Exhibit 4.2
Globe Holdings, Inc.
49,086 Units Consisting of
$49,086,000
14% Senior Discount Notes due 2009
and Warrants to Purchase Shares
of Common Stock
PURCHASE AGREEMENT
July 31, ▇▇▇▇
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Ladies and Gentlemen:
Globe Holdings, Inc., a Massachusetts corporation (the "Company"),
hereby confirms its agreement with you (the "Initial Purchaser"), as set forth
below.
1. The Units. Subject to the terms and conditions herein contained,
the Company proposes to issue and sell to the Initial Purchaser 49,086 Units
(the "Units") consisting of an aggregate of $49,086,000 principal amount at
maturity of its 14% Senior Discount Notes due 2009 (the "Notes") and Common
Stock Purchase Warrants (the "Warrants") initially entitling the holders thereof
to purchase an aggregate of 69,481 shares of the Company's Class A Common Stock
$.01 par value per share (the "Common Stock"). The Units are to be issued under
a Unit Agreement (the "Unit Agreement") to be dated as of August 6, 1998 between
the Company and Norwest Bank Minnesota, National Association, as unit agent (in
such capacity, the "Unit Agent"), as trustee under the Indenture (as defined
below) and as warrant agent under the Warrant Agreement (as defined below).
The Notes are to be issued under an indenture (the "Indenture") to be dated as
of August 6, 1998, by and between the Company and Norwest Bank Minnesota,
National Association, as trustee (in such capacity, the "Trustee"). The
Warrants are to be governed by a Warrant Agreement (the "Warrant Agreement") to
be dated as of August 6, 1998 between the Company and Norwest Bank Minnesota,
National Association, as warrant agent (in such capacity, the "Warrant Agent").
Shares of Common Stock issuable upon exercise of the Warrants are collectively
referred to herein as the "Warrant Shares." The Units, the Notes, the Warrants
and the Warrant Shares are sometimes
collectively referred to herein as the "Securities."
The Units will be offered and sold to the Initial Purchaser without
being registered under the Securities Act of 1933, as amended (the "Securities
Act"), in reliance on exemptions therefrom.
In connection with the sale of the Units, the Company will prepare a
final offering memorandum dated July 30, 1998 (the "Final Memorandum"), setting
forth or including a description of the terms of the Units, the terms of the
offering of the Units, a description of the Company and the Company's
subsidiaries listed in Schedule 1 attached hereto (the "Subsidiaries") and any
material developments relating to the Company and the Subsidiaries occurring
after the date of the most recent historical financial statements included
therein. Capitalized terms used herein and not otherwise defined shall have the
meanings given to such terms in the Final Memorandum.
The Initial Purchaser and its direct and indirect transferees of the
Units and the Notes will be entitled to the benefits of the Registration Rights
Agreement, substantially in the form attached hereto as Exhibit A (the
"Registration Rights Agreement"), pursuant to which the Company has agreed,
among other things, to file a registration statement (the "Registration
Statement") with the Securities and Exchange Commission (the "Commission") in
order to register the Notes or the Exchange Notes (as defined in the
Registration Rights Agreement) under the Securities Act.
Holders of the Warrants will have the registration rights set forth in
the Warrant Agreement. The Warrants issued to the Initial Purchasers as part of
the Units will, when executed and exercised in accordance with the terms
thereof, entitle the holders thereof to purchase 3% of the Company's outstanding
Common Stock on a fully-diluted basis as of the Closing Date (as defined in
Section 3 below).
2. Representations and Warranties. The Company represents and
warrants to, and agrees with, the Initial Purchaser on the date hereof that:
(a) Neither the Final Memorandum nor any amendment or supplement
thereto as of the date thereof and at all times subsequent thereto up to the
Closing Date contained or contains any untrue statement of a material fact or
omitted or omits to state a material fact necessary to make the statements
therein, in the light of the circumstances under which they were made, not
misleading, except that the representations and warranties set forth in this
Section 2(a) do not apply to statements or omissions made in reliance upon and
in conformity with information relating to the Initial Purchaser furnished to
the Company in writing by or on behalf of the Initial Purchaser expressly for
use in the Final Memorandum or any amendment or supplement thereto.
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(b) The Company has the authorized capitalization set forth in the
Final Memorandum. The Subsidiaries are the only subsidiaries of the Company (as
the term "subsidiary" is defined in the Final Memorandum); all of the
outstanding Equity Interests (as defined below) of the Company and the
Subsidiaries have been, and as of the Closing Date will be, duly authorized and
validly issued, are fully paid and non-assessable and were not issued in
violation of any preemptive or similar rights; as of the Closing Date, the
Company will own of record all of the outstanding Equity Interests of Globe
Manufacturing; as of the Closing Date, all of the outstanding Equity Interests
of each of the Company and the Subsidiaries will be free and clear of all liens,
encumbrances, equities and claims or restrictions on voting or transferability
(other than those imposed by the Senior Credit Facility (as defined in the Final
Memorandum) or by the Securities Act and the securities or "Blue Sky" laws of
certain jurisdictions and other than those permitted under the Indenture);
except as set forth in the Final Memorandum, there are no (i) options, warrants
or other rights to purchase from the Company or the Subsidiaries, (ii)
agreements or other obligations of the Company or the Subsidiaries to issue or
(iii) other rights to convert any obligation into, or exchange any securities
for, Equity Interests in the Company or the Subsidiaries outstanding. As used
herein "Equity Interest" of any person means any and all shares, interests,
rights to purchase, warrants, options, participations or other equivalents of or
interests in (however designated) corporate stock or other equity
participations, including partnership interests, whether general or limited, of
such person.
(c) Each of the Company and the Subsidiaries has been duly organized,
is validly existing and is in good standing under the laws of the jurisdiction
of its organization, with all requisite power and authority to own its
properties and conduct its business as now conducted, and as described in the
Final Memorandum; each of the Company and the Subsidiaries is duly qualified to
do business as a foreign corporation and is in good standing in all other
jurisdictions where the ownership or leasing of its properties or the conduct of
its business requires such qualification, except where the failure to be so
qualified, individually or in the aggregate, would not (i) have a material
adverse effect on the general affairs, management, business, condition
(financial or otherwise), prospects or results of operations of the Company and
the Subsidiaries, taken as a whole, or (ii) materially impair the ability of the
Company or the Subsidiaries to perform their respective obligations contemplated
by the Transaction Documents (as defined below) to which they are a party and
the transactions contemplated to be performed by them described in the Final
Memorandum (any such event, a "Material Adverse Effect"). This Agreement, the
Unit Agreement, the Indenture, the Notes, the Exchange Notes (as defined in the
Registration Rights Agreement), the Private Exchange Notes (as defined in the
Registration Rights Agreement), the Warrant Agreement and the Warrants are
referred to herein collectively as the "Transaction Documents."
(d) The Company has all requisite power and authority to execute,
deliver and perform each of its obligations under the Transaction Documents. The
Notes, the Exchange Notes and the Private Exchange Notes have each been duly and
validly authorized by the Company and, when executed by the Company and
authenticated by the Trustee in accordance with the provisions
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of the Indenture and, in the case of the Notes, when delivered to and paid for
by the Initial Purchaser in accordance with the terms of this Agreement, will
have been duly executed, issued and delivered and will constitute valid and
legally binding obligations of the Company, entitled to the benefits of the
Indenture and enforceable against the Company in accordance with their terms,
except that the enforcement thereof may be subject to (i) bankruptcy,
insolvency, reorganization, fraudulent conveyance, moratorium or other similar
laws now or hereafter in effect relating to creditors' rights generally, and
(ii) general principles of equity and the discretion of the court before which
any proceeding with respect thereto may be brought.
(e) The Company has all requisite power and authority to execute,
deliver and perform its obligations under the Indenture. The Indenture meets
the requirements for qualification under the Trust Indenture Act of 1939, as
amended (the "TIA"). The Indenture has been duly and validly authorized by the
Company and, when executed and delivered by the Company (assuming the due
authorization, execution and delivery by the Trustee), will constitute a valid
and legally binding agreement of the Company, enforceable against the Company in
accordance with its terms, except that the enforcement thereof may be subject to
(i) bankruptcy, insolvency, reorganization, fraudulent conveyance, moratorium or
other similar laws now or hereafter in effect relating to creditors' rights
generally and (ii) general principles of equity and the discretion of the court
before which any proceeding with respect thereto may be brought.
