Exhibit 1.1
The Kansas City Southern Railway Company
$200,000,000
9 1/2% Senior Notes due 2008
PURCHASE AGREEMENT
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September 21, 2000
CHASE SECURITIES INC.
BANC ONE CAPITAL MARKETS, INC.
FLEET SECURITIES, INC.
SCOTIA CAPITAL (USA) INC.
ABN AMRO INCORPORATED
BMO ▇▇▇▇▇▇▇ ▇▇▇▇▇ CORP.
BNY CAPITAL MARKETS, INC.
TOKYO-MITSUBISHI INTERNATIONAL PLC
c/o Chase Securities Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
The Kansas City Southern Railway Company, a Missouri corporation (the
"Company"), proposes to issue and sell $200,000,000 aggregate principal amount
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of its 9 1/2% Senior Notes due 2008 (the "Securities"). The Securities will be
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issued pursuant to an Indenture to be dated as of September 27, 2000 (the
"Indenture") between the Company, Kansas City Southern Industries, Inc. (the
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"Parent"), Kansas City Southern Lines, Inc., Gateway Eastern Railway Company,
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Gateway Western Railway Company, Global Terminaling Services, Inc., KCS
Transportation Company, Mid-South Microwave, Inc., ▇▇▇▇-▇▇▇▇▇▇ Corporation,
Southern Development Company, Southern Industrial Services, Inc., and Trans-
Serve, Inc. (collectively, including the Parent, the "Guarantors") and The Bank
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of New York, as trustee (the "Trustee") and will be guaranteed on an unsecured
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senior basis by the Guarantors. The Company and the Guarantors hereby confirm
their agreement with Chase Securities Inc. ("CSI") and Banc One Capital Markets,
Inc., Fleet Securities, Inc., Scotia Capital (USA) Inc., ABN Amro Incorporated,
BMO ▇▇▇▇▇▇▇ ▇▇▇▇▇ Corp., BNY Capital Markets, Inc. and Tokyo-Mitsubishi
International plc (together with CSI, the "Initial Purchasers") concerning the
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purchase of the Securities from the Company by the several 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
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prepared a preliminary offering memorandum dated September 8, 2000 (the
"Preliminary Offering Memorandum") and will prepare an offering memorandum dated
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the date hereof (the "Offering Memorandum") setting forth information concerning
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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 confirms that it has authorized the
use of the Preliminary Offering Memorandum and the Offering Memorandum in
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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 "Registration Rights Agreement"), pursuant to which the Company
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will agree to file with the Securities and Exchange Commission (the
"Commission") (i) a registration statement under the Securities Act (the
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"Exchange Offer Registration Statement") registering an issue of senior notes of
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the Company (the "Exchange Securities") which are identical in all material
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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").
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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
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Company and each of the Guarantors represent and warrant to, and agree with,
the several 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
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Company and the Guarantors make no representation or warranty as to
information contained in or omitted from the Preliminary Offering Memorandum
or the Offering Memorandum in reliance upon and in conformity with
information relating to the Initial Purchasers furnished to the Company by
or on behalf of any Initial Purchaser specifically for use therein (the
"Initial Purchasers' Information").
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(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.
(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
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Act").
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(d) The Parent 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
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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 Parent and its subsidiaries taken as a whole (a "Material
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Adverse Effect").
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(e) As of the Closing Date, the Parent will have an authorized
capitalization as set forth in the Offering Memorandum under the heading
"Capitalization"; all of the outstanding shares of capital stock of the
Parent have been duly and validly authorized and issued and are fully paid
and non-assessable. All of the outstanding shares of capital stock of each
subsidiary of the Parent have been duly and validly authorized and issued,
are fully paid and non-assessable and are owned directly or indirectly by
the Parent, free and clear of any lien, charge, encumbrance, security
interest, restriction upon voting or transfer or any other claim of any
third party, except those that arise under the KCS Credit Facilities.
(f) The Company and each of the Guarantors each have full right, power
and authority to execute and deliver this Agreement, the Indenture, the
Registration Rights Agreement, the Securities (in the case of the Company
only) (collectively, the "Transaction Documents") and to perform their
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respective 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 each of the Guarantors and constitutes a valid and legally
binding agreement of the Company and each of the Guarantors.
(h) The Registration Rights Agreement has been duly authorized by the
Company and each of the 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 each of the
Guarantors enforceable against the Company and each of the 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).
