EXHIBIT 1
$150,000,000 AGGREGATE PRINCIPAL AMOUNT
CINEMARK USA, INC.
9% SENIOR SUBORDINATED NOTES DUE 2013
PURCHASE AGREEMENT
February 6, 2003
▇▇▇▇▇▇ BROTHERS INC.
BANC OF AMERICA SECURITIES LLC
FLEET SECURITIES, INC.
BNY CAPITAL MARKETS, INC.
c/▇ ▇▇▇▇▇▇ Brothers Inc.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
Cinemark USA, Inc., a Texas corporation (the "COMPANY"),
proposes, subject to the terms and conditions stated herein, to issue and sell
$150,000,000 aggregate principal amount of its 9% Senior Subordinated Notes due
2013 (the "SECURITIES") to ▇▇▇▇▇▇ Brothers Inc. and the other initial purchasers
named in Schedule 1 hereto (collectively, the "INITIAL PURCHASERS").
The Securities will be issued pursuant to an indenture (the
"INDENTURE to be dated as of the Closing Date (as defined in Section 2(a)) among
the Company, the subsidiaries of the Company listed on the signature pages
hereof (the "GUARANTORS") and The Bank of New York Trust Company of Florida,
N.A., as trustee (the "TRUSTEE") and will be guaranteed on an unsecured senior
subordinated basis by the Guarantors (the "GUARANTEES"). References to the
Indenture herein, shall include, with respect to the Guarantors, the Guarantees
included therein.
This is to confirm the agreement among the Company, the
Guarantors and the Initial Purchasers concerning the offer, issue and sale of
the Securities.
The Securities will be offered and sold to the Initial
Purchasers without being registered under the Securities Act of 1933, as
amended, and the rules and regulations of the Securities and Exchange Commission
(the "COMMISSION") thereunder (collectively, the "SECURITIES ACT"), in reliance
upon an exemption therefrom.
Holders of the Securities (including the Initial Purchasers
and their direct and indirect transferees) will be entitled to the benefits of a
Registration Rights Agreement, dated as of the Closing Date (the "REGISTRATION
RIGHTS AGREEMENT"), the form of which is contained in Annex A hereof, pursuant
to which the Company will agree, among other things, to file with the
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Commission (i) a registration statement under the Securities Act (the "EXCHANGE
OFFER REGISTRATION STATEMENT") covering the issuance of a series of the
Company's debt securities identical in all respects to the Securities except
that such debt securities will not be subject to transfer restrictions under the
Securities Act (the "EXCHANGE SECURITIES") and the offer to exchange such
Exchange Securities for the Securities (the "EXCHANGE OFFER") and (ii) under
certain circumstances described therein, 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"), and, in each case, to use its best reasonable efforts to cause the
Registration Statements to be declared effective within the time periods
specified therein.
This Agreement, the Indenture and the Registration Rights
Agreement are referred to herein collectively as the "TRANSACTION DOCUMENTS".
SECTION 1. Representations, Warranties and Agreements of the Company
and the Guarantors. The Company and each of the Guarantors represent and warrant
to, and agree with, the Initial Purchasers that:
(a) The Company has prepared a preliminary offering memorandum
dated January 30, 2003 (the "PRELIMINARY OFFERING MEMORANDUM") and will prepare
an offering memorandum dated the date hereof (the "OFFERING MEMORANDUM") setting
forth information concerning the Company, the Securities and the Registration
Rights Agreement, in form and substance satisfactory to you. Copies of the
Preliminary Offering Memorandum have been, and copies of the Offering Memorandum
will be, delivered by the Company to you. As used in this Agreement,
"PRELIMINARY OFFERING MEMORANDUM" or "OFFERING MEMORANDUM" means the Preliminary
Offering Memorandum or Offering Memorandum, as the case may be, as amended or
supplemented, unless otherwise noted. Each of the Preliminary Offering
Memorandum and the Offering Memorandum, as of its respective date, did not, and
on the Closing Date the Offering Memorandum will not, contain any untrue
statement of a material fact or omit to state a material fact necessary in order
to make the statements therein, in the light of the circumstances under which
they were made, not misleading; provided that the Company and each of the
Guarantors make no representation or warranty as to information contained in or
omitted from the Preliminary Offering Memorandum or the Offering Memorandum in
reliance upon and in conformity with written information relating to the Initial
Purchasers furnished to the Company by the Initial Purchasers specifically for
inclusion therein.
(b) The Company and each of its subsidiaries (as defined in
Section 14) have been duly organized and are validly existing as corporations or
other business organizations, as applicable, in good standing under the laws of
their respective jurisdictions of incorporation or organization, as applicable,
are duly qualified to do business and are in good standing as foreign
corporations or other business organizations, as applicable, in each
jurisdiction in which their respective ownership or lease of property or the
conduct of their respective businesses requires such qualification, and have all
power and authority necessary to own or hold their respective properties and to
conduct the businesses in which they are engaged, except where the failure to so
qualify to be in good standing would not reasonably be expected to have,
individually or in the aggregate, a material adverse effect on the consolidated
financial position, stockholders' equity, results of operations, business or
prospects of the Company and its subsidiaries taken as a
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whole (a "MATERIAL ADVERSE EFFECT"); and none of the subsidiaries of the
Company, other than Cinemark Mexico (USA), Inc., Cinemark Holdings Mexico S.A.
de ▇.▇. de C.V., Cinema Properties, Inc., Cinemark de Mexico S.A. de C.V., CNMK
Investments, Inc., CNMK Delaware Investments II, L.L.C., CNMK Delaware
Investment Properties, L.P., and CNMK Texas Properties, Ltd., is a "SIGNIFICANT
SUBSIDIARY," as such term is defined in Rule 405 under the Securities Act.
(c) The Company has an authorized capitalization as set forth
in the Offering Memorandum, and all of the issued shares of capital stock of the
Company have been duly authorized and validly issued, are fully paid and
non-assessable; and all of the issued shares of capital stock or membership
interests, as applicable, of each subsidiary of the Company have been duly
authorized and validly issued and are fully paid and non-assessable and, except
as described in the Offering Memorandum and for directors' qualifying shares,
are owned directly or indirectly by the Company, free and clear of all liens,
encumbrances, equities or claims.
(d) The Company and each of the Guarantors have all necessary
power and authority to execute and deliver this Agreement and perform their
respective obligations hereunder; this Agreement has been duly authorized,
executed and delivered by the Company and each of the Guarantors and the
transactions contemplated hereby have been duly authorized by the Company and
each of the Guarantors; assuming due authorization, execution and delivery by
the Initial Purchasers, this Agreement constitutes a legally valid and binding
agreement of the Company and each of the Guarantors, enforceable against the
Company and each of the Guarantors in accordance with its terms, subject to the
effects of bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and other similar laws relating to or affecting creditors' rights
generally, general equitable principles (whether considered in a proceeding in
equity or at law) and an implied covenant of good faith and fair dealing, and
except with respect to the rights of indemnification and contribution hereunder,
where enforcement hereof may be limited by federal or state securities laws or
the policies underlying such laws; and this Agreement will conform in all
material respects to the description thereof contained in the Offering
Memorandum.
(e) The Company and each of the Guarantors have all necessary
power and authority to execute and deliver the Indenture and perform their
respective obligations thereunder; the Indenture has been duly authorized by the
Company and each of the Guarantors, and, upon the effectiveness of the Exchange
Offer Registration Statement and the Shelf Registration Statement (if
applicable), will be qualified under the Trust Indenture Act of 1939, as
amended, and the rules and regulations of the Commission thereunder
(collectively, the "TRUST INDENTURE ACT"); on the Closing Date, the Indenture
will have been duly executed and delivered by the Company and each of the
Guarantors and, assuming due authorization, execution and delivery of the
Indenture by the Trustee, the Indenture will constitute a legally valid and
binding agreement of the Company and each of the Guarantors, enforceable against
the Company and each of the Guarantors in accordance with its terms, subject to
the effects of bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and other similar laws relating to or affecting creditors' rights
generally, general equitable principles (whether considered in a proceeding in
equity or at law) and an implied covenant of good faith and fair dealing; and
the Indenture will conform, when executed, in all material respects to the
description thereof contained in the Offering Memorandum.
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(f) The Company has all necessary power and authority to
execute, issue and deliver the Securities and perform its obligations
thereunder; the Securities have been duly authorized by the Company, and when
the Securities are delivered to and paid for by the Initial Purchasers pursuant
to this Agreement, assuming due authentication thereof by the Trustee, the
Securities will be duly executed and delivered by the Company and will
constitute legally valid and binding obligations of the Company entitled to the
benefits of the Indenture and enforceable against the Company in accordance with
their terms, subject to the effects of bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium and other similar laws relating to or
affecting creditors' rights generally, general equitable principles (whether
considered in a proceeding in equity or at law) and an implied covenant of good
faith and fair dealing; and the Securities will conform, when issued, in all
material respects to the description thereof contained in the Offering
Memorandum.