(f) The Company has all requisite power and authority to execute,
deliver and perform its obligations under this Agreement and the Registration
Rights Agreement. When executed and delivered by the Company (assuming the due
authorization, execution and delivery by each other party thereto) each of this
Agreement and the Registration Rights Agreement will constitute the valid and
legally binding agreement of the Company, enforceable against the Company in
accordance with its terms, except that (A) the enforcement thereof may be
subject to (i) bankruptcy, insolvency, reorganization, fraudulent conveyance,
moratorium or other similar laws now or hereafter in effect relating to
creditors' rights generally and (ii) general principles of equity and the
discretion of the court before which any proceeding relating thereto may be
brought and (B) any rights to indemnity or contribution thereunder may be
limited by federal or state securities laws or public policy considerations.
(g) The Company has all requisite power and authority to perform its
obligations under the Unit Agreement. The Unit Agreement has been duly and
validly authorized by the Company and, when executed and delivered by the
Company (assuming the due authorization, execution and delivery by the Unit
Agent), will constitute a valid and legally binding agreement of the Company,
enforceable against the Company in accordance with its terms, except that the
enforcement thereof may be subject to (i) bankruptcy, insolvency,
reorganization, fraudulent conveyance, moratorium or other similar laws now or
hereafter in effect relating to creditors' rights generally and (ii) general
principles of equity and the discretion of the court before which any proceeding
with respect thereto may be brought.
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(h) The Company has all requisite power and authority to execute,
deliver and perform its obligations under the Warrant Agreement. The Warrant
Agreement has been duly and validly authorized by the Company and, when executed
and delivered by the Company (assuming the due authorization, execution and
delivery by the Warrant Agent), will constitute a valid and legally binding
agreement of the Company, enforceable against the Company in accordance with its
terms, except that the enforcement thereof may be subject to (i) bankruptcy,
insolvency, reorganization, fraudulent conveyance, moratorium or other similar
laws now or hereafter in effect relating to creditors' rights generally and (ii)
general principles of equity and the discretion of the court before which any
proceeding with respect thereto may be brought.
(i) The Warrants have been duly and validly authorized for issuance
and sale pursuant to this Agreement and the issuance of the Warrants will not
trigger any pre-emptive, anti-dilution or similar rights. The Warrants are
exercisable into Warrant Shares in accordance with the terms of the Warrant
Agreement. The Warrant Shares have been duly and validly authorized by the
Company and reserved for issuance upon exercise of the Warrants and, when issued
upon exercise of the Warrants in accordance with the terms thereof, will be
validly issued, fully paid and non-assessable. The issuance of the Warrant
Shares will not trigger any anti-dilution, pre-emptive or similar rights. The
Warrants and the Warrant Shares when issued and delivered, will conform in all
material respects to the description thereof in the Final Memorandum.
(j) No consent, approval, authorization or order of any court or
governmental agency or body, or third party is required for the performance by
the Company of its obligations under the Transaction Documents or the
consummation by the Company of the transactions contemplated thereby or hereby,
except such as shall have been made or obtained prior to the Closing Date, such
as may be required in connection with the registration of the Notes, Exchange
Notes or the Warrant Shares under the Securities Act in accordance with the
Registration Rights Agreement or the Warrant Agreement, such as may be required
under state securities or "Blue Sky" laws, such as may be required for
qualification of the Indenture under the TIA and such that the failure to obtain
would not, singularly or in the aggregate, reasonably be expected to have a
Material Adverse Effect. None of the Company or the Subsidiaries is (i) in
violation of its certificate of incorporation or bylaws (or similar
organizational documents), (ii) (assuming compliance with all applicable state
securities or "Blue Sky" laws and assuming the accuracy of the representations
and warranties of the Initial Purchaser in Section 8 hereof) in breach or
violation of any statute, judgment, decree, order, rule or regulation applicable
to any of them or any of their respective properties or assets, except for any
such breach or violation which, individually or in the aggregate, would not
reasonably be expected to have a Material Adverse Effect, or (iii) in breach of
or default under (nor has any event occurred which, with notice or passage of
time or both, would constitute a default under) or in violation of any of the
terms or provisions of any indenture, mortgage, deed of trust, loan agreement,
note, lease, license, franchise agreement, distributor agreement, permit,
certificate, contract or other agreement or instrument to which any of them is a
party or to which any of them or their respective properties or assets is
subject (collectively, "Contracts"), except for any
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such breach, default, violation or event which, individually or in the
aggregate, would not reasonably be expected to have a Material Adverse Effect.
(k) The issuance, sale and delivery of the Units and the execution,
delivery and performance by the Company of each of the Transaction Documents,
and the consummation by the Company of the transactions contemplated thereby and
hereby, and the fulfillment of the terms thereof or hereof, will not conflict
with or constitute or result in a breach of or a default under or an event which
with notice or passage of time or both would constitute a default under or
violation of or cause an acceleration of any material obligation under, or
result in the imposition or creation of (or the obligation to create or impose)
a lien on any property or assets of the Company with respect to (i) any of the
terms or provisions of any Contract, except for any such conflict, breach,
violation, default or event which, individually or in the aggregate, would not
reasonably be expected to have a Material Adverse Effect, (ii) the certificate
of incorporation or bylaws (or similar organizational documents) of any of the
Company or the Subsidiaries or (iii) (assuming compliance with all applicable
state securities or "Blue Sky" laws and assuming the accuracy of the
representations and warranties of the Initial Purchaser in Section 8 hereof) any
statute, judgment, decree, order, rule or regulation applicable to any of the
Company or the Subsidiaries or any of their respective properties or assets,
except for any such conflict, breach or violation which, individually or in the
aggregate, would not reasonably be expected to have a Material Adverse Effect.
(l) The historical consolidated financial statements (including the
related notes thereto) of the Company included in the Final Memorandum present
fairly in all material respects the financial position, results of operations
and cash flows of the Company and the Subsidiaries at the dates and for the
periods to which they relate and have been prepared in accordance with generally
accepted accounting principles applied on a consistent basis except as otherwise
stated therein. The financial data in the Final Memorandum under the headings
"Offering Memorandum Summary - Summary Consolidated Financial Data" and
"Selected Consolidated Financial Data" present fairly in all material respects
the information purported to be shown therein and have been prepared and
compiled on a basis consistent with the financial statements included therein,
except as otherwise stated therein. Ernst & Young LLP (the "Independent
Accountants") is an independent public accounting firm with respect to the
Company within the meaning of Rule 101 of the Code of Professional Conduct of
the American Institute of Certified Public Accountants ("AICPA") and its
interpretations and rulings thereunder, as of the dates of above-referenced
financial statements.
(m) The pro forma financial information included in the Final
Memorandum (i) has been properly computed on the bases described therein and the
assumptions used in the preparation of the pro forma financial data and other
pro forma financial information included in the Final Memorandum are reasonable,
and the adjustments used therein are appropriate to give effect to the
transactions or circumstances referred to therein; and (ii) presents fairly, in
all material respects, the information purported to be shown therein.
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(n) Except as described in the Final Memorandum, there is not pending
or, to the knowledge of the Company or any Subsidiary, threatened any action,
suit or proceeding to which the Company, any Subsidiary or any of their
respective affiliates is a party, or to which the property or assets of the
Company, any Subsidiary or their respective affiliates are subject, before or
brought by any court, arbitrator or governmental agency or body which, if
determined adversely to the Company or any Subsidiary, individually or in the
aggregate, would reasonably be expected to have a Material Adverse Effect or
which seeks to restrain, enjoin, prevent the consummation of or otherwise
challenge the issuance or sale of the Units to be sold hereunder or the
consummation of the other transactions on the Closing Date contemplated by the
Transaction Documents or otherwise described in the Final Memorandum. Neither
the Company nor any Subsidiary has received any notice or claim of any default
(or event, condition or omission which with notice or lapse of time or both
would result in a default) under any of their respective Contracts, including
those referred to in the Final Memorandum, or any other Transaction Document to
which it is a party or has knowledge of any breach of any of such Contracts by
the other party or parties thereto, except such defaults or breaches as would
not reasonably be expected to result in a Material Adverse Effect.