(i) The Indenture has been duly authorized by the Company and each of
the 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 each of the Guarantors enforceable
against the Company and each of the 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) The Securities have been duly authorized by the Company and each
of the 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
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will constitute valid and legally binding obligations of the Company, as
issuer, and each of the Guarantors, as guarantors, entitled to the benefits
of the Indenture and enforceable against the Company as issuer, and each of
the Guarantors, as 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) Each Transaction Document conforms in all material respects to the
description thereof contained in the Offering Memorandum.
(l) The execution, delivery and performance by the Company and each of
the Guarantors of each of the Transaction Documents to which each is a
party, the issuance, authentication, sale and delivery of the Securities
and compliance by the Company and each of the Guarantors 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 Parent 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 Parent
or any of its subsidiaries is a party or by which the Parent or any of its
subsidiaries is bound or to which any of the property or assets of the
Parent 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 Parent
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 Parent 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 and each of the Guarantors of each of the Transaction
Documents to which each is a party, the issuance, authentication, sale and
delivery of the Securities and compliance by the Company and each of the
Guarantors 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 Registration Rights
Agreement.
(m) PricewaterhouseCoopers LLP are independent certified public
accountants with respect to the Parent and its subsidiaries within the
meaning of Rule 101 of the Code of Professional Conduct of the American
Institute of Certified Public Accountants ("AICPA") and its interpretations
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and rulings thereunder. 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 disclosure of earnings per
share and 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 Consolidated Financial Data and Other Data",
"Capitalization", "Selected Consolidated Financial Data and Other Data",
"Management's
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Discussion and Analysis of Financial Condition and Results of Operations"
and "Management" are derived from the accounting records of the Parent and
its subsidiaries and fairly present the information purported to be shown
thereby. The other historical financial and statistical information and data
included in the Offering Memorandum are, in all material respects, fairly
presented.
(n) Except as disclosed in the Offering Memorandum, there are no legal
or governmental proceedings pending to which the Parent or any of its
subsidiaries is a party or of which any property or assets of the Parent or
any of its subsidiaries is the subject which, (A) singularly or in the
aggregate, if determined adversely to the Parent or any of its subsidiaries,
could reasonably be expected to have a Material Adverse Effect or (B)
question 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 the Company and each of the Guarantors, no such proceedings are
threatened or contemplated by governmental authorities or threatened by
others.
(o) To the best knowledge of the Company and the Guarantors, 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 Parent 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 and each of the Guarantors, threatened against or affecting the
Parent 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.
(p) Neither the Parent nor any of its subsidiaries is (i) in violation
of its charter or by-laws, (ii) in default, and no event has occurred which,
with notice or lapse of time or both, would constitute 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 of any law, ordinance, governmental rule, regulation or court
decree to which it or its property or assets may be subject, except, in the
case of clause (ii) or clause (iii), for any default or violation that could
not reasonably be expected to have a Material Adverse Effect.
(q) The Parent 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 Parent 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
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believe that any such license, certificate, authorization or permit will not
be renewed in the ordinary course.
(r) The Parent 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 Parent or any of its
subsidiaries which has had (nor does the Company or any of the Guarantors
have any knowledge of any tax deficiency which, if determined adversely to
the Parent or any of its subsidiaries, could reasonably be expected to have)
a Material Adverse Effect.
(s) Neither the Parent 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
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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.
(t) The Parent 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, to the extent necessary.
(u) The Parent 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 Parent and its subsidiaries and their respective
businesses. Neither the Parent 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.
(v) The Parent and each of its subsidiaries own or possess adequate
rights to use all patents, patent applications, trademarks, service marks,
trade names, trademark registrations, service mark 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 possess such rights could not
reasonably be expected to have a Material Adverse Effect; and the conduct of
their respective businesses will not conflict with, and the Parent and its
subsidiaries have not received any notice of any claim of conflict with, any
such rights of others that, if determined adversely to the Parent or any of
its subsidiaries would, individually or in the aggregate, have a Material
Adverse Effect.
(w) The Parent 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 Parent and its subsidiaries, in each case free and clear of all liens,
encumbrances, claims and defects and imperfections of title except those
that (i) arise under the KCS Credit Facilities or (ii) do not materially
interfere with the use made and proposed to be made of such property by the
Parent and its subsidiaries and could not reasonably be expected to have a
Material Adverse Effect.
