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Exhibit 1.1
▇▇▇▇▇▇ HOLDING CO. (DE), INC.
$135,000,000
10% Senior Subordinated Notes due 2007
PURCHASE AGREEMENT
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November 14, 1997
CHASE SECURITIES INC.
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
SECURITIES CORPORATION
▇▇▇▇▇▇▇, SACHS & CO.
c/o Chase Securities Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
▇▇▇▇▇▇ Holding Co. (DE), Inc., a Delaware corporation (the
"Company"), proposes to issue and sell $135,000,000 aggregate principal amount
of its 10% Senior Subordinated Notes due 2007 (the "Securities"). The Securities
will be issued pursuant to an Indenture which is anticipated to be dated as of
November 24, 1997 (the "Indenture") among the Company, ▇▇▇▇▇▇ Holding Co. (PA),
Inc., the parent company of the Company ("Holding"), as a guarantor, the
subsidiaries of the Company listed on the signature pages hereto (the
"Subsidiary Guarantors", and, together with Holding, the "Guarantors"), as
guarantors, and IBJ ▇▇▇▇▇▇▇▇ Bank and Trust Company, as trustee (the "Trustee").
The Securities will be guaranteed on a senior subordinated unsecured basis (the
"Note Guarantees") by each of the Guarantors. The Company hereby confirms its
agreement with Chase Securities Inc. ("CSI"), ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
Securities Corporation ("DLJ") and ▇▇▇▇▇▇▇, Sachs & Co. (together with CSI and
DLJ, 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 October 31, 1997 (the
"Preliminary Offering Memorandum") and will prepare an offering memorandum dated
the date hereof (the "Offering Memorandum") setting forth information concerning
the Company and the Securities. Copies of the Preliminary Offering Memorandum
have been, and copies of the Offering Memorandum will be, delivered by the
Company to the Initial Purchasers pursuant to the terms of this Agreement. Any
references herein to the Preliminary Offering Memorandum and the Offering
Memorandum shall be deemed to include all amendments and supplements thereto,
unless otherwise noted. The Company hereby 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 a
Registration Rights Agreement,
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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") (i) a registration
statement under the Securities Act (the "Exchange Offer Registration
Statement") registering an issue of senior subordinated notes of the Company
(the "Exchange Securities") which are identical in all material respects to the
Securities (except that the Exchange Securities will not contain terms with
respect to transfer restrictions or registration rights) and (ii) under certain
circumstances, a shelf registration statement pursuant to Rule 415 under the
Securities Act (the "Shelf Registration Statement").
The Securities are being issued in connection with the
recapitalization ("Recapitalization") of Holding. Pursuant to the
Recapitalization Agreement dated October 8, 1997, as amended and restated on
October 27, 1997 (the "Recapitalization Agreement"), by and among Holding and
certain affiliates of Investcorp S.A. ("Investcorp") and certain other
international investors organized by Investcorp (collectively, the "Investors"),
Holding will, subject to the approval of Holding's shareholders, among other
things, redeem approximately 85% of its outstanding capital stock for
approximately $330.7 million and receipt of the Market Participation Right and
the Investors will purchase from Holding, for approximately $122.7 million,
shares of Holding capital stock representing approximately 67% of the
outstanding equity of Holding following Recapitalization. The transactions
contemplated by the Recapitalization Agreement, together with the repayment of
certain indebtedness of the Company and the payment of certain fees and
expenses, will be financed by (i) the $122.7 million equity investment by the
Investors, (ii) the offering of the Securities, and (iii) approximately $185.7
million of borrowings under a new senior credit facility.
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 Guarantors. The Company and the Guarantors 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 Guarantors make no
representation or warranty as to information contained in or omitted
from the Preliminary Offering Memorandum or the Offering Memorandum in
reliance upon and in conformity with written information relating to
the Initial Purchasers furnished to the Company by or on behalf of any
Initial Purchaser specifically for use therein (the "Initial
Purchasers' Information").
(b) Each of the Preliminary Offering Memorandum and the
Offering Memorandum, as of its respective date, contains all of the
information that, if requested by a prospective purchaser of the
Securities, would be required to be provided to such prospective
purchaser pursuant to Rule 144A(d)(4) under the Securities Act.
(c) Assuming the accuracy of the representations and
warranties of the Initial Purchasers contained in Section 2 and their
compliance with the agreements set forth therein, it is not necessary,
in connection with the issuance and sale of the Securities to the
Initial Purchasers and the offer, resale and delivery of the Securities
by the Initial Purchasers in the manner contemplated by this Agreement
and the Offering Memorandum, to register the Securities under the
Securities Act or to qualify the
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Indenture under the Trust Indenture Act of 1939, as amended (the "Trust
Indenture Act").
(d) Holding has no direct subsidiaries other than the Company.
The Company has no direct and/or indirect subsidiaries other than (i)
the Subsidiary Guarantors, Manufacturers Indemnity and Insurance
Company of America, Wentworth Institutional Realty Inc., and Ad Valorem
Properties, Inc. and (ii) ▇▇▇▇▇▇ Distribution, Inc., ▇▇▇▇▇▇ (FID), Co.,
Inc., BLP Corporation and Amarlite Architectural Products, Inc. The
subsidiaries listed in clause (ii) above have no assets other than
nominal assets and are in the process of being liquidated or dissolved.
Holding and each of its subsidiaries have been duly incorporated and
are validly existing as corporations in good standing under the laws of
their respective jurisdictions of incorporation, are duly qualified to
do business and are in good standing as foreign corporations in each
jurisdiction in which their respective ownership or lease of property
or the conduct of their respective businesses requires such
qualification, and have all power and authority necessary to own or
hold their respective properties and to conduct the businesses in which
they are engaged, except where the failure to so qualify or be in good
standing or have such power or authority would not, singularly or in
the aggregate, have a material adverse effect on the condition
(financial or otherwise), results of operations, business or prospects
of Holding and its subsidiaries taken as a whole (a "Material Adverse
Effect"). Holding is not engaged in any business other than holding its
equity interest in the Company.
(e) As of the Closing Date, Holding and the Company will have
an authorized capitalization as set forth in the Offering Memorandum
under the heading "Capitalization"; all of the outstanding shares of
capital stock of Holding and each of its subsidiaries have been duly
and validly authorized and issued and are fully paid and
non-assessable; and the capital stock of Holding conforms in all
material respects to the description thereof contained in the Offering
Memorandum. Except as set forth in or contemplated by the Offering
Memorandum, all of the outstanding shares of capital stock of the
Company and each of its subsidiaries will be owned directly or
indirectly by Holding, free and clear of any lien, charge, encumbrance,
security interest, restriction upon voting or transfer or any other
claim of any third party.
(f) The Company and each of the Guarantors have full right,
power and authority to execute and deliver this Agreement, the
Indenture, the Registration Rights Agreement, and the Securities
(collectively, the "Transaction Documents") and to perform their
respective obligations hereunder and thereunder; and all corporate
action required to be taken for the due and proper authorization,
execution and delivery of each of the Transaction Documents and the
consummation of the transactions contemplated thereby have been duly
and validly taken.
(g) This Agreement has been duly authorized, executed and
delivered by the Company and each of the Guarantors and constitutes a
valid and legally binding agreement of the Company and each of the
Guarantors.
(h) The Registration Rights Agreement has been duly authorized
by the Company and each of the Guarantors and, when duly executed and
delivered in accordance with its terms by each of the parties thereto,
will constitute a valid and legally binding agreement of the Company
and each of the Guarantors enforceable against the Company and each of
the Guarantors in accordance with its terms, except to the extent that
such enforceability may be limited by applicable bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium and other
similar laws affecting creditors' rights generally and by general
equitable principles (whether considered in a
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proceeding in equity or at law) and except that any rights to
indemnification may be limited by Federal securities laws and public
policy considerations.
