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Exhibit 1.1.1
HOME PRODUCTS INTERNATIONAL, INC.
$125,000,000
9 5/8% Senior Subordinated Notes due 2008
PURCHASE AGREEMENT
May 7, 1998
CHASE SECURITIES INC.
NATIONSBANC ▇▇▇▇▇▇▇▇▇▇ SECURITIES LLC
c/o Chase Securities Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
Home Products International, Inc., a Delaware corporation (the "Company"),
proposes to issue and sell $125,000,000 aggregate principal amount of its
95/8% Senior Subordinated Notes due 2008 (the "Securities"). The Company's
payment obligations under the Securities will be unconditionally guaranteed
(the "Guarantees"), jointly and severally, by the Subsidiary Guarantors (as
defined in the Indenture). The Securities will be issued pursuant to an
Indenture to be dated as of May 14, 1998 (the "Indenture") among the Company,
the Subsidiary Guarantors and LaSalle National Bank, as trustee (the
"Trustee"). The Company hereby confirms its agreement with Chase Securities
Inc. ("CSI") and NationsBanc ▇▇▇▇▇▇▇▇▇▇ Securities LLC ("NationsBanc", and
together with CSI, the "Initial Purchasers") concerning the purchase of the
Securities from the Company by the Initial Purchasers.
The Securities will be offered and sold to the Initial Purchasers without
being registered under the Securities Act of 1933, as amended (the "Securities
Act"), in reliance upon an exemption therefrom. The Company has prepared a
preliminary offering memorandum dated April 27, 1998 (the "Preliminary Offering
Memorandum") and will prepare an offering memorandum dated the date hereof (the
"Offering Memorandum") setting forth information concerning the Company and the
Securities. Copies of the Preliminary Offering Memorandum have been, and
copies of the Offering Memorandum will be, delivered by the Company to the
Initial Purchasers pursuant to the terms of this Agreement. Any references
herein to the Preliminary Offering Memorandum and the Offering Memorandum shall
be deemed to include all amendments and supplements thereto, unless otherwise
noted. The Company hereby
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confirms that it has authorized the use of the Preliminary Offering Memorandum
and the Offering Memorandum in connection with the offering and resale of the
Securities by the Initial Purchasers in accordance with Section 2.
Holders of the Securities (including the Initial Purchasers and their
direct and indirect transferees) will be entitled to the benefits of an
Exchange and Registration Rights Agreement, substantially in the form attached
hereto as Annex A (the "Exchange and Registration Rights Agreement"), pursuant
to which the Company will agree to file with the Securities and Exchange
Commission (the "Commission") (i) a registration statement under the Securities
Act (the "Exchange Offer Registration Statement") registering an issue of
senior subordinated notes of the Company (the "Exchange Securities") which are
identical in all material respects to the Securities (except that the Exchange
Securities will not contain terms with respect to transfer restrictions) and
(ii) under certain circumstances, a shelf registration statement pursuant to
Rule 415 under the Securities Act (the "Shelf Registration Statement").
In connection with the offering and sale of the Securities, the Company
intends to enter into a $100 million senior secured revolving credit facility
(the "Senior Credit Facility"). The proceeds of the initial borrowing under
the Senior Credit Facility, together with the proceeds from the offering of the
Securities, will be applied by the Company to refinance certain of its existing
indebtedness and to obtain additional funds to be used for working capital and
general corporate purposes, including permitted acquisitions (collectively, the
"Refinancing").
Capitalized terms used but not defined herein shall have the meanings
given to such terms in the Offering Memorandum.
1. Representations, Warranties and Agreements of the Company. The
Company represents and warrants to, and agrees with, the Initial Purchasers on
and as of the date hereof and the Closing Date (as defined in Section 3) that:
(a) 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 required to be stated
therein or necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading;
provided that the Company makes 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 or on behalf of any Initial Purchaser specifically for use
therein (collectively, the "Initial Purchasers' Information").
(b) Each of the Preliminary Offering Memorandum and the Offering
Memorandum, as of its respective date, contains all of the information
that, if requested by a prospective purchaser of the Securities, would be
required to be provided to such prospective purchaser pursuant to Rule
144A(d)(4) under the Securities Act.
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(c) Assuming the accuracy of the representations and warranties of
the Initial Purchasers contained in Section 2 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 and the Offering Memorandum, to
register the Securities under the Securities Act or to qualify the
Indenture under the Trust Indenture Act of 1939, as amended (the "Trust
Indenture Act").
(d) The Company and each of its subsidiaries have been duly
incorporated and are validly existing as corporations in good standing
under the laws of their respective jurisdictions of incorporation, are
duly qualified to do business and are in good standing as foreign
corporations 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 or have such
power or authority would not, singularly or in the aggregate, have a
material adverse effect on the condition (financial or otherwise),
results of operations, business or prospects of the Company and its
subsidiaries taken as a whole (a "Material Adverse Effect").
(e) The Company has an authorized capitalization as set forth in
the Offering Memorandum under the heading "Capitalization"; all of the
outstanding shares of capital stock of the Company have been duly and
validly authorized and issued and are fully paid and non-assessable; and
the capital stock of the Company conforms in all material respects to the
description thereof contained in the Offering Memorandum. All of the
outstanding shares of capital stock of each subsidiary of the Company
have been duly and validly authorized and issued, are fully paid and
non-assessable and are owned directly or indirectly by the Company, free
and clear of any lien, charge, encumbrance, security interest,
restriction upon voting or transfer or any other claim of any third
party.
(f) The Company has full right, power and authority to execute and
deliver this Agreement, the Indenture, the Exchange and Registration
Rights Agreement, the Securities and the Senior Credit Agreement
(collectively, the "Transaction Documents") and to perform its
obligations hereunder and thereunder; and all corporate action required
to be taken for the due and proper authorization, execution and delivery
of each of the Transaction Documents and the consummation of the
transactions contemplated thereby have been duly and validly taken.
(g) This Agreement has been duly authorized, executed and delivered
by the Company and constitutes a valid and legally binding agreement of
the Company, enforceable against the Company in accordance with its
terms, except to the extent that such enforceability may be limited by
applicable bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and other similar laws affecting creditors' rights generally
and by general equitable principles (whether considered in a proceeding
in equity or at law).
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(h) The Exchange and Registration Rights Agreement has been duly
authorized by the Company and, when duly executed and delivered in
accordance with its terms by each of the parties thereto, will constitute
a valid and legally binding agreement of the Company enforceable against
the Company in accordance with its terms, except to the extent that such
enforceability may be limited by applicable bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and other similar laws
affecting creditors' rights generally and by general equitable principles
(whether considered in a proceeding in equity or at law).
(i) The Indenture has been duly authorized by each of the Company
and the Subsidiary Guarantors and, when duly executed and delivered in
accordance with its terms by each of the parties thereto, will constitute
a valid and legally binding agreement of the Company and the Subsidiary
Guarantors enforceable against the Company and the Subsidiary Guarantors
in accordance with its terms, except to the extent that such
enforceability may be limited by applicable bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and other similar laws
affecting creditors' rights generally and by general equitable principles
(whether considered in a proceeding in equity or at law). On the Closing
Date, the Indenture will conform in all material respects to the
requirements of the Trust Indenture Act and the rules and regulations of
the Commission applicable to an indenture which is qualified thereunder.
(j)(i) The Securities have been duly authorized by the Company and,
when duly executed, authenticated, issued and delivered as provided in
the Indenture and paid for as provided herein, will be duly and validly
issued and outstanding 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 to
the extent that such enforceability may be limited by applicable
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium
and other similar laws affecting creditors' rights generally and by
general equitable principles (whether considered in a proceeding in
equity or at law).
(ii) The Guarantees have been duly authorized by each of the
Subsidiary Guarantors and, when duly executed, authenticated, issued and
delivered as provided in the Indenture and paid for as provided herein,
will be duly and validly issued and outstanding and will constitute valid
and legally binding obligations of the Subsidiary Guarantors entitled to
the benefits of the Indenture and enforceable against the Subsidiary
Guarantors in accordance with their terms, except to the extent that such
enforceability may be limited by applicable bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and other similar laws
affecting creditors' rights generally and by general equitable principles
(whether considered in a proceeding in equity or at law).
(k) The Senior Credit Agreement has been duly authorized, executed
and delivered by the Company and constitutes a valid and legally binding
agreement of the Company enforceable against the Company in accordance
with its terms, except to the extent that such enforceability may be
limited by applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and other similar laws affecting
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creditors' rights generally and by general equitable principles (whether
considered in a proceeding in equity or at law).
(l) Each Transaction Document conforms in all material respects to
the description thereof contained in the Offering Memorandum.
