EXECUTION COPY
NAVISTAR INTERNATIONAL CORPORATION
$400,000,000
9-3/8% Senior Notes due 2006
PURCHASE AGREEMENT
May 23, 2001
▇.▇. ▇▇▇▇▇▇ SECURITIES INC.
CREDIT SUISSE FIRST BOSTON CORPORATION
BANC OF AMERICA SECURITIES LLC
SCOTIA CAPITAL (USA) INC.
BNY CAPITAL MARKETS, INC.
RBC DOMINION SECURITIES CORPORATION
c/o ▇.▇. ▇▇▇▇▇▇ Securities Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
Navistar International Corporation, a Delaware corporation (the
"COMPANY"), proposes to issue and sell $400,000,000 aggregate principal amount
of its 9-3/8% Senior Notes due 2006 (the "SECURITIES"). The Securities will be
issued pursuant to an Indenture to be dated as of May 31, 2001 (the "INDENTURE")
between the Company, International Truck and Engine Corporation, as subsidiary
guarantor (the "Guarantor") and BNY Midwest Trust Company, as trustee (the
"TRUSTEE"). The Securities will be guaranteed on a senior basis by the guarantee
of the Guarantor (the "Guarantee"). The Company hereby confirms its agreement
with ▇.▇. ▇▇▇▇▇▇ Securities Inc. ("JPMORGAN"), Credit Suisse First Boston
Corporation, Banc of America Securities LLC, Scotia Capital (USA) Inc., BNY
Capital Markets, Inc., and RBC Dominion Securities Corporation (collectively,
the "INITIAL PURCHASERS") concerning the 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
prepared a preliminary offering memorandum dated May 11, 2001 (the "PRELIMINARY
OFFERING MEMORANDUM") and will prepare an offering memorandum dated the date
hereof (the "OFFERING MEMORANDUM") setting forth information concerning the
Company, the Guarantor 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 refer to and include any documents
incorporated by reference therein as of the date of such Preliminary Offering
Memorandum or the Offering Memorandum, and any reference to any amendment or
supplement to the Preliminary Offering Memorandum or the Offering Memorandum
shall be deemed to refer to and include any document filed under the Securities
Exchange Act of 1934, as amended (the "EXCHANGE ACT") after the date of the
Preliminary Offering Memorandum or the Offering Memorandum, as the case may be,
unless otherwise
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noted. The Company hereby confirms that it has authorized the use of the
Preliminary Offering Memorandum and the Offering Memorandum in connection with
the offering and resale of the Securities by the Initial Purchasers 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
will agree to file with the Securities and Exchange Commission (the
"COMMISSION") a registration statement under the Securities Act (the "EXCHANGE
OFFER REGISTRATION STATEMENT") registering an issue of senior notes of the
Company (the "EXCHANGE SECURITIES") and the Guarantee which are identical in all
material respects to the Securities (except that the Exchange Securities will
not contain terms with respect to transfer restrictions) and the Guarantee and
under certain circumstances, a shelf registration statement pursuant to Rule 415
under the Securities Act (the "SHELF REGISTRATION STATEMENT").
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 AND THE
GUARANTOR. The Company and the Guarantor, jointly and severally, 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 Company and the
Guarantor make no representation or warranty as to information contained in or
omitted from the Preliminary Offering Memorandum or the Offering Memorandum in
reliance upon and in conformity with written information relating to the Initial
Purchasers furnished to the Company or the Guarantor by or on behalf of any
Initial Purchaser specifically for use therein (the "INITIAL PURCHASERS'
INFORMATION"). The documents filed by the Company under the Exchange Act and
incorporated by reference in the Preliminary Offering Memorandum and the
Offering Memorandum, when they were filed by the Company with the Commission,
conformed in all material respects to the requirements of the Exchange Act and
the rules and regulations of the Commission thereunder and none of such
documents, in each case when it was filed with the Commission, contained an
untrue statement of a material fact or omitted to state a material fact
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading, and any further documents so filed and
incorporated by reference in the Offering Memorandum, when such documents are
filed with the Commission, will conform in all material respects to the
requirements of the Exchange Act and the rules and regulations of the Commission
thereunder and shall not contain, as of such time, an untrue statement of a
material fact or omit to state a material fact necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading.
(b) The audited financial statements, and the related notes thereto,
included in the Offering Memorandum present fairly the consolidated financial
position of the Company and
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its subsidiaries and the results of their respective operations and the
changes in their respective consolidated cash flows, as of the dates and for
the periods indicated, and said financial statements have been prepared in
conformity with generally accepted accounting principles applied on a
consistent basis throughout the periods involved; the unaudited consolidated
financial statements and the related notes thereto included in the Offering
Memorandum present fairly the consolidated financial position of the Company
and its subsidiaries as of the dates and for the periods indicated and the
results of their operations and the changes in their consolidated cash flows,
subject to year-end audit adjustments, have been prepared in accordance with
generally accepted accounting principles applied on a consistent basis
throughout the periods involved and have been prepared on a basis
substantially consistent with that of the audited financial statements
referred to above except as otherwise stated therein; the summary and
selected financial and statistical data included in the Offering Memorandum
present fairly the information shown therein and have been prepared and
compiled on a basis consistent with the audited and unaudited financial
statements of the Company, except as otherwise stated therein; and Deloitte &
Touche LLP, who are reporting upon the audited consolidated financial
statements of the Company and its consolidated subsidiaries (each a
"SUBSIDIARY," and collectively, the "SUBSIDIARIES"), and the related
schedules included in the Offering Memorandum are independent public
accountants as defined in the Securities Act.
(c) Except as described in the Offering Memorandum, the Company owns,
directly or indirectly, free and clear of any mortgage, pledge, security
interest, lien, claim or other encumbrance or restriction on transferability or
voting (other than as may be imposed by the Securities Act and the various state
securities laws), all of the outstanding capital stock of each Subsidiary of the
Company. All of the outstanding capital stock of each Subsidiary of the Company
has been duly authorized and validly issued and is fully paid and
non-assessable.
(d) Since the respective dates as of which information is given in the
Offering Memorandum, except as disclosed therein, there has not been (A) any
material change in the Company's issued capital stock, warrants or options
except pursuant to the terms of the instruments governing the same or pursuant
to the exercise of such options or warrants, or the issuance of certain options
or (B) any material adverse change, or any development involving a prospective
material adverse change, in or affecting the general affairs, the management,
business, prospects, financial position, stockholder's equity or results of
operations, of the Company and the Subsidiaries, taken as a whole (a "MATERIAL
ADVERSE CHANGE").
(e) Since the respective dates as of which information is given in the
Offering Memorandum, except as disclosed therein, (i) there have been no
transactions entered into by the Company or by any of the Subsidiaries,
including those entered into in the ordinary course of business, which are
material to the Company and the Subsidiaries taken as a whole; and (ii) there
has been no dividend or distribution of any kind declared, paid or made by the
Company on any class of its capital stock, except for quarterly dividends in
accordance with the Company's past practice.
(f) The Company and each Subsidiary has been duly incorporated under
the laws of its jurisdiction of incorporation; the Company and each Subsidiary
is a validly existing corporation in good standing under the laws of its
jurisdiction of incorporation, with full power and corporate authority to own,
lease and operate its properties and conduct its business as described in the
Offering Memorandum, and is duly qualified as a foreign corporation for the
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transaction of business and is in good standing under the laws of each other
jurisdiction in which it owns or leases properties, or conducts any business, so
as to require such qualification, except where the failure to be so qualified or
in good standing would not reasonably be expected to have a material adverse
effect on the general affairs, business, prospects, management, financial
position, stockholder's equity or results of operations of the Company and the
Subsidiaries, taken as a whole (a "MATERIAL ADVERSE EFFECT").
(g) This Agreement has been duly authorized, executed and delivered by
the Company and the Guarantor.
(h) The Registration Rights Agreement has been duly authorized by the
Company and the Guarantor, and when executed and delivered by the Company
(assuming due authorization, execution and delivery thereof by the Initial
Purchasers), the Registration Rights Agreement will constitute a legal, valid
and binding agreement of the Company and the Guarantor enforceable against the
Company and the Guarantor in accordance with its terms, except that the
enforcement thereof may be subject to (i) bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or hereafter in effect
relating to creditors' rights generally and (ii) general principles of equity
and the discretion of the court before which any proceeding therefor may be
brought and (iii) public policy considerations with respect to the
enforceability of indemnification agreements for violations of the federal
securities laws.
(i) The Indenture meets the requirements for qualification under the
Trust Indenture Act of 1939, as amended (the "TRUST INDENTURE ACT"). The
Indenture (including the Guarantee set therein) has been duly and validly
authorized by the Company and the Guarantor and, when executed and delivered by
the Company and the Guarantor (assuming due authorization, execution and
delivery thereof by the Trustee), the Indenture will constitute a legal, valid
and binding agreement of the Company and the Guarantor enforceable against the
Company and the Guarantor in accordance with its terms, except that the
enforcement thereof may be subject to (i) bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or hereafter in effect
relating to creditors' rights generally and (ii) general principles of equity
and the discretion of the court before which any proceeding therefor may be
brought; and the Securities and the Indenture conform in all material respects
to the descriptions thereof in the Offering Memorandum.