(i) The Indenture has been duly authorized by the Company and
each of the Guarantors and, when duly executed and delivered in
accordance with its terms by each of the parties thereto, will
constitute a valid and legally binding agreement of the Company
and each of the Guarantors enforceable against the Company and each of
the Guarantors in accordance with its terms, except to the extent that
such enforceability may be limited by applicable bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium and other
similar laws affecting creditors' rights generally and by general
equitable principles (whether considered in a proceeding in equity or
at law). On the Closing Date, the Indenture will conform in all
material respects to the requirements of the Trust Indenture Act and
the rules and regulations of the Commission applicable to an indenture
which is qualified thereunder.
(j) The Securities have been duly authorized by the Company
and, when duly executed, authenticated, issued and delivered as
provided in the Indenture and paid for as provided herein, will be duly
and validly issued and outstanding and will constitute valid and
legally binding obligations of the Company, entitled to the benefits of
the Indenture and enforceable against the Company in accordance with
their terms, except to the extent that such enforceability may be
limited by applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and other similar laws affecting creditors'
rights generally and by general equitable principles (whether
considered in a proceeding in equity or at law).
(k) The Recapitalization Agreement has been duly authorized,
executed and delivered by Holding and constitutes a valid and legally
binding agreement of Holding enforceable against Holding in accordance
with its terms, except to the extent that such enforceability may be
limited by applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and other similar laws affecting creditors'
rights generally and by general equitable principles (whether
considered in a proceeding in equity or at law).
(l) Each Transaction Document (other than the Indenture)
conforms in all material respects to the description thereof contained
in the Offering Memorandum. As of the Closing Date, the Indenture will
conform in all material respects to the description thereof contained
in the Offering Memorandum.
(m) Except as set forth on Schedule 2(q) hereto or disclosed
in or contemplated by the Offering Memorandum, the execution, delivery
and performance by the Company and each of the Guarantors of each of
the Transaction Documents, the issuance, authentication, sale and
delivery of the Securities and compliance by the Company and each of
the Guarantors with the terms thereof and the consummation of the
transactions contemplated by the Transaction Documents will not
conflict with or result in a breach or violation of any of the terms or
provisions of, or constitute a default under, or result in the creation
or imposition of any lien, charge or encumbrance upon any property or
assets of Holding or any of its subsidiaries pursuant to, any
indenture, mortgage, deed of trust, loan agreement or other agreement
or instrument to which Holding or any of its subsidiaries is a party or
by which Holding or any of its subsidiaries is bound or to which any of
the property or assets of Holding or any of its subsidiaries is
subject, except for such conflicts, breaches, violations, defaults,
liens, charges and encumbrance that are not reasonably likely to have a
Material Adverse Effect, nor will such actions result in any violation
of the provisions of the charter or by-laws of Holding or any of its
subsidiaries or any statute or any
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judgment, order, decree, rule or regulation of any court or arbitrator
or governmental agency or body having jurisdiction over Holding or any
of its subsidiaries or any of their properties or assets, except for
such violations that are not reasonably likely to have a Material
Adverse Effect; and no consent, approval, authorization or order of, or
filing or registration with, any such court or arbitrator or
governmental agency or body under any such statute, judgment, order,
decree, rule or regulation is required for the execution, delivery and
performance by the Company and each of the Guarantors of each of the
Transaction Documents, the issuance, authentication, sale and delivery
of the Securities and compliance by the Company and the Guarantors with
the terms thereof and the consummation of the transactions contemplated
by the Transaction Documents, except for such consents, approvals,
authorizations, filings, registrations or qualifications (i) which
shall have been obtained or made prior to the Closing Date, (ii) as may
be required to be obtained or made under the Securities Act and
applicable state securities laws as provided in the Registration Rights
Agreement , or (iii) which if not obtained are not reasonably likely to
have a Material Adverse Effect.
(n) To the knowledge of the Company, Ernst & Young LLP are
independent certified public accountants with respect to Holding and
its subsidiaries within the meaning of Rule 101 of the Code of
Professional Conduct of the American Institute of Certified Public
Accountants ("AICPA") and its interpretations and rulings thereunder.
The historical financial statements (including the related notes)
contained in the Offering Memorandum comply in all material respects
with the requirements applicable to a registration statement on Form
S-1 under the Securities Act (except for the omission of financial
statement schedules required by Article 12 and separate financial
statements of Guarantor subsidiaries required by Rule 3-10 of
Regulation S-X) ; such financial statements have been prepared in
accordance with generally accepted accounting principles consistently
applied throughout the periods covered thereby and fairly present in
all material respects the financial position of the entities purported
to be covered thereby at the respective dates indicated and the results
of their operations and their cash flows for the respective periods
indicated; and the historical financial information contained in the
Offering Memorandum under the headings "Summary--Summary Historical and
Pro Forma Financial Information", "Capitalization", "Selected
Consolidated Historical Financial Data", "Management's Discussion and
Analysis of Financial Condition and Results of Operations" and
"Management--Executive Compensation" are derived from the accounting
records of Holding and its subsidiaries and fairly present the
information purported to be shown thereby. The pro forma financial
information contained in the Offering Memorandum has been prepared on a
basis consistent with the historical financial statements contained in
the Offering Memorandum (except for the pro forma adjustments specified
therein), includes all material adjustments to the historical financial
information required by Rule 11-02 of Regulation S-X under the
Securities Act and the Exchange Act to reflect the transactions
described in the Offering Memorandum, gives effect to assumptions made
on a reasonable basis and fairly presents in all material respects the
historical and proposed transactions contemplated by the Offering
Memorandum and the Transaction Documents. The other historical
financial and statistical information and data included in the Offering
Memorandum are, in all material respects, fairly presented.
(o) There are no legal or governmental proceedings pending to
which Holding or any of its subsidiaries is a party or of which any
property or assets of Holding or any of its subsidiaries is the subject
or to the best knowledge of Holding and the Company, no such
proceedings are threatened or contemplated by governmental authorities
or threatened by others, which, in each case, (i) are not disclosed in
the Offering Memorandum or (ii) singularly or in the aggregate, are
reasonably likely to have a Material Adverse Effect;
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(p) To the knowledge of the Company or the Guarantors, no
action has been taken and no statute, rule, regulation or order has
been enacted, adopted or issued by any governmental agency or body
which prevents the issuance of the Securities or suspends the sale of
the Securities in any jurisdiction; no injunction, restraining order or
order of any nature by any federal or state court of competent
jurisdiction has been issued with respect to Holding or any of its
subsidiaries which would prevent or suspend the issuance or sale of the
Securities or the use of the Preliminary Offering Memorandum or the
Offering Memorandum in any jurisdiction; no action, suit or proceeding
is pending against or, to the best knowledge of Holding or the Company,
threatened against or affecting Holding or any of its subsidiaries
before any court or arbitrator or any governmental agency, body or
official, domestic or foreign, which could reasonably be expected to
interfere with or adversely affect the issuance of the Securities or in
any manner draw into question the validity or enforceability of any of
the Transaction Documents or the Recapitalization Agreement or any
action taken or to be taken pursuant thereto; and Holding and its
subsidiaries have complied in all material respects with any and all
requests by any securities authority in any jurisdiction for additional
information to be included in the Preliminary Offering Memorandum and
the Offering Memorandum.
(q) Neither Holding nor any of its subsidiaries is (i) in
violation of its charter or by-laws, (ii) in default in any material
respect, and no event has occurred which, with notice or lapse of time
or both, would constitute such a default, in the due performance or
observance of any term, covenant or condition contained in any material
indenture, mortgage, deed of trust, loan agreement or other material
agreement or instrument to which it is a party or by which it is bound
or to which any of its property or assets is subject or (iii) in
violation in any material respect of any law, ordinance, governmental
rule, regulation or court decree to which it or its property or assets
may be subject, except in each case as may be disclosed in the Offering
Memorandum, Schedule 2(q) hereto or for such violations or defaults
which are not reasonably likely to have a Material Adverse Effect.
(r) Holding and each of its subsidiaries possess all material
licenses, certificates, authorizations and permits issued by, and have
made all declarations and filings with, the appropriate federal, state
or foreign regulatory agencies or bodies which are necessary or
desirable for the ownership of their respective properties or the
conduct of their respective businesses as described in the Offering
Memorandum, except where the failure to possess or make the same would
not, singularly or in the aggregate, have a Material Adverse Effect,
and neither Holding nor any of its subsidiaries has received
notification of any revocation or modification of any such license,
certificate, authorization or permit or has any reason to believe that
any such license, certificate, authorization or permit will not be
renewed in the ordinary course.
