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EXHIBIT 1.1
$125,000,000
SALTON/MAXIM HOUSEWARES, INC.
10 3/4% Senior Subordinated Notes due 2005
PURCHASE AGREEMENT
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December 11, 1998
▇▇▇▇▇▇ BROTHERS INC.
Three World Financial Center
New York, New York 10285
Dear Sirs:
Salton/Maxim Housewares, Inc., a Delaware corporation (the "Company"),
proposes to issue and sell to you (the "Initial Purchaser") $125.0 million in
aggregate principal amount at maturity of its 10 3/4% Senior Subordinated Notes
due 2005 (the "Initial Notes") to be issued pursuant to the terms of an
Indenture (the "Indenture") among the Company, Home Creations Direct Ltd., a
Delaware corporation (the "Guarantor"), and Norwest Bank Minnesota, National
Association, as trustee (the "Trustee"), relating to the Initial Notes. The
Initial Purchaser proposes to purchase all the Initial Notes. Capitalized terms
used but not defined herein shall have the meanings given to such terms in the
Indenture.
Payment of principal of, premium, liquidated damages, if any, and
interest on the Notes (as defined) will be unconditionally guaranteed on a
senior subordinated basis by the Guarantor (the "Guarantee," together with the
Notes, the "Securities") and any newly acquired or created Domestic Restricted
Subsidiary.
The Initial Notes will be offered and sold to you pursuant to
exemptions from the registration requirements under the Securities Act of 1933,
as amended (the "Securities Act"). The Company has prepared a preliminary
offering memorandum, dated November 30, 1998 (the "Preliminary Offering
Memorandum"), and a final offering memorandum (the "Offering Memorandum"), dated
December 11, 1998, relating to the Company and the Initial Notes. As described
in the Offering Memorandum, the Company will use the net proceeds from the
offering of the Initial Notes to reduce existing indebtedness and for working
capital and general corporate purposes.
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Upon original issuance thereof, and until such time as the same is no
longer required under the applicable requirements of the Securities Act, the
Initial Notes (and all securities issued in exchange therefor or in substitution
thereof) shall bear the following legend:
"THE SECURITY (OR ITS PREDECESSOR) EVIDENCED HEREBY WAS ORIGINALLY
ISSUED IN A TRANSACTION EXEMPT FROM REGISTRATION UNDER SECTION 5 OF THE
UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
ACT"), AND THE SECURITY EVIDENCED HEREBY MAY NOT BE OFFERED, SOLD OR
OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN
APPLICABLE EXEMPTION THEREFROM. EACH PURCHASER OF THE SECURITY
EVIDENCED HEREBY IS HEREBY NOTIFIED THAT THE SELLER MAY BE RELYING ON
THE EXEMPTION FROM THE PROVISION OF SECTION 5 OF THE SECURITIES ACT
PROVIDED BY RULE 144A THEREUNDER. THE HOLDER OF THE SECURITY EVIDENCED
HEREBY AGREES FOR THE BENEFIT OF THE COMPANY THAT (A) SUCH SECURITY MAY
BE RESOLD, PLEDGED OR OTHERWISE TRANSFERRED, ONLY (1) (a) TO A PERSON
WHO THE SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER
(AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) IN A TRANSACTION
MEETING THE REQUIREMENTS OF RULE 144A, (b) IN A TRANSACTION MEETING THE
REQUIREMENTS OF RULE 144 UNDER THE SECURITIES ACT, (c) OUTSIDE THE
UNITED STATES TO A FOREIGN PERSON IN A TRANSACTION MEETING THE
REQUIREMENTS OF RULE 903 OR 904 UNDER THE SECURITIES ACT OR (d) IN
ACCORDANCE WITH ANOTHER EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF
THE SECURITIES ACT (AND BASED UPON AN OPINION OF COUNSEL IF THE COMPANY
SO REQUESTS), (2) TO THE COMPANY OR (3) PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT AND, IN EACH CASE, IN ACCORDANCE WITH ANY
APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR ANY
OTHER APPLICABLE JURISDICTION AND (B) THE HOLDER WILL, AND EACH
SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER FROM IT OF THE
SECURITY EVIDENCED HEREBY OF THE RESALE RESTRICTIONS SET FORTH IN (A)
ABOVE."
You have represented and warranted to the Company that you will make
offers (the "Exempt Resales") of the Initial Notes purchased by you hereunder on
the terms set forth in the Offering Memorandum, as amended or supplemented,
solely to (i) persons whom you reasonably believe to be "qualified institutional
buyers," as defined in Rule 144A under the Securities Act ("QIBs"), and (ii) to
persons other than U.S. Persons in offshore transactions meeting the
requirements of Rule 903 and 904 of Regulation S under the Securities Act (such
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persons specified in clauses (i) and (ii) being referred to herein as the
"Eligible Purchasers"). As used herein, the terms "offshore transaction" and
"U.S. person" have the respective meanings given to them in Regulation S. You
will offer the Initial Notes to Eligible Purchasers initially at a price equal
to 100% of the principal amount thereof. Such price may be changed at any time
without notice.
Holders (including subsequent transferees) of the Initial Notes will
have the registration rights set forth in the registration rights agreement (the
"Registration Rights Agreement"), to be dated December 16, 1998 (the "Closing
Date"), in the form of Exhibit A hereto, for so long as such Initial Notes
constitute "Transfer Restricted Securities" (as defined in the Registration
Rights Agreement). Pursuant to the Registration Rights Agreement, the Company
and the Guarantor will agree to file with the Securities and Exchange Commission
(the "Commission") under the circumstances set forth therein, (i) a
registration statement under the Securities Act (the "Exchange Offer
Registration Statement") relating to the Company's 10 3/4% New Notes due 2005
(the "New Notes" and, together with the Initial Notes, the "Notes") to be
offered in exchange for the Initial Notes (such offer to exchange being referred
to collectively as the "Exchange Offer") and (ii) a shelf registration statement
pursuant to Rule 415 under the Securities Act (the "Shelf Registration
Statement," and together with the Exchange Offer Registration Statement, the
"Registration Statements") relating to the resale of the Initial Notes by
certain holders of such Notes, and to use their best efforts to cause such
Registration Statements to be declared effective. This Agreement, the Indenture
and the Registration Rights Agreement are hereinafter referred to collectively
as the "Operative Documents." This is to confirm the agreements concerning the
purchase of the Initial Notes from the Company by you.
1. Representations, Warranties and Agreements of the Company and
the Guarantor. The Company and the Guarantor represent, warrant and agree as
follows:
(a) The Preliminary Offering Memorandum and the Offering Memorandum
have been prepared by the Company for use by the Initial Purchaser in connection
with the Exempt Resales. No order or decree preventing the use of the
Preliminary Offering Memorandum or the Offering Memorandum, or any order
asserting that the transactions contemplated by this Agreement are subject to
the registration requirements of the Securities Act, has been issued and no
proceeding for that purpose has commenced or is pending or, to the knowledge of
the Company or the Guarantor, is contemplated.
(b) The Preliminary Offering Memorandum and the Offering Memorandum
as of their respective dates did not, and the Offering Memorandum as of the
Closing Date will not, contain an untrue statement of a material fact or omit to
state a material fact necessary in order to make the statements contained
therein, in light of the circumstances under which they were made, not
misleading, except that this representation and warranty does not apply to
statements in or omissions from the Preliminary Offering Memorandum and the
Offering Memorandum relating to the Initial Purchaser and made in reliance upon
and in conformity
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with information furnished to the Company in writing by or on behalf of the
Initial Purchaser expressly for use therein.
(c) The Company is a corporation duly incorporated and validly
existing and in good standing under the laws of Delaware with all requisite
corporate power and authority to own, lease and operate its properties and to
conduct its business as described in the Preliminary Offering Memorandum and the
Offering Memorandum, and is duly registered and qualified to conduct its
business and is in good standing in each jurisdiction or place where the nature
of its properties or the conduct of its business requires such registration or
qualification, except where the failure so to register or qualify or to be in
good standing would not have a material adverse effect on the condition
(financial or other), business, prospects, properties, or results of operations
of the Company and its Subsidiaries, taken as a whole (a "Material Adverse
Effect").
(d) Each of the Company and the Guarantor has all requisite
corporate power and authority to execute, deliver and perform its obligations
under this Agreement, the Indenture, the Securities and the Registration Rights
Agreement.
(e) This Agreement has been duly and validly authorized, executed
and delivered by each of the Company and the Guarantor, and assuming due
authorization, execution and delivery by the Initial Purchaser, constitutes the
valid and binding agreement of each of the Company and the Guarantor,
respectively, enforceable against them in accordance with its terms (subject to
applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent
transfer and other similar laws affecting creditors' rights generally from time
to time in effect and to general principles of equity, including, without
limitation, concepts of materiality, reasonableness, good faith and fair
dealing, regardless of whether in a proceeding in equity or at law, and except
as rights to indemnity and contribution hereunder may be limited by Federal or
State securities laws or principles of public policy).
(f) The Registration Rights Agreement has been duly and validly
authorized by each of the Company and the Guarantor, and, upon its execution and
delivery by each of the Company and the Guarantor, and, assuming due
authorization, execution and delivery by the Initial Purchaser, will constitute
the valid and binding agreement of each of the Company and the Guarantor,
respectively, enforceable against them in accordance with its terms (subject to
applicable bankruptcy, insolvency reorganization, moratorium, fraudulent
transfer and other similar laws affecting creditors' rights generally from time
to time in effect and to general principals of equity, including, without
limitation, concepts of materiality, reasonableness, good faith and fair
dealing, regardless of whether in a proceeding in equity or at law and except as
rights to indemnity and contribution hereunder may be limited by Federal or
State securities laws or principles of public policy).
(g) The Indenture has been duly and validly authorized by each of
the Company and the Guarantor, and upon its execution and delivery by each of
the Company and the Guarantor and, assuming due authorization, execution and
delivery by the Trustee, will
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constitute the valid and binding agreement of each of the Company and the
Guarantor, respectively, enforceable against them in accordance with its terms
(subject to applicable bankruptcy, insolvency, reorganization, moratorium,
fraudulent transfer and other similar laws affecting creditors' rights generally
from time to time in effect and to general principles of equity, including,
without limitation, concepts of materiality, reasonableness, good faith and fair
dealing, regardless of whether in a proceeding in equity or at law); no
qualification of the Indenture under the Trust Indenture Act of 1939 ( "TIA") is
required in connection with the offer and sale of the Initial Notes and the
Guarantee (collectively, the "Initial Securities") contemplated hereby or in
connection with the Exempt Resales.
(h) The Agreement and Plan of Merger by and among the Company,
Columbia Acquisition Corp. ("Mergeco"), and Toastmaster Inc. ("Toastmaster"),
dated as of August 26, 1998 (the "Merger Agreement") has been duly and validly
authorized, executed and delivered by each of the Company and Mergeco and,
assuming due authorization, execution and delivery by Toastmaster, constitutes
the valid and binding agreement of each of the Company and Mergeco,
respectively, enforceable against them in accordance with its terms (subject to
applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent
transfer and other similar laws affecting creditors' rights generally from time
to time in effect and to general principles of equity, including, without
limitation, concepts of materiality, reasonableness, good faith and fair
dealing, regardless of whether in a proceeding in equity or at law).
(i) The Guarantee has been duly and validly authorized by the
Guarantor and upon its execution and delivery by the Guarantor in accordance
with the terms of the Indenture and, assuming due authentication of the Initial
Notes by the Trustee, upon delivery to the Initial Purchaser against payment
therefor in accordance with the terms hereof, will constitute the valid and
binding agreement of the Guarantor, enforceable against it in accordance with
its terms (subject to applicable bankruptcy, insolvency, reorganization,
moratorium, fraudulent transfer and other similar laws affecting creditors'
rights generally from time to time in effect and to general principles of
equity, including, without limitation, concepts of materiality, reasonableness,
good faith and fair dealing, regardless of whether in a proceeding in equity or
at law).
(j) The Initial Notes have been duly and validly authorized by the
Company and when duly executed by the Company in accordance with the terms of
the Indenture and, assuming due authentication of the Initial Notes by the
Trustee, upon delivery to the Initial Purchaser against payment therefor in
accordance with the terms hereof, will have been validly issued and delivered,
and will constitute valid and binding obligations of the Company entitled to the
benefits of the Indenture, enforceable against the Company in accordance with
their terms (subject to applicable bankruptcy, insolvency, reorganization,
moratorium, fraudulent transfer and other similar laws affecting creditors'
rights generally from time to time in effect and to general principals of
equity, including, without limitation, concepts of materiality,
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reasonableness, good faith and fair dealing, regardless of whether in a
proceeding in equity or at law).
(k) The New Notes have been duly and validly authorized by the
Company and if and when duly issued and authenticated in accordance with the
terms of the Indenture and, assuming due authentication of the New Notes by the
Trustee, upon delivery in accordance with the Exchange Offer provided for in the
Registration Rights Agreement, will constitute valid and binding obligations of
the Company entitled to the benefits of the Indenture, enforceable against the
Company in accordance with their terms (subject to applicable bankruptcy,
insolvency, reorganization, moratorium, fraudulent transfer and other similar
laws affecting creditors' rights generally from time to time in effect and to
general principals of equity, including, without limitation, concepts of
materiality, reasonableness, good faith and fair dealing, regardless of whether
in a proceeding in equity or at law).
(l) All the shares of capital stock of the Company outstanding
prior to the issuance of the Initial Notes have been duly authorized and validly
issued and are fully paid and nonassessable, and the authorized capitalization
of the Company conforms to the description thereof under the caption
"Capitalization" in the Offering Memorandum.
(m) Neither the Company nor any of its Subsidiaries owns capital
stock or other equity interests of any corporation or entity other than as
disclosed in the Offering Memorandum. Each of the Subsidiaries of the Company
is a corporation duly incorporated and validly existing and in good standing
under the laws of the jurisdiction of its incorporation, with all requisite
corporate power and authority to own, lease and operate its properties and to
conduct its business as described in the Preliminary Offering Memorandum and the
Offering Memorandum, and is duly registered and qualified to conduct its
business and is in good standing in each jurisdiction or place where the nature
of its properties or the conduct of its business requires such registration or
qualification, except where the failure to so register or qualify or be in good
standing would not have a Material Adverse Effect. All the outstanding shares
of capital stock of each of the Company's Subsidiaries have been duly authorized
and validly issued, are fully paid and nonassessable, and are wholly owned by
the Company directly, or indirectly through one of its other Subsidiaries, free
and clear of any lien, adverse claim, security interest, equity or other
encumbrance, except as specifically described in the Offering Memorandum.
(n) There are no legal or governmental proceedings pending or, to
the knowledge of the Company or its Subsidiaries, threatened against the Company
or any of its Subsidiaries or to which any of their respective properties is
subject, that are not disclosed in the Offering Memorandum and which are
reasonably likely to have a Material Adverse Effect or to materially affect the
issuance of the Securities or the consummation of any of the other transactions
contemplated by the Operative Documents. The Offering Memorandum contains
accurate summaries of all material agreements, contracts, indentures, leases or
other instruments. Neither the Company nor any of its Subsidiaries is involved
in any strike, job
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action or labor dispute with any group of employees, and, to the knowledge of
the Company or any of its Subsidiaries, no such action or dispute is threatened.
(o) Except as described in the Offering Memorandum, no material
relationship, direct or indirect, exists between or among the Company or any of
its Subsidiaries on the one hand, and the directors, officers, stockholders,
affiliates, customers or suppliers of the Company or any of its Subsidiaries on
the other hand.
(p) The execution, delivery and performance of this Agreement and
the other Operative Documents and the issuance of the Initial Notes and the New
Notes and the consummation of the transactions contemplated hereby and thereby
will not conflict with, or result in a breach or violation of any of the terms
or provisions of, or (including with the giving of notice or the lapse of time
or both) constitute a default under (i) any indenture, mortgage, deed of trust,
loan agreement or other agreement or instrument (including, without limitation,
the Merger Agreement) to which the Company or any of its Subsidiaries is a party
or by which the Company or any of its Subsidiaries is bound or to which any of
the properties or assets of the Company or any of its Subsidiaries is subject,
(ii) the provisions of the charter, by-laws or other organizational documents of
the Company or any of its Subsidiaries or (iii) any statute or any order, rule
or regulation of any court or governmental agency or body having jurisdiction
over the Company or any of its Subsidiaries or any of their properties or
assets, except in the cases of clause (i) or (iii), such breaches, violations or
defaults that in the aggregate would not have a Material Adverse Effect, and no
consent, approval, authorization or order of, or filing or registration with,
any court or governmental agency or body is required for the execution, delivery
and performance of this Agreement and the other Operative Documents and the
issuance of the Initial Notes and the New Notes and the consummation of the
transactions contemplated hereby and thereby except as may be required by the
securities or Blue Sky laws of any state of the United States in connection with
the sale of the Initial Notes and the New Notes and except as contemplated by
the Registration Rights Agreement.
