Exhibit 10.1
Penhall Acquisition Corp.
$100,000,000
12% Senior Notes due 2006
PURCHASE AGREEMENT
July 28, 1998
BT ALEX. ▇▇▇▇▇ INCORPORATED
CREDIT SUISSE FIRST BOSTON CORPORATION
c/o BT Alex. ▇▇▇▇▇
One Bankers Trust Plaza
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
Penhall Acquisition Corp., an Arizona corporation (the
"Issuer"), hereby confirms its agreement with you (the "Initial Purchasers"), as
set forth below.
1. The Securities. Subject to the terms and conditions herein
contained, the Issuer proposes to issue and sell to the Initial Purchasers
$100,000,000 aggregate principal amount of its 12% Senior Notes due 2006 (the
"Notes"). The Notes will be unconditionally guaranteed upon consummation of the
Mergers (as defined below) (the "Guarantees" and together with the Notes, the
"Securities") on a senior basis by each of Phoenix Concrete Cutting, Inc.'s (the
"Company") subsidiaries listed on the signature page of the Assumption Agreement
(as defined below) (the "Guarantors"). The Securities are to be issued under an
indenture to be dated as of August 1, 1998, by and among the Issuer and United
States Trust Company of New York, as Trustee (the "Trustee"), as supplemented by
the First Supplemental Indenture to be dated as of the Effective Time (as
defined below) by and among the Company, the Guarantors and the Trustee
(collectively, the "Indenture"). Upon the consummation of the Mergers the Issuer
will be merged with and into the Company and the Company will, pursuant to the
terms of an Assumption Agreement dated August 4, 1998 by and among the Company
and the Guarantors (the "Assumption Agreement"), assume all of the Issuer's
obligations under the Notes and the Indenture and the Company and the Guarantors
will become a party hereto for the purposes set forth above.
2
The Issuer is issuing the Securities to effect a
recapitalization (the "Recapitalization") of Penhall International, Inc., a
California corporation ("PII" and when referred to herein prior to the Mergers,
together with its subsidiaries the "Penhall Group"). The Recapitalization will
be effected through the transactions contemplated by the Agreement and Plan of
Merger (the "Merger Agreement") dated June 30, 1998 by and among PII, the
stockholders of PII, the Company, Bruckmann, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ & Co., L.P.
("BRS") and the Issuer. Pursuant to the Merger Agreement, a newly formed,
wholly-owned subsidiary ("Phoenix Merger Sub") of the Company will be merged
with and into PII (the "Reorganization Merger"), with PII continuing as the
surviving corporation. Pursuant to the terms of the Merger Agreement, following
a series of equity transfers contemplated within the Merger Agreement, the
Company will receive common equity in PII such that the Company will become the
corporate parent and will own all the outstanding capital stock of PII.
Immediately, following the Reorganization Merger, the Issuer will be merged with
and into the Company (the "Recapitalization Merger" and, together with the
Reorganization Merger, the "Mergers"), with the Company continuing as the
surviving corporation and the successor obligor on the Notes (the "Surviving
Corporation"). Prior to or simultaneously with the consummation of the
Recapitalization Merger, the Issuer will issue the Securities and enter into a
new senior secured credit facility (such senior secured credit facility,
including that certain credit agreement and all related security and collateral
documents, the "New Credit Facility") providing for $20.0 million of term loans
and up to $30.0 million of revolving loans, and all indebtedness of the Company
other than approximately $3.7 million of notes payable will be repaid (the
"Refinancing"). In addition, pursuant to the terms of the Merger Agreement, BRS
and certain affiliated entities, and certain members of PII management, have
agreed to purchase $21.1 million and $.2 million, respectively of common and
preferred equity of the Surviving Corporation (the "Equity Contribution") and
certain management stockholders of PII have agreed to convert $8.7 million of
the equity they receive in the Company into common and preferred equity of the
Surviving Corporation after the Recapitalization Merger (the "Equity Rollover").
As part of the consideration for the Mergers an existing stockholder of PII has
agreed to acquire shares of 10.5% Senior Exchangeable Preferred Stock issued by
the Company (the "Senior Exchangeable Preferred Stock"). Following the
consummation of the Recapitalization Merger, the Company will change its
corporate name to "Penhall International Corp." and PII will change its
corporate name to "Penhall Rental Corp."
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The Securities will be offered and sold to the Initial
Purchasers without being registered under the Securities Act of 1933, as amended
(the "Act"), in reliance on exemptions therefrom.
In connection with the sale of the Securities, the Issuer has
prepared a preliminary offering memorandum dated July 1, 1998 (the "Preliminary
Memorandum") and a final offering memorandum dated July 28, 1998 (the "Final
Memorandum"; the Preliminary Memorandum and the Final Memorandum each herein
being referred to as a "Memorandum") setting forth or including a description of
the terms of the Securities, the terms of the offering of the Securities, the
terms of the Mergers and the Refinancing, a description of the Issuer and the
Penhall Group and any material developments relating to the Issuer and the
Penhall Group occurring after the date of the most recent historical financial
statements included therein.
The Initial Purchasers and their direct and indirect
transferees of the Securities will be entitled to the benefits of the
Registration Rights Agreement, substantially in the form attached hereto as
Exhibit A (the "Registration Rights Agreement"), pursuant to which the Surviving
Corporation and the Guarantors will agree, among other things, to file a
registration statement (the "Registration Statement") with the Securities and
Exchange Commission (the "Commission") registering the Notes or the Exchange
Notes (as defined in the Registration Rights Agreement) under the Act.
2. Representations and Warranties. The Issuer and, at and as
of the Effective Time (as defined below), the Company and the Guarantors,
jointly and severally, represent and warrant to and agree with each of the
Initial Purchasers that:
(a) Neither the Preliminary Memorandum as of its date nor the
Final Memorandum nor any amendment or supplement thereto as of the date thereof
and at all times subsequent thereto up to the Closing Date (as defined in
Section 3 below) contained or contains any untrue statement of a material fact
or omitted or omits to state a material fact necessary to make the statements
therein, in the light of the circumstances under which they were made, not
misleading, except that the representations and warranties set forth in this
Section 2(a) do not apply to statements or omissions made in reliance upon and
in conformity with information relating to the Initial Purchasers furnished to
the Issuer, the Company or any of their agents or advisors in writing by the
Initial Purchasers expressly for use
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in the Preliminary Memorandum, the Final Memorandum or any amendment or
supplement thereto.
(b) As of the Effective Time, the Surviving Corporation will
have the capitalization set forth in the pro forma column of the Final
Memorandum under the heading "Capitalization;" all of the subsidiaries of the
Company after giving effect to the Mergers are listed in Schedule 2 attached
hereto (each, a "Subsidiary" and collectively, the "Subsidiaries"); except as
described in the Final Memorandum, all of the outstanding shares of capital
stock of the Issuer, the Company and the Subsidiaries have been, and as of the
Closing Date will be, duly authorized and validly issued, are or on the Closing
Date will have been fully paid and nonassessable and were not or on the Closing
Date will not have been issued in violation of any preemptive or similar rights
except for liens under the New Credit Facility; except as described in the Final
Memorandum, all of the outstanding shares of capital stock of the Subsidiaries
after giving effect to the Mergers will be owned, directly or indirectly, by the
Company, free and clear of all liens, encumbrances, equities and claims or
restrictions on transferability or voting (other than those imposed by the Act
and the securities or "Blue Sky" laws of certain jurisdictions or pursuant to
the New Credit Facility); except as set forth in the Final Memorandum, there are
no (i) options, warrants or other rights to purchase, (ii) agreements or other
obligations to issue or (iii) other rights to convert any obligation into, or
exchange any securities for, shares of capital stock of or ownership interests
in the Issuer, the Company or any of the Subsidiaries outstanding. Except for
the Subsidiaries or as disclosed in the Final Memorandum, the Company does not
own, directly or indirectly, any shares of capital stock or any other equity or
debt securities or have any equity interest in any firm, partnership, joint
venture or other entity.
(c) Each of the Issuer (up until the time of the
Recapitalization Merger), the Company and the Subsidiaries is duly incorporated,
validly existing and in good standing under the laws of its respective
jurisdiction of incorporation and has all requisite corporate power and
authority to own its properties and conduct its business as described in the
Final Memorandum; each of the Company and the Subsidiaries is duly qualified to
do business as a foreign corporation in good standing in all other jurisdictions
where the ownership or leasing of its properties or the conduct of its business
requires such qualification, except where the failure to be so qualified would
not, individually or in the aggregate, have a material adverse effect on the
business, condition (financial
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or otherwise) or results of operations of the Company and the Subsidiaries,
taken as a whole (any such event, a "Material Adverse Effect").
(d) The Issuer has, and immediately after the effective time
of the Recapitalization and the Recapitalization Merger (the "Effective Time")
the Company will have, all requisite corporate power and authority to execute,
deliver and perform each of its respective obligations under the Notes, the
Exchange Notes and the Private Exchange Notes (as defined in the Registration
Rights Agreement). The Notes, when issued, will be in substantially the form
contemplated by the Indenture. The Notes, the Exchange Notes and the Private
Exchange Notes have each been duly and validly authorized by the Issuer and,
immediately after the Effective Time, will have been duly and validly authorized
by the Company and, when executed and delivered by the Issuer and the Company,
as the case may be, and authenticated by the Trustee in accordance with the
provisions of the Indenture and the Registration Rights Agreement and, in the
case of the Notes, when delivered to and paid for by the Initial Purchasers in
accordance with the terms of this Agreement, will constitute valid and legally
binding obligations of the Issuer and the Company, as applicable, entitled to
the benefits of the Indenture, and enforceable against the Issuer and the
Company, as applicable, in accordance with their terms, except that the
enforcement thereof may be subject to (i) bankruptcy, insolvency,
reorganization, moratorium, fraudulent transfer or other similar laws now or
hereafter in effect relating to creditors' rights generally, and (ii) general
principles of equity and the discretion of the court before which any proceeding
therefor may be brought (regardless of whether considered in a proceeding in
equity or at law).
(e) The Issuer has and, immediately after the Effective Time,
each of the Company and the Guarantors will have, all requisite corporate power
and authority to execute, deliver and perform its obligations under the
Indenture. The Indenture meets the requirements for qualification under the
Trust Indenture Act of 1939, as amended (the "TIA"). The Indenture has been duly
and validly authorized by the Issuer. Immediately after the Effective Time, the
Indenture will have been duly and validly authorized by the Company and the
Guarantors. When executed and delivered by the Issuer, the Company and the
Guarantors (assuming the due authorization, execution and delivery by and
enforceability against, the Trustee), the Indenture will constitute a valid and
legally binding agreement of each of the Issuer, the Company and the Guarantors,
enforceable against the Issuer, the Company and the Guarantors in accordance
with its
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terms, except that the enforcement thereof may be subject to (i)
bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer or other
similar laws now or hereafter in effect relating to creditors' rights generally
and (ii) general principles of equity and the discretion of the court before
which any proceeding therefor may be brought (regardless of whether considered
in a proceeding in equity or at law).
