsel for the Initial Purchasers to qualify or register
the Securities for sale under (or obtain exemptions from the application of) the
Blue Sky or state securities laws of those jurisdictions designated by the
Initial Purchasers, shall comply with such laws and shall continue such
qualifications, registrations and exemptions in effect so long as required for
the distribution of the Securities. Notwithstanding the above, the Company shall
not be required to qualify as a foreign corporation or to take any action that
would subject it to general service of process in any such jurisdiction where it
is not presently qualified or where it would be subject to taxation as a foreign
corporation. The Company will advise the Initial Purchasers promptly of the
suspension of the qualification or registration of (or any such exemption
relating to) the Securities for offering, sale or trading in any jurisdiction or
any initiation or threat of any proceeding for any such purpose, and in the
event of the issuance of any order suspending such qualification, registration
or exemption, the Company shall use its best efforts to obtain the withdrawal
thereof at the earliest possible moment.
(e) Use of Proceeds. The Company shall apply the net proceeds
from the sale of the Securities sold by it in the manner described under the
caption "Use of Proceeds" in the Offering Memorandum.
(f) The Depositary. The Company will cooperate with the
Initial Purchasers and use its best efforts to permit the Securities to be
eligible for clearance and settlement through the facilities of the Depositary.
(g) Additional Issuer Information. Prior to the completion of
the placement of the Securities by the Initial Purchasers with the Subsequent
Purchasers (as evidenced by a notice in writing from the Initial Purchasers to
the Company), the Company shall file, on a timely basis, with the Commission and
the Nasdaq National Market all reports and documents required to be filed under
Section 13 or 15(d) of the Exchange Act. Additionally, at any time when the
Company is not subject to Section 13 or 15(d) of the Exchange Act, for the
benefit of holders and beneficial owners from time to time of Securities, the
Company shall furnish, at its expense, upon request, to holders and beneficial
owners of Securities and prospective purchasers of Securities information
("Additional Issuer Information") satisfying the requirements of subsection
(d)(4) of Rule 144A.
(h) Agreement Not To Offer or Sell Additional Securities.
During the period of 120 days following the date of the Offering Memorandum, the
Company will not, without the prior written consent of NationsBanc Xxxxxxxxxx
Securities LLC (which consent may be withheld at the sole discretion of
NationsBanc Xxxxxxxxxx Securities LLC), directly or indirectly, sell, offer,
contract or grant any option to sell, pledge, transfer or establish an open "put
equivalent position" within the meaning of Rule 16a-1(h) under the Exchange Act,
or otherwise dispose of or transfer, or announce the offering of, or file any
registration statement under the Securities Act in respect of, any debt
securities of the Company or securities exchangeable for or convertible into
debt securities of the Company (other than as contemplated by this Agreement).
Notwithstanding the above, this Section 15(h) shall not apply to increases in
amounts available under the Company's existing Revolving Credit Facility with
First Union National Bank.
13
(i) Future Reports to the Initial Purchasers. During the
period of five years hereafter the Company will furnish to NationsBanc
Xxxxxxxxxx Securities LLC at 000 Xxxxxxxxxx Xxxxxx, Xxx Xxxxxxxxx, XX 00000,
Attention: Xxxxxx X. Xxxxxx, CIBC Xxxxxxxxxxx Corp., One World Financial Center,
000 Xxxxxxx Xxxxxx, 00xx Xxxxx, Xxx Xxxx, XX 00000, Attention: Xxxx Xxxxx,
EVEREN Securities, Inc., 1901 Avenue of the Xxxxx, Xxxxx 0000, Xxx Xxxxxxx, XX
00000, Attention: Xxx Xxxxxx, and Xxxxx Xxxxxxx Inc., 000 Xxxxx 0xx Xxxxxx,
Xxxxxxxxxxx, XX 00000, Attention: Xxxxxxx X. Xxxxxxx (i) as soon as practicable
after the end of each fiscal year, copies of the Annual Report of the Company
containing the balance sheet of the Company as of the close of such fiscal year
and statements of income, stockholders' equity and cash flows for the year then
ended and the opinion thereon of the Company's independent public or certified
public accountants; (ii) as soon as practicable after the filing thereof, copies
of each proxy statement, Annual Report on Form 10-K, Quarterly Report on Form
10-Q, Current Report on Form 8-K or other report filed by the Company with the
Commission, the NASD or any securities exchange; and (iii) as soon as available,
copies of any report or communication of the Company mailed generally to holders
of its capital stock or debt securities (including the holders of the
Securities).
(j) Registration Rights Agreement. The Company shall comply
with all provisions and obligations of the Registration Rights Agreement, and
shall comply with all applicable federal and state securities laws in connection
with the Registration Rights Agreement.
(k) No Integration. The Company agrees that it will not and
will cause its Affiliates not to make any offer or sale of securities of the
Company of any securities if, as a result of the doctrine of "integration"
referred to in Rule 502 under the Securities Act, such offer or sale would
render invalid (for the purpose of (i) the sale of the Securities by the Company
to the Initial Purchasers, (ii) the resale of the Securities by the Initial
Purchasers to Subsequent Purchasers or (iii) the resale of the Securities by
such Subsequent Purchasers to others) the exemption from the registration
requirements of the Securities Act provided by Section 4(2) thereof or by Rule
144A or by Regulation S thereunder or otherwise.
