$150,000,000
INTERNATIONAL COMFORT PRODUCTS HOLDINGS, INC.
8 5/8% Senior Notes due 2008
PURCHASE AGREEMENT
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May 8, 1998
SALOMON BROTHERS INC
CREDIT SUISSE FIRST BOSTON CORPORATION
FIRST UNION CAPITAL MARKETS, a division
of Wheat First Securities, Inc.
c/o Salomon Brothers Inc
Seven ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Dear Sirs:
International Comfort Products Holdings, Inc., a Delaware corporation
(the "Company"), proposes, upon the terms and conditions set forth herein,
to issue and sell to Salomon Brothers Inc, Credit Suisse First Boston
Corporation and First Union Capital Markets, a division of Wheat First
Securities, Inc. (the "Initial Purchasers") $150,000,000 aggregate
principal amount of its 8 5/8% Senior Notes due 2008 (the "Notes"). The
Notes will be guaranteed (the "Guarantee") on a senior basis by Interna-
tional Comfort Products Corporation, a corporation incorporated under the
laws of Canada (the "Parent Guarantor"). The Notes and the Guarantee are
referred to herein as the "Securities." The Securities will be issued
pursuant to an indenture, to be dated as of May 13, 1998 (the "Indenture"),
among the Company, the Parent Guarantor and the United States Trust Company
of New York, as trustee (the "Trustee").
The Company and the Parent Guarantor wish to confirm as follows their
agreement with the Initial Purchasers in connection with the purchase and
resale of the Securities.
1. Preliminary Offering Memorandum and Offering Memorandum. The
Securities will be offered and sold to the Initial Purchasers without
registration under the Securities Act of 1933, as amended (the "Act"), in
reliance on an exemption pursuant to Section 4(2) under the Act. The
Company has prepared a preliminary offering memorandum, dated April 24,
1998 (the "Preliminary Offering Memorandum"), and an offering
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memorandum, dated May 8, 1998 (the "Offering Memorandum"), setting forth
information regarding the Company and the Securities. Unless stated herein
to the contrary, all references herein to the Offering Memorandum are to
the Offering Memorandum at the date hereof and are not meant to include any
supplement or amendment subsequent thereto. The Company hereby confirms
that it has authorized the use of the Preliminary Offering Memorandum and
the Offering Memorandum in connection with the offering and resale of the
Securities by the Initial Purchasers on the terms and subject to the
conditions set forth herein.
The Company understands that the Initial Purchasers propose to make
offers and sales ("Exempt Resales") of the Securities purchased by the
Initial Purchasers hereunder only on the terms and in the manner set forth
in the Offering Memorandum and Section 2 hereof, as soon as the Initial
Purchasers deem advisable after this Agreement has been executed and
delivered, (i) to persons in the United States whom the Initial Purchasers
reasonably believe to be qualified institutional buyers ("Qualified
Institutional Buyers") as defined in Rule 144A under the Act, as such rule
may be amended from time to time ("Rule 144A"), in transactions under Rule
144A and (ii) outside the United States to persons other than U.S. persons
in reliance upon Regulation S under the Act ("Regulation S"). The persons
specified in clauses (i) and (ii) are referred to herein as the "Eligible
Purchasers." As used herein, the terms "United States" and "U.S. persons"
have the respective meanings given them in Regulation S.
It is understood and acknowledged that upon original issuance thereof,
and until such time as the same is no longer required under the applicable
requirements of the Act, each of the Securities (and each security issued
in exchange therefor or in substitution thereof) shall bear the following
legend:
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND,
ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT AS SET
FORTH BELOW. BY ITS ACQUISITION HEREOF, THE HOLDER
(1) REPRESENTS THAT (A) IT IS A "QUALIFIED INSTITUTIONAL
BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT)
OR (B) IT IS AN INSTITUTIONAL "ACCREDITED INVESTOR" (AS
DEFINED IN RULE 501(a)(1), (2), (3) OR (7) UNDER THE
SECURITIES ACT (AN "ACCREDITED INVESTOR")) OR (C) IT IS
NOT A U.S. PERSON AND IS ACQUIRING THIS SECURITY IN AN
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OFFSHORE TRANSACTION, (2) AGREES THAT IT WILL NOT WITHIN
TWO YEARS AFTER THE ORIGINAL ISSUANCE OF THIS SECURITY
RESELL OR OTHERWISE TRANSFER THIS SECURITY EXCEPT (A) TO
THE ISSUER OR ANY SUBSIDIARY THEREOF, (B) INSIDE THE
UNITED STATES TO A QUALIFIED INSTITUTIONAL BUYER IN
COMPLIANCE WITH RULE 144A UNDER THE SECURITIES ACT,
(C) INSIDE THE UNITED STATES TO AN ACCREDITED INVESTOR
THAT, PRIOR TO SUCH TRANSFER, FURNISHES TO THE TRUSTEE A
SIGNED LETTER CONTAINING CERTAIN REPRESENTATIONS AND
AGREEMENTS (THE FORM OF WHICH LETTER CAN BE OBTAINED FROM
THE TRUSTEE), (D) OUTSIDE THE UNITED STATES TO PERSONS
OTHER THAN U.S. PERSONS IN OFFSHORE TRANSACTIONS MEETING
THE REQUIREMENTS OF RULE 904 UNDER REGULATION S UNDER THE
SECURITIES ACT, (E) PURSUANT TO THE EXEMPTION FROM
REGISTRATION PROVIDED BY RULE 144 UNDER THE SECURITIES ACT
(IF AVAILABLE) OR (F) PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND
(3) AGREES THAT IT WILL GIVE TO EACH PERSON TO WHOM THIS
SECURITY IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE
EFFECT OF THIS LEGEND. AS USED HEREIN, THE TERMS
"OFFSHORE TRANSACTION," "UNITED STATES" AND "U.S. PERSON"
HAVE THE RESPECTIVE MEANINGS GIVEN TO THEM BY REGULATION S
UNDER THE SECURITIES ACT.
It is also understood and acknowledged that holders (including
subsequent transferees) of the Securities will have the registration rights
set forth in the registration rights agreement (the "Registration Rights
Agreement") substantially in the form attached hereto as Exhibit A to be
dated as of the Closing Date (as defined) by and among the Company, the
Parent Guarantor and the Initial Purchasers.
2. Agreements to Sell, Purchase and Resell.
(a) The Company hereby agrees, upon the basis of the
representations, warranties and agreements of the Initial Purchasers herein
contained and subject to all the terms and conditions set forth herein, to
issue and sell to the Initial Purchasers and, upon the basis of the
representations, warranties and agreements of the Company and the Parent
Guarantor herein contained and subject to all the terms and conditions set
forth herein, each Initial Purchaser, severally and not jointly, agrees to
purchase from the Company that principal amount of Notes set forth opposite
the name of such Initial Purchaser on Schedule I attached hereto at a
purchase price of 96.348% of the principal amount thereof.
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(b) Each Initial Purchaser represents and warrants to the Company
and the Parent Guarantor that it is a Qualified Institutional Buyer with
such knowledge and experience in financial and business matters as are
necessary to evaluate the merits and risks of an investment in the
Securities and has advised the Company that it proposes to offer the
Securities for resale upon the terms and conditions set forth in this
Agreement and in the Offering Memorandum in Exempt Resales. Each Initial
Purchaser hereby represents and warrants to, and agrees with, the Company
and the Parent Guarantor that it (i) will not solicit offers for, or offer
to sell, the Securities by means of any form of general solicitation or
general advertising or in any manner involving a public offering within the
meaning of Section 4(2) of the Act (including, but not limited to, (A) any
advertisement, article, notice or other communication published in any
newspaper, magazine or similar media or broadcast over television or radio,
or (B) any seminar or meeting whose attendees have been invited by any
general solicitation or general advertising; provided, however, that such
limitation shall not preclude the Initial Purchasers from placing any
tombstone announcement with respect to the resale by the Initial Purchasers
of the Securities, provided that such announcement is not prohibited by
Regulation S), and (ii) will solicit offers for the Securities only from,
and will offer, sell or deliver the Securities as part of its initial
offering, only to (A) persons in the United States whom such Initial
Purchaser reasonably believes to be Qualified Institutional Buyers, or if
any such person is buying for one or more institutional accounts for which
such person is acting as fiduciary or agent, only when such person has
represented to such Initial Purchaser that each such account is a Qualified
Institutional Buyer, to whom notice has been given that such sale or
delivery is being made in reliance on Rule 144A, in each case, in
transactions under Rule 144A and (B) outside the United States to persons
other than U.S. persons in reliance on Regulation S. Each Initial
Purchaser has advised the Company that it will offer the Securities to
Eligible Purchasers at a price initially equal to 98.818% of the principal
amount thereof, plus accrued interest, if any, from May 13, 1998.