(j) The Securities and the Guarantee have been duly and validly
authorized by the Company and the Guarantor, respectively, for issuance and when
executed by the Company and the Guarantor, respectively, and authenticated by
the Trustee in accordance with the provisions of the Indenture, and delivered to
and paid for by the Initial Purchasers in accordance with the terms hereof, will
have been duly executed, authenticated, issued and delivered and will constitute
legal, valid and binding obligations of the Company and the Guarantor,
respectively, entitled to the benefits provided by the Indenture and enforceable
against the Company and the Guarantor, respectively, in accordance with their
respective terms, except that the enforcement thereof may be subject to (i)
bankruptcy, insolvency, reorganization, moratorium or other similar laws now or
hereafter in effect relating to creditors' rights generally and (ii) general
principles of equity and the discretion of the court before which any proceeding
therefor may be brought.
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(k) The execution and delivery by the Company and the Guarantor of, and
the performance by the Company and the Guarantor of all of the provisions of its
obligations under, this Agreement, the Indenture, the Registration Rights
Agreement and the Securities (the "TRANSACTION DOCUMENTS") and the consummation
by the Company and the Guarantor of the transactions herein and therein
contemplated and as set forth in the Offering Memorandum, (i) have been duly
authorized by all necessary corporate action on the part of the Company and the
Guarantor, (ii) do not and will not result in any violation of the Certificate
of Incorporation or the By-laws of the Company and the Guarantor and (iii) do
not and will not conflict with, or result in a breach or violation of any of the
terms or provisions of, or constitute a default (or an event which, with notice
or lapse of time, or both, would constitute a default) under, or give rise to
any right to accelerate the maturity or require the prepayment of any
indebtedness or the purchase of any capital stock under, or result in the
creation or imposition of any lien, charge or encumbrance upon any properties or
assets of the Company or of any Subsidiary under, (A) any contract, indenture,
mortgage, deed of trust, loan agreement, note, lease, partnership agreement or
other agreement or instrument to which the Company or any such Subsidiary is a
party or by which any of them may be bound or to which any of their respective
properties or assets may be subject, (B) (assuming compliance with the
Securities Act and the Trust Indenture Act with respect to the exchange of the
Securities for the Exchange Securities (as defined in the Registration Rights
Agreement) and the other obligations of the Company and the Guarantor under the
Registration Rights Agreement) any applicable law or statute, rule or regulation
(other than the securities or Blue Sky laws of the various states of the United
States of America) or (C) any judgment, order or decree of any government,
governmental instrumentality, agency, body or court, domestic or foreign, having
jurisdiction over the Company or any such Subsidiary or any of their respective
properties or assets, except, with respect to clause (iii), any violation,
conflict, or breach which would not reasonably be expected, individually or in
the aggregate, to have a Material Adverse Effect.
(l) Neither the Company, the Guarantor nor any agent acting on their
behalf has taken or will take any action that will cause this Agreement or the
sale, issuance, execution or delivery of the Securities to violate Regulation G,
T, U or X of the Board of Governors of the Federal Reserve System, in each case
as in effect, or as the same may hereafter be in effect, on the Closing Date.
(m) The Company and each Subsidiary has good and marketable title to
all real and personal property described in the Offering Memorandum as being
owned by it and good and marketable title to a leasehold estate in the real and
personal property described therein as being leased by it, free and clear of all
liens, charges, encumbrances or restrictions, except, in each case, as described
in the Offering Memorandum or to the extent the failure to have such title or
the existence of such liens, charges, encumbrances or restrictions would not
reasonably be expected to have a Material Adverse Effect.
(n) No authorization, approval, consent, order, registration,
qualification or license of, or filing with, any government, governmental
instrumentality, agency, body or court, domestic or foreign or third party
(other than as have been or will be prior to the Closing Date obtained under the
securities or Blue Sky laws of the various states of the United States of
America and assuming compliance with the Securities Act and the Trust Indenture
Act with respect to the exchange of the Securities for the Exchange Securities
and the other obligations of
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the Company and the Guarantor under the Registration Rights Agreement), is
required for the valid authorization, issuance, sale and delivery of the
Securities, the issuance of the Guarantee or the performance by the Company
and the Guarantor of all of its obligations under this Agreement, the
Indenture, the Registration Rights Agreement or the Securities, or the
consummation by the Company and the Guarantor of the transactions
contemplated by this Agreement, the Indenture, the Registration Rights
Agreement or the Offering Memorandum, except where the failure to obtain such
authorization, approval, consent, order, registration, qualification or
license or to make any such filing would not reasonably be expected,
individually or in the aggregate, to have a material adverse effect on the
consummation of the transactions contemplated in, or the fulfillment of the
terms of, this Agreement, the Offering Memorandum, the Indenture or the
Registration Rights Agreement.
(o) Neither the Company nor any of the Subsidiaries (i) is in violation
of its Certificate of Incorporation or By-Laws (and in the case of the Company's
non-material Subsidiaries only, in any material respect) or (ii) is in breach or
violation of any of the terms or provisions of, or with the giving of notice or
lapse of time, or both, would be in default under, any contract, indenture,
mortgage, deed of trust, loan agreement, note, lease, partnership agreement, or
other agreement or instrument to which the Company or any Subsidiary is a party
or by which any of them may be bound or to which any of their properties or
assets may be subject, except, in the case of this clause (ii), for such
violations or defaults that would not reasonably be expected to have a Material
Adverse Effect.
(p) Except as described in the Offering Memorandum, there is no action,
suit or proceeding before or by any government, governmental instrumentality,
agency, body or court, domestic or foreign, now pending or, to the best
knowledge of the Company or the Guarantor, threatened against or affecting the
Company or any of the Subsidiaries that could reasonably be expected to have a
Material Adverse Effect or that could have a material adverse effect on the
consummation of the transactions contemplated in, or the fulfillment of the
terms of, this Agreement, the Offering Memorandum, the Indenture or the
Registration Rights Agreement; there is no action, suit or proceeding before or
by any government, governmental instrumentality, agency, body or court, now
pending, or to the best knowledge of the Company or the Guarantor, threatened
against or affecting the Company or any of the Subsidiaries that would be
required to be described in a registration statement pursuant to Item 103 of
Regulation S-K filed pursuant to the Securities Act that is not described in the
Offering Memorandum.
(q) Each of the Company and the Subsidiaries owns, possesses or has
obtained all material licenses, permits, certificates, consents, orders,
approvals other authorizations from, and has made all material declarations and
filings with, all federal, state, local and other governmental authorities
(including foreign regulatory agencies) and all courts and other tribunals,
domestic or foreign, necessary to own or lease, as the case may be, and to
operate its properties and to carry on its business as conducted as of the date
hereof, except in each case where the failure to obtain licenses, permits,
certificates, consents, orders, approvals and other authorizations, or to make
all declarations and filings, would not reasonably be expected to have a
Material Adverse Effect, and none of the Company or any of the Subsidiaries has
received any notice of any proceeding relating to revocation or modification
of any such license, permit, certificate, consent, order, approval or other
authorization, except as described in the Offering Memorandum and except, in
each case, where such revocation or modification
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would not reasonably be expected to have a Material Adverse Effect; and the
Company and each of the Subsidiaries are in material compliance with all laws
and regulations relating to the conduct of their respective businesses as
conducted as of the date hereof, except where noncompliance with such laws or
regulations would not reasonably be expected to have a Material Adverse
Effect.
(r) Neither the Company nor any affiliate (as defined in Rule 501(b) of
Regulation D under the Securities Act ("REGULATION D")) of the Company has
directly, or through any agent, sold, offered for sale, solicited offers to buy
or otherwise negotiated in respect of, any security (as defined in the
Securities Act) which is or will be integrated with the sale of the Securities
in a manner that would require the registration under the Securities Act of the
offering contemplated by the Offering Memorandum.
(s) Neither the Company, the Guarantor nor, to the best of the
Company's or the Guarantor's knowledge, any person acting on its behalf has
offered or sold the Securities by means of any general solicitation or general
advertising within the meaning of Rule 502(c) under the Securities Act or, with
respect to Securities sold outside the United States to non-U.S. persons (as
defined in Rule 902 under the Securities Act), by means of any directed selling
efforts within the meaning of Rule 902 under the Securities Act and the Company
and any of its affiliates and any person acting on their behalf has complied
with and will implement the "offering restriction" within the meaning of such
Rule 902.
(t) It is not necessary in connection with the offer, sale and delivery
of the Securities in the manner contemplated by this Agreement to register the
Securities under the Securities Act or to qualify an indenture under the Trust
Indenture Act.
(u) The Securities satisfy the requirements set forth in Rule
144A(d)(3) under the Securities Act.
(v) Except as described 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, to the best knowledge of the
Company or the Guarantor, the Company and each of its Subsidiaries or any other
entity (including any predecessor) for whose acts or omissions each of the
Company and its Subsidiaries is or could reasonably be expected to be liable,
upon any of the property now or previously owned or leased by the Company and
each of its Subsidiaries, or upon any other property, in violation of any
statute or any ordinance, rule, regulation, order, judgment, decree or permit or
which would, under any statute or any ordinance, rule (including rule of common
law), regulation, order, judgment, decree or permit, give rise to any liability,
except for any violation or liability could not reasonably be expected to have,
singularly or in the aggregate with all such violations and liabilities, a
Material Adverse Effect; and except as described in the Offering Memorandum,
there has been no disposal, discharge, emission or other release of any kind
onto such property or into the environment surrounding such property of any
toxic or other wastes or other hazardous substances with respect to which the
Company has knowledge, except for any such disposal, discharge, emission or
other release of any kind which could not reasonably be expected to have,
singularly or in the aggregate with all such discharges and other releases, a
Material Adverse Effect.
