EXHIBIT 1.01
PURCHASE AGREEMENT
Dated as of June 6, 1997
by and among
FALCON BUILDING PRODUCTS, INC.
XXXX & XXXXXX, INC.
MANSFIELD PLUMBING PRODUCTS, INC.
DEVILBISS AIR POWER COMPANY
SWC INDUSTIRES, INC.
and
EX-CELL MANUFACTURING COMPANY, INC.
and
XXXXX XXXXXX INC.
BT SECURITIES CORPORATION
CHASE SECURITIES INC.
and
XXXXXXX LYNCH, PIERCE, XXXXXX & XXXXX INCORPORATED
FALCON BUILDING PRODUCTS, INC.
XXXX & XXXXXX, INC.
MANSFIELD PLUMBING PRODUCTS, INC.
DEVILBISS AIR POWER COMPANY
SWC INDUSTRIES, INC.
EX-CELL MANUFACTURING COMPANY, INC.
$145,000,000
9 1/2% Senior Subordinated Notes due 2007
$170,000,000
10 1/2% Senior Subordinated Discount Notes due 2007
PURCHASE AGREEMENT
June 6, 1997
New York, New York
XXXXX XXXXXX INC.
BT SECURITIES CORPORATION
CHASE SECURITIES INC.
XXXXXXX LYNCH, PIERCE, XXXXXX & XXXXX INCORPORATED
c/o Xxxxx Xxxxxx Inc.
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Dear Sirs:
Falcon Building Products, Inc., a Delaware corporation (the
"COMPANY"), proposes, upon the terms and conditions set forth herein, to issue
and sell to Xxxxx Xxxxxx Inc., BT Securities Corporation, Chase Securities Inc.
and Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx Incorporated, as the initial
purchasers (collectively, the "INITIAL PURCHASERS"), $145,000,000 in aggregate
principal amount of its 9 1/2% Senior Subordinated Notes due 2007 (the "SERIES A
SUBORDINATED NOTES") and $170,000,000 in aggregate principal amount at maturity
of its 10 1/2% Senior Subordinated Discount Notes due 2007 (the "SERIES A
SUBORDINATED DISCOUNT NOTES" and, together with the Subordinated Notes, the
"SERIES A SECURITIES"), in each case, subject to the terms and conditions set
forth herein. The Company's obligations under the Series A Securities,
including the due and punctual payment of principal and interest on the Series A
Securities, will be unconditionally guaranteed (the "SERIES A SUBSIDIARY
GUARANTEES") by each of (i) Xxxx & Xxxxxx, Inc., Mansfield Plumbing Products,
Inc., DeVilbiss Air Power Company, SWC Industries, Inc. and Ex-Cell
Manufacturing Company, Inc. (each a "GUARANTOR" and, collectively, the
"GUARANTORS") and (ii) each other Subsidiary (as such term is defined in the
Indentures referred to below) of the Company formed or acquired after the
Closing Date (as defined below), other than Unrestricted Subsidiaries, and their
respective successors and assigns (collectively the "GUARANTORS"). As used
herein, the term "SERIES A SECURITIES" shall include the Series A Subsidiary
Guarantees thereof by the Guarantors, unless the context otherwise requires.
The Guarantors and Centrally Held Eagle Receivables Program, Inc., a Delaware
corporation, are collectively referred to herein as the "SUBSIDIARIES."
The Series A Securities will (i) have the terms and
provisions summarized in the Offering
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Memorandum (as defined herein) and (ii) be in the forms specified by the
Initial Purchasers pursuant to Section 3 hereof. The Series A Subordinated
Notes will be issued pursuant to the provisions of an indenture, to be dated
as of June 17, 1997 (the "SUBORDINATED NOTE INDENTURE"), between the Company
and Xxxxxx Trust and Savings Bank, as Trustee (the "SUBORDINATED NOTE
TRUSTEE") and the Series A Subordinated Discount Notes will be issued
pursuant to the provisions of an indenture, to be dated as of June 17, 1997
(the "SUBORDINATED DISCOUNT NOTE INDENTURE" and, together with the
Subordinated Note Indentures, the "INDENTURES"), between the Company and
Xxxxxx Trust and Savings Bank, as Trustee (the "SUBORDINATED DISCOUNT NOTE
TRUSTEE" and, together with the Subordinated Note Trustee, the "TRUSTEES").
Capitalized terms used herein and not otherwise defined herein shall have the
meanings assigned to such terms in the Indentures or in the Offering
Memorandum.
The Series A Securities are being issued and sold in
connection with a recapitalization of the Company (the "RECAPITALIZATION").
The Recapitalization will consist of the following steps: (i) Investcorp
Investment Equity Limited, on its own behalf and on behalf of certain of its
affiliates and other investors, will purchase for cash in the amount of
approximately $134,600,000 one hundred percent (100.0%) of the common stock
("ACQUISITION COMMON") of FBP Acquisition Corp.("ACQUISITION CORP"), Inc. a
Delaware corporation (the transaction described in this clause (i) being
hereinafter referred to as the "EQUITY FUNDING"); (ii) Acquisition Corp will
merge (the "MERGER") with and into the Company pursuant to an Agreement and
Plan of Merger dated March 20, 1997 between the Company and Acquisition Corp
(the "MERGER AGREEMENT"); (iii) the Company will issue and sell the Series A
Subordinated Notes pursuant to the terms hereof; (iv) the Company will issue
and sell the Series A Subordinated Discount Notes pursuant to the terms
hereof; (v) The Chase Manhattan Bank will provide $300,000,000 under a senior
credit facility (the "BANK CREDIT FACILITY") to the Company consisting of (A)
a $150,000,000 8-year amortizing term loan and (B) a $150,000,000 6-year
non-amortizing revolving credit facility and (vi) the existing
off-balance-sheet accounts receivable facility of the Company being provided
through PNC Capital Markets, Inc., PNC Bank, National Association and certain
other lenders will be amended and restated and increased (the "AR FACILITY"
and, together with the Bank Credit Facility, the "CREDIT FACILITIES") and
approximately $81,000,000 in funding thereunder will be outstanding at the
Closing Date (as defined below); and (vii) the proceeds of the foregoing will
be employed to refinance approximately $219,800,000 of currently outstanding
indebtedness of the Company (which constitutes all of the existing
indebtedness of the Company).
The Company and the Guarantors wish to confirm as follows
their agreement with the Initial Purchasers in connection with the purchase and
resale of the Series A Securities.
1. PRELIMINARY OFFERING MEMORANDUM AND OFFERING
MEMORANDUM. The Series A Securities will be offered and sold to the Initial
Purchasers without registration under the Securities Act of 1933, as amended
(the "SECURITIES ACT"), in reliance on an exemption pursuant to Section 4(2)
under the Securities Act. The Company has prepared a preliminary offering
memorandum, dated May 21, 1997 (the "PRELIMINARY OFFERING MEMORANDUM"), and an
offering memorandum, dated June 6, 1997 (the "OFFERING MEMORANDUM"), setting
forth information regarding the Company, the Guarantors, the Series A Securities
and the Series B Securities (as defined herein). Any references herein to the
Preliminary Offering Memorandum and the Offering Memorandum shall be deemed to
include all amendments and supplements thereto. The Company and the Guarantors
hereby confirm that they have authorized the use of the Preliminary Offering
Memorandum and the Offering Memorandum in connection with the offering and
resale of the Series A Securities by the Initial Purchasers.
The Company and the Guarantors understand that the Initial
Purchasers propose to make offers and sales (the "EXEMPT RESALES") of the Series
A Securities purchased by the Initial Purchasers hereunder only on the terms and
in the manner set forth in the Offering Memorandum and Section 2 hereof, as soon
as the Initial Purchasers deem advisable after this Agreement has been executed
and
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delivered solely to (i) persons whom the Initial Purchasers reasonably
believe to be qualified institutional buyers ("QUALIFIED INSTITUTIONAL BUYERS")
as defined in Rule 144A under the Securities Act, as such rule may be amended
from time to time ("RULE 144A"), (ii) a limited number of other institutional
investors as defined in Rule 501(a) (1), (2), (3) and (7) under the Act, that
make the representations and agreements to the Company specified in Annex A to
the Offering Memorandum in transactions under Rule 144A (each, an "ACCREDITED
INSTITUTION") and (iii) a limited number of other Accredited Investors (each
such person specified in clauses (i), (ii) and (iii) being referred to herein as
an "ELIGIBLE PURCHASER").
It is understood and acknowledged that upon original
issuance thereof, and until such time as the same is no longer required under
the applicable requirements of the Securities Act, the Series A Securities (and
all securities issued in exchange therefor or in substitution thereof) shall
bear the following legend:
"THE SECURITY (OR ITS PREDECESSOR) EVIDENCED HEREBY WAS
ORIGINALLY ISSUED IN A TRANSACTION EXEMPT FROM REGISTRATION
UNDER XXXXXXX 0 XX XXX XXXXXX XXXXXX SECURITIES ACT OF 1933
(THE "SECURITIES ACT"), AND THE SECURITY EVIDENCED HEREBY
MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE
ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION
THEREFROM. EACH PURCHASER OF THE SECURITY EVIDENCED HEREBY
IS HEREBY NOTIFIED THAT THE SELLER MAY BE RELYING ON THE
EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE SECURITIES
ACT PROVIDED BY RULE 144A THEREUNDER. THE HOLDER OF THE
SECURITY EVIDENCED HEREBY AGREES FOR THE BENEFIT OF THE
COMPANY THAT (A) SUCH SECURITY MAY BE RESOLD, PLEDGED OR
OTHERWISE TRANSFERRED, ONLY (1) (a) TO A PERSON WHO THE
SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL
BUYER (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) IN
A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (b) IN
A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144 UNDER THE
SECURITIES ACT, (c) OUTSIDE THE UNITED STATES TO A NON-U.S.
PERSON IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 904
UNDER THE SECURITIES ACT, OR (d) IN ACCORDANCE WITH ANOTHER
EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT (AND BASED UPON AN OPINION OF COUNSEL IF THE
COMPANY SO REQUESTS), (2) TO THE COMPANY, OR (3) PURSUANT TO
AN EFFECTIVE REGISTRATION STATEMENT AND, IN EACH CASE, IN
ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE
OF THE UNITED STATES OR ANY OTHER APPLICABLE JURISDICTION
AND (B) THE HOLDER WILL, AND EACH SUBSEQUENT HOLDER IS
REQUIRED TO, NOTIFY ANY PURCHASER FROM IT OF THE SECURITY
EVIDENCED HEREBY OF THE RESALE RESTRICTIONS SET FORTH IN (A)
ABOVE."