(g) The Company and each of the Guarantors have all necessary
power and authority to engage in the Exchange Offer and to execute, issue and
deliver the Exchange Securities and perform their respective obligations
thereunder; the Exchange Securities have been duly authorized by the Company and
each of the Guarantors and, if and when duly executed, authenticated and issued
in accordance with the terms of the Indenture and delivered in accordance with
the Exchange Offer, assuming due authentication of the Exchange Securities by
the Trustee, such Exchange Securities will constitute legally valid and binding
obligations of the Company and each of the Guarantors entitled to the benefits
of the Indenture, enforceable against the Company and each of the Guarantors in
accordance with their terms, except as the enforceability thereof may be limited
by bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and
other similar laws relating to or affecting creditors' rights generally, subject
to general principles of equity and to limitations on availability of equitable
relief, including specific performance (whether considered in a proceeding in
equity or at law) and an implied covenant of good faith and fair dealing; and
the Exchange Securities will conform, when issued, in all material respects to
the description thereof contained in the Offering Memorandum.
(h) The Company and each of the Guarantors have all necessary
power and authority to execute and deliver the Registration Rights Agreement and
perform their respective obligations thereunder; the Registration Rights
Agreement and the transactions contemplated thereby have been duly authorized by
the Company and each of the Guarantors and, when duly executed and delivered by
the Company and each of the Guarantors, assuming due authorization, execution
and delivery by the Initial Purchasers, the Registration Rights Agreement will
constitute a legally valid and binding agreement of the Company and each of the
Guarantors, enforceable against the Company and each of the Guarantors in
accordance with its terms, except as the enforceability thereof may be limited
by bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and
other similar laws relating to or affecting creditors' rights generally, subject
to general principles of equity and to limitations on availability of equitable
relief, including specific performance (whether considered in a proceeding in
equity or at law) and an implied covenant of good faith and fair dealing, and
except with respect to the rights of indemnification and contribution
thereunder, where enforcement thereof may be limited by federal or state
securities laws or the policies underlying such laws; and the Registration
Rights Agreement will conform, when executed and delivered, in all material
respects to the description thereof contained in the Offering Memorandum.
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(i) The execution, delivery and performance by the Company and
each of the Guarantors of this Agreement and the other Transaction Documents to
which each is a party, the issuance and sale of the Securities, compliance by
the Company and each of the Guarantors with all provisions hereof and thereof
and the consummation of the transactions contemplated hereby and thereby will
not (i) conflict with or result in a breach or violation of any of the terms or
provisions of, or constitute a default under, any indenture, mortgage, deed of
trust, loan agreement, lease, pledge or other agreement or instrument to which
the Company or any of its subsidiaries is a party or by which the Company or any
of its subsidiaries is bound or to which any of the property or assets of the
Company or any of its subsidiaries is subject, (ii) result in any violation of
the provisions of the charter or bylaws of the Company or the charter or bylaws
or any joint venture, partnership, limited liability company, shareholders' or
other agreement or organizational document of any of the Company's subsidiaries,
or (iii) result in any violation of any statute or any order, rule or regulation
of any court or governmental agency or body (whether domestic or foreign) having
jurisdiction over the Company or any of its subsidiaries or any of their
properties or assets except, in the case of clauses (i) and (iii), such
conflicts, breaches or violations that would not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect, or impair the
ability of the Company or any of the Guarantors to perform their respective
obligations under this Agreement; no consent, approval, authorization or order
of, or filing or registration with, any such court or governmental agency or
body (whether domestic or foreign) is required for the execution, delivery and
performance by the Company and any of the Guarantors of this Agreement and the
other Transaction Documents to which each is a party, the issuance and sale of
the Securities and the consummation of the transactions contemplated hereby and
thereby, except (i) with respect to the transactions contemplated by the
Registration Rights Agreement, as may be required under the Securities Act and
the qualification of the Indenture under the Trust Indenture Act, (ii) as
required by applicable state or foreign securities laws in connection with the
purchase and resale of the Securities by the Initial Purchasers, and (iii) as
have been made or obtained.
(j) Except as described in the Offering Memorandum, there are
no contracts, agreements or understandings between the Company or any of the
Guarantors and any person granting such person the right to require the Company
or any of the Guarantors to file a registration statement under the Securities
Act with respect to any securities of the Company or any of the Guarantors owned
or to be owned by such person or to require the Company or any of the Guarantors
to include such securities in any securities being registered pursuant to any
registration statement filed by the Company under the Securities Act.
(k) Neither the Company nor any of its subsidiaries has
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 (whether
domestic or foreign) otherwise than as set forth or contemplated in the Offering
Memorandum except where such losses or interferences would not reasonably be
expected to have, individually or in the aggregate, a Material Adverse Effect;
and, since such date, there has not been any material change in the capital
stock or material increase in the long-term debt of the Company or any of its
subsidiaries or any adverse change, or any development involving a prospective
adverse change, that would reasonably be expected to have, individually or in
the
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aggregate, a Material Adverse Effect, otherwise than as set forth or
contemplated in the Offering Memorandum.
(l) The consolidated financial statements (including the
related notes and supporting schedules) included in the Offering Memorandum
present fairly in all material respects the financial position and results of
operations of the Company and its subsidiaries, at the dates and for the periods
indicated, and have been prepared in conformity with generally accepted
accounting principles in the United States applied on a consistent basis
throughout the periods involved; the as adjusted information included in the
Offering Memorandum gives effect to assumptions made on a reasonable basis as of
the date hereof and presents fairly in all material respects the financial
position and results of operations of the Company and its subsidiaries on a
consolidated basis and of the Restricted Group (as defined in the Offering
Memorandum), as adjusted for the proposed transactions as contemplated in the
Offering Memorandum, at the dates and for the periods indicated.
(m) Deloitte & Touche LLP, who have certified certain
financial statements of the Company, whose report appears in the Offering
Memorandum and who have delivered the initial letter referred to in Section 5(f)
hereof, are independent public accountants as required by the Securities Act and
the Rules and Regulations.
(n) The Company and each of its subsidiaries have good and
marketable title in fee simple to all real property and good and marketable
title to all personal property owned by them, in each case free and clear of all
liens, encumbrances and defects, except such as are described in the Offering
Memorandum or such as could not, individually or in the aggregate, have a
Material Adverse Effect; and, except as described in the Offering Memorandum,
all assets held under lease by the Company and its subsidiaries are held by them
under valid, subsisting and enforceable leases, except such as are described in
the Offering Memorandum or such as could not, individually or in the aggregate,
have a Material Adverse Effect.
(o) The Company and each of its subsidiaries carry, or are
covered by, insurance in such amounts and covering such risks which the Company
believes are adequate for the conduct of their respective businesses and the
value of their respective properties.
(p) The Company and each of its subsidiaries own, possess or
can acquire on reasonable terms adequate rights to use all material patents,
patent applications, trademarks, service marks, trade names, trademark
registrations, service ▇▇▇▇ registrations, copyrights and licenses necessary for
the conduct of their respective businesses and have no reason to believe that
the conduct of their respective businesses will conflict with, and have not
received any notice of any claim of conflict with, any such rights of others
that, if determined adversely to the Company or any of its subsidiaries would
reasonably be likely to have, individually or in the aggregate, a Material
Adverse Effect.
(q) Except as described in the Offering Memorandum, there are
no legal or governmental proceedings (whether domestic or foreign) pending to
which the Company or any of its subsidiaries is a party or of which any property
or assets of the Company or any of its subsidiaries is the subject which, if
determined adversely to the Company or any of its subsidiaries, would reasonably
be expected to have, individually or in the aggregate, a Material
7
Adverse Effect; and to the best of the Company's or any of the Guarantors'
knowledge, no such proceedings are threatened or contemplated by governmental
authorities or threatened by others.
(r) There are no contracts or other documents which would be
required to be described in the Offering Memorandum if the Offering Memorandum
were a prospectus included in a registration statement on Form S-1 that has not
been so described therein.
(s) No relationship, direct or indirect, exists between or
among the Company on the one hand, and the directors, officers, stockholders,
customers or suppliers of the Company on the other hand, which would be required
to be described in the Offering Memorandum if the Offering Memorandum were a
prospectus included in a registration statement on Form S-1 that has not been so
described therein.
(t) No labor disturbance by the employees of the Company
exists or, to the knowledge of the Company or any of the Guarantors, is
imminent, which would reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect.
(u) The Company and members of its controlled group within the
meaning of Sections 414 of the Internal Revenue Code of 1986, as amended,
including the regulations and published interpretations thereunder (the "CODE")
are in compliance in all 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"), except where the
failure to be in such compliance would not reasonably be likely to have,
individually or in the aggregate, a Material Adverse Effect; no "REPORTABLE
EVENT" (as defined in ERISA) has occurred and is continuing with respect to any
"PENSION PLAN" (as defined in ERISA) for which the Company and such members
would have any liability; except for matters that would not reasonably be likely
to have, individually or in the aggregate, a Material Adverse Effect; the
Company and such members have not incurred and do not expect to incur liability
under (i) Title IV of ERISA with respect to termination of, or withdrawal from,
any "PENSION PLAN" or (ii) Sections 412 or 4971 of the Code, and each "PENSION
PLAN" for which the Company and such members 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.
