SECURITIES PURCHASE AGREEMENT
by and between
FAIRFIELD MANUFACTURING COMPANY, INC.
as Issuer
and
CIBC WOOD GUNDY SECURITIES CORP.
as Initial Purchaser
---------------------------------
Dated as of March 7, 1997
TABLE OF CONTENTS
Page
----
ARTICLE I
DEFINITIONS
Section 1.1. Definitions............................................ 1
Section 1.2. Accounting Terms; Financial Statements................. 6
ARTICLE II
ISSUE OF SHARES; PURCHASE AND SALE OF
SHARES; REGISTRATION RIGHTS OF HOLDERS OF
SHARES; OFFERING BY INITIAL PURCHASER
Section 2.1. Issue of Shares........................................ 6
Section 2.2. Purchase, Sale and Delivery of Shares.................. 7
Section 2.3. Registration Rights of Holders of Shares............... 7
Section 2.4. Offering by the Initial Purchaser...................... 7
ARTICLE III
REPRESENTATIONS AND WARRANTIES; RESALE OF SHARES
Section 3.1. Representations and Warranties of the Company.......... 8
Section 3.2. Resale of Shares....................................... 19
ARTICLE IV
CONDITIONS PRECEDENT TO CLOSING
Section 4.1. Conditions Precedent to Obligations of the
Initial Purchaser...................................... 20
ARTICLE V
COVENANTS
Section 5.1. Covenants of the Company................................ 23
ARTICLE VI
FEES
Section 6.1 Costs, Expenses and Taxes............................... 25
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ARTICLE VII
INDEMNITY
Section 7.1. Indemnity............................................... 26
Section 7.2. Contribution............................................ 29
Section 7.3. Share Registration Rights Agreement..................... 30
ARTICLE VIII
MISCELLANEOUS
Section 8.1. Survival of Provisions.................................. 30
Section 8.2. Termination............................................. 31
Section 8.3. No Waiver; Modifications in Writing..................... 32
Section 8.4 Information Supplied by the Initial Purchaser........... 32
Section 8.5. Communications.......................................... 33
Section 8.6. Execution in Counterparts............................... 33
Section 8.7. Successors.............................................. 34
Section 8.8. Governing Law........................................... 34
Section 8.9. Severability of Provisions.............................. 34
Section 8.10. Headings................................................ 34
SIGNATURE PAGE
EXHIBITS
Exhibit 1
Form of Opinion of Debevoise & ▇▇▇▇▇▇▇▇
Exhibit 2
Form of Opinion of ▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇
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SECURITIES PURCHASE AGREEMENT, dated as of March 7, 1997 (the
"Agreement"), by and between FAIRFIELD MANUFACTURING COMPANY, INC., a Delaware
corporation (the "Company"), and CIBC WOOD GUNDY SECURITIES CORP. (the "Initial
Purchaser").
In consideration of the mutual covenants and agreements set
forth herein and for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto agree as
follows:
ARTICLE I
DEFINITIONS
Section 1.1. Definitions. As used in this Agreement,
and unless the context requires a different meaning, the following terms have
the meanings indicated:
"Accredited Investor" has the meaning provided therefor
in Section 3.2 of this Agreement.
"Act" means the Securities Act of 1933, as amended, and the
rules and regulations of the Commission thereunder.
"Affiliate" means, with respect to any Person, any other
Person which directly or indirectly through one or more intermediaries controls,
or is controlled by, or is under common control with, the Person in question.
For purposes of this definition, "control" (including, with correlative
meanings, the terms "controlling", "controlled by" and "under common control
with"), as used with respect to any Person, means the possession, directly or
indirectly, of the power to direct or cause the direction of the management and
policies of such Person, whether through the ownership of voting securities, by
agreement or otherwise; provided, however, that beneficial ownership of at least
10% of the voting securities of a Person shall be deemed to be control.
"Agreement" means this Agreement, as the same may be amended,
supplemented or modified in accordance with the terms hereof.
"Basic Documents" means, collectively, the Certificate of
Designation, the Shares, the Indenture, the Share Registration Rights Agreement
and this Agreement, including (in each case) any amendments thereto.
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"Business Day" means each Monday, Tuesday, Wednesday,
Thursday and Friday which is not a day on which banking institutions in the City
of New York are authorized or obligated by law to close.
"Certificate of Designation" means the certificate of
designation dated March 7, 1997 under which the Shares will be issued.
"Certificate of Incorporation" means the certificate of
incorporation of the Company.
"Closing" has the meaning provided therefor in Section 2.2(b)
of this Agreement.
"Code" means the Internal Revenue Code of 1986, as amended.
"Commission" means the Securities and Exchange Commission or
any similar agency then having jurisdiction to enforce the Act.
"Common Stock" means the Common Stock, par value $.01 per
share, of the Company.
"Commonly Controlled Entity" has the meaning provided therefor
in Section 3.1(s) of this Agreement.
"Credit Agreement" has the meaning provided therefor in the
Certificate of Designation.
"Debentures" has the meaning provided therefor in Section
2.1 of this Agreement.
"Default" means any event, act or condition which, with notice
or lapse of time or both, would constitute an Event of Default under the
Indenture.
"Dividend Shares" has the meaning provided therefor in
Section 3.1(f) of this Agreement.
"Environmental Law" has the meaning provided therefor
in Section 3.1(z) of this Agreement.
"ERISA" means the Employee Retirement Income Security
Act of 1974, as amended.
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"Event of Default" means any event defined as an Event
of Default in the Indenture.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, and the rules and regulations of the Commission thereunder.
"Exchange Preferred Stock" shall have the meaning provided
therefor in the Share Registration Rights Agreement.
"Existing Indenture" means the indenture governing the
Existing Notes.
"Existing Notes" means the Company's 11-3/8% Senior
Subordinated Notes due July 1, 2001.
"Final Memorandum" has the meaning provided therefor in
Section 2.1 of this Agreement.
"Foreign Plans" has the meaning provided therefor in
Section 3.1(s) of this Agreement.
"Indebtedness" has the meaning provided therefor in the
Final Memorandum.
"Indemnified Party" has the meaning provided therefor
in Section 7.1(c) of this Agreement.
"Indemnifying Party" has the meaning provided therefor
in Section 7.1(c) of this Agreement.
"Indenture" means the indenture dated as of , 1997 by and
between the Company and the Trustee under which the Debentures will be issued.
"In-kind Debentures" has the meaning provided therefor
in Section 3.1(i) of this Agreement.
"Initial Purchaser" has the meaning provided therefor
in the introductory paragraph of this Agreement.
"Lancer" means Lancer Industries Inc., a Delaware
corporation.
"Lien" means, with respect to any property or assets of any
Person, any mortgage or deed of trust, pledge, hypothecation, assignment,
deposit arrangement, security
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interest, lien, charge, easement, encumbrance, preference, priority or other
security agreement or preferential arrangement of any kind or nature whatsoever
on or with respect to such property or assets (including, without limitation,
any Capitalized Lease Obligation (as defined in the Certificate of Designation),
conditional sales, or other title retention agreement having substantially the
same economic effect as any of the foregoing).
"Material Adverse Effect" means, with respect to the Company
and its Subsidiaries, a material adverse effect on the business, condition
(financial or otherwise), results of operations or prospects of the Company and
its Subsidiaries, taken as a whole; provided that, with respect to the Company,
"Material Adverse Effect" shall also mean a material adverse effect on the
ability of the Company to perform its obligations under the Basic Documents,
including this Agreement.
"Memorandum" has the meaning provided therefor in Section 2.1
of this Agreement.
"Offering" has the meaning provided therefor in the
Memorandum.
"Offering Materials" has the meaning provided therefor
in Section 7.1(a) of this Agreement.
"Person" means any individual, corporation, limited liability
company, partnership, joint venture, incorporated or unincorporated association,
joint-stock company, trust, government (or an agency or political subdivision
thereof) or other entity of any kind.
"PORTAL" means the Private Offerings, Resales and Trading
through Automated Linkages Market.
"Preliminary Memorandum" has the meaning provided
therefor in Section 2.1 of this Agreement.