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2. PURCHASE AND RESALE OF THE SECURITIES. (a) On the basis of the
representations, warranties and agreements contained herein, and subject to the
terms and conditions set forth herein, the Company agrees to issue and sell to
each of the Initial Purchasers, severally and not jointly, and each of the
Initial Purchasers, severally and not jointly, agrees to purchase from the
Company, the principal amount of Securities set forth opposite the name of such
Initial Purchaser on Schedule 1 hereto at a purchase price equal to 98.25% of
the principal amount thereof. The Company shall not be obligated to deliver any
of the Securities except upon payment for all of the Securities to be purchased
as provided herein.
(b) The Initial Purchasers have advised the Company and the Guarantor
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, nor to the best of its
knowledge, has any person acting on its behalf 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 or in any manner involving a public
offering within the meaning of Section 4(2) of the Securities Act, (iii) it and
any person acting on its behalf has solicited and will solicit offers for the
Securities only from, and has offered or sold and will offer, sell or deliver
the Securities, as part of 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 Rule 144A under the
Securities Act ("RULE 144A"), or if any such person is buying for one or more
institutional accounts for which such person is acting as fiduciary or agent,
only when such person has represented to it that each such account is a
Qualified Institutional Buyer to whom notice has been given that such sale or
delivery is being made in reliance on Rule 144A and in each case, in
transactions in accordance with Rule 144A and (B) outside the United States to
persons other than U.S. persons in reliance on Regulation S under the Securities
Act ("REGULATION S"), and (iv) that it is a Qualified Institutional Buyer.
(c) In connection with the offer and sale of Securities in reliance on
Regulation S, each Initial Purchaser, severally and not jointly, represents,
warrants and agrees that:
(i) The Securities have not been registered under the Securities Act
and may not be offered or sold within the United States or to, or for the
account or benefit of, U.S. persons except pursuant to an exemption from,
or in transactions not subject to, the registration requirements of the
Securities Act.
(ii) Such Initial Purchaser has offered and sold the Securities, and
will offer and sell the Securities, (A) as part of their distribution at
any time and (B) otherwise until 40 days after the later of the
commencement of the offering of the Securities and the Closing Date, only
in accordance with Regulation S or Rule 144A or any other available
exemption from registration under the Securities Act.
(iii) None of such Initial Purchaser or any of its affiliates or any
other person acting on its or their behalf has engaged or will engage in
any directed selling efforts with
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respect to the Securities, and all such persons have complied and will
comply with the offering restrictions requirement of Regulation S.
(iv) At or prior to the confirmation of sale of any Securities sold in
reliance on Regulation S, it will have sent to each distributor, dealer or
other person receiving a selling concession, fee or other remuneration that
purchase Securities from it during the restricted period a confirmation or
notice to substantially the following effect:
"The Securities covered hereby have not been registered under
the U.S. Securities Act of 1933, as amended (the "SECURITIES
ACT"), and may not be offered or sold within the United States
or to, or for the account or benefit of U.S. persons (i) as
part of their distribution at any time or (ii) otherwise until
40 days after the later of the commencement of the offering of
the Securities and the date of original issuance of the
Securities, except in accordance with Regulation S or Rule
144A or any other available exemption from registration under
the Securities Act. Terms used above have the meanings given
to them by Regulation S."
(v) it has not and will not enter into any contractual arrangement
with any distributor with respect to the distribution of the Securities,
except with its affiliates or with the prior written consent of the
Company.
Terms used in this Section 2(c) have the meanings given to them by Regulation S.
(d) Each Initial Purchaser, severally and not jointly, represents,
warrants and agrees that (i) it has not offered or sold and prior to the date
six months after the Closing Date will not offer or sell any Securities to
persons in the United Kingdom except to persons whose ordinary activities
involve them in acquiring, holding, managing or disposing of investments (as
principal or agent) for the purposes of their businesses or otherwise in
circumstances which have not resulted and will not result in an offer to the
public in the United Kingdom within the meaning of the Public Offers of
Securities Regulations 1995; (ii) it has complied and will comply with all
applicable provisions of the Financial Services ▇▇▇ ▇▇▇▇ and the Public Offers
of Securities Regulations 1995 with respect to anything done by it in relation
to the Securities in, from or otherwise involving the United Kingdom; and (iii)
it has only issued or passed on and will only issue or pass on in the United
Kingdom any document received by it in connection with the issue of the
Securities to a person who is of a kind described in Article 11(3) of the
Financial Services ▇▇▇ ▇▇▇▇ (Investment Advertisements) (Exemptions) Order 1996
or is a person to whom such document may otherwise lawfully be issued or passed
on.
(e) Each Initial Purchaser, severally and not jointly, agrees that,
prior to or simultaneously with the confirmation of sale by such Initial
Purchaser to any purchaser of any of the Securities purchased by such Initial
Purchaser from the Company pursuant hereto, such Initial Purchaser shall furnish
to that purchaser a copy of the Offering Memorandum (and any amendment or
supplement thereto that the Company shall have furnished to such Initial
Purchaser prior to the date of such confirmation of sale). In addition to the
foregoing, each Initial Purchaser acknowledges and agrees that the Company and,
for purposes of the opinions to be delivered to the Initial Purchasers pursuant
to Section 5(d) and (e), counsel for the Company
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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 acknowledges and agrees that the Initial Purchasers may
sell Securities to any affiliate of an Initial Purchaser and that any such
affiliate may sell Securities purchased by it to an Initial Purchaser.
3. DELIVERY OF AND PAYMENT FOR THE SECURITIES. (a) Delivery of and
payment for the Securities shall be made at the offices of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ &
▇▇▇▇▇▇▇▇, New York, New York, or at such other place as shall be agreed upon by
the Initial Purchasers and the Company, at 10:00 A.M., New York City time, on
May 31, 2001, 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 in U.S. dollars 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 JPMorgan 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 JPMorgan on behalf of the Initial
Purchasers in New York, New York at least 24 hours prior to the Closing Date.
4. FURTHER AGREEMENTS OF THE COMPANY AND THE GUARANTOR. The Company and
the Guarantor agree with each of the several Initial Purchasers:
(a) to advise the Initial Purchasers promptly and, if requested,
confirm such advice in writing, of the happening of any event which makes
any statement of a material fact made in the Offering Memorandum untrue or
which requires the making of any additions to or changes in the Offering
Memorandum (as amended or supplemented from time to time) in order to make
the statements therein, in the light of the circumstances under which they
were made, not misleading; to advise the Initial Purchasers promptly of any
order preventing or suspending the use of the Preliminary Offering
Memorandum or the Offering Memorandum, of any suspension of the
qualification of the Securities for offering or sale in any jurisdiction
and of the initiation or threatening of any proceeding for any such
purpose; and to use its 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
11
Memorandum and the Offering Memorandum (and any amendments or supplements
thereto) as may be reasonably requested at any time before the completion
of the resell of the Securities;
(c) prior to making any amendment or supplement to the Offering
Memorandum, to furnish a copy thereof to each of the Initial Purchasers and
counsel for the Initial Purchasers and not to effect any such amendment or
supplement to which the Initial Purchasers shall reasonably object by
notice to the Company after a reasonable period to review;
(d) if, at any time prior to completion of the resale of the
Securities by the Initial Purchasers, any event shall occur or condition
exist as a result of which it is necessary, in the opinion of counsel for
the Initial Purchasers or counsel for the Company, to amend or supplement
the Offering Memorandum in order that the Offering Memorandum will not
include an untrue statement of a material fact or omit to state a material
fact necessary in order to make the statements therein, in the light of the
circumstances existing at the time it is delivered to a purchaser, not
misleading, or if it is necessary to amend or supplement the Offering
Memorandum to comply with applicable law, to promptly prepare such
amendment or supplement as may be necessary to correct such untrue
statement or omission or so that the Offering Memorandum, as so amended or
supplemented, will comply with applicable law;
(e) for so long as the Securities are outstanding and are "restricted
securities" within the meaning of Rule 144(a)(3) under the Securities Act,
to furnish to holders of the Securities and prospective purchasers of the
Securities designated by such holders, upon request of such holders or such
prospective purchasers, the information required to be delivered pursuant
to Rule 144A(d)(4) under the Securities Act, unless the Company is then
subject to and in compliance with Section 13 or 15(d) of the Exchange Act
(the foregoing agreement being for the benefit of the holders from time to
time of the Securities and prospective purchasers of the Securities
designated by such holders);
(f) for so long as the Securities are outstanding, to furnish to the
Initial Purchasers upon request, copies of any annual reports, quarterly
reports and current reports filed by the Company with the Commission on
Forms 10-K, 10-Q and 8-K, or such other similar forms as may be designated
by the Commission, and such other documents, reports and information as
shall be furnished by the Company to the Trustee or to the holders of the
Securities pursuant to the Indenture or the Exchange Act or any rule or
regulation of the Commission thereunder;
(g) to promptly take from time to time prior to the completion of the
resale of the Securities 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 Company and its Subsidiaries shall not
be obligated to qualify generally to do business in any jurisdiction
12
in which it is not so then qualified or to take any action which would
subject it to general service of process or to taxation in any such
jurisdiction where it is not then so subject;
(h) to assist the Initial Purchasers in arranging 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 30 days from the date of the Offering Memorandum,
not to offer for sale, sell, contract to sell or otherwise dispose of,
directly or indirectly, or file a registration statement for, or announce
any offer, sale, contract for sale of or other disposition of any debt
securities issued or guaranteed by the Company or any of its Subsidiaries
(other than (i) the Securities, including the Exchange Securities and the
Private Exchange Securities (as such term is defined in the Registration
Rights Agreement), (ii) the senior notes in aggregate principal amount of
$19 million by the Company to finance capital improvements at the Company's
Waukesha facility and (iii) any debt securities issued in connection with
(A) sale and lease-back transactions, (B) asset-backed securitizations and
(C) the Company's Mexican finance subsidiaries) without the prior written
consent of JPMorgan and Credit Suisse First Boston Corporation;
(l) until the issuance of the Exchange Securities, the Company will
not, and will 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;
(m) in connection with the offering of the Securities, until JPMorgan
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
13
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 and;
(n) 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 contained herein, to the accuracy
of the statements of the Company and its officers made in any certificates
delivered pursuant hereto, to the performance by the Company in all material
respects of its obligations hereunder, and to each of the following additional
terms and conditions:
(a) The Offering Memorandum (and any amendments or supplements
thereto) shall have been printed and copies distributed to the Initial
Purchasers as promptly as reasonably 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 proceedings
for the 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 and the Guarantor 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) ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇ shall have furnished to the Initial Purchasers
their written opinion, as counsel to the Company and the Guarantor,
addressed to the Initial Purchasers and dated the Closing Date, in form and
substance reasonably satisfactory to the Initial Purchasers, substantially
to the effect set forth in Annex B hereto.