(v) Each of the Company and each of the Guarantors has filed
(or obtained extensions to file) all federal, state, local and foreign income
and franchise tax returns required to be filed by it through the date hereof,
except where the failure to so file would not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect, and has paid all
taxes due thereon, other than those (i) currently payable without penalty or
interest or (ii) being contested in good faith and by appropriate proceedings
and for which, in the case of both (i) and (ii), adequate reserves have been
established on the books and records of the Company or the Guarantors in
accordance with generally accepted accounting principles in the United States.
No tax deficiency has been determined adversely to the Company or any of its
subsidiaries which has had (nor does the Company or any of the Guarantors have
any knowledge of any tax deficiency which, if determined adversely to the
Company or any of its subsidiaries) or would reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect.
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(w) Since the date as of which information is given in the
Offering Memorandum through the date hereof, and except as may otherwise be
disclosed in the Offering Memorandum, neither the Company nor any of the
Guarantors has (i) issued or granted any securities (other than pursuant to the
Company's employee benefit plans described in the Offering Memorandum), (ii)
incurred any material liability or obligation, direct or contingent, other than
liabilities and obligations which were incurred in the ordinary course of
business, (iii) entered into any material transaction not in the ordinary course
of business or (iv) declared or paid any dividend on its capital stock.
(x) The Company (i) makes and keeps accurate books and records
and (ii) maintains internal accounting controls which provide reasonable
assurance that (A) transactions are executed in accordance with management's
authorization, (B) transactions are recorded as necessary to permit preparation
of its financial statements and to maintain accountability for its assets, (C)
access to its assets is permitted only in accordance with management's
authorization and (D) the recorded accountability for its assets is compared
with existing assets at reasonable intervals.
(y) Neither the Company nor any of its subsidiaries (i) is in
violation of (A), in the case of the Company, its charter or bylaws or (B) in
the case of any of the Company's subsidiaries, its charter or bylaws or any of
its joint venture, partnership, limited liability company, shareholders' or
other agreement or organizational document as the case may be, except in the
case of this clause (B), where such violation would not be reasonably expected
to have, individually or in the aggregate, a Material Adverse Effect, (ii) is in
default in any respect, and no event has occurred which, with notice or lapse of
time or both, would constitute such a default, in the due performance or
observance of any term, covenant or condition contained in any indenture,
mortgage, deed of trust, loan agreement, lease, pledge or other agreement or
instrument to which it is a party or by which it is bound or to which any of its
properties or assets is subject or (iii) is in violation in any respect of any
law, ordinance, governmental rule, regulation or court decree (whether domestic
or foreign) to which it or its property or assets may be subject or has failed
to obtain any material license, permit, certificate, franchise or other
governmental authorization or permit (whether domestic or foreign) necessary to
the ownership of its property or to the conduct of its business, except in the
case of clauses (ii) and (iii), such defaults, events, violations or failures
that in the aggregate would not reasonably be expected to have, individually or
in the aggregate, a Material Adverse Effect and provided, however, that while
the Company believes that it is in compliance with the provisions of the
Americans with Disabilities Act of 1990, as disclosed in the Offering
Memorandum, it is a party to legal proceedings alleging violations of that act.
(z) Neither the Company nor any of its subsidiaries, nor to
the best of the Company's or any of the Guarantors' knowledge, any director,
officer, agent, employee or other person associated with or acting on behalf of
the Company or any of its subsidiaries, has used any corporate or organizational
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.
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(aa) There has been no storage, disposal, generation,
manufacture, refinement, transportation, handling or treatment of toxic wastes,
medical wastes, hazardous wastes or hazardous substances by the Company or any
of its subsidiaries (or, to the knowledge of the Company or any of the
Guarantors, any of their predecessors in interest) at, upon or from any of the
property now or previously owned or leased by the Company or its subsidiaries in
violation of any applicable law, ordinance, rule, regulation, order, judgment,
decree or permit or which would require remedial action under any applicable
law, ordinance, rule, regulation, order, judgment, decree or permit, except for
any violation or remedial action which would not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect; there has been no
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 have knowledge, except
for any such spill, discharge, leak, emission, injection, escape, dumping or
release which would not reasonably be expected to have, individually 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.
(bb) Neither the Company nor any of the Guarantors is and, as
of the Closing Date after giving effect to the issuance and sale of the
Securities and the application of the net proceeds therefrom as described in the
Offering Memorandum, will be, an "INVESTMENT COMPANY" as defined in the
Investment Company Act of 1940, as amended, and the rules and regulations of the
Commission thereunder (collectively, the "INVESTMENT COMPANY ACT").
(cc) The industry, statistical and market-related data
included in the Offering Memorandum are derived from sources that the Company
reasonably and in good faith believes to be accurate, reasonable and reliable,
and such data agrees with the sources from which they were derived.
(dd) Neither the Company nor any of the Guarantors has taken,
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 any security of the Company or any
Guarantor in connection with this transaction.
(ee) Assuming the accuracy of the representations and
warranties of the Initial Purchasers contained in Section 6 and their compliance
with the agreements set forth therein, it is not necessary, in connection with
the issuance and sale of the Securities to the Initial Purchasers and the offer,
resale and delivery of the Securities by the Initial Purchasers in the manner
contemplated by this Agreement, the Indenture, the Registration Rights Agreement
and the Offering Memorandum, to register the Securities under the Securities Act
or to qualify the Indenture under the Trust Indenture Act.
(ff) No securities of the same class (within the meaning of
Rule 144A(d)(3) under the Securities Act) as the Securities are listed on any
national securities exchange registered under Section 6 of the Securities
Exchange Act of 1934, as amended, and the rules and
10
regulations of the Commission thereunder (collectively, the "EXCHANGE ACT") or
quoted on an automated inter-dealer quotation system.
(gg) None of the Company or any of its Affiliates (as defined
in Rule 501(b) of Regulation D, an "AFFILIATE"), has, directly or through an
agent, engaged in any form of general solicitation or general advertising in
connection with the offering of the Securities (as those terms are used in
Regulation D) under the Securities Act or in any manner involving a public
offering within the meaning of Section 4(2) of the Securities Act; and the
Company has not entered and will not enter into any contractual arrangement with
respect to the distribution of the Securities, except for this Agreement and the
Registration Rights Agreement.
(hh) None of the Company or any of its Affiliates has,
directly or through any agent, sold, offered for sale, solicited offers to buy
or otherwise negotiated in respect of, any "security" (as defined in the
Securities Act) which is or will be integrated with the sale of the Securities
in a manner that would require the registration under the Securities Act of the
Securities.
(ii) None of the Company, its Affiliates nor any person acting
on its or their behalf (other than the Initial Purchasers in connection with
this Agreement) has engaged or will engage in any directed selling efforts (as
that term is defined in Regulation S) with respect to the Securities and each of
the Company and its Affiliates and any person acting on its or their behalf
(other than the Initial Purchasers in connection with this Agreement) has
complied and will comply with the offering restrictions requirement of
Regulation S.
SECTION 2. Purchase, Sale and Delivery of Securities. (a) 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 to each Initial
Purchaser, and each Initial Purchaser agrees, severally and not jointly, to
purchase from the Company, at a purchase price of 97.25% of the principal amount
thereof (the "PURCHASE PRICE") of the Securities set forth opposite that Initial
Purchaser's name in Schedule 1 hereto.
Delivery of and payment for the Securities shall be made at
the offices of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇
▇▇▇▇, at 10:00 A.M., New York City time, on February 11, 2003, or such other
date or place as shall be determined by agreement of the Initial Purchasers and
the Company (such date and time of delivery and payment for the Securities being
referred to herein as the "CLOSING DATE"). Delivery of the Securities by the
Company shall be made to the Initial Purchasers against payment of the purchase
price by the Initial Purchasers; and payment for the Securities by the Initial
Purchasers shall be made against delivery to the Initial Purchasers of the
Securities as set forth below and effected by wire transfer of immediately
available funds.
(b) The Company will deliver against payment of the purchase
price the Securities initially sold to (a) qualified institutional buyers
("QIBS"), as defined in Rule 144A under the Securities Act ("RULE 144A"), and
(b) to persons other than U.S. persons as defined in Regulation S in the form of
one or more permanent global certificates (the "GLOBAL SECURITIES"), registered
in the name of Cede & Co., as nominee for The Depository Trust Company ("DTC").
Beneficial interests in the Securities initially sold to QIBs will be shown on,
and transfers thereof
11
will be effected only through, records maintained in book-entry form by DTC and
its participants. The Global Securities will be made available, at the request
of any Initial Purchaser, for checking at least 24 hours prior to 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
obligations of each Initial Purchaser hereunder.
SECTION 3. Further Agreements of the Company and the Guarantors. The
Company and each of the Guarantors agree:
(a) To prepare the Offering Memorandum in a form approved by
▇▇▇▇▇▇ Brothers Inc.