(f) The Issuer has all requisite corporate power and authority
to execute, deliver and perform its obligations under the Registration Rights
Agreement. The Company and the Guarantors have all requisite corporate power and
authority to execute and deliver the Assumption Agreement and to perform each of
their respective obligations under the Registration Rights Agreement which arise
from the assumption thereof. The Registration Rights Agreement has been duly and
validly authorized by the Issuer, and, immediately after the Effective Time and
assumption thereof pursuant to the Assumption Agreement, will have been duly and
validly authorized by each of the Company and the Guarantors and, when executed
and delivered by each of the Issuer, the Company and the Guarantors (to the
extent a party thereto), assuming the due authorization, execution and delivery
by and enforceability against, the Initial Purchasers, each of the Registration
Rights Agreement and the Assumption Agreement will constitute a valid and
legally binding agreement of each of the Issuer, the Company and the Guarantors
(to the extent a party thereto) enforceable against the Issuer, the Company and
the Guarantors in accordance with its terms, except that (A) the enforcement
thereof may be subject to (i) bankruptcy, insolvency, reorganization,
moratorium, fraudulent transfer or other similar laws now or hereafter in effect
relating to creditors' rights generally and (ii) general principles of equity
and the discretion of the court before which any proceeding therefor may be
brought (regardless of whether considered in a proceeding in equity or at law)
and (B) any rights to indemnity or contribution thereunder may be limited by
federal and state securities laws and public policy considerations.
(g) The Issuer has all requisite corporate power and authority
to execute, deliver and perform its obligations under this Agreement and to
consummate the transactions contemplated hereby. The Company and the Guarantors
have all requisite corporate power and authority to perform each of their
respective obligations under this Agreement which arise as a result of their
assumption of this Agreement pursuant to the Assumption Agreement. This
Agreement and the consummation by the Issuer of the transactions contemplated
hereby have been duly and validly
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authorized by the Issuer and at and immediately after the Effective Time, will
have been duly and validly authorized by each of the Company and the Guarantors.
This Agreement has been duly executed and delivered by the Issuer and at and
immediately after the Effective Time the Company and the Guarantors will have
duly executed and delivered the Assumption Agreement.
(h) Each of the Issuer, the Company and the Guarantors has all
requisite corporate power and authority to execute, deliver and perform its
respective obligations under the Merger Agreement and the New Credit Facility to
the extent a party thereto and to consummate the transactions contemplated in
the Final Memorandum under the caption "The Transactions."
(i) Assuming the accuracy of the representations and
warranties of the Initial Purchasers contained in this Agreement, no consent,
approval, authorization or order of any court or governmental agency or body, or
third party is required for the issuance and sale by the Issuer of the Notes to
the Initial Purchasers or the consummation by the Company and the Guarantors of
the other transactions contemplated hereby, except (i) such as have been on or
prior to the Closing Date will have been obtained, (ii) such as may be required
under state securities or "Blue Sky" laws in connection with the purchase and
resale of the Securities by the Initial Purchasers, (iii) as may be required by
federal or state securities regulatory authorities in connection with or
pursuant to the Registration Rights Agreement or (iv) that if not obtained could
not reasonably be expected to have a Material Adverse Effect. Except as
described in the Final Memorandum and the New Credit Facility (including the
schedules thereto), none of the Issuer or, to the knowledge of the Issuer after
due inquiry, the Company or the Subsidiaries is (i) in violation of its
certificate of incorporation or bylaws (or similar organizational document),
(ii) in breach or violation of any statute, judgment, decree, order, rule or
regulation applicable to any of them or any of their respective properties or
assets, except for any such breach or violation that would not, individually or
in the aggregate, have a Material Adverse Effect, or (iii) in breach of or
default under (nor has any event occurred that, with notice or passage of time
or both, would constitute a default under) or in violation of any of the terms
or provisions of any indenture, mortgage, deed of trust, loan agreement, note,
lease, license, permit, certificate, contract, or other agreement to which any
of them is a party or to which any of them or their respective properties or
assets is subject (collectively, the "Contracts"), except for any such breach,
default, violation or
8
event that would not, individually or in the aggregate, have a Material Adverse
Effect.
(j) The execution, delivery and performance by each of the
Issuer, the Company and the Guarantors of this Agreement, the Indenture and the
Registration Rights Agreement, the Guarantees, the Merger Agreements and the New
Credit Facility, to the extent a party thereto, and the consummation by the
Issuer, the Company and the Guarantors of the transactions contemplated hereby
and thereby (including, without limitation, the issuance and sale of the
Securities to the Initial Purchasers) will not conflict with or constitute or
result in a breach of or a default under (or an event that with notice or
passage of time or both would constitute a default under) or violation of any of
(i) to the knowledge of the Issuer after due inquiry, the terms or provisions of
any Contract, except for any such conflict, breach, violation, default or event
that would not, individually or in the aggregate, have a Material Adverse
Effect, (ii) the certificate of incorporation or bylaws (or similar
organizational document) of the Issuer, the Company or any of the Subsidiaries,
or (iii) (assuming compliance with all applicable state securities or "Blue Sky"
laws, the accuracy of the representations and warranties of the Initial
Purchasers in Section 8 hereof and compliance with the Act with respect to the
exchange of the Notes for Exchange Notes and the obligations of the parties
hereto under the Registration Rights Agreement) any statute, judgment, decree,
order, rule or regulation applicable to the Issuer, or to the knowledge of the
Issuer after due inquiry, the Company or any of the Subsidiaries or any of their
respective properties or assets, except for any such conflict, breach or
violation, default or event that would not, individually or in the aggregate,
have a Material Adverse Effect.
(k) Immediately after the Effective Time, the Guarantees and
the Guarantees to be endorsed on the Exchange Notes and the Private Exchange
Notes (the "Exchange Guarantees") will have been duly and validly authorized by
the Guarantors. When the Notes are duly and validly authorized, executed, issued
and authenticated in accordance with the terms of the Indenture and delivered
against payment therefor in accordance with the terms hereof, the Guarantees,
immediately after the Effective Time, will be the legally valid and binding
obligations of the Guarantors enforceable against the Guarantors, in accordance
with their terms and entitled to the benefits of the Indenture, except (i) as
such enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium, fraudulent transfer and other similar laws now or hereinafter in
effect relating to or
9
affecting creditors' rights generally and (ii) by general principles of equity
or by the discretion of the court before which any proceeding therefor may be
brought (regardless of whether considered in a proceeding in equity or at law).
When the Exchange Notes and the Private Exchange Notes are duly executed,
issued, authenticated and delivered in accordance with the terms of the
Indenture, the Guarantees of the Exchange Notes and the Private Exchange Notes
will be the legal, valid and binding obligations of the Guarantors enforceable
against the Guarantors in accordance with their terms and entitled to the
benefits of the Indenture, except (i) as such enforceability may be limited by
bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer and
similar laws now or hereinafter in effect relating to or affecting creditors'
rights generally and (ii) by general principles of equity or by the discretion
of the court before which any proceeding therefor may be brought (regardless of
whether considered in a proceeding in equity or at law).
(l) The audited consolidated financial statements and the
notes thereto of each of the Penhall Group and Highway Services, Inc. included
in the Final Memorandum present fairly in all material respects the financial
position, results of operations and cash flows of each of the Penhall Group and
Highway Services, Inc. at the dates and for the periods to which they relate and
have been prepared in accordance with generally accepted accounting principles
applied on a consistent basis, except as otherwise stated therein. Each of KPMG
Peat Marwick L.L.P., ▇▇▇▇ ▇▇▇▇▇ L.L.P., and ▇▇▇▇ ▇. ▇▇▇▇▇▇▇ & Co. P.L.L.P. (the
"Independent Accountants") is an independent public accounting firm within the
meaning of the Act and the rules and regulations promulgated thereunder.
(m) The pro forma financial statements (including the notes
thereto) and the other pro forma financial information included in the Final
Memorandum (i) comply as to form in all material respects with the applicable
requirements of Regulation S-X promulgated under the Securities Exchange Act of
1934, as amended (the "Exchange Act"), (ii) have been prepared in accordance
with the Commission's rules and guidelines with respect to pro forma financial
statements, and (iii) have been properly computed on the bases described
therein; the assumptions used in the preparation of the pro forma financial data
and other pro forma financial information included in the Final Memorandum are
reasonable and the adjustments used therein are appropriate to give effect to
the transactions or circumstances referred to therein.
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(n) Except as may be disclosed in the Final Memorandum, there
is not, to the knowledge of the Issuer, pending or threatened any action, suit,
proceeding, inquiry or investigation to which the Issuer, the Company or the
Subsidiaries are a party, or to which the property or assets of the Issuer, the
Company or the Subsidiaries are subject, before or brought by any court,
arbitrator or governmental agency or body that (i) would be required to be
described in a prospectus pursuant to the Act that is not described in the Final
Memorandum, or (ii) if determined adversely to the Issuer, the Company or the
Subsidiaries, would, individually or in the aggregate, have a Material Adverse
Effect or which seeks to restrain, enjoin, prevent the consummation of or
otherwise challenge the issuance or sale of the Notes to be sold hereunder or
the consummation of the other transactions described in the Final Memorandum. To
the knowledge of the Issuer, after due inquiry, there are no material contracts
or other documents that would be required to be described in a prospectus
pursuant to the Act that are not described in the Final Memorandum.
(o) To the knowledge of the Issuer after due inquiry, the
Company and the Subsidiaries possesses all licenses, permits, certificates,
consents, orders, approvals and other authorizations from, and has made all
declarations and filings with, all federal, state, local and other governmental
authorities, all self-regulatory organizations and all courts and other
tribunals, presently required or necessary to own or lease, as the case may be,
and to operate its respective properties and to carry on its respective
businesses as now conducted as set forth in the Final Memorandum ("Permits"),
except where the failure to obtain such Permits would not, individually or in
the aggregate, have a Material Adverse Effect; to the knowledge of the Issuer,
each of the Company and the Subsidiaries has fulfilled and performed all of its
obligations with respect to such Permits and to the knowledge of the Issuer, no
event has occurred that would reasonably be expected to allow, or after notice
or lapse of time would reasonably be expected to allow, revocation or
termination thereof or result in any other material impairment of the rights of
the holder of any such Permit, except where such revocation or termination would
not, individually or in the aggregate, have a Material Adverse Effect; and none
of the Issuer, the Company or the Subsidiaries has received any notice of any
proceeding relating to revocation or modification of any such Permit, except
where such revocation or modification would not, individually or in the
aggregate, have a Material Adverse Effect.
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(p) Since the date of the most recent financial statements
appearing in the Final Memorandum, except as described therein, (i) there has
been no material adverse change in the business, condition (financial or
otherwise), or results of operations of the Company and the Subsidiaries, taken
as a whole, (ii) none of the Issuer, the Company or the Subsidiaries has
purchased any of its outstanding capital stock, or declared, paid or otherwise
made any dividend or distribution of any kind on its capital stock (other than
with respect to any of such Subsidiaries, the purchase of, or dividend or
distribution on, capital stock owned by the Company) and (iii) there shall not
have been any material change in the capital stock or long-term indebtedness of
the Issuer, the Company or the Subsidiaries (other than in the ordinary course
of business).
(q) The Issuer has not had any historical operations of its
own, and has been formed for the sole purpose of issuing the Notes and effecting
the Mergers, the Recapitalization, the Reorganization, the Refinancing and
related transactions. The Issuer has (i) no material liabilities or obligations,
direct or contingent, and has not entered into or agreed to enter into any
material transactions or contracts (written or oral) other than this Agreement,
the Registration Rights Agreement, the Indenture, the Merger Agreement and other
ancillary agreements relating to the Mergers and the transactions described in
the previous sentence and (ii) has not purchased any of its outstanding stock or
declared, paid or otherwise made any dividend or distribution of any kind on its
capital stock.
(r) To the knowledge of the Issuer, each of the Company and
the Subsidiaries has filed all necessary federal, state and foreign income and
franchise tax returns, except where the failure to so file such returns would
not, individually or in the aggregate, have a Material Adverse Effect, and has
paid all material taxes shown as due thereon except as may be set forth or
adequately reserved for in the financial statements included in the Final
Memorandum in accordance with GAAP; and other than tax deficiencies which the
Company or the Subsidiaries are contesting in good faith and for which the
Company or the Penhall Group has provided adequate reserves, the Issuer has no
knowledge of any tax deficiency that has been asserted against the Company or
the Subsidiaries that would have, individually or in the aggregate, a Material
Adverse Effect.