(l) Restriction on Repurchases. Until the expiration of two
years after the original issuance of the Securities, the Company will not, and
will cause its Affiliates not to, purchase or agree to purchase or otherwise
acquire any of the Securities which are "restricted securities" (as such term is
defined under Rule 144(a)(3) under the Securities Act), whether as beneficial
owner or otherwise (except as agent acting as a securities broker on behalf of
and for the account of customers in the ordinary course of business in
unsolicited broker's transactions) unless, immediately upon any such purchase,
the Company or any Affiliate shall submit such Securities to the Trustee for
cancellation.
(m) Legended Securities. Each certificate for a Security will
bear the legend contained in "Transfer Restrictions" in the Offering Memorandum
for the time period and upon the other terms stated in the Offering Memorandum.
(n) PORTAL. The Company will use its best efforts to cause
such Notes to be eligible for the National Association of Securities Dealers,
Inc. PORTAL market (the "PORTAL market").
(o) Form D. The Company will file with the Commission, not
later than 15 days after the First Closing Date and the Second Closing Date, as
the case may be, five copies of a notice on Form D under the Securities Act (one
of which will be manually signed by a person duly
14
authorized by the Company); will otherwise comply with the requirements of Rule
503 under the Securities Act; and will furnish promptly to the Initial
Purchasers evidence of each such required timely filing (including a copy
thereof).
(p) Due Diligence. In connection with the original
distribution of the Securities, the Company agrees that, prior to any offer or
resale of the Securities by the Initial Purchasers, the Initial Purchasers and
counsel for the Initial Purchasers shall have the right to make reasonable
inquiries into the business of the Company and its subsidiaries. The Company
also agrees to provide answers to each prospective Subsequent Purchaser of
Securities who so requests concerning the Company and its subsidiaries (to the
extent that such information is available or can be acquired and made available
to prospective Subsequent Purchasers without unreasonable effort or expense and
to the extent the provision thereof is not prohibited by applicable law) and the
terms and conditions of the offering of the Securities, as provided in the
Offering Memorandum.
NationsBanc Xxxxxxxxxx Securities LLC, on behalf of the several Initial
Purchasers, may, in its sole discretion, waive in writing the performance by the
Company of any one or more of the foregoing covenants or extend the time for
their performance.
Section 4. Payment of Expenses
The Company agrees to pay all costs, fees and expenses incurred in
connection with the performance of its obligations hereunder and in connection
with the transactions contemplated hereby, including without limitation (i) all
expenses incident to the issuance and delivery of the Securities (including all
printing and engraving costs), (ii) all necessary issue, transfer and other
stamp taxes in connection with the issuance and sale of the Securities to the
Initial Purchasers, (iii) all fees and expenses of the Company's counsel,
independent public or certified public accountants and other advisors, (iv) all
costs and expenses incurred in connection with the preparation, printing,
filing, shipping and distribution of each preliminary Offering Memorandum and
the Offering Memorandum (including financial statements and exhibits), and all
amendments and supplements thereto, this Agreement, the Registration Rights
Agreement, the Indenture, the DTC Agreement, and the Notes, (v) all filing fees,
attorneys' fees and expenses incurred by the Company or the Initial Purchasers
in connection with qualifying or registering (or obtaining exemptions from the
qualification or registration of) all or any part of the Securities for offer
and sale under the Blue Sky laws and, if requested by the Initial Purchasers,
preparing and printing a "Blue Sky Survey" or memorandum, and any supplements
thereto, advising the Initial Purchasers of such qualifications, registrations
and exemptions, (vi) the fees and expenses of the Trustee, including the fees
and disbursements of counsel for the Trustee in connection with the Indenture
and the Securities, (vii) any fees payable in connection with the rating of the
Securities with the ratings agencies and the listing of the Securities with the
PORTAL market, (viii) any filing fees incident to, and any reasonable fees and
disbursements of counsel to the Initial Purchasers in connection with the review
by the NASD, if any, of the terms of the sale of the Securities, (ix) all fees
and expenses (including reasonable fees and expenses of counsel) of the Company
in connection with approval of the Securities by DTC for "book-entry" transfer,
and (x) the performance by the Company of its other obligations under this
Agreement. Except as provided in this Section 4, Section 6, Section 8 and
Section 9 hereof, the Initial Purchasers shall pay their own expenses, including
the fees and disbursements of their counsel.
Section 5. Conditions of the Obligations of the Initial Purchasers. The
obligations of the several Initial Purchasers to purchase and pay for the
Securities as provided herein on the First Closing Date and, with respect to the
Additional Offered Notes, the Second Closing Date, shall be
15
subject to the accuracy of the representations and warranties on the part of the
Company set forth in Section 1 hereof as of the date hereof and as of the First
Closing Date as though then made and, with respect to the Additional Offered
Notes, and as of the Second Closing Date as though then made, to the timely
performance by the Company of its covenants and other obligations hereunder, and
to each of the following additional conditions:
(a) Accountants' Comfort Letter. On the date hereof, the
Initial Purchasers shall have received from Xxxxxx Xxxxxxxx LLP, independent
public or certified public accountants for the Company, a letter dated the date
hereof addressed to the Initial Purchasers, in form and substance satisfactory
to the Initial Purchasers, containing statements and information of the type
ordinarily included in accountant's "comfort letters" to Initial Purchasers,
delivered according to Statement of Auditing Standards Nos. 72 and 76 (or any
successor bulletins), with respect to the audited and unaudited financial
statements and certain financial information contained in the Offering
Memorandum (including such statements and information incorporated by
reference).