"Private Exchange Shares" shall have the meaning provided
therefor in the Share Registration Rights Agreement.
"Proceeding" has the meaning provided therefor in Section
7.1(c) of this Agreement.
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"QIB" has the meaning provided therefor in Section 3.2 of
this Agreement.
"Regulation D" has the meaning provided therefor in Section
3.1(u) of this Agreement.
"Regulation S" has the meaning provided therefor in Section
3.1(ee) of this Agreement.
"Rule 144A" has the meaning provided therefor in Section
3.1(cc) of this Agreement.
"Securities" has the meaning provided therefor in Section
2.1 of this Agreement.
"Share Registration Rights Agreement" means the registration
rights agreement by and between the Company and the Initial Purchaser relating
to the Shares.
"Shares" has the meaning provided therefor in Section 2.1 of
this Agreement.
"State" means each of the states of the United States, the
District of Columbia and the Commonwealth of Puerto Rico.
"State Commission" means any agency of any State having
jurisdiction to enforce such State's securities laws.
"Subsidiaries" means, with respect to any Person, any
corporation, partnership, joint venture, association or other business entity,
whether now existing or hereafter organized or acquired, (i) in the case of a
corporation, of which more than 50% of the total voting power of the capital
stock entitled (without regard to the occurrence of any contingency) to vote in
the election of directors, officers or trustees thereof is held by such
first-named Person or any of its Subsidiaries; or (ii) in the case of a
partnership, joint venture, association or other business entity, with respect
to which such first-named Person or any of its Subsidiaries has the power to
direct or cause the direction of the management and policies of such entity by
contract or otherwise or if in accordance with generally accepted accounting
principles such entity is consolidated with the first-named Person for financial
statement purposes.
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"Supplement" has the meaning provided therefor in Section 2.1
of this Agreement.
"Taxes" has the meaning provided therefor in Section 3.1(v)
of this Agreement.
"T-H Licensing" means T-H Licensing, Inc., a Delaware
corporation.
"Time of Purchase" has the meaning provided therefor in
Section 2.2(b) of this Agreement.
"Trustee" means United States Trust Company of New York, as
trustee under the Indenture.
"Trust Indenture Act" means the Trust Indenture Act of 1939,
as amended, and the rules and regulations of the Commission thereunder.
"Voting Rights Triggering Event" means any event defined as
a Voting Rights Triggering Event under the Certificate of Designation.
1.2. Accounting Terms; Financial Statements. All accounting
terms used herein not expressly defined in this Agreement shall have the
respective meanings given to them in accordance with generally accepted
accounting principles in the United States as the same may be in effect from
time to time.
ARTICLE II
ISSUE OF SHARES; PURCHASE AND SALE
OF SHARES; RIGHTS OF HOLDERS OF SHARES;
OFFERING BY INITIAL PURCHASER
Section 2.1. Issue of Shares. The Company has authorized the
issuance of 50,000 shares of 11-1/4% Cumulative Exchangeable Preferred Stock,
par value $.01 per share (the "Shares"). The Shares are exchangeable, at the
option of the Company, in whole but not in part, for the Company's 11-1/4%
Subordinated Exchange Debentures due 2009 (the "Debentures") on any dividend
payment date occurring after the earlier of (i) July 2, 2001 and (ii) the date
on which all of the Existing Notes are redeemed, subject to the satisfaction of
certain conditions and provided that such exchange is permitted pursuant to the
terms of the Company's Indebtedness then outstanding. The Debentures are to be
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issued under the Indenture. The Shares and the Debentures are referred to herein
as the "Securities."
The Securities have not been registered under the Act, and the
Shares will be offered and sold to the Initial Purchaser in reliance on
exemptions therefrom.
In connection with the sale of the Shares, the Company has
prepared a preliminary offering memorandum dated February 25, 1997 (the
"Preliminary Memorandum") and prepared a final offering memorandum dated March
7, 1997 (the "Final Memorandum" and, together with the Preliminary Memorandum,
the "Memorandum") setting forth or including a description of the terms of the
Securities, the terms of the Offering, a description of the Company and any
material developments relating to the Company occurring after the date of the
most recent financial statements included therein.
Section 2.2. Purchase, Sale and Delivery of Shares. (a) On the
basis of the representations, warranties, agreements and covenants herein
contained and subject to the terms and conditions herein set forth, the Company
agrees that it will sell to the Initial Purchaser, and the Initial Purchaser
agrees that it will purchase from the Company at the Time of Purchase the Shares
at a purchase price of $970.00 per Share.
(b) The purchase, sale and delivery of the Shares will take
place at a closing (the "Closing") at the offices of ▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, ▇▇
▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇, at 9:00 A.M., New York time, on March 12, 1997,
or such later date and time, if any, as the Initial Purchaser and the Company
shall agree. The time at which such Closing is concluded is herein called the
"Time of Purchase."
(c) One or more certificates in definitive form for the Shares
that the Initial Purchaser has agreed to purchase hereunder, and in such
denomination or denominations and registered in such name or names as the
Initial Purchaser requests upon notice to the Company at least 48 hours prior to
the Closing, shall be delivered by or on behalf of the Company to the Initial
Purchaser, against payment by or on behalf of the Initial Purchaser of the
purchase price therefor by wire transfer of immediately available funds wired in
accordance with the written instructions of the Company. The Company will make
such certificate or certificates for the Shares available for
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checking and packaging by the Initial Purchaser at the offices of the Initial
Purchaser, or such other place as the Initial Purchaser may designate, at least
24 hours prior to the Closing.
Section 2.3. Registration Rights of Holders of Shares. The
Initial Purchaser and its direct and indirect transferees of the Shares will
have such rights with respect to the registration of the Shares or the Exchange
Preferred Stock under the Act as set forth in the Share Registration Rights
Agreement.
Section 2.4. Offering by the Initial Purchaser. The Initial
Purchaser proposes to make an offering of the Shares at the price and upon the
terms and in the manner set forth in the Final Memorandum, as soon as
practicable after this Agreement has been executed and delivered and as in the
judgment of the Initial Purchaser is advisable.
ARTICLE III
REPRESENTATIONS AND WARRANTIES; RESALE OF SHARES
Section 3.1. Representations and Warranties of the Company.
The Company represents and warrants to and agrees with the Initial Purchaser as
follows:
(a) The Final Memorandum, as of its date and at the Time of
Purchase, will not contain 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, except that the representations and warranties set forth in
this Section 3.1(a) do not apply to statements or omissions made in
reliance upon and in conformity with information relating to the
Initial Purchaser furnished to the Company in writing by the Initial
Purchaser expressly for use in the Final Memorandum or any amendment or
supplement thereto or relating to the manner of sale of the Shares by
the Initial Purchaser.
(b) The audited consolidated financial statements of the
Company and its Subsidiaries included in the Final Memorandum present
fairly in all material respects the financial position, results of
operations and cash flows of the Company and its Subsidiaries at the
dates and for the periods to which they relate and
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have been prepared in accordance with generally accepted accounting
principles applied on a consistent basis, except as otherwise stated
therein. The summary and selected financial data in the Final
Memorandum present fairly in all material respects the financial
information shown therein and have been prepared and compiled on a
basis consistent with the audited financial statements included
therein, except as otherwise stated therein. Coopers & ▇▇▇▇▇▇▇ LLP
("Coopers & ▇▇▇▇▇▇▇") is an independent public accounting firm within
the meaning of the Act and the rules and regulations promulgated
thereunder. The pro forma financial statements (including the notes
thereto) and the other pro forma financial information included in the
Final Memorandum have been prepared using reasonable assumptions and in
accordance with the applicable requirements of the Act and include all
adjustments necessary to present fairly the pro forma financial
information included within the Final Memorandum at the respective
dates and for the respective periods indicated.
(c) The Company is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware
and has filed all reports with the Secretary of State of Delaware
required to obtain a certificate with respect to continued subsistence
in good standing from that office. Each Subsidiary of the Company is a
corporation duly incorporated or organized, validly existing and in
good standing under the laws of the state or other jurisdiction of its
incorporation or organization. Each of the Company and its Subsidiaries
is duly qualified and in good standing as a foreign corporation and is
authorized to do business in each jurisdiction in which the ownership
or leasing of any property or the character of its operations makes
such qualification necessary, except where the failure to be so
qualified or be in good standing would not have a Material Adverse
Effect.