(c) Each Initial Purchaser represents and warrants to the Company
and the Parent Guarantor that (i) it has not offered or sold, and will not
offer or sell, directly or indirectly, any of the Securities in the United
Kingdom by means of any document, other than to persons whose ordinary
business it is to buy or sell shares or debentures whether as
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principal or agent (except in circumstances which do not constitute an
offer to the public within the meaning of the Companies ▇▇▇ ▇▇▇▇ of Great
Britain), (ii) it has complied with and will comply with all applicable
provisions of the Financial Services ▇▇▇ ▇▇▇▇ of the United Kingdom with
respect to anything done by such Initial Purchaser in relation to the
Securities 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 or from the
United Kingdom to any persons any document received by such Initial
Purchaser in connection with the issue of the Securities if the recipient
is of a kind described in Article 9(3) of the Financial Services ▇▇▇ ▇▇▇▇
of the United Kingdom (Investment Advertisements) (Exemptions) Order 1988,
as amended.
(d) Each Initial Purchaser represents and warrants to the Company
and the Guarantor that it has not offered or sold, and will not offer or
sell, directly or indirectly, any of the Securities in Canada or to
Canadian residents in connection with the Exempt Resales.
(e) Each Initial Purchaser represents and warrants to the Company
and the Parent Guarantor that with respect to Securities offered and sold
or to be offered and sold pursuant to Regulation S it has offered and sold
the Securities and agrees that it will offer and sell the Securities (i) as
part of its initial distribution at any time and (ii) otherwise until 40
days after the later of the commencement of the offering of the Securities
and the Closing Date, only in accordance with Rule 903 of Regulation S.
Accordingly, each Initial Purchaser represents and agrees that with respect
to Securities offered and sold or to be offered and sold pursuant to
Regulation S none of it, its affiliates or any persons acting on its behalf
or on behalf of its affiliates have engaged or will engage in any directed
selling efforts in the United States with respect to the Securities, and it
and its affiliates have complied and will comply with the offering
restrictions requirements of Regulation S. Each Initial Purchaser agrees
that, at or prior to confirmation of any sale of Securities pursuant to
Regulation S, it will have sent to each distributor, dealer or person
receiving a selling concession, fee or other remuneration that purchases
such Securities from it during the restricted period a confirmation or
notice to substantially the following effect:
The Securities covered hereby have not been registered
under the U.S. Securities Act of 1933, as
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amended (the "Securities Act"), and may not be offered and
sold within the United States or to, or for the account or
benefit of, U.S. persons (i) as part of their initial
distribution at any time or (ii) otherwise until 40 days
after the later of the commencement of the offering and
the Closing Date, except in either case in accordance with
Regulation S or Rule 144A under the Securities Act. Terms
used above have the respective meanings given to them in
Regulation S under the Securities Act.
Each Initial Purchaser understands that the Company and the Parent
Guarantor and, for the purposes of the opinions to be delivered to the
Initial Purchasers pursuant to Section 7(c), 7(d), 7(e) and 7(f) hereof,
counsel to the Company, Canadian counsel to the Company, counsel to the
Initial Purchasers and Canadian counsel to the Initial Purchasers will rely
upon the accuracy and truth of the foregoing representations and agreements
and each Initial Purchaser hereby consents to such reliance.
3. Delivery of the Securities and Payment Therefor. Delivery to
the Initial Purchasers of and payment for the Securities shall be made at
the office of ▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇
at 9:00 a.m., New York City time, on May 13, 1998 (the "Closing Date").
The place of closing for the Securities and the Closing Date may be varied
by agreement between the Initial Purchasers and the Company.
The Securities will be delivered to the Initial Purchasers against
payment of the purchase price therefor by federal funds certified check or
wire transfer, in each case, of immediately available funds payable in
accordance with written instructions from the Company. The Securities will
be evidenced by one or more global securities (each, a "Global Security")
and/or by additional certificated securities, and will be registered, in
the case of a Global Security, in the name of Cede & Co. as nominee of The
Depository Trust Company ("DTC"), and in the other cases, in such names and
in such denominations as the Initial Purchasers shall request prior to 1:00
p.m., New York City time, on the business day preceding the Closing Date.
The Securities to be delivered to the Initial Purchasers shall be made
available to the Initial Purchasers in New York City for inspection and
packaging not later than 9:30 a.m., New York City time, on the business day
next preceding the Closing Date.
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4. Agreements of the Company and the Parent Guarantor. The
Company and the Parent Guarantor agree with the Initial Purchasers as
follows:
(a) Until the completion of the distribution of the
Securities by the Initial Purchasers to Eligible Purchasers,
the Company will advise the Initial Purchasers promptly and,
if requested, will confirm such advice in writing, of any
material adverse change in the condition (financial or
other), business, prospects, properties, net worth or results
of operations of either the Parent Guarantor and the
Subsidiaries (as defined), taken as a whole, or of the
happening of any event or the existence of any condition
which requires any amendment or supplement to the Offering
Memorandum (as then amended or supplemented) so that the
Offering Memorandum (x) will not contain any untrue statement
of a material fact or omit to state a material fact required
to be stated therein or necessary to make the statements
therein, in the light of the circumstances under which they
were made, not misleading, or (y) will comply with applicable
law.
(b) The Company will furnish to the Initial
Purchasers, without charge, such number of copies of the
Offering Memorandum, as they may then be amended or
supplemented, as they may reasonably request.
(c) The Company will not make any amendment or
supplement to the Preliminary Offering Memorandum or to the
Offering Memorandum of which the Initial Purchasers shall not
previously have been advised or to which they shall
reasonably object in writing after being so advised.
(d) Prior to the execution and delivery of this
Agreement, the Company has delivered or will deliver to the
Initial Purchasers, without charge, in such reasonable
quantities as the Initial Purchasers shall have requested or
may hereafter request, copies of the Preliminary Offering
Memorandum. The Company consents to the use, in accordance
with the securities or Blue Sky laws of the jurisdictions in
which the Securities are offered by the Initial Purchasers
and by dealers, prior to the date of the Offering Memorandum,
of each Preliminary Offering Memorandum so furnished by the
Company. The Company consents to the use of the Offering
Memorandum (and of any amendment or supplement thereto
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prepared in accordance with Section 4(c)) in accordance
with the securities or Blue Sky laws of the jurisdictions
in which the Securities are offered by the Initial
Purchasers and by all dealers to whom Securities may be
sold, in connection with the offering and sale of the
Securities.
(e) If, at any time prior to completion of the
distribution of the Securities by the Initial Purchasers to
Eligible Purchasers, any event shall occur or condition shall
exist that in the judgment of the Company or in the opinion
of the Initial Purchasers based on advice of counsel requires
any amendment or supplement to the Offering Memorandum (as
then amended or supplemented) so that the Offering Memorandum
(x) will not contain any untrue statement of a material fact
or omit to state a material fact required to be stated
therein or necessary to make the statements therein, in the
light of the circumstances under which they were made, not
misleading, or (y) will comply with applicable law, the
Company will, in each such case subject to Section 4(c),
forthwith prepare an appropriate supplement or amendment
thereto, and will expeditiously furnish to the Initial
Purchasers that number of copies thereof as they shall
reasonably request.
(f) The Company will cooperate with the Initial
Purchasers and with their counsel in connection with the
qualification of the Securities for offering and sale by the
Initial Purchasers and by dealers under the securities or
Blue Sky laws of such jurisdictions in the United States as
the Initial Purchasers may designate and will file such
consents to service of process or other documents necessary
or appropriate in order to effect such qualification;
provided that in no event shall the Company be obligated to
qualify to do business in any jurisdiction where it is not
now so qualified or to take any action which would subject it
to general service of process in any jurisdiction where it is
not now so subject.
(g) So long as any of the Securities are
outstanding, the Company and the Parent Guarantor will
furnish to the Initial Purchasers (i) as soon as available, a
copy of each report of the Company and the Parent Guarantor
mailed to stockholders or filed with the Securities and
Exchange Commission (the "Commission").
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(h) The Company will apply the proceeds from the
sale of the Securities to be sold by it hereunder in
accordance with the description set forth under "Use of
Proceeds" in the Offering Memorandum.
(i) The Company has not taken, nor will it take,
directly or indirectly, any action designed to or that might
reasonably be expected to cause or result in stabilization or
manipulation of the price of the Securities to facilitate the
sale or resale of the Securities. Except as permitted by the
Act, the Company will not distribute any offering material in
connection with the Exempt Resales. Except following the
effectiveness of the Exchange Offer Registration Statement or
the Shelf Registration Statement (each as defined in the
Registration Rights Agreement), the Company will not solicit
any offers to buy and will not offer to sell the Securities
by means of any form of general solicitation or general
advertising (within the meaning of Regulation D under the
Act) or by means of any directed selling efforts (as defined
under Regulation S and the Commission's releases related
thereto).