(q) Each of the accountants, Deloitte & Touche LLP and KPMG Peat
Marwick LLP, who have certified certain of the financial statements included as
part of the Offering Memorandum, are independent public accountants under Rule
101 of the Code of Professional Conduct of the American Institute of Certified
Public Accountants (the "AICPA"), and its interpretation and rulings.
(r) The consolidated historical financial statements, together with
the related notes thereto, set forth in the Offering Memorandum comply as to
form in all material respects with the requirements of Regulation S-X under the
Securities Act applicable to registration statements on Form S-1 under the
Securities Act. Such historical financial statements fairly present the
financial position of each of the Company and Toastmaster at the respective
dates indicated and the results of operations and cash flows for the respective
periods indicated, in each case in accordance with generally accepted accounting
principles ("GAAP") consistently applied throughout such periods. The pro forma
financial statements contained in the Offering
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Memorandum have been prepared on a basis consistent with such historical
financial statements, except for the pro forma adjustments specified therein,
include all material adjustments to the historical financial data required by
Rule 11-02 of regulation S-X to reflect the Toastmaster Acquisition, the
Recapitalization and the Financing (each as defined in the Offering Memorandum),
give effect to assumptions made on a reasonable basis and present fairly in all
material respects the historical and proposed transactions contemplated by the
Offering Memorandum and this Agreement. The other financial information and
data included in the Offering Memorandum are, in all material respects,
accurately presented and prepared on a basis consistent with such financial
statements and the books and records of each of the Company and Toastmaster.
(s) Except as disclosed in the Offering Memorandum, since the date
of the latest audited consolidated financial statements of the Company and its
Subsidiaries included in the Offering Memorandum, neither the Company nor any of
its Subsidiaries has incurred any liability or obligation, direct or contingent,
or entered into any transaction, in each case not in the ordinary course of
business, that is material to the Company and its Subsidiaries, and there has
been no Material Adverse Effect, nor to the Company's knowledge, after due
inquiry, any development or event involving a prospective Material Adverse
Effect and, except as disclosed in or contemplated by the Offering Memorandum,
since the date of the latest audited consolidated financial statements of the
Company included in the Offering Memorandum, there has been no (i) dividend or
distribution of any kind declared, paid or made by the Company on any class of
its capital stock, (ii) issuance of securities (other than the Initial Notes
offered hereby) or (iii) material increase in short-term or long-term debt of
the Company.
(t) Each of the Company and its Subsidiaries maintains a system of
internal accounting controls sufficient to provide reasonable assurance that (i)
transactions are executed in accordance with management's general or specific
authorization; (ii) transactions are recorded as necessary to permit preparation
of consolidated financial statements in conformity with GAAP and to maintain
accountability for assets; (iii) access to assets is permitted only in
accordance with management's general or specific authorization; and (iv) the
recorded accountability for assets is compared with existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences.
(u) All the property described in the Offering Memorandum as being
held under lease by the Company and its Subsidiaries is held by it under valid,
subsisting and enforceable leases, with only such exceptions as would not in the
aggregate, have a Material Adverse Effect. In addition, except as described in
the Offering Memorandum, the consummation of the transactions contemplated by
this Agreement will not give rise to any third party rights of first refusal
under any Material Agreement (as herein defined) as to which the Company and any
of its Subsidiaries or any of their property or assets may be subject.
(v) Each of the Company and its Subsidiaries owns or possesses
adequate rights to use all patents, trademarks, trademark registrations, service
marks, service mark registrations, trade names, copyrights, licenses,
inventions, trade secrets and rights
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(collectively, "Intellectual Property") described in the Offering Memorandum as
being owned by any of them or necessary for the conduct of their respective
businesses, except where the failure to own or possess such Intellectual
Property would not have a Material Adverse Effect, and except as disclosed in
the Offering Memorandum, neither the Company nor any Subsidiary is aware of any
claim to the contrary or any challenge by any other person to the rights of the
Company or any of its Subsidiaries with respect to such rights that, if
determined adversely to the Company or any such Subsidiary, would in the
aggregate have a Material Adverse Effect.
(w) Each of the Company and its Subsidiaries has such permits,
licenses, franchises, certificates, consents, orders and other approvals or
authorizations of any governmental or regulatory authority ("Permits") as are
necessary under applicable law to own their respective properties and to conduct
their respective businesses in the manner described in the Offering Memorandum,
except to the extent that the failure to have such Permits would not have a
Material Adverse Effect. Each of the Company and its Subsidiaries has fulfilled
and performed, in all material respects, all their respective obligations with
respect to the Permits, and no event has occurred which allows, or after notice
or lapse of time would allow, revocation or termination thereof or results in
any other material impairment of the rights of the holders of any Permit,
subject in each case to such qualification as may be set forth in the Offering
Memorandum and except to the extent that any such revocation or termination
would not have a Material Adverse Effect. Except as described in the Offering
Memorandum, none of the Permits contains any restriction that is materially
burdensome to the Company or any of its Subsidiaries.
(x) Neither the Company nor any of its Subsidiaries nor any
director, officer, agent, employee or other person associated with or acting on
its behalf of the Company or any of its Subsidiaries, has used any corporate
funds for any unlawful contribution, gift, entertainment or other unlawful
expense relating to political activity; made any direct or indirect unlawful
payment to any foreign or domestic government official or employee from
corporate funds; violated or is in violation of any provision of the Foreign
Corrupt Practices Act of 1977; or made any bribe, rebate, payoff, influence
payment, kickback or other unlawful payment.
(y) Neither the Company nor any of its Subsidiaries is currently or
will be, upon sale of the Initial Notes in accordance herewith and the
application of the net proceeds therefrom as described in the Offering
Memorandum under the caption "Use of Proceeds," an "investment company" within
the meaning of the Investment Company Act of 1940, as amended.
(z) Neither the Company nor any affiliate (as defined in Rule
501(b) of Regulation D ("Regulation D") under the Securities Act) of the Company
has directly, or through any agent (provided that no representation is made as
to the Initial Purchaser or any person acting on behalf), (i) sold, offered for
sale, solicited offers to buy or otherwise negotiated in respect of, any
security (as defined in the Securities Act) which is or could be integrated with
the offering and sale of the Securities in a manner that would require the
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registration of the Securities under the Securities Act or (ii) engaged in any
form of general solicitation or general advertising (within the meaning of
Regulation D, including, but not limited to, advertisements, articles, notices
or other communications published in any newspaper, magazine, or similar medium
or broadcast over television or radio, or any seminar or meeting whose attendees
have been invited by any general solicitation or general advertising) in
connection with the offering of the Securities. No securities of the same class
as the Initial Notes have been issued and sold by the Company within the
six-month period immediately prior to the date hereof.
(aa) Except as permitted by the Securities Act, the Company has not
distributed and, prior to the later to occur of the Closing Date and completion
of the distribution of the Initial Securities, will not distribute any offering
material in connection with the offering and sale of the Initial Securities
other than the Preliminary Offering Memorandum and Offering Memorandum.
(ab) When the Initial Securities are issued and delivered pursuant
to this Agreement, such Initial Securities will not be of the same class (within
the meaning of Rule 144A under the Securities Act) as securities of the Company
that are listed on a national securities exchange registered under Section 6 of
the Securities Exchange Act of 1934, as amended (the "Exchange Act") or that
are quoted in a United States automated inter-dealer quotation system.
(ac) Assuming (i) that your representations and warranties in
Section 2 hereof are true, (ii) compliance by you with your covenants set forth
in Section 2 hereof and (iii) that each of the Eligible Purchasers is either (A)
an entity that you reasonably believe to be a QIB or (B) a person who is not a
"U.S. person" and who acquires the Initial Securities outside the United States
in an "offshore transaction" (within the meaning of Regulation S), the purchase
of the Initial Securities by you pursuant hereto and the resale of the Initial
Securities pursuant to the Exempt Resales is exempt from the registration
requirements of the Securities Act.
(ad) Each of the Company and its Subsidiaries is in compliance in
all material respects with all presently applicable provisions of the Employee
Retirement Income Security Act of 1974, as amended, including the regulations
and published interpretations thereunder ("ERISA"), no "reportable event" (as
defined in ERISA) has occurred with respect to any "pension plan" (as defined in
ERISA) for which the Company would have any liability; the Company has not
incurred and does not except to incur liability under (i) Title IV of ERISA with
respect to termination of, or withdrawal from, any "pension plan" or (ii)
Sections 412 or 4971 of the Internal Revenue Code of 1986, as amended, including
the regulations and published interpretations thereunder (the "Code"); each
"pension plan" for which the Company would have any liability that is intended
to be qualified under Section 401(a) of the Code is so qualified in all material
respects and nothing has occurred, whether by action or by failure to act, which
would cause the loss of such qualification; and the statements set forth in the
Offering Memorandum under the caption "Notice to Investors" do not include any
untrue
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statements of material facts and do not omit any material facts necessary in
order to make such statements, in light of the circumstances under which they
were made, not misleading.
(ae) Set forth on Exhibit B hereto is a list of each employee
pension or benefit plan with respect to which the Company or any entity
considered an affiliate of the Company within the meaning of Section 407(d)(7)
of ERISA is a party in interest or a disqualified person. The execution and
delivery of this Agreement, the other Operative Documents and the sale of the
Initial Notes to be purchased by the Eligible Purchasers will not involve any
prohibited transaction within the meaning of Section 406 of ERISA or Section
4975 of the Code. The representation made by the Company in the preceding
sentence is made in reliance upon and subject to the accuracy of, and compliance
with, the representations and covenants made or deemed made by the Eligible
Purchasers as set forth in the Offering Memorandum under the section entitled
"Notice to Investors."
(af) Except (i) for the registration rights granted pursuant to that
certain stock registration rights agreement dated as of August 6, 1991 (the
"Stock Registration Rights Agreement") and (ii) as described in the Offering
Memorandum, there are no contracts, agreements or understandings between the
Company or any of its Subsidiaries and any person granting such person the right
to require the Company or any of its Subsidiaries to file a registration
statement under the Securities Act with respect to any securities of the Company
and its Subsidiaries owned or to be owned by such person or to require the
Company or any of its Subsidiaries to include such securities in the securities
registered pursuant to the Registration Statements or in any securities being
registered pursuant to any other registration statement filed by the Company or
any of its Subsidiaries under the Securities Act.
(ag) Each of the Company and its Subsidiaries carries, or is covered
by, insurance in such amounts and covering such risks as is adequate for the
conduct of its businesses and the value of its properties and as is customary
for companies engaged in similar businesses in similar industries.
(ah) Each of the Company and its Subsidiaries has filed all Federal,
state and local income and franchise tax returns required to be filed through
the date hereof and has paid all taxes due thereon, and no tax deficiency has
been determined adversely to the Company or any of its Subsidiaries nor does the
Company or any of its Subsidiaries have any knowledge of any tax deficiency
which, if determined adversely to the Company, would have a Material Adverse
Effect.
(ai) There has been no storage, disposal, generation, manufacture,
refinement, transportation, handling or treatment of toxic wastes, hazardous
wastes or hazardous substances by the Company or any of its Subsidiaries (or, to
the knowledge of the Company, any of their predecessors in interest) at, upon or
from any of the property now or previously owned or leased by the Company or any
of its Subsidiaries in violation of any applicable law, ordinance, rule,
regulation, order, judgement, decree or permit or which would require remedial
action under any applicable law, ordinance, rule, regulation, order,
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judgement, decree or permit, except for any violation or remedial action which
would not have, or could not be reasonably likely to have, singularly or in the
aggregate, a Material Adverse Effect; there has been no material spill,
discharge, leak, emission, injection, escape, dumping or release of any kind
onto such property or into the environment surrounding such property of any
toxic wastes, medical wastes, solid wastes, hazardous wastes or hazardous
substances due to or caused by the Company or any of its Subsidiaries or with
respect to which the Company or any of its Subsidiaries has knowledge, except
for any such spill, discharge, leak, emission, injection, escape, dumping or
release which would not have or would not be reasonably likely to have,
singularly or in the aggregate, a Material Adverse Effect; and the terms
"hazardous wastes," "toxic wastes," "hazardous substances" and "medical wastes"
shall have the meanings specified in any applicable local, state, Federal and
foreign laws or regulations with respect to environmental protection.
(aj) Neither the Company nor any of its affiliates or any person
acting on its or their behalf has engaged or will engage during the applicable
restricted period in any directed selling efforts within the meaning of Rule
902(b) of Regulation S with respect to the Securities, and the Company and its
affiliates and all persons acting on their behalf have complied with and will
comply with the offering restriction requirements of Regulation S in connection
with the offering of the Securities outside the United States; provided that no
representation is made as to the Initial Purchaser or any person, acting on its
behalf.
(ak) The sale of the Initial Securities pursuant to Regulation S are
"offshore transactions" and are not part of a plan or scheme to evade the
registration provisions of the Securities Act.
(al) The Company is not required to deliver the information
specified in Rule 144A(d)(4) under the Securities Act in connection with the
Exempt Resales.
(am) Neither the Company nor any of its Subsidiaries has taken or
may take, directly or indirectly, any action designed to cause or result in, or
which has constituted or which might reasonably be expected to constitute, the
stabilization or manipulation of the price of the Securities to facilitate the
sale or resale of the Securities.
(an) On and immediately after the Closing Date, the Company (after
giving effect to the issuance of the Securities and to the other transactions
related thereto as described in the Offering Memorandum) will be Solvent. As
used in this paragraph, the term "Solvent" means, with respect to a particular
date, that on such date (i) the present fair market value (or present fair
saleable value) of the assets of the Company is not less than the total amount
required to pay the probable liabilities of the Company on its total existing
debts and liabilities (including contingent liabilities) as they become absolute
and matured, (ii) the Company is able to realize upon its assets and pay its
debts and other liabilities, contingent obligations and commitments as they
mature and become due in the normal course of business, (iii) assuming the sale
of the Securities as contemplated by this Agreement and the Offering Memorandum,
the Company is not incurring debts or liabilities beyond its ability to pay as
such debts and
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liabilities mature and (iv) the Company is not engaged in any business or
transaction, and is not about to engage in any business or transaction, for
which its property would constitute unreasonably small capital after giving due
consideration to the prevailing practice in the industry in which the Company is
engaged. In computing the amount of such contingent liabilities at any time, it
is intended that such liabilities will be computed at the amount that, in the
light of all the facts and circumstances existing at such time, represents the
amount that can reasonably be expected to become an actual or matured liability.
2. Representations, Warranties and Agreements of the Initial
Purchaser. The Initial Purchaser represents, warrants and agrees that:
(a) The Initial Purchaser is a QIB with such knowledge and
experience in financial and business matters as are necessary in order to
evaluate the merits and risks of an investment in the Securities.
(b) The Initial Purchaser (i) is not acquiring the Initial
Securities with a view to any distribution thereof or with any present intention
of offering or selling any of the Initial Securities in a transaction that would
violate the Securities Act or the securities laws of any State of the United
States or any other applicable jurisdiction; (ii) in connection with the Exempt
Resales, will solicit offers to buy the Securities only from and will offer to
sell the Securities only to, the Eligible Purchasers in accordance with this
Agreement and on the terms contemplated by the Offering Memorandum; and (iii)
will not offer or sell the Securities pursuant to, nor has it offered or sold
the Securities by, or otherwise engaged in, any form of general solicitation or
general advertising (within the meaning of Regulation D; including, but not
limited to, advertisements, articles, notices or other communications published
in any newspaper, magazine, or similar medium or broadcast over television or
radio, or any seminar or meeting whose attendees have been invited by any
general solicitation or general advertising).