(m) The execution, delivery and performance by the Company of each
of the Transaction Documents, the issuance, authentication, sale and
delivery of the Securities and compliance by the Company with the terms
thereof and the consummation of the transactions contemplated by the
Transaction Documents will not conflict with or result in a breach or
violation of any of the terms or provisions of, or constitute a default
under, or result in the creation or imposition of any lien, charge or
encumbrance upon any property or assets of the Company or any of its
subsidiaries pursuant to, any material indenture, mortgage, deed of
trust, loan agreement or other material agreement or instrument to which
the Company or any of its subsidiaries is a party or by which the Company
or any of its subsidiaries is bound or to which any of the property or
assets of the Company or any of its subsidiaries is subject, nor will
such actions result in any violation of the provisions of the charter or
by-laws of the Company or any of its subsidiaries or any statute or any
judgment, order, decree, rule or regulation of any court or arbitrator or
governmental agency or body having jurisdiction over the Company or any
of its subsidiaries or any of their properties or assets; and no consent,
approval, authorization or order of, or filing or registration with, any
such court or arbitrator or governmental agency or body under any such
statute, judgment, order, decree, rule or regulation is required for the
execution, delivery and performance by the Company of each of the
Transaction Documents, the issuance, authentication, sale and delivery of
the Securities and compliance by the Company with the terms thereof and
the consummation of the transactions contemplated by the Transaction
Documents, except for such consents, approvals, authorizations, filings,
registrations or qualifications (i) which shall have been obtained or
made prior to the Closing Date and (ii) as may be required to be obtained
or made under the Securities Act and applicable state securities laws as
provided in the Exchange and Registration Rights Agreement.
(n) The historical financial statements (including the related
notes) contained in the Offering Memorandum comply in all material
respects with the requirements applicable to a registration statement on
Form S-1 under the Securities Act (except that certain supporting
schedules are omitted); such financial statements have been prepared in
accordance with generally accepted accounting principles consistently
applied throughout the periods covered thereby and fairly present the
financial position of the entities purported to be covered thereby at the
respective dates indicated and the results of their operations and their
cash flows for the respective periods indicated; and the financial
information contained in the Offering Memorandum under the headings
"Summary--Summary Pro Forma Combined Financial Data", "Capitalization",
"Selected Historical Financial Data", "Unaudited Pro Forma Combined
Financial Data" and "Management's Discussion and Analysis of Financial
Condition and Results of Operations" are derived from the accounting
records of the Company and its subsidiaries and fairly present the
information purported to be shown thereby. The pro forma financial
information
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contained in the Offering Memorandum has been prepared on a basis
consistent with the historical financial statements contained in the
Offering Memorandum (except for the pro forma adjustments specified
therein), includes all material adjustments to the historical financial
information required by Rule 11-02 of Regulation S-X under the Securities
Act and the Securities Exchange Act of 1934, as amended (the "Exchange
Act") to reflect the transactions described in the Offering Memorandum,
gives effect to assumptions made on a reasonable basis and fairly
presents the historical and proposed transactions contemplated by the
Offering Memorandum and the Transaction Documents. The other historical
financial and statistical information and data included in the Offering
Memorandum are, in all material respects, fairly presented.
(o) There are no legal or governmental proceedings 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, singularly or in the aggregate, if determined adversely to
the Company or any of its subsidiaries, could reasonably be expected to
have a Material Adverse Effect; and to the best knowledge of the Company,
no such proceedings are threatened or contemplated by governmental
authorities or threatened by others.
(p) No action has been taken and no statute, rule, regulation or
order has been enacted, adopted or issued by any governmental agency or
body which prevents the issuance of the Securities or suspends the sale
of the Securities in any jurisdiction; no injunction, restraining order
or order of any nature by any federal or state court of competent
jurisdiction has been issued with respect to the Company or any of its
subsidiaries which would prevent or suspend the issuance or sale of the
Securities or the use of the Preliminary Offering Memorandum or the
Offering Memorandum in any jurisdiction; no action, suit or proceeding is
pending against or, to the best knowledge of the Company, threatened
against or affecting the Company or any of its subsidiaries before any
court or arbitrator or any governmental agency, body or official,
domestic or foreign, which could reasonably be expected to interfere with
or adversely affect the issuance of the Securities or in any manner draw
into question the validity or enforceability of any of the Transaction
Documents or any action taken or to be taken pursuant thereto; and the
Company has complied with any and all requests by any securities
authority in any jurisdiction for additional information to be included
in the Preliminary Offering Memorandum and the Offering Memorandum.
(q) Neither the Company nor any of its subsidiaries is (i) in
violation of its charter or by-laws, (ii) in default in any material
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 material
indenture, mortgage, deed of trust, loan agreement or other material
agreement or instrument to which it is a party or by which it is bound or
to which any of its property or assets is subject or (iii) in violation
in any material respect of any law, ordinance, governmental rule,
regulation or court decree to which it or its property or assets may be
subject, except where such default or violation would not, singularly or
in the aggregate, have a Material Adverse Effect.
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(r) The Company and each of its subsidiaries possess all material
licenses, certificates, authorizations and permits issued by, and have
made all declarations and filings with, the appropriate federal, state or
foreign regulatory agencies or bodies which are necessary or desirable
for the ownership of their respective properties or the conduct of their
respective businesses as described in the Offering Memorandum, except
where the failure to possess or make the same would not, singularly or in
the aggregate, have a Material Adverse Effect, and neither the Company
nor any of its subsidiaries has received notification of any revocation
or modification of any such license, certificate, authorization or permit
or has any reason to believe that any such license, certificate,
authorization or permit will not be renewed in the ordinary course,
except where such revocation, modification or nonrenewal would not,
singularly or in the aggregate, have a Material Adverse Effect.
(s) The Company and each of its subsidiaries have filed all
federal, state, local and foreign income and franchise tax returns
required to be filed through the date hereof and have paid all taxes due
thereon, and 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 its subsidiaries have any knowledge of any tax deficiency which,
if determined adversely to the Company or any of its subsidiaries, could
reasonably be expected to have) a Material Adverse Effect.
(t) Neither the Company nor any of its subsidiaries is (i) an
"investment company" or a company "controlled by" an investment company
within the meaning of the Investment Company Act of 1940, as amended (the
"Investment Company Act"), and the rules and regulations of the
Commission thereunder or (ii) a "holding company" or a "subsidiary
company" of a holding company or an "affiliate" thereof within the
meaning of the Public Utility Holding Company Act of 1935, as amended.
(u) The Company and each of its subsidiaries maintain a system of
internal accounting controls sufficient to provide reasonable assurance
that (i) transactions are executed in accordance with management's
general or specific authorizations; (ii) transactions are recorded as
necessary to permit preparation of financial statements in conformity
with generally accepted accounting principles and to maintain asset
accountability; (iii) access to assets is permitted only in accordance
with management's general or specific authorization; and (iv) the
recorded accountability for assets is compared with the existing assets
at reasonable intervals and appropriate action is taken with respect to
any differences.
(v) The Company and each of its subsidiaries have insurance
covering their respective properties, operations, personnel and
businesses, which insurance is in amounts and insures against such losses
and risks as are adequate to protect the Company and its subsidiaries and
their respective businesses. Neither the Company nor any of its
subsidiaries has received notice from any insurer or agent of such
insurer that capital improvements or other expenditures are required or
necessary to be made in order to continue such insurance.
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(w) The Company and each of its subsidiaries own or possess
adequate rights to use all material patents, patent applications,
trademarks, service marks, trade names, trademark registrations, service
▇▇▇▇ registrations, copyrights, licenses and know-how (including trade
secrets and other unpatented and/or unpatentable proprietary or
confidential information, systems or procedures) necessary for the
conduct of their respective businesses, except where the failure to so
own or possess such rights would not, singularly or in the aggregate,
have a Material Adverse Effect; and the conduct of their respective
businesses will not conflict in any material respect with, and the
Company and its subsidiaries have not received any notice of any claim of
conflict with, any such rights of others, in either case which would,
singularly or in the aggregate, have a Material Adverse Effect.
(x) The Company and each of its subsidiaries have good and
marketable title in fee simple to, or have valid rights to lease or
otherwise use, all items of real and personal property which are material
to the business of the Company and its subsidiaries, in each case free
and clear of all liens, encumbrances, claims and defects and
imperfections of title except such as (i) do not materially interfere
with the use made and proposed to be made of such property by the Company
and its subsidiaries or (ii) could not reasonably be expected to have a
Material Adverse Effect.
(y) No labor disturbance by or dispute with the employees of the
Company or any of its subsidiaries exists or, to the best knowledge of
the Company, is contemplated or threatened.
(z) No "prohibited transaction" (as defined in Section 406 of the
Employee Retirement Income Security Act of 1974, as amended, including
the regulations and published interpretations thereunder ("ERISA"), or
Section 4975 of the Internal Revenue Code of 1986, as amended from time
to time (the "Code")) or "accumulated funding deficiency" (as defined in
Section 302 of ERISA) or any of the events set forth in Section 4043(b)
of ERISA (other than events with respect to which the 30-day notice
requirement under Section 4043 of ERISA has been waived) has occurred
with respect to any employee benefit plan of the Company or any of its
subsidiaries which could reasonably be expected to have a Material
Adverse Effect; each such employee benefit plan is in compliance in all
material respects with applicable law, including ERISA and the Code; the
Company and each of its subsidiaries have not incurred and do not expect
to incur liability under Title IV of ERISA with respect to the
termination of, or withdrawal from, any pension plan for which the
Company or any of its subsidiaries would have any liability, except for
any such liability that could not reasonably be expected to have,
singularly or in the aggregate, a Material Adverse Effect; and each such
pension plan 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 could reasonably be
expected to cause the loss of such qualification, except events that
could not reasonably be expected to have, singularly or in the aggregate,
a Material Adverse Effect.