(b) No Material Adverse Change or Ratings Agency Change. For
the period from and after the date of this Agreement and prior to the First
Closing Date and, with respect to the Additional Offered Notes, the Second
Closing Date:
(i) in the judgment of the Initial Purchasers there
shall not have occurred any Material Adverse Change; and
(ii) there shall not have occurred any downgrading,
nor shall any notice have been given of any intended or potential
downgrading or of any review for a possible change that does not
indicate the direction of the possible change, in the rating accorded
any securities of the Company or any of its subsidiaries by any
"nationally recognized statistical rating organization" as such term is
defined for purposes of Rule 436(g)(2) under the Securities Act.
(c) Opinion of Counsel for the Company. On each of the First
Closing Date and the Second Closing Date, the Initial Purchasers shall have
received the favorable opinion of X'Xxxxxx, Xxxxxxxx, Xxxxxxxx, Xxxxxxxxxxxxx &
Xxxxxxxx, P.A. counsel for the Company, dated as of such Closing Date, the form
of which is attached as Exhibit A.
(d) Opinion of Counsel for the Initial Purchasers. On each of
the First Closing Date and the Second, the Initial Purchasers shall have
received the favorable opinion of Xxxxx, Xxxxx, Xxxxxx, Xxxxxxx & Xxxxxxxx,
counsel for the Initial Purchasers, dated as of such Closing Date, with respect
to such matters as may be reasonably requested by the Initial Purchasers.
(e) Officers' Certificate. On each of the First Closing Date
and the Second Closing Date, the Initial Purchasers shall have received a
written certificate executed by the Chairman of the Board, Chief Executive
Officer or President of the Company and the Chief Financial Officer or Chief
Accounting Officer of the Company, dated as of such Closing Date, to the effect
set forth in subsection (b)(ii) of this Section 5, and further to the effect
that:
(i) for the period from and after the date of this
Agreement and prior to the Closing Date there has not occurred any
Material Adverse Change;
(ii) the representations, warranties and covenants of
the Company set forth in Section 1 of this Agreement are true and
correct with the same force and effect as
16
though expressly made on and as of the Closing Date; and
(iii) the Company has complied with all the
agreements and satisfied all the conditions on its part to be performed
or satisfied at or prior to the Closing Date.
(f) Bring-down Comfort Letter. On each of the First Closing
Date and the Second Closing Date, the Initial Purchasers shall have received
from Xxxxxx Xxxxxxxx LLP, independent public or certified public accountants for
the Company, a letter dated such date, in form and substance satisfactory to the
Initial Purchasers, to the effect that they reaffirm the statements made in the
letter furnished by them pursuant to subsection (a) of this Section 5, except
that the specified date referred to therein for the carrying out of procedures
shall be no more than three business days prior to the Closing Date.
(g) PORTAL Listing. At the Closing Date, the Notes shall have
been designated for trading on the PORTAL market.
(h) Registration Rights Agreement. The Company shall have
entered into the Registration Rights Agreement and the Initial Purchasers shall
have received executed counterparts thereof.
(i) Additional Documents. On or before each of the First
Closing Date and the Second Closing Date, the Initial Purchasers and counsel for
the Initial Purchasers shall have received such information, documents and
opinions as they may reasonably require for the purposes of enabling them to
pass upon the issuance and sale of the Securities as contemplated herein, or in
order to evidence the accuracy of any of the representations and warranties, or
the satisfaction of any of the conditions or agreements, herein contained.
If any condition specified in this Section 5 is not satisfied when and
as required to be satisfied, this Agreement may be terminated by the Initial
Purchasers by notice to the Company at any time on or prior to the Closing Date,
which termination shall be without liability on the part of any party to any
other party, except that Section 4, Section 6, Section 8 and Section 9 shall at
all times be effective and shall survive such termination.
Section 6. Reimbursement of Initial Purchasers' Expenses. If this
Agreement is terminated by the Initial Purchasers pursuant to Section 5, Section
10 or Section 16, or if the sale to the Initial Purchasers of the Securities on
the Closing Date is not consummated because of any refusal, inability or failure
on the part of the Company to perform any agreement herein or to comply with any
provision hereof, the Company agrees to reimburse the Initial Purchasers (or
such Initial Purchasers as have terminated this Agreement with respect to
themselves), severally, upon demand for all out-of-pocket expenses that shall
have been reasonably incurred by the Initial Purchasers in connection with the
proposed purchase and the offering and sale of the Securities, including but not
limited to reasonable fees and disbursements of counsel, printing expenses,
travel expenses, postage, facsimile and telephone charges.
Section 7. Offer, Sale and Resale Procedures. Each of the Initial
Purchasers and the Company hereby establish and agree to observe the following
procedures in connection with the offer and sale of the Securities:
(a) Offers and Sales only to Institutional Accredited
Investors or Qualified Institutional Buyers. Offers and sales of the Securities
will be made only by the Initial Purchasers
17
or Affiliates thereof qualified to do so in the jurisdictions in which such
offers or sales are made. Each such offer or sale shall only be made (A) to
persons that the offeror or seller reasonably believes to be qualified
institutional buyers (as defined in Rule 144A under the Securities Act), (B) to
other institutional accredited investors (as such term is defined in Rule
501(a)(1), (2), (3) or (7) of Regulation D) that the offeror or seller
reasonably believes to be and, with respect to sales and deliveries, that are
Accredited Investors ("Institutional Accredited Investors") or (C) non-U.S.
persons outside the United States to whom the offeror or seller reasonably
believes offers and sales of the Securities may be made in reliance upon
Regulation S under the Securities Act, upon the terms and conditions set forth
in Annex I hereto, which Annex I is hereby expressly made a part hereof.