(c) The Initial Purchaser represents that it has not offered, sold
or delivered the Notes, and will not offer, sell or deliver the Initial Notes
(i) as part of its distribution at any time or (ii) otherwise until 40 days
after the later of the commencement of the offering and the Closing Date (such
period, the "Restricted Period"), within the United States or to, or for the
account or benefit of U.S. persons, except in accordance with Rule 144A under
the Act. Accordingly, the Initial Purchaser represents and agrees that neither
it, its affiliates nor any persons acting on its or their behalf has engaged or
will engage in any directed selling efforts within the meaning of Rule 902(b) of
Regulation S with respect to the Initial Notes, and it, its affiliates and all
persons acting on its behalf have complied and will comply with the offering
restrictions requirements of Regulation S.
(d) The Initial Purchaser further represents and agrees that (i) it
has not offered or sold and will not offer or sell any Initial Notes to persons
in the United Kingdom prior to the expiry of the period of six months from the
issue date of the Initial Notes, except to persons whose ordinary activities
involve them in acquiring, holding, managing or
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disposing of investments (as principal or agent) for the purposes of their
businesses or otherwise in circumstances which have not resulted and will not
result in an offer to the public in the United Kingdom within the meaning of the
Public Offers of Securities Regulations 1995, (ii) it has complied and will
comply with all applicable provisions of the Financial Services Act 1986 with
respect to anything done by it in relation to the Notes in, from or otherwise
involving the United Kingdom, and (iii) it has only issued or passed on and will
only issue or pass on in the United Kingdom any document received by it in
connection with the issuance of the Initial Notes to a person who is a kind
described in Article 11(3) of the Financial Services Act 1986 (Investment
advertisements) (Exemptions) Order 1995 or is a person to whom the document may
otherwise lawfully be issued or passed on.
(e) The Initial Purchaser agrees not to cause any advertisement of
the Initial Notes to be published in any newspaper or periodical or posted in
any public place and not to issue any circular relating to the Notes, except
such advertisements as may be permitted by law.
(f) The Initial Purchaser understands that the Company and, for
purposes of the opinions to be delivered to you pursuant to Section 7 hereof,
counsel to the Company and counsel to the Initial Purchaser, will rely upon the
accuracy and truth of the foregoing representations and you hereby consent to
such reliance.
The terms used in this Section 2 that have meanings assigned to them in
Regulation S are used herein as so defined.
The Initial Purchaser further agrees that, in connection with the
Exempt Resales, it will solicit offers to buy the Initial Securities only from,
and will offer to sell the Initial Securities only to, the Eligible Purchasers
in Exempt Resales.
3. Purchase of the Securities by the Initial Purchaser. On the
basis of the representations and warranties contained in, and subject to the
terms and conditions of, this Agreement, the Company agrees to sell $125.0
million in aggregate principal amount of Initial Notes to the Initial Purchaser
and the Initial Purchaser agrees to purchase all of the Initial Notes. The
Initial Purchaser will purchase the Notes at an aggregate purchase price equal
to 97.25% of the principal amount thereof (the "Purchase Price").
The Company shall not be obligated to deliver any of the Initial Notes
to be delivered, except upon payment of all the Initial Notes to be purchased on
such Closing Date as provided herein.
4. Delivery of and Payment.
(a) Delivery to the Initial Purchaser of and payment for the
Initial Securities shall be made at 9:00 a.m., New York City time, on the
Closing Date at the offices of
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▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, or
such other place or time as you and the Company shall designate.
(b) One or more Initial Notes in definitive form, registered in the
name of Cede & Co., as nominee of The Depository Trust Company ( "DTC"), or such
other names as the Initial Purchaser may request upon at least one business
day's notice to the Company, having an aggregate principal amount at maturity
corresponding to the aggregate principal amount of Initial Notes sold pursuant
to Eligible Resales (collectively, the "Global Notes"), shall be delivered by
the Company to the Initial Purchaser, against payment by the Initial Purchaser
of the purchase price thereof by wire transfer of immediately available funds as
the Company may direct by written notice delivered to you two business days
prior to the Closing Date. The Global Notes in definitive form shall be made
available to you for inspection not later than 9:00 a.m. on the business day
immediately preceding the Closing Date.
(c) Time shall be of the essence, and delivery at the time and
place specified pursuant to this Agreement is a further condition of the
obligation of the Initial Purchaser hereunder.
5. Further Agreements of the Company and the Guarantor. Each of
the Company and the Guarantor agrees:
(a) To advise you promptly and, if requested by you, to confirm
such advice in writing, of (i) the issuance by any state securities commission
of any stop order suspending the qualification or exemption from qualification
of any Securities for offering or sale in any jurisdiction, or the initiation of
any proceeding for such purpose by the Commission or any state securities
commission or other regulatory authority, and (ii) the happening of any event
that makes any statement of a material fact made in the Preliminary Offering
Memorandum or the Offering Memorandum untrue or that requires the making of any
additions to or changes in the Preliminary Offering Memorandum or the Offering
Memorandum in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. The Company shall use
its best efforts to prevent the issuance of any stop order or order suspending
the qualification or exemption of the Securities under any state securities or
Blue Sky laws and, if at any time any state securities commission shall issue
any stop order suspending the qualification or exemption of the Securities under
any state securities or Blue Sky laws, the Company shall use every reasonable
effort to obtain the withdrawal or lifting of such order at the earliest
possible time.
(b) To furnish to you, without charge, as many copies of the
Preliminary Offering Memorandum and the Offering Memorandum, and any amendments
or supplements thereto, as you may reasonably request. The Company consents to
the use of the Preliminary Offering Memorandum and the Offering Memorandum, and
any amendments and supplements thereto required pursuant to this Agreement, by
you in connection with the Exempt Resales that are in compliance with this
Agreement.
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(c) Not to amend or supplement the Offering Memorandum prior to the
Closing Date or during the period referred to in (d) below unless you shall
previously have been advised of, and shall not have reasonably objected to, such
amendment or supplement within a reasonable time, but in any event not longer
than five days after being furnished a copy of such amendment or supplement.
If, in connection with any Exempt Resales or market making transactions after
the date of this Agreement and prior to the consummation of the Exchange Offer,
any event shall occur that, in the judgment of the Company or in the judgment of
counsel to you, makes any statement of a material fact in the Offering
Memorandum untrue or that requires the making of any additions to or changes in
the Offering Memorandum in order to make the statements in the Offering
Memorandum, in light of the circumstances at the time that the Offering
Memorandum is delivered to prospective Eligible Purchasers, not misleading, or
if it is necessary to amend or supplement the Offering Memorandum to comply with
any applicable laws, the Company shall promptly notify you of such event and
prepare an appropriate amendment or supplement to the Offering Memorandum so
that (i) the statements in the Offering Memorandum as amended or supplemented
will, in light of the circumstances at the time that the Offering Memorandum is
delivered to prospective Eligible Purchasers, not be misleading and (ii) the
Offering Memorandum will comply with applicable law.
(d) To cooperate with you and your counsel in connection with the
qualification of the Initial Securities for offer and sale by you and by dealers
under the state securities or Blue Sky laws of such jurisdictions as you may
request; provided, however, that the Company shall not be obligated to qualify
as a foreign corporation in any jurisdiction in which it is not now so qualified
or to take any action that would subject it to general consent to service of
process in any jurisdiction in which it is not now so subject. The Company
shall continue such qualification in effect so long as required by law for
distribution of the Initial Securities and shall file such consents to service
of process or other documents as may be necessary in order to effect such
qualification.
(e) Prior to the Closing Date, to furnish to you, any internal
consolidated financial statements of the Company that have been prepared by the
Company for any period subsequent to the period covered by the financial
statements appearing in the Offering Memorandum.
(f) To use its reasonable best efforts to do and perform all things
required to be done and performed under this Agreement by it prior to or after
the Closing Date and to satisfy all conditions precedent on its part to the
delivery of the Initial Securities.
(g) Not to sell, offer for sale or solicit offers to buy or
otherwise negotiate in respect of any security (as defined in the Securities
Act) that would be integrated with the sale of the Initial Securities in a
manner that would require the registration under the Securities Act of the sale
to you or the Eligible Purchasers of the Initial Securities.
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(h) For a period of 120 days from the date of the Offering
Memorandum, not to, directly or indirectly, sell, contract to sell, grant any
option to purchase, issue any instrument convertible into or exchangeable for,
or otherwise transfer or dispose of, any debt securities of the Company or any
of its Subsidiaries having a maturity of more than one year from the date of
issue of such securities, except (i) for the New Notes in connection with the
Exchange Offer or (ii) with your prior consent.
(i) For so long as the Initial Notes remain outstanding and are
Restricted Securities within the meaning of Rule 144(a)(3) under the Securities
Act, to make available to such registered holder or beneficial owner of Initial
Notes in connection with any sale thereof and any prospective purchaser of such
Initial Notes from such registered holder or beneficial owner, the information
required by Rule 144A(d)(4) under the Securities Act (or any successor provision
thereto).
(j) To comply with its agreements in the Registration Rights
Agreement, and all agreements set forth in the representation letters of the
Company to DTC relating to the approval of the Securities by DTC for
"book-entry" transfer.
(k) To use its best efforts to effect the inclusion of the Notes in
the National Association of Securities Dealers, Inc. Automated Quotation System
- PORTAL ("PORTAL").
(l) To apply the net proceeds from the sale of the Initial Notes
being sold by the Company as set forth in the Offering Memorandum under the
caption "Use of Proceeds."
(m) During the period that is two years after the Closing Date, to
take such steps as shall be necessary to ensure that the Company does not become
an "investment company" within the meaning of such term under the Investment
Company Act of 1940 and the rules and regulations of the Commission thereunder.
6. Expenses. The Company and the Guarantor agree that, whether or
not the transactions contemplated by this Agreement are consummated or this
Agreement becomes effective or is terminated, to pay all costs, expenses, fees
and taxes incident to and in connection with: (i) the preparation, printing,
filing and distribution of the Preliminary Offering Memorandum and the Offering
Memorandum (including, without limitation, financial statements) and all
amendments and supplements thereto (but not, however, legal fees and expenses of
your counsel incurred in connection therewith), (ii) the preparation, printing
(including, without limitation, word processing and duplication costs) and
delivery of this Agreement, the Indenture, any Blue Sky Memoranda and any other
agreements, memoranda, correspondence and other documents printed and delivered
in connection herewith and with the Exempt Resales (but not, however, legal fees
and expenses of your counsel incurred in connection with the foregoing), (iii)
the issuance and delivery by the Company of the Securities, (iv) the
qualification of the Securities for offer and sale under the securities or Blue
Sky laws of the several states (including, without limitation, the reasonable
fees and disbursements of your counsel relating to such registration or
qualification), (v) furnishing
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such copies of the Preliminary Offering Memorandum and the Offering Memorandum,
and all amendments and supplements thereto, as may be reasonably requested by
the Initial Purchaser for use in connection with the initial Exempt Resales,
(vi) the preparation of certificates for the Securities including, without
limitation, printing and engraving, (vii) the fees, disbursements and expenses
of the Company's counsel and accountants, (viii) all expenses and listing fees
in connection with the application for quotation of the Initial Securities in
PORTAL, (ix) all fees and expenses (including fees and expenses of counsel) of
the Company in connection with the approval of the Securities by DTC for
"book-entry" transfer, (x) the fees, disbursements and expenses of the Trustee
and the Trustee's counsel and (xi) the performance by the Company of its other
obligations under this Agreement to the extent not provided for above.
7. Conditions of Initial Purchaser's Obligations. The obligations
of the Initial Purchaser hereunder are subject to the accuracy, when made and
again on the Closing Date (as if made again on and as of such date), of the
representations and warranties of the Company and the Guarantor contained
herein, to the performance by the Company and the Guarantor of their obligations
hereunder and to each of the following additional terms and conditions:
(a) The Offering Memorandum shall have been printed and copies made
available to you not later than 11:00 a.m., New York City time, on the day
following the date of this Agreement, or at such later date and time as you may
approve in writing.
(b) The Initial Purchaser shall not have discovered and disclosed
to the Company on or prior to such Closing Date that the Offering Memorandum or
any amendment or supplement thereto contains an untrue statement of a fact
which, in the opinion of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, counsel for the Initial
Purchaser, is material or omits to state a fact which, in the opinion of such
counsel, is material and is necessary to make the statements, in light of the
circumstances under which they were made, not misleading.
(c) All corporate proceedings and other legal matters incident to
the authorization, form and validity of this Agreement, the other Operative
Documents, the Offering Memorandum and all other legal matters relating to this
Agreement and the transactions contemplated hereby shall be reasonably
satisfactory in all material respects to counsel for the Initial Purchaser, and
the Company shall have furnished to such counsel all documents and information
that they may reasonably request to enable them to pass upon such matters.
(d) ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇▇▇▇ shall have furnished to the
Initial Purchaser its written opinion, as counsel to the Company, addressed to
the Initial Purchaser and dated as of the Closing Date, in form and substance
reasonably satisfactory to the Initial Purchaser and its counsel, to the effect
that:
(i) Each of the Company and the Guarantor is a corporation
duly incorporated validly existing and in good standing under the laws of the
State of Delaware and
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each of the Company and the Guarantor has all requisite corporate power and
authority to own, lease and operate its properties and to conduct its business
as described in the Offering Memorandum. Each of the Company and the Guarantor
is duly registered and qualified to conduct its business and is in good standing
in each jurisdiction or place where the nature of its properties or the conduct
of its business requires such registration or qualification, except where the
failure so to register or qualify or to be in good standing would not have a
Material Adverse Effect.
(ii) Each of the Company and the Guarantor has all
requisite power and authority to execute, deliver and perform its obligations
under this Agreement, the Merger Agreement (only with respect to the Company),
the Indenture and the Registration Rights Agreement, and to authorize, issue and
sell the Securities as contemplated by this Agreement.
(iii) This Agreement has been duly and validly authorized,
executed and delivered by each of the Company and the Guarantor.
(iv) The Registration Rights Agreement has been duly and
validly authorized, executed and delivered by each of the Company and the
Guarantor and, assuming due authorization, execution and delivery by the Initial
Purchaser, will constitute the valid and binding agreement of each of the
Company and Guarantor, enforceable against them in accordance with its terms
(subject to applicable bankruptcy, insolvency, reorganization, moratorium,
fraudulent transfer and other similar laws affecting creditors' rights generally
from time to time in effect and to general principles of equity, including,
without limitation, concepts of materiality, reasonableness, good faith and fair
dealing, regardless of whether in a proceeding in equity or at law and except as
rights to indemnity and contribution hereunder may be limited by Federal or
State securities laws or principles of public equity).
(v) The Merger Agreement has been duly and validly
authorized, executed and delivered by each of the Company and Mergeco and
constitutes the valid and binding agreement of each of the Company and Mergeco,
enforceable against them in accordance with its terms (subject to applicable
bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer and
other similar laws affecting creditors' rights generally from time to time in
effect and to general principles of equity, including, without limitation,
concepts of materiality, reasonableness, good faith and fair dealing, regardless
of whether in a proceeding in equity or at law).
(vi) The Indenture has been duly and validly authorized,
executed and delivered by each of the Company and the Guarantor and, assuming
due authorization, execution and delivery by the Trustee, will constitute the
valid and binding agreement of each of the Company and the Guarantor,
enforceable against them in accordance with its terms (subject to applicable
bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer and
other similar laws affecting creditors' rights generally from time to time in
effect and to general principles of equity, including, without limitation,
concepts of materiality, reasonableness, good faith and fair dealing, regardless
of whether in a proceeding in equity or
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at law); no qualification of the Indenture under the TIA is required in
connection with the offer and sale of the Initial Notes contemplated hereby or
in connection with the initial resale of such Initial Notes in the manner
contemplated by this Agreement and the Offering Memorandum to register the
Initial Notes under the Securities Act, it being understood that no opinion will
be expressed as to any subsequent resale of any Initial Notes.
(vii) The Initial Notes have been duly and validly
authorized by the Company and when duly executed by the Company in accordance
with the terms of the Indenture and, assuming due authentication of the Initial
Notes by the Trustee, upon delivery to the Initial Purchaser against payment
therefor in accordance with the terms hereof, will have been validly issued and
delivered, and will constitute valid and binding obligations of the Company
entitled to the benefits of the Indenture, enforceable against the Company in
accordance with their terms (subject to applicable bankruptcy, insolvency,
reorganization, moratorium, fraudulent transfer and other similar laws affecting
creditors' rights generally from time to time in effect and to general
principles of equity, including, without limitation, concepts of materiality,
reasonableness, good faith and fair dealing, regardless of whether in a
proceeding in equity or at law).