(b) To advise the Initial Purchasers promptly of any proposal
to amend or supplement the Offering Memorandum and not to effect any such
amendment or supplement without the consent of the Initial Purchasers. If, at
any time prior to completion of the resale of the Securities by the Initial
Purchasers, any event shall occur or condition exist as a result of which it is
necessary to amend or supplement the Offering Memorandum in order that the
Offering Memorandum will not include an untrue statement of a material fact or
omit to state a material fact necessary in order to make the statements therein,
in the light of the circumstances existing at the time it is delivered to a
purchaser, not misleading, to promptly notify the Initial Purchasers and
prepare, subject to the first sentence of this Section 3(b), such amendment or
supplement as may be necessary to correct such untrue statement or omission.
(c) To furnish promptly to the Initial Purchasers and to
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, counsel to the Initial Purchasers, copies of the
Preliminary Offering Memorandum and the Offering Memorandum (and all amendments
and supplements thereto), as soon as available and in such quantities as the
Initial Purchasers reasonably request for internal use and for distribution to
prospective purchasers; and to furnish to the Initial Purchasers on the date
hereof one copy of the Offering Memorandum signed by duly authorized officers of
the Company, one of which will include the independent auditors' reports therein
manually signed by such independent auditors. The Company will pay the expenses
of printing and distributing to the Initial Purchasers all such documents.
(d) For a period of two years following the Closing Date, to
furnish to the Initial Purchasers, to the extent such information is not freely
available on the Internet, copies of all materials furnished by the Company to
its security holders.
(e) Promptly from time to time to take such action as ▇▇▇▇▇▇
Brothers Inc. may reasonably request to qualify the Securities for the
non-public offering and sale under the securities laws of such jurisdictions as
▇▇▇▇▇▇ Brothers Inc. may request and to comply with such laws so as to permit
the continuance of sales and dealings therein in such jurisdictions for as long
as may be necessary to complete the distribution of the Securities; provided
that in connection therewith the Company shall not be required to qualify as a
foreign corporation, file a general consent to service of process in any
jurisdiction, subject itself to taxation in respect of
12
doing business in any jurisdiction in which it is otherwise not subject or
register the Securities for public trading other than pursuant to the
Registration Rights Agreement.
(f) For a period of 180 days from the date hereof, not to,
directly or indirectly, announce an offering of, or file a registration
statement with, the Commission relating to any debt securities issued or
guaranteed by the Company or any of the Guarantors (other than the offering and
the Exchange Offer contemplated by this Agreement), or offer for sale, sell,
pledge or otherwise dispose of (or enter into any transaction or device which is
designed to, or could be expected to, result in the disposition or purchase by
any person at any time in the future of) any debt securities issued or
guaranteed by the Company or any of the Guarantors (other than the Securities
and the Exchange Securities), or substantially similar securities or sell or
grant options, warrants or rights with respect to any debt securities issued or
guaranteed by the Company or any of the Guarantors, in each case without the
prior written consent of ▇▇▇▇▇▇ Brothers Inc.
(g) To use its best efforts to assist the Initial Purchasers
in arranging to cause the Securities to be accepted to trade in the PORTAL
market ("PORTAL") of the National Association of Securities Dealers, Inc.
("NASD").
(h) To apply the proceeds from the sale of the Securities as
set forth under "Use of Proceeds" in the Offering Memorandum.
(i) Not to take, directly or indirectly, any action which is
designed to stabilize or manipulate, or which constitutes or which might
reasonably be expected to cause or result in stabilization or manipulation of,
the price of any security of the Company or any of the Guarantors in connection
with the offering of the Securities.
(j) To use its best efforts to cause the Securities to be
accepted for clearance and settlement through the facilities of DTC.
(k) To execute and deliver the Indenture in form and substance
reasonably satisfactory to ▇▇▇▇▇▇ Brothers Inc. and the Registration Rights
Agreement.
(l) For so long as any of the Securities are "restricted
securities" within the meaning of Rule 144(a)(3) under the Securities Act, to
provide to any holder of the Securities or to any prospective purchaser of the
Securities designated by any holder, upon request of such holder or prospective
purchaser, information required to be provided by Rule 144A(d)(4) of the
Securities Act if, at the time of such request, the Company is not subject to
the reporting requirements under Section 13 or 15(d) of the Exchange Act.
(m) To ensure that each of the Securities will bear, to the
extent applicable, the legend contained in the Offering Memorandum under the
caption "Notice to Investors" for the time period and upon the other terms
stated therein, except after the Securities are resold pursuant to a
registration statement effective under the Securities Act.
(n) Except following the effectiveness of the Exchange Offer
Registration Statement or the Shelf Registration Statement, as the case may be,
not to, and will cause its Affiliates not to, solicit any offer to buy or offer
to sell the Securities by means of any form of
13
general solicitation or general advertising (as those terms are used in
Regulation D under the Securities Act) or in any manner involving a public
offering within the meaning of Section 4(2) of the Securities Act.
(o) Not to, and will cause its Affiliates 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) in a transaction that could be
integrated with the sale of the Securities in a manner that would require the
registration of the Securities under the Securities Act.
(p) None of the Company, the Affiliates of the Company nor any
person acting on its or their behalf (other than the Initial Purchasers in
connection with this Agreement) will engage in any directed selling efforts (as
that term is defined in Regulation S) with respect to the Securities, and each
of the Company, the Affiliates of the Company and each person acting on its or
their behalf (other than the Initial Purchasers in connection with this
Agreement) will comply with the offering restrictions of Regulation S.
SECTION 4. Expenses. The Company and each of the Guarantors agree to
pay: (a) the costs and expenses incident to the authorization, issuance, sale
and delivery of the Securities and any stamp, duty, transfer or similar taxes
payable in that connection; (b) the costs incident to the preparation, printing
and distribution of the Preliminary Offering Memorandum, the Offering Memorandum
and any amendment or supplement to the Offering Memorandum, all as provided in
this Agreement; (c) the costs of producing and distributing the Transaction
Documents; (d) all expenses and fees in connection with the application for
inclusion of the Securities in the PORTAL market; (e) the reasonable fees and
expenses of qualifying the Securities under the securities laws of the several
jurisdictions as provided in Section 3(e) and of preparing, printing and
distributing a Blue Sky Memorandum (including related fees and expenses of
counsel to the Initial Purchasers for preparation of a Blue Sky Memorandum) and
the fees and expenses relating to any NASD filings; (f) the costs and expenses
of the Company relating to investor presentations on any "ROAD SHOW" undertaken
in connection with the marketing of the offering of the Securities, including,
without limitation, expenses associated with the production of road show slides
and graphics, fees and expenses of any consultants engaged in connection with
the road show presentations with the prior approval of the Company, travel and
lodging expenses of the representatives and officers of the Company and any such
consultants; (g) all fees and expenses incurred in connection with any rating of
the Securities; (h) the fees and expenses (including fees and disbursements of
counsel, if applicable) of Company, Deloitte & Touche LLP, the Trustee and the
costs and charges of any registrar, transfer agent or paying agent under the
Indenture; and (h) all other costs and expenses incident to the performance of
the obligations of the Company under this Agreement; provided that, except as
provided in this Section 4 and in Section 10, the Initial Purchasers shall pay
their own costs and expenses, including the costs and expenses of their counsel.
SECTION 5. Conditions of Initial Purchasers' Obligations. The
respective obligations of the Initial Purchasers hereunder are subject to the
accuracy, when made and on the Closing Date, of the representations and
warranties of the Company and each of the Guarantors contained herein, to the
performance by the Company and each of the Guarantors of their respective
obligations hereunder, and to each of the following additional terms and
conditions:
14
(a) No Initial Purchaser shall have discovered and disclosed
to the Company prior to or on the Closing Date that the Offering Memorandum or
any amendment or supplement thereto, in the opinion of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ &
▇▇▇▇▇▇▇▇, counsel to the Initial Purchasers, contains an untrue statement of a
fact which is material or omits to state any fact which is material and
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading.
(b) All corporate proceedings and other legal matters incident
to the authorization, form and validity of the Offering Memorandum, the
Transaction Documents, the Securities, and all other legal matters relating to
this Agreement, the issuance and sale of the Securities and the other
transactions contemplated hereby shall be reasonably satisfactory in all
material respects to counsel for the Initial Purchasers.
(c) Akin, Gump, Strauss, ▇▇▇▇▇ & ▇▇▇▇, L.L.P. shall have
furnished to the Initial Purchasers their written opinion, as counsel to the
Company, addressed to the Initial Purchasers and dated the Closing Date, in form
and substance reasonably satisfactory to the Initial Purchasers, to the effect
that:
(i) The Company is duly incorporated and validly
existing as a corporation in good standing under the laws of
the State of Texas. Each Guarantor is validly existing as a
corporation or other business organization, as applicable, in
good standing under the laws of the jurisdiction of its
organization. Each of the Company and each of the Guarantors
is duly qualified and in good standing as a foreign
corporation or other business organization, as applicable, in
each jurisdiction listed on a schedule attached to the
opinion. Each of the Company and each of the Guarantors has
all corporate, limited partnership or limited liability
company power, as appropriate, necessary to own or hold its
properties and conduct the businesses in which it is engaged,
in each case as described in the Offering Memorandum.