(e) ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq., shall have furnished to the Initial
Purchasers his written opinion, as General Counsel of the Company,
addressed to the Initial Purchasers and dated the Closing Date, in
form and substance reasonably satisfactory to the Initial Purchasers,
substantially to the effect set forth in Annex C hereto.
(f) The Initial Purchasers shall have received from ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, counsel for the Initial Purchasers, such opinion
or opinions, dated the Closing
14
Date, with respect to such matters as the Initial Purchasers may
reasonably require, and the Company and the Guarantor shall have
furnished to such counsel such documents and information as they
request for the purpose of enabling them to pass upon such matters.
(g) The Company shall have furnished to the Initial Purchasers a
letter (the "INITIAL LETTER") of Deloitte & Touche 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 D hereto.
(h) The Company shall have furnished to the Initial Purchasers a
letter (the "BRING-DOWN LETTER") of Deloitte & Touche LLP, addressed
to the Initial Purchasers and dated the Closing Date confirming that
they are independent public accountants with respect to the Company
and its Subsidiaries within the meaning of Rule 101 of the Code of
Professional Conduct of the AICPA and its interpretations and rulings
thereunder, 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 confirming in all material respects the conclusions and
findings set forth in the Initial Letter.
(i) The Company shall have furnished to the Initial Purchasers a
certificate, dated the Closing Date, executed by the chief financial
officer, treasurer, or controller of the Company stating that, in
his/her capacity as an executive officer, (A) such officer has
carefully examined the Offering Memorandum, (B) in his/her 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 and (C) as of the Closing Date,
the representations and warranties of the Company in this Agreement
are true and correct in all material respects, the Company has
complied in all material respects with all agreements and satisfied
all conditions on its part to be performed or satisfied hereunder on
or prior to the Closing Date, and subsequent to the date of the most
recent financial statements contained in the Offering Memorandum,
there has been no material adverse change in the financial position or
results of operation of the Company or any of its Subsidiaries, or any
change, or any development including a prospective change, in or
affecting the condition (financial or otherwise), results of
operations, business or prospects of the Company and its Subsidiaries
taken as a whole, except as set forth in the Offering Memorandum.
15
(j) 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 and the
Guarantor.
(k) The Indenture shall have been duly executed and delivered by
the Company and the Guarantor and the Trustee, and the Securities
shall have been duly executed and delivered by the Company and duly
authenticated by the Trustee.
(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
contemplated hereby.
(n) Subsequent to the execution and delivery of this Agreement
or, if earlier, the dates as of which information is given in the
Offering Memorandum (exclusive of any amendment or supplement
thereto), there shall not have been any material change in the capital
stock or long-term debt or any Material Adverse Change, the effect of
which, in any such case described above, is, in the judgment of the
JPMorgan, 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 no
downgrading shall have occurred in the rating accorded the Securities
or any of the Company's other debt securities or preferred stock by an
"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
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.
16
(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 JPMorgan, 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.
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 shall be obligated to purchase
the aggregate principal amount of Securities which the defaulting Initial
Purchaser agreed but failed to purchase on the Closing Date in the respective
proportions which the aggregate principal amount of Securities set opposite the
name of each remaining non-defaulting Initial Purchaser in Schedule 1 hereto
bears to $400,000,000, PROVIDED that the remaining non-defaulting Initial
Purchasers shall not be obligated to purchase any Securities on the Closing Date
if the aggregate principal amount of Securities which the defaulting Initial
Purchaser or Initial Purchasers agreed but failed to purchase on such date
exceeds 10% of the aggregate principal amount of Securities to be purchased on
the Closing Date, and any remaining non-defaulting Initial Purchaser shall not
be obligated to purchase more than 110% of the aggregate principal amount of
Securities which it agreed to purchase on the Closing Date pursuant to the terms
of Section 2. If either of the foregoing maximums are exceeded, the remaining
non-defaulting Initial Purchasers, or those additional initial purchasers
satisfactory to JPMorgan who so agree, shall have the right, but shall not be
obligated, to purchase, in such proportion as may be agreed upon among them, all
the Securities to be purchased on the Closing Date. If the remaining Initial
Purchasers or other Initial Purchasers satisfactory to JPMorgan do not elect to
purchase the Securities which the defaulting Initial Purchaser or Initial
Purchasers agreed but failed to purchase on the Closing Date, this Agreement
shall terminate without liability on the part of the non-defaulting Initial
Purchasers, the Company
17
or the Guarantor, except that the Company and the Guarantor will continue to
be liable for the payment of expenses to the non-defaulting Initial
Purchasers 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, the Guarantor 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 as a result of the occurrence
of any of the events described in Sections 5(n), 5(p), 5(q)(i), 5(q)(iii) or
5q(iv), (b) the Company shall fail to tender the Securities for delivery to the
Initial Purchasers or (c) the Initial Purchasers shall decline to purchase the
Securities for any reason permitted under this Agreement, the Company and the
Guarantor shall reimburse the Initial Purchasers for such out-of-pocket expenses
(including reasonable fees and documented 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.
9. INDEMNIFICATION. (a) The Company and the Guarantor 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 and the
Guarantor pursuant to Section 4(e) or (ii) the omission or alleged omission to
state therein a material fact required to be stated therein or necessary in
order to make the statements therein, in the light of the circumstances under
which they were made, not misleading, and shall reimburse each Initial Purchaser
promptly upon demand for any legal or other expenses reasonably incurred by that
Initial Purchaser in connection with investigating or defending or preparing to
defend against or appearing as a third party witness in connection with
18
any such loss, claim, damage, liability or action as such expenses are
incurred; PROVIDED, HOWEVER, that the Company and the Guarantor 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) a copy of the Offering Memorandum (excluding any
documents incorporated by reference therein) 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 furnished by such Initial Purchaser, and shall reimburse
the Company promptly upon demand 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
19
such claim or action shall be brought against an indemnified party, and it
shall notify the indemnifying party thereof, the indemnifying party shall be
entitled to participate therein and, to the extent that it wishes, jointly
with any other similarly notified indemnifying party, to assume the defense
thereof with counsel reasonably satisfactory to the indemnified party. After
notice from the indemnifying party to the indemnified party of its election
to assume the defense of such claim or action, the indemnifying party shall
not be liable to the indemnified party under this Section 9 for any legal or
other expenses subsequently incurred by the indemnified party in connection
with the defense thereof other than reasonable costs of investigation;
PROVIDED, HOWEVER, that an indemnified party shall have the right to employ
its own counsel in any such action, but the fees, expenses and other charges
of such counsel for the indemnified party will be at the expense of such
indemnified party unless (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 or delayed), 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 or
delayed), 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 proceedings.
The obligations of the Company and the Guarantor and the
Initial Purchasers in this Section 9 and in Section 10 are in addition to any
other liability that the Company, the Guarantor 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
20
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 Guarantor 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 Guarantor on the one hand and the Initial Purchasers on the other
with respect to the statements or omissions that resulted in such loss,
claim, damage or liability, or action in respect thereof, as well as any
other relevant equitable considerations. The relative benefits received by
the Company and the Guarantor on the one hand and the Initial Purchasers on
the other with respect to such offering shall be deemed to be in the same
proportion as the total net proceeds from the offering of the Securities
purchased under this Agreement (before deducting expenses) received by or on
behalf of the Company, on the one hand, and the total discounts and
commissions received by the Initial Purchasers with respect to the Securities
purchased under this Agreement, on the other, bear to the total gross
proceeds from the sale of the Securities under this Agreement. 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 the
Guarantor or information supplied by the Company or the Guarantor 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 omissions. The
Company and the Initial Purchasers agree that it would not be just and
equitable if contributions pursuant to this Section 10 were to be determined
by PRO RATA allocation (even if the Initial Purchasers were treated as one
entity for such purpose) or by any other method of allocation that does not
take into account the equitable considerations referred to herein. The amount
paid or payable by an indemnified party as a result of the loss, claim,
damage or liability, or action in respect thereof, referred to above in this
Section 10 shall be deemed to include, for purposes of this Section 10, any
legal or other expenses reasonably incurred by such indemnified party in
connection with investigating or defending or preparing to defend any such
action or claim. Notwithstanding the provisions of this Section 10, no
Initial Purchaser shall be required to contribute any amount in excess of the
amount by which the total discounts and commissions received by such Initial
Purchaser with respect to the Securities purchased by it under this Agreement
exceeds the amount of any damages which such Initial Purchaser has otherwise
paid or become liable to pay by reason of any untrue or alleged untrue
statement or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. The Initial Purchasers' obligations to
contribute as provided in this Section 10 are several in proportion to their
respective purchase obligations and not joint.