(s) Holding and each of its subsidiaries have filed all
federal, state and material local and foreign income and franchise tax
returns required to be filed through the date hereof and have paid all
material taxes due thereon (other than those being contested in good
faith and for which adequate reserves have been provided), and no tax
deficiency has been determined adversely to Holding or any of its
subsidiaries which has had (nor does Holding or any of its subsidiaries
have any knowledge of any tax deficiency which, if determined adversely
to Holding or any of its subsidiaries, is reasonably likely to have) a
Material Adverse Effect.
(t) Neither Holding nor any of its subsidiaries is (i) an
"investment company" or a company "controlled by" an investment company
within the meaning of the Investment Company Act of 1940, as amended
(the "Investment Company Act"), and
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the rules and regulations of the Commission thereunder or (ii) a
"holding company" or a "subsidiary company" of a holding company or an
"affiliate" thereof within the meaning of the Public Utility Holding
Company Act of 1935, as amended.
(u) Holding and each of its subsidiaries maintain a system of
internal accounting controls sufficient to provide reasonable assurance
that (i) transactions are executed in accordance with management's
general or specific authorizations; (ii) transactions are recorded as
necessary to permit preparation of financial statements in conformity
with generally accepted accounting principles and to maintain asset
accountability; (iii) access to assets is permitted only in accordance
with management's general or specific authorization; and (iv) the
recorded accountability for assets is compared with the existing assets
at reasonable intervals and appropriate action is taken with respect to
any differences.
(v) Holding and each of its subsidiaries have insurance
covering their respective properties, operations, personnel and
businesses, which insurance is in amounts and insures against such
losses and risks as are adequate to protect Holding and its
subsidiaries and their respective businesses, except where the failure
to have such insurance is not reasonably likely to have a Material
Adverse Effect. Neither Holding nor any of its subsidiaries has
received notice from any insurer or agent of such insurer that capital
improvements or other expenditures are required or necessary to be made
in order to continue such insurance except such notices as are not
reasonably likely to have a Material Adverse Effect.
(w) Holding and each of its subsidiaries own or possess
adequate rights to use all patents, patent applications, trademarks,
service marks, trade names, trademark registrations, service ▇▇▇▇
registrations, copyrights, licenses and know-how (including trade
secrets and other unpatented and/or unpatentable proprietary or
confidential information, systems or procedures) necessary for the
conduct of their respective businesses as currently conducted, except
where the failure to own or possess such rights is not reasonably
likely to have a Material Adverse Effect; and the conduct of their
respective businesses will not conflict in any material respect with,
and Holding and its subsidiaries have not received any notice of any
claim of conflict with, any such rights of others except for such
claims which are not reasonably likely to have a Material Adverse
Effect.
(x) To the knowledge of the Company and the Guarantors,
Holding and each of its subsidiaries have good and marketable title in
fee simple to, or have valid rights to lease or otherwise use, all
items of real and personal property which are material to the business
of Holding and its subsidiaries, in each case free and clear of all
liens, encumbrances, claims and defects and imperfections of title
except such as (i) do not materially interfere with the use made and
proposed to be made of such property by Holding and its subsidiaries,
(ii) are not reasonably likely to have a Material Adverse Effect or
(iii) are disclosed in or contemplated by the Offering Memorandum.
(y) No labor disturbance by or dispute with the employees of
Holding or any of its subsidiaries exists or, to the best knowledge of
the Company, is contemplated or threatened except for such disturbances
or disputes which are not reasonably likely to have a Material Adverse
Effect.
(z) No "prohibited transaction" (as defined in Section 406 of
the Employee Retirement Income Security Act of 1974, as amended,
including the regulations and published interpretations thereunder
("ERISA"), or Section 4975 of the Internal Revenue Code of 1986, as
amended from time to time (the "Code")) or "accumulated
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funding deficiency" (as defined in Section 302 of ERISA) or any of the
events set forth in Section 4043(b) of ERISA (other than events with
respect to which the 30-day notice requirement under Section 4043 of
ERISA has been waived) has occurred with respect to any employee
benefit plan of Holding or any of its subsidiaries which is reasonably
likely to have a Material Adverse Effect; each such employee benefit
plan is in compliance in all material respects with applicable law,
including ERISA and the Code except for such noncompliance which is not
reasonably likely to have a Material Adverse Effect; Holding and each
of its subsidiaries have not incurred and do not expect to incur
liability under Title IV of ERISA with respect to the termination of,
or withdrawal from, any pension plan for which Holding or any of its
subsidiaries would have any liability except for any liability that is
not reasonably likely to have a Material Adverse Effect; and each such
pension plan that is intended to be qualified under Section 401(a) of
the Code is so qualified in all material respects and nothing has
occurred, whether by action or by failure to act, which could
reasonably be expected to cause the loss of such qualification.
(aa) To the best knowledge of the Company and the Guarantors
and except as disclosed in or contemplated by 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 Holding or any of its subsidiaries (or any other entity
(including any predecessor) for whose acts or omissions Holding or any
of its subsidiaries is or could reasonably be expected to be liable)
upon any of the property now or previously owned or leased by Holding
or any of its subsidiaries, or upon any other property, in violation of
any statute or any ordinance, rule, regulation, order, judgment, decree
or permit or which would, under any statute or any ordinance, rule
(including rule of common law), regulation, order, judgment, decree or
permit, give rise to any liability, except for any violation or
liability which is not reasonably likely to have, singularly or in the
aggregate with all such violations and liabilities, a Material Adverse
Effect; and there has been no disposal, discharge, emission or other
release of any kind onto such property or into the environment
surrounding such property of any toxic or other wastes or other
hazardous substances with respect to which the Company has knowledge,
except for any such disposal, discharge, emission or other release of
any kind which is not reasonably likely to have, singularly or in the
aggregate with all such discharges and other releases, a Material
Adverse Effect.
(bb) On and immediately after the Closing Date, the Company
(on a consolidated basis and after giving effect to the issuance of the
Securities and to the other Transactions related thereto as described
in the Offering Memorandum) will be Solvent. As used in this paragraph,
the term "Solvent" means, with respect to a particular date, that on
such date (i) the present fair market value (or present fair saleable
value) of the assets of the Company is not less than the total amount
required to pay the probable liabilities of the Company on its total
existing debts and liabilities (including contingent liabilities) as
they become absolute and matured, (ii) the Company is able to realize
upon its assets and pay its debts and other liabilities, contingent
obligations and commitments as they mature and become due in the normal
course of business, (iii) assuming the sale of the Securities as
contemplated by this Agreement and the Offering Memorandum and the
consummation of the other Transactions, the Company is not incurring
debts or liabilities beyond its ability to pay as such debts and
liabilities mature and (iv) the Company is not engaged in any business
or transaction, and is not about to engage in any business or
transaction, for which its property would constitute unreasonably small
capital after giving due consideration to the prevailing practice in
the industry in which the Company is engaged. In computing the amount
of such contingent liabilities at any time, it is
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intended that such liabilities will be computed at the amount that, in
the light of all the facts and circumstances existing at such time,
represents the amount that can reasonably be expected to become an
actual or matured liability.
(cc) Except as described in or contemplated by the Offering
Memorandum, there are no outstanding subscriptions, rights, warrants,
calls or options to acquire, or instruments convertible into or
exchangeable for, or agreements or understandings with respect to the
sale or issuance of, any shares of capital stock of or other equity or
other ownership interest in Holding or any of its subsidiaries.
(dd) Less than 25% of the assets of the Company and its
subsidiaries consist of "margin securities" as that term is defined in
Regulations G and U of the Board of Governors of the Federal Reserve
System (the "Federal Reserve Board"), and none of the proceeds of the
sale of the Securities will be used, directly or indirectly, for the
purpose of purchasing or carrying any margin security, for the purpose
of reducing or retiring any indebtedness which was originally incurred
to purchase or carry any margin security or for any other purpose which
might cause any of the Securities to be considered a "purpose credit"
within the meanings of Regulation G, T, U or X of the Federal Reserve
Board.