(j) The Company will assist the Initial Purchasers
in causing the Securities to be eligible for trading on the
PORTAL market.
(k) From and after the Closing Date, so long as any
of the Securities are outstanding and are "restricted
securities" within the meaning of Rule 144(a)(3) under the
Act or, if earlier, until two years after the Closing Date,
and during any period in which the Company is not subject to
Section 13 or 15(d) of the Securities Exchange Act of 1934,
as amended (the "Exchange Act"), the Company and the Parent
Guarantor will furnish to holders of the Securities and
prospective purchasers of Securities designated by such
holders, upon request of such holders or such prospective
purchasers, the information required to be delivered pursuant
to Rule 144A(d)(4) under the Act to permit compliance with
Rule 144A in connection with resales of the Securities.
(l) Each of the Company and the Parent Guarantor
agrees not to sell, offer for sale or solicit offers to buy
or otherwise negotiate in respect of any security (as defined
in the Act) that would be integrated with the sale of the
Securities in a manner that would re-
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quire the registration under the Act of the sale by the
Company and the Parent Guarantor to the Initial Purchasers or
by the Initial Purchasers to the Eligible Purchasers of the
Securities.
(m) The Company and the Parent Guarantor agree to
comply with all of the terms and conditions of 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.
(n) Each of the Company and the Parent Guarantor
agrees that not later than any registration of the Securities
pursuant to the Registration Rights Agreement, or at such
earlier time as may be so required, the Company shall use its
best efforts to cause the Indenture to be qualified under the
Trust Indenture Act of 1939 (the "1939 Act") and will cause
to be entered into any necessary supplemental indentures in
connection therewith.
(o) Each of the Company and the Parent Guarantor
shall not resell any Securities that have been acquired by
it.
(p) Prior to the Closing Date, the Parent Guarantor
will furnish to the Initial Purchasers, as soon as they have
been prepared, a copy of any unaudited interim consolidated
financial statements of the Parent Guarantor for any period
subsequent to the period covered by the most recent
consolidated financial statements of the Parent Guarantor
appearing in the Offering Memorandum.
5. Representations and Warranties of the Company and the Parent
Guarantor. The Company and the Parent Guarantor, jointly and severally,
represent and warrant to the Initial Purchasers that:
(a) No order or decree preventing the use of the
Preliminary Offering Memorandum or the Offering Memorandum or
any amendment or supplement thereto, or any order asserting
that the transactions contemplated by this Agreement are
subject to the registration requirements of the Act, has been
issued and no proceeding for any such purpose has been
commenced or is pending or,
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to the knowledge of the Company and the Parent Guarantor, is
threatened.
(b) The Preliminary Offering Memorandum and the
Offering Memorandum, as of their respective dates, and the
Offering Memorandum, as of the Closing Date, did not or will
not contain an untrue statement of a material fact or omit to
state a material fact required to be stated therein or
necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading,
except that this representation and warranty does not apply
to statements in the Preliminary Offering Memorandum and
Offering Memorandum made in reliance upon and in conformity
with information relating to the Initial Purchasers furnished
to the Company in writing by the Initial Purchasers through
Salomon Brothers Inc expressly for use therein.
(c) As of the Closing Date, the Indenture will have
been duly and validly authorized by the Company and the
Parent Guarantor and, upon its execution and delivery by the
Company and the Parent Guarantor, and assuming due
authorization, execution and delivery by the Trustee, will be
a valid and binding agreement of the Company and the Parent
Guarantor, enforceable in accordance with its terms, except
as enforcement thereof may be limited by bankruptcy,
insolvency or other similar laws affecting the enforcement of
creditors' rights generally and subject to the applicability
of general principles of equity; the Indenture conforms in
all material respects to the description thereof in the
Offering Memorandum; and no qualification of the Indenture
under the 1939 Act is required in connection with the offer
and sale of the Securities contemplated hereby or in
connection with the Exempt Resales.
(d) As of the Closing Date, (i) the Notes, Exchange
Notes (as defined in the Registration Rights Agreement) and
Private Exchange Notes (as defined in the Registration Rights
Agreement)and (ii) the Guarantee, the guarantee to be
endorsed on the Exchange Notes and the Private Exchange Notes
will have been duly authorized by the Company and the Parent
Guarantor, respectively, and, when executed by the Company
and the Parent Guarantor, respectively, and (in the case of
the Notes, Exchange Notes and Private Exchange Notes)
authenticated by the Trustee in accordance with the Indenture
and (in the case of Notes) delivered to the
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Initial Purchasers against payment therefor in accordance
with the terms hereof, will have been validly issued and
delivered, and will constitute valid and binding obligations
of the Company and the Parent Guarantor, respectively,
entitled to the benefits of the Indenture and enforceable in
accordance with their respective terms, except as enforcement
thereof may be limited by bankruptcy, insolvency or other
similar laws affecting the enforcement of creditors' rights
generally and subject to the applicability of general
principles of equity; and the Securities conform in all
material respects to the description thereof in the Offering
Memorandum.
(e) Each direct and indirect subsidiary of the
Parent Guarantor is set forth on Schedule II attached hereto
(each, a "Subsidiary"). All the outstanding shares of
capital stock of the Parent Guarantor and each Subsidiary
have been duly authorized and validly issued, are fully paid
and nonassessable and are free of any preemptive or similar
rights.
(f) Each of the Parent Guarantor and the
Subsidiaries is a corporation duly organized, validly
existing and in good standing under the laws of its
jurisdiction of incorporation with full corporate power and
authority to own, lease and operate its properties and to
conduct its business as described in the Offering Memorandum,
and is duly registered and qualified to conduct its business
as a foreign or extra-provincial corporation, as the case may
be, and is in good standing in each jurisdiction 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 could not reasonably be
expected to have a material adverse effect on the condition
(financial or other), business, prospects, properties, net
worth or results of operations of the Parent Guarantor and
Subsidiaries, taken as a whole (a "Material Adverse Effect").
(g) There are no legal or governmental proceedings
pending against the Parent Guarantor or any Subsidiary or, to
the knowledge of the Company or Parent Guarantor, threatened
against any of them or to which the Parent Guarantor or any
Subsidiary or to which any of the respective properties of
the Parent Guarantor or any Subsidiary is subject which are
not disclosed in
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the Offering Memorandum and which, if adversely decided,
could cause a Material Adverse Effect or materially adversely
affect the issuance of the Securities or the consummation of
any of the transactions contemplated by this Agreement, the
Indenture, the Securities or the Registration Rights
Agreement (collectively, the "Transaction Documents")).
There are no agreements, contracts, indentures, leases or
other instruments of the Parent Guarantor or any Subsidiary
that are material to the Parent Guarantor and Subsidiaries,
taken as a whole, which are not described in the Offering
Memorandum. Except as disclosed in the Offering Memorandum,
neither the Parent Guarantor nor any Subsidiary is involved
in any strike, job action or labor dispute with any group of
its employees which could reasonably be expected to have a
Material Adverse Effect, and, to the knowledge of the Company
and Parent Guarantor, no such action or dispute is
threatened.
(h) None of the Parent Guarantor or any Subsidiary
is (x) in violation of its certificate or articles of
incorporation or by-laws or other organizational documents,
or of any law, ordinance, administrative or governmental rule
or regulation applicable to it or of any decree of any court
or governmental agency or body having jurisdiction over it,
except where any such violation or violations in the
aggregate could not reasonably be expected to have a Material
Adverse Effect, or (y) in default in the performance of any
obligation, agreement or condition contained in any bond,
debenture, note or any other evidence of indebtedness or in
any agreement, indenture, lease or other instrument to which
the Parent Guarantor or any Subsidiary is a party or by which
any of them or any of their respective properties may be
bound, except as disclosed in the Offering Memorandum or
where any such default or defaults in the aggregate could not
reasonably be expected to have a Material Adverse Effect.