(s) The statistical and market-related data included in the
Final Memorandum are based on or derived from sources which the Issuer, the
Company and the Guarantors believe to be reliable and accurate.
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(t) None of the Issuer, the Company, the Subsidiaries or any
agent acting on their behalf has taken or will take any action that might cause
this Agreement or the sale of the Notes to violate Regulation T, U or X of the
Board of Governors of the Federal Reserve System, in each case as in effect, or
as the same may hereafter be in effect, on the Closing Date.
(u) To the knowledge of the Issuer, the Company and the
Subsidiaries have good and marketable title to all real property and own all
personal property described in the Final Memorandum as being owned by it and
good and marketable title to a leasehold estate in the real and personal
property described in the Final Memorandum as being leased by it free and clear
of all liens, charges, encumbrances or restrictions, except as described in the
Final Memorandum or as contemplated by the New Credit Facility or to the extent
the failure to have such title or ownership or the existence of such liens,
charges, encumbrances or restrictions would not, individually or in the
aggregate, have a Material Adverse Effect. To the knowledge of the Issuer, all
leases, contracts and agreements to which the Company or any of the Subsidiaries
is a party or by which any of them are bound are valid and enforceable against
the Company or the Subsidiaries, as the case may be, and are valid and
enforceable against the other party or parties thereto and are in full force and
effect with only such exceptions as would not, individually or in the aggregate,
have a Material Adverse Effect. To the best knowledge of the Issuer, the Company
or the Subsidiaries, as the case may be, own or possess adequate licenses or
other rights to use all patents, trademarks, service marks, trade names,
copyrights and know-how necessary (in any material respect) to conduct the
businesses now operated by them as described in the Final Memorandum except
where the failure to own or possess such licenses or other rights could not
reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect, and none of the Issuer or to the knowledge of the Issuer after
due inquiry, the Company or the Subsidiaries has received any notice of
infringement of or conflict with (or knows of any such infringement of or
conflict with) asserted rights of others with respect to any patents,
trademarks, service marks, trade names, copyrights or know-how that, if such
assertion of infringement or conflict were sustained, would have a Material
Adverse Effect.
(v) Except as disclosed in the Final Memorandum or as would
not, individually or in the aggregate, have a Material Adverse Effect, to the
knowledge of the Issuer after due inquiry, (A) the Company and the Subsidiaries
are in compliance
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with and have no liability under applicable Environmental Laws (as defined
below), (B) the Company and the Subsidiaries have made all filings and provided
all notices required under any applicable Environmental Law, and have and are in
compliance with all Permits required under applicable Environmental Laws and
each of them is in full force and effect, (C) there is no civil, criminal or
administrative action, suit, demand, claim, hearing, notice of violation,
investigation, proceeding, notice or demand letter or request for information
pending or threatened against the Company or the Subsidiaries under any
Environmental Law, (D) no lien, charge, encumbrance or restriction has been
recorded under any Environmental Law with respect to any material assets,
facility or property owned, operated, leased or controlled by the Company or the
Subsidiaries, (E) neither the Company nor the Subsidiaries have received notice
that they have been identified as a potentially responsible party under the
Comprehensive Environmental Response, Compensation, and Liability Act of 1980,
as amended ("CERCLA"), or any comparable state law, and (F) no property or
facility currently owned or leased, by the Company or any of the Subsidiaries is
(i) listed or proposed for listing on the National Priorities List under CERCLA
or is (ii) listed on the Comprehensive Environmental Response, Compensation,
Liability Information System List promulgated under CERCLA, or, in each of
clauses (i) or (ii), comparable list maintained by any state or local
governmental authority.
For purposes of this Agreement, "Environmental Laws" means the
common law and all applicable federal, state and local laws or regulations,
codes, orders, decrees, judgments or injunctions issued, promulgated, approved
or entered thereunder, relating to pollution or protection of public or employee
health and safety or the environment, including, without limitation, laws
relating to (i) emissions, discharges, releases or threatened releases of
hazardous materials or substances into the environment (including, without
limitation, ambient air, surface water, ground water, land surface or subsurface
strata), (ii) the manufacture, processing, distribution, use, generation,
treatment, storage, disposal, transport or handling of hazardous materials or
substances and (iii) underground and above ground storage tanks and related
piping, and emissions, discharges, releases or threatened releases therefrom.
(w) To the knowledge of the Issuer, except as described in the
Final Memorandum, there is no material strike, labor dispute, slowdown or work
stoppage with the employees of the Company
14
or any of the Subsidiaries or to the knowledge of the Issuer or any of the
Guarantors threatened against the Company or any of the Subsidiaries except for
such strikes, labor disputes, slowdowns or work stoppages that would not,
individually or in the aggregate, have a Material Adverse Effect.
(x) To the knowledge of the Issuer, the Company and the
Subsidiaries carry insurance in such amounts and covering such risks as are
adequate for the conduct of their business and the value of their properties
except where the failure to carry such insurance would not, individually or in
the aggregate, have a Material Adverse Effect.
(y) To the knowledge of the Issuer, the Company and the
Subsidiaries (i) make and keep accurate books and records in all material
respects and (ii) maintain internal accounting controls which provide reasonable
assurance that (A) transactions are executed in accordance with management's
authorization, (B) transactions are recorded as necessary to permit preparation
of its financial statements and to maintain accountability for its assets, (C)
access to their assets are permitted only in accordance with management's
authorization and (D) the reported accountability for their assets are compared
with existing assets at reasonable intervals.
(z) None of the Issuer, the Company or the Subsidiaries will
be an "investment company" or "promoter" or "principal underwriter" for an
"investment company," as such terms are defined in the Investment Company Act of
1940, as amended, and the rules and regulations thereunder.
(aa) The Securities, the Indenture, the Registration Rights
Agreement, the New Credit Facility and the Merger Agreement will conform in all
material respects to the descriptions thereof in the Final Memorandum.
(bb) Notwithstanding any other registration rights that
holders of the securities of the Issuer, the Company or the Subsidiaries might
possess, such securities holders have agreed to waive the rights to have such
securities registered under the registration statements required to be filed by
the Issuer, the Company and the Guarantors pursuant to the Registration Rights
Agreement.
(cc) Immediately after the consummation of the transactions
contemplated by this Agreement and the Merger Agreement, the fair market value
of the assets of each of the Company and the Subsidiaries (each on a
consolidated basis) will exceed the sum of its stated liabilities and identified
contingent liabilities; the present fair salable value of the
15
assets of each of the Company and the Subsidiaries (each on a consolidated
basis) is greater than the amount that will be required to pay the probable
liabilities on its debts as they become absolute and matured; none of the
Company or the Subsidiaries (each on a consolidated basis) is, nor will any of
the Company or the Subsidiaries (each on a consolidated basis) be, after giving
effect to the execution, delivery and performance of this Agreement and the
Merger Agreement, and the consummation of the transactions contemplated hereby
and thereby, (a) left with unreasonably small capital with which to carry on its
business as it is proposed to be conducted, or (b) unable to pay its debts
(contingent or otherwise) as they mature or (c) otherwise insolvent.
(dd) None of the Issuer, the Company, the Subsidiaries or any
of their respective Affiliates (as defined in Rule 501(b) of Regulation D under
the Act) has directly, or through any agent (other than the Initial Purchasers
and persons acting on their behalf as to which no representation is made), (i)
sold, offered for sale, solicited offers to buy or otherwise negotiated in
respect of any "security" (as defined in the Act) that is or could be integrated
with the sale of the Securities in a manner that would require the registration
under the Act of the Securities or (ii) engaged in any form of general
solicitation or general advertising (as those terms are used in Regulation D
under the Act) in connection with the offering of the Securities or in any
manner involving a public offering of the Securities within the meaning of
Section 4(2) of the Act. Assuming the accuracy of and compliance with the
representations, warranties and covenants of the Initial Purchasers in Section 8
hereof, and compliance by the Initial Purchasers with the offering and transfer
procedures and restrictions described elsewhere in this Agreement and the Final
Memorandum, it is not necessary in connection with the offer, sale and delivery
of the Securities to the Initial Purchasers in the manner contemplated by this
Agreement to register any of the Securities under the Act or to qualify the
Indenture under the TIA prior to the effectiveness of any Registration
Statement.
(ee) No securities of the Issuer, the Company or any
Subsidiary are of the same class (within the meaning of Rule 144A under the Act)
as the Securities and listed on a national securities exchange registered under
Section 6 of the Exchange Act, or quoted in a U.S. automated inter-dealer
quotation system.
(ff) None of the Issuer, the Company or the Subsidiaries has
taken, nor will any of them take, directly or indirectly,
16
any action designed to, or that might be reasonably expected to, cause or result
in stabilization or manipulation of the price of the Securities.
(gg) None of the Issuer, the Company, the Subsidiaries, any of
their respective Affiliates or any person acting on its or their behalf (other
than the Initial Purchasers) has engaged in any directed selling efforts (as
that term is defined in Regulation S under the Act ("Regulation S")) with
respect to the Securities; the Issuer, the Company, the Subsidiaries and their
respective Affiliates and any person acting on its or their behalf (other than
the Initial Purchasers) have complied with the offering restrictions requirement
of Regulation S.
(hh) The Issuer has delivered or made available to the Initial
Purchasers true and correct executed copies of the Merger Agreement and all of
the ancillary documents related thereto and there have been no amendments,
alterations or modifications thereto or waivers of any of the provisions
thereof. The representations and warranties of the Issuer, the Company and each
Subsidiary set forth in the Merger Agreement will be true and correct as of the
Closing Date (except to the extent that any such representation or warranty was
expressly made as of any other date, in which case such representation and
warranty was true and correct as of such date) except to the extent the failure
of any such representation or warranty to be true would not have a Material
Adverse Effect.
(ii) Except as set forth in the Final Memorandum, the Company
and the Subsidiaries have no liability for any prohibited transaction within the
meaning of Section 406 of the Employee Retirement Income Security Act of 1974,
as amended ("ERISA"), or funding deficiency within the meaning of Section 302 of
ERISA or any complete or partial withdrawal liability under Section 4201 of
ERISA with respect to any pension, profit sharing or other plan which is subject
to ERISA to which the Company or any Subsidiary makes or ever has made a
contribution and in which any employee of the Company or any Subsidiary is or
has ever been a participant, which prohibited transaction liability or
withdrawal liability is reasonably likely to have a Material Adverse Effect.
With respect to such plans, the Penhall Group is to the best knowledge of the
Issuer, in compliance in all material respects with all applicable provisions of
ERISA.
(jj) The Company has consummated the acquisition of all of the
assets of Highway Services, Inc. ("HSI") pursuant to the terms of the Asset
Purchase Agreement dated April 29, 1998
17
by and among HSI, ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ Company.
Any certificate signed by any officer of the Company or any
Guarantor and delivered to any Initial Purchaser or to counsel for the Initial
Purchasers shall be deemed a joint and several representation and warranty by
the Company and each of the Guarantors to each Initial Purchaser as to the
matters covered thereby.