(d) As of the Time of Purchase (after giving pro forma effect
to the Offering), the Company will have the authorized, issued and
outstanding capitalization as set forth in the Final Memorandum. All of
the issued and outstanding shares of capital stock of the Company and
its Subsidiaries are validly issued, all of such capital stock is fully
paid and nonassessable and none of such shares or interests were issued
in
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violation of any preemptive or similar rights. The Company has no
Subsidiaries other than T-H Licensing. Except as set forth in the Final
Memorandum, (i) all of the capital stock of each Subsidiary of the
Company is owned directly by the Company, free and clear of any Liens,
(ii) there are no outstanding subscriptions, options, warrants, rights,
convertible securities or other binding agreements or commitments of
any character obligating the Company or its Subsidiaries to issue any
securities and (iii) there is no agreement, understanding or
arrangement among the Company or its Subsidiaries and their respective
stockholders or any other Person relating to the ownership or
disposition of any capital stock in the Company or any of its
Subsidiaries, the election of directors of the Company or any of its
Subsidiaries or the governance of the Company's or any of its
Subsidiaries' affairs, and such agreements, arrangements or
understandings will not be breached or violated as a result of the
execution and delivery of, or the consummation of the transactions
contemplated by, this Agreement and the other Basic Documents.
(e) This Agreement has been duly authorized, executed
and delivered by the Company and (assuming the due authorization,
execution and delivery by the Initial Purchaser) is a valid and legally
binding obligation of the Company, enforceable against the Company in
accordance with its terms except (i) that the enforcement hereof may be
subject to bankruptcy, insolvency, reorganization, fraudulent
conveyance, moratorium or other similar laws now or hereafter in effect
relating to creditors' rights generally, and to general principles of
equity (regardless of whether enforcement is considered in a proceeding
in equity or at law) and the discretion of the court before which any
proceeding therefor may be brought and (ii) as any rights to indemnity
or contribution hereunder may be limited by federal and state
securities laws and public policy considerations.
(f) The Certificate of Designation relating to the Shares and
any additional Shares issued as dividends in accordance with the terms
of the Certificate of Designation (the "Dividend Shares"), as of the
Time of Purchase, will be duly authorized by the Company. The Shares,
the Dividend Shares, the Exchange Preferred Stock and the Private
Exchange Preferred
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Stock (as defined in the Share Registration Rights Agreement), as of
the Time of Purchase, will be duly authorized and, when issued and
delivered by the Company in accordance with the provisions of this
Agreement against payment therefor, in the case of the Shares, and in
accordance with the terms of the Certificate of Designation, in the
case of the Dividend Shares, will be validly issued, fully paid and
nonassessable and free of any preemptive or similar rights; the
certificates for the Shares and the Dividend Shares are in due and
proper form; and the holders of such Shares and Dividend Shares will
not be subject to personal liability by reason of being such holders.
The Company has reserved for issuance, and duly authorized the issuance
of, the maximum number of Dividend Shares issuable as dividends
pursuant to the terms of the Certificate of Designation. The
Certificate of Incorporation of the Company, by virtue of the
Certificate of Designation, sets forth the rights, preferences and
priorities of the Shares and the Dividend Shares.
(g) The Indenture, as of the Time of Purchase, will be duly
authorized by the Company and, when executed and delivered by the
Company (assuming the due authorization, execution and delivery by the
Trustee), will constitute a valid and legally binding obligation of the
Company, enforceable against the Company in accordance with its terms
except (i) that the enforcement thereof may be subject to bankruptcy,
insolvency, reorganization, fraudulent conveyance, moratorium or other
similar laws now or hereafter in effect relating to creditors' rights
generally, and to general principles of equity (regardless of whether
enforcement is considered in a proceeding in equity or at law) and the
discretion of the court before which any proceeding therefor may be
brought and (ii) as any rights to indemnity or contribution thereunder
may be limited by federal and state securities laws and public policy
considerations.
(h) The Share Registration Rights Agreement, as of the Time of
Purchase, will be duly authorized by the Company and, when executed and
delivered by the Company (assuming the due authorization, execution and
delivery by the Initial Purchaser), will constitute a valid and legally
binding obligation of the Company, enforceable against it in accordance
with its terms except (i) that
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the enforcement thereof may be subject to bankruptcy, insolvency,
reorganization, fraudulent conveyance, moratorium or other similar laws
now or hereafter in effect relating to creditors' rights generally, and
to general principles of equity (regardless of whether enforcement is
considered in a proceeding in equity or at law) and the discretion of
the court before which any proceeding therefor may be brought and (ii)
as any rights to indemnity or contribution thereunder may be limited by
federal and state securities laws and public policy considerations.
(i) The Debentures and any additional Debentures issued as
interest in accordance with the provisions of the Indenture (the
"In-kind Debentures"), as of the Time of Purchase, will be duly
authorized by the Company for issuance and conform in all material
respects to the description thereof in the Final Memorandum. The
Debentures and the In-kind Debentures, when executed by the Company and
authenticated by the Trustee in accordance with the provisions of the
Indenture and delivered upon the exchange of the Shares and/or the
Dividend Shares, if any, in the case of the Exchange Debentures, or as
interest on outstanding Debentures, in the case of the In-kind
Debentures, will have been duly executed, issued and delivered and will
constitute valid and legally binding obligations of the Company,
entitled to the benefits of the Indenture and enforceable against the
Company in accordance with their terms, except (i) that the enforcement
thereof may be subject to bankruptcy, insolvency, reorganization,
fraudulent conveyance, moratorium or other similar laws now or
hereafter in effect relating to creditors' rights and remedies
generally and to general principles of equity (regardless of whether
enforcement is considered in a proceeding in equity or at law) and the
discretion of the court before which any proceeding therefor may be
brought and (ii) as any rights to indemnity or contribution thereunder
may be limited by federal and state securities laws and public policy
considerations.
(j) Immediately after the consummation of the transactions
contemplated by this Agreement (including the use of proceeds from the
sale of the Shares at the Time of Purchase), the fair value and present
fair saleable value of the assets of the Company (on a consolidated
basis) will exceed the sum of its stated
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liabilities and identified contingent liabilities; the Company (on a
consolidated basis) will not be, after giving effect to the execution,
delivery and performance of this Agreement and the consummation of the
transactions contemplated hereby (including the use of proceeds from
the sale of the Shares at the Time of Purchase), (i) left with
unreasonably small capital with which to carry on its business as it is
proposed to be conducted, (ii) unable to pay its debts (contingent or
otherwise) as they mature or (iii) otherwise insolvent. In computing
the amount of contingent liabilities at any time, it is intended that
such liabilities will be computed at the amount that, in light of all
the facts and circumstances existing at such time, represents the
amount that can be reasonably be expected to become an actual or
matured liability.
(k) The Company has all requisite corporate power and
authority to (i) execute, deliver and perform its obligations under
each of this Agreement, the Certificate of Designation, the Indenture,
the Share Registration Rights Agreement, the Shares, the Dividend
Shares, the Debentures and the In-kind Debentures, (ii) execute,
deliver and perform its obligations under all other agreements and
instruments to be executed and delivered by the Company pursuant to or
in connection with each of the Basic Documents and the transactions
contemplated hereby and thereby and (iii) subsequent to the filing of
the Certificate of Designation, issue and deliver the Shares in the
manner and for the purpose contemplated by this Agreement.
(l) Subsequent to the date as of which information is given
in the Final Memorandum to the date hereof, except as otherwise stated
or contemplated thereby, there has not been (i) any event or condition
that has had or that could reasonably be expected to have a Material
Adverse Effect, (ii) any transaction entered into by the Company or any
of its Subsidiaries, other than in the ordinary course of business,
that is material to the Company and its Subsidiaries, taken as a whole,
or (iii) any dividend or distribution of any kind declared, paid or
made by the Company on its common stock.