(i) None of (x) the issuance, offer, sale or
delivery of the Securities, (y) the execution, delivery or
performance of the Transaction Documents by the Parent
Guarantor or any Subsidiary to the extent a party thereto, or
(z) the consummation by the Parent Guarantor or any
Subsidiary of the transactions contemplated hereby or thereby
(i) requires any consent, approval, authorization or other
order of, or registration or filing with (each, a "Consent"),
any court, regulatory
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body, administrative agency or other governmental body,
agency or official (except such Consents as may have been
obtained or may be required in connection with the
registration under the Act of the Securities in accordance
with the Registration Rights Agreement, the qualification of
the Indenture under the 1939 Act and except for compliance
with the securities or Blue Sky laws of various jurisdictions
or the failure to obtain which could not reasonably be
expected to have a Material Adverse Effect or materially
adversely affect the transactions contemplated by the
Transaction Documents) or conflicts or will conflict with or
constitutes or will constitute a breach of, or a default
under, the certificate or articles of incorporation or
bylaws, or other organizational documents, of the Parent
Guarantor or any Subsidiary, except any such conflicts and
breaches that in the aggregate could not reasonably be
expected to have a Material Adverse Effect, or (ii) conflicts
or will conflict with or constitutes or will constitute a
breach of, or a default under, any agreement, indenture,
lease or other instrument to which the Parent Guarantor or
any Subsidiary is a party or by which any of them or any of
their respective properties may be bound, except as disclosed
in the Offering Memorandum or any such conflicts, breaches or
defaults that in the aggregate could not reasonably be
expected to have a Material Adverse Effect, or (iii) violates
or will violate any statute, law, regulation or judgment,
injunction, order or decree applicable to the Parent
Guarantor or any Subsidiary or any of their respective
properties, except any such violations that in the aggregate
could not reasonably be expected to have a Material Adverse
Effect, or (iv) will result in the creation or imposition of
any lien, charge or encumbrance upon any property or assets
of the Parent Guarantor or any Subsidiary pursuant to the
terms of any agreement or instrument to which any of them is
a party or by which any of them may be bound or to which any
of their property or assets is subject, other than liens,
charges and encumbrances under the Credit Agreement as
disclosed in the Offering Memorandum or which could not in
the aggregate be expected to have a Material Adverse Effect.
(j) Each of Coopers & ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ &
Co., who have certified the consolidated financial statements
of the Parent Guarantor, included as part of the Offering
Memorandum, are independent public ac-
-15-
countants under Rule 101 of the AICPA's Code of Professional
Conduct and its interpretations and rulings.
(k) The consolidated financial statements of Parent
Guarantor included in the Offering Memorandum, together with
the related notes thereto, present fairly the consolidated
financial position, results of operations and cash flows of
Parent Guarantor at the dates and for the periods to which
they relate, and have been prepared in accordance with
generally accepted accounting principles in Canada applied on
a consistent basis ("GAAP"). The pro forma financial
statements and other pro forma financial information
(including the notes thereto) included in the Offering
Memorandum (A) present fairly in all material respects the
information shown therein, (B) have been prepared in
accordance with applicable requirements of Rule 11-02 of
Regulation S-X promulgated under the Act and (C) have been
properly computed on the basis described therein. The
assumptions used in the preparation of the pro forma
financial statements and other pro forma financial
information included in the Offering Memorandum are
reasonable and the adjustments used therein are appropriate
to give effect to the transactions or circumstances referred
to therein.
(l) Each of the Company and the Parent Guarantor has
all the requisite corporate power and authority to execute,
deliver and perform its obligations under this Agreement and
the Registration Rights Agreement; the execution and delivery
of, and the performance by each of the Company and the Parent
Guarantor of its obligations under, this Agreement and the
Registration Rights Agreement have been duly and validly
authorized by the Company and the Parent Guarantor and each
of this Agreement and, as of the Closing Date, the
Registration Rights Agreement will have been duly executed
and delivered by each of the Company and the Parent Guarantor
and will constitute the valid and legally binding agreement
of each of the Company and the Parent Guarantor, enforceable
against the Company and the Parent Guarantor in accordance
with its terms, except as the enforcement hereof and thereof
may be limited by bankruptcy, insolvency or other similar
laws affecting the enforcement of creditors' rights generally
and subject to the applicability of general principles of
equity, and except as rights to indemnity and contribution
-16-
hereunder and thereunder may be limited by Federal or state
securities laws or principles of public policy.
(m) Except as disclosed in the Offering Memorandum,
subsequent to the date as of which such information is given
in the Offering Memorandum, neither the Parent Guarantor nor
Subsidiary has incurred any liability or obligation, direct
or contingent, or entered into any transaction, not in the
ordinary course of business, that is material or will be
material to the Parent Guarantor and the Subsidiaries, taken
as a whole, and there has not been any material change in the
capital stock, or material increase in the short-term or
long-term debt of the Parent Guarantor or any Subsidiary.
(n) Each of the Parent Guarantor and the
Subsidiaries has good and marketable title to all property
(real and personal) described in the Offering Memorandum as
being owned by it, free and clear of all liens, claims,
security interests or other encumbrances except such as are
described in the Offering Memorandum or could not, in the
aggregate, reasonably be expected to have a Material Adverse
Effect and all the property described in the Offering
Memorandum as being held under lease by each of the Parent
Guarantor and the Subsidiaries is held by it under valid,
subsisting and enforceable leases, except as the enforcement
thereof may be limited by bankruptcy, insolvency, or similar
laws affecting the enforcement of creditors' rights generally
and subject to the applicability of general principles of
equity, or except such as are described in the Offering
Memorandum or could not, in the aggregate, reasonably be
expected to have a Material Adverse Effect.
(o) Except as permitted by the Act, neither the
Parent Guarantor nor any Subsidiary has distributed and,
prior to the later to occur of the Closing Date and
completion of the distribution of the Securities, will not
distribute any offering material in connection with the
offering and sale of the Securities other than the
Preliminary Offering Memorandum and Offering Memorandum (and
any amendment or supplement thereto in accordance with
Section 4(c) hereof).
(p) Each of the Parent Guarantor and the
Subsidiaries has such permits, licenses, franchises, certifi-
-17-
▇▇▇▇▇ of need and other approvals or authorizations of all
governmental or regulatory authorities ("Permits") as are
necessary under applicable law to own their respective
properties and to conduct their respective businesses in the
manner described in the Offering Memorandum, except to the
extent that the failure to have such Permits could not
reasonably be expected to have a Material Adverse Effect;
each of Parent Guarantor and the Subsidiaries has fulfilled
and performed in all material respects all its obligations
with respect to the Permits, and, to the knowledge of the
Company and Parent Guarantor, no event has occurred which
allows, or after notice or lapse of time would allow,
revocation or termination thereof or results in any other
material impairment of the rights of the holder of any such
Permit, subject in each case to such qualification as may be
set forth in the Offering Memorandum and except to the extent
that any such revocation or termination, individually or in
the aggregate, could not reasonably be expected to have a
Material Adverse Effect.
(q) Each of the Parent Guarantor and the
Subsidiaries maintains a system of internal accounting
controls sufficient to provide reasonable assurances that
(i) transactions of the Parent Guarantor and the Subsidiaries
are executed in accordance with management's general or
specific authorization; (ii) transactions of the Parent
Guarantor and the Subsidiaries are recorded as necessary to
permit preparation of financial statements in conformity with
GAAP and to maintain accountability for assets; (iii) access
to assets of the Parent Guarantor and the Subsidiaries is
permitted only in accordance with management's general or
specific authorization; and (iv) the recorded accountability
for assets of the Parent Guarantor and the Subsidiaries is
compared with existing assets of the Parent Guarantor and the
Subsidiaries at reasonable intervals and appropriate action
is taken with respect to any differences.
(r) Neither the Parent Guarantor nor any Subsidiary
nor, to the knowledge of the Company or Parent Guarantor, any
employee or agent of the Parent Guarantor or any Subsidiary
has made any payment of funds or received or retained any
funds in violation of any law, rule or regulation, which
violation could reasonably be expected to have a Material
Adverse Effect.
-18-
(s) Except as disclosed in the Offering Memorandum,
the Parent Guarantor and the Subsidiaries have filed all
necessary federal, state and foreign income and franchise tax
returns required to be filed (other than filings for which
extensions have been obtained or are being contested in good
faith), which returns are true and correct in all material
respects, and neither of the Parent Guarantor nor any
Subsidiary is in default in the payment of any taxes which
were payable pursuant to said returns or any assessments with
respect thereto (other than taxes being contested in good
faith), except where the failure to file such returns and
make such payments (whether or not being contested in good
faith) could not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect.
(t) No holder of any security of the Company or the
Parent Guarantor (other than holders of the Securities) has
any right to request or demand registration of any security
of the Company or the Parent Guarantor because of the
consummation of the transactions contemplated by the
Transaction Documents.
(u) Each of the Parent Guarantor and the
Subsidiaries owns, possesses, or possesses adequate rights to
use all patents, trademarks, trademark registrations, service
marks, service ▇▇▇▇ registrations, trade names, copyrights,
licenses, inventions, trade secrets and rights described in
the Offering Memorandum as being owned by it or necessary for
the conduct of its business, and neither the Company nor
Parent Guarantor has not received notice of any claim to the
contrary (a "Claim") or any challenge (a "Challenge") by any
other person to the rights of each of the Parent Guarantor
and the Subsidiaries with respect to the foregoing, except
for such Claims and Challenges which could not reasonably be
expected to have a Material Adverse Effect.