(ee) Except as disclosed in or contemplated by the Offering
Memorandum and except for fees paid in connection with the Commitment
Letter by and among Investcorp Investment Equity Limited, The Chase
Manhattan Bank, Chase Securities Inc., DLJ Bridge Finance, Inc., and
▇▇▇▇▇▇▇ ▇▇▇▇▇ Credit Partners L.P., dated November 14, 1997 and
documents related thereto, neither Holding nor any of its subsidiaries
is a party to any contract, agreement or understanding with any person
that would give rise to a valid claim against Holding, the Company or
the Initial Purchasers for a brokerage commission, finder's fee or like
payment in connection with the offering and sale of the Securities.
(ff) The Securities satisfy the eligibility requirements of
Rule 144A(d)(3) under the Securities Act.
(gg) None of Holding, any of its affiliates or any person
acting on its or their behalf (other than the Initial Purchasers and
persons acting on their behalf, as to which no representation is made)
has engaged or will engage in any directed selling efforts (as such
term is defined in Regulation S under the Securities Act ("Regulation
S")), and all such persons have complied and will comply with the
offering restrictions requirement of Regulation S to the extent
applicable.
(hh) Neither Holding nor any of its affiliates has, directly
or through any agent (other than the Initial Purchasers and persons
acting on their behalf, as to which no representation is made), sold,
offered for sale, solicited offers to buy or otherwise negotiated in
respect of, any security (as such term is defined in the Securities
Act), which is or will be integrated with the sale of the Securities in
a manner that would require registration of the Securities under the
Securities Act.
(ii) None of Holding or any of its affiliates or any other
person acting on its or their behalf (other than the Initial Purchasers
and persons acting on their behalf, as to which no representation is
made) has engaged, in connection with the offering of the Securities,
in any form of general solicitation or general advertising within the
meaning of Rule 502(c) under the Securities Act.
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(jj) There are no securities of Holding or the Company
registered under the Securities and Exchange Act of 1934 (the "Exchange
Act"), or listed on a national securities exchange or quoted in a U.S.
automated inter-dealer quotation system.
(kk) Neither Holding nor the Company have taken and will not
take, directly or indirectly (other than through the Initial Purchasers
and persons acting on their behalf, as to which no representation is
made), any action prohibited by Regulation M under the Exchange Act in
connection with the offering of the Securities.
(ll) No forward-looking statement (within the meaning of
Section 27A of the Securities Act and Section 21E of the Exchange Act)
contained in the Preliminary Offering Memorandum or the Offering
Memorandum has been made or reaffirmed without a reasonable basis or
has been disclosed other than in good faith.
(mm) Neither Holding nor any of its subsidiaries does business
with the government of Cuba or with any person or affiliate located in
Cuba within the meaning of Florida Statutes Section 517.075.
(nn) Except as disclosed in or as contemplated by the Offering
Memorandum, since the date as of which information is given in the
Offering Memorandum, except as otherwise stated therein, (i) there has
been no material adverse change or any development involving a
prospective material adverse change in the condition, financial or
otherwise, or in the earnings, business affairs, management or business
prospects of Holding or its subsidiaries, whether or not arising in the
ordinary course of business, (ii) Holding and its subsidiaries have not
incurred any material liability or obligation, direct or contingent,
other than in the ordinary course of business, (iii) Holding and its
subsidiaries have not entered into any material transaction other than
in the ordinary course of business and (iv) there has not been any
change in the capital stock or long-term debt of Holding or any of its
subsidiaries or any dividend or distribution of any kind declared, paid
or made by Holding or any of its subsidiaries on any class of its
capital stock.
2. Purchase and Resale of the Securities. (a) On the basis of
the representations, warranties and agreements contained herein, and
subject to the terms and conditions set forth herein, the Company
agrees to issue and sell to each of the Initial Purchasers, severally
and not jointly, and each of the Initial Purchasers, severally and not
jointly, agrees to purchase from the Company, the principal amount of
Securities set forth opposite the name of such Initial Purchaser on
Schedule 1 hereto at a purchase price equal to 97.00% of the principal
amount thereof. The Company shall not be obligated to deliver any of
the Securities except upon payment for all of the Securities to be
purchased as provided herein.
(b) The Initial Purchasers have advised the Company that they
propose to offer the Securities for resale upon the terms and subject
to the conditions set forth herein and in the Offering Memorandum. The
Initial Purchasers agree to promptly (but in no event more than 2
business days after completion of the resale) notify the Company of the
completion of the resale of the Securities. Each Initial Purchaser,
severally and not jointly, represents and warrants to and agrees with
the Company and the Guarantors that (i) it is purchasing the Securities
pursuant to a private sale exempt from registration under the
Securities Act, (ii) it has not solicited offers for, or offered or
sold, and will not solicit offers for, or offer or sell, the Securities
by means of any form of general solicitation or general advertising
within the meaning of Rule 502(c) of Regulation D under the Securities
Act ("Regulation D") or in any manner involving a public offering
within the meaning of Section 4(2) of the Securities Act and (iii) it
has solicited and will
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solicit offers for the Securities only from, and has offered or sold
and will offer, sell or deliver the Securities, as part of its initial
offering, only (A) within the United States to persons whom it
reasonably believes to be qualified institutional buyers ("Qualified
Institutional Buyers"), as defined in Rule 144A under the Securities
Act ("Rule 144A"), or if any such person is buying for one or more
institutional accounts for which such person is acting as fiduciary or
agent, only when such person has represented to it that each such
account is a Qualified Institutional Buyer to whom notice has been
given that such sale or delivery is being made in reliance on Rule 144A
and in each case, in transactions in accordance with Rule 144A and (B)
outside the United States to persons other than U.S. persons in
reliance on and in compliance with Regulation S under the Securities
Act ("Regulation S").
(c) In connection with the offer and sale of Securities in
reliance on Regulation S, each Initial Purchaser, severally and not
jointly, represents and warrants to and agrees with the Company and the
Guarantors that:
(i) The Securities have not been registered under the
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 except pursuant to
an exemption from, or in transactions not subject to, the
registration requirements of the Securities Act.
(ii) Such Initial Purchasers have 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 Purchasers or any of their
affiliates or any other person acting on its or their behalf
has engaged or will engage in any directed selling efforts
with respect to the Securities, and all such persons have
complied and will comply with the offering 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 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."
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(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 and warrants to and agrees with the Company and the
Guarantors 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
Advertisement) (Exemptions), Order 1996 or is a person to whom such
document may otherwise lawfully be issued or passed on.
(e) Each Initial Purchaser, severally and not jointly, agrees
that, prior to or simultaneously with the confirmation of sale by such
Initial Purchaser to any purchaser of any of the Securities purchased
by such Initial Purchaser from the Company pursuant hereto, such
Initial Purchaser shall furnish to that purchaser a copy of the
Offering Memorandum (and any amendment or supplement thereto that the
Company shall have furnished to such Initial Purchaser prior to the
date of such confirmation of sale). In addition to the foregoing, each
Initial Purchaser acknowledges and agrees that the Company and, for
purposes of the opinions to be delivered to the Initial Purchasers
pursuant to Sections 5(c) and (d) counsel for the Company and for the
Initial Purchasers and the Company's general counsel, respectively, may
rely upon the accuracy and truth 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, subject to the terms, conditions, representations
and warranties set forth herein.
3. Delivery of and Payment for the Securities. (a) Delivery of
and payment for the Securities shall be made at the offices of ▇▇▇▇▇▇,
▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP, 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 November 24, 1997, or at such other
time or date, not later than seven full business days thereafter, as
shall be agreed upon by the Initial Purchasers and the Company (such
date and time of payment and delivery being referred to herein as the
"Closing Date").
(b) On the Closing Date, payment of the purchase price for the
Securities shall be made to the Company by wire or book-entry transfer
of same-day funds to such account or accounts as the Company shall
specify prior to the Closing Date or by such other means as the parties
hereto shall agree prior to the Closing Date against delivery
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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 parties hereunder. Upon delivery, the Securities
shall be in global form, registered in such names and in such
denominations as CSI on behalf of the Initial Purchasers shall have
requested in writing not less than two full business days prior to the
Closing Date. The Company agrees to make one or more global
certificates evidencing the Securities available for inspection by CSI
on behalf of the Initial Purchasers in New York, New York at least 24
hours prior to the Closing Date.