11. PERSONS ENTITLED TO BENEFIT OF AGREEMENT. This Agreement shall
inure to the benefit of and be binding upon the Initial Purchasers, the
Company and the Guarantor 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 and the Guarantor 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
21
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 Guarantor, jointly and severally,
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 and the Guarantor'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(h) and of preparing, printing and distributing Blue Sky
Memoranda (including related fees and expenses of counsel for the Initial
Purchasers not to exceed $5,000); (g) any fees charged by rating agencies for
rating the Securities; (h) the fees and expenses of the Trustee and any
paying agent (including related fees and expenses of any counsel to such
parties); (i) all expenses and application fees incurred in connection with
the application for the approval of the Securities for book-entry transfer by
DTC; (j) (I) the expenses incurred by the employees of the Company or the
Guarantor and not directly billed to the Initial Purchasers in connection
with their participation in the road-show relating to the offering of the
Securities, including charges relating to hotels, commercial airfare and
related incidentals and (II) 50% of the cost of any chartered aircraft used
in connection with the road-show, except for the use of such aircraft from
Oakland, California to Los Angeles, California; and (k) all other costs and
expenses incident to the performance of the obligations of the Company under
this Agreement which are not otherwise specifically provided for in this
Section 12; PROVIDED, HOWEVER, that except as provided in this Section 12 and
Section 8, the Initial Purchasers shall pay their own costs and expenses.
13. SURVIVAL. The respective indemnities, rights of contribution,
representations, warranties and agreements of the Company and the Guarantor
and the Initial Purchasers contained in this Agreement or made by or on
behalf of the Company and the Guarantor 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 ▇.▇. ▇▇▇▇▇▇ Securities Inc., ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇-▇▇▇▇▇
(telecopier no.: (▇▇▇) ▇▇▇-▇▇▇▇); or
(b) if to the Company or the Guarantor, shall be delivered or
sent by mail or telecopy transmission (i) prior to May 28, 2001, to
the address of the Company set forth
22
in the Offering Memorandum, Attention: Treasurer and Controller, with
a copy to the General Counsel of the Company at the same address
(telecopier no.: (▇▇▇) ▇▇▇-▇▇▇▇), or (ii) after May 28, 2001, to
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: Treasurer
and Controller, with a copy to the General Counsel of the Company at
the same address;
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 JPMorgan.
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: the statements concerning the
Initial Purchasers contained in the third paragraph, third and fourth sentences
of the tenth paragraph, and the eleventh paragraph 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 agreement, 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.
23
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 and the several
Initial Purchasers in accordance with its terms.
Very truly yours,
NAVISTAR INTERNATIONAL CORPORATION
By: /s/ ▇.▇. ▇▇▇▇▇
-------------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Vice President and Treasurer
Accepted:
▇.▇. ▇▇▇▇▇▇ SECURITIES INC.
On behalf of the Initial Purchasers
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------------------------------
Authorized Signatory
Address for notices pursuant to Section 9(c):
1 Chase ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: Legal Department
24
IN WITNESS WHEREOF, we have hereunto signed our names,
whereupon this instrument will become a binding agreement between the Company,
the Guarantor and the several Initial Purchasers in accordance with its terms.
Very truly yours,
INTERNATIONAL TRUCK AND ENGINE CORPORATION
By: /s/ ▇.▇. ▇▇▇▇▇
-------------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Vice President and Treasurer
SCHEDULE 1
Principal
Amount
INITIAL PURCHASERS OF SECURITIES
------------------ -------------
▇.▇. ▇▇▇▇▇▇ Securities Inc. $ 160,000,000
Credit Suisse First Boston Corporation 160,000,000
Banc of America Securities LLC 22,857,200
Scotia Capital (USA) Inc. 22,857,200
BNY Capital Markets, Inc. 17,142,800
RBC Dominion Securities Corporation 17,142,800
-----------
Total 400,000,000
ANNEX A
[Form of Exchange and Registration Rights Agreement]
ANNEX B
[Form of ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇ Opinion]
▇▇▇▇▇▇▇▇ & ▇▇▇▇▇ shall have furnished to the Initial
Purchasers their written opinion, as counsel to the Company, addressed to the
Initial Purchasers and dated the Closing Date, in form and substance reasonably
satisfactory to the Initial Purchasers, substantially to the effect set forth in
the attached document.
We are issuing this letter in our capacity as special counsel for
Navistar International Corporation, a Delaware corporation (the "COMPANY"), and
International Truck and Engine Corporation, a Delaware corporation
("INTERNATIONAL ") in response to the requirement in Section 5(d) of the
Purchase Agreement dated May 23, 2001 (the "PURCHASE AGREEMENT") among the
Company, International and ▇.▇. ▇▇▇▇▇▇ Securities Inc. and Credit Suisse First
Boston Corporation (collectively, the "INITIAL PURCHASERS" and herein being
called "YOU"). Every term which is defined or given a special meaning in the
Purchase Agreement and which is not given a different meaning in this letter has
the same meaning whenever it is used in this letter as the meaning it is given
in the Purchase Agreement.
In connection with the preparation of this letter, we have among other
things read:
(a) the Offering Memorandum of the Company, dated May [__], 2001,
covering the offering and sale of the Securities (the
"OFFERING MEMORANDUM");
(a) an executed original of the Purchase Agreement;
(b) an executed original of the Indenture and the Securities to be
delivered on the date hereof;
(c) an executed original of the Registration Rights Agreement;
(d) a certified copy of resolutions adopted by the Board of
Directors of the Company on April [__], 2001, a certified copy
of resolutions adopted on May [__], 2001 by the Pricing
Committee appointed in the Company's Board resolutions and a
certified copy of resolutions adopted by the Board of
Directors of International on May [__], 2001; and
(e) copies of all certificates and other documents delivered in
connection with the sale of the Securities on the date hereof
and the consummation of the other transactions contemplated by
the Purchase Agreement.
The term "TRANSACTION DOCUMENTS" is used in this letter to collectively
refer to the Purchase Agreement, the Indenture, the Securities and the
Registration Rights Agreement.
Subject to the assumptions, qualifications and limitations which are
identified in this letter, we advise you that:
1. The Company and International are corporations existing and in good
standing under the General Corporation Law of the State of Delaware.
2. The Purchase Agreement has been duly authorized, executed and delivered
by the Company and International.
3. The Indenture has been duly authorized, executed and delivered by the
Company and International. The Indenture is a valid and binding
obligation of the Company and International, and is enforceable against
the Company and International in accordance with its terms.
4. The Registration Rights Agreement has been duly authorized, executed
and delivered by the Company and International. The Registration Rights
Agreement is a valid and binding obligation of the Company and
International, and is enforceable against the Company and International
in accordance with its terms.
5. The Securities have been duly authorized, executed and delivered by the
Company, and when paid for by the Initial Purchasers in accordance with
the terms of the Purchase Agreement (assuming the due authorization,
execution and delivery of the Indenture by the Trustee and due
authentication and delivery of the Securities by the Trustee in
accordance with the Indenture), will constitute Securities under the
terms of the Indenture, will constitute a valid and binding obligation
of the Company, and will be enforceable against the Company in
accordance with their terms.
6. The International Guarantee has been duly authorized, executed and
delivered by International, and when the Securities are paid for by the
Initial Purchasers in accordance with the terms of the Purchase
Agreement (assuming that due authorization, execution and delivery of
the Indenture by the Trustee and due authentication and delivery of the
Securities by the Trustee in accordance with the Indenture), will
constitute a Subsidiary Guarantee under the Indenture, will constitute
a valid and binding obligation of International, and will be
enforceable against International in accordance with its terms.
7. The Board of Directors of each of the Company and International has
adopted by requisite vote the resolutions necessary to authorize the
execution, delivery and performance of, in the case of the Company, the
Exchange Securities and the Private Exchange Securities (as defined in
the Registration Rights Agreement), as the case may be, and, in the
case of International, the Subsidiary Guarantee of the Exchange
Securities and the Private Exchange Securities, as the case may be. No
approval by the stockholders of the Company or International is
required.
8. The execution and delivery of the Transaction Documents by the Company
and International, the performance by the Company and International of
their respective obligations thereunder and the consummation of the
transactions contemplated thereby (including, without limitation, the
Company"s issuance and sale of the Securities to you in accordance with
the terms of the Purchase Agreement and the application of the net
proceeds therefrom as described in the Offering Memorandum under the
caption "Use of Proceeds") do not and will not conflict with or
constitute or result in a breach or default under (or an event which
with notice or the passage of time or both would constitute a default
under) or violation of any of, (i) the charter, bylaws or other
organizational documents of the Company and International, (ii) any
statute or governmental rule or regulation which, in our experience, is
normally applicable both to general business corporations that are not
engaged in regulated business activities and to transactions of the
type contemplated by the Offering Memorandum (but without our having
made any special investigation as to other laws and provided that we
express no opinion in this paragraph with respect to (a) any laws,
rules or regulations to which the Company or International may be
subject as a result of the Initial Purchasers' legal or regulatory
status or the involvement of the Initial Purchasers in such
transactions, (b) any laws, rules or regulations relating to
misrepresentations or fraud or (c) the Securities Act, the Exchange Act
or the Trust Indenture Act) or (iii) the terms or provisions of any
contract set forth on SCHEDULE A attached hereto (provided that in each
case we express no opinion as to compliance with any financial test or
cross-default provision in any such agreement), except for in the case
of items (ii) and (iii) any such conflict, breach, violation, default
or event which would not, individually or in the aggregate, reasonably
be expected to have a Material Adverse Effect or to materially impair
the ability of the Company or International to perform their respective
obligations under the Transaction Documents.