(v) Each of the Parent Guarantor and the
Subsidiaries is not and, upon sale of the Securities to be
issued and sold hereby in accordance herewith and the
application of the net proceeds to the Company of such sale
as described in the Offering Memorandum under the caption
"Use of Proceeds," will not be an "investment company" within
the meaning of the Investment Company Act of 1940, as
amended.
-19-
(w) When the Securities are issued and delivered
pursuant to this Agreement, such Securities will not be of
the same class (within the meaning of Rule 144A(d)(3) under
the Act) as any security of the Parent Guarantor or the
Subsidiaries that is listed on a national securities exchange
registered under Section 6 of the Exchange Act or that is
quoted in a United States automated interdealer quotation
system.
(x) None of the Parent Guarantor, the Subsidiaries
nor any of their affiliates (as defined in Rule 501(b) of
Regulation D under the Act) has directly, or through any
agent (provided that no representation is made as to the
Initial Purchasers or any person acting on their behalf),
(i) sold, offered for sale, solicited offers to buy or
otherwise negotiated in respect of, any security (as defined
in the Act) which is or will be integrated with the offering
and sale of the Securities in a manner that would require the
registration of the Securities under the Act or (ii) engaged
in any form of general solicitation or general advertising
(within the meaning of Regulation D under the Act) in
connection with the offering of the Securities.
(y) Assuming (i) the representations and warranties
of the Initial Purchasers in Section 2 hereof are true and
correct in all material respects, (ii) each Initial Purchaser
complies with the covenants set forth in Section 2 hereof
(iii) compliance by each Initial Purchaser with the offering
and transfer procedures and restrictions described in the
Offering Memorandum, (iv) the accuracy of the representations
and warranties deemed to be made in the Offering Memorandum
by purchasers to whom the Initial Purchasers initially resell
Securities and (v) purchasers to whom the Initial Purchasers
initially resell Securities receive a copy of the Offering
Memorandum prior to such sale, the purchase and sale of the
Securities pursuant hereto (including the Initial Purchasers'
proposed offering of the Securities on the terms and in the
manner set forth in the Offering Memorandum and Section 2
hereof) do not require registration under the Act.
(z) The execution and delivery of this Agreement and
the other Transaction Documents and the sale of the
Securities to the Initial Purchasers by the Company and by
the Initial Purchasers to Eligible Purchasers in accordance
with the terms hereof will not result in any
-20-
prohibited transaction within the meaning of Section 406 of
ERISA or Section 4975 of the Internal Revenue Code. The
representations made by the Company in the preceding sentence
are 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 "Transfer
Restrictions."
(aa) Except as disclosed or contemplated by the
Offering Memorandum, each of the Parent Guarantor and the
Subsidiaries is in compliance with, and not subject to any
liability under, any Canadian and United States applicable
federal, state, provincial, local, municipal and foreign
statute, regulation, law, rule, codes, ordinances, policy,
rule of common law, directives and orders relating to
pollution or to protection of public or employee health or
safety or to the environment, including, without limitation,
those that relate to any Hazardous Material (as defined
herein ("Environmental Laws"), except, in each case, where
noncompliance or liability, individually or in the aggregate,
could not reasonably be expected to have a Material Adverse
Effect. The term "Hazardous Material" means any pollutant,
contaminant or waste, or any hazardous, dangerous, or toxic
chemical, material, waste, substance or constituent subject
to regulation under any Environmental Law.
(bb) Immediately after the consummation of the
purchase and sale of the Securities, the fair value and
present fair saleable value of the consolidated assets of the
Parent Guarantor will exceed the sum of its consolidated
stated liabilities and identified contingent liabilities; the
Parent Guarantor is not, nor will it be, after giving effect
to the consummation of such transactions, (i) left with
unreasonably small capital with which to carry on its
business as it is proposed to be conducted, (ii) unable to
pay its debts (contingent or otherwise) as they mature or
(iii) otherwise insolvent.
6. Indemnification and Contribution.
(a) The Company and the Parent Guarantor agree to jointly and
severally indemnify and hold harmless each Initial Purchaser and each
person, if any, who controls an Ini-
-21-
tial Purchaser within the meaning of Section 15 of the Act or Section 20 of
the Exchange Act from and against any and all losses, claims, damages,
liabilities and out-of-pocket expenses (including reasonable costs of
investigation) incurred by any such persons arising out of or based upon
any statement of a material fact contained in the Preliminary Offering
Memorandum or Offering Memorandum or in any amendment or supplement thereto
that was untrue or alleged to have been untrue when made therein, or
arising out of or based upon any omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make
the statements therein, in the light of the circumstances under which they
were made, not misleading, except insofar as such losses, claims, damages,
liabilities or expenses arise out of or are based upon any untrue statement
or omission or alleged untrue statement or omission which has been made
therein or omitted therefrom in reliance upon and in conformity with the
information relating to an Initial Purchaser furnished in writing to the
Company by an Initial Purchaser, through Salomon Brothers Inc, expressly
for use in connection therewith; provided, however, that the
indemnification contained in this paragraph (a) with respect to the
Preliminary Offering Memorandum shall not inure to the benefit of an
Initial Purchaser on account of any such loss, claim, damage, liability or
expense arising from the sale of the Securities by such Initial Purchaser
to any person if the untrue statement or alleged untrue statement or
omission or alleged omission of a material fact contained in the
Preliminary Offering Memorandum was corrected in the Offering Memorandum
and such Initial Purchaser sold Securities to that person without sending
or giving, at or prior to the written confirmation of such sale, a copy of
the Offering Memorandum (as then amended or supplemented). The foregoing
indemnity agreement shall be in addition to any liability which the Company
or the Parent Guarantor may otherwise have.
(b) If any action, suit or proceeding shall be brought against an
Initial Purchaser or any person who controls an Initial Purchaser in
respect of which indemnity may be sought against the Company and the Parent
Guarantor in accordance with this Section 6, such Initial Purchaser or any
such person who controls such Initial Purchaser shall promptly notify in
writing the Company, and the Company and the Parent Guarantor shall assume
the defense thereof, including the employment of counsel reasonably
acceptable to such Initial Purchaser or such person who controls such
Initial Purchaser and payment of all fees and expenses relating
-22-
to the assumption of the defense by the Company and the Parent Guarantor.
An Initial Purchaser or any person who controls an Initial Purchaser shall
have the right to employ separate counsel in any such action, suit or
proceeding and to participate in the defense thereof, but the fees and
expenses of such counsel shall be at the expense of such Initial Purchaser
or any such person who controls an Initial Purchaser unless (i) the Company
has agreed in writing to pay such fees and expenses, (ii) the Company has
failed to assume the defense and employ counsel on a timely basis or
(iii) the named parties to any such action, suit or proceeding (including
any impleaded parties) include both such Initial Purchaser or any such
person who controls an Initial Purchaser and the Company or the Parent
Guarantor and such Initial Purchaser or any such person who controls an
Initial Purchaser shall have been advised by its counsel that
representation of such indemnified party and the Company or the Parent
Guarantor by the same counsel would be inappropriate under applicable
standards of professional conduct (whether or not such representation by
the same counsel has been proposed) due to actual or potential differing
interests between them (in which case the Company shall not have the right
to assume the defense of such action, suit or proceeding (a "Conflicted
Action") on behalf of such Initial Purchaser or any such person who
controls an Initial Purchaser). It is understood, however, that the
Company and the Parent Guarantor shall, in connection with any such
Conflicted Action, be liable for the reasonable fees and expenses of a
single counsel (in addition to any local counsel) who shall represent
collectively the Initial Purchasers and each such person who controls an
Initial Purchaser, which firm shall be designated in writing by Salomon
Brothers Inc, and that all such reasonable fees and expenses shall be
reimbursed as incurred as provided in paragraph (a) hereof. The Company
and the Parent Guarantor shall not be liable for any settlement of any such
action, suit or proceeding effected without the written consent of the
Company, but if settled with such written consent, or if there be a final
judgment for the plaintiff in any such action, suit or proceeding, the
Company and the Parent Guarantor agree to jointly and severally indemnify
and hold harmless the Initial Purchasers, to the extent provided in
paragraph (a), and any person who controls an Initial Purchaser from and
against any loss, claim, damage, liability or expense by reason of such
settlement or judgment.
(c) Each Initial Purchaser, severally and not jointly, agrees to
indemnify and hold harmless the Company, the Par-
-23-
ent Guarantor, their respective directors and officers and any person who
controls the Company or the Parent Guarantor within the meaning of
Section 15 of the Act or Section 20 of the Exchange Act (i) for any breach
of a representation, warranty or covenant herein and (ii) to the same
extent as the indemnity from the Company and the Parent Guarantor to the
Initial Purchasers set forth in paragraph (a) hereof, but only with respect
to information relating to such Initial Purchaser furnished in writing by
such Initial Purchaser expressly for use in the Preliminary Offering
Memorandum or Offering Memorandum or any amendment or supplement thereto.