(o) Each of the Company and the Subsidiaries owns or possesses
adequate licenses or other rights to use all patents, trademarks, service marks,
trade names, copyrights and know-how necessary to conduct the businesses now or
proposed to be operated by it as described in the Final Memorandum except where
the failure to possess or make the same would not reasonably be expected to have
a Material Adverse Effect, and none of the Company or the Subsidiaries has
received any notice of infringement of or conflict with (or knows of any such
infringement of or conflict with) asserted rights of others with respect to any
patents, trademarks, service marks, trade names, copyrights or know-how which,
if such assertion of infringement or conflict were sustained, individually or in
the aggregate, would have a Material Adverse Effect.
(p) Since the date of the most recent financial statements appearing
in the Final Memorandum, except as described therein or as contemplated by the
Transaction Documents or the Merger Agreement, (i) neither the Company nor any
Subsidiary has incurred any liabilities or obligations, direct or contingent, or
entered into or agreed to enter into any transactions or contracts (written or
oral) not in the ordinary course of business which liabilities, obligations,
transactions or contracts, individually or in the aggregate, would reasonably be
expected to have a Material Adverse Effect, (ii) neither the Company nor any
Subsidiary has purchased any of its outstanding Equity Interests, or declared,
paid or otherwise made any dividend or distribution of any kind on its Equity
Interests and (iii) there has not been any change in the long term indebtedness
of the Company or any Subsidiary that, individually or in the aggregate, would
have a Material Adverse Effect. Since the respective dates as of which
information is given in the Final Memorandum, except as described therein, there
has been no occurrence or any fact or event known to the Company which has had,
or would reasonably be expected to have, a Material Adverse Effect.
(q) Each of the Company and the Subsidiaries has filed all necessary
federal, state
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and foreign income and franchise tax returns required to be filed through the
date hereof except where the failure to so file such returns, individually or in
the aggregate, would not reasonably be expected to have a Material Adverse
Effect, and has paid all taxes shown as due thereon prior to the date upon which
penalties attach thereto, except for taxes which the Company or any Subsidiary
is contesting in good faith for which adequate reserves have been established;
and other than tax deficiencies which the Company or any Subsidiary is
contesting in good faith and for which the Company or such Subsidiary has
provided adequate reserves, there is no tax deficiency that has been asserted
against the Company or any of the Subsidiaries that, individually or in the
aggregate, would reasonably be expected to have a Material Adverse Effect.
(r) The statements set forth under the heading "Description of
Capital Stock" in the Final Memorandum, insofar as such statements purport to
summarize certain provisions of the articles of incorporation of the Company
provide a fair summary of such provisions and information with respect thereto;
the statements set forth under the heading "Description of the Warrants" in the
Final Memorandum, insofar as such statements purport to summarize certain
provisions of the Warrant Agreement, the Warrant Registration Rights Agreement
and the Warrants provide a fair summary of such provisions and information with
respect thereto; the statements set forth under the heading "Description of the
Notes" in the Final Memorandum, insofar as such statements purport to summarize
certain provisions of the Notes and the Indenture, provide a fair summary of
such provisions and information with respect thereto; the statements set forth
under the heading "Description of Senior Credit Facility" in the Final
Memorandum, insofar as such statements purport to summarize certain provisions
of the Senior Credit Facility provide a fair summary of such provisions and
information with respect thereto; the statements set forth under the heading
"Certain Relationships and Related Transactions" in the Final Memorandum,
insofar as such statements purport to summarize certain provisions of the
Recapitalization, the Merger Agreement, the Management Agreement, the
Stockholders Agreement, the Registration Agreement and the Tax Sharing Agreement
(each as defined in the Final Memorandum), provide a fair summary of such
provisions and information with respect thereto; the statements set forth under
the subheading "Recapitalization" under the heading "Certain Relationships and
Related Transactions" in the Final Memorandum, insofar as such statements
purport to summarize certain provisions of the Recapitalization (as defined in
the Final Memorandum), provide a fair summary of such provisions and information
with respect thereto.
(s) The statistical and market-related data included in the Final
Memorandum are based on or derived from sources which the Company believes to be
reliable and accurate.
(t) No part of the proceeds of the sale of the Notes will be used,
directly or indirectly, for any purpose that violates any provision of
Regulation T, U or X of the Board of Governors of the Federal Reserve System, in
each case as in effect, or as the same may hereafter be in effect, on the
Closing Date.
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(u) Each of the Company and the Subsidiaries has good and marketable
title in fee simple to all real property and owns all personal property
described in the Final Memorandum as being owned by it and holds a leasehold
estate in the real and personal property described in the Final Memorandum as
being leased by it, in each case, free and clear of all liens, charges,
encumbrances or restrictions, except (i) liens, encumbrances and claims securing
the Senior Credit Facility or otherwise permitted under the Indenture, (ii) as
described in the Final Memorandum or (iii) to the extent the failure to have
such title or the existence of such liens, charges, encumbrances or
restrictions, individually or in the aggregate, would not reasonably be expected
to have a Material Adverse Effect. All leases, contracts and agreements to
which the Company or any of the Subsidiaries is a party or by which any of them
is bound are valid and enforceable against the Company or the Subsidiary, as the
case may be, and, to the Company's knowledge, are valid and enforceable against
the other party or parties thereto (in each case, subject to (i) bankruptcy,
insolvency, reorganization, fraudulent conveyance, moratorium or other similar
laws now or hereafter in effect relating to creditors' rights generally, and
(ii) general principles of equity and the discretion of the court before which
any proceeding with respect thereto may be brought) and are in full force and
effect with only such exceptions as, individually or in the aggregate, would not
reasonably be expected to have a Material Adverse Effect.
(v) Except as described in the Final Memorandum or as, individually
or in the aggregate, would not reasonably be expected to have a Material Adverse
Effect (A) each of the Company and the Subsidiaries is in compliance with and
not subject to liability under applicable Environmental Laws (as defined below),
(B) each of the Company and the Subsidiaries has made all filings and provided
all notices required under any applicable Environmental Law, and has and is in
compliance with all permits required under any applicable Environmental Laws and
each of them is in full force and effect, (C) there is no civil, criminal or
administrative action, suit, claim, hearing, notice of violation, investigation,
proceeding, written notice or demand letter or request for information pending
or, to the knowledge of the Company or any Subsidiary, threatened against the
Company or any Subsidiary under any Environmental Law, (D) no lien, encumbrance
or restriction has been recorded under any Environmental Law with respect to any
assets, facility or property owned, operated, leased or controlled by the
Company or any Subsidiary, (E) none of the Company or the Subsidiaries has
received notice that it has been identified as a potentially responsible party
under the Comprehensive Environmental Response, Compensation and Liability Act
of 1980, as amended ("CERCLA") or any comparable state law, (F) no property or
facility of the Company or any Subsidiary is (i) listed or proposed for listing
on the National Priorities List under CERCLA or is (ii) listed in the
Comprehensive Environmental Response, Compensation, Liability Information System
List promulgated pursuant to CERCLA, or on any comparable list maintained by any
state or local governmental authority.
For purposes of this Agreement, "Environmental Laws" means the common
law and all applicable federal, state and local laws or regulations, codes,
orders, decrees, judgments or injunctions issued, promulgated, approved or
entered thereunder, relating to pollution or protection
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of public or employee health and safety or the environment, including, without
limitation, laws relating to (i) emissions, discharges, releases or threatened
releases of hazardous substances as defined by CERCLA, including, without
limitation, petroleum, crude oil or any fraction thereof (collectively,
"Hazardous Materials"), into the environment (including, without limitation,
ambient air, surface water, ground water, land surface or subsurface strata) and
(ii) the manufacture, processing, distribution, use, generation, treatment,
storage, disposal, transport or handling of Hazardous Materials.