It is also understood and acknowledged that holders
(including subsequent transferees) of the Series A Securities will have the
registration rights set forth in the registration rights agreement (the
"REGISTRATION RIGHTS AGREEMENT"), to be dated the Closing Date, in the form
of Exhibit A hereto, for so long as such Series A Securities constitute
"TRANSFER RESTRICTED SECURITIES" (as defined in the
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Registration Rights Agreement). Pursuant to the Registration Rights
Agreement, the Company will agree to file with the Securities and Exchange
Commission under the circumstances set forth therein, (i) a registration
statement under the Securities Act relating to the Company's 9 1/2% Series B
Senior Subordinated Notes due 2007 (the "SERIES B SUBORDINATED NOTES"), the
Company's 10 1/2% Series B Senior Subordinated Discount Notes due 2007 (the
"SERIES B SUBORDINATED DISCOUNT NOTES") and the guarantees thereof (the
"SERIES B SUBSIDIARY GUARANTEES") by the Guarantors to be offered in exchange
for the Series A Securities (the "REGISTERED EXCHANGE OFFER") and (ii) under
certain circumstances, a shelf registration statement pursuant to Rule 415
under the Securities Act relating to the resale by certain holders of the
Series A Securities, and to use its best efforts to cause such registration
statements to be declared effective. As used herein, (a) the term "SERIES A
SECURITIES" shall include the Series A Subsidiary Guarantees thereof by the
Guarantors, unless the context otherwise requires, (b) the term "SERIES B
SECURITIES" shall include the Series B Subsidiary Guarantees thereof by the
Guarantors, unless the context otherwise requires and (c) the Series A
Securities and the Series B Securities, are hereinafter referred to
collectively as the "SECURITIES." This Agreement, the Indentures, the
Securities, the Series A Subsidiary Guarantees, the Series B Subsidiary
Guarantees and the Registration Rights Agreement are hereinafter referred to
collectively as the "OPERATIVE DOCUMENTS."
2. AGREEMENTS TO SELL, PURCHASE AND RESELL. (a) The
Company and the Guarantors hereby agree, on the basis of the representations,
warranties and agreements of the Initial Purchasers contained herein and subject
to all the terms and conditions set forth herein, to issue and sell to the
Initial Purchasers and, upon the basis of the representations, warranties and
agreements of the Company and the Guarantors herein contained and subject to all
the terms and conditions set forth herein, each Initial Purchaser agrees,
severally and not jointly, to purchase from the Company, (i) at a purchase price
of 97.00% of the principal amount thereof, the aggregate principal amount of
Series A Subordinated Notes and (ii) at a purchase price of 96.50% of the
initial Accreted Value thereof, the aggregate principal amount at maturity of
Series A Discount Notes, in each case, set forth opposite the name of such
Initial Purchaser in Schedule I hereto. The Company and the Guarantors shall
not be obligated to deliver any of the securities to be delivered hereunder
except upon payment for all of the securities to be purchased as provided
herein.
(b) Each of the Initial Purchasers hereby represents and
warrants to the Company and the Guarantors that it will offer the Series A
Securities for sale upon the terms and conditions set forth in this Agreement
and in the Offering Memorandum. Each of the Initial Purchasers hereby
represents and warrants to, and agrees with, the Company and the Guarantors that
such Initial Purchaser (i) is either a QIB or an Accredited Institution, in
either case with such knowledge and experience in financial and business matters
as are necessary in order to evaluate the merits and risks of an investment in
the Series A Securities; (ii) is purchasing the Series A Securities pursuant to
a private sale exempt from registration under the Securities Act; (iii) in
connection with the Exempt Resales, will solicit offers to buy the Series A
Securities only from, and will offer to sell the Series A Securities only to,
the Eligible Purchasers in accordance with this Agreement and on the terms
contemplated by the Offering Memorandum; and (iv) will not offer or sell the
Series A Securities, nor has it offered or sold the Securities by, or otherwise
engaged in, any form of general solicitation or general advertising (within the
meaning of Regulation D; including, but not limited to, advertisements,
articles, notices or other communications published in any newspaper, magazine,
or similar medium or broadcast over television or radio, or any seminar or
meeting whose attendees have been invited by any general solicitation or general
advertising) in connection with the offering of the Series A Securities. The
Initial Purchasers have advised the Company that they will offer the Series A
Subordinated Notes to Eligible Purchasers at a price initially equal to 100% of
the principal amount thereof, plus accrued interest, if any, from the date of
issuance of the Series A Subordinated Notes and the Series A Subordinated
Discount Notes to Eligible Purchasers at a price initially equal to 100% of the
initial Accreted Value thereof, plus accrued interest, if any, from the date of
issuance of the Series A Subordinated Discount Notes. Such prices may be
changed by the Initial
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Purchasers at any time thereafter without notice.
Each of the Initial Purchasers understands that the Company
and the Guarantors and, for purposes of the opinions to be delivered to the
Initial Purchasers pursuant to Sections 7(d), 7(e) and 7(f) hereof, counsel to
the Company and counsel to the Initial Purchasers, will rely upon the accuracy
and truth of the foregoing representations and agreements and each Initial
Purchaser hereby consents to such reliance.
3. DELIVERY OF THE SECURITIES AND PAYMENT THEREFOR.
Delivery to the Initial Purchasers of and payment for the Series A Securities
shall be made at the office of Xxxxx Xxxxxx Inc., 000 Xxxxxxxxx Xxxxxx, Xxx
Xxxx, XX 00000, at 10:00 A.M., New York City time, on June 17, 1997 (the
"CLOSING DATE"). The place of closing for the Series A Securities and the
Closing Date may be varied by agreement between the Initial Purchasers and the
Company.
The Series A Securities will be delivered to the Initial
Purchasers against payment of the purchase price therefor in immediately
available funds. The Series A Senior Subordinated Notes will be evidenced by
one or more global securities in definitive form (the "GLOBAL SENIOR
SUBORDINATED NOTES") and/or by additional definitive securities, and the Series
A Senior Subordinated Discount Notes will be evidenced by one or more global
securities in definitive form (the "GLOBAL SENIOR SUBORDINATED DISCOUNT NOTES"
and, together with the Global Senior Subordinated Notes, the "GLOBAL NOTES")
and/or by additional definitive securities. The Global Notes will be registered
in the name of Cede & Co. as nominee of The Depository Trust Company ("DTC"),
and other definitive securities will be registered in such names and in such
denominations as the Initial Purchasers shall request prior to 9:30 a.m., New
York City time, on the second business day preceding the Closing Date. The
Series A Securities to be delivered to the Initial Purchasers shall be made
available to the Initial Purchasers in New York City for inspection and
packaging not later than 9:30 A.M., New York City time, on the business day next
preceding the Closing Date.
4. AGREEMENTS OF THE COMPANY AND THE GUARANTORS. The
Company and the Guarantors, jointly and severally, represent to and agree with
each Initial Purchaser as follows:
(a) The Company and the Guarantors will furnish to the
Initial Purchasers, without charge, such number of copies of the Offering
Memorandum as may then be amended or supplemented as they may reasonably
request, on or prior to 12:00 (noon) on the date following this Agreement.
(b) The Company and the Guarantors will not make any
amendment or supplement to the Preliminary Offering Memorandum or to the
Offering Memorandum of which the Initial Purchasers shall not previously have
been advised or to which they shall reasonably object after being so advised.
(c) Prior to the execution and delivery of this Agreement,
the Company and the Guarantors shall have delivered or will deliver to the
Initial Purchasers, without charge, in such quantities as the Initial Purchasers
shall have reasonably requested or may hereafter reasonably request, copies of
the Preliminary Offering Memorandum. The Company and each of the Guarantors
consent to the use, in accordance with the securities or Blue Sky laws of the
jurisdictions in which the Series A Securities are offered by the Initial
Purchasers and by dealers, prior to the date of the Offering Memorandum, of each
Preliminary Offering Memorandum so furnished by the Company and the Guarantors.
The Company and each of the Guarantors consent to the use of the Offering
Memorandum in accordance with the securities or Blue Sky laws of the
jurisdictions in which the Series A Securities are offered by the Initial
Purchasers and by all dealers to whom Series A Securities may be sold, in
connection with the offering and sale of the Series A Securities.
6
(d) If, at any time prior to completion of the distribution
of the Series A Securities by the Initial Purchasers to Eligible Purchasers, any
event shall occur that in the judgment of the Company, any of the Guarantors or
in the opinion of counsel for the Initial Purchasers should be set forth in the
Offering Memorandum in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading, or if it is necessary
to supplement or amend the Offering Memorandum in order to comply with any law,
the Company and the Guarantors will forthwith prepare an appropriate supplement
or amendment thereto or such document, and will expeditiously furnish to the
Initial Purchasers and dealers a reasonable number of copies thereof.
(e) The Company and each of the Guarantors will cooperate
with the Initial Purchasers and with their counsel in connection with the
qualification of the Series A Securities for offering and sale by the Initial
Purchasers and by dealers under the securities or Blue Sky laws of such
jurisdictions as the Initial Purchasers may designate and will file such
consents to service of process or other documents necessary or appropriate in
order to effect such qualification; PROVIDED, that in no event shall the Company
or any of the Guarantors be obligated to qualify to do business in any
jurisdiction where it is not now so qualified or to take any action which would
subject it to (i) service of process in suits, other than those arising out of
the offering or sale of the Series A Securities or (ii) taxation in excess of a
nominal amount, in each case in any jurisdiction where it is not now so subject.
(f) So long as any of the Securities are outstanding, the
Company and the Guarantors will furnish to the Initial Purchasers (i) as soon as
available, a copy of each report of the Company mailed to the Trustee or the
holders of the Securities generally or filed with any stock exchange or
regulatory body and (ii) from time to time such other information concerning the
Company and/or the Guarantors as the Initial Purchasers may reasonably request.
(g) If this Agreement shall terminate or shall be
terminated after execution and delivery pursuant to any provisions hereof
(otherwise than by notice given by the Initial Purchasers terminating this
Agreement pursuant to Section 10 hereof) or if this Agreement shall be
terminated by the Initial Purchasers because of any failure or refusal on the
part of the Company or any of the Guarantors to comply with the terms or
fulfill any of the conditions of this Agreement, the Company and the
Guarantors agree to reimburse the Initial Purchasers for all out-of-pocket
expenses (including reasonable fees and expenses of its counsel) reasonably
incurred by it in connection herewith, but without any further obligation on
the part of the Company or any of the Guarantors for loss of profits or
otherwise.
(h) The Company and the Guarantors will apply the net
proceeds from the sale of the Series A Securities to be sold by it hereunder
substantially in accordance with the description set forth in the Offering
Memorandum under the caption "Use of Proceeds."
(i) Except as stated in this Agreement and in the
Preliminary Offering Memorandum and Offering Memorandum, the Company and the
Guarantors have not taken, nor will any of them take, directly or indirectly,
any action designed to or that might reasonably be expected to cause or result
in stabilization or manipulation of the price of the Securities to facilitate
the sale or resale of the Securities. Except as permitted by the Securities
Act, the Company and the Guarantors will not distribute any offering material in
connection with the Exempt Resales.
(j) The Company and the Guarantors will use their best
efforts to permit the Securities to be designated Private Offerings, Resales and
Trading through Automated Linkages ("PORTAL") Market securities in accordance
with the rules and regulations adopted by the National Association of Securities
Dealers, Inc. relating to trading in the PORTAL Market and to permit the
Securities to be eligible for clearance and settlement through DTC.