If any action, suit or proceeding shall be brought against the Company or
the Parent Guarantor, any of their respective directors or officers or any
such controlling person based on the Preliminary Offering Memorandum or
Offering Memorandum, or any amendment or supplement thereto, and in respect
of which indemnity may be sought against an Initial Purchaser pursuant to
this paragraph (c), such Initial Purchaser shall have the rights and duties
given to the Company and the Parent Guarantor by paragraph (b) above
(except that if the Company or Parent Guarantor shall have assumed the
defense thereof, such Initial Purchaser shall not be required to do so, but
may employ separate counsel therein and participate in the defense thereof,
but the fees and expenses of such counsel shall be at such Initial
Purchaser's expense), and the Company, the Parent Guarantor, their
respective directors and officers and any such controlling person shall
have the rights and duties given to the Initial Purchasers by paragraph (b)
above. The foregoing indemnity agreement shall be in addition to any
liability which an Initial Purchaser may otherwise have.
(d) If the indemnification provided for in this Section 6 is
unavailable to an indemnified party under paragraphs (a) or (c) hereof in
respect of any losses, claims, damages, liabilities or expenses referred to
therein, then an indemnifying party, in lieu of indemnifying such
indemnified party, shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, claims, damages, liabilities
or expenses (i) in such proportion as is appropriate to reflect the
relative benefits received by the Company and the Parent Guarantor on the
one hand and an Initial Purchaser on the other hand from the offering of
the 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 Parent Guarantor
-24-
on the one hand and an Initial Purchaser on the other in connection with
the statements or omissions that resulted in such losses, claims, damages,
liabilities or expenses, as well as any other relevant equitable
considerations. The relative benefits received by the Company and the
Parent Guarantor on the one hand and an Initial Purchaser on the other
shall be deemed to be in the same proportion as the total net proceeds from
the offering (before deducting expenses) received by the Company bear to
the total discounts and commissions received by such Initial Purchaser, in
each case as set forth in the table on the cover page of the Offering
Memorandum. The relative fault of the Company and the Parent Guarantor on
the one hand and an Initial Purchaser on the other hand shall be determined
by reference to, among other things, whether the untrue or alleged untrue
statement of a material fact or the omission or alleged omission to state a
material fact relates to information supplied by the Company or the Parent
Guarantor on the one hand or by such Initial Purchaser on the other hand
and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission.
(e) The Company, the Parent Guarantor and the Initial Purchasers
agree that it would not be just and equitable if contribution pursuant to
this Section 6 were determined by a pro rata allocation or by any other
method of allocation that does not take account of the equitable
considerations referred to in paragraph (d) above. The amount paid or
payable by an indemnified party as a result of the losses, claims, damages,
liabilities and expenses referred to in paragraph (d) above shall be deemed
to include, subject to the limitations set forth above, any legal or other
out-of-pocket expenses reasonably incurred by such indemnified party in
connection with investigating any claim or defending any such action, suit
or proceeding. Notwithstanding the provisions of this Section 6, no
Initial Purchaser shall be required to contribute any amount in excess of
the amount by which the total price of the Securities purchased by it
exceeds the amount of any damages which such Initial Purchaser has
otherwise been required to pay by reason of such 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 Act) shall be
entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation.
-25-
(f) Any losses, claims, damages, liabilities or expenses for which
an indemnified party is entitled to indemnification or contribution under
this Section 6 shall be paid by the indemnifying party to the indemnified
party as such losses, claims, damages, liabilities or expenses are
incurred. The indemnity and contribution agreements contained in this
Section 6 and the representations and warranties of the Company, the Parent
Guarantor and the Initial Purchasers set forth in this Agreement shall
remain operative and in full force and effect, regardless of (i) any
investigation made by or on behalf of an Initial Purchaser, the Company or
the Parent Guarantor or any person who controls an Initial Purchaser, the
Company, the Parent Guarantor, their respective directors or officers or
any person controlling the Company or Parent Guarantor, (ii) acceptance of
any Securities and payment therefor hereunder and (iii) any termination of
this Agreement. A successor to an Initial Purchaser or any person who
controls an Initial Purchaser, or to the Company, the Parent Guarantor,
their respective directors or officers or any person controlling the
Company or Parent Guarantor, shall be entitled to the benefits of the
indemnity, contribution and reimbursement agreements contained in this
Section 6.
(g) No indemnifying party shall, without the prior written consent
of the indemnified party, effect any settlement of any pending or
threatened action, suit or proceeding in respect of which any indemnified
party is or could have been a party and indemnity could have been sought
hereunder by such indemnified party, unless such settlement includes an
unconditional release of such indemnified party from all liability on
claims that are the subject matter of such action, suit or proceeding.
7. Conditions of the Initial Purchasers' Obligations. The
obligations of each Initial Purchaser to purchase and pay for the
Securities to be purchased by it on the Closing Date hereunder are subject
to the fulfillment, in such Initial Purchaser's sole discretion, of the
following conditions:
(a) At the time of execution of this Agreement and
on the Closing Date, no order or decree preventing the use of
the Offering Memorandum or any amendment or supplement
thereto, or any order asserting that the transactions
contemplated by this Agreement are subject to the
registration requirements of the Act shall have been issued
and no proceedings for those purposes shall have been
commenced or shall be pending or, to the
-26-
knowledge of the Company and Parent Guarantor, threatened.
No order suspending the sale of the Securities in any
jurisdiction shall have been issued and no proceedings for
that purpose shall have been commenced or shall be pending
or, to the knowledge of the Company and Parent Guarantor,
threatened.
(b) Subsequent to the date hereof, (i) except as
disclosed or contemplated in the Offering Memorandum, there
shall not have occurred any material adverse change in the
condition (financial or other), business, prospects,
properties, assets, net worth or results of operations of the
Parent Guarantor and the Subsidiaries, taken as a whole,
which, in the opinion of the Initial Purchasers, would
materially adversely affect the market for the Securities,
and (ii) the Offering Memorandum shall not contain any untrue
statement of a material fact or omit to state a material fact
required to be stated therein or necessary in order to make
the statements therein, in the light of the circumstances
under which they were made, not misleading, if amending or
supplementing the Offering Memorandum to correct any such
misstatement or omission could, in the sole judgment of the
Initial Purchasers, materially adversely affect the
marketability of the Securities.
(c) The Initial Purchasers shall have received on
the Closing Date an opinion of Tuke ▇▇▇▇ & ▇▇▇▇▇▇▇, PLC
counsel for the Company, dated the Closing Date and addressed
to the Initial Purchasers, in the form of Exhibit B hereto.
(d) The Initial Purchasers shall have received on
the Closing Date an opinion of Osler, ▇▇▇▇▇▇ & Harcourt,
Canadian counsel for the Company, dated the Closing Date and
addressed to the Initial Purchasers, in the form of Exhibit C
hereto.
(e) The Initial Purchasers shall have received on
the Closing Date an opinion of ▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇,
counsel for the Initial Purchasers, dated the Closing Date,
and addressed to the Initial Purchasers, with respect to such
matters as the Initial Purchasers may request.
(f) The Initial Purchasers shall have received on
the Closing Date an opinion of ▇▇▇▇▇▇, ▇▇▇▇ & ▇▇▇▇, Canadian
counsel for the Initial Purchasers, dated the
-27-
Closing Date and addressed to the Initial Purchasers, with
respect to such matters as the Initial Purchasers may
request.
(g) The Initial Purchasers shall have received "cold
comfort" letters addressed to the Initial Purchasers, and
dated the date hereof and the Closing Date, from ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ & Co. substantially in the forms heretofore approved
by the Initial Purchasers.
(h) (i) There shall not have been any change in the
capital stock of the Parent Guarantor or any Subsidiary nor
any material increase in the short-term or long-term debt of
the Parent Guarantor or any Subsidiary from that set forth or
contemplated in the Offering Memorandum; (ii) except as
disclosed or contemplated by the Offering Memorandum, the
Parent Guarantor and the Subsidiaries shall not have any
liabilities or obligations, direct or contingent (whether or
not in the ordinary course of business), that are material to
the Parent Guarantor and the Subsidiaries, taken as a whole;
(iii) all the representations and warranties of the Parent
Guarantor and the Company contained in this Agreement shall
be true and correct in all material respects on and as of the
date hereof and on and as of the Closing Date as if made on
and as of the Closing Date; and (iv) the Initial Purchasers
shall have received a certificate, dated the Closing Date and
signed by the chief executive officer and the chief
accounting officer of each of the Company and the Parent
Guarantor (or such other officers as are acceptable to the
Initial Purchasers), to the effect set forth in this
Section 7(h) and in Section 7(i) hereof.
(i) The Company and the Parent Guarantor shall not
have failed at or prior to the Closing Date to have performed
or complied with any of their respective agreements herein
contained and required to be performed or complied with by
them hereunder at or prior to the Closing Date.