(m) Except as set forth in the Final Memorandum, there is no
action, suit, investigation or proceeding, governmental or otherwise,
pending or, to the best
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knowledge of the Company, threatened to which the Company or any of its
Subsidiaries is or would be a party or of which the properties or
assets of the Company or its Subsidiaries are or may be subject, that
(i) seeks to restrain, enjoin, prevent the consummation of or otherwise
challenge the issuance and sale of the Shares by the Company or any of
the other transactions contemplated hereby, (ii) questions the legality
or validity of any such transactions or seeks to recover damages or
obtain other relief in connection with any such transactions or (iii)
could reasonably be expected to have a Material Adverse Effect.
(n) The execution, delivery and performance by the Company of
the Basic Documents, the issuance and sale by the Company of the
Shares, and the execution, delivery and performance by the Company of
all other agreements and instruments to be executed and delivered by
the Company pursuant hereto or thereto or in connection herewith or
therewith or in connection with any of the transactions contemplated
hereby or thereby, and compliance by the Company with the terms and
provisions hereof and thereof, do not and will not (i) violate any
provision of any law, rule or regulation (including, without
limitation, Regulation G, T, U or X of the Board of Governors of the
Federal Reserve System), order, writ, judgment, decree, determination
or award presently in effect or in effect at the Time of Purchase
having applicability to the Company or any of its Subsidiaries, (ii)
conflict with or result in a breach of or constitute a default under
the certificate of incorporation or by-laws (or similar organizational
document) of the Company or any of its Subsidiaries, or, as of the Time
of Purchase, any indenture or loan or credit agreement, or any other
material agreement or instrument, to which the Company or any of its
Subsidiaries is a party or by which the Company or any of its
Subsidiaries or any of their respective properties or assets may be
bound or affected, or (iii) except as contemplated by the Basic
Documents or the Credit Agreement, result in, or require the creation
or imposition of, any Lien upon or with respect to any of the
properties or assets now owned or hereafter acquired by the Company or
any of its Subsidiaries, except, in each case, where such violation,
conflict, default or creation or imposition of any Lien would not
(individually or in the
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aggregate) be reasonably likely to have a Material Adverse Effect.
(o) Each agreement or instrument (other than the Basic
Documents) executed and delivered by the Company in connection with the
Basic Documents and the transactions contemplated thereby has been duly
and validly authorized and, when executed and delivered by the Company,
will constitute a valid and legally binding obligation of the Company,
enforceable against it in accordance with its terms, except (i) that
the enforcement thereof may be subject to bankruptcy, insolvency,
reorganization, fraudulent conveyance, moratorium or other similar laws
now or hereafter in effect relating to creditors' rights generally, and
to general principles of equity (regardless of whether enforcement is
considered in a proceeding in equity or at law) and the discretion of
the court before which any proceeding therefor may be brought and (ii)
as any rights to indemnity and contribution hereunder and thereunder
may be limited by applicable law.
(p) Neither the Company nor any of its Subsidiaries is
currently or, after giving effect to the consummation of the
transactions contemplated by this Agreement, will be (i) in violation
of its respective certificate of incorporation or by-laws (or similar
organizational document), (ii) in default (nor will an event occur
which with notice or passage of time or both would constitute such a
default) under or in violation of any indenture or loan or credit
agreement or any other material agreement or instrument to which it is
a party or by which it or any of its properties or assets may be bound
or affected (except as set forth in the Final Memorandum), (iii) in
violation of any order of any court, arbitrator or governmental body,
or (iv) in violation of or will have violated any statute, rule or
regulation of any governmental authority, except in each case, which
default or violation (individually or in the aggregate) could
reasonably be expected to (x) affect the legality, validity or
enforceability of any of the Basic Documents in any material respect or
(y) have a Material Adverse Effect.
(q) Except as set forth in the Final Memorandum, and assuming
the accuracy of the Initial Purchaser's representations and warranties
set forth in Section 3.2
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hereof, and the due performance by the Initial Purchaser of the
covenants and agreements set forth in Section 3.2 hereof, no
authorization, consent, approval, license, qualification or formal
exemption from, nor any filing, declaration or registration with, any
court, governmental agency or regulatory authority or any securities
exchange is required in connection with the execution, delivery or
performance by the Company or any of its Subsidiaries (to the extent
they are a party thereto) of any of the Basic Documents or any of the
transactions contemplated thereby, except (i) as may be required under
state securities or "blue sky" laws or the laws of any foreign
jurisdiction in connection with the offer and sale of the Shares or
(ii) as would not (individually or in the aggregate) be reasonably
likely to have a Material Adverse Effect. All such authorizations,
consents, approvals, licenses, qualifications, exemptions, filings,
declarations and registrations set forth in the Final Memorandum (other
than as disclosed therein) which are required to have been obtained by
the date hereof have been obtained or made, as the case may be, and are
in full force and effect and not the subject of any pending or, to the
knowledge of the Company, threatened attack by appeal or direct
proceeding or otherwise.
(r) The Company is not, and immediately after the Time of
Purchase will not be, an "investment company" or a company "controlled"
by an "investment company" within the meaning of the Investment Company
Act of 1940, as amended.
(s) (i) No Reportable Event (as defined in Section 4043 of
ERISA) has occurred during the five-year period prior to the date on
which this representation is made with respect to any Employee Benefit
Plan (as defined in Section 3(3) of ERISA), (ii) the Company and its
Subsidiaries have complied in all material respects with the applicable
provisions of ERISA and the Code in connection with each Employee
Benefit Plan, (iii) neither the Company nor any person or entity
treated with the Company as a single employer under Section 414 of
ERISA (a "Commonly Controlled Entity") has had a complete or partial
withdrawal from any Multiemployer Plan (as defined in ERISA), (iv)
neither the Company nor any Commonly Controlled Entity would become
subject to any liability under ERISA if the Company or any such
Commonly Controlled
-17-
Entity were to withdraw completely from all Multiemployer Plans as of
the valuation date most closely preceding the date on which this
representation is made, and (v) no such Multiemployer Plan is in
reorganization or insolvent, which, in any such case under clause (i),
(ii), (iii), (iv) or (v), individually or in the aggregate, will result
in a Material Adverse Effect.
(t) The Company and each of its Subsidiaries have good and
valid title to, or valid and enforceable leasehold interests in, all
properties and assets identified in the Final Memorandum as owned or
leased, respectively, by each of them which are material to the
business of the Company and its Subsidiaries, taken as a whole, free
and clear of all Liens, except (i) such Liens as are described in the
Final Memorandum or (ii) Liens created in the ordinary course of
business which are Permitted Liens (as defined in the Indenture). All
of the leases material to the business of the Company or any of its
Subsidiaries and under which the Company or any of its Subsidiaries, as
the case may be, holds properties described in the Final Memorandum,
are valid and binding as leased by them, with such exceptions as are
not material and do not interfere with the use made and proposed to be
made of such properties by the Company or any of its Subsidiaries, as
the case may be.
(u) Neither the Company nor any of its Subsidiaries, or any
person acting on its or their behalf, has engaged in (i) any form of
general solicitation or general advertising (within the meaning of
Regulation D under the Act ("Regulation D")) in connection with any
offer or sale of the Shares, (ii) any public offering of the shares
(within the meaning of Section 4(2) of the Act) or (iii) any action
which would require the registration of the offering and sale of the
Shares pursuant to this Agreement under any Act; provided that the
foregoing representation and warranty shall not be deemed to apply to
the actions of the Initial Purchaser.
(v) All tax returns required to be filed by the Company or any
of its Subsidiaries in any jurisdiction (including foreign
jurisdictions) have been duly filed and all taxes, assessments, fees
and other charges including, without limitation, withholding taxes,
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penalties, and interest ("Taxes") due or claimed to be due have been
paid, other than those Taxes being contested in good faith and for
which adequate reserves or accruals have been established in accordance
with generally accepted accounting principles, except where the failure
to file such returns or to pay such Taxes is not reasonably likely to
have, singly or in the aggregate, a Material Adverse Effect. The
Company knows of no actual or proposed additional tax assessments for
any fiscal period against the Company or any of its Subsidiaries that,
individually or in the aggregate, is reasonably likely to have a
Material Adverse Effect.