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(k) From and after the Closing Date, so long as any of the
Securities are outstanding and are "restricted securities" within the meaning of
the Rule 144(a)(3) under the Securities Act and during any period in which the
Company is not subject to Section 13 or 15(d) of the Securities Exchange Act of
1934, as amended (the "EXCHANGE ACT"), the Company and the Guarantors will
furnish to holders of the Securities and prospective purchasers of Securities
designated by such holders, upon request of such holders or such prospective
purchasers, the information required to be delivered pursuant to Rule 144A(d)(4)
under the Securities Act to permit compliance with Rule 144A in connection with
resale of the Securities.
(l) The Company and the Guarantors have complied and will
comply with all provisions of Florida Statutes Section 517.075 relating to
issuers doing business with Cuba.
(m) The Company and the Guarantors agree not to sell, offer
for sale or solicit offers to buy or otherwise negotiate in respect of any
security (as defined in the Securities Act) that would be integrated with the
sale of the Series A Securities in a manner that would require the registration
under the Securities Act of the sale to the Initial Purchasers or the Eligible
Purchasers of the Series A Securities.
(n) The Company and the Guarantors agree to comply with all
the terms and conditions of the Registration Rights Agreement and all agreements
set forth in the representation letters of the Company and the Guarantors to DTC
relating to the approval of the Securities by DTC for "book entry" transfer.
(o) The Company and the Guarantors agree to cause the
Exchange Offer, if available, to be made in the appropriate form, as
contemplated by the Registration Rights Agreement, to permit registration of the
Series B Securities to be offered in exchange for the Series A Securities, and
to comply with all applicable federal and state securities laws in connection
with the Registered Exchange Offer.
(p) The Company and the Guarantors agree that prior to any
registration of the Securities pursuant to the Registration Rights Agreement, or
at such earlier time as may be required, the Indenture shall be qualified under
the Trust Indenture Act of 1939 (the "TIA") and any necessary supplemental
indentures will be entered into in connection therewith.
(q) The Company and the Guarantors will not voluntarily
claim, and will resist actively all attempts to claim, the benefit of any usury
laws against holders of the Securities.
(r) The Company and the Guarantors will use their
respective best efforts to do and perform all things required or necessary to be
done and performed under this Agreement by them prior to the Closing Date, and
to satisfy all conditions precedent to the Initial Purchasers' obligations
hereunder to purchase the Series A Securities.
5. REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE
GUARANTORS. The Company and the Guarantors, jointly and severally, represent
and warrant to the Initial Purchasers that:
(a) The Preliminary Offering Memorandum and Offering
Memorandum with respect to the Securities have been prepared by the Company and
the Guarantors for use by the Initial Purchasers in connection with the Exempt
Resales. No order or decree preventing the use of the Preliminary Offering
Memorandum or the Offering Memorandum or any amendment or supplement thereto, or
any order asserting that the transactions contemplated by this Agreement are
subject to the registration requirements of the Securities Act has been issued
and no proceeding for that purpose has commenced or is pending or, to the
knowledge of the Company and the Guarantors, is contemplated.
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(b) The Preliminary Offering Memorandum and the Offering
Memorandum as of their respective dates and the Offering Memorandum as of the
Closing Date, did not or will not at any time contain an untrue statement of a
material fact or omit to state a material fact necessary to make the statements
therein, in the light of the circumstances under which they were made, not
misleading, except that this representation and warranty does not apply to
statements in or omissions from the Preliminary Offering Memorandum and Offering
Memorandum made in reliance upon and in conformity with information relating to
the Initial Purchasers furnished to the Company in writing by or on behalf of
the Initial Purchasers expressly for use therein.
(c) The market-related and customer-related data and
estimates included under the captions "Offering Memorandum Summary-The Company"
and "Business" in the Preliminary Offering Memorandum and the Offering
Memorandum are based on or derived from sources which the Company believes to be
reliable and accurate.
(d) The Subordinated Note Indenture has been duly and
validly authorized by the Company and the Guarantors and, upon its execution,
delivery and, assuming due authorization, execution and delivery by the
Subordinated Note Trustee, will constitute the valid and binding agreement of
the Company and the Guarantors, enforceable in accordance with its terms,
subject to the qualification that the enforceability of the Company's and the
Guarantors' obligations thereunder may be limited by bankruptcy, fraudulent
conveyance, insolvency reorganization, moratorium, and other laws relating to
or affecting creditors' rights generally and by general equitable principles;
assuming the accuracy of the representations and warranties of the Initial
Purchasers in Section 2 hereof, no qualification of the Subordinated Note
Indenture under the TIA is required in connection with the offer and sale of
the Series A Subordinated Notes contemplated hereby or in connection with the
Exempt Resales.
(e) The Subordinated Discount Note Indenture has been
duly and validly authorized by the Company and the Guarantors and, upon its
execution, delivery and, assuming due authorization, execution and delivery
by the Subordinated Discount Note Trustee, will constitute the valid and
binding agreement of the Company and the Guarantors, enforceable in
accordance with its terms, subject to the qualification that the
enforceability of the Company's and the Guarantors' obligations thereunder
may be limited by bankruptcy, fraudulent conveyance, insolvency
reorganization, moratorium, and other laws relating to or affecting
creditors' rights generally and by general equitable principles; assuming the
accuracy of the representations and warranties of the Initial Purchasers in
Section 2 hereof, no qualification of the Subordinated Discount Note
Indenture under the TIA is required in connection with the offer and sale of
the Series A Subordinated Discount Notes contemplated hereby or in connection
with the Exempt Resales.
(f) The Series A Securities have been duly and validly
authorized by the Company and when issued by the Company in accordance with
the terms of the applicable Indenture and, assuming due authentication of the
Series A Securities by the applicable Trustee, upon delivery to the Initial
Purchasers against payment therefor in accordance with the terms hereof, will
have been validly issued and delivered, and will constitute valid and binding
obligations of the Company entitled to the benefits of the applicable
Indenture, enforceable against the Company in accordance with their terms,
subject to the qualification that the enforceability of the Company's
obligations thereunder may be limited by bankruptcy, fraudulent conveyance,
insolvency, reorganization, moratorium, and other laws relating to or
affecting creditors' rights generally and by general equitable principles.
(g) The Series B Securities have been duly and validly
authorized by the Company and if and when duly issued and authenticated in
accordance with the terms of the applicable Indenture and delivered in
accordance with the Exchange Offer provided for in the Registration Rights
Agreement, will constitute valid and binding obligations of the Company
entitled to the benefits of the applicable
9
Indenture, enforceable against the Company in accordance with their terms,
subject to the qualification that the enforceability of the Company's
obligations thereunder may be limited by bankruptcy, fraudulent conveyance,
insolvency, reorganization, moratorium, and other laws relating to or
affecting creditors' rights generally and by general equitable principles.
(h) The Series A Subsidiary Guarantees have been duly and
validly authorized by the Guarantors and when duly executed and delivered by the
Guarantors in accordance with the terms of the applicable Indenture and upon the
due execution, authentication and delivery of the Series A Securities in
accordance with the applicable Indenture and the issuance of the Series A
Securities in the sale to the Initial Purchasers contemplated by this Agreement,
will constitute valid and binding obligations of the Guarantors, enforceable
against the Guarantors in accordance with their terms, subject to the
qualification that the enforceability of the Guarantors' obligations thereunder
may be limited by bankruptcy, fraudulent conveyance, insolvency, reorganization,
moratorium, and other laws relating to or affecting creditors' rights generally
and by general equitable principles.
(i) The Series B Subsidiary Guarantees have been duly and
validly authorized by the Guarantors and if and when duly executed and delivered
by the Guarantors in accordance with the terms of the applicable Indenture and
upon the due execution and authentication of the Series B Securities in
accordance with the applicable Indenture and the issuance and delivery of the
Series B Securities in the Exchange Offer contemplated by the Registration
Rights Agreement, will constitute valid and binding obligations of the
Guarantors, enforceable against the Guarantors in accordance with their terms,
subject to the qualification that the enforceability of the Guarantors'
obligations thereunder may be limited by bankruptcy, fraudulent conveyance,
insolvency, reorganization, moratorium, and other laws relating to or affecting
creditors' rights generally and by general equitable principles.
(j) This Agreement has been duly and validly authorized by
the Company and each of the Guarantors and, when duly executed and delivered by
the Company and each of the Guarantors, will constitute the valid and binding
agreement of the Company and the Guarantors, enforceable in accordance with its
terms, subject to the qualification that the enforceability of the Company's and
the Guarantors' obligations thereunder may be limited by bankruptcy, fraudulent
conveyance, insolvency reorganization, moratorium, and other laws relating to or
affecting creditors' rights generally and by general equitable principles.
(k) The Registration Rights Agreement has been duly and
validly authorized by the Company and each of the Guarantors and, when duly
executed and delivered by the Company and each of the Guarantors, will
constitute the valid and binding agreement of the Company and the Guarantors,
enforceable in accordance with its terms, subject to the qualification that the
enforceability of the Company's and the Guarantors' obligations thereunder may
be limited by bankruptcy, fraudulent conveyance, insolvency reorganization,
moratorium, and other laws relating to or affecting creditors' rights generally
and by general equitable principles.
(l) The Bank Credit Facility has been duly and validly
authorized by the Company and each of the Guarantors and, when duly executed and
delivered by the Company and each of the Guarantors, will constitute the valid
and binding agreement of the Company and the Guarantors, enforceable in
accordance with its terms, subject to the qualification that the enforceability
of the Company's and the Guarantors' obligations thereunder may be limited by
bankruptcy, fraudulent conveyance, insolvency reorganization, moratorium, and
other laws relating to or affecting creditors' rights generally and by general
equitable principles.
(m) The amended and restated AR Facility (the "AMENDED AND
RESTATED AR FACILITY") has been duly and validly authorized by the Company and,
when the Amended and Restated AR Facility
10
has been duly executed and delivered by the Company, the Amended and Restated
AR Facility, as amended, will constitute the valid and binding agreement of
the Company, enforceable in accordance with its terms, subject to the
qualification that the enforceability of the Company's obligations thereunder
may be limited by bankruptcy, fraudulent conveyance, insolvency
reorganization, moratorium, and other laws relating to or affecting
creditors' rights generally and by general equitable principles.
(n) The Merger Agreement has been duly and validly
authorized, executed and delivered by the Company and is the valid and binding
agreement of the Company, enforceable in accordance with its terms, subject to
the qualification that the enforceability of the Company's obligations
thereunder may be limited by bankruptcy, fraudulent conveyance, insolvency
reorganization, moratorium, and other laws relating to or affecting creditors'
rights generally and by general equitable principles. The Merger shall have
been consummated or will, concurrently with the closing of the issuance and sale
of the Series A Securities to the Initial Purchasers hereunder, be consummated
in accordance with the terms of the Merger Agreement. All of the certificates
of merger that were required under Delaware law to be filed with the Secretary
of State of the State of Delaware to effect the Merger have been so filed or
will, concurrently with the closing of the issuance and sale of the Series A
Securities to the Initial Purchasers hereunder, be so filed.
(o) All the shares of capital stock of the Company
outstanding prior to the issuance of the Series A Securities have been duly
authorized and validly issued and are fully paid and nonassessable.