9. To our actual knowledge, no consent, waiver, approval, authorization or
order of any court or governmental authority is required for the
issuance and sale by the Company of the Notes to the Initial Purchasers
or the consummation by the Company and International of the other
transactions contemplated by the Transaction Documents, except such as
may be required under the Securities Act, the Exchange Act, the Trust
Indenture Act and the security or Blue Sky laws of the various states
(and the rules and regulations thereunder), as to which we express no
opinion in this paragraph.
10. No registration under the Securities Act of the Securities is required
in connection with the sale of the Securities to the Initial Purchasers
in the manner contemplated by the Purchase Agreement and the Offering
Memorandum or in connection with the initial resale of the Securities
by the Initial Purchasers in accordance with Section 2(b) of the
Purchase Agreement, and prior to the effectiveness of the Exchange
Offer Registration Statement or the Shelf Registration Statement, the
Indenture is not required to be qualified under the Trust Indenture
Act, in each case assuming (i) that the purchasers who buy such
Securities in the initial resale thereof are qualified institutional
buyers as defined in Rule 144A promulgated under the Securities Act, or
persons other than U. S. persons in connection with offers and sales
made in reliance upon Regulation S under the Securities Act, (ii) the
accuracy and completeness of the Initial Purchasers' representations
set forth in Section 2 of the Purchase Agreement, and those of the
Company contained in the Purchase Agreement regarding the absence of a
general solicitation in connection with the sale of such Securities to
the Initial Purchasers and the initial resales thereof, and (iii) the
compliance with the procedures set forth in the Purchase Agreement by
the Initial Purchasers and the Company.
11. The information in the Offering Memorandum under the heading
"Description of the Notes," "Federal Income Tax Considerations,"
"Exchange and Registration Rights Agreement" and "Transfer
Restrictions" to the extent that it summarizes laws, governmental rules
or regulations or documents referred to therein is correct in all
material respects.
12. To our actual knowledge, there is no legal or governmental proceeding
that is pending or threatened against the Company or any of its
subsidiaries that has caused us to conclude that such proceeding would
be required to be described by Item 103 of Regulation S-K under the
Securities Act if the issuance of the Securities were being registered
under the Securities Act but is not so described in the Offering
Memorandum.
13. The Company is not, nor immediately after the sale of the Securities to
the Initial Purchasers and application of the net proceeds therefrom as
described in the Offering Memorandum under the caption "Use of
Proceeds" will be, an "investment company" as such term is defined in
the Investment Company Act.
14. Neither the sale, issuance, execution or delivery of the Securities nor
the application of the net proceeds therefrom as described in the
Offering Memorandum under the caption "Use of Proceeds" will contravene
Regulation T (12 C.F.R. Part 220), Regulation U (12 C.F.R. Part 221) or
Regulation X (12 C.F.R. Part 224) of the Board of Governors of the
Federal Reserve System.
* * * * * * * *
The purpose of our professional engagement was not to establish factual
matters, and preparation of the Offering Memorandum involved many determinations
of a wholly or partially nonlegal character. We make no representation that we
have independently verified the accuracy, completeness or fairness of the
Offering Memorandum or that the actions taken in connection with the preparation
of the Offering Memorandum (including the actions described in the next
paragraph) were sufficient to cause the Offering Memorandum to be accurate,
complete or fair. We are not passing upon and do not assume any responsibility
for the accuracy, completeness or fairness of the Offering Memorandum except to
the extent otherwise explicitly indicated in numbered paragraph 11 above. We
were not retained by the Company to prepare the periodic reports or other
materials incorporated by reference into the Offering Memorandum, and our
knowledge about these materials is limited. We were not present at any meeting
of the Board of Directors of the Company or its Pricing Committee at which any
resolution relevant to this letter was discussed or adopted.
We can however confirm that we have participated in conferences with
representatives of the Company, representatives of the Initial Purchasers,
counsel for the Initial Purchasers and representatives of the independent
accountants for the Company during which disclosures in the Offering Memorandum
and related matters were discussed. In addition, we have reviewed certain
corporate records furnished to us by the Company.
Based upon our participation in the conferences and our document review
identified in the preceding paragraph, our understanding of applicable law and
the experience we have gained in our practice thereunder and relying as to
materiality to a large extent upon the opinions and on statements of officers of
the Company, we can, however, advise you that nothing has come to our attention
that has caused us to conclude that the Offering Memorandum, at the date it
bears or on the date of this letter, contained or contains an untrue statement
of a material fact or omitted or omits to state a material fact necessary in
order to make the statements therein, in light of the circumstances under which
they were made, not misleading.
* * * * * * * *
Except for the activities described in the immediately preceding
section of this letter, we have not undertaken any investigation to determine
the facts upon which the advice in this letter is based.
We have assumed for purposes of this letter: each document we have
reviewed for purposes of this letter is accurate and complete, each such
document that is an original is authentic, each such document that is a copy
conforms to an authentic original, and all signatures on each such document are
genuine; that the Purchase Agreement and every other agreement we have examined
for purposes of this letter constitutes a valid and binding obligation of each
party to that document and that each such party has satisfied all legal
requirements that are applicable to such party to the extent necessary to
entitle such party to enforce such agreement (except that we make no such
assumption with respect to the Company); and that you have acted in good faith
and without notice of any fact which has caused you to reach any conclusion
contrary to any of the advice provided in this letter. We have also made other
assumptions which we believe to be appropriate for purposes of this letter.
In preparing this letter we have relied without independent
verification upon: (i) information contained in certificates obtained from
governmental authorities; (ii) factual information represented to be true in the
Purchase Agreement and other documents specifically identified at the beginning
of this letter as having been read by us; (iii) factual information provided to
us by the Company or its representatives; and (iv) factual information we have
obtained from such other sources as we have deemed reasonable. We have assumed
that there has been no relevant change or development between the dates as of
which the information cited in the preceding sentence was given and the date of
this letter and that the information upon which we have relied is accurate and
does not omit disclosures necessary to prevent such information from being
misleading. For purposes of numbered paragraph 1, we have relied exclusively
upon certificates issued by governmental authorities in the relevant
jurisdiction and such opinion is not intended to provide any conclusion or
assurance beyond that conveyed by those certificates.
We confirm that we do not have knowledge that has caused us to conclude
that our reliance and assumptions cited in the two immediately preceding
paragraphs are unwarranted. Whenever this letter provides advice about (or based
upon) our knowledge of any particular information or about any information which
has or has not come to our attention such advice is based entirely on the
conscious awareness at the time this letter is delivered on the date it bears by
the lawyers with ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇ at that time who spent substantial time
representing the
Company in connection with the offering effected pursuant to the Offering
Memorandum.
Each opinion (an "ENFORCEABILITY OPINION") in this letter that any
particular contract is a valid and binding obligation or is enforceable in
accordance with its terms is subject to: (i) the effect of bankruptcy,
insolvency, fraudulent conveyance and other similar laws and judicially
developed doctrines in this area such as substantive consolidation and equitable
subordination; (ii) the effect of general principles of equity; and (iii) other
commonly recognized statutory and judicial constraints on enforceability
including statutes of limitations. "General principles of equity" include but
are not limited to: principles limiting the availability of specific performance
and injunctive relief; principles which limit the availability of a remedy under
certain circumstances where another remedy has been elected; principles
requiring reasonableness, good faith and fair dealing in the performance and
enforcement of an agreement by the party seeking enforcement; principles which
may permit a party to cure a material failure to perform its obligations; and
principles affording equitable defenses such as waiver, laches and estoppel. It
is possible that terms in a particular contract covered by our enforceability
opinion may not prove enforceable for reasons other than those explicitly cited
in this letter should an actual enforcement action be brought, but (subject to
all the exceptions, qualifications, exclusions and other limitations contained
in this letter) such unenforceability would not in our opinion prevent the party
entitled to enforce that contract from realizing the principal benefits
purported to be provided to that party by the terms in that contract which are
covered by our enforceability opinion.
The enforceability opinion related to the International Guarantee is
further subject to the effect of rules of law that may render guarantees
unenforceable under circumstances where, in the absence of an effective consent
or waiver by guarantors (as to which we express no opinion herein), actions,
failures to act or waivers, amendments or replacement of the Indenture or the
Securities so radically change the essential nature of the terms and conditions
of the guaranteed obligations and the related transactions that, in effect, a
new relationship has arisen between the Indenture Trustee and the Company or
International, which is substantially and materially different from that
presently contemplated by the Indenture and the Securities.