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(aa) There has been no storage, generation, transportation,
handling, treatment, disposal, discharge, emission or other release of
any kind of toxic or other wastes or other hazardous substances by, due
to or caused by the Company or any of its subsidiaries (or, to the best
knowledge of the Company, any other entity (including any predecessor)
for whose acts or omissions the Company or any of its subsidiaries is or
could reasonably be expected to be liable) upon any of the property now
or previously owned or leased by the Company or any of its subsidiaries,
or upon any other property, in violation of any statute or any ordinance,
rule, regulation, order, judgment, decree or permit or which would, under
any statute or any ordinance, rule (including rule of common law),
regulation, order, judgment, decree or permit, give rise to any
liability, except for any violation or liability could not reasonably be
expected to have, singularly or in the aggregate with all such violations
and liabilities, a Material Adverse Effect; and there has been no
disposal, discharge, emission or other release of any kind onto such
property or into the environment surrounding such property of any toxic
or other wastes or other hazardous substances with respect to which the
Company has knowledge, except for any such disposal, discharge, emission
or other release of any kind which could not reasonably be expected to
have, singularly or in the aggregate with all such discharges and other
releases, a Material Adverse Effect.
(bb) Neither the Company nor, to the best knowledge of the Company,
any director, officer, agent, employee or other person associated with or
acting on behalf of the Company has (i) used any corporate funds for any
unlawful contribution, gift, entertainment or other unlawful expense
relating to political activity; (ii) made any direct or indirect unlawful
payment to any foreign or domestic government official or employee from
corporate funds; (iii) violated or is in violation of any provision of
the Foreign Corrupt Practices Act of 1977; or (iv) made any bribe,
rebate, payoff, influence payment, kickback or other unlawful payment.
(cc) Except as described in the Offering Memorandum, there are no
outstanding subscriptions, rights, warrants, calls or options to acquire,
or instruments convertible into or exchangeable for, or agreements or
understandings with respect to the sale or issuance of, any shares of
capital stock of or other equity or other ownership interest in the Company
or any of its subsidiaries.
(dd) None of the proceeds of the sale of the Securities will be
used, directly or indirectly, for the purpose of purchasing or carrying any
margin security, for the purpose of reducing or retiring any indebtedness
which was originally incurred to purchase or carry any margin security or
for any other purpose which might cause any of the Securities to be
considered a "purpose credit" within the meanings of Regulation G, T, U or
X of the Board of Governors of the Federal Reserve System.
(ee) Neither the Company nor any of its subsidiaries is a party to
any contract, agreement or understanding with any person that would give
rise to a valid claim against the Company or the Initial Purchasers for a
brokerage commission, finder's fee or like payment in connection with the
offering and sale of the Securities.
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(ff) The Securities satisfy the eligibility requirements of Rule
144A(d)(3) under the Securities Act.
(gg) None of the Company, any of its affiliates or any person
acting on its or their behalf has engaged or will engage in any directed
selling efforts (as such term is defined in Regulation S under the
Securities Act ("Regulation S")), and all such persons have complied and
will comply with the offering restrictions requirement of Regulation S to
the extent applicable.
(hh) Neither the Company nor 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 such term is defined
in the Securities Act), which is or will be integrated with the sale of
the Securities in a manner that would require registration of the
Securities under the Securities Act.
(ii) None of the Company or any of its affiliates or any other
person acting on its or their behalf has engaged, in connection with the
offering of the Securities, in any form of general solicitation or
general advertising within the meaning of Rule 502(c) under the
Securities Act.
(jj) There are no securities of the Company other than the
Company's common stock registered under the Exchange Act or listed on a
national securities exchange or quoted in a U.S. automated inter-dealer
quotation system.
(kk) The Company has not taken and will not take, directly or
indirectly, any action prohibited by Regulation M under the Exchange Act
in connection with the offering of the Securities.
(ll) No forward-looking statement (within the meaning of Section
27A of the Securities Act and Section 21E of the Exchange Act) contained
in the Preliminary Offering Memorandum or the Offering Memorandum has
been made or reaffirmed without a reasonable basis or has been disclosed
other than in good faith.
(mm) Since the date as of which information is given in the
Offering Memorandum, except as otherwise stated therein, (i) there has
been no material adverse change or any development involving a
prospective material adverse change in the condition, financial or
otherwise, or in the earnings, business affairs, management or business
prospects of the Company and its subsidiaries taken as a whole, whether
or not arising in the ordinary course of business, (ii) the Company has
not incurred any material liability or obligation, direct or contingent,
other than in the ordinary course of business, (iii) the Company has not
entered into any material transaction other than in the ordinary course
of business and (iv) there has not been any change in the capital stock
or long-term debt of the Company, or any dividend or distribution of any
kind declared, paid or made by the Company on any class of its capital
stock, except as disclosed in the Offering Memorandum.
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2. Purchase and Resale of the Securities. (a) On the basis of the
representations, warranties and agreements contained herein, and subject to the
terms and conditions set forth herein, the Company agrees to issue and sell to
each of the Initial Purchasers, severally and not jointly, and each of the
Initial Purchasers, severally and not jointly, agrees to purchase from the
Company, the principal amount of Securities set forth opposite the name of such
Initial Purchaser on Schedule 1 hereto at a purchase price equal to 97.25% of
the principal amount thereof. The Company shall not be obligated to deliver any
of the Securities except upon payment for all of the Securities to be purchased
as provided herein.
(b) The Initial Purchasers have advised the Company that they propose to
offer the Securities for resale upon the terms and subject to the conditions
set forth herein and in the Offering Memorandum. Each Initial Purchaser,
severally and not jointly, represents and warrants to, and agrees with, the
Company that (i) it is purchasing the Securities pursuant to a private sale
exempt from registration under the Securities Act, (ii) it has not solicited
offers for, or offered or sold, and will not solicit offers for, or offer or
sell, the Securities by means of any form of general solicitation or general
advertising within the meaning of Rule 502(c) of Regulation D under the
Securities Act ("Regulation D") or in any manner involving a public offering
within the meaning of Section 4(2) of the Securities Act and (iii) it has
solicited and will solicit offers for the Securities only from, and has offered
or sold and will offer, sell or deliver the Securities, as part of its initial
offering, only (A) within the United States to persons whom it reasonably
believes to be qualified institutional buyers ("Qualified Institutional
Buyers"), as defined in Rule 144A under the Securities Act ("Rule 144A"), 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 Qualified Institutional Buyer 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 in accordance with Rule 144A and (B)
outside the United States to persons other than U.S. persons in reliance on
Regulation S under the Securities Act ("Regulation S").
(c) In connection with the offer and sale of Securities in reliance on
Regulation S, each Initial Purchaser, severally and not jointly, represents,
warrants and agrees that:
(i) the Securities 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 except pursuant to an exemption
from, or in transactions not subject to, the registration requirements of
the Securities Act.
(ii) such Initial Purchaser has offered and sold the Securities,
and will offer and sell the Securities, (A) as part of their distribution
at any time and (B) otherwise until 40 days after the later of the
commencement of the offering of the Securities and the Closing Date, only
in accordance with Regulation S or Rule 144A or any other available
exemption from registration under the Securities Act.
(iii) none of such Initial Purchaser or any of its affiliates or
any other person acting on its or their behalf has engaged or will engage
in any directed selling efforts with
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respect to the Securities, and all such persons have complied and will
comply with the offering restrictions requirement of Regulation S.
(iv) at or prior to the confirmation of sale of any Securities sold
in reliance on Regulation S, it will have sent to each distributor,
dealer or other person receiving a selling concession, fee or other
remuneration that purchases Securities from it during the restricted
period a confirmation or notice to substantially the following effect:
"The Securities covered hereby have not been registered under the
U.S. Securities Act of 1933, as amended (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 40 days after the
later of the commencement of the offering of the Securities and the
date of original issuance of the Securities, except in accordance
with Regulation S or Rule 144A or any other available exemption
from registration under the Securities Act. Terms used above have
the meanings given to them by Regulation S."
(v) it has not and will not enter into any contractual arrangement
with any distributor with respect to the distribution of the Securities,
except with its affiliates or with the prior written consent of the
Company.
Terms used in this Section 2(c) have the meanings given to them by Regulation
S.