(p) The Company is a corporation duly organized, validly
existing and in good standing under the laws of Delaware with requisite
corporate power and authority to own, lease and operate its properties and to
conduct its business as described in the Offering Memorandum, and is duly
registered or qualified to conduct its business and is in good standing in each
jurisdiction or place where the nature of its properties or the conduct of its
business requires such registration or qualification, except where the failure
so to register or qualify does not have a material adverse effect on the
condition (financial or other), business, properties, net worth or results of
operations of the Company and the Subsidiaries taken as a whole (a "MATERIAL
ADVERSE EFFECT").
(q) Each Subsidiary is a corporation duly organized,
validly existing and in good standing in the jurisdiction of its incorporation,
with requisite corporate power and authority to own, lease and operate its
properties and to conduct its business as described in the Offering Memorandum,
and is duly registered or qualified to conduct its business and is in good
standing in each jurisdiction or place where the nature of its properties or the
conduct of its business requires such registration or qualification, except
where the failure so to register or qualify or be in good standing does not have
a Material Adverse Effect. All the outstanding shares of capital stock of each
of the Subsidiaries have been duly authorized and validly issued, are fully paid
and nonassessable, and are wholly owned by the Company directly or indirectly
through one of the other Subsidiaries, free and clear of any lien, adverse
claim, security interest, equity or other encumbrance, except as specifically
described in the Notes to the Consolidated Financial Statements contained in the
Offering Memorandum.
(r) There are no legal or governmental proceedings pending
or, to the knowledge of the Company or any of the Guarantors, threatened,
against the Company or any of the Subsidiaries or to which the Company or any of
the Subsidiaries or to which any of their respective properties, is subject,
that are not disclosed in the Offering Memorandum and which, if adversely
decided, are reasonably likely to cause a Material Adverse Effect or to
materially affect the issuance of the Securities or the consummation of the
transactions contemplated by the Operative Documents. The Offering Memorandum
contains accurate summaries of all material agreements, contracts, indentures,
leases or other instruments required to be described or summarized therein.
Neither the Company nor any of the Subsidiaries is
11
involved in any strike, job action or labor dispute with any group of
employees, and, to the Company's or any of the Guarantors' knowledge, no such
action or dispute is threatened, except for any such strike, action or
dispute which is not reasonably likely to have a Material Adverse Effect.
(s) Neither the Company nor any of the Subsidiaries is (i)
in violation of its certificate or articles of incorporation or by-laws or other
organizational documents, or of any law, ordinance, administrative or
governmental rule or regulation applicable to the Company or any of the
Subsidiaries or of any decree of any court or governmental agency or body having
jurisdiction over the Company or any of the Subsidiaries except where any such
violation or violations in the aggregate would not have a Material Adverse
Effect or (ii) in default in the performance of any obligation, agreement or
condition contained in any bond, debenture, note or any other evidence of
indebtedness or in any agreement, indenture, lease or other instrument to which
the Company or any of the Subsidiaries is a party or by which any of them or any
of their respective properties may be bound, except as may be disclosed in the
Offering Memorandum and except where any such default would not have a Material
Adverse Effect.
(t) None of (i) the issuance, offer, sale or delivery of
the Series A Securities, (ii) the execution, delivery or performance of this
Agreement or the other Operative Documents, (iii) the execution, delivery or
performance of the Merger Agreement, (iv) the execution, delivery or performance
of the Bank Credit Facility, (v) the execution, delivery or performance of the
Amended and Restated AR Facility or (vi) the consummation by the Company and the
Guarantors of the transactions contemplated hereby or thereby, (x) assuming the
accuracy of the representations and warranties of the Initial Purchasers in
Section 2 hereof, requires any consent, approval, authorization or other order
of, or registration or filing with, any court, regulatory body, administrative
agency or other governmental body, agency or official (except such as may be
required in connection with the registration under the Securities Act of the
Series B Securities in accordance with the Registration Rights Agreement,
qualification of the Indentures under the TIA and compliance with the securities
or Blue Sky laws of various jurisdictions), or conflicts or will conflict with
or constitutes or will constitute a breach of, or a default under, the
certificate or articles of incorporation or bylaws, or other organizational
documents, of the Company or any of the Subsidiaries or (y) conflicts or will
conflict with or constitutes or will constitute a breach of, or a default under,
any agreement, indenture, lease or other instrument to which the Company or any
of the Subsidiaries is a party or by which any of them or any of their
respective properties may be bound, or violates or will violate any statute,
law, regulation or filing or judgment, injunction, order or decree applicable to
the Company or any of the Subsidiaries or any of their respective properties, or
except liens created in connection with the Bank Credit Facility and the AR
Facility as disclosed in the Offering Memorandum, will result in the creation or
imposition of any lien, charge or encumbrance upon any property or assets of the
Company or any of the Subsidiaries pursuant to the terms of any agreement or
instrument to which any of them is a party or by which any of them may be bound
or to which any of the property or assets of any of them is subject except, in
each case under this clause (y), for any such breaches, defaults, violations,
liens, changes or encumbrances that would not have a Material Adverse Effect.
(u) The accountants, Xxxxxx Xxxxxxxx LLP, who have
certified or shall certify the financial statements included as part of the
Offering Memorandum (or any amendment or supplement thereto), are, with respect
to the Company, independent public accountants under Rule 101 of the AICPA's
Code of Professional Conduct, and its interpretation and rulings.
(v) The financial statements (historical and pro forma),
together with related schedules and notes forming part of the Offering
Memorandum, present fairly in all material respects the consolidated financial
position, results of operations and changes in stockholders' equity and cash
flows of the Company and the Subsidiaries on the basis stated in the Offering
Memorandum at the respective dates or for the respective periods to which they
apply; such statements and related notes have been
12
prepared in accordance with generally accepted accounting principles
consistently applied throughout the periods involved, except as disclosed
therein, and meet the requirements of Regulation S-X under the Securities Act
for registration statements on Form S-1; and the other financial and
statistical information and data set forth in the Offering Memorandum is
accurately presented and, to the extent such information and data is derived
from the financial books and records of the Company, is prepared on a basis
consistent with such financial statements and the books and records of the
Company.
(w) Except as disclosed in, or specifically contemplated
by, the Offering Memorandum, subsequent to the respective dates as of which such
information is given in the Offering Memorandum (or any amendment or supplement
thereto), neither the Company nor any of the Subsidiaries has incurred any
liability or obligation, direct or contingent, or entered into any transaction,
not in the ordinary course of business, that is material to the Company and the
Subsidiaries taken as a whole, and there has not been any material change in the
capital stock, or material increase in the short-term or long-term debt, of the
Company and the Subsidiaries, taken as a whole, or any material adverse change,
or any development involving or which could reasonably be expected to involve a
prospective material adverse change, in the condition (financial or other),
business, properties, net worth or results of operations of the Company and the
Subsidiaries taken as a whole.
(x) Each of the Company and the Subsidiaries has good and
marketable title to all property (real and personal) described in the Offering
Memorandum as being owned by it, free and clear of all liens, claims, security
interests or other encumbrances except such as are described in the Offering
Memorandum and all the property described in the Offering Memorandum as being
held under lease by each of the Company and the Subsidiaries is held by it under
valid, subsisting and enforceable leases, except, in each case under this
Section 5(x), for such exceptions as in the aggregate are not materially
burdensome and do not interfere in any material respect with the conduct of the
business of the Company and the Subsidiaries taken as a whole.
(y) Except as permitted by the Securities Act, neither the
Company nor any of the Subsidiaries have distributed and, prior to the later to
occur of the Closing Date and completion of the distribution of the Series A
Securities, will not distribute any offering material in connection with the
offering and sale of the Series A Securities other than the Preliminary Offering
Memorandum and Offering Memorandum.
(z) Each of the Company and the Subsidiaries have such
permits, licenses, franchises, certificates of need and other approvals or
authorizations of governmental or regulatory authorities ("PERMITS") as are
necessary under applicable law to own their respective properties and to conduct
their respective businesses in the manner described in the Offering Memorandum,
except to the extent that the failure to have such Permits would not have a
Material Adverse Effect; the Company and each of the Subsidiaries have fulfilled
and performed all their respective obligations with respect to the Permits,
except to the extent that the failure to so fulfill or perform any such
obligations would not have a Material Adverse Effect, and, to the knowledge of
the Company, no event has occurred which allows, or after notice or lapse of
time would allow, revocation or termination thereof or results in any other
material impairment of the rights of the holder of any such Permit, subject in
each case to such qualification as may be set forth in the Offering Memorandum
and except to the extent that any such revocation or termination would not have
a Material Adverse Effect; and, except as described in the Offering Memorandum,
none of the Permits contains any restriction that is materially burdensome to
the Company and the Subsidiaries taken as a whole.
(aa) The Company and each of the Subsidiaries have filed all
tax returns required to be filed, and neither the Company nor any Subsidiary is
in default in the payment of any taxes which were payable pursuant to said
returns or any assessments with respect thereto, except where the failure
13
to file such returns and make such payments would not have a Material Adverse
Effect.
(ab) Except as described in or contemplated by the Offering
Memorandum, there are no outstanding options, warrants or other rights calling
for the issuance of, and there are no commitments to issue, any shares of
capital stock of the Company or any security convertible into or exchangeable or
exercisable for capital stock of the Company.
(ac) The Company and each of the Subsidiaries own or possess
all patents, trademarks, trademark registration, service marks, service xxxx
registrations, trade names, copyrights, licenses, inventions, trade secrets and
rights described in the Offering Memorandum as being owned by any of them or
necessary for the conduct of their respective businesses, except where the
failure to own or possess such rights would not have a Material Adverse Effect,
and the Company is not aware of any claim to the contrary.
(ad) The Company and the Guarantors are not and, upon sale
of the Series A Securities to be issued and sold thereby in accordance herewith
and the application of the net proceeds to the Company of such sale as described
in the Offering Memorandum under the caption "Use of Proceeds," will not be an
"investment company" within the meaning of the Investment Company Act of 1940,
as amended.
(ae) When the Series A Securities are issued and delivered
pursuant to this Agreement, such Securities will not be of the same class
(within the meaning of Rule 144A(d)(3) under the Securities Act) as any security
of the Company that is listed on a national securities exchange registered under
Section 6 of the Exchange Act or that is quoted in a United States automated
interdealer quotation system.
(af) Neither the Company nor any affiliate (as defined in
Rule 501(b) of Regulation D ("REGULATION D") under the Securities Act) of the
Company has directly, or through any agent (provided that no representation is
made as to the Initial Purchasers or any person acting on its behalf), (i) sold,
offered for sale, solicited offers to buy or otherwise negotiated in respect of,
any security (as defined in the Securities Act) which is or will be integrated
with the offering and sale of the Series A Securities in a manner that would
require the registration of the Series A Securities under the Securities Act or
(ii) engaged in any form of general solicitation or general advertising (within
the meaning of Regulation D) in connection with the offering of the Series A
Securities.
(ag) Assuming (i) that the representations and warranties
in Section 2 hereof are true, (ii) the Initial Purchasers comply with the
covenants set forth in Section 2 hereof and (iii) that each person to whom
the Initial Purchasers offer, sell or deliver the Securities is a Qualified
Institutional Buyer or an Accredited Institution, the purchase and sale of
the Series A Securities pursuant hereto (including the Initial Purchasers'
proposed offering of the Series A Securities on the terms and in the manner
set forth in the Offering Memorandum and Section 2 hereof) is exempt from the
registration requirements of the Securities Act.