4. Further Agreements of the Company and Holding. Holding and
the Company agree with each of the several Initial Purchasers:
(a) at any time prior to completion of the resale of the
Securities by the Initial Purchasers, to advise the Initial Purchasers
promptly and, if requested, confirm such advice in writing, of the
happening of any event which makes any statement of a material fact
made in the Offering Memorandum untrue or which requires the making of
any additions to or changes in the Offering Memorandum (as amended or
supplemented from time to time) in order to make the statements
therein, in the light of the circumstances under which they were made,
not misleading; to advise the Initial Purchasers promptly of any order
preventing or suspending the use of the Preliminary Offering Memorandum
or the Offering Memorandum, of any suspension of the qualification of
the Securities for offering or sale in any jurisdiction and of the
initiation or threatening of any proceeding for any such purpose; and
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 use its
reasonable best efforts to obtain the lifting thereof at the earliest
possible time;
(b) to furnish promptly to each of the Initial Purchasers and
counsel for the Initial Purchasers, without charge, as many copies of
the Preliminary Offering Memorandum and the Offering Memorandum (and
any amendments or supplements thereto) as may be reasonably requested;
(c) prior to making any amendment or supplement to the
Offering Memorandum, to furnish a copy thereof to each of the Initial
Purchasers and counsel for the Initial Purchasers and not to effect any
such amendment or supplement to which the Initial Purchasers shall
reasonably object by notice to the Company after a reasonable period to
review;
(d) if, at any time prior to completion of the resale of the
Securities by the Initial Purchasers, (i) any event shall occur or
condition exist as a result of which it is necessary, in the reasonable
opinion of counsel for the Initial Purchasers or counsel for the
Company to amend or supplement the Offering Memorandum so 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 (ii) 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
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the Securities and prospective purchasers of the Securities designated
by such holders, upon request of such holders or such prospective
purchasers, the information required to be delivered pursuant to Rule
144A(d)(4) under the Securities Act, unless the Company is then subject
to and in compliance with Section 13 or 15(d) of the Exchange Act (the
foregoing agreement being for the benefit of the holders from time to
time of the Securities and prospective purchasers of the Securities
designated by such holders);
(f) for so long as the Securities are outstanding, to furnish
to the Initial Purchasers copies of any annual reports, quarterly
reports and current reports filed by the Company or Holding 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 Holding or the Company to the
Trustee or to the holders of the Securities pursuant to the Indenture
or the Exchange Act or any rule or regulation of the Commission
thereunder;
(g) to promptly take from time to time such actions as the
Initial Purchasers may reasonably request to qualify the Securities for
offering and sale under the securities or Blue Sky laws of such
jurisdictions as the Initial Purchasers may designate and to continue
such qualifications in effect for so long as required for the resale of
the Securities by the Initial Purchasers; 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 in no event shall Holding and its subsidiaries
be obligated to qualify to do business in any jurisdiction in which
they are not so qualified or to take any action which would subject it
to (i) service of process in suits, other than those arising out of the
sale of the Securities or (ii) taxation in excess of a nominal amount,
in each case where it is not now so subject;
(h) to use its reasonable best efforts to assist the Initial
Purchasers in arranging for the Securities to be designated Private
Offerings, Resales and Trading through Automated Linkages ("PORTAL")
Market securities in accordance with the rules and regulations adopted
by the National Association of Securities Dealers, Inc. ("NASD")
relating to trading in the PORTAL Market and for the Securities to be
eligible for clearance and settlement through The Depository Trust
Company ("DTC");
(i) not to, and to cause its affiliates not to, sell, offer
for sale or solicit offers to buy or otherwise negotiate in respect of
any security (as such term is defined in the Securities Act) which
could be integrated with the sale of the Securities in a manner which
would require registration of the Securities under the Securities Act;
(j) except following the effectiveness of the Exchange Offer
Registration Statement or the Shelf Registration Statement, as the case
may be, not to, and to cause its affiliates not to, and not to
authorize or knowingly permit any person acting on their behalf to,
solicit any offer to buy or offer to sell the Securities by means of
any form of general solicitation or general advertising within the
meaning of Regulation D or in any manner involving a public offering
within the meaning of Section 4(2) of the Securities Act; and not to
offer, sell, contract to sell or otherwise dispose of, directly or
indirectly, any securities under circumstances where such offer, sale,
contract or disposition would cause the exemption afforded by Section
4(2) of the Securities Act to cease to be applicable to the offering
and sale of the Securities as contemplated by this Agreement and the
Offering Memorandum;
(k) except as disclosed in or contemplated by the Offering
Memorandum, for a period of 180 days from the date of the Offering
Memorandum, not to offer for sale, sell, contract to sell or otherwise
dispose of, directly or indirectly, or file a registration
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statement for, or announce any offer, sale, contract for sale of or
other disposition of any debt securities issued or guaranteed by
Holding or any of its subsidiaries (other than the Securities) without
the prior written consent of the Initial Purchasers ;
(l) during the period from the Closing Date until two years
after the Closing Date, without the prior written consent of the
Initial Purchasers, not to, and not permit any of its affiliates (as
defined in Rule 144 under the Securities Act) to, resell any of the
Securities that have been reacquired by them, except for Securities
purchased by the Company or any of its affiliates and resold in a
transaction registered or exempt from registration under the Securities
Act;
(m) not to, for so long as the Securities are outstanding, be
or become, or be or become owned by, an open-end investment company,
unit investment trust or face-amount certificate company that is or is
required to be registered under Section 8 of the Investment Company
Act, and to not be or become, or be or become owned by, a closed-end
investment company required to be registered, but not registered
thereunder;
(n) in connection with the offering of the Securities, until
CSI on behalf of the Initial Purchasers shall have notified the Company
of the completion of the resale of the Securities, not to, and to cause
its affiliated purchasers (as defined in Regulation M under the
Exchange Act) not to, either alone or with one or more other persons,
bid for or purchase, for any account in which it or any of its
affiliated purchasers has a beneficial interest, any Securities, or
attempt to induce any person to purchase any Securities; and not to,
and to cause its affiliated purchasers not to, make bids or purchase
for the purpose of creating actual, or apparent, active trading in or
of raising the price of the Securities;
(o) in connection with the offering of the Securities, to make
the appropriate officers, employees, independent accountants and legal
counsel of Holding and its subsidiaries reasonably available upon
request by the Initial Purchasers;
(p) to furnish to each of the Initial Purchasers on the date
hereof a copy of the independent accountants' report included in the
Offering Memorandum signed by the accountants rendering such report;
(q) to do and perform all things required to be done and
performed by it under this Agreement that are within its control prior
to or after the Closing Date, and to use its reasonable best efforts to
satisfy all conditions precedent on its part to the delivery of the
Securities;
(r) to use its reasonable best efforts not to take any action
prior to the Closing Date which in the Company's reasonable judgment
would require the Offering Memorandum to be amended or supplemented
pursuant to Section 4(d);
(s) prior to the Closing Date, not to issue any press release
or other communication directly or indirectly or hold any press
conference with respect to Holding or any of its subsidiaries regarding
their condition, financial or otherwise, or earnings, business affairs
or business prospects (except for routine oral marketing communications
in the ordinary course of business and consistent with the past
practices of the Company), without the prior written consent of the
Initial Purchasers, unless in the judgment of Holding or the Company
and its respective counsel, and after notification to the Initial
Purchasers, such press release or communication is required by law; and
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(t) to apply the net proceeds from the sale of the Securities
as set forth in the Offering Memorandum under the heading "Use of
Proceeds".