(b) No General Solicitation. The Securities will be offered by
approaching prospective Subsequent Purchasers on an individual basis. No general
solicitation or general advertising (within the meaning of Rule 502(c) under the
Securities Act) will be used in the United States in connection with the
offering of the Securities.
(c) Purchases by Non-Bank Fiduciaries. In the case of a
non-bank Subsequent Purchaser of a Security acting as a fiduciary for one or
more third parties, in connection with an offer and sale to such purchaser
pursuant to clause (i) above, each third party shall, in the judgment of the
applicable Initial Purchaser, be an Institutional Accredited Investor or a
Qualified Institutional Buyer or a non-U.S. person outside the United States.
(d) Restrictions on Transfer. Upon original issuance by the
Company, and until such time as the same is no longer required under the
applicable requirements of the Securities Act, the Notes (and all securities
issued in exchange therefor or in substitution thereof) shall bear the following
legend:
THE NOTE EVIDENCED HEREBY HAS NOT BEEN REGISTERED UNDER THE
U.S. SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE
SECURITIES LAWS, AND, ACCORDINGLY, NEITHER THIS NOTE, THE SHARES OF COMMON STOCK
ISSUABLE UPON CONVERSION OF THIS NOTE, NOR ANY INTEREST OR PARTICIPATION HEREIN
OR THEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR
OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH
TRANSACTION IS EXEMPT FROM OR NOT SUBJECT TO, REGISTRATION. UNLESS THE SHARES OF
COMMON STOCK HAVE BEEN REGISTERED UNDER THE SECURITIES ACT, A HOLDER OF THIS
NOTE WILL BE ABLE TO EXERCISE THE CONVERSION RIGHT ONLY IF THE HOLDER CERTIFIES
THAT IT IS A "QUALIFIED INSTITUTIONAL BUYER" OR AN INSTITUTIONAL "ACCREDITED
INVESTOR" AS DEFINED BELOW.
THE HOLDER OF THIS NOTE, BY ITS ACQUISITION HEREOF, AGREES
THAT IT WILL NOT, PRIOR TO THE DATE WHICH IS TWO YEARS AFTER THE LATER OF THE
ORIGINAL ISSUE DATE HEREOF AND THE LAST DATE ON WHICH THE COMPANY OR ANY
AFFILIATE OF THE COMPANY WAS THE OWNER OF THIS NOTE (OR ANY PREDECESSOR OF SUCH
SECURITY), RESELL OR OTHERWISE TRANSFER THE NOTE EVIDENCED HEREBY OR THE COMMON
STOCK ISSUABLE UPON CONVERSION OF SUCH NOTE EXCEPT (A) TO THE COMPANY, OR ANY
SUBSIDIARY THEREOF, (B) INSIDE THE UNITED STATES TO A QUALIFIED INSTITUTIONAL
BUYER IN COMPLIANCE WITH RULE 144A UNDER THE SECURITIES ACT, (C) INSIDE THE
UNITED STATES TO AN INSTITUTIONAL ACCREDITED INVESTOR THAT, PRIOR TO SUCH
TRANSFER, FURNISHES TO FIRST UNION NATIONAL BANK, AS TRUSTEE (OR A SUCCESSOR
TRUSTEE, AS APPLICABLE), A SIGNED LETTER CONTAINING CERTAIN REPRESENTATIONS AND
AGREEMENTS RELATING TO THE RESTRICTIONS ON TRANSFER OF THE NOTE
18
EVIDENCED HEREBY (THE FORM OF WHICH LETTER CAN BE OBTAINED FROM SUCH TRUSTEE OR
SUCCESSOR TRUSTEE, AS APPLICABLE), (D) OUTSIDE THE UNITED STATES IN AN OFFSHORE
TRANSACTION IN COMPLIANCE WITH REGULATION S UNDER THE SECURITIES ACT, (E)
PURSUANT TO THE EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 UNDER THE
SECURITIES ACT (IF AVAILABLE) OR (F) PURSUANT TO A REGISTRATION STATEMENT WHICH
HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT (AND WHICH CONTINUES TO BE
EFFECTIVE AT THE TIME OF SUCH TRANSFER); AND AGREES THAT IT WILL DELIVER TO EACH
PERSON TO WHOM THE NOTE EVIDENCED XXXXXX IS TRANSFERRED A NOTICE SUBSTANTIALLY
TO THE EFFECT OF THIS LEGEND. IN CONNECTION WITH ANY TRANSFER OF THE NOTE
EVIDENCED HEREBY, OR THE SHARES OF COMMON STOCK ISSUABLE UPON CONVERSION
THEREOF, WITHIN TWO YEARS AFTER THE ORIGINAL ISSUANCE OF SUCH NOTE, THE HOLDER
MUST CHECK THE APPROPRIATE BOX SET FORTH ON THE REVERSE HEREOF RELATING TO THE
MANNER OF SUCH TRANSFER AND SUBMIT THIS CERTIFICATE TO FIRST UNION NATIONAL
BANK, AS TRUSTEE (OR A SUCCESSOR TRUSTEE, AS APPLICABLE). IF THE PROPOSED
TRANSFEREE IS AN INSTITUTIONAL ACCREDITED INVESTOR OR A PURCHASER WHO IS NOT A
U.S. PERSON, THE HOLDER MUST, PRIOR TO SUCH TRANSFER, FURNISH TO FIRST UNION
NATIONAL BANK, AS TRUSTEE (OR A SUCCESSOR TRUSTEE, AS APPLICABLE), SUCH
CERTIFICATIONS, LEGAL OPINIONS OR OTHER INFORMATION AS IT MAY REASONABLY REQUIRE
TO CONFIRM THAT SUCH TRANSFER IS BEING MADE PURSUANT TO AN EXEMPTION FROM, OR IN
A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES
ACT. THIS LEGEND WILL BE REMOVED UPON ANY TRANSFER OF THE NOTE EVIDENCED HEREBY,
OR THE SHARES OF COMMON STOCK ISSUED UPON CONVERSION THEREOF, AFTER THE
EXPIRATION OF TWO YEARS FROM THE ORIGINAL ISSUANCE OF THE NOTE EVIDENCED HEREBY.