(d) Each Initial Purchaser, severally and not jointly, represents,
warrants and agrees that (i) it has not offered or sold and prior to the date
six months after the Closing Date 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 businesses or otherwise in
circumstances which have not resulted and will not result in an offer to the
public in the United Kingdom within the meaning of the Public Offers of
Securities Regulations 1995; (ii) it has complied and will comply with all
applicable provisions of the Financial Services ▇▇▇ ▇▇▇▇ and the Public Offers
of Securities Regulations 1995 with respect to anything done by it in relation
to the Securities in, from or otherwise involving the United Kingdom; and (iii)
it has only issued or passed on and will only issue or pass on in the United
Kingdom any document received by it in connection with the issue of the
Securities to a person who is of a kind described in Article 11(3) of the
Financial Services ▇▇▇ ▇▇▇▇ (Investment Advertisements) (Exemptions) Order 1996
or is a person to whom such document may otherwise lawfully be issued or passed
on.
(e) Each Initial Purchaser, severally and not jointly, agrees that, prior
to or simultaneously with the confirmation of sale by such Initial Purchaser to
any purchaser of any of the Securities purchased by such Initial Purchaser from
the Company pursuant hereto, such Initial Purchaser shall furnish to that
purchaser a copy of the Offering Memorandum (and any amendment or supplement
thereto that the Company shall have furnished to such Initial Purchaser prior
to the date of such confirmation of sale). In addition to the foregoing, each
Initial Purchaser acknowledges and agrees that the Company and, for purposes of
the opinions to be delivered to the Initial Purchasers pursuant to Sections
5(d) and (e), counsel for the Company and for the
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Initial Purchasers, respectively, may rely upon the accuracy of the
representations and warranties of the Initial Purchasers and their compliance
with their agreements contained in this Section 2, and each Initial Purchaser
hereby consents to such reliance.
(f) The Company acknowledges and agrees that the Initial Purchasers may
sell Securities to any affiliate of an Initial Purchaser and that any such
affiliate may sell Securities purchased by it to an Initial Purchaser.
3. Delivery of and Payment for the Securities. (a) Delivery of and
payment for the Securities shall be made at the offices of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ &
▇▇▇▇▇▇▇▇, New York, New York, or at such other place as shall be agreed upon by
the Initial Purchasers and the Company, at 10:00 A.M., New York City time, on
May 14, 1998, or at such other time or date, not later than seven full business
days thereafter, as shall be agreed upon by the Initial Purchasers and the
Company (such date and time of payment and delivery being referred to herein as
the "Closing Date").
(b) On the Closing Date, payment of the purchase price for the Securities
shall be made to the Company by wire or book-entry transfer of same-day funds
to such account or accounts as the Company shall specify prior to the Closing
Date or by such other means as the parties hereto shall agree prior to the
Closing Date against delivery to the Initial Purchasers of the certificates
evidencing the Securities. 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 the Initial Purchasers hereunder. Upon delivery, the
Securities shall be in global form, contain the legends required by the
Indenture and be registered in such names and in such denominations as CSI on
behalf of the Initial Purchasers shall have requested in writing not less than
two full business days prior to the Closing Date. The Company agrees to make
one or more global certificates evidencing the Securities available for
inspection by CSI on behalf of the Initial Purchasers in New York, New York at
least 24 hours prior to the Closing Date.
4. Further Agreements of the Company. The Company agrees with each of
the Initial Purchasers:
(a) to advise the Initial Purchasers promptly and, if requested,
confirm such advice in writing, of the happening of any event which makes
any statement of a material fact made in the Offering Memorandum untrue
or which requires the making of any additions to or changes in the
Offering Memorandum (as amended or supplemented from time to time) in
order to make the statements therein, in the light of the circumstances
under which they were made, not misleading; to advise the Initial
Purchasers promptly of any order preventing or suspending the use of the
Preliminary Offering Memorandum or the Offering Memorandum, of any
suspension of the qualification of the Securities for offering or sale in
any jurisdiction and of the initiation or threatening of any proceeding
for any such purpose; and to use its best efforts to prevent the issuance
of any such order preventing or suspending the use of the Preliminary
Offering Memorandum or the Offering Memorandum or suspending any such
qualification and, if any such suspension is issued, to obtain the
lifting thereof at the earliest possible time;
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(b) to furnish promptly to each of the Initial Purchasers and
counsel for the Initial Purchasers, without charge, as many copies of the
Preliminary Offering Memorandum and the Offering Memorandum (and any
amendments or supplements thereto) as may be reasonably requested;
(c) prior to making any amendment or supplement to the Offering
Memorandum, to furnish a copy thereof to each of the Initial Purchasers
and counsel for the Initial Purchasers and not to effect any such
amendment or supplement to which the Initial Purchasers shall reasonably
object by notice to the Company after a reasonable period to review;
(d) 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, in the opinion of counsel for
the Initial Purchasers or counsel for the Company, 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, or if it is necessary to amend or supplement
the Offering Memorandum to comply with applicable law, to promptly
prepare such amendment or supplement as may be necessary to correct such
untrue statement or omission or so that the Offering Memorandum, as so
amended or supplemented, will comply with applicable law;
(e) for so long as the Securities are outstanding and are
"restricted securities" within the meaning of Rule 144(a)(3) under the
Securities Act, to furnish to holders of the Securities and prospective
purchasers of the Securities designated by such holders, upon request of
such holders or such prospective purchasers, the information required to
be delivered pursuant to Rule 144A(d)(4) under the Securities Act, unless
the Company is then subject to and in compliance with Section 13 or 15(d)
of the Exchange Act (the foregoing agreement being for the benefit of the
holders from time to time of the Securities and prospective purchasers of
the Securities designated by such holders);
(f) for so long as the Securities are outstanding, to furnish to
the Initial Purchasers copies of any annual reports, quarterly reports
and current reports filed by the Company with the Commission on Forms
10-K, 10-Q and 8-K, or such other similar forms as may be designated by
the Commission, and such other documents, reports and information as
shall be furnished by the Company to the Trustee or to the holders of the
Securities pursuant to the Indenture or the Exchange Act or any rule or
regulation of the Commission thereunder;
(g) to promptly take from time to time such actions as the Initial
Purchasers may reasonably request to qualify the Securities for offering
and sale under the securities or Blue Sky laws of such jurisdictions as
the Initial Purchasers may designate and to continue such qualifications
in effect for so long as required for the resale of the Securities; and
to arrange for the determination of the eligibility for investment of the
Securities under the laws of such jurisdictions as the Initial Purchasers
may reasonably
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request; provided that the Company and its subsidiaries shall not be
obligated to qualify as foreign corporations in any jurisdiction in which
they are not so qualified or to file a general consent to service of
process in any jurisdiction;
(h) to assist the Initial Purchasers in arranging for the
Securities to be designated Private Offerings, Resales and Trading
through Automated Linkages ("PORTAL") Market securities in accordance
with the rules and regulations adopted by the National Association of
Securities Dealers, Inc. ("NASD") relating to trading in the PORTAL
Market and for the Securities to be eligible for clearance and settlement
through The Depository Trust Company ("DTC");
(i) not to, and to cause its affiliates not to, sell, offer for
sale or solicit offers to buy or otherwise negotiate in respect of any
security (as such term is defined in the Securities Act) which could be
integrated with the sale of the Securities in a manner which would
require registration of the Securities under the Securities Act;
(j) except following the effectiveness of the Exchange Offer
Registration Statement or the Shelf Registration Statement, as the case
may be, not to, and to cause its affiliates not to, and not to authorize
or knowingly permit any person acting on their behalf to, solicit any
offer to buy or offer to sell the Securities by means of any form of
general solicitation or general advertising within the meaning of
Regulation D or in any manner involving a public offering within the
meaning of Section 4(2) of the Securities Act; and not to offer, sell,
contract to sell or otherwise dispose of, directly or indirectly, any
securities under circumstances where such offer, sale, contract or
disposition would cause the exemption afforded by Section 4(2) of the
Securities Act to cease to be applicable to the offering and sale of the
Securities as contemplated by this Agreement and the Offering Memorandum;
(k) for a period of 180 days from the date of the Offering
Memorandum, not to offer for sale, sell, contract to sell or otherwise
dispose of, directly or indirectly, or file a registration statement for,
or announce any offer, sale, contract for sale of or other disposition of
any debt securities issued or guaranteed by the Company or any of its
subsidiaries (other than the Securities) without the prior written
consent of the Initial Purchasers;
(l) during the period from the Closing Date until three years after
the Closing Date, without the prior written consent of the Initial
Purchasers, not to, and not permit any of its subsidiaries to, resell any
of the Securities that have been reacquired by them, except for
Securities purchased by the Company or any of its subsidiaries and resold
in a transaction registered under the Securities Act;
(m) in connection with the offering of the Securities, until CSI on
behalf of the Initial Purchasers shall have notified the Company of the
completion of the resale of the Securities, not to, and to cause its
affiliated purchasers (as defined in Regulation M under the Exchange Act)
not to, either alone or with one or more other persons, bid for or
purchase, for any account in which it or any of its affiliated purchasers
has a beneficial
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interest, any Securities, or attempt to induce any person to purchase any
Securities; and not to, and to cause its affiliated purchasers not to,
make bids or purchase for the purpose of creating actual, or apparent,
active trading in or of raising the price of the Securities;
(n) in connection with the offering of the Securities, to make its
officers, employees, independent accountants and legal counsel reasonably
available upon request by the Initial Purchasers;
(o) to furnish to each of the Initial Purchasers on the date hereof
a copy of the independent accountants' report included in the Offering
Memorandum signed by the accountants rendering such report;
(p) prior to the Closing Date, not to issue any press release or
other communication directly or indirectly or hold any press conference
with respect to the Company, its condition, financial or otherwise, or
earnings, business affairs or business prospects (except for routine oral
marketing communications in the ordinary course of business and
consistent with the past practices of the Company and of which the
Initial Purchasers are notified), without the prior written consent of
the Initial Purchasers, unless in the judgment of the Company and its
counsel, and after notification to the Initial Purchasers, such press
release or communication is required by law; and
(q) to apply the net proceeds from the sale of the Securities as
set forth in the Offering Memorandum under the heading "Use of Proceeds".