(w) There is no strike, labor dispute, slowdown or work stoppage with
the employees of any of the Company or the Subsidiaries which is pending or, to
the knowledge of the Company or any Subsidiary, threatened, which would
reasonably be expected to have a Material Adverse Effect. No employees of the
Company or any Subsidiary are covered by a collective bargaining agreement nor
is any union organizing effort or campaign pending or, to the knowledge of the
Company or any Subsidiary, threatened with respect to any such employees.
(x) Each of the Company and the Subsidiaries maintains insurance in
such amounts and covering such risks as are reasonable and customary given the
nature of their respective businesses and the value of their properties.
(y) None of the Company or the Subsidiaries has any liability for any
prohibited transaction or accumulated funding deficiency (as defined in Section
412 of the Code) or any complete or partial withdrawal liability with respect to
any pension, profit sharing or other plan which is subject to the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), to which the
Company or any Subsidiary makes or ever has made a contribution and in which any
employee of the Company or any Subsidiary is or has ever been a participant.
With respect to such plans, the Company and each Subsidiary is in compliance in
all material respects with all applicable provisions of ERISA.
(z) Each of the Company and the Subsidiaries (i) makes and keeps
reasonably accurate books and records and (ii) maintains internal accounting
controls which provide reasonable assurance that (A) transactions are executed
in accordance with management's general or specific authorizations, (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 general or specific
authorizations and (D) the reported accountability for its assets is compared
with existing assets at reasonable intervals and appropriate action has been
taken with respect to any differences.
(aa) None of the Company or any Subsidiary is or will be an
"investment company" or "promoter" or "principal underwriter" for an "investment
company," as such terms are defined in the Investment Company Act of 1940, as
amended, and the rules and regulations thereunder.
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(bb) None of the Company or any Subsidiary does business with the
government of Cuba or with any person or affiliate located in Cuba within the
meaning of Section 517.075, Florida Statutes 1985, as amended, and all
regulations promulgated thereunder.
(cc) No condition, omission, event or act has occurred with respect
to the Company or any Subsidiary which, had the Indenture already been executed
and delivered, would (or, with the giving of notice and/or the lapse of time
and/or the issuance of a certificate, could) constitute a Default (as defined in
the Indenture).
(dd) Other than holders of the Notes or the Exchange Notes pursuant
to the Registration Rights Agreement and holders of the Warrants pursuant to the
Warrant Agreement, no holder of securities of the Company or any Subsidiary will
be entitled to have such securities registered under the registration statements
required to be filed by the Company pursuant to the Registration Rights
Agreement or the Warrant Agreement other than as expressly permitted thereby.
(ee) Immediately after the consummation of the transactions
contemplated by this Agreement (including the Related Transactions (as defined
below)), the fair value and present fair saleable value of the assets of the
Company (on a consolidated and going concern basis) will exceed the sum of its
stated liabilities and identified contingent liabilities; the Company (on a
consolidated basis) is not, nor will the Company (on a consolidated basis) be,
after giving effect to the execution, delivery and performance of this Agreement
and the consummation of the transactions contemplated hereby (including the
Related Transactions (as defined below)), (a) left with unreasonably small
capital with which to carry on its business as it is proposed to be conducted,
or (b) unable to pay its debts (contingent or otherwise) as they mature.
(ff) Assuming the accuracy of the representations and warranties of
the Initial Purchaser contained in Section 8 hereof and their compliance with
the agreements set forth therein, none of the Company, any Subsidiary or any of
their respective Affiliates (as defined in Rule 501(b) of Regulation D under the
Securities Act) has directly, or through any authorized agent, (i) sold, offered
for sale, solicited offers to buy or otherwise negotiated in respect of, any
"security" (as defined in the Securities Act) which is or will be integrated
with the sale of the Units in a manner that would require the registration under
the Securities Act of the Units, the Notes or the Warrant Shares or (ii) engaged
in any form of general solicitation or general advertising (as those terms are
used in Rule 502(c) under the Securities Act) in connection with the offering of
the Units or in any manner involving a public offering within the meaning of
Section 4(2) of the Securities Act.
(gg) Assuming the accuracy of the representations and warranties of
the Initial Purchaser in Section 8 hereof and its compliance with the agreements
set forth therein, it is not necessary in connection with the offer, sale and
delivery of the Units to the Initial Purchaser in the manner contemplated by
this Agreement to register any of the Units, the Notes, the Warrants or the
11
Warrant Shares under the Securities Act or to qualify the Indenture under the
TIA.
(hh) No securities of the Company or any Subsidiary are of the same
class (within the meaning of Rule 144A under the Securities Act) as the Units,
the Notes, the Warrants or the Warrant Shares and listed on a national
securities exchange registered under Section 6 of the Exchange Act, or quoted in
a United States automated inter-dealer quotation system.
(ii) None of the Company or the Subsidiaries has taken, nor will any
of them take, directly or indirectly, any action designed to, or that might be
reasonably expected to, cause or result in stabilization or manipulation of the
price of the Units, the Notes or the Warrants in violation of Regulation M under
the Exchange Act.
3. Purchase, Sale and Delivery of the Units. On the basis of the
representations, warranties, agreements and covenants herein contained and
subject to the terms and conditions herein set forth, the Company agrees to
issue and sell to the Initial Purchaser, and the Initial Purchaser agrees to
purchase from the Company, 49,086 Units at a purchase price of $500.39705 per
Unit (the "Unit Purchase Price"), or an aggregate purchase price of $24,562,490
(the "Purchase Price"). The Company and the Initial Purchaser agree that, for
federal income tax purposes, (i) the Notes and the Warrants constitute
investment units and (ii) the aggregate issuance price of the Units is $509.31,
with the aggregate issue price of the Notes being $496.72 and the aggregate
issue price of the Warrants being $12.59. Neither the Company nor the Initial
Purchaser shall voluntarily take any action inconsistent with the agreement set
forth in the immediately preceding sentence, except that, with respect to clause
(ii) thereof, any such party may, after notice to the other party, compromise or
settle any audit or review of such treatment initiated by the Internal Revenue
Service.
One or more certificates in definitive form for the Units that the
Initial Purchaser has agreed to purchase hereunder, and in such denomination or
denominations and registered in such name or names as the Initial Purchaser
requests upon notice to the Company at least thirty-six (36) hours prior to the
Closing Date, shall be delivered by or on behalf of the Company to the Initial
Purchaser on the Closing Date, against payment by or on behalf of the Initial
Purchaser of the purchase price therefor by wire transfer (same day funds), to
such account or accounts as the Company shall specify prior to the Closing Date,
or by such means as the parties hereto shall agree prior to the Closing Date.
The Units will be represented by one or more definitive global securities in
book-entry form which will be deposited by or on behalf of the Company with The
Depository Trust Company or its designated custodian. For purposes of Rule
15c6-1 under the Exchange Act, the Closing Date shall be the date for payment of
funds and delivery of securities for all the Units sold pursuant to the offering
of the Units. Such delivery of and payment for the Units shall be made at the
offices of Winston & ▇▇▇▇▇▇, ▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, at 10:00
A.M., Chicago time, on August 5, 1998, or at such other place, time or date as
the Initial Purchaser and the Company may agree upon, such time and date of
delivery against payment being herein referred to as the "Closing Date." The
Company will make such certificate or certificates for the Units available
12
for checking and packaging by the Initial Purchaser at the offices of Winston &
▇▇▇▇▇▇ in Chicago, Illinois, or at such other place as the Initial Purchaser may
designate, at least twenty-four (24) hours prior to the Closing Date.
The Company hereby agrees to pay any transfer taxes payable in
connection with the initial delivery to the Initial Purchaser of the Notes.
4. Offering by the Initial Purchaser. The Initial Purchaser proposes
to make an offering of the Units at the price and upon the terms set forth in
the Final Memorandum, as soon as practicable after this Agreement is entered
into and as in the judgment of the Initial Purchaser is advisable.