(ah) The execution and delivery of this Agreement and the
other Operative Documents and the sale of the Series Securities to the Initial
Purchasers or by the Initial Purchasers to Eligible Purchasers will not involve
any prohibited transaction within the meaning of Section 406 of the Employee
Retirement Income Security Act, as amended, or the rules and regulations
promulgated thereunder ("ERISA") or Section 4975 of the Internal Revenue Code of
1986, as amended, including the regulations and published interpretations
thereunder (the "CODE"), except as would not cause a Material Adverse Effect.
The representation made by the Company in the preceding sentence is made in
reliance upon and subject to the accuracy of, and compliance with, the
representations and covenants made or deemed made by the Eligible Purchasers as
set forth in the Offering Memorandum under the caption entitled "Notice
14
to Investors."
(ai) The Company and each of the Subsidiaries is in
compliance in all respects with all presently applicable provisions of ERISA; no
"reportable event" (as defined in ERISA) has occurred with respect to any
"pension plan" (as defined in ERISA) for which the Company or any Subsidiary
would have any liability; none of the Company or any Subsidiary has incurred or
expects to incur liability under (i) Title IV of ERISA with respect to
termination of, or withdrawal from, any "pension plan" or (ii) Sections 412 or
4971 of the Code; and each "pension plan" for which the Company would have any
liability that is intended to be qualified under Section 401 (a) of the Code is
so qualified and nothing has occurred, whether by action or by failure to act,
which would cause the loss of such qualification except, in each case under this
clause (ai), to the extent such non-compliance, occurrence, incurrence,
nonqualification or loss would not have a Material Adverse Effect.
(aj) None of the Company or any of its Subsidiaries has
violated any foreign, federal, state or local law or regulation relating to the
protection of human health and safety, the environment or hazardous or toxic
substances or wastes, pollutants or contaminants ("ENVIRONMENTAL LAWS") which
could reasonably be expected to have a Material Adverse Effect.
(ak) There is no alleged liability, or to the knowledge of
the Company, potential liability, (including, without limitation, alleged or
potential liability or investigatory costs, cleanup costs, governmental
response costs, natural resource damages, property damages, personal injuries
or penalties) of the Company or any of its Subsidiaries arising out of, based
on or resulting from (i) the presence or release into the environment of any
Hazardous Material (as defined herein) at any location, whether or not owned
by the Company or any of its Subsidiaries which could reasonably be expected
to have a Material Adverse Effect or (ii) any violation or alleged violation
of any Environmental Law by the Company or any Subsidiary, which could
reasonably be expected to have a Material Adverse Effect other than as
disclosed in the Offering Memorandum. The term "HAZARDOUS MATERIAL" means
(A) any "hazardous substance" as defined by the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended, (B) any
"hazardous waste" as defined by the Resource Conservation and Recovery Act,
as amended, (C) any petroleum or petroleum product, (D) any polychlorinated
biphenyl and (E) any pollutant or contaminant or hazardous, dangerous or
toxic chemical, material waste or substance regulated under or within the
meaning of any other Environmental Law.
(al) None of the execution, delivery and performance of this
Agreement, the issuance and sale of the Series A Securities, the application of
the proceeds from the issuance and sale of the Securities or the Subsidiary
Guarantees and the consummation of the transactions contemplated thereby as set
forth in the Offering Memorandum, will violate Regulations G, T, U or X
promulgated by the Board of Governors of the Federal Reserve System.
(am) The Company and the Guarantors do not intend to, nor do
they believe that they will, incur debts beyond their ability to pay such debts
as they mature. The present fair saleable value of the assets of the Company on
a consolidated basis exceeds the amount that will be required to be paid on or
in respect of the existing debts and other liabilities (including contingent
liabilities) of the Company on a consolidated basis as they become absolute and
matured. The assets of the Company on a consolidated basis do not constitute
unreasonably small capital to carry out the business of the Company and its
Subsidiaries, taken as a whole, as conducted or as proposed to be conducted.
Upon the issuance of the Series A Securities, the present fair saleable value of
the assets of the Company on a consolidated basis will exceed the amount that
will be required to be paid on or in respect of the existing debts and other
liabilities (including contingent liabilities) of the Company on a consolidated
basis as they become absolute and matured. Upon the issuance of the Series A
Securities, the assets of the Company on a consolidated basis will not
constitute unreasonably small capital to carry out its businesses as now
15
conducted, including the capital needs of the Company on a consolidated
basis, taking into account the projected capital requirements and capital
availability.
6. INDEMNIFICATION AND CONTRIBUTION. (a) The Company and
the Guarantors, jointly and severally, agree to indemnify and hold harmless each
Initial Purchaser and each person, if any, who controls a Initial Purchaser
within the meaning of Section 15 of the Securities Act or Section 20 of the
Exchange Act, from and against any and all losses, claims, damages, liabilities
and expenses (including reasonable costs of investigation) arising out of or
based upon any untrue statement or alleged untrue statement of a material fact
contained in the Preliminary Offering Memorandum or Offering Memorandum or in
any amendment or supplement thereto, or arising out of or based upon any
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading,
except insofar as such losses, claims, damages, liabilities or expenses arise
out of or are based upon any untrue statement or omission or alleged untrue
statement or omission which has been made therein or omitted therefrom in
reliance upon and in conformity with the information relating to the Initial
Purchasers furnished in writing to the Company by or on behalf of the Initial
Purchasers expressly for use in connection therewith. The foregoing indemnity
agreement shall be in addition to any liability which the Company may otherwise
have.
(b) If any action, suit or proceeding shall be brought
against the Initial Purchasers or any person controlling the Initial
Purchasers in respect of which indemnity may be sought against the Company or
any Guarantor, the Initial Purchasers or such controlling person shall
promptly notify the parties against whom indemnification is being sought (the
"INDEMNIFYING PARTIES"), and such indemnifying parties shall assume the
defense thereof, including the employment of counsel and payment of all fees
and expenses. The Initial Purchasers or any such controlling person shall
have the right to employ separate counsel in any such action, suit or
proceeding and to participate in the defense thereof, but the fees and
expenses of such counsel shall be at the expense of the Initial Purchasers or
such controlling person unless (i) the indemnifying parties have agreed in
writing to pay such fees and expenses, (ii) the indemnifying parties have
failed to assume the defense and employ counsel, or (iii) the named parties
to any such action, suit or proceeding (including any impleaded parties)
include both the Initial Purchasers or such controlling person and the
indemnifying parties and the Initial Purchasers or such controlling person
shall have been advised by its counsel that representation of such
indemnified party and any indemnifying party by the same counsel would be
inappropriate under applicable standards of professional conduct (whether or
not such representation by the same counsel has been proposed) due to actual
or potential differing interests between them (in which case the indemnifying
party shall not have the right to assume the defense of such action, suit or
proceeding on behalf of the Initial Purchasers or such controlling person).
It is understood, however, that the indemnifying parties shall, in connection
with any one such action, suit or proceeding or separate but substantially
similar or related actions, suits or proceedings in the same jurisdiction
arising out of the same general allegations or circumstances, be liable for
the reasonable fees and expenses of only one separate firm of attorneys (in
addition to any local counsel) at any time for the Initial Purchasers and
controlling persons not having actual or potential differing interests with
the Initial Purchasers or among themselves, which firm shall be designated in
writing by Xxxxx Xxxxxx Inc., and that all such fees and expenses shall be
reimbursed on a monthly basis to the extent provided in paragraph (a) hereof.
The indemnifying parties shall not be liable for any settlement of any such
action, suit or proceeding effected without their written consent, but if
settled with such written consent, or if there be a final judgment for the
plaintiff in any such action, suit or proceeding, the indemnifying parties
agree to indemnify and hold harmless the Initial Purchasers, to the extent
provided in paragraph (a), and any such controlling person from and against
any loss, claim, damage, liability or expense by reason of such settlement or
judgment.
(c) The Initial Purchasers, severally and not jointly,
agree to indemnify and hold harmless the Company and the Guarantors, and their
respective directors and officers, and any person
16
who controls the Company or any Guarantor within the meaning of Section 15 of
the Securities Act or Section 20 of the Exchange Act to the same extent as
the indemnity from the Company and the Guarantors to the Initial Purchasers
set forth in paragraph (a) hereof, but only with respect to information
relating to the Initial Purchasers furnished in writing by or on behalf of
the Initial Purchasers expressly for use in the Preliminary Offering
Memorandum or Offering Memorandum or any amendment or supplement thereto. If
any action, suit or proceeding shall be brought against the Company or any
Guarantor, any of their respective directors or officers, or any such
controlling person based on the Preliminary Offering Memorandum or Offering
Memorandum, or any amendment or supplement thereto, and in respect of which
indemnity may be sought against the Initial Purchasers pursuant to this
paragraph (c), the Initial Purchasers shall have the rights and duties given
to the Company and the Guarantors by paragraph (b) above (except that if the
Company and the Guarantors shall have assumed the defense thereof the Initial
Purchasers shall not be required to do so, but may employ separate counsel
therein and participate in the defense thereof, but the fees and expenses of
such counsel shall be at the Initial Purchasers' expense), and the Company
and the Guarantors, their respective directors and officers, and any such
controlling person shall have the rights and duties given to the Initial
Purchasers by paragraph (b) above. The foregoing indemnity agreement shall
be in addition to any liability which the Initial Purchasers may otherwise
have.
(d) If the indemnification provided for in this Section 6
is unavailable to an indemnified party under paragraphs (a) or (c) hereof in
respect of any losses, claims, damages, liabilities or expenses referred to
therein, then an indemnifying party, in lieu of indemnifying such indemnified
party, shall contribute to the amount paid or payable by such indemnified party
as a result of such losses, claims, damages, liabilities or expenses (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 Series A Securities, or (ii) if the allocation provided by
clause (i) above is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred to in clause (i)
above but also the relative fault of the Company on the one hand and the Initial
Purchasers on the other in connection with the statements or omissions that
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 shall be
deemed to be in the same proportion as the total net proceeds from the offering
(before deducting expenses) received by the Company bear to the total
underwriting discounts and commissions received by the Initial Purchasers, in
each case as set forth in the table on the cover page of the Offering
Memorandum. The relative fault of the Company on the one hand and the Initial
Purchasers on the other hand shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by the Company on the one hand or by 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.
(e) The Company, the Guarantors and the Initial Purchasers
agree that it would not be just and equitable if contribution pursuant to this
Section 6 were determined by a pro rata allocation or by any other method of
allocation that does not take account of the equitable considerations referred
to in paragraph (d) above. The amount paid or payable by an indemnified party
as a result of the losses, claims, damages, liabilities and expenses referred to
in paragraph (d) above shall be deemed to include, subject to the limitations
set forth above, any legal or other expenses reasonably incurred by such
indemnified party in connection with investigating any claim or defending any
such action, suit or proceeding. Notwithstanding the provisions of this Section
6, the Initial Purchasers shall not be required to contribute any amount in
excess of the amount by which the total price of the Series A Securities
purchased by it and resold pursuant to Section 2 exceeds the amount of any
damages which the Initial Purchasers have otherwise been required to pay by
reason of such untrue or alleged untrue statement or
17
omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation.