5. Conditions of Initial Purchasers' Obligations. The respective
obligations of the Initial Purchasers hereunder are subject to the accuracy, on
and as of the date hereof and the Closing Date, of the representations and
warranties of the Company contained herein, to the accuracy of the statements
of the Company and its officers made in any certificates delivered pursuant
hereto, to the performance by the Company of its obligations hereunder, and to
each of the following additional terms and conditions:
(a) The Offering Memorandum (and any amendments or supplements
thereto) shall have been printed and copies distributed to the Initial
Purchasers as promptly as practicable on or following the date of this
Agreement or at such other date and time as to which the Initial
Purchasers may agree; and no stop order suspending the sale of the
Securities in any jurisdiction shall have been issued and no proceeding
for that purpose shall have been commenced or shall be pending or
threatened.
(b) None of the Initial Purchasers shall have discovered and
disclosed to the Company on or prior to the Closing Date that the
Offering Memorandum or any amendment or supplement thereto contains an
untrue statement of a fact which, in the opinion of counsel for the
Initial Purchasers, is material or omits to state any fact which, in the
opinion of such counsel, is material and is required to be stated therein
or is necessary to make the statements therein not misleading.
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(c) All corporate proceedings and other legal matters incident to
the authorization, form and validity of each of the Transaction Documents
and the Offering Memorandum, and all other legal matters relating to the
Transaction Documents and the transactions contemplated thereby, shall be
satisfactory in all material respects to the Initial Purchasers, and the
Company shall have furnished to the Initial Purchasers all documents and
information that they or their counsel may reasonably request to enable
them to pass upon such matters.
(d) Sonnenschein, Nath & ▇▇▇▇▇▇▇▇▇ 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,
substantially to the effect set forth in Annex B hereto.
(e) The Initial Purchasers shall have received from ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
& ▇▇▇▇▇▇▇▇, counsel for the Initial Purchasers, such opinion or opinions,
dated the Closing Date, with respect to such matters as the Initial
Purchasers may reasonably require, and the Company shall have furnished
to such counsel such documents and information as they request for the
purpose of enabling them to pass upon such matters.
(f) The Company shall have furnished to the Initial Purchasers a
letter (the "Initial Letter") of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP
and Ernst & Young LLP, addressed to the Initial Purchasers and dated the
date hereof, in form and substance satisfactory to the Initial
Purchasers, substantially to the effect set forth in Annex C hereto.
(g) The Company shall have furnished to the Initial Purchasers a
letter (the "Bring-Down Letter") of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
LLP and Ernst & Young LLP, addressed to the Initial Purchasers and dated
the Closing Date (i) confirming that they are independent public
accountants with respect to the Company and its subsidiaries within the
meaning of Rule 101 of the Code of Professional Conduct of the AICPA and
its interpretations and rulings thereunder, (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 three business days prior to the date of the Bring-Down
Letter), that the conclusions and findings of such accountants with
respect to the financial information and other matters covered by the
Initial Letter are accurate and (iii) confirming in all material respects
the conclusions and findings set forth in the Initial Letter.
(h) The Company shall have furnished to the Initial Purchasers a
certificate, dated the Closing Date, of its chief executive officer and
its chief financial officer stating that (A) such officers have carefully
examined the Offering Memorandum, (B) in their opinion, the Offering
Memorandum, as of its date, did not include any untrue statement of a
material fact and did not omit to state a material fact required to be
stated therein or necessary in order to make the statements therein, in
the light of the circumstances under which they were made, not
misleading, and since the date of the Offering Memorandum,
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no event has occurred which should have been set forth in a supplement or
amendment to the Offering Memorandum so that the Offering Memorandum (as
so amended or supplemented) would not include any untrue statement of a
material fact and would not omit to state a material fact required to be
stated therein or necessary in order to make the statements therein, in
the light of the circumstances under which they were made, not misleading
and (C) as of the Closing Date, the representations and warranties of the
Company in this Agreement are true and correct, the Company has complied
with all agreements and satisfied all conditions on its part to be
performed or satisfied hereunder on or prior to the Closing Date, and
subsequent to the date of the most recent financial statements contained
in the Offering Memorandum, there has been no material adverse change in
the financial position or results of operation of the Company and its
subsidiaries taken as a whole, or any change, or any development
including a prospective change, in or affecting the condition (financial
or otherwise), results of operations, business or prospects of the
Company and its subsidiaries taken as a whole, except as set forth in the
Offering Memorandum.
(i) The Initial Purchasers shall have received a counterpart of the
Exchange and Registration Rights Agreement which shall have been executed
and delivered by a duly authorized officer of the Company.
(j) The Indenture shall have been duly executed and delivered by
the Company and the Trustee, and the Securities shall have been duly
executed and delivered by the Company and duly authenticated by the
Trustee.
(k) The Securities shall have been approved by the NASD for trading
in the PORTAL Market.
(l) If any event shall have occurred that requires the Company
under Section 4(d) to prepare an amendment or supplement to the Offering
Memorandum, such amendment or supplement shall have been prepared, the
Initial Purchasers shall have been given a reasonable opportunity to
comment thereon, and copies thereof shall have been delivered to the
Initial Purchasers reasonably in advance of the Closing Date.
(m) There shall not have occurred any invalidation of Rule 144A
under the Securities Act by any court or any withdrawal or proposed
withdrawal of any rule or regulation under the Securities Act or the
Exchange Act by the Commission or any amendment or proposed amendment
thereof by the Commission which in the judgment of the Initial Purchasers
would materially impair the ability of the Initial Purchasers to
purchase, hold or effect resales of the Securities as contemplated
hereby.
(n) Subsequent to the execution and delivery of this Agreement or,
if earlier, the dates as of which information is given in the Offering
Memorandum (exclusive of any amendment or supplement thereto), there
shall not have been any change in the capital stock or long-term debt or
any change, or any development involving a prospective change, in or
affecting the condition (financial or otherwise), results of operations,
business or prospects of the Company and its subsidiaries taken as a
whole, the effect of
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which, in any such case described above, is, in the judgment of the
Initial Purchasers, so material and adverse as to make it impracticable
or inadvisable to proceed with the sale or delivery of the Securities on
the terms and in the manner contemplated by this Agreement and the
Offering Memorandum (exclusive of any amendment or supplement thereto).
(o) No action shall have been taken and no statute, rule,
regulation or order shall have been enacted, adopted or issued by any
governmental agency or body which would, as of the Closing Date, prevent
the issuance or sale of the Securities; and no injunction, restraining
order or order of any other nature by any federal or state court of
competent jurisdiction shall have been issued as of the Closing Date
which would prevent the issuance or sale of the Securities.
(p) Subsequent to the execution and delivery of this Agreement (i)
no downgrading shall have occurred in the rating accorded the Securities
or any of the Company's other debt securities or preferred stock by any
"nationally recognized statistical rating organization", as such term is
defined by the Commission for purposes of Rule 436(g)(2) of the rules and
regulations of the Commission under the Securities Act and (ii) no such
organization shall have publicly announced that it has under surveillance
or review (other than an announcement with positive implications of a
possible upgrading), its rating of the Securities or any of the Company's
other debt securities or preferred stock.
(q) Subsequent to the execution and delivery of this Agreement
there shall not have occurred any of the following: (i) trading in
securities generally on the New York Stock Exchange, the American Stock
Exchange or the over-the-counter market shall have been suspended or
limited, or minimum prices shall have been established on any such
exchange or market by the Commission, by any such exchange or by any
other regulatory body or governmental authority having jurisdiction, or
trading in any securities of the Company on any exchange or in the
over-the-counter market shall have been suspended or (ii) any moratorium
on commercial banking activities shall have been declared by federal or
New York state authorities or (iii) an outbreak or escalation of
hostilities or a declaration by the United States of a national emergency
or war or (iv) a material adverse change in general economic, political
or financial conditions (or the effect of international conditions on the
financial markets in the United States shall be such) the effect of
which, in the case of this clause (iv), is, in the judgment of the
Initial Purchasers, so material and adverse as to make it impracticable
or inadvisable to proceed with the sale or the delivery of the Securities
on the terms and in the manner contemplated by this Agreement and in the
Offering Memorandum (exclusive of any amendment or supplement thereto).