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(x) No labor disturbance by or dispute with the employees of the Parent
or any of its subsidiaries exists or, to the best knowledge of the Company
and each of the Guarantors, is contemplated or threatened that could
reasonably be expected to have a Material Adverse Effect.
(y) 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
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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
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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 Parent or any of its subsidiaries which could
reasonably be expected to have a Material Adverse Effect; each such employee
benefit plan is in compliance with applicable law, including ERISA and the
Code, except where such noncompliance, individually or in the aggregate,
could not reasonably be expected to have a Material Adverse Effect; the
Parent 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 Parent or any of its
subsidiaries would have any liability; 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.
(z) Except as otherwise disclosed in the Offering Memorandum, 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 Parent or any of its
subsidiaries (or, to the best knowledge of the Company and each of the
Guarantors, any other entity (including any predecessor) for whose acts or
omissions the Parent 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 Parent 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 that 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 or each of the Guarantors 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.
(aa) Neither the Parent nor, to the best knowledge of the Company and
each of the Guarantors, any director, officer, agent, employee or other
person associated with or acting on behalf of the Parent or any of its
subsidiaries 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 unlawful bribe, rebate, payoff,
influence payment, kickback or other unlawful payment.
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(bb) On and immediately after the Closing Date, the Company (after
giving effect to the issuance of the Securities and to the other
transactions related thereto as described in the Offering Memorandum) will
be Solvent. As used in this paragraph, the term "Solvent" means, with
respect to a particular date, that on such date (i) the present fair market
value (or present fair saleable value) of the assets of the Company is not
less than the total amount required to pay the probable liabilities of the
Company on its total existing debts and liabilities (including contingent
liabilities) as they become absolute and matured, (ii) the Company is able
to realize upon its assets and pay its debts and other liabilities,
contingent obligations and commitments as they mature and become due in the
normal course of business, (iii) assuming the sale of the Securities as
contemplated by this Agreement and the Offering Memorandum, the Company is
not incurring debts or liabilities beyond its ability to pay as such debts
and liabilities mature and (iv) the Company is not engaged in any business
or transaction, and is not about to engage in any business or transaction,
for which its property would constitute unreasonably small capital after
giving due consideration to the prevailing practice in the industry in which
the Company is engaged. In computing the amount of such contingent
liabilities at any time, it is intended that such liabilities will be
computed at the amount that, in the light of all the facts and circumstances
existing at such time, represents the amount that can reasonably be expected
to become an actual or matured liability.
(cc) Neither the Parent nor any of its subsidiaries owns any "margin
securities" as that term is defined in Regulation U of the Board of
Governors of the Federal Reserve System (the "Federal Reserve Board"), and
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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 T, U or X of the Federal
Reserve Board.
(dd) Neither the Parent 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 Parent, any of its subsidiaries, or the Initial
Purchasers for a brokerage commission, finder's fee or like payment in
connection with the offering and sale of the Securities.
(ee) The Securities satisfy the eligibility requirements of Rule
144A(d)(3) under the Securities Act.
(ff) 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
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the offering restrictions requirement of Regulation S to the extent
applicable; provided that no such representation or warranty is made with
respect to CSI.
(gg) 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.
(hh) 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
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general solicitation or general advertising within the meaning of Rule
502(c) under the Securities Act.
(ii) There are no securities of the Company registered under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), or listed
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on a national securities exchange or quoted in a U.S. automated inter-dealer
quotation system.
(jj) None of the Company or any of the Guarantors has taken or will
take, directly or indirectly, any action prohibited by Regulation M under
the Exchange Act in connection with the offering of the Securities.
(kk) 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.
(ll) None of the Parent or any of its subsidiaries does business with
the government of Cuba or with any person or affiliate located in Cuba
within the meaning of Florida Statutes Section 517.075.
(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 or any of
the Guarantors, whether or not arising in the ordinary course of business,
(ii) none of the Company or any of the Guarantors has incurred any material
liability or obligation, direct or contingent, other than in the ordinary
course of business, (iii) none of the Company or any of the Guarantors has
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 of the Guarantors, or any dividend or
distribution of any kind declared, paid or made by the Company or any of the
Guarantors on any class of their respective capital stock.