AS USED HEREIN, THE TERMS "OFFSHORE TRANSACTION," "UNITED STATES" AND "U.S.
PERSON" HAVE THE MEANINGS GIVEN TO THEM BY REGULATION S UNDER THE SECURITIES
ACT.
Following the sale of the Securities by the Initial Purchasers
to Subsequent Purchasers pursuant to the terms hereof, the Initial Purchasers
shall not be liable or responsible to the Company for any losses, damages or
liabilities suffered or incurred by the Company, including any losses, damages
or liabilities under the Securities Act, arising from or relating to any resale
or transfer of any Security.
(e) Delivery of Offering Memorandum. Each Initial Purchaser
will deliver to each purchaser of the Securities from such Initial Purchaser, in
connection with its original distribution of the Securities, a copy of the
Offering Memorandum, as amended and supplemented at the date of such delivery.
Section 8. Indemnification.
(a) Indemnification of the Initial Purchasers. The Company
agrees to indemnify and hold harmless each Initial Purchaser, its officers and
employees, and each person, if any, who controls any Initial Purchaser within
the meaning of the Securities Act and the Exchange Act against any loss, claim,
damage, liability or expense, as incurred, to which such Initial Purchaser or
such controlling person may become subject, under the Securities Act, the
Exchange Act or other federal or state statutory law or regulation, or at common
law or otherwise (including in settlement of any litigation, if such settlement
is effected with the written consent of the Company), insofar as such loss,
claim, damage, liability or expense (or actions in respect thereof as
contemplated below) arises out of or is based upon any untrue statement or
alleged untrue statement of a material fact contained in the Preliminary
Offering Memorandum or the Offering
19
Memorandum (or any amendment or supplement thereto), or the omission or alleged
omission therefrom of a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading, and to reimburse each Initial Purchaser and each such controlling
person for any and all expenses (including the fees and disbursements of counsel
chosen by NationsBanc Xxxxxxxxxx Securities LLC) as such expenses are reasonably
incurred by such Initial Purchaser or such controlling person in connection with
investigating, defending, settling, compromising or paying any such loss, claim,
damage, liability, expense or action; provided, however, that the foregoing
indemnity agreement shall not apply to any loss, claim, damage, liability or
expense to the extent, but only to the extent, arising out of or based upon any
untrue statement or alleged untrue statement or omission or alleged omission
made in reliance upon and in conformity with written information furnished to
the Company by the Initial Purchasers expressly for use in any Preliminary
Offering Memorandum or the Offering Memorandum (or any amendment or supplement
thereto); and provided, further, that with respect to any Preliminary Offering
Memorandum, the foregoing indemnity agreement shall not inure to the benefit of
any Initial Purchaser from whom the person asserting any loss, claim, damage,
liability or expense purchased Securities, or any person controlling such
Initial Purchaser, if copies of the Offering Memorandum were timely delivered to
the Initial Purchaser pursuant to Section 2 and a copy of the Offering
Memorandum (as then amended or supplemented if the Company shall have furnished
any amendments or supplements thereto) was not sent or given by or on behalf of
such Initial Purchaser to such person, at or prior to the written confirmation
of the sale of the Securities to such person, and if the Offering Memorandum (as
so amended or supplemented) would have cured the defect giving rise to such
loss, claim, damage, liability or expense. The indemnity agreement set forth in
this Section 8(a) shall be in addition to any liabilities that the Company may
otherwise have.
(b) Indemnification of the Company, its Directors and
Officers. Each Initial Purchaser agrees, severally and not jointly, to indemnify
and hold harmless the Company and each of its directors and each person, if any,
who controls the Company within the meaning of the Securities Act or the
Exchange Act, against any loss, claim, damage, liability or expense, as
incurred, to which the Company or any such director or controlling person may
become subject, under the Securities Act, the Exchange Act, or other federal or
state statutory law or regulation, or at common law or otherwise (including in
settlement of any litigation, if such settlement is effected with the written
consent of such Initial Purchaser), insofar as such loss, claim, damage,
liability or expense (or actions in respect thereof as contemplated below)
arises out of or is based upon any untrue or alleged untrue statement of a
material fact contained in any Preliminary Offering Memorandum or the Offering
Memorandum (or any amendment or supplement thereto), or arises out of or is
based upon the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading, in each case to the extent, but only to the extent, that such untrue
statement or alleged untrue statement or omission or alleged omission was made
in any Preliminary Offering Memorandum or the Offering Memorandum (or any
amendment or supplement thereto), in reliance upon and in conformity with
written information furnished to the Company by the Initial Purchasers expressly
for use therein; and to reimburse the Company, or any such director or
controlling person for any legal and other expenses reasonably incurred by the
Company, or any such director or controlling person in connection with
investigating, defending, settling, compromising or paying any such loss, claim,
damage, liability, expense or action. The Company hereby acknowledges that the
only information that the Initial Purchasers have furnished to the Company
expressly for use in any Preliminary Offering Memorandum or the Memorandum (or
any amendment or supplement thereto) are the statements set forth (A) in the
paragraph on the inside front cover page of the Offering Memorandum concerning
stabilization by the Initial Purchasers and (B) under the caption "Plan of
20
Distribution" in the Offering Memorandum; and the Initial Purchasers confirm
that such statements are correct. The indemnity agreement set forth in this
Section 8(b) shall be in addition to any liabilities that each Initial Purchaser
may otherwise have.