3. Purchase, Sale and Delivery of the Securities. On the basis
of the representations, warranties, agreements and covenants herein contained
and subject to the terms and conditions herein set forth, the Issuer and, at and
as of the Effective Time, the Company and the Guarantors agree to issue and sell
to the Initial Purchasers, and the Initial Purchasers, acting severally and not
jointly, agree to purchase, the Securities in the respective amounts set forth
on Schedule 1 hereto from the Issuer at 97% of their principal amount. The
Company agrees, immediately upon the consummation of the Recapitalization
Merger, to assume all of the Issuer's obligations under the Notes and the
Indenture. One or more certificates in definitive form for the Securities that
the Initial Purchasers have agreed to purchase hereunder, and in such
denomination or denominations and registered in such name or names as the
Initial Purchasers request upon notice to the Issuer at least 36 hours prior to
the Closing Date, shall be delivered by or on behalf of the Issuer to the
Initial Purchasers, against payment by or on behalf of the Initial Purchasers of
the purchase price therefor by wire transfer of federal (same day) funds to such
account or accounts as the Issuer shall specify prior to the Closing Date, or by
such means as the parties hereto shall agree prior to the Closing Date. Such
delivery of and payment for the Securities shall be made at the offices of
Dechert Price & ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ at 9:00 A.M.
(New York time), on August 4, 1998, or at such other place, time or date not
later than seven full business days thereafter as the Initial Purchasers, on the
one hand, and the Issuer, on the other hand, may agree upon, such time and date
of delivery against payment being herein referred to as the "Closing Date." The
Issuer will make such certificate or certificates for the Notes available for
checking and packaging by the Initial Purchasers at the offices of Dechert Price
& ▇▇▇▇▇▇ in New York, New York, at least 24 hours prior to the Closing Date.
4. Offering by the Initial Purchasers. The Initial Purchasers
propose to make an offering of the Securities at the
18
price and upon the terms set forth in the Final Memorandum, as soon as
practicable after this Agreement is entered into and as in the judgment of the
Initial Purchasers is advisable.
5. Covenants of the Issuer, the Company and the Guarantors.
The Issuer and, at and as of the Effective Time, the Company and the Guarantors
covenant and agree, jointly and severally, with each of the Initial Purchasers
that:
(a) The Issuer will not and, at and after the Effective Time,
the Company and the Guarantors will not amend or supplement the Final Memorandum
or any amendment or supplement thereto of which the Initial Purchasers shall not
previously have been advised and furnished a copy for a reasonable period of
time prior to the proposed amendment or supplement and as to which the Initial
Purchasers shall not have given their consent, which consent shall not be
unreasonably withheld. The Issuer and the Company will, prior to the Closing
Date, upon the reasonable request of the Initial Purchasers or counsel for the
Initial Purchasers, make any amendments or supplements to the Preliminary
Memorandum or the Final Memorandum that may be necessary or advisable in
connection with the resale of the Notes by the Initial Purchasers.
(b) The Issuer will and, at and after the Effective Time, the
Company and the Guarantors will, cooperate with the Initial Purchasers in
arranging for the qualification of the Notes for offering and sale under the
securities or "Blue Sky" laws of such jurisdictions as the Initial Purchasers
may designate and will continue such qualifications in effect for as long as may
be necessary to complete the resale of the Securities; provided, however, that
in connection therewith, neither the Issuer, the Company nor any of the
Guarantors shall be required to qualify as a foreign corporation or as a dealer
in securities or to execute a general consent to service of process in any
jurisdiction or subject itself to taxation in excess of a nominal dollar amount
in any such jurisdiction where it is not then so subject.
(c) If, at any time prior to the completion of the
distribution by the Initial Purchasers of the Securities or the Private Exchange
Notes, any event occurs or information becomes known as a result of which the
Final Memorandum as then amended or supplemented would include any 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, or if for any other reason it is necessary at any time to
amend or supplement the Final
19
Memorandum to comply with applicable law, the Issuer or the Company will
promptly notify the Initial Purchasers thereof and will prepare, at the expense
of the Company, an amendment or supplement to the Final Memorandum that corrects
such statement or omission or effects such compliance.
(d) The Issuer will and, at and after the Effective Time, the
Company will, without charge, provide to the Initial Purchasers and to counsel
for the Initial Purchasers as many copies of the Preliminary Memorandum and the
Final Memorandum or any amendment or supplement thereto as the Initial
Purchasers may reasonably request.
(e) The Issuer will and, at and after the Effective Time the
Company will, apply the net proceeds from the sale of the Securities as set
forth under "Use of Proceeds" and "The Transactions" in the Final Memorandum.
(f) For a period of five years hereafter the Company will
furnish to the Initial Purchasers copies of all reports and other communications
(financial or otherwise) furnished by the Company to the Trustee or to the
holders of the Notes and, promptly after their preparation, copies of any
reports or financial statements furnished to or filed by the Company with the
Commission or any national securities exchange on which any class of securities
of the Company may be listed.
(g) None of the Issuer, the Company or any of their respective
Affiliates will sell, offer for sale or solicit offers to buy or otherwise
negotiate in respect of any "security" (as defined in the Act) that could be
integrated with the sale of the Securities in a manner that would require the
registration under the Act of the Securities.
(h) Except following the effectiveness of the Registration
Statement, the Issuer will not and, at and after the Effective Time, the Company
will not, and will not permit any of the Subsidiaries to, engage in any form of
general solicitation or general advertising (as those terms are used in
Regulation D under the Act) in connection with the offering of the Securities or
in any manner involving a public offering of the Securities within the meaning
of Section 4(2) of the Act.
(i) For so long as any of the Securities remain outstanding
and are restricted securities as defined in Rule 144 under the Act, the Company
will make available at its expense, upon request, to any holder of such
Securities and any prospective purchasers thereof the information specified in
20
Rule 144A(d)(4) under the Act, unless the Company is then subject to Section 13
or 15(d) of the Exchange Act.
(j) The Issuer and on and after the Closing Date the Company
and the Guarantors will use their best efforts to (i) permit the Securities to
be designated PORTAL securities in accordance with the rules and regulations
adopted by the National Association of Securities Dealers, Inc. relating to
trading in the Private Offerings, Resales and Trading through Automated Linkages
market (the "Portal Market") and (ii) permit the Securities to be eligible for
clearance and settlement through The Depository Trust Company.
(k) In connection with Securities offered and sold in an
offshore transaction (as defined in Regulation S) neither the Issuer nor the
Company will register any transfer of such Securities not made, to its
knowledge, in accordance with the provisions of Regulation S and will not,
except in accordance with the provisions of Regulation S, if applicable, issue
any such Securities in the form of definitive securities.
6. Expenses. The Issuer agrees to pay all costs and expenses
incident to the performance of each of the Issuer's, the Company's and the
Guarantors' obligations under this Agreement, whether or not the transactions
contemplated herein are consummated or this Agreement is terminated pursuant to
Section 11 hereof, including all costs and expenses incident to (i) the
printing, word processing or other production of documents with respect to the
transactions contemplated hereby, including any costs of printing the
Preliminary Memorandum and the Final Memorandum and any amendment or supplement
thereto, and any "Blue Sky" memoranda, (ii) all arrangements relating to the
delivery to the Initial Purchasers of copies of the foregoing documents, (iii)
the fees and disbursements of the counsel, the accountants and any other experts
or advisors retained by the Issuer, the Company or the Guarantors, (iv)
preparation (including printing), issuance and delivery to the Initial
Purchasers of the Securities, (v) the qualification of the Securities under
state securities and "Blue Sky" laws, including filing fees and fees and
reasonable disbursements of counsel for the Initial Purchasers relating thereto,
(vi) expenses in connection with any meetings with prospective investors in the
Securities, (vii) fees and expenses of the Trustee including fees and expenses
of counsel for the Trustee, (viii) all expenses and listing fees incurred in
connection with the application for quotation of the Securities on the PORTAL
Market and (ix) any fees charged by investment rating agencies for the rating of
the Securities. If the sale of the Securities provided
21
for herein is not consummated because any condition to the obligations of the
Initial Purchasers set forth in Section 7 hereof is not satisfied, because this
Agreement is terminated or because of any failure, refusal or inability on the
part of the Issuer, the Company or the Guarantors to perform all obligations and
satisfy all conditions on their part to be performed or satisfied hereunder in
all material respects (other than, in any case, solely by reason of a default by
the Initial Purchasers of their obligations hereunder), the Company agrees to
promptly reimburse the Initial Purchasers upon demand for all reasonable
out-of-pocket expenses (including reasonable fees, disbursements and charges of
▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, counsel for the Initial Purchasers) that shall have
been incurred by the Initial Purchasers in connection with the proposed purchase
and sale of the Securities. Except as specifically set forth herein, the Initial
Purchasers shall pay their own costs and expenses including the costs and
expenses of their counsel.
7. Conditions of the Initial Purchasers' Obligations. The
obligation of the Initial Purchasers to purchase and pay for the Securities
shall, in their sole discretion, be subject to the satisfaction or waiver of the
following conditions on or prior to the Closing Date:
(a) On the Closing Date, the Initial Purchasers shall have
received (i) the opinion, dated as of the Closing Date and addressed to the
Initial Purchasers, of Dechert Price & ▇▇▇▇▇▇ ("DP&R"), counsel for the Issuer
which opinion shall be satisfactory to counsel for the Initial Purchasers, and
substantially in the form of Exhibit A hereto, (ii) a reliance letter, dated as
of the Closing Date and addressed to the Initial Purchasers, of DP&R, allowing
the Initial Purchasers to rely on the opinion required to be delivered pursuant
to Section 6.3(f) of the Merger Agreement, which opinion shall be satisfactory
to counsel for the Initial Purchasers and (iii) a reliance letter, dated as of
the Closing Date and addressed to the Initial Purchasers, of DP&R, allowing the
Initial Purchasers to rely on the opinion delivered in connection with the
execution and delivery of the New Credit Facility, which opinion shall be
satisfactory to counsel for the Initial Purchasers;
(b) On the Closing Date, the Initial Purchasers shall have
received the opinion, dated as of the Closing Date and addressed to the Initial
Purchasers, of ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ & Salmon, P.L.C., special Arizona counsel to
the Issuer and the
22
Company, in form and substance satisfactory to counsel for the Initial
Purchasers, to the extent that:
(i) Each of the Issuer and the Company is duly
incorporated, validly existing and in good standing in its jurisdiction
of incorporation and has all requisite corporate power and authority to
own its properties and conduct its business as described in the Final
Memorandum. Each of the Issuer and the Company is duly qualified to do
business as a foreign corporation in good standing in each of the
jurisdictions where the conduct of its business or the ownership of
property would require such qualification.
(ii) To the knowledge of such counsel, all of the
outstanding shares of capital stock of the Issuer and the Company
(including the capital stock issued in connection with the Equity
Contribution, the Equity Rollover and the Senior Exchangeable Preferred
Stock) have been duly authorized and validly issued, are fully paid and
nonassessable and were not issued in violation of any preemptive or
similar rights, to our knowledge, except for liens under the New Credit
Facility.
(iii) Each of the Issuer and the Company has all
requisite corporate power and authority to execute, deliver and perform
each of its obligations under the Indenture, the Securities, the
Exchange Securities and the Private Exchange Securities; the Indenture
has been duly and validly authorized by each of the Issuer and the
Company.
(iv) The issuance of the Notes has been duly and
validly authorized by the Issuer and the Company.
(v) The issuance of the Exchange Notes and the Private
Exchange Notes has been duly and validly authorized by the Company.
(vi) Each of the Issuer and the Company has all
requisite corporate power and authority to execute, deliver and perform
its obligations under the Registration Rights Agreement; the
Registration Rights Agreement has been duly and validly authorized by
the Company and the Issuer.
(vii) The Guarantees have been duly and validly
authorized for issuance and sale to the Initial Purchasers.