(f) Any losses, claims, damages, liabilities or expenses
for which an indemnified party is entitled to indemnification or contribution
under this Section 6 shall be paid by the indemnifying party to the indemnified
party as such losses, claims, damages, liabilities or expenses are incurred.
The indemnity and contribution agreements contained in this Section 6 and the
representations and warranties of the Company and the Guarantors set forth in
this Agreement shall remain operative and in full force and effect, regardless
of (i) any investigation made by or on behalf of the Initial Purchasers or any
person controlling the Initial Purchasers, the Company, the Guarantors, their
respective directors or officers or any person controlling the Company or any
Guarantor, (ii) acceptance of any Series A Securities and payment therefor
hereunder, and (iii) any termination of this Agreement. A successor to the
Initial Purchasers or any person controlling the Initial Purchasers, or to the
Company, the Guarantors, their respective directors or officers or any person
controlling the Company or any Guarantor, shall be entitled to the benefits of
the indemnity, contribution and reimbursement agreements contained in this
Section 6.
(g) No indemnifying party shall, without the prior written
consent of the indemnified party, effect any settlement of any pending or
threatened action, suit or proceeding in respect of which any indemnified party
is or could have been a party and indemnity could have been sought hereunder by
such indemnified party, unless such settlement includes an unconditional release
of such indemnified party from all liability on claims that are the subject
matter of such action, suit or proceeding.
7. CONDITIONS OF THE INITIAL PURCHASER'S OBLIGATIONS. The
obligations of the Initial Purchasers to purchase the Securities hereunder are
subject to the following conditions:
(a) At the time of execution of this Agreement and on the
Closing Date, no order or decree preventing the use of the Offering Memorandum
or any amendment or supplement thereto, or any order asserting that the
transactions contemplated by this Agreement are subject to the registration
requirements of the Securities Act shall have been issued and no proceedings for
that purpose shall have been commenced or shall be pending or, to the knowledge
of the Company or any of the Guarantors, be contemplated. No stop order
suspending the sale of the Series A Securities in any jurisdiction designated by
the Initial Purchasers shall have been issued and no proceedings for that
purpose shall have been commenced.
(b) Subsequent to the date as of which information is
given in the Offering Memorandum, except as otherwise stated in the Offering
Memorandum, there shall not have occurred (i) any change, or any development
involving a prospective change, in or affecting the condition (financial or
other), business, properties, net worth or results of operations of the
Company and the Subsidiaries taken as a whole, except as specifically
contemplated by the Offering Memorandum, which in the opinion of the Initial
Purchasers, would materially adversely affect the market for the Series A
Securities, or (ii) any event or development relating to or involving the
Company or the Guarantors or any officer or director of the Company or the
Guarantors which makes any statement of a material fact made in the Offering
Memorandum untrue or which, in the opinion of the Company and its counsel or
the Initial Purchasers and their counsel, requires the making of any addition
to or change in the Offering Memorandum in order to state a material fact
necessary in order to make the statements therein, in the light of the
circumstance under which they were made, not misleading, if amending or
supplementing the Offering Memorandum to reflect such event or development
would, in the opinion of the Initial Purchasers, materially adversely affect
the market for the Series A Securities.
(c) The final Offering Memorandum shall have been printed
and copies thereof
18
distributed to the Initial Purchasers in such quantities as shall have been
previously specified by them not later than 12:00 p.m. New York City time, on
June 7, 1997, or at such later date and time as the Initial Purchasers may
approve in writing.
(d) The Initial Purchasers shall have received on the
Closing Date an opinion of Xxxxxx, Xxxx & Xxxxxxxx LLP, counsel for the Company,
dated the Closing Date and addressed to the Initial Purchasers, to the effect
that:
(i) The Company is a corporation duly incorporated and existing in
good standing under the laws of Delaware with the requisite corporate power
and authority to own, lease and operate its properties and to conduct its
business as described in the Offering Memorandum (and any amendment or
supplement thereto);
(ii) Each of the Guarantors is a corporation duly organized and
existing and in good standing under the laws of the jurisdiction of its
organization, with the requisite corporate power and authority to own,
lease, and operate its properties and to conduct its business as described
in the Offering Memorandum (and any amendment or supplement thereto);
(iii) Each of the Company and the Guarantors has the requisite
corporate power and authority to enter into this Agreement and to issue,
sell and deliver the Securities to be sold by it to the Initial Purchasers
as provided herein;
(iv) Each of the Company and the Guarantors has the requisite
corporate power and authority to enter into the Registration Rights
Agreement and the Registration Rights Agreement has been duly authorized,
executed and delivered by the Company and each of the Guarantors and is the
valid, legal and binding agreement of the Company and each of the
Guarantors, enforceable against each of them in accordance with its terms,
except (A) as enforcement of rights to indemnity and contribution hereunder
and thereunder may be limited by Federal or state securities laws or
principles of public policy and (B) subject to the qualification that the
enforceability of the Company's and each of the Guarantors' obligations
hereunder and thereunder may be limited by bankruptcy, fraudulent
conveyance, insolvency, reorganization, moratorium, and other laws relating
to or affecting creditors' rights generally and by general equitable
principles;
(v) The Subordinated Note Indenture has been duly and validly
authorized, executed and delivered by the Company and, assuming due
authorization, execution and delivery by the Subordinated Note Trustee, is
a valid and binding agreement of the Company and the Guarantors,
enforceable in accordance with its terms, subject to the qualification that
the enforceability of the Company's and the Guarantors' obligations
thereunder may be limited by bankruptcy, fraudulent conveyance, insolvency,
reorganization, moratorium, and other laws relating to or affecting
creditors' rights generally and by general equitable principles; no
qualification of the Subordinated Note Indenture under the TIA is required
in connection with the offer and sale of the Subordinated Notes
contemplated hereby or in connection with the Exempt Resales;
(vi) The Subordinated Discount Note Indenture has been duly and
validly authorized, executed and delivered by the Company and, assuming due
authorization, execution and delivery by the Subordinated Discount Note
Trustee, is a valid and binding agreement of the Company and the
Guarantors, enforceable in accordance with its terms, subject to the
qualification that the enforceability of the Company's and the Guarantors'
obligations thereunder may be limited by bankruptcy, fraudulent conveyance,
insolvency, reorganization, moratorium, and other laws relating to or
affecting creditors' rights generally and by general equitable principles;
no
19
qualification of the Subordinated Discount Note Indenture under the TIA
is required in connection with the offer and sale of the Subordinated
Discount Notes contemplated hereby or in connection with the Exempt
Resales;
(vii) The Series A Securities have been duly and validly
authorized by the Company and when duly executed by the Company in
accordance with the terms of the applicable Indenture and, assuming due
authentication of the Series A Securities by the applicable Trustee, upon
delivery to the Initial Purchasers against payment therefor in accordance
with the terms hereof, will have been validly issued and delivered, and
will constitute valid and binding obligations of the Company entitled to
the benefits of the applicable Indenture, enforceable against the Company
in accordance with their terms, subject to the qualification that the
enforceability of the Company's obligations thereunder may be limited by
bankruptcy, fraudulent conveyance, insolvency, reorganization, moratorium,
and other laws relating to or affecting creditors' rights generally and by
general equitable principles;
(viii) The Series B Securities have been duly and validly
authorized by the Company and if and when duly issued and authenticated in
accordance with the terms of the applicable Indenture and delivered in
accordance with the Exchange Offer provided for in the Registration Rights
Agreement, will constitute valid and binding obligations of the Company
entitled to the benefits of the applicable Indenture, enforceable against
the Company in accordance with their terms, subject to the qualification
that the enforceability of the Company's obligations thereunder may be
limited by bankruptcy, fraudulent conveyance, insolvency, reorganization,
moratorium, and other laws relating to or affecting creditors' rights
generally and by general equitable principles;
(ix) The Series A Subsidiary Guarantees have been duly and validly
authorized by the Guarantors and when duly executed and delivered by the
Guarantors in accordance with the terms of the applicable Indenture and
upon the due execution, authentication and delivery of the Series A
Securities in accordance with the applicable Indenture and the issuance of
the Series A Securities in the sale to the Initial Purchasers contemplated
by this Agreement, will constitute valid and binding obligations of the
Guarantors, enforceable against the Guarantors in accordance with their
terms, subject to the qualification that the enforceability of the
Guarantors' obligations thereunder may be limited by bankruptcy, fraudulent
conveyance, insolvency, reorganization, moratorium, and other laws relating
to or affecting creditors' rights generally and by general equitable
principles;
(x) The Series B Subsidiary Guarantees have been duly and validly
authorized by the Guarantors and, if and when duly executed and delivered
by the Guarantors in accordance with the terms of the applicable Indenture
and upon the due execution, authentication and delivery of the Series B
Securities in accordance with the applicable Indenture and the issuance and
delivery of the Series B Securities in the Exchange Offer contemplated by
the Registration Rights Agreement, will constitute valid and binding
obligations of the Guarantors, enforceable against the Guarantors in
accordance with their terms, subject to the qualification that the
enforceability of the Guarantors' obligations thereunder may be limited by
bankruptcy, fraudulent conveyance, insolvency, reorganization, moratorium,
and other laws relating to or affecting creditors' rights generally and by
general equitable principles;
(xi) The Merger Agreement has been duly and validly authorized,
executed and delivered by the Company and is a valid and binding agreement
of the Company, enforceable against it in accordance with its terms,
subject to the qualification that the enforceability of the Company's
obligations thereunder may be limited by bankruptcy, fraudulent conveyance,
20
insolvency, reorganization, moratorium, and other laws relating to or
affecting creditors' rights generally and by general equitable principles;
(xii) None of (i) the issuance, offer, sale or delivery of the
Series A Securities by the Company and the Guarantors, (ii) the execution,
delivery or performance of this Agreement or the other Operative Documents,
(iii) the execution, delivery or performance of the Merger Agreement or
(iv) the consummation by the Company and the Guarantors of the transactions
contemplated hereby or thereby, (x) requires any consent, approval,
authorization or other order of, or registration or filing with, any court,
regulatory body, administrative agency or other governmental body, agency
or official (except such as may be required in connection with the
registration under the Securities Act of the Securities in accordance with
the Registration Rights Agreement, qualification of the Indentures under
the TIA and compliance with the securities or Blue Sky laws of various
jurisdictions and except where the failure to obtain any such consent,
approval, authorization or order, or to effect such registration or to make
such filing, would not have a Material Adverse Effect), or conflicts or
will conflict with or constitutes or will constitute a breach of, or a
default under, the certificate or articles of incorporation or bylaws of
the Company or any of the Subsidiaries or (y) conflicts or will conflict
with or constitutes or will constitute a breach of, or a default under, in
any material respect, any agreement, indenture, lease or instrument
identified to such counsel in a certificate of the Company (attached as an
exhibit to such opinion) as being material to the Company and
the Subsidiaries taken as a whole, to which the Company or any of the
Subsidiaries is a party or by which any of them or any of their respective
properties may be bound, or violates or will violate in any material
respect any statute, law or regulation that in our experience is generally
applicable to the transactions contemplated hereby or to our knowledge any
judgment, injunction, order or decree applicable to the Company or any of
the Subsidiaries or any of their respective properties, or except liens
created in connection with the Bank Credit Facility and the AR Facility as