(r) The Initial Purchasers shall have received (i) copies of the
documentation evidencing the Senior Credit Facility (the "Bank
Documents"), in each case certified by the secretary of the Company as
being true, complete and correct and (ii) evidence, reasonably
satisfactory to them, that the initial funding is occurring under the
Bank Documents.
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All opinions, letters, evidence and certificates mentioned above or
elsewhere in this Agreement shall be deemed to be in compliance with the
provisions hereof only if they are in form and substance reasonably
satisfactory to counsel for the Initial Purchasers.
6. Termination. The obligations of the Initial Purchasers hereunder may
be terminated by the Initial Purchasers, in their absolute discretion, 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
Section 5(m), (n), (o), (p) or (q) shall have occurred and be continuing.
7. Defaulting Initial Purchasers. (a) If, on the Closing Date, any
Initial Purchaser defaults in the performance of its obligations under this
Agreement, the non-defaulting Initial Purchasers may make arrangements for the
purchase of the Securities which such defaulting Initial Purchaser agreed but
failed to purchase by other persons satisfactory to the Company and the
non-defaulting Initial Purchasers, but if no such arrangements are made within
36 hours after such default, this Agreement shall terminate without liability
on the part of the non-defaulting Initial Purchasers or the Company, except
that the Company will continue to be liable for the payment of expenses to the
extent set forth in Sections 8 and 12 and except that the provisions of
Sections 9 and 10 shall not terminate and shall remain in effect. As used in
this Agreement, the term "Initial Purchasers" includes, for all purposes of
this Agreement unless the context otherwise requires, any party not listed in
Schedule 1 hereto that, pursuant to this Section 7, purchases Securities which
a defaulting Initial Purchaser agreed but failed to purchase.
(b) Nothing contained herein shall relieve a defaulting Initial Purchaser
of any liability it may have to the Company or any non-defaulting Initial
Purchaser for damages caused by its default. If other persons are obligated or
agree to purchase the Securities of a defaulting Initial Purchaser, either the
non-defaulting Initial Purchasers 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,
and the Company agrees to promptly prepare any amendment or supplement to the
Offering Memorandum that effects any such changes.
8. Reimbursement of Initial Purchasers' Expenses. If (a) this Agreement
shall have been terminated pursuant to Section 6 or 7, (b) the Company shall
fail to tender the Securities for delivery to the Initial Purchasers for any
reason permitted under this Agreement or (c) the Initial Purchasers shall
decline to purchase the Securities for any reason permitted under this
Agreement, the Company shall reimburse the Initial Purchasers for such
out-of-pocket expenses (including reasonable fees and disbursements of counsel)
as shall have been reasonably incurred by the Initial Purchasers in connection
with this Agreement and the proposed purchase and resale of the Securities. If
this Agreement is terminated pursuant to Section 7 by reason of the default of
one or more of the Initial Purchasers, the Company shall not be obligated to
reimburse any defaulting Initial Purchaser on account of such expenses.
9. Indemnification. (a) The Company and the Subsidiary Guarantors
shall, jointly and severally, indemnify and hold harmless each Initial
Purchaser, its affiliates, their respective officers, directors, employees,
representatives and agents, and each person, if any, who
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controls any Initial Purchaser within the meaning of the Securities Act or the
Exchange Act (collectively referred to for purposes of this Section 9(a) and
Section 10 as an Initial Purchaser), from and against any loss, claim, damage
or liability, joint or several, or any action in respect thereof (including,
without limitation, any loss, claim, damage, liability or action relating to
purchases and sales of the Securities), to which that Initial Purchaser may
become subject, whether commenced or threatened, under the Securities Act, the
Exchange Act, any other federal or state statutory law or regulation, at common
law 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 the Preliminary Offering Memorandum
or the Offering Memorandum or in any amendment or supplement thereto or in any
information provided by the Company pursuant to Section 4(e) or (ii) the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading, and
shall reimburse each Initial Purchaser promptly upon demand for any legal or
other expenses reasonably incurred by that Initial Purchaser in connection with
investigating or defending or preparing to defend 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, that the Company
and the Subsidiary Guarantors shall not be liable in any such case to the
extent that any such loss, claim, damage, liability or action arises out of, or
is based upon, an untrue statement or alleged untrue statement in or omission
or alleged omission from any of such documents in reliance upon and in
conformity with any Initial Purchasers' Information furnished by such Initial
Purchaser; and provided, further, that with respect to any such untrue
statement in or omission from the Preliminary Offering Memorandum, the
indemnity agreement contained in this Section 9(a) shall not inure to the
benefit of any such Initial Purchaser to the extent that the sale to the person
asserting any such loss, claim, damage, liability or action was an initial
resale by such Initial Purchaser and any such loss, claim, damage, liability or
action of or with respect to such Initial Purchaser results from the fact that
both (A) to the extent required by applicable law, a copy of the Offering
Memorandum was not sent or given to such person at or prior to the written
confirmation of the sale of such Securities to such person and (B) the untrue
statement in or omission from the Preliminary Offering Memorandum was corrected
in the Offering Memorandum unless such failure to deliver the Offering
Memorandum was a result of non-compliance by the Company with Section 4(b).
(b) Each Initial Purchaser, severally and not jointly, shall indemnify
and hold harmless the Company, the Subsidiary Guarantors, their respective
affiliates, officers, directors, employees, representatives and agents, and
each person, if any, who controls the Company and the Subsidiary Guarantors
within the meaning of the Securities Act or the Exchange Act (collectively
referred to for purposes of this Section 9(b) and Section 10 as the Company),
from and against any loss, claim, damage or liability, joint or several, or any
action in respect thereof, to which the Company may become subject, whether
commenced or threatened, under the Securities Act, the Exchange Act, any other
federal or state statutory law or regulation, at common law 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 the Preliminary Offering Memorandum or the Offering
Memorandum or in any amendment or supplement thereto or (ii) the omission or
alleged omission to state therein a material fact required to be stated therein
or necessary in order to make the statements therein, in the light of
22
22
the circumstances under which they were made, 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
any Initial Purchasers' Information furnished by such Initial Purchaser, and
shall reimburse the Company for any legal or other expenses reasonably incurred
by the Company in connection with investigating or defending or preparing to
defend against or appearing as a third party witness in connection with any
such loss, claim, damage, liability or action as such expenses are incurred.
(c) Promptly after receipt by an indemnified party under this Section 9
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 pursuant to Section 9(a) or 9(b), 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 9 except to the extent that it
has been materially prejudiced (through the forfeiture of substantive rights or
defenses) by such failure; and, provided, further, that the failure to notify
the indemnifying party shall not relieve it from any liability which it may
have to an indemnified party otherwise than under this Section 9. 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 9 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
an indemnified party shall have the right to employ its own counsel in any such
action, but the fees, expenses and other charges of such counsel for the
indemnified party will be at the expense of such indemnified party unless (i)
the employment of counsel by the indemnified party has been authorized in
writing by the indemnifying party, (ii) the indemnified party has reasonably
concluded (based upon advice of counsel to the indemnified party) that there
may be legal defenses available to it or other indemnified parties that are
different from or in addition to those available to the indemnifying party,
(iii) a conflict or potential conflict exists (based upon advice of counsel to
the indemnified party) between the indemnified party and the indemnifying party
(in which case the indemnifying party will not have the right to direct the
defense of such action on behalf of the indemnified party) or (iv) the
indemnifying party has not in fact employed counsel reasonably satisfactory to
the indemnified party to assume the defense of such action within a reasonable
time after receiving notice of the commencement of the action, in each of which
cases the reasonable fees, disbursements and other charges of counsel will be
at the expense of the indemnifying party or parties. It is understood that the
indemnifying party or parties shall not, in connection with any proceeding or
related proceedings in the same jurisdiction, be liable for the reasonable
fees, disbursements and other charges of more than one separate firm of
attorneys (in addition to any local counsel) at any one time for all such
indemnified party or parties. Each indemnified party, as a condition of the
indemnity agreements contained in Sections 9(a) and 9(b), shall use all
reasonable efforts to cooperate with the indemnifying party in the defense of
any such action or claim. No indemnifying party shall be liable for any
settlement of any such action effected without its written consent (which
consent
23
23
shall not be unreasonably withheld), but if settled with its written consent or
if there be a final judgment for 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. No indemnifying party shall, without the prior written consent of
the indemnified party (which consent shall not be unreasonably withheld),
effect any settlement of any pending or threatened proceeding in respect of
which any indemnified party is or could have been a party and indemnity could
have been sought hereunder by such indemnified party unless such settlement
includes an unconditional release of such indemnified party from all liability
on claims that are the subject matter of such proceeding.
The obligations of the Company and the Initial Purchasers in this Section
9 and in Section 10 are in addition to any other liability that the Company or
the Initial Purchasers, as the case may be, may otherwise have, including in
respect of any breaches of representations, warranties and agreements made
herein by any such party.