23
(viii) Each of the Issuer and the Company has all
requisite corporate power and authority to execute, deliver and perform
its obligations under this Agreement and the Assumption Agreement and
to consummate the transactions contemplated hereby; this Agreement, the
Assumption Agreement and the consummation by the Issuer and the Company
of the transactions contemplated hereby and thereby have been duly and
validly authorized by each of the Issuer and the Company. This
Agreement has been duly executed and delivered by each of the Issuer
and the Company.
(ix) To the knowledge of such counsel, the execution,
delivery and performance of this Agreement, the Indenture, the
Registration Rights Agreement, the Assumption Agreement and the
consummation of the transactions contemplated hereby and thereby
(including, without limitation, the issuance and sale of the Securities
to the Initial Purchasers) will not conflict with or constitute or
result in a breach or a default under (or an event that with notice or
passage of time or both would constitute a default under) or violation
of any of (i) the articles of incorporation or bylaws (or similar
organizational document) of the Issuer or the Company, or (ii)
(assuming compliance with all applicable state securities or "Blue Sky"
laws and assuming the accuracy of the representations and warranties of
the Initial Purchasers in Section 8 hereof) any present law or
regulation of any governmental agency or authority of the State of
Arizona or the Arizona General Business Corporation Act, or (iii) based
solely on a review of judgments, decrees, orders and rulings disclosed
by the Issuer, the Company and the Arizona Guarantors in officers'
certificates, any judgment, decree, order or rule known to such counsel
to be applicable to the Issuer or the Company or any of their
respective properties or assets, except for any such conflict, breach
or violation which would not, individually or in the aggregate, have a
Material Adverse Effect.
(x) No consent, approval, authorization or order of
any governmental authority is required for the issuance and sale by the
Issuer or the Company of the Securities to the Initial Purchasers or
the consummation by the Issuer or the Company of the other transactions
contemplated hereby, except such as may be required under Blue Sky
laws, as to which such counsel need express no opinion, and those which
have previously been obtained.
24
(xi) Upon the payment of any filing fee and proper
filing of the certificate of the Articles of Merger and Plan of Merger
with the Arizona Corporation Commission, the Recapitalization Merger
will be effective, as contemplated by the Merger Agreement, assuming
publication in accordance with the laws of the State of Arizona.
Such counsel shall also state that in rendering the opinion
required by Section 7(a) and (d) hereof, each of Dechert Price & ▇▇▇▇▇▇ and
▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ may rely upon the opinions provided hereby. Such counsel
shall also allow the Initial Purchasers to rely upon the opinions required to be
delivered by such counsel pursuant to the terms of the Merger Agreement and in
connection with the execution of the New Credit Facility, which opinions shall
be in form and substance satisfactory to counsel for the Initial Purchasers.
(c) On the Closing Date, the Initial Purchasers shall have
received the opinion, dated as of the Closing Date and addressed to the Initial
Purchasers, of ▇▇▇▇▇▇, ▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP, special California counsel to PII
and Penhall Company (the "California Guarantors"), in form and substance
satisfactory to counsel for the Initial Purchasers, to the extent that:
(i) Each of the California Guarantors is validly
existing as a corporation under the laws of, and is in good standing in
the State of California and has all requisite corporate power and
authority to own its properties and conduct its business as described
in the Final Memorandum.
(ii) Each of the California Guarantors has all
requisite corporate power and authority to execute, deliver and perform
each of its obligations under the Indenture, the Securities, the
Exchange Securities and the Private Exchange Securities; the
Supplemental Indenture, which provides that each of the California
Guarantors shall thereby become a party to the Indenture, has been duly
and validly authorized by each of the California Guarantors.
(iii) The Guarantees have been duly and validly
authorized by each of the California Guarantors. The Guarantees to be
endorsed on the Exchange Notes and the Private Exchange Notes (the
"Exchange Guarantees") have been duly and validly authorized by each of
the California Guarantors.
25
(iv) Each of the California Guarantors has all
requisite corporate power and authority to execute, deliver and perform
its obligations under the Registration Rights Agreement; the Assumption
Agreement, which provides that each of the California Guarantors shall
thereby become a party to this Agreement and the Registration Rights
Agreement, has been duly and validly authorized by the California
Guarantors.
(v) Each of the California Guarantors has all
requisite corporate power and authority to execute, deliver and perform
its obligations under this Agreement and to consummate the transactions
contemplated hereby. This Agreement has been duly executed by each of
the California Guarantors.
(vi) The execution, delivery and performance of this
Agreement, the Indenture, the Registration Rights Agreement and the
consummation of the transactions contemplated hereby and thereby
(including, without limitation, the issuance and sale of the Securities
to the Initial Purchasers) will not conflict with or constitute or
result in a breach or a default under (or an event that with notice or
passage of time or both would constitute a default under) or violation
of any of (i) the certificate of incorporation or bylaws (or similar
organizational document) of either of the California Guarantors, or
(ii) (assuming compliance with all applicable state securities or "Blue
Sky" laws and compliance of the Reorganization Merger and Certificate
of Merger with the requirements of the California Corporations Code and
assuming the accuracy of the representations and warranties of the
Initial Purchasers in Section 8 hereof) the California Corporations
Code or any other present law or regulation of any governmental agency
or authority of the State of California applicable to the California
Guarantors that, in our experience, is generally applicable to
transactions in the nature of those contemplated by this Agreement, the
Indenture or the Registration Rights Agreement, or (iii) any judgment,
decree, order or rule known to such counsel to be applicable to the
California Guarantors or any of their respective properties or assets,
except for any such conflict, breach or violation which would not,
individually or in the aggregate, have a Material Adverse Effect.
(vii) No consent, approval, authorization or order of
any California governmental authority is required for the consummation
by the California Guarantors of the
26
transactions contemplated hereby under any present law or regulation of
any governmental agency or authority of the State of California
applicable to the California Guarantors that, in our experience, is
generally applicable to transactions in the nature of those
contemplated by this Agreement, the Indenture or the Registration
Rights Agreement, except such as may be required under Blue Sky laws,
as to which such counsel need express no opinion, and those which have
previously been obtained.
Such counsel shall also state that in rendering the opinion
required by Section 7(a) and (d) hereof, each of Dechert Price & ▇▇▇▇▇▇ and
▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ may rely upon this opinions provided hereby.
(d) On the Closing Date, the Initial Purchasers shall have
received a letter from Irell & ▇▇▇▇▇▇▇ allowing the Initial Purchasers to rely
upon their opinions delivered pursuant to the terms of the Merger Agreement and
in connection with the execution of the New Credit Facility, which opinions
shall be in form and substance satisfactory to counsel for the Initial
Purchasers.
(e) On the Closing Date, the Initial Purchasers shall have
received the opinion, in form and substance satisfactory to the Initial
Purchasers, dated as of the Closing Date and addressed to the Initial
Purchasers, of ▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, counsel for the Initial Purchasers, with
respect to certain legal matters relating to this Agreement and such other
related matters as the Initial Purchasers may reasonably require. In rendering
such opinion, ▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ shall have received and may rely upon such
certificates and other documents and information as it may reasonably request to
pass upon such matters.
(f) The Initial Purchasers shall have received from each of
the Independent Accountants a comfort letter or letters dated the date hereof
and the Closing Date, in form and substance reasonably satisfactory to counsel
for the Initial Purchasers.
(g) The representations and warranties of the Issuer contained
in this Agreement shall be true and correct on and as of the Closing Date as if
made on and as of the Closing Date and the representations and warranties of the
Company and the Guarantors contained in this Agreement and made in the
Assumption Agreement shall be true and correct as of the Closing Date; the
statements of the Issuer's, the Company's and the
27
Guarantors' officers made pursuant to any certificate delivered in accordance
with the provisions hereof shall be true and correct on and as of the date made
and on and as of the Closing Date; the Issuer, the Company and the Guarantors in
all material respects shall have performed all covenants and agreements and
satisfied all conditions on their part to be performed or satisfied hereunder at
or prior to the Closing Date; and, except as described in the Final Memorandum
(exclusive of any amendment or supplement thereto after the date hereof),
subsequent to the date of the most recent financial statements in such Final
Memorandum, there shall have been no event or development, and no information
shall have become known, that, individually or in the aggregate, has or would be
reasonably likely to have a Material Adverse Effect.
(h) The sale of the Securities hereunder shall not be enjoined
(temporarily or permanently) on the Closing Date.
(i) Subsequent to the date of the most recent financial
statements in the Final Memorandum (exclusive of any amendment or supplement
thereto after the date hereof), Penhall Group shall not have sustained any loss
or interference with respect to its business or properties from fire, flood,
hurricane, accident or other calamity, whether or not covered by insurance, or
from any strike, labor dispute, slow down or work stoppage or from any legal or
governmental proceeding, order or decree, which loss or interference,
individually or in the aggregate, has or would be reasonably likely to have a
Material Adverse Effect.
(j) The Initial Purchasers shall have received separate
certificates of each of the Issuer, the Company and each Guarantor, dated the
Closing Date, signed on behalf of the Issuer, the Company and each Guarantor by
its Chairman of the Board, President or any Vice President and the Chief
Financial Officer, to the effect that:
(i) The representations and warranties of the Issuer,
the Company or the Guarantors as the case may be, contained in this
Agreement are true and correct on and as of the Closing Date and, in
the case of the Issuer, on the date hereof, and each of the Issuer, the
Company and the Guarantors in all material respects has performed all
covenants and agreements and satisfied all conditions on its part to be
performed or satisfied hereunder at or prior to the Closing Date;
28
(ii) At the Closing Date, since the date hereof or,
except as described in the Final Memorandum, since the date of the most
recent financial statements in the Final Memorandum (exclusive of any
amendment or supplement thereto after the date hereof), no event or
development has occurred, and no information has become known, that,
individually or in the aggregate, has or would be reasonably likely to
have a Material Adverse Effect; and
(iii) To the knowledge of the Issuer, the Company or the
Guarantor, as applicable, the sale of the Securities hereunder has not
been enjoined (temporarily or permanently).
(k) The New Credit Facility and each of the other documents
necessary to consummate the transactions contemplated by the Final Memorandum
under the caption "The Transactions" shall have been, or shall concurrently be,
executed and delivered by the parties thereto, shall be in full force and effect
and in form and substance consistent with the description thereof contained in
the Final Memorandum in all material respects.
(l) On the Closing Date, the Company shall have received the
proceeds from the Equity Contribution from BRS and the proceeds from the Equity
Rollover from the management stockholders and the Senior Exchangeable Preferred
Stock shall have been issued as described in the Final Memorandum.
(m) On or prior to the Closing Date, the Issuer, the Company
and the Guarantors, as the case may be, shall have filed Certificates of Merger,
in the states necessary to give effect to the Mergers contemplated by the Merger
Agreement and each of the transactions set forth under "The Transactions" in the
Final Memorandum, shall have been completed (other than those not contemplated,
by the Final Memorandum, to occur on or prior to the Closing Date), including,
but not limited to the Equity Rollover, the Equity Contribution.
(n) On the Closing Date, the Initial Purchasers shall have
received the Registration Rights Agreement executed by the Issuer and such
agreement shall be in full force and effect at all times from and after the
Closing Date.
(o) On the Closing Date the Company shall have assumed all of
the Issuer's obligations under this Agreement, the Notes, the Indenture and the
Registration Rights Agreement and the Guarantors will become parties to this
Agreement, the Registration
29
Rights Agreement and the Indenture and such Guarantors will execute the
Guarantees.
(p) On or prior to the Closing Date, the Merger Agreement
shall have been amended to provide for the issuance of $10 million of Senior
Exchangeable Preferred Stock to the Foundation (as defined in the Final
Memorandum) in lieu of cash Merger consideration.