disclosed in the Offering Memorandum will result in the creation or
imposition of any lien, charge or encumbrance upon any property or assets
of the Company or any of the Subsidiaries pursuant to the terms of any
agreement or instrument identified to such counsel in a certificate of the
Company (attached as an exhibit to such opinion) as being material to the
Company and the Subsidiaries taken as a whole, to which any of them is a
party or by which any of them may be bound or to which any of the property
or assets of any of them is subject except in each case under this clause
(y) for conflicts, breaches, defaults and other events which would not have
a Material Adverse Effect;
(xiii) To the knowledge of such counsel, (A) other than as
described or contemplated in the Offering Memorandum (or any supplement
thereto), there are no legal or governmental proceedings pending or
threatened against the Company or any of the Subsidiaries or to which the
Company or any of the Subsidiaries or any of their properties, are subject,
which are not disclosed in the Offering Memorandum and which, if adversely
decided, are reasonably likely to cause a Material Adverse Effect or
materially affects the issuance of the Securities or the consummation of
the transactions contemplated by this Agreement and (B) based solely upon
such counsel's review of the corporate records, minute books and charter
documents of the Company and the Subsidiaries and of those agreements and
instruments identified to such counsel in a certificate of the Company
(attached as an exhibit to such opinion) as being material to the Company
and the Subsidiaries taken as a whole, there are no agreements, contracts,
indentures, leases or instruments which are material to the Company and the
Subsidiaries taken as a whole that are not described in the Offering
Memorandum (or any amendment or supplement thereto);
(xiv) The statements under the captions "Risk Factors" and
"Business," in the Offering Memorandum, insofar as they are descriptions of
contracts, agreements or other legal documents, or refer to statements of
law or legal conclusions, to the knowledge of such counsel, are accurate
21
in all material respects; the statements in the Offering Memorandum under
the caption "Certain Federal Income Tax Consequences," to the extent they
constitute matters of law or regulation or legal conclusions, fairly
summarize the matters described therein in all material respects;
(xv) When the Series A Securities are issued and delivered to the
Initial Purchasers pursuant to this Agreement, such Series A Securities
will not be of the same class (within the meaning of Rule 144A(d)(3) under
the Securities Act) as any security of the Company that is listed on a
national securities exchange registered under Section 6 of the Exchange Act
or that is quoted in a United States automated interdealer quotation
system;
(xvi) No registration of the Series A Securities under the
Securities Act is required for the sale of the Series A Securities to the
Initial Purchasers as contemplated in this Agreement or for the Exempt
Resales (assuming (A) that any Eligible Purchaser who buys the Series A
Securities in the Exempt Resales is a Qualified Institutional Buyer or
Accredited Institution, (B) the accuracy of the Initial Purchasers'
representations and those of the Company and the Guarantors in this
Agreement and compliance by them with their respective agreements contained
herein and (C) the accuracy of the representations made by each Accredited
Institution who purchases Series A Securities pursuant to an Exempt Resale
as set forth in the letter of representation executed by such Accredited
Institution in the form of Annex A to the Offering Memorandum (it being
understood that no opinion is being expressed as to any resale subsequent
to the Exempt Resales or any resale of securities by any person other than
the Initial Purchasers));
(xvii) The Company and the Guarantors are not required to deliver the
information specified in Rule 144A(d)(4) in connection with the offering
and resale of the Series Securities by the Initial Purchasers; and
In addition, such counsel shall also state that such counsel
has participated in conferences with officers and representatives of the
Company, representatives of the independent public accountants for the Company
and the Initial Purchasers at which the contents of the Offering Memorandum and
related matters were discussed and, although such counsel is not passing upon
and does not assume any responsibility for and has not verified the accuracy,
completeness or fairness of the statements contained in the Offering Memorandum,
and has not made any independent check or verification thereof, on the basis of
the foregoing (relying as to materiality to the extent such counsel deemed
appropriate upon facts provided by officers and other representatives of the
Company and the Guarantors), no facts have come to the attention of such counsel
that lead such counsel to believe that the Offering Memorandum, as of its date
or as of the Closing Date, contained or contains any untrue statement of
material fact or omitted or omits to state any material fact necessary to make
the statements therein, in light of the circumstances under which they were
made, not misleading (it being understood that such counsel need express no
belief or opinion with respect to the financial statements and other financial
and statistical data included therein).
The opinion of such counsel may be limited to the laws of
the state of New York, the General Corporation Law of the State of Delaware and
the federal laws of the United States.
(e) The Initial Purchasers shall have received on the
Closing Date an opinion of Xxx X. Xxxxx Esq., General Counsel of the Company,
dated the Closing Date and addressed to the Initial Purchasers to the effect
that:
(i) The Company is duly registered and qualified to conduct its
business and is in good standing as a foreign corporation in each
jurisdiction or place where the nature of its properties or the conduct of
its business requires such registration or qualification, except where
22
the failure so to register or qualify or to be in good standing does not
have a Material Adverse Effect. Each Subsidiary is duly registered and
qualified to conduct its business and is in good standing as a foreign
corporation in each jurisdiction or place where the nature of its
properties or the conduct of its business requires such registration or
qualification, except where the failure so to register or qualify or to be
in good standing does not have a Material Adverse Effect;
(ii) The capitalization of the Company is as set forth under the
caption "Capitalization" in the Offering Memorandum and the authorized
capital stock of the Company is as set forth in an exhibit to be attached
to such opinion;
(iii) All the outstanding shares of capital stock of each of the
Subsidiaries have been duly authorized and validly issued, are fully paid
and nonassessable, and to the knowledge of such counsel, are wholly owned
by the Company directly, or indirectly through one of the other
Subsidiaries, free and clear of any security interest, lien, adverse claim,
equity or other encumbrance, except as specifically described in the
Offering Memorandum under the caption "Description of Other Debt";
(iv) Neither the Company nor any of the Subsidiaries is in violation
in any material respect of its respective certificate or articles of
incorporation or bylaws, or other organizational documents, or to the best
knowledge of such counsel after reasonable inquiry, is in default in any
material respect in the performance of any material obligation, agreement
or condition contained in any bond, debenture, note or other evidence of
indebtedness or in any material agreement, indenture, lease or other
instrument to which the Company or any of the Subsidiaries is a party or by
which any of them or any of their respective properties may be bound,
except as disclosed in the Offering Memorandum and except to the extent
that any such violation or default would not have a Material Adverse
Effect; and
(v) None of (i) the issuance, offer, sale or delivery of the Series A
Securities by the Company and the Guarantors, (ii) the execution, delivery
or performance of this Agreement or the other Operative Documents, (iii)
the execution, delivery or performance of the Merger Agreement or (iv) the
consummation by the Company and the Guarantors of the transactions
contemplated hereby or thereby, (x) requires any consent, approval,
authorization or other order of, or registration or filing with, any court,
regulatory body, administrative agency or other governmental body, agency
or official (except such as may be required in connection with the
registration under the Securities Act of the Securities in accordance with
the Registration Rights Agreement, qualification of the Indentures under
the TIA and compliance with the securities or Blue Sky laws of various
jurisdictions and except where the failure to obtain any such consent,
approval authorization or order, or to effect such registration or to make
such filing, would not have a Material Adverse Effect), or conflicts or
will conflict with or constitutes or will constitute a breach of, or a
default under, the certificate or articles of incorporation or bylaws of
the Company or any of the Subsidiaries or (y) conflicts or will conflict
with or constitutes or will constitute a breach of, or a default under, in
any material respect, any material agreement, indenture, lease or other
instrument to which the Company or any of the Subsidiaries is a party or by
which any of them or any of their respective properties may be bound, or
violates or will violate in any material respect any statute, law,
regulation or filing or judgment, injunction, order or decree applicable to
the Company or any of the Subsidiaries or any of their respective
properties, or except liens created in connection with the Bank Credit
Facility and the AR Facility as disclosed in the Offering Memorandum will
result in the creation or imposition of any lien, charge or encumbrance
upon any property or assets of the Company or any of the Subsidiaries
pursuant to the terms of any agreement or instrument to which any of them
is a party or by which any of them may be bound or to which any of the
property or assets of any of them is subject,
23
except in each case under this clause (y) for conflicts, breaches, defaults
and other events which would not have a Material Adverse Effect;
(vi) The statements under the caption "Management" in the Offering
Memorandum, insofar as they are descriptions of contracts, agreements or
other legal documents, or refer to statements of law or legal conclusions,
are accurate in all material respects and present fairly the information
required to be shown;
(vii) To the best knowledge of such counsel after reasonable
inquiry, neither the Company nor any of the Subsidiaries is in violation of
any law, ordinance, administrative or governmental rule or regulation
applicable to the Company or any of the Subsidiaries or of any decree of
any court or governmental agency or body having jurisdiction over the
Company or any of the Subsidiaries, except to the extent that any such
violation would not have a Material Adverse Effect.
(viii) The Company and the Subsidiaries have all Permits that are
required under applicable law to own their respective properties and to
conduct their respective businesses as now being conducted as described in
the Offering Memorandum except where the failure to have any such Permits
would not, individually or in the aggregate, have a Material Adverse
Effect;
In addition, such counsel shall also state that such counsel
has participated in conferences with officers and representatives of the Company
and the Guarantors, representatives of the independent public accountants for
the Company and the Guarantors and the Initial Purchasers at which the contents
of the Offering Memorandum and related matters were discussed and, although such
counsel is not passing upon and does not assume any responsibility for and has
not verified the accuracy, completeness or fairness of the statements contained
in the Offering Memorandum, and has not made any independent check or
verification thereof, on the basis of the foregoing (relying as to materiality
to the extent such counsel deemed appropriate upon facts provided by officers
and other representatives of the Company and the Guarantors), no facts have come
to the attention of such counsel that lead such counsel to believe that the
Offering Memorandum, as of its date or as of the Closing Date, contained or
contains any untrue statement of material fact or omitted or omits to state any
material fact necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading (it being understood
that such counsel need express no belief or opinion with respect to the
financial statements and other financial and statistical data included therein).
(f) The Initial Purchasers shall have received on the
Closing date an opinion, of Xxxxxx & Xxxxxxx, counsel for the Initial
Purchasers, dated the Closing date, and addressed to the Initial Purchasers,
with respect to the Offering Memorandum and such other
related matters as the Initial Purchasers may reasonably request, and such
counsel shall have received such certificates, documents and information as they
may reasonably request to enable them to pass upon such matters.
(g) The Initial Purchasers shall have received letters
addressed to the Initial Purchasers, and dated the date hereof and the Closing
Date from Xxxxxx Xxxxxxxx, LLP, independent certified public accountants,
substantially in the forms heretofore approved by the Initial Purchasers.
(h) Acquisition Corp shall have received, or will,
concurrently with the closing of the issuance and sale of the Series A
Securities to the Initial Purchasers hereunder, receive no less than $134.6
million of proceeds resulting from the Equity Funding.