Our advice on every legal issue addressed in this letter is based
exclusively on the internal law of the State of New York, or the federal law of
the United States, except that the opinions in paragraph 1 and paragraphs 2, 3,
4 and 5 with respect due authorization, execution and delivery of the
Transaction Documents are based solely on the Delaware General Corporation Law
(the "DGCL"). In our opinion, New York state courts would apply New York state
law to resolve state law issues arising under the Transaction Documents. We
express no opinion as to what law might be applied by any other courts to
resolve any issue addressed by our opinion and we express no opinion as to
whether any relevant difference exists between the laws upon which our opinions
are based and any other laws which may actually be applied to resolve issues
which may arise under the Transaction Documents. The manner in which any
particular issue would be treated in any actual court case would depend in part
on facts and circumstances particular to the case and would also depend on how
the court involved chose to exercise the wide discretionary authority generally
available to it. This letter is not intended to guarantee the outcome of any
legal dispute which may arise in the future.
None of the opinions or other advice contained in this letter considers
or covers: (i) any state securities (or "BLUE SKY") laws or regulations, (ii)
any financial statements or supporting schedules (or any notes to any such
statements or schedules) or other financial or statistical information set forth
or incorporated by reference in (or omitted from) the Offering Memorandum or
(iii) any rules and regulations of the National Association of Securities
Dealers, Inc. relating to the compensation of underwriters. In addition, none of
the opinions or other advice contained in the letter covers or otherwise
addresses any of the following types of provisions which may be contained in the
Transaction Documents: (i) provisions mandating contribution towards judgments
or settlements among various parties; (ii) waivers of benefits and rights to the
extent they cannot be waived under applicable law; (iii) provisions providing
for liquidated damages, late charges and prepayment charges, in each case if
deemed to constitute penalties; (iv) provisions which might require
indemnification or contribution in violation of general principles of equity or
public policy, including, without limitation, indemnification or contribution
obligations which arise out of the failure to comply with applicable state or
federal securities laws; or (v) requirements in the Transaction Documents
specifying that provisions thereof may only be waived in writing (these
provisions may not be valid, binding or enforceable to the extent that an oral
agreement or an implied agreement by trade practice or course of conduct has
been created modifying any provision of such documents). This letter does not
cover any other laws, statutes, governmental rules or regulations or decisions
which in our experience are not usually considered for or covered by opinions
like those contained in this letter or are not generally applicable to
transactions of the kind covered by the Purchase Agreement.
This letter speaks as of the time of its delivery on the date it bears.
We do not assume any obligation to provide you with any subsequent opinion or
advice by reason of any fact about which we did not have knowledge at that time,
by reason of any change subsequent to that time in any law other governmental
requirement or interpretation thereof covered by any of our opinions or advice,
or for any other reason.
This letter may be relied upon by the Initial Purchasers only for the
purpose served by the provision in the Purchase Agreement cited in the initial
paragraph of this letter in response to which it has been delivered. Without our
written consent: (i) no person other than the Initial Purchasers may rely on
this letter for any purpose; (ii) this letter may not be cited or quoted in any
financial statement, offering memorandum, private placement memorandum or other
similar document; (iii) this letter may not be cited or quoted in any other
document or communication which might encourage reliance upon this letter by any
person or for any purpose excluded by the restrictions in this paragraph; and
(iv) copies of this letter may not be furnished to anyone for purposes of
encouraging such reliance.
SCHEDULE A
Specified Contracts
NAVISTAR INTERNATIONAL CORPORATION
1. $125,000,000 Credit Agreement dated as of November 26, 1997, as amended
by Amendment No. 1 dated as of February 4, 1998, and as amended by
Amendment No. 2 dated as of July 10, 1998, among Camiones Motores
International de Mexico S.A. de C.V. (formerly known as Navistar
International Corporation Mexico, S.A. de C.V.), the Company, certain
banks, certain Co-Arranger banks, Bank of Montreal, as Paying Agent,
and Bancomer, S.A., Institucion de Banca Multiple, Grupo Financiero, as
Peso Agent and Collateral Agent.
2. Indenture, dated as of February 4, 1998, by and between the Company and
BNY Midwest Trust Company (formerly known as ▇▇▇▇▇▇ Trust and Savings
Bank), as trustee, for 7% Senior Notes due 2003 for $100,000,000, as
amended by the First Supplement thereto dated May [31]. 2001.
3. Indenture, dated as of February 4, 1998, by and between the Company and
BNY Midwest Trust Company (formerly known as ▇▇▇▇▇▇ Trust and Savings
Bank), as trustee, for 8% Senior Subordinated Notes due 2008 for
$250,000,000, as amended by the First Supplement thereto dated May
[31]. 2001.
4. Rights Agreement, dated as of April 20, 1999 between the Company and
BNY Midwest Trust Company (formerly known as ▇▇▇▇▇▇ Trust and Savings
Bank), as rights agent, including the form of Certificate of
Designation, Preferences and Rights of Junior Participating Preferred
Stock, Series A attached thereto as Exhibit A, and the form of Rights
Certificate attached thereto as Exhibit B.
NAVISTAR FINANCIAL CORPORATION
5. Indenture, dated as of May 30, 1997, by and between Navistar Financial
Corporation ("NFC") and The Fuji Bank and Trust Company, as trustee,
for 9% Senior Subordinated Notes due 2002 for $100,000,000.
6. Pooling and Servicing Agreement, dated as of June 8, 1995, among NFC,
as Servicer, Navistar Financial Securities Corporation, as Seller, The
Chase Manhattan Bank (survivor in the merger between The Chase
Manhattan Bank and Chemical Bank which was the survivor in the merger
between Chemical Bank and Manufacturers Hanover Trust Company), as 1990
Trust Trustee, and The Bank of New York, as Master Trust Trustee.
7. Indenture, dated as of May 30, 1996, between Navistar Financial 1996-A
Owner Trust and The Bank of New York, as Indenture Trustee, with
respect to Navistar Financial 1996-A Owner Trust.
8. Indenture, dated as of November 6, 1996, between Navistar Financial
1996-B Owner Trust and The Bank of New York, as Indenture Trustee, with
respect to Navistar Financial 1996-B Owner Trust.
9. Indenture, dated as of May 7, 1997, between Navistar Financial 1997-A
Owner Trust and The Bank of New York, as Indenture Trustee, with
respect to Navistar Financial 1997-A Owner Trust.
10. Indenture, dated as of November 5, 1997, between Navistar Financial
1997-B Owner Trust and The Bank of New York, as Indenture Trustee, with
respect to Navistar Financial 1997-B Owner Trust.
11. Indenture, dated as of June 4, 1998, between Navistar Financial 1998-A
Owner Trust and The Bank of New York, as Indenture Trustee, with
respect to Navistar Financial 1998-A Owner Trust.
12. Transfer and Administration Agreement, dated as of November 13, 1998,
between NFC, as Servicer, and Navistar Financial Retail Receivables
Corporation, as Transferor, Park Avenue Receivables Corporation, as
Purchaser, and The Chase Manhattan Bank, as Funding Agent and APA Bank.
13. Trust Agreement, dated as of June 3, 1999, between Navistar Financial
Retail Receivables Corporation, as Seller, and Chase Manhattan Bank
Delaware, as Owner Trustee, with respect to Navistar Financial 1999-A
Owner Trust.
14. Indenture, dated as of June 3, 1999, between Navistar Financial 1999-A
Owner Trust and The Bank of New York, as Indenture Trustee, with
respect to Navistar Financial 1999-A Owner Trust.
15. Receivable Purchase Agreement, dated as of November 12, 1999, between
Navistar Financial Retail Receivables Corporation, as Seller, NFC, as
Servicer, and Falcon Asset Securitization Corporation and International
Securitization Corporation, as investors, and Bank One NA, as agent and
as Securities Intermediary, with respect to Navistar Financial 1999-B
Multi-seller Asset-backed Commercial Paper Conduit.
16. Indenture, dated as of March 9, 2000, between Navistar Financial 2000-A
Owner Trust and The Bank of New York, as Indenture Trustee, with
respect to Navistar Financial 2000-A Owner Trust.
17. Indenture, dated as of November 1, 2000, between Navistar Financial
2000-B Owner Trust and The Bank of New York, as Indenture Trustee, with
respect to Navistar Financial 2000-B Owner Trust.
18. Credit Agreement for $820,000,000 Revolving Credit and Competitive
Advance Facility, dated as of December 8, 2000, between NFC,
Arrendadora Financiera Navistar, S.A. de C.V., Servicios Financieros
Navistar, S.A. de C.V. and Navistar Comercial, S.A. de C.V., as
borrowers, lenders party hereto, The Chase Manhattan Bank as
Administrative Agent, Bank of America as Syndication Agent and Bank of
Nova Scotia as Documentation Agent.
19. Parents Side Agreement, dated as of December 8, 2000, by the Company
and International, for the benefit of the Lenders from time to time
party to the Credit Agreement referred to above.
20. Guarantee, dated as of December 8, 2000, made by the Company in favor
of The Chase Manhattan Bank, as Administrative Agent, for the lenders
parties to the Credit Agreement, dated as of December 8, 2000, among
NFC and Arrendadora Financiera Navistar, S.A. de C.V., Servicios
Financieros Navistar, S.A. de C.V. and Navistar Comercial, S.A. de
C.V., the Lenders, Bank of America, N.A., as Syndication Agent, The
Bank of Nova Scotia, as Documentation Agent, and the Administrative
Agent.
21. 364-Day Credit Agreement for $80,000,000 364-Day Revolving Credit
Facility, as of December 8, 2000, between NFC, as borrower, lenders
party hereto, The Chase Manhattan Bank as Administrative Agent, Bank of
America, N.A., as Syndication Agent and Bank of Nova Scotia, as
Documentation Agent.