On or before the Closing Date, the Initial Purchasers and
counsel for the Initial Purchasers shall have received such further documents,
opinions, certificates, letters and schedules or instruments relating to the
business, corporate, legal and financial affairs of the Issuer, the Company and
the Subsidiaries as they shall have heretofore reasonably requested.
All such documents, opinions, certificates, letters, schedules
or instruments delivered pursuant to this Agreement will comply with the
provisions hereof only if they are reasonably satisfactory in all material
respects to the Initial Purchasers and counsel for the Initial Purchasers. The
Company shall furnish to the Initial Purchasers such conformed copies of such
documents, opinions, certificates, letters, schedules and instruments in such
quantities as the Initial Purchasers shall reasonably request.
8. Offering of Notes; Restrictions on Transfer. (a) Each of
the Initial Purchasers represents and warrants (as to itself only) that it is a
Qualified Institutional Buyer ("QIB") and an "accredited investor" within the
meaning of Regulation D under the Act. Each of the Initial Purchasers
represents, warrants and agrees with the Company (as to itself only) that (i)
it, its affiliates and any person acting for its benefit has not and will not
solicit offers for, or offer or sell, the Securities by any form of general
solicitation or general advertising (as those terms are used in Regulation D
under the Act) or in any manner involving a public offering within the meaning
of Section 4(2) of the Act, including, but not limited to (i) any advertisement,
article, notice or other communication published in any newspaper, magazine or
similar media or broadcast over television or radio, or (ii) any seminar or
meeting whose attendees have been invited by any general solicitation or general
advertising. Each Initial Purchaser agrees, with respect to resales made in
reliance on Rule 144A of any of the Securities, to deliver either with the
confirmation of such resale or otherwise prior to settlement of such resale a
notice to the effect that the resale of such Securities has been made in
reliance upon the exemption from the registration
30
requirements of the Securities Act provided by Rule 144A; and (ii) it, its
affiliates and any person acting for its benefit has and will solicit offers for
the Securities only from, and will offer and sell the Securities only to (A) in
the case of offers inside the United States, persons whom the Initial Purchasers
reasonably believe to be QIBs or, if any such person is buying for one or more
institutional accounts for which such person is acting as fiduciary or agent,
only when such person has represented to the Initial Purchasers that each such
account is a QIB, to whom notice has been given that such sale or delivery is
being made in reliance on Rule 144A, and, in each case, in transactions under
Rule 144A and (B) in the case of offers outside the United States, to persons
other than U.S. persons ("foreign purchasers," which term shall include dealers
or other professional fiduciaries in the United States acting on a discretionary
basis for foreign beneficial owners (other than an estate or trust)) in reliance
on Regulation S; provided, however, that, in the case of this clause (B), in
purchasing such Notes such persons are deemed to have represented and agreed as
provided under the caption "Transfer Restrictions" contained in the Final
Memorandum (or, if the Final Memorandum is not in existence, in the most recent
Memorandum).
(b) Each of the Initial Purchasers represents and warrants (as
to itself only) with respect to offers and sales outside the United States that
(i) it has and will comply with all applicable laws and regulations in each
jurisdiction in which it acquires, offers, sells or delivers Securities or has
in its possession or distributes any Memorandum or any such other material, in
all cases at its own expense; (ii) the Securities have not been and will not be
offered or sold within the United States or to, or for the account or benefit
of, U.S. persons except in accordance with Regulation S under the Act or
pursuant to an exemption from the registration requirements of the Act; (iii) it
has offered the Securities and will offer and sell the Notes (A) as part of its
distribution at any time and (B) otherwise until 40 days after the later of the
commencement of the offering and the Closing Date, only in accordance with Rule
903 of Regulation S and, accordingly, neither it, nor its affiliates nor any
persons acting on its behalf have engaged or will engage in any directed selling
efforts (within the meaning of Regulation S) with respect to the Securities, and
any such persons have complied and will comply with the offering restrictions
requirement of Regulation S; and (iv) it agrees that, at or prior to
confirmation of sales of the Securities, it will have sent to each distributor,
dealer or person receiving a selling concession, fee or other remuneration that
purchases
31
Securities from it during the restricted period a confirmation or notice to
substantially the following effect:
"The Securities covered hereby have not been registered under the
United States Securities Act of 1933 (the "Securities Act") and may not
be offered and sold within the United States or to, or for the account
or benefit of, U.S. persons (i) as part of the distribution of the
Securities at any time or (ii) otherwise until 40 days after the later
of the commencement of the offering and the closing date of the
offering, except in either case in accordance with Regulation S (or
Rule 144A if available) under the Securities Act. Terms used above have
the meaning given to them in Regulation S."
(c) Each Initial Purchaser represents, warrants and agrees
that it and each of its affiliates has not entered and will not enter into any
contractual arrangement with respect to the distribution of Securities except
for any such arrangements with the other Initial Purchasers or affiliates of the
other Initial Purchaser or with the prior written consent of the Issuers, the
Company and the Guarantors.
(d) The Initial Purchasers agree that prior to or
simultaneously with the confirmation of sale by it to any purchaser of any of
the Securities purchased by such Initial Purchasers from the Issuer pursuant
hereto, it shall furnish to that purchaser a copy of the Final Memorandum.
(e) In addition to the foregoing, the Initial Purchasers
acknowledge and agree that the Issuer and the Company and for purposes of
delivering their opinions pursuant to Sections 7(a), (b) and (c), counsel for
the Issuer, the Company and the Guarantors may rely upon the accuracy and truth
of the representations, warranties and agreements of the Initial Purchasers and
its compliance with its agreements contained in this Section 8, and the Initial
Purchasers hereby consent to such reliance.
Terms used in this Section 8 and not defined in this Agreement
have the meanings given to them in Regulation S.
9. Indemnification and Contribution. (a) Each of the Issuer,
the Company and the Guarantors, jointly and severally, agrees to indemnify and
hold harmless the Initial Purchasers, and each person, if any, who controls any
Initial Purchaser within the meaning of Section 15 of the Act or Section
32
20 of the Exchange Act, against any losses, claims, damages or liabilities to
which any Initial Purchaser or such controlling person may become subject under
the Act, the Exchange Act or otherwise, insofar as any such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or are based
upon:
(i) any untrue statement or alleged untrue statement
of any material fact contained in any Memorandum or any amendment or
supplement thereto or any application or other document, or any
amendment or supplement thereto, executed by any of the Issuer, the
Company or the Guarantors or based upon written information furnished
by or on behalf of the Issuer, the Company or the Guarantors filed in
any jurisdiction in order to qualify the Securities under the
securities or "Blue Sky" laws thereof or filed with any securities
association or securities exchange (each an "Application"); or
(ii) the omission or alleged omission to state, in any
Memorandum or any amendment or supplement thereto or any Application, a
material fact necessary to make the statements therein, in the light of
the circumstances under which they were made, not misleading,
and will reimburse, as incurred, the Initial Purchasers and each such
controlling person for any legal or other expenses reasonably incurred by the
Initial Purchasers or such controlling person in connection with investigating,
defending against or appearing as a third-party witness in connection with any
such loss, claim, damage, liability or action; provided, however, the Issuer,
the Company and the Guarantors will not be liable in any such case to the extent
that any such loss, claim, damage, or liability arises out of or is based upon
any untrue statement or alleged untrue statement or omission or alleged omission
made in any Memorandum or any amendment or supplement thereto in reliance upon
and in conformity with written information concerning the Initial Purchasers
furnished to the Issuer by the Initial Purchasers specifically for use therein.
This indemnity agreement will be in addition to any liability that the Issuer,
the Company and the Guarantors may otherwise have to the indemnified parties;
and provided further, however, that with respect to any untrue statement or
omission or alleged untrue statement or omission made in the Preliminary
Memorandum, the indemnity agreement contained in this subsection (a) shall not
inure to the benefit of any Initial Purchaser that sold the Securities concerned
to the person asserting any such losses, claims, damages or liabilities, to the
ex-
33
tent that such sale was an initial resale by such Initial Purchaser and any
such loss, claim, damage or liability of such Initial Purchaser results from the
fact that there was not sent or given to such person, at or prior to the written
confirmation of the sale of such Securities to such person, a copy of the Final
Memorandum if the Issuer or the Company had previously furnished copies thereof
to such Initial Purchaser and the Final Memorandum corrected such untrue
statement or omission or alleged untrue statement or omission. The Issuer, the
Company and the Guarantors shall not be liable under this Section 9 for any
settlement of any claim or action effected without its prior written consent,
which consent shall not be unreasonably withheld.
(b) Each of the Initial Purchasers agrees, severally and not
jointly, to indemnify and hold harmless the Issuer, the Company and the
Guarantors, their respective directors and officers and each person, if any, who
controls the Issuer, the Company or any Guarantor within the meaning of Section
15 of the Act or Section 20 of the Exchange Act against any losses, claims,
damages or liabilities to which the Issuer, the Company or any Guarantor or any
such director, officer or controlling person may become subject under the Act,
the Exchange Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon (i)
any untrue statement or alleged untrue statement of any material fact contained
in any Memorandum or any amendment or supplement thereto or any Application, or
(ii) the omission or the alleged omission to state therein a material fact
required to be stated in any Memorandum or any amendment or supplement thereto
or any Application, or necessary to make the statements therein not misleading,
in each case to the extent, but only to the extent, that such untrue statement
or alleged untrue statement or omission or alleged omission was made in reliance
upon and in conformity with written information concerning such Initial
Purchaser, furnished to the Issuer by the Initial Purchasers specifically for
use therein; and subject to the limitation set forth immediately preceding this
clause, will reimburse, as incurred, any legal or other expenses incurred by the
Issuer, the Company or any Guarantor or any such director, officer or
controlling person in connection with investigating or defending against or
appearing as a third party witness in connection with any such loss, claim,
damage, liability or action in respect thereof. This indemnity agreement will be
in addition to any liability that the Initial Purchasers may otherwise have to
the indemnified parties. The Initial Purchasers shall not be liable under this
Section 9 for any settlement of any claim or action effected without their
con-
34
sent, which consent shall not be unreasonably withheld. The Company shall not,
without the prior written consent of BT Alex. ▇▇▇▇▇ Incorporated, which consent
shall not be unreasonably withheld, effect any settlement or compromise of any
pending or threatened proceeding in respect of which any Initial Purchaser is or
could have been a party, or indemnity could have been sought hereunder by any
Initial Purchaser, unless such settlement (A) includes an unconditional written
release of the Initial Purchasers, in form and substance reasonably satisfactory
to the Initial Purchasers, from all liability on claims that are the subject
matter of such proceeding and (B) does not include any statement as to an
admission of fault, culpability or failure to act by or on behalf of any Initial
Purchaser.