(viii) The New Notes have been duly and validly authorized
by the Company and if and when duly issued and authenticated in accordance with
the terms of the Indenture and delivered in accordance with the Exchange Offer
provided for in the Registration Rights Agreement, will constitute valid and
binding obligations of the Company entitled to the benefits of the Indenture,
enforceable against the Company in accordance with their terms (subject to
applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent
transfer and other similar laws affecting creditors' rights generally from time
to time in effect and to general principles of equity, including, without
limitation, concepts of materiality, reasonableness, good faith and fair
dealing, regardless of whether in a proceeding in equity or at law).
(ix) The Guarantee has been duly and validly authorized by
the Guarantor, and when executed and delivered by the Guarantor in accordance
with the terms of the Indenture, will constitute a valid and binding obligation
of the Guarantor, enforceable against the Guarantor in accordance with its terms
(subject to applicable bankruptcy, insolvency, reorganization, moratorium,
fraudulent transfer and other similar laws affecting creditors' rights generally
from time to time in effect and to general principles of equity, including,
without limitation, concepts of materiality, reasonableness, good faith and fair
dealing, regardless of whether in a proceeding in equity or at law).
(x) The authorized capital stock of the Company conforms
to the description thereof under the caption "Capitalization" in the Offering
Memorandum.
(xi) All the outstanding shares of capital stock of the
Guarantor have been duly authorized and validly issued, are fully paid and
nonassessable, and are wholly
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owned by the Company directly, or indirectly through one of the other
Subsidiaries, free and clear of any lien, adverse claim, security interest,
equity or other encumbrance.
(xii) To the knowledge of such counsel, there are no legal
or governmental proceedings pending or threatened against the Company or any of
its Subsidiaries, or to which any of their respective properties, is subject,
that are not disclosed in the Offering Memorandum and which are reasonably
likely to have a Material Adverse Effect or to materially affect the issuance of
the Securities or the consummation of the other transactions contemplated by the
Operative Documents.
(xiii) None of the issuance, offer or sale of the Initial
Notes, the execution, delivery or performance by the Company of this Agreement,
the other Operative Documents, compliance by the Company with the provisions
hereof or thereof nor consummation by the Company of the transactions
contemplated hereby or thereby (i) requires any consent, approval, authorization
or other order of, or registration or filing with, any court, regulatory body,
administrative agency or other governmental body, agency or official (except
such as may be required in connection with the registration under the Securities
Act of the New Notes in accordance with the Registration Rights Agreement,
qualification of the Indenture under the TIA and compliance with the securities
or Blue Sky laws of various jurisdictions), or conflicts or will conflict with
or constitutes or will constitute a breach of, or a default under, the
certificate of incorporation or by-laws, or other organizational documents, of
the Company or the Guarantor or (ii) conflicts or will conflict with or
constitutes or will constitute a breach of, or a default under any agreement
listed on a certificate of an officer of the Company as being the Company's and
its Subsidiaries' material agreements (the "Material Agreements"), or violates
or will violate any law, rule or regulation of the United States or the State of
Illinois or the General Corporation Law of the State of Delaware, or, to such
counsel's knowledge, an order or decree of any court or government agency or
instrumentality or will result in the creation or imposition of any Lien upon
any property or assets of the Company or any of its Subsidiaries pursuant to the
terms of any agreement or instrument to which any of them is a party or by which
any of them may be bound or under any to which any of their respective property
or assets is subject, except in each case such breaches, conflicts or defaults
that, individually or in the aggregate, would not have a Material Adverse
Effect.
(xiv) The Company is not and, upon sale of the Initial
Notes to be issued and sold in accordance with this Agreement and the
application of the net proceeds to the Company of such sale as described in the
Offering Memorandum under the caption "Use of Proceeds," will not be an
"investment company" within the meaning of the Investment Company Act of 1940,
as amended.
(xv) When the Initial Securities are issued and delivered
pursuant to this Agreement, such Initial Securities will not be of the same
class (within the meaning of Rule 144A under the Securities Act) as securities
of the Company that are listed on a national
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securities exchange registered under Section 6 of the Exchange Act or that are
quoted in a United States automated inter-dealer quotation system.
(xvi) Assuming (i) that your representations and
warranties in Section 2 hereof are true, (ii) compliance by you with your
covenants set forth in Section 2 hereof and (iii) that each of the Eligible
Purchasers is a QIB or a person who acquires the Initial Securities outside the
United States in an "offshore transaction" and is not a "U.S. Person" (within
the meaning of Regulation S), it is not necessary in connection with the offer,
sale and delivery of the Initial Securities hereunder or in connection with the
resale of such Initial Securities in the manner contemplated by this Agreement
and the Offering Memorandum to register the Initial Securities under the
Securities Act.
(xvii) To the knowledge of such counsel, except (i) for
the registration rights granted pursuant to the Stock Registration Rights
Agreement and (ii) as disclosed in the Offering Memorandum, there are no
contracts, agreements or understandings between the Company or any of its
Subsidiaries and any person granting such person the right to require the
Company or any of its Subsidiaries to file a registration statement under the
Securities Act with respect to any securities of the Company owned or to be
owned by such person or to require the Company or any of its Subsidiaries to
include such securities in all the securities registered pursuant to the
Registration Statements or in any securities being registered pursuant to any
other registration statement filed by the Company or any of its Subsidiaries
under the Securities Act.
(xviii) The Company is not required to obtain stockholder
consent for the issuance or offering of the Securities.
(xix) The descriptions of the Indenture, the Initial
Securities and the Registration Rights Agreement in the Offering Memorandum
conform in all material respects to the terms thereof.
(xx) The statements set forth under the heading
"Description of the Notes" in the Offering Memorandum, insofar as such
statements purport to summarize certain provisions of the Initial Securities,
provide a fair summary of such provisions.
(xxi) The statements set forth under the heading
"Description of Preferred Stock and Certain Indebtedness" in the Offering
Memorandum, insofar as such statements purport to summarize certain provisions
of the outstanding indebtedness and preferred stock of the Company, fairly
summarize such provisions described therein in all material respects.
(xxii) The statements set forth under the heading "Certain
United States Federal Income Tax Considerations" in the Offering Memorandum,
insofar as such statements purport to summarize the Federal laws of the United
States, fairly summarize such provisions described therein in all material
respects.
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(xxiii) The Company is not required to deliver to the
Eligible Purchasers the information specified in Rule 144A(d)(4) in connection
with Exempt Resales.
In addition, such counsel shall also state that such counsel has
participated in conferences with officers of the Company and with the
independent public accountants for the Company concerning the preparation of the
Offering Memorandum and, although such counsel has made certain inquiries and
investigations in connection with the preparation of the Offering Memorandum, it
is not passing upon and does not assume any responsibility for the accuracy or
completeness of the statements contained in the Offering Memorandum and on the
basis of the foregoing such counsel's work in connection with this matter did
not disclose any information that gave such counsel reason to believe that the
Offering Memorandum, as of its date or as of the Closing Date, included or
includes an untrue statement of a material fact or omitted or omits to state a
material fact necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading (it being understood
that such counsel need express no belief or opinion with respect to the
financial statements and other financial data included therein).
The opinion of such counsel may be limited to the laws of the States of
Delaware and Illinois and the Federal laws of the United States. In rendering
such opinion, such counsel may rely as to matters of fact, to the extent such
counsel deems proper, on certificates of responsible officers of the Company and
public officials.
(e) The Initial Purchaser shall have received from ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
& ▇▇▇▇▇▇▇▇, counsel for the Initial Purchaser, such opinion or opinions, dated
as of the Closing Date, with respect to the issuance and sale of the Initial
Securities, the Offering Memorandum and other related matters as the Initial
Purchaser may reasonably require, and the Company shall have furnished to such
counsel such documents as they reasonably request for the purpose of enabling
them to pass upon such matters.
(f) The Company, the Guarantor and the Trustee shall have entered
into the Indenture and the Initial Purchaser shall have received counterparts,
conformed as executed, thereof.
(g) The Company, the Guarantor and the Initial Purchaser shall have
entered into the Registration Rights Agreement and the Initial Purchaser shall
have received counterparts, conformed as executed, hereof.
(h) With respect to the letter of Deloitte & Touche LLP delivered
to the Initial Purchaser concurrently with the execution of this Agreement (the
"Deloitte initial letter"), the Company shall have furnished to the Initial
Purchaser a letter (as used in this paragraph, the "Deloitte bring-down
letter") of such accountant, addressed to the Initial Purchaser and dated as of
the Closing Date (i) confirming that it is an independent public accountant
under the guidelines of the AICPA, (ii) stating, as of the date of the Deloitte
bring-down letter (or, with respect to matters involving changes or developments
since the respective dates as of which
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specified financial information is given in the Offering Memorandum, as of a
date not more than two days prior to the date of the Deloitte bring-down
letter), the conclusions and findings of such firm with respect to the financial
information and other matters covered by the Deloitte initial letter and (iii)
confirming in all material respects the conclusions and findings set forth in
the Deloitte initial letter.
(i) With respect to the letter of KPMG Peat Marwick LLP delivered
to the Initial Purchaser concurrently with the execution of this Agreement (the
"KMPG initial letter"), the Company shall have furnished to the Initial
Purchaser a letter (as used in this paragraph, the "KPMG bring-down letter") of
such accountant, addressed to the Initial Purchaser and dated as of the Closing
Date (i) confirming that it is an independent public accountant under the
guidelines of the AICPA, (ii) stating, as of the date of the KPMG bring-down
letter (or, with respect to matters involving changes or developments since the
respective dates as of which specified financial information is given in the
Offering Memorandum, as of a date not more than two days prior to the date of
the KPMG bring-down letter), the conclusions and findings of such firm with
respect to the financial information and other matters covered by the KPMG
initial letter and (iii) confirming in all material respects the conclusions and
findings set forth in the KPMG initial letter.
(j) The Company shall have furnished to the Initial Purchaser a
certificate, dated as of the Closing Date, of its Chief Executive Officer or
President and its Chief Financial Officer or Treasurer stating that:
(i) The representations, warranties and agreements of the
Company and the Guarantor in Section 1 hereof are true and correct as of such
Closing Date and after giving effect to the consummation of the transactions
contemplated by this Agreement; the Company and the Guarantor have complied with
all their agreements contained herein, and the condition set forth in Section
7(k) hereof has been fulfilled; and
(ii) They have carefully examined the Preliminary Offering
Memorandum and the Offering Memorandum and, in their opinion (i) as of their
respective dates and as of the Closing Date, the Preliminary Offering Memorandum
and the Offering Memorandum did not include any untrue statement of a material
fact and did not omit to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading, and (ii) since the date of the Offering
Memorandum, no event has occurred which should have been set forth in a
supplement or amendment to the Offering Memorandum.
(k) (i) Neither the Company nor any of its Subsidiaries shall have
sustained since the date of the latest audited financial statements included in
the Offering Memorandum any loss or interference with its business from fire,
explosion, flood or other calamity, whether or not covered by insurance, or from
any labor dispute or court or governmental action, order or decree, otherwise
than as set forth or contemplated in the Offering Memorandum or (ii) since such
date there shall not have been any change in the capital stock
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or long-term debt of the Company or any of its Subsidiaries or any change, or
any development involving a prospective change, that would have a Material
Adverse Effect, otherwise than as set forth or contemplated in the Offering
Memorandum, the effect of which, in any such case described in clause (i) or
(ii), is, in the judgment of the Initial Purchaser, so material and adverse as
to make it impracticable or inadvisable to proceed with the payment for and
delivery of the Initial Notes being delivered on such Closing Date on the terms
and in the manner contemplated in the Offering Memorandum.
(l) There shall exist at and as of the Closing Date no conditions
that would constitute a default (or an event that with notice or the lapse of
time, or both, would constitute a default) under the Senior Credit Facilities
(as defined in the Offering Memorandum).
(m) ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ shall have been furnished with such
other documents and opinions, in addition to those set forth above, as they may
reasonably require for the purpose of enabling them to review or pass upon the
matters referred to in this Agreement and in order to evidence the accuracy,
completeness or satisfaction in all material respects of any of the
representations, warranties or conditions herein contained.
(n) Subsequent to the execution and delivery of this Agreement (i)
no downgrading shall have occurred in the rating accorded the Company's debt
securities by any "nationally recognized statistical rating organization," as
that term is defined by the Commission for purposes of Rule 436(g)(2) under the
Securities Act and (ii) no such organization shall have publicly announced that
it has under surveillance or review, with possible negative implications, its
rating of any of the Company's debt securities.
(o) Subsequent to the execution and delivery of this Agreement
there shall not have occurred any of the following: (i) trading in securities
generally on the New York Stock Exchange or the American Stock Exchange or in
the over-the-counter market, or trading in any securities of the Company on any
exchange or in the over-the-counter market, shall have been suspended or minimum
prices shall have been established on any such exchange or such market by the
Commission, by such exchange or by any other regulatory body or governmental
authority having jurisdiction, (ii) a banking moratorium shall have been
declared by Federal or state authorities, (iii) the United States shall have
become engaged in hostilities, there shall have been an escalation in
hostilities involving the United States or there shall have been a declaration
of a national emergency or war by the United States or (iv) there shall have
occurred such a material adverse change in general economic, political or
financial conditions (or the effect of international conditions on the financial
markets in the United States shall be such) as to make it, in the judgment of
the Initial Purchaser, impracticable or inadvisable to proceed with the public
offering or delivery of the Securities being delivered on such Closing Date on
the terms and in the manner contemplated in the Offering Memorandum.
(p) The Initial Notes shall have been approved by the National
Association of Securities Dealers, Inc. for trading in the PORTAL market.
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All opinions, letters, evidence and certificates mentioned above or
elsewhere in this Agreement shall be deemed to be in compliance with the
provisions hereof only if they are in form and substance reasonably satisfactory
to counsel for the Initial Purchaser.
8. Indemnification and Contribution.
(a) Each of the Company and the Guarantor hereby jointly and
severally agrees to indemnify and hold harmless the Initial Purchaser, its
officers and employees and each person, if any, who controls the Initial
Purchaser within the meaning of the Securities Act, from and against any loss,
claim, damage or liability, joint or several, or any action in respect thereof
(including, but not limited to, any loss, claim, damage, liability or action
relating to purchases and sales of Securities), to which the Initial Purchaser,
officer, employee or controlling person may become subject, under the Securities
Act or otherwise, insofar as such loss, claim, damage, liability or action
arises out of, or is based upon, (i) any untrue statement or alleged untrue
statement of a material fact contained (A) in any Preliminary Offering
Memorandum or the Offering Memorandum (in each case as amended or supplemented)
or (B) in any blue sky application or other document prepared or executed by the
Company (or based upon any written information furnished by the Company)
specifically for the purpose of qualifying any or all of the Securities under
the securities laws of any state or other jurisdiction (any such application,
document or information being hereinafter called a "Blue Sky Application"),
(ii) the omission or alleged omission to state in any Preliminary Offering
Memorandum or the Offering Memorandum (in each case as amended or supplemented)
or in any Blue Sky Application any material fact required to be stated therein
or necessary to make the statements therein not misleading or (iii) any act or
failure to act or any alleged act or failure to act by the Initial Purchaser in
connection with, or relating in any manner to, the Securities or the offering
contemplated hereby, and which is included as part of or referred to in any
loss, claim, damage, liability or action arising out of or based upon matters
covered by clauses (i) or (ii) above (provided that neither the Company nor the
Guarantor shall be liable under this clause (iii) to the extent that it is
determined in a final judgment by a court of competent jurisdiction that such
loss, claim, damage, liability or action resulted directly from any such acts or
failure to act undertaken or omitted to be taken by the Initial Purchaser
through its gross negligence or willful misconduct); and shall reimburse the
Initial Purchaser and each such officer, employee or controlling person promptly
upon demand for any legal or other expenses reasonably incurred by the Initial
Purchaser, officer, employee or controlling person in connection with
investigating or defending or preparing to defend against any such loss, claim,
damage, liability or action as such expenses are incurred; provided, however,
that the Company and the Guarantor shall not be liable in any such case to the
extent that any such loss, claim, damage, liability or action arises out of, or
is based upon, any untrue statement or alleged untrue statement or omission or
alleged omission made in any Preliminary Offering Memorandum or the Offering
Memorandum (in each case as amended or supplemented) or in any Blue Sky
Application in reliance upon and in conformity with written information
concerning the Initial Purchaser furnished to the Company by or on behalf of the
Initial Purchaser specifically for inclusion therein. The foregoing indemnity
agreement is in addition
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to any liability which the Company and the Guarantor may otherwise have to the
Initial Purchaser or to any officer, employee or controlling person of the
Initial Purchaser.