5. Covenants of the Company. The Company covenants and agrees with
the Initial Purchaser that:
(a) The Company will not amend or supplement the Final Memorandum or
any amendment or supplement thereto of which the Initial Purchaser shall not
previously have been advised and furnished a copy for a reasonable period of
time prior to the proposed amendment or supplement and as to which the Initial
Purchaser shall have objected to by notice to the Company, unless the Company is
advised by counsel that such amendment or supplement is legally required. The
Company will promptly, upon the reasonable request of the Initial Purchaser or
counsel for the Initial Purchaser, make any amendments or supplements to the
Final Memorandum that may be necessary or advisable in connection with the
resale of the Notes by the Initial Purchaser.
(b) The Company will cooperate with the Initial Purchaser in
arranging for the qualification of the Units for offering and sale under the
securities or "Blue Sky" laws of such jurisdictions as the Initial Purchaser may
reasonably designate and will continue such qualifications in effect for as long
as may be necessary to complete the resale of the Units; provided, however, that
in connection herewith, the Company shall not be required to qualify as a
foreign entity or to execute a general consent to service of process in any
jurisdiction or subject itself to taxation in any such jurisdiction where it is
not then so subject or qualified.
(c) If, at any time prior to the completion of the resale by the
Initial Purchaser of the Units, any event occurs or information becomes known as
a result of which, in the reasonable opinion of counsel for the Company, the
Final Memorandum as then amended or supplemented would include any untrue
statement of a material fact, or omit to state a material fact necessary to make
the statements therein, in light of the circumstances under which they were made
and at the time made, not misleading, or if for any other reason it is
necessary, in the reasonable opinion of counsel for the Company, at any time to
amend or supplement the Final Memorandum to comply with applicable law, the
Company will promptly notify the Initial Purchaser thereof and will prepare,
13
at the expense of the Company, an amendment or supplement to the Final
Memorandum that corrects such statement or omission or effects such compliance.
(d) The Company will, without charge, provide to the Initial
Purchaser and to counsel for the Initial Purchaser as many copies of the Final
Memorandum or any amendment or supplement thereto as the Initial Purchaser may
reasonably request.
(e) For and during the period commencing on the date hereof and
ending on the date that no Units, Notes or Warrants are outstanding, the Company
will furnish to the Initial Purchaser copies of all reports and other
communications (financial or otherwise) furnished by the Company to the Unit
Agent, the Trustee, the Warrant Agent or the holders of the Units, the Notes,
the Exchange Notes or the Warrants and, as soon as available, copies of any
reports or financial statements furnished to or filed by the Company with the
Commission or any national securities exchange or governing body of any
automated quotation system on which any class of securities of the Company may
be listed.
(f) Prior to the Closing Date, the Company will furnish to the
Initial Purchaser, as soon as they are available to the Company, a copy of any
unaudited interim financial statements of the Company and the Subsidiaries, for
any period subsequent to the period covered by the most recent financial
statements appearing in the Final Memorandum.
(g) None of the Company, the Subsidiaries or any of their respective
affiliates will sell, offer for sale or solicit offers to buy or otherwise
negotiate in respect of any "security" (as defined in the Securities Act) which
could be integrated with the sale of the Units in a manner which would require
the registration under the Securities Act of any of the Securities.
(h) None of the Company or the Subsidiaries shall, for a period of
120 days following the date hereof, without the prior written consent of the
Initial Purchaser, offer, sell, contract to sell or otherwise dispose of,
directly or indirectly, any debt securities of the Company or the Subsidiaries,
other than the Notes, the Exchange Notes, the Private Exchange Notes, and debt
securities evidencing indebtedness under the Senior Credit Facility,
indebtedness otherwise permitted under the Senior Credit Facility, indebtedness
of Globe Manufacturing pursuant to the Senior Subordinated Note Offering (as
defined in the Final Memorandum) or indebtedness under a loan or similar
agreement entered into between the Company or Globe Manufacturing and banks or
banking or other financial institutions or otherwise relating to receivables or
inventory financings entered into by the Company or Globe Manufacturing.
(i) Prior to the effectiveness of the Exchange Registration Statement
(as defined in the Registration Rights Agreement) or the Shelf Registration
Statement (as defined in the Registration Rights Agreement), as the case may be,
and thereafter only to the extent contemplated by such registration statements,
none of the Company or its affiliates will engage in any form of
14
general solicitation or general advertising (as those terms are used in
Regulation D under the Securities Act) in connection with the offering of the
Units or in any manner involving a public offering within the meaning of Section
4(2) of the Securities Act.
(j) For so long as any of the Units, the Notes or the Warrants remain
outstanding and are "restricted securities" within the meaning of Rule 144(a)(3)
under the Securities Act, the Company will make available, upon request, to any
holder of such securities the information specified in Rule 144A(d)(4) under the
Securities Act, unless the Company is then subject to Section 13 or 15(d) of the
Exchange Act.
(k) The Company will use its reasonable best efforts to (i) permit
the Units, the Notes and the Warrants to be designated PORTAL securities in
accordance with the rules and regulations adopted by the National Association of
Securities Dealers (the "NASD") relating to trading in the Private Offerings,
Resales and Trading through Automated Linkages Market (the "Portal Market") and
(ii) permit such securities to be eligible for clearance and settlement through
The Depository Trust Company and its participants.
6. Expenses. The Company agrees to pay all costs and expenses
incident to the performance of its obligations under this Agreement, whether or
not the transactions contemplated herein are consummated or this Agreement is
terminated pursuant to Section 11 hereof, including all costs and expenses
incident to (i) the printing, word processing or other production of documents
with respect to the transactions contemplated hereby, including any costs of
printing the Final Memorandum and any amendment or supplement thereto, and any
"Blue Sky" memoranda, (ii) all arrangements relating to the delivery to the
Initial Purchaser of copies of the foregoing documents, (iii) the fees and
disbursements of the counsel, the accountants and any other experts or advisors
retained by the Company, (iv) preparation (including printing), issuance and
delivery to the Initial Purchaser of the Units, (v) the qualification of the
Securities under state securities and "Blue Sky" laws, including filing fees and
reasonable fees and expenses of counsel for the Initial Purchaser relating
thereto, (vi) reasonable fees and expenses of the Unit Agent, the Trustee and
the Warrant Agent including reasonable fees and expenses of counsel thereto,
(vii) all expenses and listing fees incurred in connection with the application
for quotation of the Units, the Notes and the Warrants on the PORTAL Market and
(viii) any fees charged by investment rating agencies for the rating of the
Notes; provided, however, that except as expressly provided in the last sentence
of this Section 6, the Initial Purchaser shall pay its own costs and expenses.
If the sale of the Units provided for herein is not consummated because any
condition to the obligations of the Initial Purchaser set forth in Section 7
hereof is not satisfied, because this Agreement is terminated pursuant to
Section 11 hereof or because of any failure, refusal or inability on the part of
the Company to perform all obligations and satisfy all conditions on its part to
be performed or satisfied hereunder (other than solely by reason of a default by
the Initial Purchaser of its obligations hereunder after all conditions
hereunder have been satisfied in accordance herewith), the Company agrees to
promptly reimburse the Initial Purchaser upon demand for all out-of-pocket
expenses (including reasonable fees and
15
expenses of Winston & ▇▇▇▇▇▇, counsel for the Initial Purchaser) that shall have
been incurred by the Initial Purchaser in connection with the proposed purchase
and sale of the Units.
7. Conditions of the Initial Purchaser's Obligations. The
obligation of the Initial Purchaser to purchase and pay for the Notes shall, in
its sole discretion, be subject to the satisfaction or waiver of the following
conditions on or prior to the Closing Date:
(a) On the Closing Date, the Initial Purchaser shall have received
(i) an opinion, dated as of the Closing Date and addressed to the Initial
Purchaser, of ▇▇▇▇ & ▇▇▇▇, special counsel for the Company, in form and
substance satisfactory to the Initial Purchaser, and (ii) an opinion, dated as
of the Closing Date and addressed to the Initial Purchaser, of ▇▇▇▇▇▇▇, ▇▇▇▇▇▇
and ▇▇▇▇ P.C., special counsel for Globe Manufacturing, in form and substance
satisfactory to the Initial Purchaser.