(w) The Company and each of its Subsidiaries owns or has the
legal right to use, all trade names, unregistered trademarks and
service marks, brand names, patents, patent rights, licenses, know-how,
registered and unregistered copyrights, registered trademarks and
service marks, and all applications for any of the foregoing, necessary
for each of them to conduct its business as currently conducted except
for those the failure to own or have such legal right to use would not
reasonably be expected to have a Material Adverse Effect. Except as set
forth in the Final Memorandum, none of the Company or any of its
Subsidiaries has been charged with any material infringement with
respect to any intangible property of the character described above
relating to the business or been notified or advised of any material
claim of any other Person relating to any of the intangible property,
which infringements or claims (individually or in the aggregate) would
be reasonably likely to have a Material Adverse Effect.
(x) The Shares, the Certificate of Designation, the
Debentures, the Indenture, the Share Registration Rights Agreement and
this Agreement conform in all material respects to the descriptions
thereof in the Final Memorandum.
(y) Assuming the accuracy of the Initial Purchaser's
representations and warranties set forth in Section 3.2 hereof, and the
due performance by the Initial Purchaser of the covenants and
agreements set forth in Section 3.2 hereof, the offer and sale of the
Shares to the Initial Purchaser in the manner
-19-
contemplated by this Agreement and the Memorandum does not require
registration under the Act.
(z) Except as described in the Final Memorandum, each of the
Company and its Subsidiaries is in compliance with the common law and
all federal, state, local and foreign laws, and any rules, regulations,
orders, decrees, judgments or injunctions issued or promulgated
thereunder relating to pollution and protection of public and employee
health and the environment ("Environmental Law") and with the terms and
conditions of any permit, license or approval required thereunder in
connection with the ownership, operation or use of its business,
property and assets where the failure to be in such compliance could
reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect; except as disclosed in the Final Memorandum,
and to the knowledge of the Company, none of the Company or any of its
Subsidiaries is subject to any liability, absolute or contingent, under
any Environmental Law which liability would, individually or in the
aggregate, be reasonably likely to result in a Material Adverse Effect;
except as disclosed in the Final Memorandum, there is no civil,
criminal or administrative action, suit, demand, hearing, notice of
violation or deficiency, investigation, proceeding or notice of
potential responsibility or liability or demand letter or request for
information pending or, to the knowledge of the Company, threatened
against the Company or any of its Subsidiaries under any Environmental
Law which, if determined adversely to the Company or any such
Subsidiary, would, individually or in the aggregate, be reasonably
likely to result in a Material Adverse Effect.
(aa) No labor dispute exists with the employees of the Company
or any of its Subsidiaries or, to the knowledge of the Company or any
of its Subsidiaries, is threatened or imminent, except as described in
or contemplated by the Final Memorandum and except for such disputes
that would not be reasonably likely to result in a Material Adverse
Effect.
(bb) Each of the Company and its Subsidiaries carries
insurance (including self insurance) in such amounts and covering such
risks as in its reasonable
-20-
determination is adequate for the conduct of its business and the value
of its properties.
(cc) No securities of the Company or any of its Subsidiaries
are of the same class (within the meaning of Rule 144A under the Act
("Rule 144A")) as the Shares 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.
(dd) None of the Company or its Subsidiaries has
taken, nor will any of them take, directly or indirectly, any action
designed to, or that might be reasonably expected to, cause or result
in stabilization or manipulation of the price of the Shares.
(ee) None of the Company, its Subsidiaries, any of their
respective Affiliates or any person acting on its or their behalf
(other than the Initial Purchaser) has engaged in any directed selling
efforts (within the meaning of Regulation S under the Act ("Regulation
S") with respect to the Shares and the Company, its Subsidiaries and
their respective Affiliates and any person acting on its or their
behalf (other than the Initial Purchaser) have acted in accordance with
the offering restrictions requirement of Regulation S.
(ff) As of the Time of Purchase, the Company will have duly
authorized each of the transactions contemplated hereby and by the
Final Memorandum.
(gg) Except as stated in the Final Memorandum, the Company
does not know of any claims for services, either in the nature of a
finder's fee or financial advisory fee, with respect to the offering of
the Shares and the transactions contemplated by the Final Memorandum.
Section 3.2. Resale of Shares. The Initial Purchaser
represents and warrants that it is a "qualified institutional buyer" (as defined
in Rule 144A ("QIB")). The Initial Purchaser represents and warrants and agrees
with the Company that (a) it has not and will not, directly or indirectly,
solicit offers for, or offer or sell, the Shares by any form of general
solicitation or general advertising (as those terms are used in Regulation D) or
in any manner involving a public offering (within the meaning of Section
-21-
4(2) of the Act); (b) it has not and will not, directly or indirectly, engage in
any "directed selling efforts" (within the meaning of Regulation S under the
Act) in the United States in connection with the Shares being offered and sold
pursuant to Regulation S under the Act; (c) it has not and will not, directly or
indirectly, purchase with a view to or for offer or sale in connection with any
distribution that would be in violation of federal or state law; and (d) it has
and will solicit offers for the Shares only from, and will offer the Shares only
to (A) in the case of offers inside the United States, (i) Persons whom the
Initial Purchaser reasonably believes 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
Purchaser 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 or (ii) a limited number of other institutional
investors reasonably believed by the Initial Purchaser to be "Accredited
Investors" (as defined in Rule 501(a)(1), (2), (3) or (7) of the Act) that,
prior to their purchase of the Shares, deliver to the Initial Purchaser and the
Company a letter containing the representations and agreements set forth in
Annex A to the Final Memorandum and (B) in the case of offers outside the United
States, to Persons other than U.S. Persons in reliance upon Regulation S, in
transactions meeting the requirements of Regulation S.
ARTICLE IV
CONDITIONS PRECEDENT TO CLOSING
Section 4.1. Conditions Precedent to Obligations of the
Initial Purchaser. The obligation of the Initial Purchaser to purchase the
Shares to be purchased by it hereunder is subject to the satisfaction of the
following conditions:
(a) The Initial Purchaser shall have received an opinion,
addressed to the Initial Purchaser in form and substance satisfactory
to counsel to the Initial Purchaser and dated the Time of Purchase,
from Debevoise & ▇▇▇▇▇▇▇▇, counsel to the Company, covering the matters
set forth in Exhibit 1 hereto.
(b) The Initial Purchaser shall have received an opinion,
addressed to the Initial Purchaser in form and
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substance satisfactory to the Initial Purchaser and dated the Time of
Purchase, of ▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, counsel to the Initial Purchaser,
substantially in the form of Exhibit 2 hereto.
In rendering such opinions in accordance with Sections 4.1(a)
and (b), each such counsel may rely as to factual matters upon
certificates or other documents furnished by officers and directors of
the Company and representations of the Initial Purchaser and by
government officials, and upon such other documents as such counsel
deem appropriate as a basis for their opinion. Each such counsel may
specify the jurisdictions in which it is admitted to practice and that
it is not admitted to practice in any other jurisdiction or an expert
in the law of any other jurisdiction. To the extent such opinion
concerns the laws of any other such jurisdiction such counsel may rely
upon the opinion of counsel (satisfactory to the Initial Purchaser)
admitted to practice in such jurisdiction. Any opinion relied upon by
such counsel as aforesaid shall be delivered to the Initial Purchaser
together with the opinion of such counsel, which opinion shall state
that such counsel believes that their and the Initial Purchaser's
reliance thereon is justified.
(c) The Company shall have received an opinion, in form and
substance satisfactory to the Initial Purchaser and counsel to the
Initial Purchaser and dated the Time of Purchase, of Chartered Capital
Advisers, Inc., concerning the effect of the Offering on the capital
structure of the Company.
(d) The Initial Purchaser shall have received from Coopers &
▇▇▇▇▇▇▇ a comfort letter or letters dated the date hereof and the Time
of Purchase in form and substance satisfactory to counsel to the
Initial Purchaser.