(c) Promptly after receipt by an indemnified party under this
Section 9 of notice of the commencement of any action for which such indemnified
party is entitled to indemnification under this Section 9, such indemnified
party will, if a claim in respect thereof is to be made against the indemnifying
party under this Section 9, notify the indemnifying party of the commencement
thereof in writing; but the omission to so notify the indemnifying party (i)
will not relieve it from any liability under paragraph (a) or (b) above unless
and to the extent such failure results in the indemnifying party being
materially prejudiced and (ii) will not, in any event, relieve the indemnifying
party from any obligations to any indemnified party other than the
indemnification obligation provided in paragraphs (a) and (b) above. In case any
such action is brought against any indemnified party, and it notifies the
indemnifying party of the commencement thereof, the indemnifying party will be
entitled to participate therein and, to the extent that it may wish, jointly
with any other indemnifying party similarly notified, to assume the defense
thereof, with counsel reasonably satisfactory to such indemnified party;
provided, however, that if (i) the use of counsel chosen by the indemnifying
party to represent the indemnified party would present such counsel with a
conflict of interest, (ii) the defendants in any such action include both the
indemnified party and the indemnifying party and the indemnified party shall
have been advised by counsel that there may be one or more legal defenses
available to it and/or other indemnified parties that are different from or
additional to those available to the indemnifying party, or (iii) the
indemnifying party shall not have employed counsel reasonably satisfactory to
the indemnified party to represent the indemnified party within a reasonable
time after receipt by the indemnifying party of notice of the institution of
such action, then, in each such case, the
35
indemnifying party shall not have the right to direct the defense of such action
on behalf of such indemnified party or parties and such indemnified party or
parties shall have the right to select separate counsel reasonably acceptable to
the indemnifying party to defend such action on behalf of such indemnified party
or parties. After notice from the indemnifying party to such indemnified party
of its election so to assume the defense thereof and approval by such
indemnified party of counsel appointed to defend such action, the indemnifying
party will not be liable to such indemnified party under this Section 9 for any
legal or other expenses, other than reasonable costs of investigation,
subsequently incurred by such indemnified party in connection with the defense
thereof, unless (i) the indemnified party shall have employed separate counsel
in accordance with the proviso to the immediately preceding sentence (it being
understood, however, that in connection with such action the indemnifying party
shall not be liable for the expenses of more than one separate counsel (in
addition to local counsel) in any one action or separate but substantially
similar actions in the same jurisdiction arising out of the same general
allegations or circumstances, designated by the Initial Purchasers in the case
of paragraph (a) of this Section 9 or the Company in the case of paragraph (b)
of this Section 9, representing the indemnified parties under such paragraph (a)
or paragraph (b), as the case may be, who are parties to such action or actions)
or (ii) the indemnifying party has authorized in writing the employment of
counsel for the indemnified party at the expense of the indemnifying party. The
indemnifying party will not be liable for the costs and expenses of any
settlement of any action effected by such indemnified party without the prior
written consent of the indemnifying party (which consent shall not be
unreasonably withheld), unless such indemnified party waived in writing its
rights under this Section 9, in which case the indemnified party may effect such
a settlement without such consent.
(d) In circumstances in which the indemnity agreement provided
for in the preceding paragraphs of this Section 9 is unavailable to, or
insufficient to hold harmless, an indemnified party in respect of any losses,
claims, damages or liabilities (or actions in respect thereof), each
indemnifying party, in order to provide for just and equitable contribution,
shall contribute to the amount paid or payable by such indemnified party as a
result of such losses, claims, damages or liabilities (or actions in respect
thereof) in such proportion as is appropriate to reflect (i) the relative
benefits received by the indemnifying party or parties on the one hand and the
indemnified party on the other from the offering of the Notes or
36
(ii) if the allocation provided by the foregoing clause (i) is not permitted by
applicable law, not only such relative benefits but also the relative fault of
the indemnifying party or parties on the one hand and the indemnified party on
the other in connection with the statements or omissions or alleged statements
or omissions that resulted in such losses, claims, damages or liabilities (or
actions in respect thereof). The relative benefits received by the Issuer and
the Company on the one hand and any Initial Purchaser on the other shall be
deemed to be in the same proportion as the total proceeds from the offering
(before deducting expenses) received by the Issuer and the Company bear to the
total discounts and commissions received by such Initial Purchaser. The relative
fault of the parties 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 Issuer or the Company on the one hand, or such Initial Purchaser
on the other, the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission or alleged
statement or omission, and any other equitable considerations appropriate in the
circumstances. The Issuer, the Company, the Guarantors and the Initial
Purchasers agree that it would not be equitable if the amount of such
contribution were determined by pro rata or per capita allocation or by any
other method of allocation that does not take into account the equitable
considerations referred to in the first sentence of this paragraph (d).
Notwithstanding any other provision of this paragraph (d), no Initial Purchaser
shall be obligated to make contributions hereunder that in the aggregate exceed
the total discounts, commissions and other compensation received by such Initial
Purchaser under this Agreement, less the aggregate amount of any damages that
such Initial Purchaser has otherwise been required to pay by reason of the
untrue or alleged untrue statements or the omissions or alleged omissions to
state a material fact, and no person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. For purposes of this paragraph (d), each person, if any, who
controls an Initial Purchaser within the meaning of Section 15 of the Act or
Section 20 of the Exchange Act shall have the same rights to contribution as the
Initial Purchasers, and each director of the Issuer, the Company and the
Guarantors, each officer of the Issuer, the Company and the Guarantors and each
person, if any, who controls the Issuer, the Company and the Guarantors within
the meaning of Section 15 of the Act or Section 20 of the Ex-
37
change Act, shall have the same rights to contribution as the Company and the
Guarantors.
10. Survival Clause. The respective representations,
warranties, agreements, covenants, indemnities and other statements of the
Issuer, the Company and the Guarantors and their respective officers and the
Initial Purchasers set forth in this Agreement or made by or on behalf of them
pursuant to this Agreement shall remain in full force and effect, regardless of
(i) any investigation made by or on behalf of the Issuer, the Company, the
Guarantors, any of their respective officers or directors, the Initial
Purchasers or any controlling person referred to in Section 9 hereof and (ii)
delivery of and payment for the Notes. The respective agreements, covenants,
indemnities and other statements set forth in Sections 6, 9 and 16 hereof shall
remain in full force and effect, regardless of any termination or cancellation
of this Agreement.
11. Termination. (a) This Agreement may be terminated in the
sole discretion of the Initial Purchasers by notice to the Issuer given prior to
the Closing Date in the event that the Issuer, the Company or any of the
Guarantors shall have failed, refused or been unable to perform all obligations
and satisfy all conditions on its part to be performed or satisfied hereunder at
or prior thereto (other than as a result of a default by the Initial Purchasers)
or, if at or prior to the Closing Date:
(i) any of the Company or the Subsidiaries shall have
sustained any loss or interference with respect to its businesses or
properties from fire, flood, hurricane, accident or other calamity,
whether or not covered by insurance, or from any strike, labor dispute,
slow down or work stoppage or any legal or governmental proceeding,
which loss or interference, in the sole judgment of the Initial
Purchasers, has had or has a Material Adverse Effect, or there shall
have been, in the sole judgment of the Initial Purchasers, any event or
development that, individually or in the aggregate, has or could be
reasonably likely to have a Material Adverse Effect (including without
limitation a change in control of the Company or the Subsidiaries),
except in each case as described in the Final Memorandum (exclusive of
any amendment or supplement thereto);
(ii) trading in securities generally on the New York
Stock Exchange, American Stock Exchange or the NASDAQ National Market
shall have been suspended or minimum or
38
maximum prices shall have been established on any such exchange or
market;
(iii) a banking moratorium shall have been declared by
New York or United States authorities;
(iv) there shall have been (A) a significant outbreak
or escalation of hostilities between the United States and any foreign
power, or (B) a significant outbreak or escalation of any other
insurrection or armed conflict involving the United States or any other
significant national or international calamity or emergency or (C) any
material change in the financial markets of the United States that, in
the case of (A), (B) or (C) above and in the sole judgment of the
Initial Purchasers, makes it impracticable or inadvisable to proceed
with the offering or the delivery of the Notes as contemplated by the
Final Memorandum; or
(v) any securities of the Issuer, the Company or the
Subsidiaries shall have been downgraded or placed on any "watch list"
for possible downgrading by any nationally recognized statistical
rating organization.
(b) Termination of this Agreement pursuant to this Section 11
shall be without liability of any party to any other party except as provided in
Section 10 hereof.
12. Information Supplied by the Initial Purchasers. The
statements set forth (i) in the last paragraph on the front cover page, (ii) in
the third and fourth sentences of the fourth paragraph and in the sixth
paragraph under the heading "Private Placement" in the Final Memorandum, and
(iii) in the legend concerning over-allotments and stabilizing on the inside
cover page (to the extent such statements relate to the Initial Purchasers)
constitute the only information furnished by the Initial Purchasers to the
Issuer or the Company for the purposes of Sections 2(a) and 9 hereof.
13. Notices. All communications hereunder shall be in writing
and, if sent to the Initial Purchasers, shall be mailed or delivered to BT Alex.
▇▇▇▇▇ Incorporated, One Bankers Trust Plaza, ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇
▇▇▇▇ ▇▇▇▇▇, Attention: Corporate Finance Department; if sent to the Company,
shall be mailed or delivered to the Company at ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇, ▇.▇. ▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: Chief Financial Officer; with a copy to
Dechert Price & ▇▇▇▇▇▇,
39
▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇ ▇. ▇▇▇▇, Esq.
All such notices and communications shall be deemed to have
been duly given: when delivered by hand, if personally delivered; five business
days after being deposited in the mail, postage prepaid, if mailed; and one
business day after being timely delivered to a next-day air courier.
14. Binding Effect. The provisions of this Agreement will not
be binding upon the Company or any of the Guarantors prior to the consummation
of the Mergers.
15. Successors. This Agreement shall inure to the benefit of
and be binding upon the Initial Purchasers, the Issuer, the Company, the
Guarantors and their respective successors and legal representatives, and
nothing expressed or mentioned in this Agreement is intended or shall be
construed to give any other person any legal or equitable right, remedy or claim
under or in respect of this Agreement, or any provisions herein contained; this
Agreement and all conditions and provisions hereof being intended to be and
being for the sole and exclusive benefit of such persons and for the benefit of
no other person except that (i) the indemnities of the Issuer, the Company and
the Guarantors contained in Section 9 of this Agreement shall also be for the
benefit of any person or persons who control the Initial Purchasers within the
meaning of Section 15 of the Act or Section 20 of the Exchange Act and (ii) the
indemnities of the Initial Purchasers contained in Section 9 of this Agreement
shall also be for the benefit of the directors of the Issuer, the Company and
the Guarantors, their officers and any person or persons who control the Issuer,
the Company and the Guarantors within the meaning of Section 15 of the Act or
Section 20 of the Exchange Act. No purchaser of Notes from the Initial
Purchasers will be deemed a successor because of such purchase.
16. APPLICABLE LAW. THE VALIDITY AND INTERPRETATION OF THIS
AGREEMENT, AND THE TERMS AND CONDITIONS SET FORTH HEREIN 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 WHOLLY THEREIN, WITHOUT GIVING EFFECT TO ANY
PROVISIONS THEREOF RELATING TO CONFLICTS OF LAW.
17. Counterparts. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
40
If the foregoing correctly sets forth our understanding,
please indicate your acceptance thereof in the space provided below for that
purpose, whereupon this letter shall constitute a binding agreement between the
Issuer and the Initial Purchasers.
Very truly yours,
PENHALL ACQUISITION CORP.
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Vice President
41
The foregoing Agreement is
hereby confirmed and accepted
as of the date first above
written.