(b) The Initial Purchaser shall indemnify and hold harmless the
Company, the Guarantor, their respective officers and employees, each of their
respective directors, and each person, if any, who controls the Company or the
Guarantor within the meaning of the Securities Act, from and against any loss,
claim, damage or liability, joint or several, or any action in respect thereof,
to which the Company or the Guarantor or any such director, officer or
controlling person may become subject, under the Securities Act or otherwise,
insofar as such loss, claim, damage, liability or action arises out of, or is
based upon, (i) any untrue statement or alleged untrue statement of a material
fact contained (A) in any Preliminary Offering Memorandum or the Offering
Memorandum (in each case as amended or supplemented) or (B) in any Blue Sky
Application or (ii) the omission or alleged omission to state in any Preliminary
Offering Memorandum or the Offering Memorandum (in each case as amended or
supplemented) or in any Blue Sky Application any material fact required to be
stated therein or necessary to make the statements therein not misleading, but
in each case only to the extent that the untrue statement or alleged untrue
statement or omission or alleged omission was made in reliance upon and in
conformity with written information concerning the Initial Purchaser furnished
to the Company by or on behalf of the Initial Purchaser specifically for
inclusion therein, and shall reimburse the Company or the Guarantor and any such
director, officer or controlling person for any legal or other expenses
reasonably incurred by the Company or the Guarantor or any such director,
officer or controlling person in connection with investigating or defending or
preparing to defend against any such loss, claim, damage, liability or action as
such expenses are incurred. The foregoing indemnity agreement is in addition to
any liability which the Initial Purchaser may otherwise have to the Company, the
Guarantor or any such director, officer, employee or controlling person.
(c) Promptly after receipt by an indemnified party under this
Section 8 of the notice of any claim or the commencement of any action, the
indemnified party shall, if a claim in respect thereof is to be made against the
indemnifying party under this Section 8, notify the indemnifying party in
writing of the claim or the commencement of that action; provided, however, that
the failure to notify the indemnifying party shall not relieve it from any
liability which it may have under this Section 8 except to the extent it has
been materially prejudiced by such failure and, provided, however, that the
failure to notify the indemnifying party shall not relieve it from any liability
which it may have to an indemnified party otherwise than under this Section 8.
If any such claim or action shall be brought against an indemnified party, and
it shall notify the indemnifying party thereof, the indemnifying party shall be
entitled to participate therein and, to the extent that it wishes, jointly with
any other similarly notified indemnifying party, to assume the defense thereof
with counsel reasonably satisfactory to the indemnified party. After notice
from the indemnifying party to the indemnified party of its election to assume
the defense of such claim or action, the indemnifying party shall not be liable
to the indemnified party under this Section 8 for any legal or other expenses
subsequently incurred by the indemnified party in connection with the defense
thereof other than reasonable costs of investigation; provided, however, that
the Initial Purchaser shall have
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the right to employ counsel (in addition to local counsel, if necessary) to
represent jointly it and its officers, employees and controlling persons who may
be subject to liability arising out of any claim in respect of which indemnity
may be sought by the Initial Purchaser against the Company and the Guarantor
under this Section 8 if, in the reasonable judgment of the Initial Purchaser, it
is advisable for the Initial Purchaser and its officers, employees and
controlling persons to be jointly represented by separate counsel, and in that
event the fees and expenses of such separate counsel shall be paid by the
Company and the Guarantor. No indemnifying party shall (i) without the prior
written consent of the indemnified parties (which consent shall not be
unreasonably withheld), settle or compromise or consent to the entry of any
judgment with respect to any pending or threatened claim, action, suit or
proceeding in respect of which indemnification or contribution may be sought
hereunder (whether or not the indemnified parties are actual or potential
parties to such claim or action) unless such settlement, compromise or consent
includes an unconditional release of each indemnified party from all liability
arising out of such claim, action, suit or proceeding, or (ii) be liable for any
settlement of any such action effected without its written consent (which
consent shall not be unreasonably withheld), but if settled with the consent of
the indemnifying party or if there be a final judgment of the plaintiff in any
such action, the indemnifying party agrees to indemnify and hold harmless any
indemnified party from and against any loss or liability by reason of such
settlement or judgment.
(d) If the indemnification provided for in this Section 8 shall for
any reason be unavailable to or insufficient to hold harmless an indemnified
party under Section 8(a) or 8(b) in respect of any loss, claim, damage or
liability, or any action in respect thereof, referred to therein, then each
indemnifying party shall, in lieu of indemnifying such indemnified party,
contribute to the amount paid or payable by such indemnified party as a result
of such loss, claim, damage or liability, or action in respect thereof, (i) in
such proportion as shall be appropriate to reflect the relative benefits
received by the Company and the Guarantor on the one hand and the Initial
Purchaser on the other from the offering of the Initial Securities or (ii) if
the allocation provided by clause (i) above is not permitted by applicable law,
in such proportion as is appropriate to reflect not only the relative benefits
referred to in clause (i) above but also the relative fault of the Company and
the Guarantor on the one hand and the Initial Purchaser on the other with
respect to the statements or omissions which resulted in such loss, claim,
damage or liability, or action in respect thereof, as well as any other relevant
equitable considerations. The relative benefits received by the Company and the
Guarantor on the one hand and the Initial Purchaser on the other with respect to
such offerings shall be deemed to be in the same proportion as the total net
proceeds from the offering of the Initial Securities purchased under this
Agreement (before deducting expenses) received by the Company and the Guarantor,
on the one hand, and the total discounts and commissions received by the Initial
Purchaser with respect to the Initial Securities purchased under this Agreement,
on the other hand, bear to the total gross proceeds from the offering of the
Initial Securities under this Agreement, in each case as set forth in the table
on the cover page of the Offering Memorandum. The relative fault shall be
determined by reference to whether the untrue or alleged untrue statement of a
material fact or omission or alleged omission to state a material fact relates
to information supplied by the Company and the Guarantor or the Initial
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Purchaser, the intent of the parties and their relative knowledge, access to
information and opportunity to correct or prevent such statement or omission.
The Company and the Initial Purchaser agree that it would not be just and
equitable if contributions pursuant to this Section 8(d) were to be determined
by pro rata allocation or by any other method of allocation which does not take
into account the equitable considerations referred to herein. The amount paid
or payable by an indemnified party as a result of the loss, claim, damage or
liability, or action in respect thereof, referred to above in this Section shall
be deemed to include, for purposes of this Section 8(d), any legal or other
expenses reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim. Notwithstanding the
provisions of this Section 8(d), the Initial Purchaser shall not be required to
contribute any amount in excess of the amount by which the total price at which
the Initial Securities purchased by it were resold to Eligible Purchasers
exceeds the amount of any damages which the Initial Purchaser has otherwise paid
or become liable to pay by reason of any untrue or alleged untrue statement or
omission or alleged omission. No person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation.
(e) The Initial Purchaser confirms and the Company acknowledges
that the last paragraph on the cover page, the stabilization legend on page ii,
and the second, third, ninth, tenth and eleventh paragraphs of the section
entitled "Plan of Distribution" constitute the only information concerning the
Initial Purchaser furnished in writing to the Company by or on behalf of the
Initial Purchaser specifically for inclusion in the Preliminary Offering
Memorandum or the Offering Memorandum.
9. Termination. The obligations of the Initial Purchaser
hereunder may be terminated by the Initial Purchaser by notice given to the
Company prior to delivery of and payment for the Initial Securities if, prior to
that time, any of the events described in Sections 7(k), 7(n) or 7(o) shall have
occurred or if the Initial Purchaser shall decline to purchase the Initial
Securities for any reason permitted under this Agreement.
10. Reimbursement of Initial Purchaser's Expenses. If the Company
shall fail to tender the Initial Securities for delivery to the Initial
Purchaser by reason of any failure, refusal or inability on the part of the
Company or the Guarantor to perform any agreement on their part to be performed,
or because any other condition of the Initial Purchaser's obligations hereunder
required to be fulfilled by the Company or the Guarantor is not fulfilled, the
Company and the Guarantor will reimburse the Initial Purchaser for all
reasonable out-of-pocket expenses (including the fees and disbursements of its
counsel) incurred by the Initial Purchaser in connection with this Agreement and
the proposed purchase of the Initial Securities, and upon demand the Company and
the Guarantor shall pay the full amount thereof to the Initial Purchaser.
11. Notices, etc. All statements, requests, notices and agreements
hereunder shall be in writing, and:
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(a) If to the Initial Purchaser, shall be delivered or sent by
mail, telex or facsimile transmission to ▇▇▇▇▇▇ Brothers Inc., Three World
Financial Center, New York, New York 10285, Attention: Syndicate Department
(Fax: ▇▇▇-▇▇▇-▇▇▇▇), with a copy to ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: Rise ▇. ▇▇▇▇▇▇, Esq. (Fax:
▇▇▇-▇▇▇-▇▇▇▇); and
(b) If to the Company or the Guarantor, shall be delivered or sent
by mail, telex or facsimile transmission to Salton/Maxim Housewares, Inc., ▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇. Prospect, Ill. 60056, Attention: Chief Financial
Officer (Fax: ▇▇▇-▇▇▇-▇▇▇▇), with a copy to ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇▇▇▇, ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, Esq. (Fax:
▇▇▇-▇▇▇-▇▇▇▇).
Any such statements, requests, notices or agreements shall take effect
at the time of receipt thereof. The Company and the Guarantor shall be entitled
to act and rely upon any request, consent, notice or agreement given or made by
the Initial Purchaser. Any notice of a change of address or facsimile
transmission number must be given by the Company, the Guarantor or by the
Initial Purchaser, as the case may be, in writing, at least three days in
advance of such change.
12. Persons Entitled to Benefit of Agreement. This Agreement shall
inure to the benefit of and be binding upon the Initial Purchaser, its personal
representatives and successors. This Agreement and the terms and provisions
hereof are for the sole benefit of only those persons, except that (i) the
representations, warranties, indemnities and agreements of the Company and the
Guarantor contained in this Agreement shall also be deemed to be for the benefit
of the person or persons, if any, who control the Initial Purchaser within the
meaning of Section 15 of the Securities Act and (ii) the representations,
warranties, indemnities and agreements of the Initial Purchaser contained in
this Agreement shall also be deemed to be for the benefit of officers and
directors of each of the Company and the Guarantor and any person who controls
the Company within the meaning of Section 15 of the Securities Act.
13. Survival. The respective indemnities, representations,
warranties and agreements of the Initial Purchaser and the Company and the
Guarantor contained in this Agreement or made by or on behalf of them,
respectively, pursuant to this Agreement, shall survive the delivery of and
payment for the Securities and shall remain in full force and effect, regardless
of any investigation made by on behalf of any of them or any person controlling
any of them.
14. Definition of the Terms "Business Day." For purposes of this
Agreement "business day" means any day on which the New York Stock Exchange,
Inc. is open for trading.
15. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of New York.
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16. Counterparts. This Agreement may be executed in one or more
counterparts and, if executed in more than one counterpart, the executed
counterparts shall each be deemed to be an original but all such counterparts
shall together constitute one and the same instrument.
17. Headings. The headings herein are inserted for convenience of
reference only and are not intended to be part of, or to affect the meaning or
interpretation of, this Agreement.
[The remainder of this page left blank intentionally]
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If the foregoing correctly sets forth the agreement among the Initial
Purchaser, the Company and the Guarantor, please indicate your acceptance in the
space provided for the purpose below.
Very truly yours,
SALTON/MAXIM HOUSEWARES, INC.
By: ____________________________
Name:
Title:
HOME CREATIONS DIRECT LTD.
By: ____________________________
Name:
Title:
Accepted:
▇▇▇▇▇▇ BROTHERS INC.,
as the Initial Purchaser
By: _________________________________
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Senior Vice President
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EXHIBIT A
Registration Rights Agreement
34
EXECUTION COPY
================================================================================
REGISTRATION RIGHTS AGREEMENT
Dated as of December 16, 1998
Among
SALTON/MAXIM HOUSEWARES, INC.
HOME CREATIONS DIRECT LTD.
and
▇▇▇▇▇▇ BROTHERS INC.
as Initial Purchaser
================================================================================
35
TABLE OF CONTENTS
-----------------
Page
----
1. Definitions....................................................... 1
2. Securities Subject to This Agreement.............................. 3
3. Registered Exchange Offer......................................... 3
4. Shelf Registration................................................ 4
5. Liquidated Damages................................................ 6
6. Registration Procedures........................................... 6
7. Registration Expenses............................................. 14
8. Indemnification and Contribution.................................. 14
9. Rule 144A......................................................... 17
10. Participation in Underwritten Registrations....................... 17
11. Selection of Underwriters......................................... 17
12. Miscellaneous..................................................... 17
i
36
1
This Registration Rights Agreement (this "Agreement") is made and entered
into as of December 16, 1998 by and among Salton/Maxim Housewares, Inc., a
Delaware corporation (the "Company"), the Company's wholly-owned subsidiary,
Home Creations Direct Ltd. (the "Guarantor") and ▇▇▇▇▇▇ Brothers Inc. (the
"Initial Purchaser").
This Agreement is entered into in connection with the Purchase
Agreement, dated as of December 11, 1998, by and among the Company, the
Guarantor and the Initial Purchaser (the "Purchase Agreement"), which provides
for the sale by the Company to the Initial Purchaser of $125,000,000 aggregate
principal amount of the Company's 10 3/4% Senior Subordinated Notes due 2005
(the "Notes"). The Notes will be guaranteed on a senior subordinated basis by a
guarantee (the "Guarantee") issued by the Guarantor. The Notes and the
Guarantee are collectively referred to herein as the "Securities." In order to
induce the Initial Purchaser to enter into the Purchase Agreement, the Company
has agreed to provide the registration rights set forth in this Agreement for
the benefit of the Initial Purchaser and its direct and indirect transferees and
assigns. The execution and delivery of this Agreement is a condition to the
Initial Purchaser's obligations to purchase the Securities under the Purchase
Agreement. Capitalized terms used but not specifically defined herein have the
respective meanings ascribed thereto in the Purchase Agreement.
The parties hereby agree as follows:
1. Definitions. As used in this Agreement, the following
capitalized terms shall have the following meanings:
Broker-Dealer: Any broker or dealer registered under the
Exchange Act.
Closing Date: The date on which the Securities were sold.
Commission: The Securities and Exchange Commission.
Consummate: A registered Exchange Offer shall be deemed
"Consummated" for purposes of this Agreement upon the occurrence of (i) the
filing and effectiveness under the Securities Act of the Exchange Offer
Registration Statement relating to the New Securities to be issued in the
Exchange Offer, (ii) the maintenance of such Registration Statement
continuously effective and the keeping of the Exchange Offer open for a
period not less than the minimum period required pursuant to Section 3(b)
hereof and (iii) the delivery by the Company of the New Securities in the
same aggregate principal amount as the aggregate principal amount of
Transfer Restricted Securities that were validly tendered by Holders
thereof pursuant to the Exchange Offer.
Effectiveness Target Date: As defined in Section 5(a) hereof.
Exchange Act: The Securities Exchange Act of 1934, as amended.
Exchange Offer: The registration by the Company under the
Securities Act of the New Securities pursuant to a Registration Statement
pursuant to which the Company offers the Holders of all outstanding
Transfer Restricted Securities the opportunity to exchange all such
outstanding Transfer Restricted Securities held by such Holders for New
Securities in an aggregate principal amount equal to the aggregate
principal amount of the Transfer Restricted Securities tendered in such
exchange offer by such Holders.
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Exchange Offer Registration Statement: The Registration
Statement relating to the Exchange Offer, including the Prospectus which
forms a part thereof.
Exempt Resales: The transactions in which the Initial
Purchaser proposes to sell the Securities to certain "qualified
institutional buyers," as such term is defined in Rule 144A under the
Securities Act and to certain non-U.S. persons.