(c) Notifications and Other Indemnification Procedures.
Promptly after receipt by an indemnified party under this Section 8 of notice of
the commencement of any action, such indemnified party will, if a claim in
respect thereof is to be made against an indemnifying party under this Section
8, notify the indemnifying party in writing of the commencement thereof, but the
omission so to notify the indemnifying party will not relieve it from any
liability which it may have to any indemnified party for contribution or
otherwise than under the indemnity agreement contained in this Section 8 or to
the extent it is not prejudiced as a proximate result of such failure. In case
any such action is brought against any indemnified party and such indemnified
party seeks or intends to seek indemnity from an indemnifying party, the
indemnifying party will be entitled to participate in and, to the extent that it
shall elect, jointly with all other indemnifying parties similarly notified, by
written notice delivered to the indemnified party promptly after receiving the
aforesaid notice from such indemnified party, to assume the defense thereof with
counsel reasonably satisfactory to such indemnified party; provided, however, if
the defendants in any such action include both the indemnified party and the
indemnifying party and the indemnified party shall have reasonably concluded
that a conflict may arise between the positions of the indemnifying party and
the indemnified party in conducting the defense of any such action or that there
may be legal defenses available to it and/or other indemnified parties which are
different from or additional to those available to the indemnifying party, the
indemnified party or parties shall have the right to select separate counsel to
assume such legal defenses and to otherwise participate in the defense of such
action on behalf of such indemnified party or parties. Upon receipt of notice
from the indemnifying party to such indemnified party of such indemnifying
party's election so to assume the defense of such action and approval by the
indemnified party of counsel, the indemnifying party will not be liable to such
indemnified party under this Section 8 for any legal or other expenses
subsequently incurred by such indemnified party in connection with the defense
thereof unless (i) the indemnified party shall have employed separate counsel in
accordance with the proviso to the next preceding sentence (it being understood,
however, that the indemnifying party shall not be liable for the expenses of
more than one separate counsel (together with local counsel), approved by the
indemnifying party (NationsBanc Xxxxxxxxxx Securities LLC in the case of Section
8(b) and Section 9), representing the indemnified parties who are parties to
such action) or (ii) the indemnifying party shall not have employed counsel
xxxxxxxxxxxx to the indemnified party to represent the indemnified party within
a reasonable time after notice of commencement of the action, in each of which
cases the fees and expenses of counsel shall be at the expense of the
indemnifying party.
(d) Settlements. The indemnifying party under this Section 8
shall not be liable for any settlement of any proceeding effected without its
written consent, but if settled with such consent or if there be a final
judgment for the plaintiff, the indemnifying party agrees to indemnify the
indemnified party against any loss, claim, damage, liability or expense by
reason of such settlement or judgment. Notwithstanding the foregoing sentence,
if at any time an indemnified party shall have requested an indemnifying party
to reimburse the indemnified party for fees and expenses of counsel as
contemplated by Section 8(c) hereof, the indemnifying party agrees that it shall
be liable for any settlement of any proceeding effected without its written
consent if (i) such settlement is entered into more than 90 days after receipt
by such indemnifying party of the aforesaid request and (ii) such indemnifying
party shall not have reimbursed the indemnified party in accordance with such
request prior to the date of such settlement. No indemnifying party shall,
without the prior written consent of the indemnified party, effect any
settlement, compromise or
21
consent to the entry of judgment in any pending or threatened action, suit or
proceeding in respect of which any indemnified party is or could have been a
party and indemnity was or could have been sought hereunder by such indemnified
party, unless such settlement, compromise or consent includes an unconditional
release of such indemnified party from all liability on claims that are the
subject matter of such action, suit or proceeding.
Section 9. Contribution.
If the indemnification provided for in Section 8 is for any reason held
to be unavailable to or otherwise insufficient to hold harmless an indemnified
party in respect of any losses, claims, damages, liabilities or expenses
referred to therein, then each indemnifying party shall contribute to the
aggregate amount paid or payable by such indemnified party, as incurred, as a
result of any losses, claims, damages, liabilities or expenses referred to
therein (i) in such proportion as is appropriate to reflect the relative
benefits received by the Company, on the one hand, and the Initial Purchasers,
on the other hand, from the offering of the Securities pursuant to this
Agreement or (ii) if the allocation provided by clause (i) above is not
permitted by applicable law, in such proportion as is appropriate to reflect not
only the relative benefits referred to in clause (i) above but also the relative
fault of the Company, on the one hand, and the Initial Purchasers, on the other
hand, in connection with the statements or omissions or inaccuracies in the
representations and warranties herein which resulted in such losses, claims,
damages, liabilities or expenses, as well as any other relevant equitable
considerations. The relative benefits received by the Company, on the one hand,
and the Initial Purchasers, on the other hand, in connection with the offering
of the Securities pursuant to this Agreement shall be deemed to be in the same
respective proportions as the total net proceeds from the offering of the
Securities pursuant to this Agreement (before deducting expenses) received by
the Company, and the total discount received by the Initial Purchasers bear to
the aggregate initial offering price of the Securities. The relative fault of
the Company, on the one hand, and the Initial Purchasers, on the other hand,
shall be determined by reference to, among other things, whether any such untrue
or alleged untrue statement of a material fact or omission or alleged omission
to state a material fact or any such inaccurate or alleged inaccurate
representation or warranty relates to information supplied by the Company, on
the one hand, or the Initial Purchasers, on the other hand, and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission.