2. Purchase and Resale of the Securities. (a) On the basis of the
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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 98.25 % of
the principal amount thereof (which reflects a price of par less fees paid to
the Initial Purchasers). 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, warrants and agrees 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
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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
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offer, sell or deliver the Securities, as part of their 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
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Rule 144A under the Securities Act ("Rule 144A"), or if any such person is
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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 respect to the Securities, and all such
persons have complied and will comply with the offering restriction
requirements 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
11
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 Act 1986 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 Act 1986 (Investment Advertisements) (Exemptions) Order 1996
(as amended) 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 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 and each of the Guarantors 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 Cravath, Swaine &
▇▇▇▇▇, 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
September 27, 2000, 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, 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.
12
4. Further Agreements of the Company and the Guarantors. The Company
----------------------------------------------------
and each of the Guarantors agree with each of the several Initial Purchasers:
(a) at all times prior to the completion of the resale of the
Securities by the Initial Purchasers, 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, prior to the completion of the
resale of the Securities by the Initial Purchasers, to use its reasonable
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;
(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 CSI
copies of any annual reports, quarterly reports and current reports filed
by the Company or Parent with the
13
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 request; provided that the Parent 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 provide reasonable assistance to 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 90 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 Parent 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 two years after the
Closing Date, without the prior written consent of the Initial Purchasers,
not to, and not permit any of its affiliates (as defined in Rule 144 under
the Securities Act) to, resell any of the Securities that have been
reacquired by them, except for Securities purchased by the Company or any
of its affiliates and resold in a transaction registered under the
Securities Act;
14
(m) not to, for so long as the Securities are outstanding, be or
become, or be or become owned by, an open-end investment company, unit
investment trust or face-amount certificate company that is or is required
to be registered under Section 8 of the Investment Company Act, and to not
be or become, or be or become owned by, a closed-end investment company
required to be registered, but not registered thereunder;
(n) 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 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;
(o) 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;
(p) 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;
(q) to do and perform all things required to be done and performed by
it under this Agreement that are within its control prior to or after the
Closing Date, and to use its reasonable best efforts to satisfy all
conditions precedent on its part to the delivery of the Securities;
(r) to not take any action prior to the execution and delivery of the
Indenture which, if taken after such execution and delivery, would have
violated any of the covenants contained in the Indenture;
(s) to not take any action prior to the Closing Date which would
require the Offering Memorandum to be amended or supplemented pursuant to
Section 4(d);
(t) 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 CSI are notified),
without the prior written consent of the CSI, unless in the judgment of the
Company and its counsel, and after notification to the CSI, such press
release or communication is required by law; and
(u) 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 several 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 and each of the Guarantors
contained herein, to the accuracy of the statements of the Company and each of
the Guarantors and their respective officers made in any certificates delivered
pursuant hereto, to the performance by the
15
Company and each of the Guarantors of their respective 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.
(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) ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇▇▇▇▇▇, Nath & ▇▇▇▇▇▇▇▇▇ shall have
furnished to the Initial Purchasers their written opinions, as general
counsel and outside counsel to the Company, addressed to the Initial
Purchasers and dated the Closing Date, in form and substance reasonably
satisfactory to the Initial Purchasers, covering the matters set forth in
Annex B hereto.
(e) The Initial Purchasers shall have received from Cravath, Swaine &
▇▇▇▇▇, 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 PricewaterhouseCoopers 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 PricewaterhouseCoopers LLP, addressed
-----------------
to the Initial Purchasers and dated the Closing Date (i) confirming that
they are independent public accountants with respect to the Parent 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
16
(iii) confirming in all material respects the conclusions and findings set
forth in the Initial Letter.
(h) The Company and each of the Guarantors shall have furnished to
the Initial Purchasers a certificate, dated the Closing Date, of their
respective chief executive officers and their respective chief financial
officers 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, 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, (C) as of the Closing Date, the representations
and warranties of the Company or the particular Guarantor, as applicable,
in this Agreement are true and correct in all material respects, the
Company or the particular Guarantor, as applicable, 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 (D) with respect
to officers of the Company only, 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 Parent or any of its subsidiaries, 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 Parent and its subsidiaries taken as a whole.
(i) The Initial Purchasers shall have received a counterpart of the
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, the Guarantors 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.
17
(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 Parent and its subsidiaries taken as a whole, the effect
of 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).
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.
18
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 and the Guarantors 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 and the Guarantors 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 and the
Guarantors shall not be obligated to reimburse any defaulting Initial Purchaser
on account of such expenses.