(b) On the Closing Date, the Initial Purchaser shall have received
the opinion, dated as of the Closing Date and addressed to the Initial
Purchaser, of ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇, counsel for the Company, in form and substance
satisfactory to the Initial Purchaser. In addition, the Initial Purchaser shall
have received a letter or letters permitting it to rely on any opinions rendered
by counsel to MergerCo, the Company and Globe Manufacturing in connection with
the Transactions.
(c) On the Closing Date, the Initial Purchaser shall have received
the opinion, in form and substance satisfactory to the Initial Purchaser, dated
as of the Closing Date and addressed to the Initial Purchaser, of Winston &
▇▇▇▇▇▇, counsel for the Initial Purchaser, with respect to certain legal matters
relating to this Agreement and such other related matters as the Initial
Purchaser may reasonably require. In rendering such opinion, Winston & ▇▇▇▇▇▇
shall have received and may rely upon such certificates and other documents and
information as it may reasonably request to pass upon such matters.
(d) The Initial Purchaser shall have received from the Independent
Accountants a comfort letter or letters dated the date hereof and the Closing
Date, in form and substance reasonably satisfactory to counsel for the Initial
Purchaser.
(e) The representations and warranties of the Company contained in
this Agreement shall be true and correct on and as of the date hereof and on and
as of the Closing Date as if made on and as of the Closing Date; the statements
of the Company's officers made pursuant to any certificate delivered in
accordance with the provisions hereof shall be true and correct and as of the
date made and on and as of the Closing Date; the Company shall have performed
all covenants and agreements and satisfied all conditions on its part to be
performed or satisfied hereunder at or prior the Closing Date; and, except as
described in the Final Memorandum (exclusive of any amendment or supplement
thereto after the date hereof), subsequent to the date of the most recent
financial statements in such Final Memorandum, there shall have been no event or
development that,
16
individually or in the aggregate, has or would reasonably be expected to have a
Material Adverse Effect.
(f) The sale of the Units hereunder shall not be enjoined
(temporarily or permanently) on the Closing Date.
(g) Subsequent to the date of the most recent financial statements in
the Final Memorandum (exclusive of any amendment or supplement thereto after the
date hereof), the conduct of the business and operations of the Company or the
Subsidiaries shall not have been interfered with by strike, fire, flood,
hurricane, accident or other calamity (whether or not insured) or by any court
or governmental action, order or decree, and, except as otherwise stated
therein, the properties of the Company or any Subsidiary shall not have
sustained any loss or damage (whether or not insured) as a result of any such
occurrence, except any such interference, loss or damage which, individually or
in the aggregate, would not reasonably be expected to have a Material Adverse
Effect.
(h) The Initial Purchaser shall have received a certificate of the
Company, dated the Closing Date, signed by its Chairman of the Board, President
or any Vice President and the Chief Financial Officer (in their respective
capacities as such), to the effect that:
(i) The representations and warranties of the Company contained
in this Agreement are true and correct as of the date hereof and as of
the Closing Date, and the Company has performed all covenants and
agreements and satisfied all conditions on its part to be performed or
satisfied hereunder at or prior to the Closing Date;
(ii) At the Closing Date, since the date hereof or since the
date of the most recent financial statements in the Final Memorandum
(exclusive of any amendment or supplement thereto after the date
hereof), no event or events have occurred, no information has become
known nor does any condition exist that, individually or in the
aggregate, would reasonably be expected to have a Material Adverse
Effect;
(iii) The sale of the Units hereunder shall not have been
enjoined (temporarily or permanently); and
(iv) The Related Transactions have been consummated. As used
herein, "Related Transactions" means (i) the Recapitalization of the
Company (as defined in the Final Memorandum) pursuant to the Merger
Agreement (as defined below), (ii) the Merger (as defined in the Final
Memorandum), (iii) the CHS Loan, (iv) the repayment of the CHS Loan by
the Company with the net proceeds of the offering of the Units, (v)
the Asset Drop Down (as defined in the Final Memorandum), (vi) the
consummation of the Senior Credit Facility and the initial borrowing
by Globe Manufacturing of approximately $120 million thereunder, (vii)
the repayment of all
17
outstanding obligations under the Old Credit Facility (as defined in
the Final Memorandum) and the release of all liens on property of the
Company granted in connection therewith and (viii) the other
transactions contemplated by the Merger Agreement. As used herein, the
Merger Agreement means the Agreement and Plan of Merger dated June 23,
1998, by and between the Company and Globe Acquisition Company, a
newly formed affiliate of Code ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ III, L.P., as
amended through the date hereof.
(i) On the Closing Date, the Initial Purchaser shall have received
(x) the Registration Rights Agreement executed by the Company, (y) the Unit
Agreement executed by the Company and the Unit Agent, the Trustee and the
Warrant Agent and (z) the Warrant Agreement executed by the Company and the
Warrant Agent and each such agreement shall be in full force and effect at all
times from and after the Closing Date except as otherwise terminated in
accordance with its terms.
(j) The conditions to the obligations of MergerCo under the Merger
Agreement shall have been satisfied in all material respects, and the Merger
shall have been consummated in accordance with the terms of the Merger Agreement
and as described in the Final Memorandum (exclusive of any amendment or
supplement thereto after the date hereof).
(k) The Related Transactions shall have been consummated, and counsel
to the Initial Purchaser shall have received such documents relating thereto and
other evidence thereof as they may request in form and substance reasonably
satisfactory to such counsel.
(l) On the Closing Date, the Initial Purchaser shall have received
certified copies of the Tax Sharing Agreement, the Management Agreement, the
Registration Agreement, the Merger Agreement, the Senior Credit Facility and the
agreement effecting the Asset Drop Down, each executed by the Company and/or the
other signatories thereto and in form and substance reasonably satisfactory to
the Initial Purchaser.
(m) On the Closing Date, the Initial Purchaser shall have received
the opinion dated as of the Closing Date and addressed to the Initial Purchaser
of Valuation Research Corporation, regarding the solvency of the Company after
giving effect to the Transactions (including the offering of the Units
contemplated by the Final Memorandum), together with copies of all officers'
certificates and other documents referred to therein, and such opinion and other
documents shall be in form and substance reasonably satisfactory to the Initial
Purchaser.
(n) On the Closing Date, the Initial Purchaser shall have received
evidence, in form and substance satisfactory to the Initial Purchaser, of the
repayment in full of the CHS Loan.
On or before the Closing Date, the Initial Purchaser and counsel for
the Initial
18
Purchaser shall have received such further documents, opinions, certificates,
letters and schedules or instruments relating to the business, corporate, legal
and financial affairs of the Company and the Subsidiaries as they shall have
heretofore reasonably requested from the Company.
All such documents, opinions, certificates, letters, schedules or
instruments delivered pursuant to this Agreement will comply with the provisions
hereof only if they are reasonably satisfactory in all material respects to the
Initial Purchaser and counsel for the Initial Purchaser. The Company shall
furnish to the Initial Purchaser such conformed copies of such documents,
opinions, certificates, letters, schedules and instruments in such quantities as
the Initial Purchaser shall reasonably request.
8. Offering of Notes; Restrictions on Transfer. The Initial
Purchaser agrees with the Company that (i) it has not and will not solicit
offers for, or offer or sell, the Units by any form of 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; and (ii) it has and will solicit offers
for the Units only from, and has offered or sold and will offer, sell or
deliver, the Units only to (A) in the case of offers inside the United States,
(x) persons whom the Initial Purchaser reasonably believes to be QIBs or, if any
such person is buying for one or more institutional accounts for which such
person is acting as fiduciary or agent, only when such person has represented to
the Initial Purchaser that each such account is a QIB, to whom notice has been
given that such sale or delivery is being made in reliance on Rule 144A, and, in
each case, in transactions under Rule 144A or (y) a limited number of other
institutional investors reasonably believed by the Initial Purchaser to be
Accredited Investors that, prior to their purchase of the Units, deliver to the
Initial Purchaser a letter containing the representations and agreements set
forth in Annex A to the Final Memorandum and (B) in the case of offers outside
the United States, to persons other than U.S. persons, in each case, in
compliance with Regulation S under the Securities Act ("foreign purchasers,"
which term shall include dealers or other professional fiduciaries in the United
States acting on a discretionary basis for foreign beneficial owners (other than
an estate or trust)); provided, however, that, in the case of this clause (B),
in purchasing such Units such persons are deemed to have represented and agreed
as provided under the caption "Notice to Investors" contained in the Final
Memorandum.