(j) At the time of the execution of this Agreement,
the Company shall deliver in substantially final form to both
the Initial Purchasers and counsel to the Initial Purchasers
(i) the amendment to the Loan and Security Agreement dated as
of July 18, 1997 between International Comfort Products
Corporation (USA), the Borrower and NationsBank, N.A., the
Lender (the
-28-
"NationsBank Amendment") and (ii) the amendment to the Credit
Agreement dated December 19, 1996 between International
Comfort Products Corporation (Canada), as the Borrower, ▇.▇.
▇▇▇▇▇▇▇▇ Supply Limited, as a Loan Party, the Lender or
Lenders named therein, and General Electric Capital Canada
Inc., as Agent (the "GECC Amendment", the NationsBank
Amendment and the GECC Amendment being collectively, the
"Amendments") and at or prior to the Closing Date, the
Company shall deliver an executed copy of each of the
Amendments (including copies of any related documents
executed in conjunction with the Amendments). Prior to the
Closing Date, there shall be no material changes from the
Amendments in draft form that were delivered to the Initial
Purchasers and counsel to the Initial Purchasers at the date
of the execution of this Agreement.
(k) At the time of the execution of this Agreement,
the Company shall deliver in substantially final form to the
Initial Purchasers and counsel to the Initial Purchasers (i)
the consent from SunTrust Bank, Nashville, N.A. related to
the Loan Agreement dated December 19, 1996, by and between
CHL Holdings, Inc., the Borrower, and SunTrust Bank,
Nashville, N.A., the lender, consenting to the merger of CHL
Holdings, Inc. and International Comfort Products
Corporations (USA) (the "SunTrust Consent") and (ii) the
consent from ▇▇▇▇▇▇▇ Electric Co. related to the Continuing
Guaranty dated December 19, 1996, by ▇▇▇▇▇▇▇ Electric Co. in
favor of SunTrust Bank, Nashville, N.A., consenting to the
merger of CHL Holdings, Inc. and International Comfort
Products Corporations (USA) (the "▇▇▇▇▇▇▇ Consent", the
SunTrust Consent and the ▇▇▇▇▇▇▇ Consent being collectively,
the "Credit Consents") and at or prior to the Closing Date,
the Company shall deliver an executed copy of each of the
Credit Consents (including any related documentation executed
in conjunction with the Credit Consents) with no material
changes from the Credit Consents delivered to the Initial
Purchasers and counsel to the Initial Purchasers at the date
of the execution of this Agreement.
(l) There shall not have been any announcement by
any "nationally recognized statistical rating organization,"
as defined for purposes of Rule 436(g) under the Act, that
(i) it is downgrading its rating assigned to any class of
securities of the Company or the Parent Guarantor (including
the Securities), or (ii) it is re-
-29-
viewing its ratings assigned to any class of securities of
the Company or the Parent Guarantor (including the
Securities) with a view to possible downgrading, with
negative implications or direction not determined.
(m) The Securities shall have been approved for
trading on PORTAL.
(n) The Company shall have taken all necessary acts
to repay all of the indebtedness for money borrowed of the
Subsidiaries indicated as being repaid in the Offering
Memorandum under the caption "Use of Proceeds".
(o) On the Closing Date, the Initial Purchasers
shall have received the Registration Rights Agreement
executed by the Company and the Parent Guarantor and such
agreement shall be in full force and effect at all times from
and after the Closing Date.
(p) The Company and the Parent Guarantor shall have
furnished or caused to be furnished to the Initial Purchasers
such further certificates and customary closing documents as
the Initial Purchasers shall have reasonably requested.
All such opinions, certificates, letters and other documents will be
in compliance with the provisions hereof only if they are reasonably
satisfactory in form and substance to the Initial Purchasers.
Any certificate or document signed by any officer of the Company or
the Parent Guarantor and delivered to the Initial Purchasers, or to counsel
for the Initial Purchasers, shall be deemed a representation and warranty
by the Company or the Parent Guarantor to the Initial Purchasers as to the
statements made therein.
8. Expenses.
(a) Whether or not the purchase and sale of the Securities
hereunder is consummated or this Agreement is terminated pursuant to
Section 9 hereof, the Company and the Parent Guarantor jointly and
severally agree to pay the following costs and expenses and all other costs
and expenses incident to the performance by them of their respective
obligations hereunder: (i) the printing or reproduction of the Preliminary
Offering Memorandum and the Offering Memorandum
-30-
(including financial statements thereto), and each amendment or supplement
to any of them, this Agreement, the Registration Rights Agreement and the
Indenture; (ii) the delivery (including postage, air freight charges and
charges for counting and packaging) of such copies of the Offering
Memorandum, the Preliminary Offering Memorandum and all amendments or
supplements thereto as may be reasonably requested for use in connection
with the offering and sale of the Securities; (iii) the printing,
authentication, issuance and delivery of certificates for the Securities,
including any stamp taxes in connection with the original issuance and sale
of the Securities; (iv) the printing (or reproduction) and delivery of the
preliminary and supplemental Blue Sky Memoranda and all other agreements
and documents printed (or reproduced) and delivered in connection with the
offering of the Securities; (v) the application for quotation of the
Securities on PORTAL; (vi) the qualification of the Securities for offer
and sale under the securities or Blue Sky laws of the several states as
provided in Section 4(f) hereof (including the reasonable fees, expenses
and disbursements of counsel for the Initial Purchasers, limited up to the
initial $10,000 of such fees, expenses and disbursements, relating to the
preparation, printing or reproduction, and delivery of the preliminary and
supplemental Blue Sky Memoranda and such qualification); and (vii) the fees
and expenses of the Company's and the Parent Guarantor's accountants and
the fees and expenses of counsel (including local and special counsel) for
the Parent Guarantor and the Company, but in all events excluding the
attorneys' fees and expenses of the Initial Purchasers except for
attorney's fees, expenses and disbursements as described in clause (vi)
herein.
(b) If the purchase and sale of the Securities hereunder is not
consummated because any condition to the obligations of the Initial
Purchaser set forth in Section 7 hereof is not satisfied, because this
Agreement is terminated pursuant to Section 9(a) hereof or because of any
failure, refusal or inability on the part of the Company or the Parent
Guarantor to perform all obligations and satisfy all conditions on their
respective parts to be performed or satisfied hereunder other than by
reason of a default by an Initial Purchaser in payment for the Securities
on the Closing Date, the Company and the Parent Guarantor jointly and
severally agree to reimburse the Initial Purchasers promptly upon demand
for all reasonable out-of-pocket expenses (including reasonable fees and
disbursements of counsel) that shall have been incurred by them in
connection with the proposed
-31-
purchase and sale of the Securities and the other transactions contemplated
hereby.
9. Termination of Agreement.
(a) This Agreement shall be subject to termination in the absolute
discretion of the Initial Purchasers, without liability on the part of the
Initial Purchasers to the Company and the Parent Guarantor, by notice to
the Company, if prior to the Closing Date, (i) trading in securities
generally on the Toronto Stock Exchange, New York Stock Exchange, American
Stock Exchange or the Nasdaq National Market shall have been suspended or
materially limited, (ii) a general moratorium on commercial banking
activities in Toronto shall have been declared by either Canadian or
Ontario authorities or in New York shall have been declared by either U.S.
Federal or New York state authorities or (iii) there shall have occurred
any outbreak or escalation of hostilities or other international or
domestic calamity, crisis or change in political, financial or economic
conditions, the effect of which on the financial markets of the United
States or Canada or the market for the Securities is such as to make it, in
the sole judgment of the Initial Purchasers, impracticable or inadvisable
to commence or continue the offering of the Securities on the terms set
forth on the cover page of the Offering Memorandum or to enforce contracts
for the resale of the Securities by the Initial Purchasers. Notice of
such termination may be given to the Company by telegram, telecopy or
telephone and shall be subsequently confirmed by letter.
(b) If any Initial Purchaser shall fail to purchase and pay for any
of the Securities agreed to be purchased by such Initial Purchaser
hereunder and such failure to purchase shall constitute a default in the
performance of its obligations under this Agreement, the remaining Initial
Purchaser(s) shall be obligated to take up and pay for the Securities which
the defaulting Initial Purchaser agreed but failed to purchase; provided,
however, that in the event that the aggregate principal amount of
Securities which the defaulting Initial Purchaser agreed but failed to
purchase shall exceed 10% of the aggregate principal amount of Securities
set forth in Schedule I hereto, the remaining Initial Purchaser shall have
the right to purchase all, but shall not be under any obligation to
purchase any, of the Securities, and if such non-defaulting Initial
Purchaser does not purchase all the Securities, this Agreement will
terminate without liability to the non-defaulting Initial Purchaser or the
Company and the Parent Guarantor. In the
-32-
event of a default by any Initial Purchaser as set forth in this
Section 9(b), the Closing Date shall be postponed for such period, not
exceeding seven days, as the non-defaulting Initial Purchaser(s) shall
determine in order that the required changes in the Offering Memorandum or
in any other documents or arrangements may be effected. Nothing contained
in this Agreement shall relieve any defaulting Initial Purchaser of its
liability, if any, to the Company and the Parent Guarantor or the non-
defaulting Initial Purchaser(s) for damages occasioned by its default
hereunder.