(ii) Each of the Company and each of the Guarantors
has all necessary corporate, limited partnership or limited
liability company power, as appropriate, and authority to
execute and deliver each of the Transaction Documents to which
it is a party, to perform its obligations hereunder and
thereunder, to issue, sell and deliver the Securities to the
Initial Purchasers and to engage in the Exchange Offer and to
issue and deliver the Exchange Securities.
(iii) This Agreement has been duly authorized,
executed and delivered by the Company and each of the
Guarantors.
(iv) The Indenture (including, with respect to the
Guarantors, the Guarantees included therein) has been duly
authorized, executed and delivered by the Company and each of
the Guarantors and, assuming due authorization, execution and
delivery thereof by the Trustee, constitutes a valid and
binding agreement of the Company and each of the Guarantors
enforceable against the Company and each of the Guarantors in
accordance with its terms under the laws of the State of New
York.
15
(v) The Securities have been duly authorized by the
Company, and when executed, issued, authenticated and
delivered in accordance with the Indenture and payment
therefor has been made by the Initial Purchasers in accordance
with this Agreement, the Securities 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 under the laws of the State of New York.
(vi) The Registration Rights Agreement has been duly
authorized, executed and delivered by the Company and each of
the Guarantors and, assuming due authorization, execution and
delivery thereof by the Initial Purchasers, constitutes a
valid and binding agreement of the Company and each of the
Guarantors enforceable against the Company and each of the
Guarantors in accordance with its terms under the laws of the
State of New York.
(vii) If and when the Exchange Securities are
executed, issued, authenticated and delivered in accordance
with the terms of the Exchange Offer, the Registration Rights
Agreement and the Indenture, the Exchange Securities will be
the valid and binding obligations of the Company, enforceable
against the Company in accordance with their terms under the
laws of the State of New York.
(viii) The execution and delivery and performance of
this Agreement and the other Transaction Documents by the
Company and each of the Guarantors, the issuance of the
Securities and the Exchange Securities, the compliance by the
Company and each of the Guarantors with all the provisions
hereof and thereof and the consummation of the transactions
contemplated hereby and thereby by the Company and each of the
Guarantors will not, (A) result in a breach of any of the
terms or provisions of, or constitute a default under, any
agreement listed in Schedule 3 hereto, or (B) result in a
violation of the articles of incorporation or bylaws of the
Company or any of the Guarantors' charter documents, or (C)
result in a violation of any Included Law (as defined below)
or, to such counsel's knowledge, any judgment, decree or order
listed on a schedule attached to the opinion of any court or
any public, governmental or regulatory agency or body having
jurisdiction over the Company or any of the Subsidiaries or
any of their respective properties or assets, except in the
case of clause (C) above for such violations which would not
reasonably be expected, individually or in the aggregate, to
have a Material Adverse Effect. The opinion in clause (A)
above shall be after giving effect to the Offering, and such
counsel expresses no opinion in clause (A) above with respect
to breaches or violations of or defaults under any covenant,
restriction or provision with respect to financial ratios or
tests, or any aspect of the financial condition or results of
operations of any party.
(ix) No consent, approval, authorization, order,
registration or filing of or with any court or governmental
agency or body is required under any Included Law for the
execution, delivery and performance of this Agreement or any
of the other Transaction Documents by the Company or any of
the Guarantors or the consummation of the transactions
contemplated hereby and thereby, except for
16
(A) with respect to the transaction contemplated by the
Registration Rights Agreement as may be required under the
Securities Act and the qualification of the Indenture under
the Trust Indenture Act, (B) such as may be required under any
foreign securities laws or state securities or Blue Sky laws
in connection with the purchase and distribution of the
Securities by the Initial Purchasers, as to which such counsel
expresses no opinion, and (C) such as have been made or
obtained.
(x) No registration of the Securities and the
Guarantees under the Securities Act, and no qualification of
the Indenture under the Trust Indenture Act, is required in
connection with the offer, sale and delivery of the Securities
in the manner contemplated by the Offering Memorandum, this
Agreement and the Indenture.
(xi) The statements in the Offering Memorandum under
the captions "Description of Notes," "Description of Certain
Debt Instruments--Senior Subordinated Indentures" and
"Description of Certain Debt Instruments--Existing Credit
Facility" insofar as they purport to constitute summaries of
the terms of contracts and other documents, fairly present, in
all material respects, the information purported to be
included therein.
(xii) The statements in the Offering Memorandum under
the caption "Important Federal Income Tax Considerations"
insofar as such statements describe federal or state statutes,
rules and regulations, fairly present, in all material
respects, the information purported to be included therein.
(xiii) Except as described in the Offering
Memorandum, to such counsel's knowledge, none of the
agreements listed on a schedule attached to the opinion grants
any person the right to require the Company 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 to include such securities in
any securities being registered pursuant to any registration
statement filed by the Company under the Securities Act.
(xiv) The Company is not an "investment company" as
defined in the Investment Company Act.
In rendering such opinion, such counsel may state that their
opinion is limited to matters governed by the Federal laws of the United States
of America, the laws of the State of New York, the laws of the State of and
Texas and the General Corporation Law of the State of Delaware (the "INCLUDED
LAWS"). Such counsel may make such assumptions, qualification, exceptions and
limitations as are standard in such opinions or otherwise reasonably acceptable
to counsel for the Initial Purchasers, including the exception that
enforceability of the Transaction Documents may be limited by (i) applicable
bankruptcy, insolvency, fraudulent transfer and conveyance, reorganization,
moratorium and similar laws affecting creditors' rights and remedies generally
including court decisions interpreting such laws; (ii) general principles of
equity, including, without limitation, concepts of good faith and fair dealing
(regardless of whether
17
enforcement is sought in a proceeding at law or in equity); (iii) the power of
the courts to award damages in lieu of equitable remedies; and (iv) securities
laws and public policy underlying such laws with respect to rights to
indemnification and contribution. Such opinion shall also be to the effect that
(x) such counsel has acted as counsel to the Company in connection with the
preparation of the Offering Memorandum, (y) based on the foregoing, no
information has come to the attention of such counsel that causes them to
believe that the Offering Memorandum (except for the financial statements and
financial schedules and related notes and other financial and statistical data
included therein, as to which such counsel need express no belief), as of its
date or as of the Closing Date, contained any 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 circumstance under which they were made, not
misleading, and (z) to such counsel's knowledge, there is no litigation or
governmental or other action, suit, proceeding or investigation before any court
or before or by any public, regulatory or governmental agency or body pending or
threatened or contemplated against, or involving the properties or business of,
the Company or any of its subsidiaries, which is of a character that would be
required to be disclosed in a prospectus included in a registration statement on
Form S-1 which has not been disclosed in the Offering Memorandum. The foregoing
opinion and statement may be qualified by a statement to the effect that such
counsel does not assume any responsibility for the accuracy, completeness or
fairness of the statements contained in the Offering Memorandum (other than as
set forth above).
(d) ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ shall have furnished to the Initial
Purchasers his written opinion, as General Counsel to the Company, addressed to
the Initial Purchasers and dated the Closing Date, in form and substance
reasonably satisfactory to the Initial Purchasers, to the effect that:
(i) The Company and each of its subsidiaries have
been duly organized and are validly existing as corporations
or other business organizations, as applicable, in good
standing under the laws of their respective jurisdictions of
incorporation or organization, as applicable, are duly
qualified to do business and are in good standing as foreign
corporations or other business organizations, as applicable,
in each jurisdiction in which their respective ownership or
lease of property or the conduct of their respective
businesses requires such qualification, except where failure
to be so qualified would not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect,
and have all power and authority necessary to own or hold
their respective properties and conduct the businesses in
which they are engaged, except where such would not reasonably
be expected to have a Material Adverse Effect.
(ii) To the best of such counsel's knowledge and
other than as set forth in the Offering Memorandum, there are
no legal or governmental proceedings (whether domestic or
foreign) pending to which the Company or any of its
subsidiaries is a party or of which any property or assets of
the Company or any of its subsidiaries is the subject which,
if determined adversely to the Company or any of its
subsidiaries, would not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect;
and, to the best of such counsel's knowledge, no such
proceedings are threatened or contemplated by governmental
authorities or threatened by others.
18
(iii) To the best of such counsel's knowledge, there
are no contracts or other documents which would be required to
be described in the Offering Memorandum if the Offering
Memorandum were a prospectus included in a registration
statement on Form S-1 that has not been so described therein.