10. Contribution. If the indemnification provided for in Section 9 is
unavailable or insufficient to hold harmless an indemnified party under Section
9(a) or 9(b), 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 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 on
the one hand and the Initial Purchasers on the other with respect to the
statements or omissions that 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 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 or on behalf of the Company, on the one hand, and the total
discounts and commissions received by the Initial Purchasers with respect to
the Securities purchased under this Agreement, on the other, bear to the total
gross proceeds from the sale of the Securities under this Agreement, in each
case as set forth in the table on the cover page of the Offering Memorandum.
The relative fault shall be determined by reference to, 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 the Company
and its subsidiaries or information supplied by the Company on the one hand or
to any Initial Purchasers' Information on the other, the intent of the parties
and their relative knowledge, access to information and opportunity to correct
or prevent such untrue statement or omission. The Company and the Initial
Purchasers agree that it would not be just and equitable if contributions
pursuant to this Section 10 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 that 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 10 shall be deemed
to include, for purposes of this Section 10, any legal or other expenses
reasonably incurred by such indemnified party in
24
24
connection with investigating or defending or preparing to defend any such
action or claim. Notwithstanding the provisions of this Section 10, no Initial
Purchaser shall be required to contribute any amount in excess of the amount by
which the total discounts and commissions received by such Initial Purchaser
with respect to the Securities purchased by it under this Agreement 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 10 are several in proportion to their respective
purchase obligations and not joint.
11. Persons Entitled to Benefit of Agreement. This Agreement shall inure
to the benefit of and be binding upon the Initial Purchasers, the Company and
their respective successors. This Agreement and the terms and provisions
hereof are for the sole benefit of only those persons, except as provided in
Sections 9 and 10 with respect to affiliates, officers, directors, employees,
representatives, agents and controlling persons of the Company, the Subsidiary
Guarantors and the Initial Purchasers and in Section 4(e) with respect to
holders and prospective purchasers of the Securities. Nothing in this
Agreement is intended or shall be construed to give any person, other than the
persons referred to in this Section 11, any legal or equitable right, remedy or
claim under or in respect of this Agreement or any provision contained herein.
12. Expenses. The Company agrees with the Initial Purchasers to pay (a)
the costs incident to the authorization, issuance, sale, preparation and
delivery of the Securities and any 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 amendments or supplements
thereto; (c) the costs of reproducing and distributing each of the Transaction
Documents; (d) the costs incident to the preparation, printing and delivery of
the certificates evidencing the Securities, including stamp duties and transfer
taxes, if any, payable upon issuance of the Securities; (e) the fees and
expenses of the Company's counsel and independent accountants; (f) the fees and
expenses of qualifying the Securities under the securities laws of the several
jurisdictions as provided in Section 4(g) and of preparing, printing and
distributing Blue Sky Memoranda (including related fees and expenses of counsel
for the Initial Purchasers); (g) any fees charged by rating agencies for rating
the Securities; (h) the fees and expenses of the Trustee and any paying agent
(including related fees and expenses of any counsel to such parties); (i) all
expenses and application fees incurred in connection with the application for
the inclusion of the Securities on the PORTAL Market and the approval of the
Securities for book-entry transfer by DTC; and (j) all other costs and expenses
incident to the performance of the obligations of the Company under this
Agreement which are not otherwise specifically provided for in this Section 12;
provided, however, that except as provided in this Section 12 and Section 8,
the Initial Purchasers shall pay their own costs and expenses.
13. Survival. The respective indemnities, rights of contribution,
representations, warranties and agreements of the Company and the Initial
Purchasers contained in this Agreement or made by or on behalf of the Company
or the Initial Purchasers pursuant to this
25
25
Agreement or any certificate delivered pursuant hereto 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 of their respective
affiliates, officers, directors, employees, representatives, agents or
controlling persons.
14. 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
or telecopy transmission to Chase Securities Inc., ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇
▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇ ▇▇▇▇▇ (telecopier no.: (212)
270-0994); or
(b) if to the Company, shall be delivered or sent by mail or
telecopy transmission to the address of the Company set forth in the
Offering Memorandum, Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇ (telecopier no.: (773)
890-0523);
provided that any notice to an Initial Purchaser pursuant to Section 9(c) shall
also be delivered or sent by mail to such Initial Purchaser at its address set
forth on the signature page hereof. Any such statements, requests, notices or
agreements shall take effect at the time of receipt thereof. The Company shall
be entitled to act and rely upon any request, consent, notice or agreement
given or made on behalf of the Initial Purchasers by CSI.
15. Definition of Terms. For purposes of this Agreement, (a) the term
"business day" means any day on which the New York Stock Exchange, Inc. is open
for trading, (b) the term "subsidiary" has the meaning set forth in Rule 405
under the Securities Act and (c) except where otherwise expressly provided, the
term "affiliate" has the meaning set forth in Rule 405 under the Securities
Act.
16. Initial Purchasers' Information. The parties hereto acknowledge and
agree that, for all purposes of this Agreement, the Initial Purchasers'
Information consists solely of the following information in the Preliminary
Offering Memorandum and the Offering Memorandum: (i) the last paragraph on the
front cover page concerning the terms of the offering by the Initial
Purchasers; (ii) the legend on the inside front cover page concerning
over-allotment and trading activities by the Initial Purchasers; (iii) the
statements concerning the Initial Purchasers contained in the fifth paragraph
under the heading "Certain Transactions"; and (iv) the statements concerning
the Initial Purchasers contained in the first and second sentences of the third
paragraph and paragraph twelve under the heading "Plan of Distribution".
17. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
18. Counterparts. This Agreement may be executed in one or more
counterparts (which may include counterparts delivered by telecopier) 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.
26
26
19. Amendments. No amendment or waiver of any provision of this
Agreement, nor any consent or approval to any departure therefrom, shall in any
event be effective unless the same shall be in writing and signed by the
parties hereto.
20. 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.
27
27
If the foregoing is in accordance with your understanding of our
agreement, kindly sign and return to us a counterpart hereof, whereupon this
instrument will become a binding agreement among the Company, the Subsidiary
Guarantors and the Initial Purchasers in accordance with its terms.
Very truly yours,
HOME PRODUCTS INTERNATIONAL, INC.
By______________________________
Name:
Title:
SELFIX, INC.,
as a Subsidiary Guarantor
By______________________________
Name:
Title:
SEYMOUR HOUSEWARES CORPORATION,
as a Subsidiary Guarantor
By______________________________
Name:
Title:
SHUTTERS, INC.,
as a Subsidiary Guarantor
By______________________________
Name:
Title:
TAMOR CORPORATION,
as a Subsidiary Guarantor
By______________________________
Name:
Title:
28
28
Accepted:
CHASE SECURITIES INC.