(e) The representations and warranties made by the Company
herein shall be true and correct in all material respects (except for
changes expressly provided for in this Agreement) on and as of the Time
of Purchase with the same effect as though such representations and
warranties had been made on and as of the Time of Purchase; the Company
shall have complied in all material respects with all agreements
-23-
to be performed as set forth in or contemplated hereunder and in the
other Basic Documents required to be performed by the Company at or
prior to the Time of Purchase.
(f) Subsequent to the date of the Final Memorandum, (i) there
shall not have been any change, or any development involving a
prospective change, which has had or could be reasonably likely to have
a Material Adverse Effect, and (ii) the Company and its Subsidiaries
shall have conducted their respective businesses only in the ordinary
course (except as contemplated or disclosed in the Final Memorandum).
(g) At the Time of Purchase and after giving effect to the
consummation of the transactions contemplated by this Agreement and the
other Basic Documents, there shall exist no Voting Rights Triggering
Event.
(h) The purchase of and payment for the Shares by the Initial
Purchaser hereunder shall not be prohibited or enjoined (temporarily
or permanently) by any applicable law or governmental regulation
(including, without limitation, Regulation G, T, U or X of the Board
of Governors of the Federal Reserve System).
(i) At the Time of Purchase, the Initial Purchaser shall have
received a certificate, dated the Time of Purchase, from the Company
stating that the conditions specified in Sections 4.1(e), (f), (g) and
(l) have been satisfied or duly waived at the Time of Purchase.
(j) Each of the Basic Documents shall be satisfactory in form
and substance to the Initial Purchaser and shall have been executed and
delivered by all the respective parties thereto and shall be in full
force and effect.
(k) All proceedings taken in connection with the issuance of
the Shares and the transactions contemplated by this Agreement, the
other Basic Documents and all documents and papers relating thereto
shall be satisfactory to the Initial Purchaser and counsel to the
Initial Purchaser. The Initial Purchaser and counsel to the Initial
Purchaser shall have received copies of such papers and documents as
-24-
they may reasonably request in connection therewith, all in form and
substance reasonably satisfactory to them.
(l) The issuance and sale of the Shares hereunder shall not
have been enjoined (temporarily or permanently) at the Time of
Purchase.
(m) There shall not have been any announcement by any
"nationally recognized statistical rating organization" (as defined in
Rule 436(g) of the Act) that (A) it is downgrading its rating assigned
to any debt securities of the Company, or (B) it is reviewing its
rating assigned to any debt securities of the Company with a view to
possible downgrading, or with negative implications, or of a possible
change in any such rating that does not indicate the direction of the
possible change.
(n) The Initial Purchaser shall have sold the Shares in
accordance with the provisions of Section 3.2 hereof.
(o) The Trustee shall have received a letter, addressed to the
Trustee and dated the Time of Purchase, from Debevoise & ▇▇▇▇▇▇▇▇ to
the effect that its opinion delivered in accordance with Section 4.1(a)
may be relied upon by the Trustee as though the same was delivered to
it.
On or before the Time of Purchase, the Initial Purchaser and
counsel to the Initial Purchaser shall have received such further documents,
opinions, certificates and schedules or other instruments relating to the
business, corporate, legal and financial affairs of the Company and its
Subsidiaries as they may reasonably request.
ARTICLE V
COVENANTS
Section 5.1. Covenants of the Company. The Company covenants
and agrees with the Initial Purchaser that:
(a) The Company will not amend or supplement the Final
Memorandum or any amendment or supplement thereto of which the Initial
Purchaser shall not previously
-25-
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 Purchaser shall not have given its consent, which consent shall
not be unreasonably or untimely withheld. The Company will promptly,
upon the reasonable request of the Initial Purchaser or counsel to the
Initial Purchaser, make any amendments or supplements to the
Preliminary Memorandum or the Final Memorandum that may be necessary or
advisable in the opinion of the Initial Purchaser or counsel to the
Initial Purchaser in connection with the resale of the Shares by the
Initial Purchaser.
(b) The Company will cooperate with the Initial Purchaser in
arranging for the qualification of the Shares for offering and sale
under the securities or "blue sky" laws of such jurisdictions as the
Initial Purchaser may designate and will continue such qualifications
in effect for as long as may be reasonably necessary to complete the
resale of the Shares; provided, however, that in connection therewith,
the Company shall not be required to qualify as a foreign corporation
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 Purchaser of the Shares, the Exchange Preferred Stock or the
Private Exchange Preferred Stock, 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 Memorandum to comply with applicable
law, the Company will promptly notify the Initial Purchaser thereof
(who thereafter will not use such Final Memorandum until appropriately
amended or supplemented) 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;
provided, however, that the Company's obligation hereunder shall not be
applicable
-26-
to the extent resale by the Initial Purchaser may be accomplished
pursuant to a Registration Statement (as defined in the Share
Registration Rights Agreement).
(d) The Company will, without charge, provide to the Initial
Purchaser and to counsel to the Initial Purchaser as many copies of the
Preliminary Memorandum and the Final Memorandum or any amendment or
supplement thereto as the Initial Purchaser may reasonably request.
(e) The Company will apply the net proceeds from the sale of
the Shares as set forth under "Use of Proceeds" in the Final
Memorandum.
(f) For and during the period ending on the date no Securities
are outstanding, the Company will furnish to the Initial Purchaser
copies of all reports and other communications (financial or otherwise)
furnished by the Company to the holders of the Securities and to its
common stockholders generally and, promptly after available, 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) Prior to the Time of Purchase, the Company will furnish to
the Initial Purchaser, as soon as they have been prepared, a copy of
any unaudited interim financial statements of the Company for any
period subsequent to the period covered by the most recent financial
statements appearing in the Final Memorandum.
(h) None of the Company or any of its Affiliates will sell,
offer for sale or solicit offers to buy or otherwise negotiate in
respect of any "security" (as defined in the Act) which could be
integrated with the sale of the Shares in a manner which would require
the registration of the Shares under the Act.
(i) The Company will not, and will not permit any of its
Subsidiaries to, solicit any offer to buy or offer to sell the
Securities by means of any form of general solicitation or general
advertising (within the meaning of Regulation D) or in any manner
involving a public offering (within the meaning of Section 4(2) of the
Act).
-27-
(j) For so long as any of the Securities remain outstanding
and are "restricted securities" (as defined in Rule 144(a)(3) of the
Act) and not salable in full under Rule 144 of the Act (or any
successor provision), the Company will make available, upon request, to
any seller of such Securities the information specified in Rule
144A(d)(4) under the Act, unless the Company is then subject to Section
13 or 15(d) of the Exchange Act.
(k) The Company will use its best efforts to (i) permit the
Shares to be included for quotation on PORTAL and (ii) permit the
Shares to be eligible for clearance and settlement through The
Depository Trust Company.
(l) The Company will use its best efforts to do and perform
all things required to be done and performed by it under this Agreement
and the other Basic Documents prior to or after the Closing and to
satisfy all conditions precedent on its part to the obligations of the
Initial Purchaser to purchase and accept delivery of the Shares.
ARTICLE VI
FEES
Section 6.1. Costs, Expenses and Taxes. The Company agrees to pay all
costs and expenses incident to the performance of its obligations under this
Agreement, whether or not the transactions contemplated herein are consummated
or this Agreement is terminated pursuant to Section 8.2 hereof, including, but
not limited to, all costs and expenses incident to (i) its negotiation,
preparation, printing, typing, reproduction, execution and delivery of this
Agreement and each of the other Basic Documents, any amendment or supplement to
or modification of any of the foregoing and any and all other documents
furnished pursuant hereto or thereto or in connection herewith or therewith,
(ii) any costs of printing the Preliminary Memorandum and the Final Memorandum
and any amendment or supplement thereto, any other marketing related materials
and any "blue sky" memoranda (which shall include the reasonable disbursements
of counsel to the Initial Purchaser in respect thereof), (iii) all arrangements
relating to the delivery to the Initial Purchaser of copies of the foregoing
documents, (iv) the fees and disbursements of the counsel, the
-28-
accountants and any other experts or advisors retained by the Company, (v) pre
paration (including printing), issuance and delivery to the Initial Purchaser of
the Shares, including transfer agent fees, (vi) the qualification of the Shares
under state securities and "blue sky" laws, including filing fees and reasonable
fees and disbursements of counsel to the Initial Purchaser relating thereto,
(vii) its respective expenses and the cost of any private or chartered jets in
connection with any meetings with prospective investors in the Shares, including
transfer agent fees, (viii) fees and expenses of the Trustee including fees and
expenses of counsel to the Trustee, (ix) all expenses and listing fees incurred
in connection with the application for quotation of the Shares on PORTAL, (x)
any fees charged by investment rating agencies for the rating of the Shares and
(xi) except as limited by Article VII, all costs and expenses (including,
without limitation, reasonable attorneys' fees and expenses), if any, in
connection with the enforcement of this Agreement, the Shares or any other
agreement furnished pursuant hereto or thereto or in connection herewith or
therewith.