22. Parents Side Agreement, dated as of December 8, 2000, by the Company
and International, for the benefit of the Lenders from time to time
party to the Credit Agreement referred to above.
ANNEX C
[Form of ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq. Opinion]
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq., shall have furnished to the Initial
Purchasers his written opinion, as General Counsel of the Company, addressed to
the Initial Purchasers and dated the Closing Date, in form and substance
reasonably satisfactory to the Initial Purchasers, substantially to the effect
set forth in the attached document:
I am Senior Vice President and General Counsel of Navistar
International Corporation, a Delaware corporation (the "COMPANY"). This opinion
is delivered to you pursuant to Section 5(e) of the Purchase Agreement, dated
May [___], 2001 (the "PURCHASE AGREEMENT"), between the Company and ▇.▇. ▇▇▇▇▇▇
Securities Inc. and Credit Suisse First Boston Corporation (the "INITIAL
PURCHASERS"). Capitalized terms used but not otherwise defined herein shall have
the respective meanings specified in the Purchase Agreement.
In connection with this opinion, I have reviewed the Offering
Memorandum of the Company, dated May [ ], 2001, covering the offering and sale
of the Securities (including the documents incorporated by reference therein,
the "OFFERING MEMORANDUM"), an executed original of the Purchase Agreement, an
executed original of the Indenture, a specimen certificate of the Securities, an
executed original of the Registration Rights Agreement, the Certificate of
Incorporation and the By-laws of the Company, certificates of certain public
officials, and certificates of certain officers of the Company as to certain
factual matters. In addition, I have reviewed such other documents and have
given consideration to such other matters of law and fact (in accordance with
the principles set forth herein) as I have deemed appropriate, in my
professional judgment, to express the opinions expressed herein under the laws
specified below.
In such review and investigation, I have assumed with your permission
and without independent investigation: (a) the genuineness of the signatures of
persons signing all documents in connection with which this opinion is rendered
on behalf of the parties thereto other than the Company, (b) the authenticity of
all documents submitted to me as originals, (c) the conformity to authentic
original documents of all documents submitted to me as certified. conformed or
photostatic copies, and (d) all public authority documents are accurate,
complete and authentic and all official public records (including their indexing
and filing) are accurate and complete. I have also assumed the due
authorization, execution and delivery of the Purchase Agreement and every other
agreement I have examined for purposes of this opinion and the validity, binding
effect and enforceability thereof by or on behalf of the parties thereto other
than the Company. As to factual matters material to this opinion, when such
facts have not been independently established, I have relied upon originals (or
copies certified or otherwise identified to my satisfaction) of such records,
documents, certificates and other written information as in my judgment are
necessary or appropriate to enable me to render the opinions expressed below.
Based upon the foregoing and subject to the qualifications, assumptions
and limitations set forth below, I am of the opinion that:
2
1. The Company has been duly incorporated and is validly existing as a
corporation in good standing under the laws of the State of Delaware with full
power and authority (corporate and other) to own, lease and operate its
properties and to conduct business as described in the Offering Memorandum.
2. The Company has been duly qualified as a foreign corporation for the
transaction of business and is in good standing in each jurisdiction in which it
owns or leases properties, or conducts business, so as to require such
qualification, except where the failure to be in good standing would not
reasonably be expected to have a Material Adverse Effect.
3. Each Subsidiary has been duly incorporated and is validly existing
as a corporation under the laws of its jurisdiction of incorporation with power
and authority (corporate and other) to own, lease and operate its properties and
to conduct its business, and has been duly qualified as a foreign corporation
for the transaction of business and is in good standing in each jurisdiction in
which it owns or leases properties, or conducts business, so as to require such
qualification, except where the failure to be in good standing would not
reasonably be expected to have a Material Adverse Effect.
4. The authorized capital stock of the Company is as set forth in the
Offering Memorandum.
5. All the outstanding shares of capital stock of each Subsidiary have
been duly authorized and validly issued and are fully paid and non-assessable,
and except as otherwise set forth in the Offering Memorandum, are directly or
indirectly owned by the Company free and clear of any mortgage, pledge, security
interest, lien, claim or other encumbrance or restriction on transferability or
voting (other than as may be imposed by the Securities Act and the various state
securities laws).
6. All of the outstanding shares of capital stock of the Company have
been duly authorized and validly issued and are fully paid and non-assessable.
7. Except as described in the Offering Memorandum, there is no action,
suit or proceeding before or by any government, governmental instrumentality,
agency, body or court, domestic or foreign, now pending or, to the best of my
knowledge after reasonable investigation, threatened against or affecting the
Company or any of the Subsidiaries that could reasonably be expected to have a
Material Adverse Effect or that could reasonably be expected to have material
adverse effect on the consummation of the transactions contemplated in, or the
fulfillment of the terms of, this Agreement, the Offering Memorandum, the
Indenture or the Registration Rights Agreement; there is no action, suit or
proceeding before or by an government, governmental instrumentality, agency,
body or court, now pending, or to the best of my knowledge after reasonable
investigation, threatened against or affecting the Company or any Subsidiary
that would be required to be described in a registration statement filed
pursuant to the Securities Act that is not described in the Offering Memorandum.
8. The execution and delivery by the Company of, and the performance by
the
3
Company of all of the provisions of its obligations under, this Agreement, the
Indenture, the Registration Rights Agreement, the Securities, and the
consummation by the Company of the transactions contemplated therein and in the
Offering Memorandum, do not and will not conflict with, or result in a breach or
violation of any of the terms or provisions of, or constitute a default (or an
event which, with notice or lapse of time, or both, would constitute a default)
under, or give rise to any right to accelerate the maturity or require the
prepayment of any indebtedness or the purchase of any capital stock under, or
result in the creation or imposition of any lien, charge or encumbrance upon any
material properties or assets of the Company or of any Subsidiary under, (A) any
material contact, indenture, mortgage, deed of trust, loan agreement, note,
lease, partnership agreement or other agreement or instrument known to me after
reasonable investigation to which the Company or any Subsidiary is a party or by
which any of them may be bound or to which any of their respective properties or
assets may be subject or (B) any judgment, order or decree of any government,
governmental instrumentality, agency, body or court, domestic or foreign, having
jurisdiction over the Company or any Subsidiary or any of their respective
properties or assets known to me after reasonable investigation except, with
respect to clauses (A) and (B), any breach or violation that would not
reasonably be expected to have a Material Adverse Effect.
The preparation of the Offering Memorandum involved many determinations
of a wholly or partially nonlegal character. I make no representation that I
have independently verified the accuracy, completeness or fairness of the
Offering Memorandum or that the actions taken in connection with the preparation
of the Offering Memorandum were sufficient to cause the Offering Memorandum to
be accurate, complete and fair. I am not passing upon and do not assume any
responsibility for the accuracy, completeness or fairness of the Offering
Memorandum.
Based on my participation in the preparation of the Offering Memorandum
and conferences with officers and representatives of the Company,
representatives of the independent public accountants for the Company,
representatives of the Initial Purchasers and counsel for the Initial Purchasers
during which disclosures in the Offering Memorandum and related matters were
discussed, my understanding of applicable law and the experience I have gained
in my practice, and relying as to materiality to a large extent upon the
opinions and statements of officers of the Company, I can, however, advise you
that nothing has come to my attention that has caused me to conclude that the
Offering Memorandum (other than the financial statements, supporting schedules
and other financial and statistical data set forth therein, as to which no
advise is given) at the date it bears or on the date of this letter contained an
untrue statement of a material fact or omitted or omits to state a material fact
necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading.
My opinions expressed herein are limited to the substantive laws of the
State of Illinois, the General Corporation Law of the State of Delaware and the
Federal laws of the United States which, in my experience, are normally
applicable to general business corporations which are not engaged in regulated
business activities and to transactions of the type contemplated under the
Agreements (but without my having made any special investigation as to any other
laws).
My opinions expressed herein are limited to the specific issues
addressed herein and are
4
limited in all respects to documents, laws and facts existing on the date
hereof. By rendering my opinions, I do not undertake to advise you of any
changes in such documents, laws or facts which may occur after the date hereof.
My opinions expressed herein have been furnished at the request of the
Initial Purchasers and may be relied upon by the Initial Purchasers only for the
purpose served by the provision in the Purchase Agreement cited in the initial
paragraph of this letter in response to which it has been delivered. This letter
may not be relied upon by any other person or used for any other purpose without
my prior written consent.
ANNEX D
[Form of Initial Comfort Letter]
The Company and the Guarantor shall have furnished to the
Initial Purchasers a letter of Deloitte & Touche 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:
(a) they are independent certified public accountants with
respect to the Company and the Guarantor within the meaning of Rule 101 of the
Code of Professional Conduct of the AICPA and its interpretations and rulings;
(b) 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);
(c) based upon a reading of the latest unaudited financial
statements made available by the Company v, 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 and the Guarantor 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, or (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
(d) 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 and the Guarantor 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
April 30, 2001 unaudited balance sheet included in the Offering Memorandum or
(B) for the period from April 30, 2001 to a specified date not more than three
business days prior to the date of such letter, there were any decreases, as
compared with the corresponding period in the preceding year, in net sales,
income from operations, or net income, except
2
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;
(e) they have performed certain other specified procedures as
a result of which they determined that certain information of an accounting,
financial or statistical nature (which is limited to accounting, financial or
statistical information derived from the general accounting records of the
Company and the Guarantor) set forth in the Offering Memorandum agrees with the
accounting records of the Company and the Guarantor, excluding any questions of
legal interpretation.