By____________________________
Authorized Signatory
Address for notices pursuant to Section 9(c):
▇ ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: Legal Department
NATIONSBANC ▇▇▇▇▇▇▇▇▇▇ SECURITIES LLC
By____________________________
Authorized Signatory
Address for notices pursuant to Section 9(c):
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Legal Department
29
29
SCHEDULE 1
Senior Subordinated Notes
Principal
Amount
Initial Purchasers of Securities
------------------------------------- -------------
Chase Securities Inc. $81,250,000
NationsBanc ▇▇▇▇▇▇▇▇▇▇ Securities LLC $43,750,000
Total $125,000,000
30
A-1
ANNEX A
[Form of Exchange and Registration Rights Agreement]
31
B-1
ANNEX B
[Form of Opinion of Counsel for the Company]
Sonnenschein, Nath & ▇▇▇▇▇▇▇▇▇ 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, substantially to the effect set forth
below:
(i) the Company and each of its subsidiaries are validly existing
as corporations in good standing under the laws of their respective
jurisdictions of incorporation, are duly qualified to do business and are
in good standing as foreign corporations 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 or have such power or authority would not,
singularly or in the aggregate, have a Material Adverse Effect);
(ii) the Company has an authorized capitalization as set forth in
the Offering Memorandum;
(iii) the descriptions in the Offering Memorandum of statutes,
legal and governmental proceedings and contracts and other documents are
accurate in all material respects; the statements in the Offering
Memorandum under the heading "Certain Federal Income Tax Consequences",
to the extent that they constitute summaries of matters of law or
regulation or legal conclusions, have been reviewed by such counsel and
fairly summarize the matters described therein in all material respects;
and such counsel does not have actual knowledge of any current or pending
legal or governmental actions, suits or proceedings 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 which are not described as so required;
(iv) the Indenture conforms in all material respects with the
requirements of the Trust Indenture Act and the rules and regulations of
the Commission applicable to an indenture which is qualified thereunder;
(v) the Company has full right, power and authority to execute and
deliver each of the Transaction Documents and to perform its obligations
thereunder; and all corporate action required to be taken for the due and
proper authorization, execution and delivery of each of the Transaction
Documents and the consummation of the transactions contemplated thereby
have been duly and validly taken;
32
B-2
(vi) each of the Purchase Agreement and the Exchange and
Registration Rights Agreement has been duly authorized, executed and
delivered by the Company and constitutes a valid and legally binding
agreement of the Company enforceable against the Company in accordance
with its terms, except to the extent that such enforceability may be
limited by applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and other similar laws affecting creditors'
rights generally and by general equitable principles (whether considered
in a proceeding in equity or at law) and except to the extent that the
indemnification provisions thereof may be unenforceable;
(vii) the Indenture has been duly authorized, executed and delivered
by the Company and the Subsidiary Guarantors and, assuming due
authorization, execution and delivery thereof by the Trustee, constitutes
a valid and legally binding agreement of the Company and the Subsidiary
Guarantors enforceable against the Company and the Subsidiary Guarantors
in accordance with its terms, except to the extent that such
enforceability may be limited by applicable bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and other similar laws
affecting creditors' rights generally and by general equitable principles
(whether considered in a proceeding in equity or at law);
(viii)(a) the Securities have been duly authorized and issued by
the Company and, assuming due authentication thereof by the Trustee and
upon payment and delivery in accordance with the Purchase Agreement, 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 to the extent that such
enforceability may be limited by applicable bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and other similar laws
affecting creditors' rights generally and by general equitable principles
(whether considered in a proceeding in equity or at law);
(b) the Guarantees have been duly authorized and issued by each of
the Subsidiary Guarantors and, assuming due authentication of the
Securities by the Trustee and upon payment and delivery of the Securities
in accordance with the Purchase Agreement, will constitute valid and
legally binding obligations of the Subsidiary Guarantors entitled to the
benefits of the Indenture and enforceable against the Subsidiary
Guarantors in accordance with their terms, except to the extent that such
enforceability may be limited by applicable bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and other similar laws
affecting creditors' rights generally and by general equitable principles
(whether considered in a proceeding in equity or at law);
(x) each Transaction Document conforms in all material respects to
the description thereof contained in the Offering Memorandum;
(xi) the execution, delivery and performance by the Company of each
of the Transaction Documents, the issuance, authentication, sale and
delivery of the Securities and compliance by the Company with the terms
thereof and the consummation of the transactions contemplated by the
Transaction Documents will not conflict with or result
33
B-3
in a breach or violation of any of the terms or provisions of, or
constitute a default under, or result in the creation or imposition of
any lien, charge or encumbrance upon any property or assets of the
Company or any of its subsidiaries pursuant to, any material indenture,
mortgage, deed of trust, loan agreement or other material 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, nor will such actions
result in any violation of the provisions of the charter or by-laws of
the Company or any of its subsidiaries or any statute or any judgment,
order, decree, rule or regulation of any court or arbitrator or
governmental agency or body having jurisdiction over the Company or any
of its subsidiaries or any of their properties or assets; and no consent,
approval, authorization or order of, or filing or registration with, any
such court or arbitrator or governmental agency or body under any such
statute, judgment, order, decree, rule or regulation is required for the
execution, delivery and performance by the Company of each of the
Transaction Documents, the issuance, authentication, sale and delivery of
the Securities and compliance by the Company with the terms thereof and
the consummation of the transactions contemplated by the Transaction
Documents, except for such consents, approvals, authorizations, filings,
registrations or qualifications (i) which have been obtained or made
prior to the Closing Date and (ii) as may be required to be obtained or
made under the Securities Act and applicable state securities laws as
provided in the Exchange and Registration Rights Agreement;
(xii) to the knowledge of such counsel, there are no pending
actions or suits or judicial, arbitral, rule-making, administrative or
other proceedings 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 (A) singularly or in the aggregate, if
determined adversely to the Company or any of its subsidiaries, could
reasonably be expected to have a Material Adverse Effect or (B) questions
the validity or enforceability of any of the Transaction Documents or any
action taken or to be taken pursuant thereto; and to the best knowledge
of such counsel, no such proceedings are threatened or contemplated by
governmental authorities or threatened by others; and
(xiii) assuming the accuracy of the representations, warranties and
agreements of the Company and of the Initial Purchasers contained in the
Purchase Agreement, no registration of the Securities under the Securities Act
or qualification of the Indenture under the Trust Indenture Act is required in
connection with the issuance and sale of the Securities by the Company and the
offer, resale and delivery of the Securities by the Initial Purchasers in the
manner contemplated by the Purchase Agreement and the Offering.
Such counsel shall also state that they have participated in conferences
with representatives of the Company, representatives of its independent
accountants and counsel and representatives of the Initial Purchasers and their
counsel at which conferences the contents of the Preliminary Offering
Memorandum and the Offering Memorandum and any amendment and supplement thereto
and related matters were discussed and, although such counsel assumes no
responsibility for the accuracy, completeness or fairness of the Offering
Memorandum or any amendment or supplement thereto (except as expressly provided
above), nothing has come to the
34
B-4
attention of such counsel to cause such counsel to believe that the Offering
Memorandum or any amendment or supplement thereto (other than the financial
statements and other financial and statistical information contained therein,
as to which such counsel need express no belief), as of the date thereof and as
of 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.
In rendering such opinion, such counsel may rely as to matters of fact, to
the extent such counsel deems proper, on certificates of responsible officers
of the Company and public officials which are furnished to the Initial
Purchasers.
35
C-1
ANNEX C
[Form of Initial Comfort Letter]
The Company shall have furnished to the Initial Purchasers a letter of
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP and Ernst & Young LLP, addressed to the
Initial Purchasers and dated the date of the Purchase Agreement, in form and
substance satisfactory to the Initial Purchasers, substantially to the effect
set forth below:
(i) they are independent certified public accountants with respect
to the Company within the meaning of Rule 101 of the Code of Professional
Conduct of the AICPA and its interpretations and rulings;
(ii) in their opinion, the audited financial statements included in
the Offering Memorandum and reported on by them comply in form in all
material respects with the accounting requirements of the Exchange Act
and the related published rules and regulations of the Commission
thereunder that would apply to the Offering Memorandum if the Offering
Memorandum were a prospectus included in a registration statement on Form
S-1 under the Securities Act (except that certain supporting schedules
are omitted);
(iii) based upon a reading of the latest unaudited financial
statements made available by the Company, the procedures of the AICPA for
a review of interim financial information as described in Statement of
Auditing Standards No. 71, reading of minutes and inquiries of certain
officials of the Company who have responsibility for financial and
accounting matters and certain other limited procedures requested by the
Initial Purchasers and described in detail in such letter, nothing has
come to their attention that causes them to believe that (A) any
unaudited financial statements included in the Offering Memorandum do not
comply as to form in all material respects with applicable accounting
requirements, (B) any material modifications should be made to the
unaudited financial statements included in the Offering Memorandum for
them to be in conformity with generally accepted accounting principles
applied on a basis substantially consistent with that of the audited
financial statements included in the Offering Memorandum or (C) the
information included under the headings "Summary--Summary [Pro Forma]
Financial Data", "Capitalization", "Selected Consolidated Historical
Financial Data", "Unaudited Pro Forma Condensed Combined Financial Data",
"Management's Discussion and Analysis of Results of Operations and
Financial Condition" and "Management--Executive Compensation" is not in
conformity with the disclosure requirements of Regulation S-K that would
apply to the Offering Memorandum if the Offering Memorandum were a
prospectus included in a registration statement on Form S-1 under the
Securities Act;
36
C-2
(iv) based upon the procedures detailed in such letter with respect
to the period subsequent to the date of the last available balance sheet,
including reading of minutes and inquiries of certain officials of the
Company who have responsibility for financial and accounting matters,
nothing has come to their attention that causes them to believe that (A)
at a specified date not more than three business days prior to the date
of such letter, there was any change in capital stock, increase in
long-term debt or decrease in net current assets as compared with the
amounts shown in the March 28, 1998 unaudited balance sheet included in
the Offering Memorandum or (B) for the period from December 27, 1997 to a
specified date not more than three business days prior to the date of
such letter, there were any decreases, as compared with the corresponding
period in the preceding year, in net sales, income from operations,
EBITDA or net income, except in all instances for changes, increases or
decreases that the Offering Memorandum discloses have occurred or which
are set forth in such letter, in which case the letter shall be
accompanied by an explanation by the Company as to the significance
thereof unless said explanation is not deemed necessary by the Initial
Purchasers;
(v) they have performed certain other specified procedures as a
result of which they determined that certain information of an
accounting, financial or statistical nature (which is limited to
accounting, financial or statistical information derived from the general
accounting records of the Company) set forth in the Offering Memorandum
agrees with the accounting records of the Company, excluding any
questions of legal interpretation; and
(vi) on the basis of a reading of the unaudited pro forma financial
information included in the Offering Memorandum, carrying out certain
specified procedures, reading of minutes and inquiries of certain
officials of the Company who have responsibility for financial and
accounting matters and proving the arithmetic accuracy of the application
of the pro forma adjustments to the historical amounts in the pro forma
financial information, nothing came to their attention which caused them
to believe that the pro forma financial information does not comply in
form in all material respects with the applicable accounting requirements
of Rule 11-02 of Regulation S-X or that the pro forma adjustments have
not been properly applied to the historical amounts in the compilation of
such information.