9. Indemnification. (a) The Company and each of the 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 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
19
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
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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; 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, in either case, 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, its affiliates, their respective
officers, directors, employees, representatives and agents, and each person, if
any, who controls the Company 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 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, 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
20
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 (1) the employment of counsel by
the indemnified party has been authorized in writing by the indemnifying party,
(2) 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, (3) 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 (4) 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 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, the Guarantors and the Initial
Purchasers in this Section 9 and in Section 10 are in addition to any other
liability that the Company, the Guarantors 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 and the Guarantors on the
one hand and the Initial Purchasers on the other from the offering of the
Securities or (ii) if the allocation provided by clause (i) above is not
permitted by applicable law, in such proportion as is appropriate to reflect not
only the relative benefits referred to in clause (i) above but also the relative
fault of the Company and the Guarantors on the
21
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 and the Guarantors on the one hand and
the Initial Purchasers on the other with respect to such offering shall be
deemed to be in the same proportion as the total net proceeds from the offering
of the Securities purchased under this Agreement (before deducting expenses)
received by or on behalf of the Company and the Guarantors, 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.
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 or
information supplied by the Company and the Guarantors 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, the Guarantors 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 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,
the Guarantors 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
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 and the Guarantors agree 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
22
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, the Guarantors and
the Initial Purchasers contained in this Agreement or made by or on behalf of
the Company, the Guarantors or the Initial Purchasers pursuant to this
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. (▇▇▇)-▇▇▇-▇▇▇▇);
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 two bullet points
on the front cover page concerning the terms of the offering by the Initial
Purchasers and (ii) the statements concerning the Initial Purchasers contained
in the first through sixth paragraphs and in the ninth, tenth, eleventh and
twelfth paragraphs 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.
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.
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 between the Company, the Guarantors
and the several Initial Purchasers in accordance with its terms.
Very truly yours,
The Kansas City Southern Railway Company
By /s/ ▇.▇. ▇▇▇▇▇▇▇
----------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: President & Chief Executive Officer
Kansas City Southern Industries, Inc.
By /s/ ▇.▇. ▇▇▇▇▇▇▇
----------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: President & Chief Executive Officer
Kansas City Southern Lines, Inc.
By /s/ ▇.▇. ▇▇▇▇▇▇▇
----------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: President & Chief Executive Officer
Gateway Eastern Railway Company
By /s/ ▇.▇. ▇▇▇▇
-------------
Name: ▇.▇. ▇▇▇▇
Title: Executive Vice President
Gateway Western Railway Company
By /s/ ▇.▇. ▇▇▇▇
-------------
Name: ▇.▇. ▇▇▇▇
Title: Executive Vice President
Global Terminaling Services, Inc.
By /s/ ▇.▇. ▇▇▇▇▇▇▇
----------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: President
KCS Transportation Company
By /s/ ▇.▇. ▇▇▇▇▇▇▇
----------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: President & Chief Executive Officer
Mid-South Microwave, Inc.
By /s/ ▇.▇. ▇▇▇▇▇▇▇
----------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: President
▇▇▇▇-▇▇▇▇▇▇ Corporation
By /s/ ▇.▇. ▇▇▇▇▇▇▇
----------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: President
Southern Development Company
By /s/ ▇.▇. ▇▇▇▇▇▇▇
----------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: President
Southern Industrial Services, Inc.
By /s/ ▇.▇. ▇▇▇▇▇▇▇
----------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: President
Trans-Serve, Inc.
By /s/ ▇.▇. ▇▇▇▇
-------------
Name: ▇.▇. ▇▇▇▇
Title: President
Accepted:
CHASE SECURITIES INC.
BANC ONE CAPITAL MARKETS, INC.
FLEET SECURITIES, INC.
SCOTIA CAPITAL (USA) INC.
ABN AMRO INCORPORATED
BMO ▇▇▇▇▇▇▇ ▇▇▇▇▇ CORP.
BNY CAPITAL MARKETS, INC.
TOKYO-MITSUBISHI INTERNATIONAL PLC
By CHASE SECURITIES INC.