5. Conditions of Initial Purchasers' Obligations. The
respective obligations of the several Initial Purchasers hereunder are
subject to the accuracy, on and as of the date hereof and the Closing
Date, of the representations and warranties of the Company and the
Guarantors 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 and each of the Guarantors of
their obligations hereunder, and to each of the following additional
terms and conditions:
(a) The Offering Memorandum (and any amendments or supplements
thereto) shall have been printed and copies distributed to the Initial
Purchasers as promptly as practicable on or following the date of this
Agreement or at such other date and time as to which the Initial
Purchasers may agree; and no stop order suspending the sale of the
Securities in any jurisdiction shall have been issued and no proceeding
for that purpose shall have been commenced or shall be pending or
threatened.
(b) 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 Guarantors 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.
(c) ▇▇▇▇▇▇, ▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP, ▇▇▇▇ ▇▇▇▇▇▇, Esq., general
counsel of the Company, and outside counsel to the Company qualified to
give Pennsylvania law opinions and reasonably acceptable to the Initial
Purchasers shall have furnished to the Initial Purchasers their written
opinions 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 Annexes B, C and
D, respectively, hereto.
(d) The Initial Purchasers shall have received from Cravath,
Swaine & ▇▇▇▇▇, counsel for the Initial Purchasers, such opinion or
opinions, dated the Closing Date, with respect to such matters as the
Initial Purchasers may reasonably require, and the Company and the
Guarantors shall have furnished to such counsel such documents and
information as they may reasonably request for the purpose of enabling
them to pass upon such matters.
(e) The Company shall have furnished to the Initial Purchasers
a letter (the "Initial Letter") of Ernst & Young LLP, addressed to the
Initial Purchasers and dated the date hereof, in form and substance
reasonably satisfactory to the Initial Purchasers, substantially to the
effect set forth in Annex E hereto.
(f) The Company shall have furnished to the Initial Purchasers
a letter (the "Bring-Down Letter") of Ernst & Young LLP, addressed to
the Initial Purchasers and dated the Closing Date (i) confirming that
they are independent public accountants with respect to the Company and
its subsidiaries within the meaning of Rule 101 of the Code of
Professional Conduct of the AICPA and its interpretations and rulings
thereunder, (ii) stating, as of the date of the Bring-Down Letter (or,
with respect to matters involving changes or developments since the
respective dates as of which specified financial information is given
in the Offering Memorandum, as of a date not more than
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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 in all material respects and (iii) confirming in all
material respects the conclusions and findings set forth in the Initial
Letter.
(g) The Company shall have furnished to the Initial Purchasers
a certificate, dated the Closing Date, of its chief executive officer
and its chief financial officer or other officers reasonably acceptable
to the Initial Purchasers stating that (A) such officers have carefully
examined the Offering Memorandum, (B) in their opinion, the Offering
Memorandum, as of its date, did not include any untrue statement of a
material fact and did not omit to state a material fact required to be
stated therein or necessary in order to make the statements therein, in
the light of the circumstances under which they were made, not
misleading, and since the date of the Offering Memorandum, no event has
occurred which should have been set forth in a supplement or amendment
to the Offering Memorandum so that the Offering Memorandum (as so
amended or supplemented) would not include any untrue statement of a
material fact and would not omit to state a material fact required to
be stated therein or necessary in order to make the statements therein,
in the light of the circumstances under which they were made, not
misleading and (C) to the best of their knowledge after reasonable
investigation, as of the Closing Date, the representations and
warranties of the Company and each of the Guarantors in this Agreement
are true and correct in all material respects, each of Holding and its
subsidiaries have 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 Holding 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 Holding and its subsidiaries taken
as a whole, except as set forth in the Offering Memorandum.
(h) 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 each
Guarantor.
(i) The Indenture shall have been duly executed and delivered
by the Company, each of the Guarantors and the Trustee, and the
Securities shall have been duly executed and delivered by the Company
and duly authenticated by the Trustee.
(j) The Securities shall have been approved by the NASD for
trading in the PORTAL Market.
(k) 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.
(l) 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
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reasonable judgment of the Initial Purchasers would materially impair
the ability of the Initial Purchasers to purchase, hold or effect
resales of the Securities as contemplated hereby.
(m) Subsequent to the execution and delivery of this Agreement
or, if earlier, the dates as of which information is given in the
Offering Memorandum (exclusive of any amendment or supplement thereto),
there shall not have been any change in the capital stock or long-term
debt or any change, or any development involving a prospective change,
in or affecting the condition (financial or otherwise), results of
operations, business or prospects of Holding and its subsidiaries taken
as a whole (other than as disclosed in or contemplated by the Offering
Memorandum), the effect of which, in any such case described above, is,
in the reasonable judgment of the Initial Purchasers, so material and
adverse as to make it impracticable or inadvisable to proceed with the
sale or delivery of the Securities on the terms and in the manner
contemplated by this Agreement and the Offering Memorandum (exclusive
of any amendment or supplement thereto).
(n) 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.
(o) Subsequent to the execution and delivery of this Agreement
(i) no downgrading shall have occurred in the rating accorded the
Securities by any "nationally recognized statistical rating
organization", as such term is defined by the Commission for purposes
of Rule 436(g)(2) of the rules and regulations of the Commission under
the Securities Act and (ii) no such organization shall have publicly
announced that it has under surveillance or review (other than an
announcement with positive implications of a possible upgrading), its
rating of the Securities.
(p) 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 any 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
(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 reasonable judgment of the Initial Purchasers, so material
and adverse as to make it impracticable or inadvisable to proceed with
the sale or the delivery of the Securities on the terms and in the
manner contemplated by this Agreement and in the Offering Memorandum
(exclusive of any amendment or supplement thereto).
(q) All conditions to the consummation of each of the
Transactions (other than the offering of the Securities) shall have
been satisfied or waived with the consent of the Initial Purchasers
(which consent shall not be unreasonably withheld) and each of such
Transactions shall be consummated substantially concurrently with the
sale of the
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Securities hereunder. The Initial Purchasers shall have received copies
of all closing documents relating to such Transactions.
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 written 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(l), (m), (n),
(o) or (p) shall have occurred and be continuing.
7. Defaulting Initial Purchasers. (a) If, on the Closing Date,
any Initial Purchaser defaults in the performance of its obligations
under this Agreement, the non-defaulting Initial Purchasers may make
arrangements for the purchase of the Securities which such defaulting
Initial Purchaser agreed but failed to purchase by other persons
satisfactory to the Company and the non-defaulting Initial Purchasers,
but if no such arrangements are made within 36 hours after such
default, this Agreement shall terminate without liability on the part
of the non-defaulting Initial Purchasers, the Company or the
Guarantors, except that the Company and the Guarantors will continue to
be liable for the payment of expenses to the extent set forth in
Sections 8 and 12 and except that the provisions of Sections 9 and 10
shall not terminate and shall remain in effect. As used in this
Agreement, the term "Initial Purchasers" includes, for all purposes of
this Agreement unless the context otherwise requires, any party not
listed in Schedule 1 hereto that, pursuant to this Section 7, purchases
Securities which a defaulting Initial Purchaser agreed but failed to
purchase.
(b) Nothing contained herein shall relieve a defaulting
Initial Purchaser of any liability it may have to the Company or any
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 or 7, (b)
the Company shall fail to tender the Securities for delivery to the
Initial Purchasers for any reason permitted under this Agreement or (c)
the Initial Purchasers shall decline to purchase the Securities for any
reason permitted under this Agreement, the Company and the Guarantors
shall jointly and severally reimburse the Initial Purchasers for such
out-of-pocket expenses (including reasonable fees and disbursements of
counsel) as shall have been reasonably incurred by the Initial
Purchasers in connection with this Agreement and the proposed purchase
and resale of the Securities. Notwithstanding any provision herein to
the contrary, if this Agreement is terminated pursuant to Section 7 by
reason of the default of one or more of the Initial Purchasers, the
Company shall not be obligated to reimburse any defaulting Initial
Purchaser or their counsel on account of such expenses.