10. Information Furnished by the Initial Purchasers. The
statements set forth in the stabilization legend on the inside front cover,
the last paragraph on the cover page and in the fifth paragraph under the
caption "Plan of Distribution" in the Preliminary Offering Memorandum and
Offering Memorandum, constitute the only information furnished by the
Initial Purchasers or as such information is referred to in Sections 5(b)
and 6 hereof.
11. Miscellaneous. Except as otherwise provided herein, notice
given pursuant to any provision of this Agreement shall be in writing and
shall be delivered (i) if to the Company and the Parent Guarantor, at ▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention:
General Counsel, or (ii) if to the Initial Purchasers, to Salomon Brothers
Inc, Seven ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇, Attention: Manager,
Investment Banking Division.
This Agreement has been and is made solely for the benefit of the
Initial Purchasers, the Company and the Parent Guarantor, and their
respective directors, officers and the controlling persons referred to in
Section 6 hereof and their respective successors and assigns, to the extent
provided herein, and no other person shall acquire or have any right under
or by virtue of this Agreement. Neither the term "successor" nor the terms
"successors and assigns" as used in this Agreement shall include a
purchaser from an Initial Purchaser of any of the Securities in its status
as such purchaser.
12. Successors. This Agreement shall inure to the benefit of and
be binding upon the Initial Purchasers, the Company, the Parent Guarantor
and their respective successors and legal representatives, and nothing
expressed or mentioned in this Agreement is intended or shall be construed
to give any other person any legal or equitable right, remedy or claim
under or in respect of this Agreement, or any provisions herein
-33-
contained; this Agreement and all conditions and provisions hereof being
intended to be and being for the sole and exclusive benefit of such persons
and for the benefit of no other person except that (i) the indemnities of
the Company and the Parent Guarantor contained in Section 6 of this
Agreement shall also be for the benefit of the directors, officers,
employees and agents and any person or persons who control the Initial
Purchasers within the meaning of Section 15 of the Securities Act or
Section 20 of the Exchange Act and (ii) the indemnities of the Initial
Purchasers contained in Section 6 of this Agreement shall also be for the
benefit of the directors, officers, employees and agents of any person or
persons who control the Company and the Parent Guarantor within the meaning
of Section 15 of the Securities Act or Section 20 of the Exchange Act. No
purchaser of Securities from any Initial Purchaser will be deemed a
successor because of such purchase.
13. No Waiver; Modifications in Writing. No failure or delay on
the part of the Company, the Parent Guarantor or the Initial Purchasers in
exercising any right, power or remedy hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise of any such right, power
or remedy preclude any other or further exercise thereof or the exercise of
any other right, power or remedy. The remedies provided for herein are
cumulative and are not exclusive of any remedies that may be available to
the Company, the Parent Guarantor or the Initial Purchasers at law or in
equity or otherwise. No waiver of or consent to any departure by the
Company, the Parent Guarantor or the Initial Purchasers from any provision
of this Agreement shall be effective unless signed in writing by the party
entitled to the benefit thereof; provided, however, that notice of any such
waiver shall be given to each party hereto as set forth below. Except as
otherwise provided herein, no amendment, modification or termination of any
provision of this Agreement shall be effective unless signed in writing by
or on behalf of each of the Company, the Parent Guarantor and the Initial
Purchasers. Any amendment, supplement or modification of or to any
provision of this Agreement, any waiver of any provision of this Agreement,
and any consent to any departure by the Company, the Parent Guarantor or
the Initial Purchasers from the terms of any provision of this Agreement
shall be effective only in the specific instance and for the specific
purpose for which made or given. Except when notice is specifically
required by this Agreement, no notice to or demand on the Company and the
Parent Guarantor in any case shall entitle the Company and the Parent
Guarantor to any other or further notice or demand in similar or other
circumstances.
-34-
14. Entire Agreement. This Agreement constitutes the entire
agreement among the parties hereto and supersedes all prior agreements,
understandings and arrangements, oral or written, among the parties hereto
with respect to the subject matter hereof.
15. APPLICABLE LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, AS APPLIED
TO CONTRACTS MADE AND PERFORMED WITHIN THE STATE OF NEW YORK, WITHOUT
REGARD TO PRINCIPLES OF CONFLICTS OF LAW.
16. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
17. Agent for Service; Submission to Jurisdiction; Waiver of
Immunities. By the execution and delivery of this Agreement, the Parent
Guarantor (i) acknowledges that it has, by separate written instrument,
designated and appointed Osler, ▇▇▇▇▇▇ & Harcourt, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇
▇▇▇, ▇▇▇ ▇▇▇▇, ▇.▇. ▇▇▇▇▇ ("Osler") (and any successor entity), as its
authorized agent upon which process may be served in any suit or proceeding
arising out of or relating to this Agreement, the Guarantee, the
Registration Rights Agreement or the Indenture that may be instituted in
any federal or state court in the State of New York (the "New York Court")
or brought under federal or state securities laws, and acknowledge that
Osler has accepted such designation, (ii) submits to the jurisdiction of
any such court in any such suit or proceeding, and (iii) agrees that
service of process upon Osler and written notices of said service to the
Parent Guarantor in accordance with Section 11 shall be deemed in every
respect effective service of process upon the Parent Guarantor in any such
suit or proceeding. The Parent Guarantor further agrees to take any and
all action, including the execution and filing of any and all such
documents and instruments, as may be necessary to continue such designation
and appointment of Osler in full force and effect so long as any of the
Notes shall be outstanding; provided, however, that the Parent Guarantor
may, by written notice to the Initial Purchasers, designate such additional
or alternative agent for service of process under this Section 17 that
(i) maintains an office located in the Borough of Manhattan, City of New
York in the State of New York and (ii) is either (x) counsel for the Parent
Guarantor or (y) a corporate service company which acts as agent for
service of process for other persons in the ordinary course of its
business. Such written notice shall iden-
-35-
tify the name of such agent for process and the address of the office of
such agent for process in the Borough of Manhattan, City of New York, State
of New York.
To the extent the Parent Guarantor has or hereafter may acquire any
immunity from jurisdiction of any court or from any legal process (whether
through service of notice, attachment prior to judgment, attachment in aid
of execution, execution or otherwise) with respect to itself or its
property, it hereby irrevocably waives such immunity in respect of its
obligations under the above-referenced documents, to the extent permitted
by law.
18. Judgment Currency. The Parent Guarantor shall indemnify each
Initial Purchaser, their respective affiliates, each person, if any, who
controls any of such parties within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act and each of their
respective officers, directors, general partners, employees and agents
against any loss incurred by such party as a result of any judgment or
order being given or made for any amount due under this Agreement and such
judgment or order being expressed and paid in a currency (the "Judgment
Currency") other than United States dollars and as a result of any
variation as between (i) the rate of exchange at which the United States
dollar amount is converted into the Judgment Currency for the purpose of
such judgment or order and (ii) the spot rate of exchange in The City of
New York at which such party on the date of payment of such judgment or
order is able to purchase United States dollars with the amount of the
Judgment Currency actually received by such party. The foregoing indemnity
shall continue in full force and effect notwithstanding any such judgment
or order as aforesaid. The term "spot rate of exchange" shall include any
premiums and costs of exchange payable in connection with the purchase of,
or conversion into, United States dollars.
19. Joint and Several Obligations. All of the obligations of the
Company and the Parent Guarantor hereunder shall be joint and several
obligations of each of them.
Please confirm that the foregoing correctly sets forth the agreement
among the Company, the Parent Guarantor and the Initial Purchasers.
Very truly yours,
INTERNATIONAL COMFORT PRODUCTS
HOLDINGS, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇
----------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇
Title: Senior Vice President,
General Counsel and
Secretary
INTERNATIONAL COMFORT PRODUCTS
CORPORATION, as Parent Guar-
antor
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇
----------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇
Title: Senior Vice President,
General Counsel and
Confirmed as of the date first
above mentioned.
SALOMON BROTHERS INC
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
-------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: Managing Director
CREDIT SUISSE FIRST BOSTON
CORPORATION
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇.
-------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇.
Title: Managing Director
FIRST UNION CAPITAL MARKETS, a
division of Wheat First
Securities, Inc.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Senior Director
SCHEDULES AND EXHIBITS OMITTED