By /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------
Authorized Signatory
Address for notices pursuant to Section 9(c):
▇ ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: Legal Department
SCHEDULE 1
Principal
Amount
Initial Purchasers of Securities
------------------ -------------
Chase Securities Inc. $150,000,000.00
Scotia Capital (USA) Inc. 10,857,142.86
Banc One Capital Markets, Inc. 7,857,142.86
Fleet Securities, Inc. 7,857,142.86
ABN Amro Incorporated 5,857,142.86
BMO ▇▇▇▇▇▇▇ ▇▇▇▇▇ Corp. 5,857,142.86
BNY Capital Markets, Inc. 5,857,142.86
Tokyo-Mitsubishi International plc 5,857,142.86
Total $200,000,000.00
ANNEX A
[Form of Exchange and Registration Rights Agreement]
ANNEX B
Opinions of Counsel for the Company
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇▇▇▇▇▇, Nath & ▇▇▇▇▇▇▇▇▇ shall have furnished to
the Initial Purchasers their written opinions, as general counsel and outside
counsel to the Company, addressed to the Initial Purchasers and dated the
Closing Date, in form and substance reasonably satisfactory to the Initial
Purchasers, covering the matters set forth below:
(i) the Company and each of the Guarantors have been duly
incorporated and are validly existing as corporations in good standing
under the laws of Missouri, 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 respective 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 Parent and Company have an authorized capitalization as set
forth in the Offering Memorandum, and 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;
(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 Considerations", 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 and each of the Guarantors have full right, power
and authority to execute and deliver each of the Transaction Documents to
which they are a party and to perform their respective 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;
(vi) each of the Purchase Agreement and the Registration Rights
Agreement has been duly authorized, executed and delivered by the Company
and each of the Guarantors and constitutes a valid and legally binding
agreement of the Company and each of the Guarantors enforceable against the
Company and each of the Guarantors in accordance with its terms, except 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 each of the Guarantors and, assuming due authorization,
execution and delivery thereof by the Trustee, constitutes a valid and
legally binding agreement of the Company enforceable against the Company
and each of the 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) 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 as issuer,
and each of the Guarantors, as guarantors, entitled to the benefits of the
Indenture and enforceable against the Company as issuer, and each of the
Guarantors, as 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);
(ix) each Transaction Document conforms in all material respects to
the description thereof contained in the Offering Memorandum;
(x) the execution, delivery and performance by the Company and each
of the Guarantors of each of the Transaction Documents to which each is a
party, the issuance, authentication, sale and delivery of the Securities
and compliance by the Company and each of the Guarantors 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 Parent 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
Parent or any of its subsidiaries is a party or by which the Parent or any
of its subsidiaries is bound or to which any of the property or assets of
the Parent 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
Parent 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 Parent 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 and each of the
Guarantors of each of the Transaction Documents to which each is a party,
the issuance, authentication, sale and delivery of the Securities and
compliance by the Company and each of the Guarantors 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 Registration Rights Agreement;
(xi) Except as disclosed in the Offering Memorandum, to the best
knowledge of such counsel, there are no pending actions or suits or
judicial, arbitral, rule-making, administrative or other proceedings to
which the Parent or any of its subsidiaries is a party or of which any
property or assets of the Parent or any of its subsidiaries is the subject
which (A) singularly or in the aggregate, if determined adversely to the
Parent 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.
(xii) neither the Parent nor any of its subsidiaries is (A) in
violation of its charter or by-laws, (B) 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 (C) 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;
(xiii) neither the Parent nor any of its subsidiaries is (A) an
"investment company" or a company "controlled by" an investment company
within the meaning of the Investment Company Act and the rules and
regulations of the Commission thereunder, without, with respect to the
Parent, taking account of any exemption under the Investment Company Act
arising out of the number of holders of the Parent's securities or (B) 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;
(xiv) neither the consummation of the transactions contemplated by
this Agreement nor the sale, issuance, execution or delivery of the
Securities will violate Regulation T, U or X of the Federal Reserve Board;
and
(xv) assuming the accuracy of the representations, warranties and
agreements of the Company, each of the Guarantors 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 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 opinions, 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 the Guarantors and public officials which are
furnished to the Initial Purchasers.
ANNEX C
Comfort Letter
The Company shall have furnished to the Initial Purchasers a letter of
PricewaterhouseCoopers 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 Parent and 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 Consolidated Financial Data and Other Data",
"Capitalization", "Selected Consolidated Financial Data and Other Data",
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and "Management" 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;
(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 June 30, 2000 unaudited balance sheet included in the Offering
Memorandum or (B) for the period from June 30, 2000 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 revenues, 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 Parent and its subsidiaries) set forth in the Offering Memorandum
agrees with such accounting records, excluding any questions of legal
interpretation.