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9. Indemnification. (a) The Company and the Guarantors shall
jointly and severally indemnify and hold harmless each Initial
Purchaser, its affiliates, their respective officers, directors,
employees, representatives and agents, and each person, if any, who
controls any Initial Purchaser within the meaning of the Securities Act
or the Exchange Act (collectively referred to for purposes of this
Section 9(a) and Section 10 as an Initial Purchaser), from and against
any loss, claim, damage or liability, joint or several, or any action
in respect thereof (including, without limitation, any loss, claim,
damage, liability or action relating to purchases and sales of the
Securities), to which that Initial Purchaser may become subject,
whether commenced or threatened, under the Securities Act, the Exchange
Act, any other federal or state statutory law or regulation, at common
law or otherwise, insofar as such loss, claim, damage, liability or
action arises out of, or is based upon, (i) any untrue statement or
alleged untrue statement of a material fact contained in the
Preliminary Offering Memorandum or the Offering Memorandum or in any
amendment or supplement thereto or in any information provided by the
Company pursuant to Section 4(e) or (ii) the omission or alleged
omission to state therein a material fact required to be stated therein
or necessary in order to make the statements therein, in the light of
the circumstances under which they were made, not misleading, and shall
reimburse each Initial Purchaser promptly upon demand for any legal or
other expenses reasonably incurred by that Initial Purchaser in
connection with investigating or defending or preparing to defend
against or appearing as a third party witness in connection with any
such loss, claim, damage, liability or action as such expenses are
incurred; provided, however, that the Company and the Guarantors shall
not be liable in any such case to the extent that any such loss, claim,
damage, liability or action arises out of, or is based upon, an untrue
statement or alleged untrue statement in or omission or alleged
omission from any of such documents in reliance upon and in conformity
with any Initial Purchasers' Information; and provided, further, that
with respect to any such untrue statement in or omission from the
Preliminary Offering Memorandum, the indemnity agreement contained in
this Section 9(a) shall not inure to the benefit of any such Initial
Purchaser to the extent that the sale to the person asserting any such
loss, claim, damage, liability or action was an initial resale by such
Initial Purchaser and any such loss, claim, damage, liability or action
of or with respect to such Initial Purchaser results from the fact that
both (A) to the extent required by applicable law, a copy of the
Offering Memorandum was not sent or given to such person at or prior to
the written confirmation of the sale of such Securities to such person
and (B) the untrue statement in or omission from the Preliminary
Offering Memorandum was corrected in the Offering Memorandum unless, in
either case, such failure to deliver the Offering Memorandum was a
result of non-compliance by Holding or 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
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under which they were made, not misleading, but in each case only to
the extent that the untrue statement or alleged untrue statement or
omission or alleged omission was made in reliance upon and in
conformity with any Initial Purchasers' Information, and shall
reimburse the Company for any legal or other expenses reasonably
incurred by the Company in connection with investigating or defending
or preparing to defend against or appearing as a third party witness in
connection with any such loss, claim, damage, liability or action as
such expenses are incurred.
(c) Promptly after receipt by an indemnified party under this
Section 9 of notice of any claim or the commencement of any action, the
indemnified party shall, if a claim in respect thereof is to be made
against the indemnifying party pursuant to Section 9(a) or 9(b), notify
the indemnifying party in writing of the claim or the commencement of
that action; provided, however, that the failure to notify the
indemnifying party shall not relieve it from any liability which it may
have under this Section 9 except to the extent that it has been
materially prejudiced (through the forfeiture of substantive rights or
defenses) by such failure; and, provided, further, that the failure to
notify the indemnifying party shall not relieve it from any liability
which it may have to an indemnified party otherwise than under this
Section 9. If any such claim or action shall be brought against an
indemnified party, and it shall notify the indemnifying party thereof,
the indemnifying party shall be entitled to participate therein and, to
the extent that it wishes, jointly with any other similarly notified
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 that makes it
impossible or inadvisable for counsel to the indemnifying party to
conduct the defense of both the indemnifying party and the indemnified
party (in which case the indemnifying party will not have the right to
direct the defense of such action on behalf of the indemnified party)
or (4) the indemnifying party has not in fact employed counsel
reasonably satisfactory to the indemnified party to assume the defense
of such action within a reasonable time after receiving notice of the
commencement of the action, in each of which cases the reasonable fees,
disbursements and other charges of counsel will be at the expense of
the indemnifying party or parties. It is understood that the
indemnifying party or parties shall not, in connection with any
proceeding or related proceedings in the same jurisdiction, be liable
for the reasonable fees, disbursements and other charges of more than
one separate firm of attorneys (in addition to any local counsel) at
any one time for all such indemnified party or parties. Each
indemnified party, as a condition of the indemnity agreements contained
in Sections 9(a) and 9(b), shall use all reasonable efforts to
cooperate with the indemnifying party in the defense of any such action
or claim. No indemnifying party shall be liable for any settlement of
any such action effected without its written consent (which consent
shall not be unreasonably withheld), but if settled with its written
consent or if there be a final judgment for the plaintiff in any such
action, the
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indemnifying party agrees to indemnify and hold harmless any
indemnified party from and against any loss or liability by reason of
such settlement or judgment. No indemnifying party shall, without the
prior written consent of the indemnified party (which consent shall not
be unreasonably withheld), effect any settlement of any pending or
threatened proceeding in respect of which any indemnified party is or
could have been a party and indemnity could have been sought hereunder
by such indemnified party unless such settlement includes an
unconditional release of such indemnified party from all liability on
claims that are the subject matter of such proceeding.
The obligations of the Company, the Guarantors and the Initial
Purchasers in this Section 9 and in Section 10 are in addition to any
other liability that the Company, the Guarantors or the Initial
Purchasers, as the case may be, may otherwise have, including in
respect of any breaches of representations, warranties and agreements
made herein by any such party.
10. Contribution. If the indemnification provided for in
Section 9 is unavailable or insufficient to hold harmless an
indemnified party under Section 9(a) or 9(b), then each indemnifying
party shall, in lieu of indemnifying such indemnified party, contribute
to the amount paid or payable by such indemnified party as a result of
such loss, claim, damage or liability, or action in respect thereof,
(i) in such proportion as shall be appropriate to reflect the relative
benefits received by the Company and the Guarantors, on the one hand,
and the Initial Purchasers, on the other, from the offering of the
Securities or (ii) if the allocation provided by clause (i) above is
not permitted by applicable law, in such proportion as is appropriate
to reflect not only the relative benefits referred to in clause (i)
above but also the relative fault of the Company and the Guarantors, on
the one hand, and the Initial Purchasers, on the other, with respect to
the statements or omissions that resulted in such loss, claim, damage
or liability, or action in respect thereof, as well as any other
relevant equitable considerations. The relative benefits received by
the Company and the Guarantors, on the one hand, and the Initial
Purchasers on the other with respect to such offering shall be deemed
to be in the same proportion as the total net proceeds from the
offering of the Securities purchased under this Agreement (before
deducting expenses) received by or on behalf of the Company, on the one
hand, and the total discounts and commissions received by the Initial
Purchasers with respect to the Securities purchased under this
Agreement, on the other, bear to the total gross proceeds from the sale
of the Securities under this Agreement, in each case as set forth in
the table on the cover page of the Offering Memorandum. The relative
fault shall be determined by reference to, among other things, whether
the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to the
Company and the Guarantors or information supplied by the Company and
the Guarantors, on the one hand, or to any Initial Purchasers'
Information, on the other, the intent of the parties and their relative
knowledge, access to information and opportunity to correct or prevent
such untrue statement or omission. The Company, the Guarantors and the
Initial Purchasers agree that it would not be just and equitable if
contributions pursuant to this Section 10 were to be determined by pro
rata allocation (even if the Initial Purchasers were treated as one
entity for such purpose) or by any other method of allocation that does
not take into account the equitable considerations referred to herein.
The amount paid or payable by an indemnified party as a result of the
loss, claim, damage or liability, or action in respect thereof,
referred to above in this Section 10 shall be deemed to include, for
purposes of this Section 10, any legal or other expenses reasonably
incurred by such indemnified party in connection with investigating or
defending or preparing to defend any such action or claim.
Notwithstanding the provisions of this Section 10, no Initial Purchaser
shall be required to contribute any amount in excess of
23
23
the amount by which the total discounts and commissions received by
such Initial Purchaser with respect to the Securities purchased by it
under this Agreement exceeds the amount of any damages which such
Initial Purchaser has otherwise paid or become liable to pay by reason
of any untrue or alleged untrue statement or omission or alleged
omission. No person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. The Initial Purchasers' obligations to contribute as
provided in this Section 10 are several in proportion to their
respective purchase obligations and not joint.