The amount paid or payable by a party as a result of the losses,
claims, damages, liabilities and expenses referred to above shall be deemed to
include, subject to the limitations set forth in Section 8(c), any legal or
other fees or expenses reasonably incurred by such party in connection with
investigating or defending any action or claim. The provisions set forth in
Section 8(c) with respect to notice of commencement of any action shall apply if
a claim for contribution is to be made under this Section 9; provided, however,
that no additional notice shall be required with respect to any action for which
notice has been given under Section 8(c) for purposes of indemnification.
The Company and the Initial Purchasers agree that it would not be just
and equitable if contribution pursuant to this Section 9 were determined by pro
rata allocation (even if the Initial Purchasers were treated as one entity for
such purpose) or by any other method of allocation which does not take account
of the equitable considerations referred to in this Section 9.
Notwithstanding the provisions of this Section 9, no Initial Purchaser
shall be required to contribute any amount in excess of the discount received by
such Initial Purchaser in connection with the Securities distributed by it. No
person guilty of fraudulent misrepresentation (within the
22
meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. The Initial Purchasers' obligations to contribute pursuant to
this Section 9 are several, and not joint, in proportion to their respective
commitments as set forth opposite their names in Schedule A. For purposes of
this Section 9, each officer and employee of an Initial Purchaser and each
person, if any, who controls an Initial Purchaser within the meaning of the
Securities Act and the Exchange Act shall have the same rights to contribution
as such Initial Purchaser, and each director of the Company, each officer of the
Company, and each person, if any, who controls the Company within the meaning of
the Securities Act and the Exchange Act shall have the same rights to
contribution as the Company.
Section 10. Termination of this Agreement. Prior to the Closing Date,
this Agreement maybe terminated by the Initial Purchasers by notice given to the
Company if at any time (i) trading in or quotation of any of the Company's
securities shall have been suspended or limited by the Commission or by the
Nasdaq Stock Market, or trading in securities generally on either the Nasdaq
Stock Market or the New York Stock Exchange shall have been suspended or
limited, or minimum or maximum prices shall have been generally established on
any of such stock exchanges by the Commission or the NASD; (ii) a general
banking moratorium shall have been declared by any of federal, New York,
Delaware or California authorities; (iii) there shall have occurred any outbreak
or escalation of national or international hostilities or any crisis or
calamity, or any change in the United States or international financial markets,
or any substantial change or development involving a prospective substantial
change in United States or international political, financial or economic
conditions, as in the judgment of the Initial Purchasers is material and adverse
and makes it impracticable to market the Securities in the manner and on the
terms described in the Offering Memorandum or to enforce contracts for the sale
of securities; (iv) in the judgment of the Initial Purchasers there shall have
occurred any Material Adverse Change; or (v) the Company shall have sustained a
loss by strike, fire, flood, earthquake, accident or other calamity of such
character as in the judgment of the Initial Purchasers may interfere materially
with the conduct of the business and operations of the Company regardless of
whether or not such loss shall have been insured. Any termination pursuant to
this Section 10 shall be without liability on the part of (a) the Company to any
Initial Purchaser, except that the Company shall be obligated to reimburse the
expenses of the Initial Purchasers pursuant to Sections 4 and 6 hereof, (b) any
Initial Purchaser to the Company, or (c) of any party hereto to any other party
except that the provisions of Section 8 and Section 9 shall at all times be
effective and shall survive such termination.
Section 11. Representations and Indemnities to Survive Delivery. The
respective indemnities, agreements, representations, warranties and other
statements of the Company, of its officers and of the several Initial Purchasers
set forth in or made pursuant to this Agreement will remain in full force and
effect, regardless of any investigation made by or on behalf of any Initial
Purchaser or the Company or any of its or their partners, officers or directors
or any controlling person, as the case may be, and will survive delivery of and
payment for the Securities sold hereunder and any termination of this Agreement.
Section 12. Notices. All communications hereunder shall be in writing
and shall be mailed, hand delivered or telecopied and confirmed to the parties
hereto as follows:
23
If to the Initial Purchasers:
NationsBanc Xxxxxxxxxx Securities LLC
000 Xxxxxxxxxx Xxxxxx
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Facsimile: 000-000-0000
Attention: Xxxxxxx X. Xxxxx
with a copy to:
NationsBanc Xxxxxxxxxx Securities LLC
000 Xxxxxxxxxx Xxxxxx
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxxx X. Xxxxxx, Esq.
If to the Company:
Action Performance Companies, Inc.
0000 Xxxx Xxxxxxxx Xxxx
Xxxxxxx, Xxxxxxx 00000
Facsimile: (000) 000-0000
Attention: Chief Financial Officer
with a copy to:
X'Xxxxxx, Xxxxxxxx, Xxxxxxxx, Xxxxxxxxxxxxx & Xxxxxxxx, P.A.
Xxx Xxxx Xxxxxxxxx Xxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxx 00000-1656
Facsimile: (000) 000-0000
Attention: Xxxxxx X. Xxxx, Esq.