ARTICLE VII
INDEMNITY
Section 7.1. Indemnity.
(a) Indemnification by the Company. The Company agrees and
covenants to hold harmless and indemnify the Initial Purchaser and any
Affiliates thereof (including any director, officer, employee, agent or
controlling Person of any of the foregoing) from and against any losses, claims,
damages, liabilities and expenses (including expenses of investigation) to which
the Initial Purchaser and its Affiliates may become subject arising out of or
based upon any untrue statement or alleged untrue statement of a material fact
contained in the Memorandum and any amendments or supplements thereto, or
arising out of or based upon the omission or alleged omission thereon to state a
material fact required to be stated therein or necessary to make the statements
therein, in the light of the circumstances under which they were made, not
misleading; provided, however, that the Company shall not be liable under this
paragraph (a) to the extent that such losses, claims, damages or liabilities
arose out of or are based upon an untrue statement or omission made in the
Memorandum and any amendments or supplements thereto in reliance upon and in
-29-
conformity with information relating to the Initial Purchaser furnished in
writing by the Initial Purchaser for inclusion therein (or for a breach by the
Initial Purchaser of any representation or warranty contained in this
Agreement); provided, further, that the Company shall not be liable under this
paragraph (a) to the extent that such losses, claims, damages or liabilities
arose out of or are based upon an untrue statement or omission made in any
Memorandum that is corrected in the Final Memorandum (or any amendment or
supplement thereto) if the person asserting such loss, claim, damage or
liability purchased Shares from the Initial Purchaser in reliance on such
Memorandum but was not given the Final Memorandum (or any amendment or
supplement thereto) on or prior to the confirmation of the sale of such Shares.
The Company further agrees to reimburse the Initial Purchaser for any reasonable
legal and other expenses as they are incurred by it in connection with
investigating, preparing to defend or defending any lawsuits, claims or other
proceedings or investigations arising in any manner out of or in connection with
such Person being the Initial Purchaser; provided that if the Company reimburses
the Initial Purchaser hereunder for any expenses incurred in connection with a
lawsuit, claim or other proceeding for which indemnification is sought, the
Initial Purchaser hereby agrees to refund such reimbursement of expenses to the
extent that the losses, claims, damages or liabilities arise out of or are based
upon an untrue statement or omission made in the Memorandum and any amendments
or supplements thereto in reliance upon and in conformity with information
relating to the Initial Purchaser furnished in writing by the Initial Purchaser
for inclusion therein (or for a breach by the Initial Purchaser of any
representation or warranty contained in this Agreement). The Company further
agrees that the indemnification, contribution and reimbursement commitments set
forth in this Article VII shall apply whether or not the Initial Purchaser is a
formal party to any such lawsuits, claims or other proceedings. The indemnity,
contribution and expense reimbursement obligations of the Company under this
Article VII shall be in addition to any liability the Company may otherwise
have.
(b) Indemnification by the Initial Purchaser. The Initial
Purchaser agrees to hold harmless and indemnify the Company and any Affiliates
thereof (including any director, officer, employee, agent or controlling Person
of any of the foregoing) from and against any losses, claims, damages,
liabilities and expenses insofar as such losses,
-30-
claims, damages, liabilities or expenses arise out of or are based upon any
untrue statement of any material fact contained in the Offering Materials, or
any omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, in each case to the
extent, but only to the extent, that such untrue statement or omission was made
in reliance upon and in conformity with information relating to the Initial
Purchaser furnished in writing by the Initial Purchaser for inclusion therein.
The indemnity, contribution and expense reimbursement obligations of the Initial
Purchaser under this Article VII shall be in addition to any liability the
Initial Purchaser may otherwise have and shall apply whether or not the Company
or any Affiliates thereof is a formal party to any lawsuits, claims or other
proceedings.
(c) Procedure. If any Person shall be entitled to indemnity
hereunder (each an "Indemnified Party"), such Indemnified Party shall give
prompt written notice to the party or parties from which such indemnity is
sought (each an "Indemnifying Party") of the commencement of any action, suit,
investigation or proceeding, governmental or otherwise (a "Proceeding"), with
respect to which such Indemnified Party seeks indemnification or contribution
pursuant hereto; provided, however, that the failure so to notify the
Indemnifying Parties shall not relieve the Indemnifying Parties from any
obligation or liability except to the extent that the Indemnifying Parties have
been prejudiced materially by such failure. The Indemnifying Parties shall have
the right, exercisable by giving written notice to an Indemnified Party promptly
after the receipt of written notice from such Indemnified Party of such
Proceeding, to assume, at the Indemnifying Parties' expense, the defense of any
such Proceeding, with counsel reasonably satisfactory to such Indemnified Party;
provided, however, that an Indemnified Party or parties (if more than one such
Indemnified Party is named in any Proceeding) shall have the right to employ
separate counsel in any such Proceeding and to participate in the defense
thereof, but the fees and expenses of such counsel shall be at the expense of
such Indemnified Party or parties unless: (1) the Indemnifying Parties agree to
pay such fees and expenses; or (2) the Indemnifying Parties fail promptly to
assume the defense of such Proceeding or fail to employ counsel reasonably
satisfactory to such Indemnified Party or parties; or (3) the named parties to
any such Proceeding (including any impleaded parties) include both such
Indemnified Party or parties and the Indemnifying Party or an Affiliate of the
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Indemnifying Party and such Indemnified Parties, and the Indemnified Parties
shall have been advised in writing by counsel that there may be one or more
legal defenses available to such Indemnified Party or parties that are different
from or additional to those available to the Indemnifying Parties, in which
case, if such Indemnified Party or parties notifies the Indemnifying Parties in
writing that it elects to employ separate counsel at the expense of the
Indemnifying Parties, the Indemnifying Parties shall not have the right to
assume the defense thereof with respect to the Indemnified Parties and such
counsel shall be at the expense of the Indemnifying Parties, it being
understood, however, that the Indemnifying Parties shall not, in connection with
any one such Proceeding or separate but substantially similar or related
Proceedings in the same jurisdiction, arising out of the same general
allegations or circumstances, be liable for the fees and expenses of more than
one separate firm of attorneys (together with appropriate local counsel) at any
time for such Indemnified Party or parties, or for fees and expenses that are
not reasonable. No Indemnified Party or Parties will settle any Proceeding
without the consent of the Indemnifying Party or parties (but such consent shall
not be unreasonably withheld). No Indemnifying Party shall, without the prior
written consent of the Indemnified Party, effect any settlement of any pending
or threatened Proceeding in respect of which any Indemnified Party is or could
have been or a party and indemnity could have been sought hereunder by such
Indemnified Party, unless such settlement includes an unconditional release of
such Indemnified Party from all liability or claims that are the subject of such
Proceeding.