9. Indemnification and Contribution. (a) The Company agrees to
indemnify and hold harmless the Initial Purchaser, and each person, if any, who
controls the Initial Purchaser within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act, against any losses, claims,
damages or liabilities to which the Initial Purchaser or such controlling person
may become subject under the Securities Act, the Exchange Act or otherwise,
insofar as any such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon:
(i) any untrue statement or alleged untrue statement of any
material fact
19
contained in the Final Memorandum or any amendment or supplement
thereto or any application, or any amendment or supplement thereto,
prepared or executed by the Company or any Subsidiary or based upon
written information furnished by or on behalf of the Company or any
Subsidiary filed in any jurisdiction in order to qualify the
Securities under the securities or "Blue Sky" laws thereof or filed
with any securities association or securities exchange (each an
"Application"); or
(ii) the omission or alleged omission to state, in the Final
Memorandum or any amendment or supplement thereto or any Application,
a material fact required to be stated therein or necessary to make the
statements therein in light of the circumstances in which they were
made, not misleading,
and will reimburse, promptly after demand, the Initial Purchaser and each such
controlling person for any reasonable legal or other expenses reasonably
incurred by the Initial Purchaser or such controlling person in connection with
investigating, defending against or appearing as a third-party witness in
connection with any such loss, claim, damage, liability or action as such
expenses are incurred; provided, however, the Company will not be liable in any
such case to the extent that any such loss, claim, damage, or liability arises
out of or is based upon any untrue statement or alleged untrue statement or
omission or alleged omission made in the Final Memorandum or any amendment or
supplement thereto or any Application in reliance upon and in conformity with
written information concerning the Initial Purchaser furnished to the Company by
the Initial Purchaser specifically for use therein. This indemnity agreement
will be in addition to any liability that the Company may otherwise have to the
indemnified parties. The Company shall not be liable under this Section 9 for
any settlement of such claim or action effected without its consent, which shall
not be unreasonably withheld.
(b) The Initial Purchaser agrees to indemnify and hold harmless the
Company and its directors, officers, employees, representatives, affiliates and
agents and each person, if any, who controls the Company within the meaning of
Section 15 of the Securities Act or Section 20 of the Exchange Act against any
losses, claims, damages or liabilities to which the Company or any such
director, officer, employee, representative, affiliate, agent or controlling
person may become subject under the Securities Act, the Exchange Act or
otherwise, insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon (i) any untrue statement or
alleged untrue statement of any material fact contained in the Final Memorandum
or any amendment or supplement thereto or any Application, or (ii) the omission
or the alleged omission to state therein a material fact required to be stated
in the Final Memorandum or any amendment or supplement thereto or any
Application, or necessary to make the statements therein in light of the
circumstances in which they were made, not misleading, in each case to the
extent, but only to the extent, that such untrue statement or alleged untrue
statement or omission or alleged omission was made in reliance upon and in
conformity with written information concerning such Initial Purchaser, furnished
to the Company by or on behalf of such Initial Purchaser specifically for use
therein; and subject to the
20
limitation set forth immediately preceding this clause, will reimburse, promptly
after demand, any reasonable legal or other expenses reasonably incurred by the
Company or any such director, officer, employee, representative, affiliate,
agent or controlling person in connection with investigating or defending
against or appearing as a third party witness in connection with any such loss,
claim, damage, liability or action in respect thereof. This indemnity agreement
will be in addition to any liability that the Initial Purchaser may otherwise
have to the indemnified parties. The Initial Purchaser shall not be liable under
this Section 9 for any settlement of any claim or action effected without their
consent, which shall not be unreasonably withheld.
(c) Promptly after receipt by an indemnified party under this Section
9 of notice of the commencement of any action for which such indemnified party
is entitled to indemnification under this Section 9, such indemnified party
will, if a claim in respect thereof is to be made against the indemnifying party
under this Section 9, notify the indemnifying party of the commencement thereof
in writing; but the omission to so notify the indemnifying party (i) will not
relieve it from any liability under paragraph (a) or (b) above unless and to the
extent such failure results in the forfeiture by the indemnifying party of
substantial rights and defenses and (ii) will not, in any event, relieve the
indemnifying party from any obligations to any indemnified party other than the
indemnification obligation provided in paragraphs (a) and (b) above. In case any
such action is brought against any indemnified party, and it notifies the
indemnifying party of the commencement thereof, the indemnifying party will be
entitled to participate therein and, to the extent that it may wish, jointly
with any other indemnifying party similarly notified, to assume the defense
thereof, with counsel reasonably satisfactory to such indemnified party;
provided, however, that if (i) the use of counsel chosen by the indemnifying
party to represent the indemnified party would present such counsel with a
conflict of interest, (ii) the defendants in any such action include both the
indemnified party and the indemnifying party and the indemnified party shall
have been advised by counsel that there may be one or more legal defenses
available to it and/or other indemnified parties that are different from or
additional to those available to the indemnifying party, or (iii) the
indemnifying party shall not have employed counsel reasonably satisfactory to
the indemnified party to represent the indemnified party within a reasonable
time after receipt by the indemnifying party of notice of the institution of
such action, then, in each such case, the indemnifying party shall not have the
right to direct the defense of such action on behalf of such indemnified party
or parties and such indemnified party or parties shall have the right to select
separate counsel to defend such action on behalf of such indemnified party or
parties. After notice from the indemnifying party to such indemnified party of
its election so to assume the defense thereof and approval by such indemnified
party of counsel appointed to defend such action (which approval shall not be
unreasonably withheld), the indemnifying party will not be liable to such
indemnified party under this Section 9 for any legal or other expenses, other
than reasonable costs of investigation, subsequently incurred by such
indemnified party in connection with the defense thereof, unless (i) the
indemnified party shall have employed separate counsel in accordance with the
proviso to the immediately preceding sentence (it being understood, however,
that in connection with such action the indemnifying party shall not be liable
for the expenses of more than one separate counsel (in addition to local
counsel)
21
in any one action or separate but substantially similar actions in the same
jurisdiction arising out of the same general allegations or circumstances,
designated by the Initial Purchaser in the case of paragraph (a) of this Section
9 or the Company in the case of paragraph (b) of this Section 9, representing
the indemnified parties under such paragraph (a) or paragraph (b), as the case
may be, who are parties to such action or actions) or (ii) the indemnifying
party has authorized in writing the employment of counsel for the indemnified
party at the expense of the indemnifying party. After such notice from the
indemnifying party to such indemnified party, the indemnifying party will not be
liable for the costs and expenses of any settlement of such action effected by
such indemnified party without the prior written consent of the indemnifying
party (which consent shall not be unreasonably withheld), unless such
indemnified party waived in writing its rights under this Section 9, in which
case the indemnified party may effect such a settlement without such consent.