Any party hereto may change the address for receipt of communications by giving
written notice to the others.
Section 13. Successors. This Agreement will inure to the benefit of and
be binding upon the parties hereto, including any substitute Initial Purchasers
pursuant to Section 16 hereof, and to the benefit of the employees, officers and
directors and controlling persons referred to in Section 8 and Section 9, and in
each case their respective successors, and no other person will have any right
or obligation hereunder. The term "successors" shall not include any purchaser
of the Securities as such from any of the Initial Purchasers merely by reason of
such purchase.
Section 14. Partial Unenforceability. The invalidity or
unenforceability of any Section, paragraph or provision of this Agreement shall
not affect the validity or enforceability of any other Section, paragraph or
provision hereof. If any Section, paragraph or provision of this Agreement is
for any reason determined to be invalid or unenforceable, there shall be deemed
to be made such minor changes (and only such minor changes) as are necessary to
make it valid and enforceable.
24
Section 15. Governing Law Provisions. THIS AGREEMENT SHALL BE GOVERNED
BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK
APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED IN SUCH STATE.
Section 16. Default of One or More of the Several Initial Purchasers.
If any one or more of the several Initial Purchasers shall fail or refuse to
purchase Securities that it or they have agreed to purchase hereunder on the
Closing Date or the Second Closing Date, and the aggregate number of Securities
which such defaulting Initial Purchaser or Initial Purchasers agreed but failed
or refused to purchase does not exceed 10% of the aggregate number of the
Securities to be purchased on such date, the other Initial Purchasers shall be
obligated, severally, in the proportions that the number of Securities set forth
opposite their respective names on Schedule A bears to the aggregate number of
Securities set forth opposite the names of all such non-defaulting Initial
Purchasers, or in such other proportions as may be specified by the Initial
Purchasers with the consent of the non-defaulting Initial Purchasers, to
purchase the Securities which such defaulting Initial Purchaser or Initial
Purchasers agreed but failed or refused to purchase on such date. If any one or
more of the Initial Purchasers shall fail or refuse to purchase Securities and
the aggregate number of Securities with respect to which such default occurs
exceeds 10% of the aggregate number of Securities to be purchased on the Closing
Date, and arrangements satisfactory to the Initial Purchasers and the Company,
including the substitution of a new Initial Purchaser for the defaulting Initial
Purchaser, for the purchase of such Securities are not made within 48 hours
after such default, this Agreement shall terminate without liability of any
party to any other party except that the provisions of Section 4, Section 6,
Section 8 and Section 9 shall at all times be effective and shall survive such
termination. In any such case either the Initial Purchasers or the Company shall
have the right to postpone the Closing Date or the Second Closing Date, as the
case may be, but in no event for longer than seven days in order that the
required changes, if any, to the Offering Memorandum or any other documents or
arrangements may be effected.
As used in this Agreement, the term "Initial Purchaser" shall be deemed
to include any person substituted for a defaulting Initial Purchaser under this
Section 16. Any action taken under this Section 16 shall not relieve any
defaulting Initial Purchaser from liability in respect of any default of such
Initial Purchaser under this Agreement.
Section 17. General Provisions. This Agreement constitutes the entire
agreement of the parties to this Agreement and supersedes all prior written or
oral and all contemporaneous oral agreements, understandings and negotiations
with respect to the subject matter hereof. This Agreement may be executed in two
or more counterparts, each one of which shall be an original, with the same
effect as if the signatures thereto and hereto were upon the same instrument.
This Agreement may not be amended or modified unless in writing by all of the
parties hereto, and no condition herein (express or implied) may be waived
unless waived in writing by each party whom the condition is meant to benefit.
The Table of Contents and the section headings herein are for the convenience of
the parties only and shall not affect the construction or interpretation of this
Agreement.
Each of the parties hereto acknowledges that it is a sophisticated
business person that was adequately represented by counsel during negotiations
regarding the provisions hereof, including, without limitation, the
indemnification provisions of Section 8 and the contribution provisions of
Section 9, and is fully informed regarding said provisions. Each of the parties
hereto further acknowledges that the provisions of Sections 8 and 9 hereto
fairly allocate the risks in light of the
25
ability of the parties to investigate the Company, its affairs and its business
in order to assure that adequate disclosure has been made in any registration
statement, any preliminary Offering Memorandum and the Offering Memorandum (and
any amendments and supplements thereto), as required by the Securities Act and
the Exchange Act.
If the foregoing is in accordance with your understanding of our
agreement, kindly sign and return to the Company the enclosed copies hereof,
whereupon this instrument, along with all counterparts hereof, shall become a
binding agreement in accordance with its terms.
Very truly yours,
ACTION PERFORMANCE COMPANIES, INC.
By: /s/ Xxxx X. Xxxxxxxxx
------------------------------
Name: Xxxx X. Xxxxxxxxx
Title: Chairman of the Board, President
and Chief Executive Officer
The foregoing Purchase Agreement is hereby confirmed and accepted by the Initial
Purchasers in San Francisco, California as of the date first above written.
NATIONSBANC XXXXXXXXXX SECURITIES LLC
CIBC XXXXXXXXXXX CORP.
EVEREN SECURITIES, INC.
XXXXX XXXXXXX INC.
As the several Initial Purchasers
By NATIONSBANC XXXXXXXXXX SECURITIES LLC
By: /s/ Xxx Xxxxxxx
------------------------------
Name: Xxx Xxxxxxx
Title: Sr. Managing Director
26