Section 7.2. Contribution. If for any reason the
indemnification provided for in Section 7.1 of this Agreement is unavailable to
an Indemnified Party, or insufficient to hold it harmless, in respect of any
losses, claims, damages, liabilities or expenses referred to therein, then each
applicable Indemnifying Party, in lieu of indemnifying such Indemnified Party,
shall contribute to the amount paid or payable by such Indemnified Party as a
result of such losses, claims, damages or liabilities in such proportion as is
appropriate to reflect not only the relative benefits received by the
Indemnifying Party on the one hand and the Indemnified Party on the other, but
also the relative fault of the Indemnifying and Indemnified Parties in
connection with the statements or omissions which resulted in such losses,
claims, damages or liabilities, as
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well as any other relevant equitable considerations. The relative benefits
received by the Indemnifying and Indemnified Parties shall be deemed to be in
the same proportion as the total proceeds from the offering of the Shares
(before deducting expenses) received by the Company bear to the total discounts
and commissions received by the Initial Purchaser. The relative fault of the
Indemnifying and Indemnified 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 Indemnifying or Indemnified Parties and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission. The amount paid or payable by a party as a
result of the losses, claims, damages and liabilities referred to above shall be
deemed to include any legal or other fees or expenses incurred by such party in
connection with investigating or defending any such claim.
The Company, on the one hand, and the Initial Purchaser, on
the other hand, agree that it would not be just and equitable if contribution
pursuant to the immediately preceding paragraph were determined pro rata or per
capita or by any other method of allocation which does not take into account the
equitable considerations referred to in such paragraph. Notwithstanding any
other provision of this Section 7.2, the Initial Purchaser shall not be
obligated to make contributions hereunder that in the aggregate exceed the total
discounts, commissions and other compensation received by the Initial Purchaser
under this Agreement, less the aggregate amount of any damages that the Initial
Purchaser has otherwise been required to pay by reason of the untrue or alleged
untrue statements or a breach of a representation or warranty or the omissions
or alleged omissions to state a material fact; provided, however, that 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.
Section 7.3. Share Registration Rights Agreement.
Notwithstanding anything to the contrary in this Article VII, the
indemnification and contribution provisions of the Share Registration Rights
Agreement shall govern any claim with respect thereto.
ARTICLE VIII
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MISCELLANEOUS
Section 8.1. Survival of Provisions. The representations,
warranties and covenants of the Company, its officers and the Initial Purchaser
made herein, the indemnity and contribution agreements contained herein and each
of the provisions of Articles VI, VII and VIII shall remain operative and in
full force and effect regardless of (a) the investigation made by or on behalf
of the Company, the Initial Purchaser or any Indemnified Party, (b) acceptance
of any of the Shares and payment therefor, (c) any termination of this Agreement
or (d) disposition of the Shares by the Initial Purchaser whether by redemption,
exchange, sale or otherwise.
Section 8.2. Termination. (a) This Agreement may be terminated
in the sole discretion of the Initial Purchaser by notice to the Company given
prior to the Time of Purchase in the event that the Company 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 or, if at or
prior to the Closing:
(i) the Company or any of its 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
Purchaser, has had or has a Material Adverse Effect, or there shall
have been, in the sole judgment of the Initial Purchaser, 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 any of its
Subsidiaries), except in each case as described in the Final Memorandum
(exclusive of any amendment or supplement thereto);
(ii) trading in securities of the Company or in securities
generally on the New York Stock Exchange, American Stock Exchange or
the Nasdaq National Market shall have been suspended or minimum or
maximum prices shall have been established on any such exchange or
market;
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(iii) a banking moratorium shall have been declared by
New York or United States authorities;
(iv) there shall have been (A) an outbreak or escalation of
hostilities between the United States and any foreign power, or (B) an
outbreak or escalation of any other insurrection or armed conflict
involving the United States or any other national or international
calamity or emergency, or (C) any material change in the financial
markets of the United States which, in the case of (A), (B) or (C)
above and in the sole judgment of the Initial Purchaser, makes it
impracticable or inadvisable to proceed with the offering or the
delivery of the Shares as contemplated by the Final Memorandum; or
(v) any securities of the Company 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
8.2 shall be without liability of any party to any other party except as
provided in Section 8.1 hereof.
Section 8.3. No Waiver; Modifications in Writing. No
failure or delay on the part of the Company or the Initial Purchaser in
exercising any right, power or remedy hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise of any such right, power or
remedy preclude any other or further exercise thereof or the exercise of any
other right, power or remedy. The remedies provided for herein are cumulative
and are not exclusive of any remedies that may be available to the Company or
the Initial Purchaser at law or in equity or otherwise. No waiver of or consent
to any departure by the Company or the Initial Purchaser from any provision of
this Agreement shall be effective unless signed in writing by the party entitled
to the benefit thereof, provided that notice of any such waiver shall be given
to each party hereto as set forth below. Except as otherwise provided herein,
no amendment, modification or termination of any provision of this Agreement
shall be effective unless signed in writing by or on behalf of each of the
Company and the Initial Purchaser. Any amendment, supplement or modification of
or to any provision of this Agreement, any waiver of any provision of this
Agreement, and any consent to any departure by the Company or the Initial
Purchaser from the terms of any
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provision of this Agreement, shall be effective only in the specific instance
and for the specific purpose for which made or given. Except where notice is
specifically required by this Agreement, no notice to or demand on the Company
in any case shall entitle the Company to any other or further notice or demand
in similar or other circumstances.
Section 8.4. Information Supplied by the Initial Purchaser.
The statements set forth in the fourth and fifth sentences of the third
paragraph and the seventh paragraph under the heading "Plan of Distribution" in
the Final Memorandum (to the extent such statements relate to the Initial
Purchaser) constitute the only information furnished by the Initial Purchaser to
the Company for the purposes of Sections 3.1(a) and 7.1(a) and (b) hereof.
Section 8.5. Communications. All notices, demands and other
communications provided for hereunder shall be in writing, and, (a) if to the
Initial Purchaser, shall be given by registered or certified mail, return
receipt requested, telex, telegram, telecopy, courier service or personal
delivery, addressed to CIBC Wood Gundy Securities Corp., ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇▇ ▇▇▇▇▇, with a copy to
▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention:
▇▇▇▇▇ ▇▇▇▇▇▇▇, Esq., and (b) if to the Company, shall be given by similar means
to Fairfield Manufacturing Company, Inc., U.S. 52 South, ▇.▇. ▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇, Attention: President, with a copy to Debevoise &
▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇ ▇▇▇▇▇▇,
Esq. In each case notices, demands and other communications shall be deemed
given when received.
Section 8.6. Execution in Counterparts. This Agreement may be
executed in any number of counterparts and by different parties hereto on
separate counterparts, each of which counterparts, when so executed and
delivered, shall be deemed to be an original and all of which counterparts,
taken together, shall constitute but one and the same Agreement.
Section 8.7. Successors. This Agreement shall inure
to the benefit of and be binding upon the Initial Purchaser, the
Company 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
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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 Company contained in
Section 7.1(a) of this Agreement shall also be for the benefit of the directors,
officers, employees and agents of the Initial Purchaser and any Person or
Persons who control the Initial Purchaser within the meaning of Section 15 of
the Act or Section 20 of the Exchange Act and (ii) the indemnities of the
Initial Purchaser contained in Section 7.1(b) of this Agreement shall also be
for the benefit of the directors of the Company, their respective officers,
employees and agents and any Person or Persons who control the Company within
the meaning of Section 15 of the Act or Section 20 of the Exchange Act. No
purchaser of Shares from the Initial Purchaser will be deemed a successor
because of such purchase.
Section 8.8. Governing Law. THIS AGREEMENT SHALL BE DEEMED TO
BE A CONTRACT MADE UNDER THE LAWS OF THE STATE OF NEW YORK, AND FOR ALL PURPOSES
SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF SAID STATE, WITHOUT REGARD TO
PRINCIPLES OF CONFLICTS OF LAW.
Section 8.9. Severability of Provisions. Any provision of this
Agreement which is prohibited or unenforceable in any jurisdiction shall, as to
such jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof or
affecting the validity or enforceability of such provision in any other
jurisdiction.
Section 8.10. Headings. The Article and Section
headings and Table of Contents used or contained in this
Agreement are for convenience of reference only and shall not
affect the construction of this Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed as of the date first written above.
FAIRFIELD MANUFACTURING
COMPANY,
INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
-------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
Title: Vice President Finance
The foregoing Agreement is hereby
confirmed and accepted as of the
date first written above
CIBC WOOD GUNDY SECURITIES CORP.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
____________________________
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Managing Director