(iv) The issue and sale of the Securities being
delivered on the Closing Date by the Company pursuant to this
Agreement, and the execution, delivery and compliance by the
Company and each of the Guarantors with all of the provisions
of this Agreement and the other Transaction Documents and the
consummation of the transactions contemplated hereby and
thereby will not (i) conflict with or result in a breach or
violation of any of the terms or provisions of, or constitute
a default under, any indenture, mortgage, deed of trust, loan
agreement, lease, pledge or other agreement or instrument
known to such counsel 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 property or
assets of the Company or any of its subsidiaries is subject,
(ii) result in any violation of the provisions of the charter
or bylaws of the Company or the charter or bylaws or any joint
venture, partnership, limited liability company, shareholders'
or other agreement or organizational document any of the
Company's subsidiaries, or (iii) result in any violation of
any statute or any order, rule or regulation known to such
counsel of any court or governmental agency or body (whether
domestic or foreign) having jurisdiction over the Company or
any of its subsidiaries or any of their properties or assets
except in the case of clauses (i) and (iii), such conflicts,
breaches or violations that would not reasonably be expected
to have, individually or in the aggregate, a Material Adverse
Effect; and no consent, approval, authorization or order of,
or filing or registration with, any such court or governmental
agency or body (whether domestic or foreign) is required for
the execution, delivery and performance of this Agreement or
any of the other Transaction Documents by the Company or any
of the Guarantors or the consummation of the transactions
contemplated hereby and thereby, except for (A) with respect
to the transaction contemplated by the Registration Rights
Agreement as may be required under the Securities Act and the
qualification of the Indenture under the Trust Indenture Act,
(B) such as may be required under any foreign securities laws
or state securities or Blue Sky laws in connection with the
purchase and distribution of the Securities by the Initial
Purchasers, as to which such counsel expresses no opinion, and
(C) such as have been made or obtained.
(v) Except as described in the Offering Memorandum,
to the best of such counsel's knowledge, there are no
contracts, agreements or understandings between the Company
and any person granting such person the right to require the
Company or any of the Guarantors to file a registration
statement under the Securities Act with respect to any
securities of the Company or any Guarantor owned or to be
owned by such person or to require the Company or any
Guarantor to include such securities in any securities being
registered pursuant to any registration statement filed by the
Company or any Guarantor under the Securities Act.
19
Such opinion shall also be to the effect that (x) such counsel
has acted as counsel to the Company in connection with the preparation of the
Offering Memorandum and (y) based on the foregoing, no facts have come to the
attention of such counsel which leads him to believe that the Offering
Memorandum (except for the financial statements and financial schedules and
other financial and statistical data included therein, as to which such counsel
need express no belief), as of its date or as of the Closing Date, contained any
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 circumstance
under which they were made, not misleading, and such counsel may make such
assumptions, qualification, exceptions and limitations as are standard in such
opinions or otherwise reasonably acceptable to counsel for the Initial
Purchasers.
(e) The Initial Purchasers shall have received from ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, counsel for the Initial Purchasers, such opinion or
opinions, dated the Closing Date, with respect to the issuance and sale of the
Securities, the Offering Memorandum and other related matters as the Initial
Purchasers may reasonably require, and the Company shall have furnished to such
counsel such documents and information as they may reasonably request to enable
them to pass upon such matters.
(f) At the time of execution of this Agreement, the Initial
Purchasers shall have received from Deloitte & Touche LLP a letter, in form and
substance satisfactory to the Initial Purchasers, addressed to the Initial
Purchasers and dated the date hereof (i) confirming that they are independent
public accountants within the meaning of the Securities Act and are in
compliance with the applicable requirements relating to the qualification of
accountants under Rule 2-01 of Regulation S-X of the Commission and (ii)
stating, as of the date hereof (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 five
days prior to the date hereof), the conclusions and findings of such firm with
respect to the financial information and other matters ordinarily covered by
accountants' "COMFORT LETTERS" to underwriters in connection with registered
public offerings.
(g) With respect to the letter of Deloitte & Touche LLP
referred to in the preceding paragraph and delivered to the Initial Purchasers
concurrently with the execution of this Agreement (the "INITIAL LETTERS"), the
Company shall have furnished to the Initial Purchasers a letter (the "BRING-DOWN
LETTER") of such accountants, addressed to the Initial Purchasers and dated the
Closing Date (i) confirming that they are independent public accountants within
the meaning of the Securities Act and are in compliance with the applicable
requirements relating to the qualification of accountants under Rule 2-01 of
Regulation S-X of the Commission, (ii) stating, as of the date of the 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 five days prior to the date of
the bring-down letter), the conclusions and findings of such firm with respect
to the financial information and other matters covered by the initial letters
and (iii) confirming in all material respects the conclusions and findings set
forth in the initial letter.
(h) The Company and each of the Guarantors shall have
furnished to the Initial Purchasers a certificate, dated such Closing Date, of
its Chairman of the Board, President or Chief Financial Officer stating that:
20
(i) The representations, warranties and agreements of
the Company or the particular Guarantor, as applicable, in
Section 1 are true and correct as of the Closing Date; the
Company or the particular Guarantor, as applicable, has
complied with all its agreements contained herein; and the
conditions set forth in Sections 5(a), 5(k) and 5(l) have been
fulfilled; and
(ii) They have carefully examined the Offering
Memorandum and, in their opinion (A) as of the Closing Date,
the Offering Memorandum did not include any untrue statement
of a material fact and did not omit to state a material fact
necessary to make the statements, in light of the
circumstances in which they were made, not misleading, and (B)
since the Closing Date no event has occurred which should have
been set forth in a supplement or amendment to the Offering
Memorandum.
(i) The Indenture (in form and substance reasonably
satisfactory to the Initial Purchasers) shall have been duly executed and
delivered by the Company, each of the Guarantors and the Trustee, and the
Securities shall have been duly executed and delivered by the Company and duly
authenticated by the Trustee.
(j) The Company, each of the Guarantors and the Initial
Purchasers shall have executed and delivered the Registration Rights Agreement,
and the Registration Rights Agreement shall be in full force and effect.
(k) 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 (A) 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 (B)
since such date there shall not have been any change in the capital stock or
long-term debt of the Company or any of its subsidiaries or any change, or any
development involving a prospective change, in or affecting the consolidated
financial position, stockholders' equity, results of operations, business or
prospects of the Company and its subsidiaries taken as a whole, otherwise than
as set forth or contemplated in the Offering Memorandum, the effect of which, in
any such case described in clause (A) or (B), is, in the judgment of the Initial
Purchasers, so material and adverse as to make it impracticable or inadvisable
to proceed with the offering or the delivery of the Securities being delivered
on the Closing Date on the terms and in the manner contemplated in the Offering
Memorandum.
(l) 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) of the
Rules and Regulations 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.
(m) 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
21
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 the settlement of such
trading generally shall have been materially disrupted 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, including
without limitation as a result of terrorist activities after the date hereof,
(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 ▇▇▇▇▇▇ Brothers
Inc., impracticable or inadvisable to proceed with the offering or delivery of
the Securities being delivered on the Closing Date on the terms and in the
manner contemplated in the Offering Memorandum.
(n) The NASD shall have accepted the Securities for trading on
PORTAL; provided that the failure of the Securities to be so listed shall not be
due to any action taken or failure to act by the Initial Purchasers.
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 Purchasers. ▇▇▇▇▇▇ Brothers Inc. may in
their sole discretion waive on behalf of the Initial Purchasers compliance with
any conditions to the obligations of the Initial Purchasers hereunder.
SECTION 6. Representation, Warranties and Agreements of Initial
Purchasers.
(a) Each Initial Purchaser represents and warrants to,
severally and not jointly, and agrees with the Company and each of the
Guarantors that it (i) is a QIB, (ii) is purchasing the Securities pursuant to a
private sale exempt from registration under the Securities Act without the
intent to distribute the Securities in violation of the Securities Act, (iii)
will not solicit offers for, or offer or 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 Securities Act and
(iv) 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
whom it reasonably believe to be QIBs, or, if any such person is buying for one
or more institutional accounts for which such person is acting as fiduciary or
agent, only when such person has represented to it that each such account is a
QIB, to whom notice has been given that such sale or delivery is being made in
reliance on Rule 144A in transactions under Rule 144A , and (B) in the case of
offers outside the United States, to persons other than U.S. persons (as defined
in Regulation S) in accordance with Rule 903 of Regulation S.
(b) Each Initial Purchaser agrees that in connection with the
transactions described in subsection 6(a)(iii)(B) it has offered and sold the
Securities, and will offer and sell the Securities, (i) as part of its
distribution at any time and (ii) otherwise until one year after the later of
the commencement of the offering and the Closing Date (the "RESTRICTED PERIOD"),
only
22
in accordance with Rule 903 of Regulation S. Accordingly, each Initial Purchaser
represents and agrees that, severally and not jointly, with respect to the
transactions described in subsection 6(a)(iii)(B), neither it, nor any of its
Affiliates, nor any person acting on their behalf has engaged or will engage in
any directed selling efforts with respect to the Securities, and that it has
complied and will comply with the offering restrictions of Regulation S. It
agrees that, at or prior to the confirmation of sale of the Securities pursuant
to subsection 6(a)(iii)(B), it shall have sent to each distributor, dealer or
person receiving a selling concession, fee or other remuneration that purchases
Securities from the Initial Purchasers during the Restricted Period, a
confirmation or notice to substantially the following effect:
"The Securities covered hereby have not been registered under
the Securities Act and may not be offered or sold within the
United States or to, or for the account or benefit of U.S.
Persons (i) as part of their distribution at any time or (ii)
otherwise until one year after the later of the commencement
of the offering and the time of delivery of the Securities,
except in either case in accordance with Regulation S or Rule
144A under the Securities Act. The terms used above have the
meaning given to them by Regulation S."