(i) The Company and the Guarantors shall have entered into
the Bank Credit Facility (the form and substance of which shall be reasonably
acceptable to the Initial Purchasers in all material
24
respects) and the Initial Purchasers shall have received counterparts,
conformed as executed, thereof and of all other documents and agreements
entered into in connection therewith.
(j) Each material condition to the closing contemplated by
the Bank Credit Facility (other than the issuance and sale of the Series A
Securities pursuant hereto and the closing under the Amended and Restated AR
Facility) shall have been satisfied or, with the written consent of each of the
Initial Purchasers, waived. There shall exist at and as of the Closing Date
(after giving effect to the transactions contemplated by this Agreement, the
Amended and Restated AR Facility and the Merger Agreement) no conditions that
would constitute a default (or an event that with notice or the lapse of time,
or both, would constitute a default) under the Bank Credit Facility. On the
Closing Date, the closing under the Bank Credit Facility shall have been
consummated or will, concurrently with the closing of the issuance and sale of
the Series A Securities to the Initial Purchasers hereunder, be consummated on
terms that conform in all material respects to the description thereof in the
Offering Memorandum and the Initial Purchasers shall have received evidence
satisfactory to the Initial Purchasers of the consummation thereof.
(k) The Merger Agreement shall have been duly executed and
delivered and the Merger shall have been consummated. The Recapitalization
shall have been consummated or will, concurrently with the closing of the
issuance and sale of the Series A Securities to the Initial Purchasers
hereunder, be consummated on terms that conform in all material respects to the
description thereof in the Offering Memorandum and the Initial Purchasers shall
have received evidence satisfactory to the Initial Purchasers of the
consummation thereof. The Company shall have delivered or shall deliver, as
soon as reasonably practicable, to the Initial Purchasers copies of all of the
certificates of merger that were required under Delaware law to effect the
Merger, as certified by the Secretary of State of the State of Delaware.
(l)(i) There shall not have been any material change in the
capital stock of the Company nor any material increase in the short-term or
long-term debt of the Company (other than in the ordinary course of business)
from that set forth or contemplated in the Offering Memorandum (or any amendment
or supplement thereto); (ii) there shall not have been, since the respective
dates as of which information is given in the Offering Memorandum (or any
amendment or supplement thereto), except as may otherwise be stated in the
Offering Memorandum (or any amendment or supplement thereto), any material
adverse change in the condition (financial or other), business, properties, net
worth or results of operations of the Company and the Subsidiaries taken as a
whole; and (iii) all the representations and warranties of the Company and the
Guarantors contained in this Agreement shall be true and correct in all material
respects on and as of the date hereof and on and as of the Closing Date as if
made on and as of the Closing Date, and the Initial Purchasers shall have
received a certificate, dated the Closing Date and signed by the chief executive
officer and the chief accounting officer of the Company (or such other officers
as are acceptable to the Initial Purchasers), to the effect set forth in this
Section 7(l) and in Section 7(m) hereof.
(m) Neither the Company, in any material respect, nor any
Guarantor shall have failed at or prior to the Closing Date to have performed or
complied with any of its agreements herein contained and required to be
performed or complied with by it hereunder at or prior to the Closing Date.
(n) There shall not have been any announcement by any
"nationally recognized statistical rating organization," as defined for purposes
of Rule 436(g) under the Securities Act, that (i) it is downgrading its rating
assigned to any debt securities of the Company, or (ii) it is reviewing its
ratings assigned to any debt securities of the Company with a view to possible
downgrading, or with negative implications, or direction not determined.
25
(o) The Series A Securities shall have been approved for
trading on PORTAL.
(p) The Company shall have furnished or caused to be
furnished to the Initial Purchasers such further certificates and documents as
the Initial Purchasers shall have reasonably requested.
All such opinions, certificates, letters and other documents
will be in compliance with the provisions hereof only if they are reasonably
satisfactory in form and substance to the Initial Purchasers and counsel for the
Initial Purchasers. Any certificate or document signed by any officer of the
Company or any Guarantor and delivered to the Initial Purchasers, or to counsel
for the Initial Purchasers, shall be deemed a representation and warranty by the
Company or such Guarantor, as the case may be, to the Initial Purchasers as to
the statements made therein.
8. EXPENSES. The Company and the Guarantors agree to pay
the following costs and expenses and all other costs and expenses incident to
the performance by it of its obligations hereunder: (i) the preparation,
printing or reproduction of the Offering Memorandum (including financial
statements thereto), and each amendment or supplement to any of them, this
Agreement and the Indentures; (ii) the printing (or reproduction) and delivery
(including postage, air freight charges and charges for counting and packaging)
of such copies of the Offering Memorandum, the Preliminary Offering Memorandum,
and all amendments or supplements to any of them as may be reasonably requested
for use in connection with the offering and sale of the Series A Securities;
(iii) the preparation, printing, authentication, issuance and delivery of
certificates for the Series A Securities, including any stamp taxes in
connection with the original issuance and sale of the Series A Securities; (iv)
the printing (or reproduction) and delivery of this Agreement, the preliminary
and supplemental Blue Sky Memoranda and all other agreements or documents
printed (or reproduced) and delivered in connection with the offering of the
Series A Securities; (v) the application for quotation of the Series A
Securities on the PORTAL market; (vi) the qualification of the Series A
Securities for offer and sale under the securities or Blue Sky laws of the
several states as provided in Section 4(e) hereof (including the reasonable
fees, expenses and disbursements of counsel for the Initial Purchasers relating
to the preparation, printing or reproduction, and delivery of the preliminary
and supplemental Blue Sky Memoranda and such qualification); (vii) the
performance by the Company of its obligations under the Registration Rights
Agreement; and (viii) the fees and expenses of the Company's accountants and the
fees and expenses of counsel (including local and special counsel) for the
Company. The Company hereby agrees that it will pay in full on the Closing Date
the fees and expenses referred to in clause (vi) of this Section 8 by delivering
to counsel for the Initial Purchasers on such date a check payable to such
counsel in the requisite amount.
9. EFFECTIVE DATE OF AGREEMENT. This Agreement shall
become effective upon the execution and delivery hereof by all the parties
hereto.
10. TERMINATION OF AGREEMENT. This Agreement shall be
subject to termination in the absolute discretion of the Initial Purchasers,
without liability on the part of the Initial Purchasers to the Company, by
notice to the Company, if prior to the Closing Date (i) trading in securities
generally on the New York Stock Exchange, the American Stock Exchange or the
Nasdaq National Market shall have been suspended or materially limited, (ii) a
general moratorium on commercial banking activities in New York shall have been
declared, or (iii) there shall have occurred any outbreak or escalation of
hostilities or other U.S. or international calamity, crisis or change in
political, financial or economic conditions, the effect of which on the
financial markets of the United States is such as to make it, in the judgment of
the Initial Purchasers, impracticable or inadvisable to commence or continue the
offering of the Series A Securities on the terms set forth on the cover page of
the Offering Memorandum or to enforce contracts for the resale of the Series A
Securities by the Initial Purchasers. Notice of such termination may be given
to the Company by telegram, telecopy or telephone and shall be subsequently
confirmed by letter.
26
11. INFORMATION FURNISHED BY THE INITIAL PURCHASERS. The
statements set forth in the stabilization legend on the inside front cover, the
last paragraph on the cover page of the Preliminary Offering Memorandum and
Offering Memorandum, constitute the only information furnished by or on behalf
of the Initial Purchasers as such information is referred to in Sections 5(b)
and 6 hereof.
12. MISCELLANEOUS. Except as otherwise provided in
Sections 4, 9 and 10 hereof, notice given pursuant to any provision of this
Agreement shall be in writing and shall be delivered (i) if to the Company or
the Guarantors, at the office of the Company at Xxx Xxxxx Xxxxxxxxx Xxxxx, Xxxxx
0000, Xxxxxxx, XX 00000, Attention: Xxx Xxxxx, or (ii) if to the Initial
Purchasers, to Xxxxx Xxxxxx Inc., 000 Xxxxxxxxx Xxxxxx, Xxx Xxxx, XX 00000,
Attention: Manager, Investment Banking Division. The Company shall be entitled
to act and rely upon any request, consent, notice or agreement given or made on
behalf of the Initial Purchasers by Xxxxx Xxxxxx Inc.
This Agreement has been and is made solely for the benefit
of the Initial Purchasers, the Company, the Guarantors, their respective
directors, their respective officers and the controlling persons referred to in
Section 6 hereof and their respective successors and assigns, to the extent
provided herein, and no other person shall acquire or have any right under or by
virtue of this Agreement. Neither the term "successor" nor the term "successors
and assigns" as used in this Agreement shall include a purchaser from the
Initial Purchasers of any of the Securities in his status as such purchaser.
13. APPLICABLE LAW; COUNTERPARTS This Agreement shall be
governed by and construed in accordance with the laws of the State of New York
applicable to contracts made and to be performed within the State of New York
and without regard to the conflicts of law principles thereof.
This Agreement may be signed in various counterparts which
together constitute one and the same instrument. If signed in counterparts,
this Agreement shall not become effective unless at least one counterpart hereof
shall have been executed and delivered on behalf of each party hereto.
27
Please confirm that the foregoing correctly sets forth the
agreement among the Company, the Guarantors and the Initial Purchasers.
Very truly yours,
FALCON BUILDING PRODUCTS, INC.
By: /s/ Xxx X. Xxxxx
----------------------------------
Name: Xxx X. Xxxxx
Title: Senior Vice-President
XXXX & XXXXXX, INC.
By: /s/ Xxx X. Xxxxx
----------------------------------
Name: Xxx X. Xxxxx
Title: Vice-President
MANSFIELD PLUMBING PRODUCTS, INC.
By: /s/ Xxx X. Xxxxx
----------------------------------
Name: Xxx X. Xxxxx
Title: Vice-President
DEVILBISS AIR POWER COMPANY
By: /s/ Xxx X. Xxxxx
----------------------------------
Name: Xxx X. Xxxxx
Title: Vice-President
28
SWC INDUSTRIES, INC.
By: /s/ Xxx X. Xxxxx
----------------------------------
Name: Xxx X. Xxxxx
Title: Vice-President
EX-CELL MANUFACTURING COMPANY, INC.
By: /s/ Xxx X. Xxxxx
----------------------------------
Name: Xxx X. Xxxxx
Title: Vice-President
29
Confirmed as of the date first
above mentioned.
XXXXX XXXXXX INC.
BT SECURITIES CORPORATION
CHASE SECURITIES INC.
XXXXXXX LYNCH, PIERCE, XXXXXX & XXXXX INCORPORATED
By: Xxxxx Xxxxxx Inc.
By: /s/ Xxxxxxx Xxxxx
--------------------------
Managing Director
30
SCHEDULE I
FALCON BUILDING PRODUCTS, INC.
Principal Amount Principal Amount
Initial Purchaser of Subordinated Notes
----------------- ---------------------
of Subordinated
Discount Notes
--------------
Xxxxx Xxxxxx Inc. $ 47,125,000 $ 56,875,000
BT Securities Corporation $ 47,125,000 $ 56,875,000
Chase Securities Inc $ 36,250,000 $ 43,750,000
Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx Incorporated $ 14,500,000 $ 17,500,000
------------ ------------
Total $145,000,000 $170,000,000
------------ ------------
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