Holders: As defined in Section 2(b) hereof.
Indenture: The Indenture, dated as of December 16, 1998,
among the Company, the Guarantor and Norwest Bank Minnesota, National
Association, as trustee (the "Trustee"), pursuant to which the Securities
are to be issued, as such Indenture is amended or supplemented from time to
time in accordance with the terms thereof.
Initial Purchaser: ▇▇▇▇▇▇ Brothers Inc.
Liquidated Damages: As defined in Section 5(a) hereof.
NASD: National Association of Securities Dealers, Inc.
New Securities: The Securities to be issued pursuant to the
Indenture in the Exchange Offer.
Participant: As defined in Section 8(a) hereof.
Person: An individual, partnership, corporation, limited
liability company, trust or unincorporated organization, or a government or
agency or political subdivision thereof.
Prospectus: The prospectus included in a Registration
Statement, as amended or supplemented by any prospectus supplement and by
all other amendments thereto, including post-effective amendments, and all
material incorporated by reference into such Prospectus.
Registration Default: As defined in Section 5(a) hereof.
Registration Statement: Any registration statement of the
Company relating to (a) an offering of New Securities pursuant to an
Exchange Offer or (b) the registration for resale of Transfer Restricted
Securities pursuant to the Shelf Registration Statement, which is filed
pursuant to the provisions of this Agreement, in either case, including the
Prospectus included therein, all amendments and supplements thereto
(including post-effective amendments) and all exhibits and material
incorporated by reference therein.
Securities Act: The Securities Act of 1933, as amended.
Shelf Filing Deadline: As defined in Section 4(a) hereof.
Shelf Registration Statement: As defined in Section 4(a)
hereof.
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TIA: The Trust Indenture Act of 1939 (15 U.S.C. Section
77aaa-77bbbb), as amended.
Transfer Restricted Securities: Each Security, until the
earliest to occur of (a) the date on which such Security has been exchanged
by a person other than a Broker-Dealer for a New Security in the Exchange
Offer, (b) following the exchange by a Broker-Dealer in the Exchange Offer
of a Security for a New Security, the date on which such New Security is
sold to a purchaser who receives from such Broker-Dealer on or prior to the
date of such sale a copy of the prospectus contained in the Exchange Offer
Registration Statement, (c) the date on which such Security has been
effectively registered under the Securities Act and disposed of in
accordance with the Shelf Registration Statement or (d) the date on which
such Security is eligible to be distributed to the public pursuant to Rule
144 under the Securities Act.
Underwritten Registration or Underwritten Offering: A
registration in which securities of the Company are sold to an underwriter
for reoffering to the public.
2. Securities Subject to This Agreement.
(a) Transfer Restricted Securities. The securities entitled
to the benefits of this Agreement are the Transfer Restricted Securities.
(b) Holders of Transfer Restricted Securities. A Person is
deemed to be a holder of Transfer Restricted Securities (each such Person,
a "Holder") whenever such Person owns Transfer Restricted Securities.
3. Registered Exchange Offer.
(a) Unless the Exchange Offer shall not be permissible under
applicable law or Commission policy (after the procedures set forth in
Section 6(a) below have been complied with) or one of the events set forth
in Section 4(a)(ii) has occurred, the Company shall (i) cause to be filed
with the Commission promptly after the Closing Date, but in no event later
than 60 days after the Closing Date, a Registration Statement under the
Securities Act relating to the New Securities and the Exchange Offer, (ii)
use its best efforts to cause such Registration Statement to become
effective no later than 120 days after the Closing Date, (iii) in
connection with the foregoing, file (A) all pre-effective amendments to
such Registration Statement as may be necessary in order to cause such
Registration Statement to become effective, (B) if applicable, a
post-effective amendment to such Registration Statement pursuant to Rule
430A under the Securities Act and (C) cause all necessary filings in
connection with the registration and qualification of the New Securities to
be made under the Blue Sky laws of such jurisdictions as are necessary to
permit Consummation of the Exchange Offer, and (iv) unless the Exchange
Offer would not be permitted by applicable law or Commission policy, the
Company will commence the Exchange Offer and use its best efforts to issue
on or prior to 30 business days after the date on which such Registration
Statement was declared effective by the Commission, New Securities in
exchange for all Securities tendered prior thereto in the Exchange Offer.
The Exchange Offer shall be on the appropriate form permitting registration
of the New Securities to be offered in exchange for the Transfer Restricted
Securities and to permit resales of New Securities held by Broker-Dealers
as contemplated by Section 3(c) below. The 60, 120 and 30 business day
periods referred to in (i), (ii) and (iv) of this Section
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3(a) shall not include any period during which the Company is pursuing a
Commission ruling pursuant to Section 6(a)(i) below.
(b) The Company shall use its best efforts to cause the
Exchange Offer Registration Statement to be effective continuously and
shall keep the Exchange Offer open for a period of not less than the
minimum period required under applicable federal and state securities laws
to Consummate the Exchange Offer; provided, however, that in no event shall
such period be less than 20 business days. The Company shall cause the
Exchange Offer to comply in all material respects with all applicable
federal and state securities laws. No securities other than the New
Securities shall be included in the Exchange Offer Registration Statement.
The Company shall use its best efforts to cause the Exchange Offer to be
Consummated on the earliest practicable date after the Exchange Offer
Registration Statement has become effective, but in no event later than 30
business days thereafter.
(c) The Company shall indicate in a "Plan of Distribution"
section contained in the Prospectus contained in the Exchange Offer
Registration Statement that any Broker-Dealer who holds Securities that are
Transfer Restricted Securities and that were acquired for its own account
as a result of market-making activities or other trading activities (other
than Transfer Restricted Securities acquired directly from the Company),
may exchange such Securities pursuant to the Exchange Offer; however, such
Broker-Dealer may be deemed to be an "underwriter" within the meaning of
the Securities Act and must, therefore, deliver a prospectus meeting the
requirements of the Securities Act in connection with any resales of the
New Securities received by such Broker-Dealer in the Exchange Offer, which
prospectus delivery requirement may be satisfied by the delivery by such
Broker-Dealer of the Prospectus contained in the Exchange Offer
Registration Statement. Such "Plan of Distribution" section shall also
contain all other information with respect to such resales by
Broker-Dealers that the Commission may require in order to permit such
resales pursuant thereto, but such "Plan of Distribution" shall not name
any such Broker-Dealer or disclose the amount of New Securities held by any
such Broker-Dealer except to the extent required by the Commission as a
result of a change in policy announced after the date of this Agreement.
The Company shall use its reasonable best efforts to keep the Exchange
Offer Registration Statement continuously effective, supplemented and amended as
required by the provisions of Section 6(c) below to the extent necessary to
ensure that it is available for resales of New Securities acquired by
Broker-Dealers for their own accounts as a result of market-making activities or
other trading activities and to ensure that it conforms with the requirements of
this Agreement, the Securities Act and the policies, rules and regulations of
the Commission as announced from time to time, for a period of 180 days from the
date on which the Exchange Offer Registration Statement is declared effective.
The Company shall provide sufficient copies of the latest version of
such Prospectus to Broker-Dealers promptly upon request at any time during such
180-day period in order to facilitate such resales.
4. Shelf Registration.
(a) Shelf Registration. If (i) the Company is not required to
file an Exchange Offer Registration Statement or to Consummate the Exchange
Offer because the
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Exchange Offer is not permitted by applicable law or Commission policy
(after the procedures set forth in Section 6(a) below have been complied
with) or (ii) if any Holder of Transfer Restricted Securities that is a
"qualified institutional buyer" (as defined in Rule 144A under the
Securities Act) or an institutional "accredited investor" (as defined in
Rule 501(A)(1), (2), (3) or (7) under the Securities Act) shall notify the
Company at least 20 business days prior to the Consummation of the Exchange
Offer (A) that such Holder is prohibited by applicable law or Commission
policy from participating in the Exchange Offer or (B) that such Holder may
not resell the New Securities acquired by it in the Exchange Offer to the
public without delivering a prospectus and that the Prospectus contained in
the Exchange Offer Registration Statement is not appropriate or available
for such resales by such Holder or (C) that such Holder is a Broker-Dealer
and holds Securities acquired directly from the Company or one of its
affiliates, then the Company shall in lieu of, or in the event of (ii)
above, in addition to, effecting the registration of the New Securities
pursuant to the Exchange Offer Registration Statement use its best efforts
to:
(x) cause to be filed a shelf registration statement
pursuant to Rule 415 under the Securities Act, which may be an
amendment to the Exchange Offer Registration Statement (in either
event, the "Shelf Registration Statement"), on or prior to the earlier
to occur of (1) the 60th day after the date on which the Company
determines that it is not required to file the Exchange Offer
Registration Statement or (2) the 60th day after the date on which the
Company receives notice from a Holder of Transfer Restricted Securities
as contemplated by clause (ii) above (such earlier date being the
"Shelf Filing Deadline"), which Shelf Registration Statement shall
provide for resales of all Transfer Restricted Securities the Holders
of which shall have provided the information required pursuant to
Section 4(b) hereof; and
(y) cause such Shelf Registration Statement to be
declared effective by the Commission on or before the 120th day after
the Shelf Filing Deadline.
The Company shall use its best efforts to keep such Shelf Registration
Statement continuously effective, supplemented and amended as required by
the provisions of Sections 6(b) and (c) hereof to the extent necessary to
ensure that it is available for resales of Securities by the Holders of
Transfer Restricted Securities entitled to the benefit of this Section 4(a)
and to ensure that it conforms with the requirements of this Agreement, the
Securities Act and the policies, rules and regulations of the Commission as
announced from time to time, for a period ending on the second anniversary
of the Closing Date.
(b) Provision by Holders of Certain Information in Connection
with the Shelf Registration Statement. No Holder of Transfer Restricted
Securities may include any of its Transfer Restricted Securities in any
Shelf Registration Statement pursuant to this Agreement unless and until
such Holder furnishes to the Company in writing, within 20 days after
receipt of a request therefor, such information as the Company may
reasonably request for use in connection with any Shelf Registration
Statement or Prospectus or preliminary Prospectus included therein. No
Holder of Transfer Restricted Securities shall be entitled to
41
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Liquidated Damages pursuant to Section 5 hereof unless and until such
Holder shall have used its best efforts to provide all such reasonably
requested information. Each Holder as to which any Shelf Registration
Statement is being effected agrees to furnish promptly to the Company all
information required to be disclosed in order to make the information
previously furnished to the Company by such Holder not materially
misleading.
5. Liquidated Damages
(a) If (a) any of the Registration Statements required by this
Agreement is not filed with the Commission on or prior to the date specified for
such filing in this Agreement, (b) any of such Registration Statements has not
been declared effective by the Commission on or prior to the date specified for
such effectiveness in this Agreement (the "Effectiveness Target Date"), (c) the
Exchange Offer has not been Consummated within 30 business days after the
Effectiveness Target Date with respect to the Exchange Offer Registration
Statement or (d) any Registration Statement required by this Agreement is filed
and declared effective but shall thereafter cease to be effective or fail to be
usable for its intended purpose without being succeeded within two business days
by a post-effective amendment to such Registration Statement that cures such
failure and that is itself immediately declared effective (each such event
referred to in clauses (a) through (d), a "Registration Default"), additional
cash interest ("Liquidated Damages") shall accrue to each Holder of the
Securities commencing upon the occurrence of such Registration Default in an
amount equal to $.05 per week per $1,000 principal amount of Securities held by
such Holder. The amount of Liquidated Damages will increase by an additional
$.05 per week per $1,000 principal amount of Securities with respect to each
subsequent 90-day period until all Registration Defaults have been cured, up to
a maximum amount of Liquidated Damages for all Registration Defaults of $.50 per
week per $1,000 principal amount of Securities. All accrued Liquidated Damages
shall be paid to Holders by the Company in the same manner as interest is paid
pursuant to the Indenture. Following the cure of all Registration Defaults
relating to any particular Transfer Restricted Securities, the accrual of
Liquidated Damages with respect to such Transfer Restricted Securities will
cease.
All obligations of the Company set forth in the preceding paragraph
that have accrued and are outstanding with respect to any Transfer Restricted
Security at the time such security ceases to be a Transfer Restricted Security
shall survive until such time as all such obligations with respect to such
Transfer Restricted Security shall have been satisfied in full.
(b) The Company shall notify the Trustee within one business day
after each and every date on which an event occurs in respect of which
Liquidated Damages are required to be paid. Liquidated Damages shall be paid by
depositing Liquidated Damages with the Trustee, in trust, for the benefit of the
Holders of the Securities, on or before the applicable Interest Payment Date (as
defined in the Indenture) (whether or not any payment other than Liquidated
Damages is payable on such Securities), in immediately available funds in sums
sufficient to pay the Liquidated Damages then due to such Holders. Each
obligation to pay Liquidated Damages shall be deemed to accrue from the
applicable date of the occurrence of the Registration Default.
6. Registration Procedures.
(a) Exchange Offer Registration Statement. In connection with
the Exchange Offer, the Company shall comply with all of the provisions of
Section 6(c) below, shall use its best efforts to effect such exchange to
permit the sale of Transfer Restricted
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Securities being sold in accordance with the intended method or methods of
distribution thereof, and shall comply with all of the following
provisions:
(i) If in the reasonable opinion of counsel to the Company
there is a question as to whether the Exchange Offer is permitted by
applicable law, the Company hereby agrees to seek a no-action letter or
other favorable decision from the Commission allowing the Company to
Consummate an Exchange Offer for such Securities. The Company hereby
agrees to pursue the issuance of such a decision to the Commission staff
level but shall not be required to take commercially unreasonable action to
effect a change of Commission policy. The Company hereby agrees, however,
to (A) participate in telephonic conferences with the Commission, (B)
deliver to the Commission staff an analysis prepared by counsel to the
Company setting forth the legal bases, if any, upon which such counsel has
concluded that such an Exchange Offer should be permitted and (C)
diligently pursue a resolution (which need not be favorable) by the
Commission staff of such submission.
(ii) As a condition to its participation in the Exchange
Offer pursuant to the terms of this Agreement, each Holder of Transfer
Restricted Securities shall furnish, upon the request of the Company, prior
to the Consummation thereof, a written representation to the Company (which
may be contained in the letter of transmittal contemplated by the Exchange
Offer Registration Statement) to the effect that (A) it is not an affiliate
of the Company, (B) it is not engaged in, and does not intend to engage in,
and has no arrangement or understanding with any person to participate in,
a distribution of the New Securities to be issued in the Exchange Offer and
(C) it is acquiring the New Securities in its ordinary course of business.
In addition, all such Holders of Transfer Restricted Securities shall
otherwise cooperate in the Company's preparations for the Exchange Offer.
Each Holder hereby acknowledges and agrees that any Broker-Dealer and any
such Holder using the Exchange Offer to participate in a distribution of
the securities to be acquired in the Exchange Offer (1) could not under
Commission policy as in effect on the date of this Agreement rely on the
position of the Commission enunciated in ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ and Co., Inc.
(available June 5, 1991) and Exxon Capital Holdings Corporation (available
May 13, 1988), as interpreted in the Commission's letter to ▇▇▇▇▇▇▇▇ &
Sterling dated July 2, 1993, and similar no-action letters (including Brown
& Wood LLP (available February 7, 1997), and any no-action letter obtained
pursuant to clause (i) above) and (2) must comply with the registration and
prospectus delivery requirements of the Securities Act in connection with a
secondary resale transaction and that such a secondary resale transaction
should be covered by an effective registration statement containing the
selling security holder information required by Item 507 or 508, as
applicable, of Regulation S-K if the resales are of New Securities obtained
by such Holder in exchange for Securities acquired by such Holder directly
from the Company.
(iii) Prior to the effectiveness of the Exchange Offer
Registration Statement, the Company shall provide a supplemental letter to
the Commission (A) stating that the Company is registering the Exchange
Offer in reliance on the position of the Commission enunciated in Exxon
Capital Holdings Corporation (available May 13, 1988), ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ and
Co., Inc. (available June 5, 1991), Brown & Wood LLP (available February 7,
1997) and, if applicable, any no-action letter obtained
43
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pursuant to clause (i) above and (B) including a representation that the
Company has not entered into any arrangement or understanding with any
Person to distribute the New Securities to be received in the Exchange
Offer and that, to the best of the Company's information and belief, each
Holder participating in the Exchange Offer is acquiring the New Securities
in its ordinary course of business and has no arrangement or understanding
with any Person to participate in the distribution of the New Securities
received in the Exchange Offer.