(c) Each of the initial purchasers represents and agrees that:
(1) other than in connection with the offering of the Securities, it
has not offered or sold and, during the period ending six months after Closing
Date, it will not offer or sell any Securities to persons in the United Kingdom
except to persons whose ordinary activities involve them in acquiring, holding,
managing or disposing of investments (as principal or agent) for the purposes of
their business, or otherwise, in circumstances which have not resulted in 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 (as amended):
(2) it has complied and will comply with all applicable provisions of
the Financial Services Act of 1986 (the "ACT") (and, after they come into force,
all applicable provisions of the Financial Services and Markets ▇▇▇ ▇▇▇▇, the
"FSMA") with respect to anything done by it in relation to the Securities in,
from and otherwise involving the United Kingdom; and
(3) it has only issued or passed on and will only issue or pass on in
the United Kingdom before the repeal of Section 57 of the Act, any document
received by it in connection with the issue, offer, and sale of the Securities
to a person who is of a kind described in Article 11(3) of the Act (Investment
Advertisements) (Exemption) Order of 1996 (as amended) or is a person to whom
such document may otherwise lawfully be issued or passed on. After the repeal of
Section 57 of the Act it will only communicate or cause to be communicated an
invitation or inducement to engage in investment activity (within the meaning of
Section 21 of the FSMA) in connection with the issue or sale of such Securities
in circumstances in which Section 21(1) of the FSMA does not apply to the
Company.
23
(d) Each Initial Purchaser, severally and not jointly,
represents, warrants and agrees with respect to offers and sales of Securities
outside the United States that it understands that no action has been or will be
taken in any jurisdiction by the Company that would permit a public offering of
the Securities, or possession or distribution of either the Preliminary Offering
Memorandum or the Offering Memorandum or any other offering or publicity
material relating to the Securities, in any country or jurisdiction where action
for that purpose is required; and such Initial Purchaser will comply with all
applicable laws and regulations in each jurisdiction in which it acquires,
offers, sells or delivers Securities or has in its possession or distributes
either the Preliminary Offering Memorandum or the Offering Memorandum or any
such other material, in all cases at its own expense.
SECTION 7. Indemnification and Contribution.
(a) The Company and each of the Guarantors shall jointly and
severally indemnify and hold harmless each Initial Purchaser, its officers and
employees and each person, if any, who controls any 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 that Initial Purchaser, officer,
employee or controlling person may become subject 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 (A)
Preliminary Offering Memorandum, or the Offering Memorandum or in any amendment
or supplement thereto, or (B) in any materials or information provided to
investors by, or with the approval of, the Company in connection with the
marketing of the offering of the Securities ("MARKETING MATERIALS"), including
any road show or investor presentations made to investors by the Company
(whether in person or electronically), (ii) the omission or alleged omission to
state in any Preliminary Offering Memorandum or the Offering Memorandum, or in
any amendment or supplement thereto, or in any Marketing Materials, any material
fact 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 any Initial Purchaser
in connection with, or relating in any manner to, the Securities or the offering
contemplated hereby, and that 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 clause (i) or (ii) above (provided that neither the Company nor any 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 failures to
act undertaken or omitted to be taken by such Initial Purchaser through its
gross negligence or willful misconduct), and shall reimburse each Initial
Purchaser and each such officer, employee or controlling person promptly upon
demand for any legal or other expenses reasonably incurred by that 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 neither the Company nor any Guarantor shall be liable in any such case to
the extent that any such loss, claim, damage, liability or action (i) 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, or in any such amendment or supplement, in reliance upon
and in conformity with written information concerning such Initial Purchaser
furnished to the Company through ▇▇▇▇▇▇ Brothers Inc. by or on behalf of any
Initial Purchaser
24
specifically for inclusion therein which information consists solely of the
information specified in Section 7(e) or (ii) results solely from an untrue
statement of material fact contained in, or the omission of a material fact
from, such Preliminary Offering Memorandum, which untrue statement or omission
was completely corrected in the Offering Memorandum (as then amended or
supplemented); provided further, however, that the Company and the Guarantors
shall sustain the burden of proving that the Initial Purchasers sold the
Securities to the person alleging such loss, claim, damage, liability or action
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) if the
Company had previously furnished sufficient quantities of copies thereof to the
Initial Purchasers within a reasonable amount of time prior to such sale or such
confirmation, and the Initial Purchasers failed to deliver the corrected
Offering Memorandum, if required by law to have so delivered it and if delivered
would have cured the defect giving rise to such loss, claim, damage, liability
or action. The foregoing indemnity agreement is in addition to any liability
that the Company or any of the Guarantors may otherwise have to any Initial
Purchaser or to any officer, employee or controlling person of that Initial
Purchaser.
(b) Each Initial Purchaser, severally and not jointly, shall
indemnify and hold harmless the Company and each of the Guarantors, their
respective officers and employees, each of their respective directors, and each
person, if any, who controls the Company or any 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, the
Guarantors 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 in any
Preliminary Offering Memorandum or the Offering Memorandum or in any amendment
or supplement thereto, or (ii) the omission or alleged omission to state in any
Preliminary Offering Memorandum or the Offering Memorandum, or in any amendment
or supplement thereto, any material fact 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 such
Initial Purchaser furnished to the Company through ▇▇▇▇▇▇ Brothers Inc. by or on
behalf of that Initial Purchaser specifically for inclusion therein, and shall
reimburse the Company, the Guarantors and any such director, officer or
controlling person for any legal or other expenses reasonably incurred by the
Company, the Guarantors 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 any Initial
Purchaser may otherwise have to the Company, any Guarantor or any such director,
officer, employee or controlling person.
(c) Promptly after receipt by an indemnified party under this
Section 7 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 7, 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 7 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
25
Section 7. 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 7 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 Purchasers shall have the right to employ counsel to
represent jointly the Initial Purchasers 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 Initial Purchasers
against the Company or any of the Guarantors under this Section 7 if, in the
reasonable judgment of such Initial Purchaser and their counsel, it is advisable
for such Initial Purchaser and such officers, employees and controlling persons
to be jointly represented by separate counsel, and in that event the fees and
expenses of not more than one separate firm (in addition to any local counsel)
shall be paid by the Company and the Guarantors. 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 non-appealable 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 7
shall for any reason be unavailable or insufficient to hold harmless an
indemnified party under Section 7(a) or 7(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 Guarantors on the one hand and the Initial
Purchasers on the other 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 Guarantors on the one hand and the Initial Purchasers 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
Guarantors on the one hand and the Initial Purchasers on the other with respect
to such offering shall be deemed to be in the same proportion as the total net
proceeds from the offering of the Securities purchased under this Agreement
(before deducting expenses) received by the Company and the Guarantors, on the
one hand, and the total discounts and commissions received by the Initial
Purchasers with respect to
26
the Securities purchased under this Agreement, on the other hand, bear to the
total gross proceeds from the offering of the Securities under this Agreement.
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
Guarantors or the Initial Purchasers, 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 each of the Guarantors agrees with
the Initial Purchasers that it would not be just and equitable if contributions
pursuant to this Section 7 were to be determined by pro rata allocation (even if
the Initial Purchasers 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 shall be deemed to include, for
purposes of this Section 7(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 7(d), no Initial
Purchaser shall be required to contribute any amount in excess of the amount by
which the total price at which the Securities resold by it in the initial
placement of such Securities were offered to investors exceeds the amount of any
damages which such 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. The Initial
Purchasers' obligations to contribute as provided in this Section 7(d) are
several in proportion to their respective obligations and not joint.
(e) The Initial Purchasers severally confirm and the Company
and the Guarantors acknowledge that the statements in paragraphs numbers five
and six on the cover page of the Offering Memorandum and paragraphs numbers
seven, eight and ten under the "Plan of Distribution" in the Offering Memorandum
are correct and constitute the only information concerning such Initial
Purchasers furnished in writing to the Company by or on behalf of the Initial
Purchasers specifically for inclusion in the Offering Memorandum.