(d) In circumstances in which the indemnity agreement provided for in
the preceding paragraphs of this Section 9 is unavailable to, or insufficient to
hold harmless, an indemnified party in respect of any losses, claims, damages or
liabilities (or actions in respect thereof), each indemnifying party, in order
to provide for just and equitable contribution, shall contribute to the amount
paid or payable by such indemnified party as a result of such losses, claims,
damages or liabilities (or actions in respect thereof) in such proportion as is
appropriate to reflect (i) the relative benefits received by the indemnifying
party or parties on the one hand and the indemnified party on the other from the
offering of the Units or (ii) if the allocation provided by the foregoing clause
(i) is not permitted by applicable law, not only such relative benefits but also
the relative fault of the indemnifying party or parties on the one hand and the
indemnified party on the other in connection with the statements or omissions or
alleged statements or omissions that resulted in such losses, claims, damages or
liabilities (or actions in respect thereof). The relative benefits received by
the Company on the one hand and the Initial Purchaser on the other shall be
deemed to be in the same proportion as the total net proceeds from the offering
(before deducting expenses) received by the Company and the total discounts and
commissions received by the Initial Purchaser on the other hand, bear to the
total gross proceeds from the sale of the Units. The relative fault of the
parties shall be determined by reference to, among other things, whether the
untrue or alleged untrue statement of a material fact or the omission or alleged
omission to state a material fact relates to information supplied by the Company
on the one hand, or the Initial Purchaser on the other, the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission or alleged statement or omission, and any other
equitable considerations appropriate in the circumstances. The Company and the
Initial Purchaser agree that it would not be equitable if the amount of such
contribution were determined by pro rata or per capita allocation or by any
other method of allocation that does not take into account the equitable
considerations referred to in the first sentence of this paragraph (d).
Notwithstanding any other provision of this paragraph (d), the Initial Purchaser
shall not be obligated to make contributions hereunder that in the aggregate
exceed the total discounts, commissions and other compensation received by the
Initial Purchaser under this Agreement, less the aggregate amount of any damages
that the Initial Purchaser has otherwise been required to pay by reason of the
untrue or alleged untrue statements or the
22
omissions or alleged omissions to state a material fact, and no person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation. For purposes of this paragraph (d),
each person, if any, who controls the Initial Purchaser within the meaning of
Section 15 of the Securities Act or Section 20 of the Exchange Act shall have
the same rights to contribution as the Initial Purchaser, and each director,
officer, employee, representative, affiliate and agent of the Company and each
person, if any, who controls the Company within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act, shall have the same rights to
contribution as the Company.
10. Survival Clause. The respective representations, warranties,
agreements, covenants, indemnities and other statements of the Company, its
officers and directors and the Initial Purchaser set forth in this Agreement or
made by or on behalf of them pursuant to this Agreement shall remain in full
force and effect until termination of this Agreement, except as set forth in the
following sentence, regardless of (i) any investigation made by or on behalf of
the Company, any of its officers or directors, the Initial Purchaser or any
controlling person referred to in Section 9 hereof and (ii) delivery of and
payment for the Units. The respective agreements, covenants, indemnities and
other statements set forth in Sections 6, 9 and 15 hereof shall remain in full
force and effect, regardless of any termination or cancellation of this
Agreement.
11. Termination. (a) This Agreement may be terminated in the sole
discretion of the Initial Purchaser by notice to the Company given prior to the
Closing Date in the event that the Company shall have failed, refused or been
unable to perform all obligations and satisfy all conditions on its part to be
performed or satisfied hereunder at or prior thereto or, if on and after the
date hereof and at or prior to the Closing Date:
(i) any of the Company or the Subsidiaries shall have sustained
any loss or interference with respect to its businesses or properties
from fire, flood, hurricane, accident or other calamity, whether or
not covered by insurance, or from any strike, labor dispute, slowdown
or work stoppage or any legal or governmental proceeding, which loss
or interference, in the sole judgment of the Initial Purchaser, has
had or could be reasonably likely to have a Material Adverse Effect,
or there shall have been, in the sole judgment of the Initial
Purchaser, any event or development that, individually or in the
aggregate, has or could be reasonably likely to have a Material
Adverse Effect (including without limitation a change in control of
the Company), except in each case as described in the Final Memorandum
(exclusive of any amendment or supplement thereto);
(ii) trading in securities generally on the New York Stock
Exchange, on the American Stock Exchange or in the Nasdaq National
Market System shall have been suspended or minimum or maximum prices
shall have been established on any
23
such exchange or market;
(iii) a banking moratorium shall have been declared by New York
or United States authorities;
(iv) there shall have been (A) an outbreak or escalation of
hostilities between the United States and any foreign power, or (B) an
outbreak or escalation of any other insurrection or armed conflict
involving the United States or any other national or international
calamity or emergency, or (C) any material change in the financial
markets of the United States which, in the case of (A), (B) or (C)
above and in the sole judgment of the Initial Purchaser, makes it
impracticable or inadvisable to proceed with the offering or the
delivery of the Units as contemplated by the Final Memorandum; or
(v) any securities of the Company shall have been downgraded
or placed on any "watch list" for possible downgrading by any
nationally recognized statistical rating organization.
(b) Termination of this Agreement pursuant to this Section 11 shall
be without liability of any party to any other party except as provided in
Section 10 hereof.
12. Information Supplied by the Initial Purchaser. The statements
set forth (i) in the last paragraph on the front cover page of the Final
Memorandum, (ii) in the first paragraph on page i of the Final Memorandum and
(iii) in the third, fourth and sixth paragraphs and in the second sentence of
the fifth paragraph under the heading "Plan of Distribution" of the Final
Memorandum constitute the only information furnished by the Initial Purchaser to
the Company for the purposes of Sections 2(a) and 9 hereof.
13. Notices. All communications hereunder shall be in writing and,
if sent to the Initial Purchaser, shall be mailed or delivered to (i)
BancAmerica ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, with a copy to Winston & ▇▇▇▇▇▇,
▇▇ ▇. ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇; if sent to
the Company, shall be mailed or delivered to ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: Chief Financial Officer; with a copy to Code,
▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLC, ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇,
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, and to ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇.
All such notices and communications shall be deemed to have been duly
given: when delivered by hand, if personally delivered; five business days after
being deposited in the mail, postage prepaid, if mailed; and one business day
after being timely delivered to a next-day air courier.
24
14. Successors. This Agreement shall inure to the benefit of and be
binding upon the Initial Purchaser, the Company and their respective successors
and legal representatives, and nothing expressed or mentioned in this Agreement
is intended or shall be construed to give any other person any legal or
equitable right, remedy or claim under or in respect of this Agreement, or any
provisions herein contained; this Agreement and all conditions and provisions
hereof being intended to be and being for the sole and exclusive benefit of such
persons and for the benefit of no other person except that (i) the indemnities
of the Company contained in Section 9 of this Agreement shall also be for the
benefit of any person or persons who control the Initial Purchaser within the
meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act
and (ii) the indemnities of the Initial Purchaser contained in Section 9 of this
Agreement shall also be for the benefit of the directors, officers, employees,
representatives, affiliates and agents and any person or persons who control the
Company within the meaning of Section 15 of the Securities Act or Section 20 of
the Exchange Act. No purchaser of the Units from the Initial Purchaser will be
deemed a successor because of such purchase.
15. APPLICABLE LAW. THE VALIDITY AND INTERPRETATION OF THIS
AGREEMENT, AND THE TERMS AND CONDITIONS SET FORTH HEREIN SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO
CONTRACTS MADE AND TO BE PERFORMED WHOLLY THEREIN, WITHOUT GIVING EFFECT TO ANY
PROVISIONS THEREOF RELATING TO CONFLICTS OF LAW OTHER THAN SECTION 5-1401 OF THE
NEW YORK GENERAL OBLIGATIONS LAW.
16. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
17. Effective Date. This Agreement shall be deemed effective as of
July 30, 1998.
[Signature pages follow]
25
If the foregoing correctly sets forth our understanding, please
indicate your acceptance thereof in the space provided below for that purpose,
whereupon this letter shall constitute a binding agreement between the Company
and the Initial Purchaser.
Very truly yours,
GLOBE HOLDINGS, INC.
By /s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
---------------------------
Name: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Vice President, Finance and
Administration Treasurer and
Assistant Clerk
The foregoing Agreement is
hereby confirmed and accepted
as of the date first above written.
BANCAMERICA ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
------------------------------
Title: Managing Director
Schedule 1
Subsidiaries of the Company
Jurisdiction of
Name Incorporation
----------------------------------------------------------- ---------------
Globe Manufacturing Corp. Alabama
Globe Manufacturing FSC Ltd. Barbados
Exhibit A
Form of Registration Rights Agreement