BT ALEX. ▇▇▇▇▇ INCORPORATED
CREDIT SUISSE FIRST BOSTON CORPORATION
By: BT ALEX. ▇▇▇▇▇ INCORPORATED
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇
-----------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: Vice President
SCHEDULE 1
Principal
Amount of
Initial Purchasers Notes
------------------ --------------
BT Alex. ▇▇▇▇▇ Incorporated................................... $70,000,000
Credit Suisse First Boston Corporation........................ $30,000,000
--------------
Total............................................... $100,000,000
------------
------------
SCHEDULE 2
Subsidiaries
Jurisdiction of
Name Incorporation
---- ------------------
Penhall International, Inc.1 California
Penhall Company California
--------------
1 Corporate name will be changed to Penhall Rental Corp.
Exhibit A
Form of Opinion of DP&R
(i) The Indenture meets the requirements for qualification
under the TIA. When the Indenture shall have been duly authorized, executed and
delivered by the Issuer, it will constitute a valid and legally binding
obligation of the Issuer, and, subsequent to the consummation of the
Recapitalization Merger, when the Indenture shall have been duly authorized by
the Company and each Guarantor and the Supplemental Indenture shall have been
duly authorized, executed and delivered by the Company and each Guarantor, the
Indenture and the Supplemental Indenture will constitute a valid and legally
binding obligation of the Company and each Guarantor, in each case enforceable
against the Issuer, the Company and each Guarantor (to the extent a party
thereto) in accordance with its terms, subject to applicable bankruptcy,
insolvency, reorganization, moratorium, fraudulent transfer and similar laws
affecting creditors' rights and remedies generally and to general principles of
equity (regardless of whether enforcement is sought in a proceeding at law or in
equity).
(ii) Subsequent to the consummation of the Recapitalization
Merger, when the Assumption Agreement shall have been duly authorized, executed
and delivered by the Company and each Guarantor, the Assumption Agreement will
constitute a valid and legally binding obligation of the Company and each
Guarantor, enforceable against the Company and each Guarantor in accordance with
its terms, subject to applicable bankruptcy, insolvency, reorganization,
moratorium, fraudulent transfer and similar laws affecting creditors' rights and
remedies generally and to general principles of equity (regardless of whether
enforcement is sought in a proceeding at law or in equity).
(iii) The Securities conform in all material respects to the
description thereof contained in the Final Memorandum. The Notes are in the form
contemplated by the Indenture and the Supplemental Indenture. When the Notes
shall have been duly authorized, executed and delivered by the Issuer and paid
for by the Initial Purchasers in accordance with the terms of the Purchase
Agreement (assuming the due authorization, execution and delivery of the
Indenture by the Trustee in accordance with the Indenture and the due
authentication of the Notes by the Trustee in accordance with the Indenture),
the Notes will be entitled to the benefits of the Indenture and will be valid
and
2
legally binding obligations of the Issuer, and, subsequent to the consummation
of the Recapitalization Merger, when the Company shall have duly authorized the
Indenture and duly authorized, executed and delivered the Notes and the
Supplemental Indenture (assuming the due authorization, execution and delivery
of the Indenture and the Supplemental Indenture by the Trustee in accordance
with the Indenture and the due authentication of the Notes by the Trustee in
accordance with the Indenture), the Notes will be entitled to the benefits of
the Indenture and will be valid and legally binding obligations of the Company,
in each case enforceable against the Issuer and the Company in accordance with
their terms, subject to applicable bankruptcy, insolvency, reorganization,
moratorium, fraudulent transfer and similar laws affecting creditors' rights and
remedies generally and to general principles of equity (regardless of whether
enforcement is sought in a proceeding at law or in equity).
(iv) The Guarantees are in the form contemplated by the
Indenture. Subsequent to the consummation of the Recapitalization Merger, when
each Guarantor shall have duly authorized the Indenture and duly authorized,
executed and delivered the Guarantees and the Supplemental Indenture and when
the Notes shall have been paid for by the Initial Purchasers in accordance with
the terms of the Purchase Agreement (assuming the due authorization, execution
and delivery of the Indenture and the Supplemental Indenture by the Trustee in
accordance with the Indenture and the Supplemental Indenture and the due
authentication of the Notes by the Trustee in accordance with the Indenture and
the Supplemental Indenture), the Guarantees will be entitled to the benefits of
the Indenture, and will be valid and legally binding obligations of each
Guarantor, enforceable in accordance with their terms, subject to applicable
bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer and
similar laws affecting creditors' rights and remedies generally and to general
principles of equity (regardless of whether enforcement is sought in a
proceeding at law or in equity).
(v) When the Registration Rights Agreement shall have been
duly authorized, executed and delivered by the Issuer, it will constitute a
valid and binding obligation of the Issuer and, subsequent to the consummation
of the Recapitalization Merger, when the Registration Rights Agreement shall
have been duly authorized by the Company and each Guarantor and when the
Assumption Agreement shall have been duly authorized, executed and delivered by
the Company and each Guarantor, the Registration Rights Agreement will
constitute a valid and legally binding obligation of the Company and each
Guarantor, in each
3
case enforceable against the Issuer, the Company and each Guarantor in
accordance with its terms, subject to applicable bankruptcy, insolvency,
reorganization, moratorium, fraudulent transfer and similar laws affecting
creditors' rights and remedies generally and to general principles of equity
(regardless of whether enforcement is sought in a proceeding at law or in
equity).
(vi) The Registration Rights Agreement, the Merger Agreement
and the New Credit Facility conform in all material respects to the descriptions
thereof in the Final Memorandum.
(vii) To our knowledge, no authorization, approval, consent or
order of any governmental authority of the United States or the State of New
York is required for the execution, delivery and performance by the Issuer, the
Company and the Guarantors of their obligations under the Purchase Agreement,
the Indenture, the Supplemental Indenture, the Registration Rights Agreement,
the Assumption Agreement and the Securities (to the extent a party thereto)
(subject to the opinion set forth in paragraph (xi) as it relates to the Act and
the TIA), except (i) such authorizations, approvals, consents, orders, filings
or registrations as may be required under state securities or Blue Sky laws or
regulations, (ii) such authorizations, approvals, consents, orders, filings or
registrations as may be required under the conduct rules of the National
Association of Securities Dealers, Inc. in connection with the offer and sale of
the Securities, (iii) with respect to the Registration Rights Agreement and the
transactions contemplated thereunder, such filings or registrations as are
required under the Act, the Exchange Act or the TIA or the rules and regulations
of the Commission promulgated thereunder and (iv) such authorizations,
approvals, consents, orders, filings, or registrations as have been obtained and
are in full force and effect.
(viii) The execution, delivery and performance by each of the
Issuer, the Company and the Guarantors of its obligations under the Purchase
Agreement, the Indenture, the Supplemental Indenture, the Registration Rights
Agreement, the Assumption Agreement and the Securities (to the extent a party
thereto) will not (i) result in a breach or violation of any statute, rule or
regulation of the United States or the State of New York applicable to the
Issuer, the Company or the Guarantors or any order known to such counsel of any
governmental agency or body or any court of the United States or the State of
New York having jurisdiction over any of the Issuer, the Company or the
Guarantors or any of its properties (except that such counsel need not express
any opinion as to state securi-
4
ties or Blue Sky laws, or fraudulent conveyance, fraudulent transfer or similar
laws), or (ii) result in a breach or violation of any of the terms and
provisions of, or constitute a default under, any agreement or instrument (A)
known to such counsel to which the Issuer is a party or (B) to which the Company
or any Guarantor is a party and which is listed on Schedule 2.19 to the Merger
Agreement, except in the cases of clauses (i) and (ii) to the extent any such
breach, violation or default, singly or in the aggregate with all other such
breaches, violations and defaults, would not reasonably be expected to result in
a Material Adverse Effect.
(ix) To our knowledge, except as disclosed in the Final
Memorandum, there are no pending or threatened actions, suits or proceedings
against the Issuer or any of its properties which (i) question the validity of
the Purchase Agreement, the Indenture, the Supplemental Indenture, the
Registration Rights Agreement, the Assumption Agreement or the Securities or
which are otherwise material in the context of the issuance and sale of the
Securities, or (ii) if determined adversely to the Issuer, would be reasonably
expected, individually or in the aggregate, to result in a Material Adverse
Effect.
(x) None of the Issuer, the Company or either Guarantor is,
and immediately after the offering and sale of the Securities and the
application of the proceeds thereof as described in the Final Memorandum under
the caption "Use of Proceeds" none of the Issuer, the Company or the Guarantors
will be, an "investment company" as such term is defined in the Investment
Company Act of 1940, as amended.
(xi) Assuming (i) the accuracy of, and compliance with, the
representations, warranties and agreements of the Issuer, the Company and the
Guarantors set forth in Sections 2(dd), 2(ee), 2(gg) and 5 of the Purchase
Agreement, (ii) the accuracy of, and compliance with, the representations,
warranties and agreements of the Initial Purchasers set forth in Section 8 of
the Purchase Agreement, (iii) compliance by the Initial Purchasers with the
offering and transfer procedures and restrictions described elsewhere in the
Final Memorandum and (iv) the accuracy of, and compliance with, the
representations, warranties and agreements made in accordance with the Purchase
Agreement, the Final Memorandum and the Indenture by purchasers to whom the
Initial Purchasers initially resell Securities and the receipt by such
purchasers of a copy of the Final Memorandum prior to such sale, it is not
necessary in connection with the offer and sale of the Securities or in
connection with the initial resale of the Securities in the manner contemplated
by
5
the Purchase Agreement and the Final Memorandum to register the Securities
under the Act or to qualify the Indenture under the TIA (it being understood
that no opinion is expressed as to any subsequent resale of the Securities).
(xii) When the Exchange Notes and Private Exchange Notes shall
have been duly executed and delivered by the Company in accordance with the
terms of the Registration Rights Agreement and the Indenture (assuming the due
authorization, execution and delivery of the Indenture by the Trustee and the
due authentication and delivery of the Exchange Notes and the Private Exchange
Notes by the Trustee in accordance with the Indenture), the Exchange Notes and
the Private Exchange Notes will be entitled to the benefits of the Indenture and
will be valid and legally binding obligations of the Company, enforceable in
accordance with their terms, subject to applicable bankruptcy, insolvency,
reorganization, moratorium, fraudulent transfer and similar laws affecting
creditors' rights and remedies generally and to general principles of equity
(regardless of whether enforcement is sought in a proceeding at law or in
equity).
(xiii) Assuming that the proceeds of the offering of the
Securities will be applied as described in the Final Memorandum under the
caption "Use of Proceeds," neither the consummation of the transactions
contemplated by the Purchase Agreement nor the sale, issuance, execution or
delivery of the Securities will violate Regulation T, U or X of the Board of
Governors of the Federal Reserve System.
(xiv) Each of the Issuer, the Company and the Guarantors is
duly qualified to do business as a foreign corporation and is in good standing
under the laws of each jurisdiction set forth opposite their respective names on
Schedule A hereto.
(xv) The opinion described above may state that it is limited
to the laws of the United States of America and the State of New York. In
rendering the opinions set forth above, Dechert Price & ▇▇▇▇▇▇ may assume and/or
rely on the opinions provided pursuant to Sections 7(b) and (c) hereof.
(xvi) The Initial Purchasers shall also have received a
letter, dated the Closing Date, from Dechert Price & ▇▇▇▇▇▇, to the effect that
such counsel has no reason to believe that, as of the date of the Final
Memorandum or as of the Closing Date, the Final Memorandum, as amended or
supplemented (except for the financial statements and the notes related thereto
and other financial, statistical and accounting data included
6
therein, as to which such counsel need not express any belief), contains any
untrue statement of a material fact or omits to state a material fact necessary
in order to make the statements therein, in the light of the circumstances under
which they were made, not misleading. In writing such letter with respect to the
matters covered by this paragraph, such counsel may state that their belief is
based upon their participation in the preparation of the Final Memorandum and
any amendments or supplements thereto and review and discussion of the contents
thereof, but are without independent check or verification except as specified.
Additionally, the Initial Purchasers shall have received a
letter, dated the Closing Date, from Dechert Price & ▇▇▇▇▇▇, to the effect that
the Initial Purchasers may rely on the opinions of such counsel rendered
pursuant to the Merger Agreement and the New Credit Facility.