SECTION 8. Defaulting Initial Purchasers. If, on the Closing Date, any
Initial Purchaser defaults in the performance of its obligations under this
Agreement, the remaining non-defaulting Initial Purchasers shall be obligated to
purchase the Securities which the defaulting Initial Purchaser agreed but failed
to purchase on the Closing Date in the respective proportions which the
principal amount of Securities set opposite the name of each remaining
non-defaulting Initial Purchaser in Schedule 1 hereto bears to the aggregate
principal amount of the Securities set opposite the names of all the remaining
non-defaulting Initial Purchasers in Schedule 1 hereto; provided, however, that
the remaining non-defaulting Initial Purchasers shall not be obligated to
purchase any of the Securities on the Closing Date if the aggregate principal
amount of the Securities which the defaulting Initial Purchaser or Initial
Purchasers agreed but failed to purchase on such date exceeds 9.09% of the
aggregate principal amount of the Securities to be purchased on the Closing
Date, and any remaining non-defaulting Initial Purchaser shall not be obligated
to purchase more than 110% of the aggregate principal amount of the Securities
which it agreed to purchase on the Closing Date pursuant to the terms of Section
2. If the foregoing maximums are exceeded, the remaining non-defaulting Initial
Purchasers, or those other purchasers satisfactory to the Initial Purchasers who
so agree, shall have the right, but
27
shall not be obligated, to purchase, in such proportion as may be agreed upon
among them, the aggregate principal amount of Securities to be purchased on the
Closing Date. If the remaining Initial Purchasers or other purchasers
satisfactory to the Initial Purchasers do not elect to purchase the shares which
the defaulting Initial Purchaser or Initial Purchasers agreed but failed to
purchase on the Closing Date, this Agreement shall terminate without liability
on the part of any non-defaulting Initial Purchaser or the Company and the
Guarantors, except that the Company and each of the Guarantors will continue to
be liable for the payment of expenses to the extent set forth in Sections 4 and
10. As used in this Agreement, the term "INITIAL PURCHASER" includes, for all
purposes of this Agreement unless the context requires otherwise, any party not
listed in Schedule 1 hereto who, pursuant to this Section 8, purchases
Securities which a defaulting Initial Purchaser agreed but failed to purchase.
Nothing contained herein shall relieve a defaulting Initial
Purchaser of any liability it may have to the Company and the Guarantors for
damages caused by its default. If other purchasers are obligated or agree to
purchase the Securities of a defaulting or withdrawing Initial Purchaser, either
▇▇▇▇▇▇ Brothers Inc. or the Company may postpone the Closing Date for up to
seven full business days in order to effect any changes that in the opinion of
counsel for the Company or counsel for the Initial Purchasers may be necessary
in the Offering Memorandum or in any other document or arrangement.
SECTION 9. Termination. The obligations of the Initial Purchasers
hereunder may be terminated by the Initial Purchasers by notice given to and
received by the Company prior to delivery of and payment for the Securities if,
prior to that time, any of the events described in Sections 5(k), 5(l) or 5(m),
shall have occurred or if the Initial Purchasers shall decline to purchase the
Securities for any reason permitted under this Agreement.
SECTION 10. Reimbursement of Initial Purchasers' Expense. If (a) the
Company shall fail to tender the Securities for delivery to the Initial
Purchasers by reason of any failure, refusal or inability on the part of the
Company or any of the Guarantors to perform any agreement on its part to be
performed, or because any other condition of the Initial Purchasers' obligations
hereunder required to be fulfilled by the Company or any of the Guarantors
(including, without limitation, with respect to the transactions) is not
fulfilled or (b) the Initial Purchasers decline to purchase the Securities for
any reason permitted under this Agreement (including the termination of this
Agreement pursuant to Section 9), the Company and each of the Guarantors jointly
and severally agree to reimburse the Initial Purchasers for all reasonable
out-of-pocket expenses (including fees and disbursements of counsel) incurred by
the Initial Purchasers in connection with this Agreement and the proposed
purchase of the Securities, and upon demand the Company and the Guarantors
jointly and severally agree to pay the full amount thereof to the Initial
Purchasers. If this Agreement is terminated pursuant to Section 9 by reason of
the default of one or more Initial Purchasers, neither the Company nor any of
the Guarantors shall be obligated to reimburse any defaulting Initial Purchaser
on account of any expenses.
SECTION 11. Notices, Etc. All statements, requests, notices and
agreements hereunder shall be in writing, and:
(a) if to the Initial Purchasers, shall be delivered or sent
by mail, telex or facsimile transmission to ▇▇▇▇▇▇ Brothers Inc., 1285 Avenue of
the ▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇
▇▇
▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: Syndicate Registration Department (Fax:
▇▇▇-▇▇▇-▇▇▇▇), with a copy, in the case of any notice pursuant to Section 9(c),
to the Director of Litigation, Office of the General Counsel, ▇▇▇▇▇▇ Brothers
Inc., ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇ and with a copy to ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention:
D. ▇▇▇▇▇ ▇▇▇▇▇▇▇, Esq. (Fax: ▇▇▇-▇▇▇-▇▇▇▇; Telephone: (▇▇▇) ▇▇▇-▇▇▇▇);
(b) if to the Company or any of the Guarantors, shall be
delivered or sent by mail, telex or facsimile transmission to the address of the
Company set forth in the Offering Memorandum, Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ (Fax:
▇▇▇-▇▇▇-▇▇▇▇), with a copy to Akin, Gump, Strauss, ▇▇▇▇▇ & ▇▇▇▇, L.L.P.,
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, P.C., ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇
▇▇▇▇▇;
provided, however, that any notice to an Initial Purchaser pursuant to Section
7(c) shall be delivered or sent by mail, telex or facsimile transmission to each
Initial Purchaser, which address will be supplied to any other party hereto by
▇▇▇▇▇▇ Brothers Inc. upon request. Any such statements, requests, notices or
agreements shall take effect at the time of receipt thereof. The Company and the
Guarantors shall be entitled to act and rely upon any request, consent, notice
or agreement given or made on behalf of the Initial Purchasers by ▇▇▇▇▇▇
Brothers Inc.
SECTION 12. Persons Entitled to Benefit of Agreement. This Agreement
shall inure to the benefit of and be binding upon the Initial Purchasers, the
Company, each of the Guarantors and their respective successors. This Agreement
and the terms and provisions hereof are for the sole benefit of only those
persons, except that (A) the representations, warranties, indemnities and
agreements of the Company and each of the Guarantors contained in this Agreement
shall also be deemed to be for the benefit of the officers and employees of the
Initial Purchasers and the person or persons, if any, who control any Initial
Purchaser within the meaning of Section 15 of the Securities Act and (B) the
indemnity agreement of the Initial Purchasers contained in Section 7(b) of this
Agreement shall be deemed to be for the benefit of directors of the Company,
directors of any Guarantor, officers of the Company, officers of any Guarantor
and any person controlling the Company and the Guarantors within the meaning of
Section 15 of the Securities Act. Nothing in this Agreement is intended or shall
be construed to give any person, other than the persons referred to in this
Section 12, any legal or equitable right, remedy or claim under or in respect of
this Agreement or any provision contained herein.
SECTION 13. Survival. The respective indemnities, representations,
warranties and agreements of the Company and each of the Guarantors and the
Initial Purchasers 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 termination or cancellation of this Agreement or any investigation made
by or on behalf of any of them or any person controlling any of them.
SECTION 14. Definition of the Terms "BUSINESS DAY" and "SUBSIDIARY".
For purposes of this Agreement, (a) "BUSINESS DAY" means each Monday, Tuesday,
Wednesday, Thursday or Friday which is not a day on which banking institutions
in New York are generally authorized or obligated by law or executive order to
close and (b) "SUBSIDIARY" has the meaning set forth in
29
Rule 405 of the Rules and Regulations, but in any event includes, without
limitation, each of the Guarantors.
SECTION 15. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of New York.
SECTION 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.
SECTION 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.
If the foregoing correctly sets forth the agreement among the
Company and the Initial Purchasers, please indicate your acceptance in the space
provided for that purpose below.
Very truly yours,
CINEMARK USA, INC.
SUNNYMEAD CINEMA CORP.
CINEMARK MEXICO (USA), INC
CINEMARK INVESTMENTS CORPORATION
CINEMARK LEASING COMPANY
CINEMARK PARADISO, INC.
CINEMARK PARTNERS I, INC.
CINEMARK PROPERTIES, INC.
MISSOURI CITY CENTRAL 6, INC.
MULTIPLEX SERVICES, INC.
TRANS TEXAS CINEMA, INC.
CINEMARK, L.L.C.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
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Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Vice President-General Counsel
CNMK INVESTMENTS, INC.
MULTIPLEX PROPERTIES, INC.
CNMK DELAWARE INVESTMENTS I, L.L.C.
CNMK DELAWARE INVESTMENTS II, L.L.C.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
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Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
Title: Secretary
CNMK DELAWARE INVESTMENT PROPERTIES, LTD.,
by CNMK Delaware Investments I, L.L.C., its
general partner
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
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Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
Title: Secretary
LAREDO THEATRE, LTD.,
by CNMK TEXAS PROPERTIES, LTD., its general
partner,
by Sunnymead Cinema Corp., the general
partner of CNMK Texas Properties, Ltd.,
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
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Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Vice President-General Counsel
CNMK TEXAS PROPERTIES, LTD.
by Sunnymead Cinema Corp., its general
partner,
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
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Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Vice President-General Counsel
Accepted:
▇▇▇▇▇▇ BROTHERS INC.
BANC OF AMERICA SECURITIES LLC
BNY CAPITAL MARKETS, INC.
FLEET SECURITIES, INC.
BY ▇▇▇▇▇▇ BROTHERS INC.
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
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Authorized Representative
SCHEDULE 1
Aggregate Principal Amount of
Initial Purchasers Securities to be Purchased
▇▇▇▇▇▇ Brothers Inc. .................................... 90,000,000
Banc of America Securities LLC .......................... 40,000,000
Fleet Securities, Inc. .................................. 13,000,000
BNY Capital Markets, Inc. ............................... 7,000,000
Total ................................................... $150,000,000