(b) Shelf Registration Statement. In connection with the Shelf
Registration Statement, the Company shall comply with all the provisions of
Section 6(c) below and shall use its best efforts to effect such registration to
permit the sale of the Transfer Restricted Securities being sold in accordance
with the intended method or methods of distribution thereof, and pursuant
thereto the Company will prepare and file with the Commission a Registration
Statement relating to the registration on any appropriate form under the
Securities Act, which form shall be available for the sale of the Transfer
Restricted Securities in accordance with the intended method or methods of
distribution thereof within the time periods and otherwise in accordance with
the provisions hereof.
(c) General Provisions. In connection with any Registration
Statement and any Prospectus required by this Agreement to permit the sale or
resale of Transfer Restricted Securities (including, without limitation, any
Registration Statement and the related Prospectus required to permit resales of
Securities by Broker-Dealers), the Company shall:
(i) use its reasonable best efforts to keep such
Registration Statement continuously effective and provide all requisite
financial statements for the period specified in Section 3 or 4 of this
Agreement, as applicable; upon the occurrence of any event that would cause
any such Registration Statement or the Prospectus contained therein (A) to
contain a material misstatement or omission or (B) not to be effective and
usable for resale of Transfer Restricted Securities during the period
required by this Agreement, the Company shall file promptly an appropriate
amendment to such Registration Statement, in the case of clause (A),
correcting any such misstatement or omission, and, in the case of either
clause (A) or (B), use its reasonable best efforts to cause such amendment
to be declared effective and such Registration Statement and the related
Prospectus to become usable for their intended purpose(s) as soon as
practicable thereafter;
(ii) prepare and file with the Commission such amendments and
post-effective amendments to the Registration Statement as may be necessary
to keep the Registration Statement effective for the applicable period set
forth in Section 3 or 4 hereof, as applicable, or such shorter period as
will terminate when all Transfer Restricted Securities covered by such
Registration Statement have been sold; cause the Prospectus to be
supplemented by any required Prospectus supplement, and as so supplemented
to be filed pursuant to Rule 424 under the Securities Act, and to comply
fully with the applicable provisions of Rules 424 and 430A under the
Securities Act in a timely manner; and comply with the provisions of the
Securities Act with respect to the disposition of all securities covered by
such Registration Statement during the applicable period in accordance with
the intended method or methods of distribution by
44
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the sellers thereof set forth in such Registration Statement or supplement
to the Prospectus;
(iii) in the case of a Shelf Registration Statement, advise
the underwriter(s), if any, and selling Holders promptly and, if requested
by such Persons, confirm such advice in writing, (A) when the Prospectus or
any Prospectus supplement or post-effective amendment has been filed, and,
with respect to any Registration Statement or any post-effective amendment
thereto, when the same has become effective, (B) of any request by the
Commission for amendments to the Registration Statement or amendments or
supplements to the Prospectus or for additional information relating
thereto, (C) of the issuance by the Commission of any stop order suspending
the effectiveness of the Registration Statement under the Securities Act or
of the suspension by any state securities commission of the qualification
of the Transfer Restricted Securities for offering or sale in any
jurisdiction, or the initiation of any proceeding for any of the preceding
purposes, or (D) of the existence of any fact or the happening of any event
that makes any statement of a material fact made in the Registration
Statement, the Prospectus, any amendment or supplement thereto, or any
document incorporated by reference therein untrue, or that requires the
making of any additions to or changes in the Registration Statement or the
Prospectus in order to make the statements therein not misleading. If at
any time the Commission shall issue any stop order suspending the
effectiveness of the Registration Statement, or any state securities
commission or other regulatory authority shall issue an order suspending
the qualification or exemption from qualification of the Transfer
Restricted Securities under state securities or Blue Sky laws, the Company
shall use its reasonable best efforts to obtain the withdrawal or lifting
of such order at the earliest possible time;
(iv) in the case of a Shelf Registration Statement, furnish
to each of the selling or exchanging Holders and each of the
underwriter(s), if any, before filing with the Commission, copies of any
Registration Statement or any Prospectus included therein or any amendments
or supplements to any such Registration Statement or Prospectus (including
all documents incorporated by reference after the initial filing of such
Registration Statement, if any), which documents will be subject to the
review of such Holders and underwriter(s), if any, for a period of at least
five business days, and the Company will not file any such Registration
Statement or Prospectus or any amendment or supplement to any such
Registration Statement or Prospectus (including all such documents
incorporated by reference) to which selling Holders of a majority in
aggregate principal amount of Transfer Restricted Securities covered by
such Registration Statement or the underwriter(s), if any, shall reasonably
object within five business days after the receipt thereof. A selling
Holder or underwriter, if any, shall be deemed to have reasonably objected
to such filing if such Registration Statement, amendment, Prospectus or
supplement, as applicable, as proposed to be filed, contains a material
misstatement or omission;
(v) in the case of a Shelf Registration Statement, promptly
prior to the filing of any document that is to be incorporated by reference
into a Registration Statement or Prospectus, if any, provide copies of such
document to the selling Holders and to the underwriter(s), if any, make the
Company's representatives available for discussion of such document and
other customary due diligence matters, and include
45
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such information in such document prior to the filing thereof as such
selling Holders or underwriter(s), if any, reasonably may request;
(vi) in the case of a Shelf Registration Statement, make
available at reasonable times for inspection by the selling Holders, any
underwriter participating in any disposition pursuant to such Registration
Statement, and any attorney or accountant retained by such selling Holders
or any of the underwriter(s), all financial and other records, pertinent
corporate documents and properties of the Company and cause the Company's
officers, directors, managers and employees to supply all information
reasonably requested by any such Holder, underwriter, attorney or
accountant in connection with such Registration Statement subsequent to the
filing thereof and prior to its effectiveness;
(vii) in the case of a Shelf Registration Statement, if
requested by any selling Holders or the underwriter(s), if any, promptly
incorporate in any Registration Statement or Prospectus, pursuant to a
supplement or post-effective amendment if necessary, such information as
such selling Holders and underwriter(s), if any, may reasonably request to
have included therein, including, without limitation, information relating
to the "Plan of Distribution" of the Transfer Restricted Securities,
information with respect to the principal amount of Transfer Restricted
Securities being sold to such underwriter(s), the purchase price being paid
therefor and any other terms of the offering of the Transfer Restricted
Securities to be sold in such offering, and make all required filings of
such Prospectus supplement or post-effective amendment as soon as
practicable after the Company is notified of the matters to be incorporated
in such Prospectus supplement or post-effective amendment;
(viii) cause the Transfer Restricted Securities covered by the
Registration Statement to be rated with the appropriate rating agencies, if
so requested by the Holders of a majority in aggregate principal amount of
Securities covered thereby or the underwriter(s), if any;
(ix) in the case of a Shelf Registration Statement, furnish
to each selling Holder and each of the underwriter(s), if any, without
charge, at least one copy of the Registration Statement, as first filed
with the Commission, and of each amendment thereto, including all documents
incorporated by reference therein, if any, and all exhibits (including
exhibits incorporated therein by reference);
(x) in the case of a Shelf Registration Statement, deliver
to each selling Holder and each of the underwriter(s), if any, without
charge, as many copies of the Prospectus (including each preliminary
prospectus) and any amendment or supplement thereto as such Persons
reasonably may request; the Company hereby consents to the use of the
Prospectus and any amendment or supplement thereto by each of the selling
Holders and each of the underwriter(s), if any, in connection with the
offering and the sale of the Transfer Restricted Securities covered by the
Prospectus or any amendment or supplement thereto;
(xi) in the case of a Shelf Registration Statement, enter
into such agreements (including an underwriting agreement) and make such
representations and
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warranties, and take all such other actions in connection therewith, in
order to expedite or facilitate the disposition of the Transfer Restricted
Securities pursuant to any Registration Statement contemplated by this
Agreement, all to such extent as may be requested by any purchaser or by
any Holder of Transfer Restricted Securities or underwriter, if any, in
connection with any sale or resale pursuant to any Registration Statement
contemplated by this Agreement; and in connection with an Underwritten
Registration, the Company shall:
(A) upon request, furnish (or in the case of paragraphs
(i) and (iii), use its reasonable best efforts to furnish) to each
selling Holder and each underwriter, if any, in such substance and
scope as they may request and as are customarily made by issuers to
underwriters in primary underwritten offerings, upon the date of
the effectiveness of the Shelf Registration Statement:
(1) a certificate, dated the date of the
effectiveness of the Shelf Registration Statement, signed by
(y) the Chairman of the Board, its President or a Vice
President and (z) the Chief Financial Officer of the Company,
confirming, as of the date thereof, such matters as such
parties may reasonably request;
(2) an opinion, dated the date of the
effectiveness of the Shelf Registration Statement, of counsel
for the Company, covering such matters as such parties may
reasonably request, and in any event including a statement to
the effect that such counsel has participated in conferences
with officers and other representatives of the Company,
representatives of the independent public accountants for the
Company, the Initial Purchaser's representatives and the
Initial Purchaser's counsel in connection with the preparation
of such Registration Statement and the related Prospectus and
have considered the matters required to be stated therein and
the statements contained therein, although such counsel has not
independently verified the accuracy, completeness or fairness
of such statements, and that such counsel advises that, on the
basis of the foregoing (relying as to materiality to a large
extent upon facts provided to such counsel by officers and
other representatives of the Company and without independent
check or verification), no facts came to such counsel's
attention that caused such counsel to believe that the
applicable Registration Statement, at the time such
Registration Statement or any post-effective amendment thereto
became effective, contained an untrue statement of a material
fact or omitted to state a material fact required to be stated
therein or necessary to make the statements therein not
misleading, or that the Prospectus contained in such
Registration Statement as of its date, contained an untrue
statement of a material fact or omitted to state a material
fact necessary in order to make the statements therein, in
light of the circumstances under which they were made, not
misleading. Without limiting the foregoing, such counsel may
state further that such counsel assumes no responsibility for,
and has not independently verified, the accuracy, completeness
or fairness
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of the financial statements, notes and schedules and other
financial and statistical data included in any Registration
Statement contemplated by this Agreement or the related
Prospectus; and
(3) a customary comfort letter, dated the date of
the effectiveness of the Shelf Registration Statement, from the
Company's independent accountants, in the customary form and
covering matters of the type customarily covered in comfort
letters by underwriters in connection with primary underwritten
offerings.
(4) a customary comfort letter, dated the date of
the effectiveness of the Shelf Registration Statement, from
Toastmaster's independent accountants, in the customary form
and covering matters of the type customarily covered in comfort
letters by underwriters in connection with primary underwritten
offerings.
(B) set forth in full or incorporate by reference in
the underwriting agreement, if any, the indemnification provisions
and procedures of Section 8 hereof with respect to all parties to
be indemnified pursuant to said Section; and
(C) deliver such other documents and certificates as
may be reasonably requested by such parties to evidence compliance
with clause (A) above and with any customary conditions contained
in the underwriting agreement or other agreement entered into by
the Company pursuant to this clause (xi), if any.
If at any time the representations and warranties of the
Company contemplated in clause (A)(1) above cease to be true and correct,
the Company shall so advise the Initial Purchaser and the underwriter(s),
if any, and each selling Holder promptly and, if requested by such Persons,
shall confirm such advice in writing.
(xii) in the case of a Shelf Registration Statement, prior to
any public offering of Transfer Restricted Securities, cooperate with the
selling Holders, the underwriter(s), if any, and their respective counsel
in connection with the registration and qualification of the Transfer
Restricted Securities under the securities or Blue Sky laws of such
jurisdictions as the selling Holders or underwriter(s) may reasonably
request and do any and all other acts or things necessary or advisable to
enable the disposition in such jurisdictions of the Transfer Restricted
Securities covered by the Shelf Registration Statement; provided, however,
that the Company shall not be required to register or qualify as a foreign
corporation where it is not now so qualified or to take any action that
would subject it to service of process in suits or to taxation, other than
as to matters and transactions relating to the Registration Statement, in
any jurisdiction where it is not now so subject;
(xiii) in the case of a Shelf Registration Statement, shall
issue, upon the request of any Holder of Securities covered by the Shelf
Registration Statement, New Securities in the same amount as the Securities
surrendered to the Company by
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such Holder in exchange therefor or being sold by such Holder, such New
Securities to be registered in the name of such Holder or in the name of
the purchaser(s) of such Securities, as the case may be; in return, the
Securities held by such Holder shall be surrendered to the Company for
cancellation;
(xiv) in the case of a Shelf Registration Statement,
cooperate with the selling Holders and the underwriter(s), if any, to
facilitate the timely preparation and delivery of certificates representing
Transfer Restricted Securities to be sold and not bearing any restrictive
legends and enable such Transfer Restricted Securities to be in such
denominations and registered in such names as the Holders or the
underwriter(s), if any, may request at least two business days prior to any
sale of Transfer Restricted Securities made by such underwriter(s);
(xv) use its best efforts to cause the Transfer Restricted
Securities covered by the Registration Statement to be registered with or
approved by such other governmental agencies or authorities as may be
necessary to enable the seller or sellers thereof or the underwriter(s), if
any, to consummate the disposition of such Transfer Restricted Securities,
subject to the proviso contained in clause (xii) above;
(xvi) if any fact or event contemplated by clause (c)(iii)(D)
above shall exist or have occurred, prepare a supplement or post-effective
amendment to the Registration Statement or related Prospectus or any
document incorporated therein by reference or file any other required
document so that, as thereafter delivered to the purchasers of Transfer
Restricted Securities, the Prospectus will not contain an untrue statement
of a material fact or omit to state any material fact necessary to make the
statements therein not misleading;
(xvii) obtain CUSIP numbers for all Transfer Restricted
Securities not later than the effective date of the Registration Statement
and provide certificates for the Transfer Restricted Securities;
(xviii) cooperate and assist in any filings required to be made
with the NASD and in the performance of any due diligence investigation by
any underwriter (including any "qualified independent underwriter") that is
required to be retained in accordance with the rules and regulations of the
NASD, and use its best efforts to cause such Registration Statement to
become effective and approved by such governmental agencies or authorities
as may be necessary to enable the Holders selling Transfer Restricted
Securities to consummate the disposition of such Transfer Restricted
Securities; provided, however, that the Company shall not be required to
register or qualify as a foreign corporation where it is not now so
qualified or to take any action that would subject it to service of process
in suits or to taxation, other than as to matters and transactions relating
to the Registration Statement, in any jurisdiction where it is not now so
subject;
(xix) otherwise use its reasonable best efforts to comply with
all applicable rules and regulations of the Commission, and make
generally available to its security holders, as soon as
practicable, a consolidated earning statement meeting the
requirements of Rule 158 under the Securities Act (which need not
be audited) for the
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twelve-month period (A) commencing at the end of any fiscal quarter in
which Transfer Restricted Securities are sold to underwriters in a firm or
best efforts Underwritten Offering or (B) if not sold to underwriters in
such an offering, beginning with the first month of the Company's first
fiscal quarter commencing after the effective date of the Registration
Statement;
(xx) cause the Indenture to be qualified under the TIA not
later than the effective date of the first Registration Statement required
by this Agreement, and, in connection therewith, cooperate with the Trustee
and the Holders of Securities to effect such changes to the Indenture as
may be required for such Indenture to be so qualified in accordance with
the terms of the TIA, and execute and use its best efforts to cause the
Trustee to execute all documents that may be required to effect such
changes and all other forms and documents required to be filed with the
Commission to enable such Indenture to be so qualified in a timely manner;
and
(xxi) provide promptly to each Holder upon request each
document filed with the Commission pursuant to the requirements of Section
13 and Section 15 of the Exchange Act.
Each Holder agrees by acquisition of a Transfer Restricted
Security that, upon receipt of any notice from the Company of the existence
of any fact of the kind described in Section 6(c)(iii)(D) hereof, such
Holder will forthwith discontinue disposition of Transfer Restricted
Securities pursuant to the applicable Registration Statement until such
Holder's receipt of the copies of the supplemented or amended Prospectus
contemplated by Section 6(c)(xvi) hereof, or until it is advised in writing
(the "Advice") by the Company that the use of the Prospectus may be
resumed, and has received copies of any additional or supplemental filings
that are incorporated by reference in the Prospectus. If so directed by
the Company each Holder will deliver to the Company (at the Company's
expense) all copies, other than permanent file copies then in such Holder's
possession, of the Prospectus covering such Transfer Restricted Securities
that was current at the time of receipt of such notice. In the event the
Company shall give any such notice, the time period regarding the
effectiveness of such Registration Statement set forth in Section 3 or 4
hereof, as applicable, shall be extended by the number of days during the
period from and including the date of the giving of such notice pursuant to
Section 6(c)(iii)(D) hereof to and including the date when each selling
Holder covered by such Registration Statement shall have received the
copies of the supplemented or amended Prospectus contemplated by Section
6(c)(xvi) hereof or shall have received the Advice.
7. Registration Expenses.
All expenses incident to the Company's performance of or
compliance with this Agreement will be borne by the Company, regardless of
whether a Registration Statement becomes effective, including without
limitation: (i) all registration and filing fees and expenses (including
filings made by any purchaser or Holder with the NASD (and, if applicable,
the fees and expenses of any "qualified independent underwriter" and its
counsel that may be required by the rules and regulations of the NASD));
(ii) all fees and expenses of compliance with federal securities and state
Blue Sky or securities laws; (iii) all expenses of printing (including
printing certificates for the New Securities to be issued in the Exchange
Offer and printing of
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Prospectuses), and associated messenger and delivery services and
telephone; (iv) all fees and disbursements of counsel for the Company; (v)
all application and filing fees in connection with listing Securities on a
national securities exchange or automated quotation system, and the
obtaining of a rating of the Securities, if applicable; and (vi) all fees
and disbursements of independent certified public accountants of the
Company (including the expenses of any special audit and comfort letters
required by or incident to such performance).
The Company will, in any event, bear its internal expenses
(including, without limitation, all salaries and expenses of its officers
and employees performing legal or accounting duties), the expenses of any
annual audit and the fees and expenses of any Person, including special
experts, retained by the Company.
8. Indemnification and Contribution.
(a) In connection with a Shelf Registration Statement or in
connection with any delivery of a Prospectus contained in an Exchange Offer
Registration Statement by any participating Broker-Dealer or the Initial
Purchaser, as applicable, who seeks to sell New Securities, the Company shall
indemnify and hold harmless each Holder of Transfer Restricted Securities
included within any such Shelf Registration Statement and each participating
Broker-Dealer or the Initial Purchaser selling New Securities, and each person,
if any, who controls any such person within the meaning of Section 15 of the
Securities Act (each, a "Participant") from and against any loss, claim, damage
or liability, joint or several, or any action in respect thereof (including, but
not limited to, any loss, claim, damage, liability or action relating to
purchases and sales of Securities) to which such Participant or controlling
person may become subject, under the Securities Act or otherwise, insofar as
such loss, claim, damage, liability or action arises out of, or is based upon,
(i) any untrue statement or alleged untrue statement of a material fact
contained in any such Registration Statement or any prospectus forming part
thereof or in any amendment or supplement thereto or (ii) the omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading, and shall reimburse
each Participant promptly upon demand for any legal or other expenses reasonably
incurred by such Participant in connection with investigating or defending or
preparing to defend against any such loss, claim, damage, liability or action as
such expenses are incurred; provided, however, that (i) the Company shall not be
liable in any such case to the extent that any such loss, claim, damage,
liability or action arises out of, or is based upon, any untrue statement or
alleged untrue statement or omission or alleged omission made in any such
Registration Statement or any prospectus forming part thereof or in any such
amendment or supplement in reliance upon and in conformity with written
information furnished to the Company by or on behalf of any Participant
specifically for inclusion therein; and provided further that as to any
preliminary Prospectus, the indemnity agreement contained in this Section 8(a)
shall not inure to the benefit of any such Participant or any controlling person
of such Participant on account of any loss, claim, damage, liability or action
arising from the sale of the New Securities to any person by that Participant if
(i) that Participant failed to send or give a copy of the Prospectus, as the
same may be amended or supplemented, to that person within the time required by
the Securities Act and (ii) the untrue statement or alleged untrue statement of
a material fact or omission or alleged omission to state a material fact in such
preliminary Prospectus was corrected in the Prospectus, unless, in each case,
such failure resulted from non-compliance by the Company with Section 6(c)
hereof. The foregoing indemnity agreement is in addition to any liability which
the Company may otherwise have to any Participant or to any controlling person
of that Participant.
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(b) Each Participant, severally and not jointly, shall indemnify
and hold harmless the Company, each of its directors, officers, employees or
agents and each person, if any, who controls the Company within the meaning of
Section 15 of the Securities Act, from and against any loss, claim, damage or
liability, joint or several, or any action in respect thereof, to which the
Company or any such director, officer, employees or agents or controlling person
may become subject, under the Securities Act or otherwise, insofar as such loss,
claim, damage, liability or action arises out of, or is based upon, (i) any
untrue statement or alleged untrue statement of a material fact contained in any
preliminary Prospectus, Registration Statement or Prospectus or in any amendment
or supplement thereto or (ii) the omission or alleged omission to state therein
a material fact required to be stated therein or necessary to make the
statements therein not misleading, but in each case only to the extent that the
untrue statement or alleged untrue statement or omission or alleged omission was
made in reliance upon and in conformity with written information furnished to
the Company by or on behalf of that Participant specifically for inclusion
herein, and shall reimburse the Company and any such director, officer, employee
or agent or controlling person for any legal or other expenses reasonably
incurred by the Company or any such director, officer, employee or agent or
controlling person in connection with investigating or defending or preparing to
defend against any such loss, claim, damage, liability or action as such
expenses are incurred. The foregoing indemnity agreement is in addition to any
liability which any Participant may otherwise have to the Company or any such
director, officer or controlling person.
(c) Promptly after receipt by an indemnified party under this
Section 8 of notice of any claim or the commencement of any action, the
indemnified party shall, if a claim in respect thereof is to be made against the
indemnifying party under this Section 8, notify the indemnifying party in
writing of the claim or the commencement of that action; provided, however, that
the failure to notify the indemnifying party shall not relieve it from any
liability which it may have under this Section 8 except to the extent it has
been materially prejudiced by such failure and, provided further, that the
failure to notify the indemnifying party shall not relieve it from any liability
which it may have to an indemnified party otherwise than under this Section 8.
If any such claim or action shall be brought against an indemnified party, and
it shall have notified the indemnifying party thereof, the indemnifying party
shall be entitled to participate therein and, to the extent that it wishes,
jointly with any other similarly notified indemnifying party, to assume the
defense thereof with counsel satisfactory to the indemnified party. After
notice from the indemnifying party to the indemnified party of its election to
assume the defense of such claim or action, the indemnifying party shall not be
liable to the indemnified party under this Section 8 for any legal or other
expenses subsequently incurred by the indemnified party in connection with the
defense thereof other than reasonable costs of investigation; provided, however,
that the indemnified party shall have the right to employ separate counsel to
represent jointly the indemnified party and those other Participants and their
respective officers, employees and controlling persons who may be subject to
liability arising out of any claim in respect of which indemnity may be sought
by the Participants against the indemnifying party under this Section 8 if, in
the reasonable judgment of the indemnified party it is advisable for the
indemnified party and those Participants, officers, employees and controlling
persons to be jointly represented by separate counsel, and in that event the
fees and expenses of such separate counsel shall be paid by the indemnifying
party. In no event shall the indemnifying parties be liable for the fees and
expenses of more than one counsel (in addition to local counsel). Each
indemnified party, as a condition of the indemnity agreements contained in
Section 8, shall use its best efforts to cooperate with the indemnifying party
in the defense of any such action or claim. No indemnifying party shall (i)
without the prior written consent of the indemnified parties (which consent
shall not be unreasonably withheld), settle or compromise or consent to the
entry of any judgment with respect to any pending or threatened
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claim, action, suit or proceeding in respect of which indemnification or
contribution may be sought hereunder (whether or not the indemnified parties are
actual or potential parties to such claim or action) unless such settlement,
compromise or consent includes an unconditional release of each indemnified
party from all liability arising out of such claim, action, suit or proceeding
or (ii) be liable for any settlement of any such action effected without its
written consent (which consent shall not be unreasonably withheld), but if
settled with its written consent or if there be a final judgment of the
plaintiff in any such action, the indemnifying party agrees to indemnify and
hold harmless any indemnified party from and against any loss or liability by
reason of such settlement or judgment.
(d) If the indemnification provided for in this Section 8 shall for
any reason be unavailable to or insufficient to hold harmless an indemnified
party under Section 8(a) or 8(b) in respect of any loss, claim, damage or
liability, or any action in respect thereof, referred to therein, then each
indemnifying party shall, in lieu of indemnifying such indemnified party,
contribute to the amount paid or payable by such indemnified party as a result
of such loss, claim, damage or liability, or action in respect thereof, in such
proportion as shall be appropriate to reflect the relative fault of the Company
on the one hand and the Participants on the other with respect to the statements
or omissions which resulted in such loss, claim, damage or liability, or action
in respect thereof, as well as any other relevant equitable considerations. The
relative fault shall be determined by reference to whether the untrue or alleged
untrue statement of a material fact or omission or alleged omission to state a
material fact relates to information supplied by the Company or the
Participants, the intent of the parties and their relative knowledge, access to
information and opportunity to correct or prevent such statement or omission.
The Company and the Participants agree that it would not be just and equitable
if contributions pursuant to this Section 8(d) were to be determined by pro rata
allocation (even if the Participants were treated as one entity for such
purpose) or by any other method of allocation which does not take into account
the equitable considerations referred to herein. The amount paid or payable by
an indemnified party as a result of the loss, claim, damage or liability, or
action in respect thereof, referred to above in this Section 8(d) shall be
deemed to include, for purposes of this Section 8(d), any legal or other
expenses reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim. Notwithstanding the
provisions of this Section 8(d), no Participant shall be required to contribute
any amount in excess of the amount by which proceeds received by such
Participant from an offering of the Securities exceeds the amount of any damages
which such Participant has otherwise paid or become liable to pay by reason of
any untrue or alleged untrue statement or omission or alleged omission. No
person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation. The Participants'
obligations to contribute as provided in this Section 8(d) are several and not
joint.
9. Rule 144A.
The Company hereby agrees with each Holder, for so long as any Transfer
Restricted Securities remain outstanding, to make available to any Holder or
beneficial owner of Transfer Restricted Securities in connection with any sale
thereof and any prospective purchaser of such Transfer Restricted Securities
from such Holder or beneficial owner, the information required by Rule
144A(d)(4) under the Securities Act in order to permit resales of such Transfer
Restricted Securities pursuant to Rule 144A.
10. Participation in Underwritten Registrations.
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No Holder may participate in any Underwritten Registration hereunder
unless such ▇▇▇▇▇▇ (a) agrees to sell such ▇▇▇▇▇▇'s Transfer Restricted
Securities on the basis provided in any underwriting arrangements approved by
the Persons entitled hereunder to approve such arrangements and (b) completes
and executes all reasonable questionnaires, powers of attorney, indemnities,
underwriting agreements, lock-up letters and other documents required under the
terms of such underwriting arrangements.
11. Selection of Underwriters.
The Holders of Transfer Restricted Securities covered by the Shelf
Registration Statement who desire to do so may sell such Transfer Restricted
Securities in an Underwritten Offering. In any such Underwritten Offering, the
investment banker or investment bankers and manager or managers that will
administer the offering will be selected by the Holders of a majority in
aggregate principal amount of the Transfer Restricted Securities included in
such offering; provided that such investment bankers and managers must be
reasonably satisfactory to the Company.
12. Miscellaneous.
(a) Remedies. The Company agrees that monetary damages
(including Liquidated Damages) would not be adequate compensation for any
loss incurred by reason of a breach by it of the provisions of this
Agreement and hereby agrees to waive the defense in any action for specific
performance that a remedy at law would be adequate.
(b) No Inconsistent Agreements. The Company will not on or
after the date of this Agreement enter into any agreement with respect to
its securities that is inconsistent with the rights granted to the Holders
in this Agreement or otherwise conflicts with the provisions hereof.
Except for that certain Stock Registration Rights Agreement dated as of
August 6, 1991 between the Company and certain investors parties thereto,
the Company has not previously entered into any agreement granting any
registration rights with respect to its securities to any Person. The
rights granted to the Holders hereunder do not in any way conflict with and
are not inconsistent with the rights granted to the holders of the
Company's securities under any agreement in effect on the date hereof.
(c) Adjustments Affecting the Securities. The Company will
not take any action, or permit any change to occur, with respect to
Securities that would materially and adversely affect the ability of the
Holders to Consummate any Exchange Offer unless such action or change is
required by applicable law.
(d) Amendments and Waivers. The provisions of this Agreement
may not be amended, modified or supplemented, and waivers or consents to or
departures from the provisions hereof may not be given unless the Company
has obtained the written consent of Holders of a majority of the
outstanding principal amount of Transfer Restricted Securities.
Notwithstanding the foregoing, a waiver or consent to departure from the
provisions hereof that relates exclusively to the rights of Holders whose
securities are being tendered pursuant to the Exchange Offer and that does
not affect directly or indirectly the rights of other Holders whose
securities are not being tendered pursuant to such Exchange Offer may be
given by the Holders of a majority of the outstanding principal amount of
Transfer Restricted Securities being tendered or registered.
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(e) Notices. All notices and other communications provided
for or permitted hereunder shall be made in writing by hand-delivery,
first-class mail (registered or certified, return receipt requested),
telex, telecopier, or air courier guaranteeing overnight delivery:
(i) if to a Holder, at the address of such Holder
maintained by the Registrar under the Indenture; and
(ii) if to the Company:
Salton/Maxim Housewares, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇. Prospect, IL 60056
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
With a copy to:
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, Esq.
▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
All such notices and communications shall be deemed to have
been duly given: at the time delivered by hand, if personally delivered;
five business days after being deposited in the mail, postage prepaid, if
mailed; when answered back, if telexed; when receipt acknowledged, if
telecopied; and on the next business day, if timely delivered to an air
courier guaranteeing overnight delivery.
Copies of all such notices, demands or other communications
shall be concurrently delivered by the Person giving the same to the
Trustee at the address specified in the Indenture.
(f) Successors and Assigns. This Agreement shall inure to the
benefit of and be binding upon the successors and assigns of each of the
parties, including without limitation and without the need for an express
assignment, subsequent Holders of Transfer Restricted Securities; provided,
however, that this Agreement shall not inure to the benefit of or be
binding upon a successor or assign of a Holder unless and to the extent
such successor or assign acquired Transfer Restricted Securities from such
Holder.
(g) Counterparts. This Agreement may be executed in any
number of counterparts and by the parties hereto in separate counterparts,
each of which when so executed shall be deemed to be an original and all of
which taken together shall constitute one and the same agreement.
(h) Headings. The headings in this Agreement are for
convenience of reference only and shall not limit or otherwise affect the
meaning hereof.
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(i) Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
(j) Severability. In the event that any one or more of the
provisions contained herein, or the application thereof in any
circumstance, is held invalid, illegal or unenforceable, the validity,
legality and enforceability of any such provision in every other respect
and of the remaining provisions contained herein shall not be affected or
impaired thereby.
(k) Entire Agreement. This Agreement together with the other
transaction documents is intended by the parties as a final expression of
their agreement and intended to be a complete and exclusive statement of
the agreement and understanding of the parties hereto in respect of the
subject matter contained herein. There are no restrictions, promises,
warranties or undertakings, other than those set forth or referred to
herein with respect to the registration rights granted by the Company with
respect to the Transfer Restricted Securities. This Agreement supersedes
all prior agreements and understandings between the parties with respect to
such subject matter.
(l) Required Consents. Whenever the consent or approval of
Holders of a specified percentage of Transfer Restricted Securities is
required hereunder, Transfer Restricted Securities held by the Company or
its affiliates (as such term is defined in Rule 405 under the Securities
Act) shall not be counted in determining whether such consent or approval
was given by the Holders of such required percentage.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
SALTON/MAXIM HOUSEWARES, INC.
By:_______________________________
Name:
Title:
HOME CREATIONS DIRECT LTD.
By:_______________________________
Name:
Title:
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Accepted as of the date hereof:
▇▇▇▇▇▇ BROTHERS INC.,
as Initial Purchaser
By:_______________________________
Name:
Title:
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EXHIBIT B
ERISA Plans