11. Persons Entitled to Benefit of Agreement. This Agreement
shall inure to the benefit of and be binding upon the Initial
Purchasers, the Company, the Guarantors and their respective
successors. This Agreement and the terms and provisions hereof are for
the sole benefit of only those persons, except as provided in Sections
9 and 10 with respect to affiliates, officers, directors, employees,
representatives, agents and controlling persons of the Company and the
Initial Purchasers and in Section 4(e) with respect to holders and
prospective purchasers of the Securities. Nothing in this Agreement is
intended or shall be construed to give any person, other than the
persons referred to in this Section 11, any legal or equitable right,
remedy or claim under or in respect of this Agreement or any provision
contained herein. The term "successor" shall not include a purchaser
from the Initial Purchaser of any of the Securities in his status as
such purchaser.
12. Expenses. The Company and the Guarantors 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 Guarantors' counsel and independent
accountants; (f) the fees and expenses of qualifying the Securities
under the securities laws of the several jurisdictions as provided in
Section 4(g) and of preparing, printing and distributing Blue Sky
Memoranda (including related fees and expenses of counsel for the
Initial Purchasers); (g) any fees charged by rating agencies for rating
the Securities; (h) the fees and expenses of the Trustee and any paying
agent (including related fees and expenses of any counsel to such
parties); (i) all expenses and application fees incurred in connection
with the application for the inclusion of the Securities on the PORTAL
Market and the approval of the Securities for book-entry transfer by
DTC; and (j) all other costs and expenses incident to the performance
of the obligations of the Company and the Guarantors 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 including the costs and expenses of their counsel, any
transfer taxes on the Securities that they may sell and the expenses of
advertising any offering of the Securities made by the Initial
Purchasers.
13. Survival. The respective indemnities, rights of
contribution, representations, warranties and agreements of the
Company, the Guarantors and the Initial Purchasers contained in this
Agreement or made by or on behalf of the Company or the Initial
Purchasers pursuant to this Agreement or any certificate delivered
pursuant hereto shall survive the delivery of and payment for the
Securities
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24
and shall remain in full force and effect, regardless of any
termination or cancelation of this Agreement or any investigation made
by or on behalf of any of them or any of their respective affiliates,
officers, directors, employees, representatives, agents or controlling
persons
14. Notices, etc. All statements, requests, notices and
agreements hereunder shall be in writing, and:
(a) if to the Initial Purchasers, shall be delivered or sent
by mail or telecopy transmission to Chase Securities Inc., ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: Mr. ▇▇▇▇▇▇ ▇▇▇▇▇▇
(telecopier no.: (▇▇▇) ▇▇▇-▇▇▇▇); or
(b) if to the Company, shall be delivered or sent by mail or
telecopy transmission to ▇▇▇▇▇▇ Holding Co., ▇▇ ▇▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇, Attention: ▇▇▇▇ ▇▇▇▇▇▇ (telecopier no.:
(▇▇▇) ▇▇▇-▇▇▇▇), with a copy to: ▇▇▇▇▇▇, ▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP, ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: E. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, Esq.
(telecopier no. (▇▇▇) ▇▇▇-▇▇▇▇) and to: Investcorp International, Inc.,
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇ (telecopier no. (▇▇▇) ▇▇▇-▇▇▇▇);
provided that any notice to an Initial Purchaser pursuant to Section
9(c) shall also be delivered or sent by mail to such Initial Purchaser
at its address set forth on the signature page hereof. Any such
statements, requests, notices or agreements shall take effect at the
time of receipt thereof. The Company shall be entitled to act and rely
upon any request, consent, notice or agreement given or made on behalf
of the Initial Purchasers by CSI.
15. Definition of Terms. For purposes of this Agreement, (a)
the term "business day" means any day on which the New York Stock
Exchange, Inc. is open for trading, (b) the term "subsidiary" has the
meaning set forth in Rule 405 under the Securities Act and (c) except
where otherwise expressly provided, the term "affiliate" has the
meaning set forth in Rule 405 under the Securities Act.
16. Initial Purchasers' Information. The parties hereto
acknowledge and agree that, for all purposes of this Agreement, the
Initial Purchasers' Information consists solely of the following
information in the Preliminary Offering Memorandum and the Offering
Memorandum: (i) the last paragraph on the front cover page concerning
the terms of the offering by the Initial Purchasers; (ii) the legend on
the inside front cover page concerning over-allotment and trading
activities by the Initial Purchasers; and (iii) the statements
concerning the Initial Purchasers contained in the third, fourth,
fifth, seventh , ninth, twelfth and thirteenth paragraphs under the
heading "Plan of Distribution".
17. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
18. Counterparts. This Agreement may be executed in one or
more counterparts (which may include counterparts delivered by
telecopier) and, if executed in more than one counterpart, the executed
counterparts shall each be deemed to be an original, but all such
counterparts shall together constitute one and the same instrument.
19. Amendments. No amendment or waiver of any provision of
this Agreement, nor any consent or approval to any departure therefrom,
shall in any event be effective unless the same shall be in writing and
signed by the parties hereto.
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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.
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26
If the foregoing is in accordance with your understanding of
our agreement, kindly sign and return to us a counterpart hereof,
whereupon this instrument will become a binding agreement between the
Company, the Guarantors and the several Initial Purchasers in
accordance with its terms.
Very truly yours,
▇▇▇▇▇▇ HOLDING CO. (DE), INC.,
by /s/
-----------------------------------
Name:
Title:
▇▇▇▇▇▇ HOLDING CO. (PA), INC.,
by /s/
-----------------------------------
Name:
Title:
▇▇▇▇▇▇ CO.,
by /s/
-----------------------------------
Name:
Title:
GOLD MEDAL LADDER COMPANY,
by /s/
-----------------------------------
Name:
Title:
KENTUCKY LADDER COMPANY,
by /s/
-----------------------------------
Name:
Title:
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27
FLORIDA LADDER COMPANY,
by /s/
-----------------------------------
Name:
Title:
▇▇▇▇▇▇ MANAGEMENT CO.,
by /s/
-----------------------------------
Name:
Title:
▇▇▇▇▇▇ FINANCIAL INC.,
by /s/
-----------------------------------
Name:
Title:
R. D. ARIZONA LADDER CORP.,
by /s/
-----------------------------------
Name:
Title:
WIP TECHNOLOGIES, INC.,
by /s/
-----------------------------------
Name:
Title:
ARDEE INVESTMENT CO., INC.,
by /s/
----------------------------------
Name:
Title:
OLYMPUS PROPERTIES, INC.,
by /s/
-----------------------------------
Name:
Title:
28
28
PHOENIX MANAGEMENT SERVICES, INC.,
by /s/
-----------------------------------
Name:
Title:
29
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Accepted:
CHASE SECURITIES INC.,
by /s/
------------------------------------
Authorized Signatory
Address for notices pursuant to Section 9(c):
▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: Legal Department
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
SECURITIES CORPORATION,
by /s
------------------------------------
Authorized Signatory
Address for notices pursuant to Section 9(c):
2121 Avenue of the Stars
▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Legal Department
▇▇▇▇▇▇▇, SACHS & CO.,
by /s/
------------------------------------
Authorized Signatory
Address for notices pursuant to Section 9(c):
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Legal Department
30
Schedule I
Principal
Amount
Initial Purchasers of Securities
------------------ -------------
Chase Securities Inc........................................... $ 54,000,000
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ Securities Corporation ........... 54,000,000
▇▇▇▇▇▇▇, Sachs & Co. .......................................... 27,000,000
----------
Total................................................. $ 135,000,000
============
31
ANNEX A
[Form of Registration Rights Agreement]
32
ANNEX B
Form of Opinion of ▇▇▇▇▇▇, ▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP
▇▇▇▇▇▇, ▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP 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, limited to New York law,
the Delaware General Corporation Law (the "DGCL") and the Federal securities
laws of the United States in form and substance and subject to additional
qualification, in each case reasonably satisfactory to the Initial Purchasers,
substantially to the effect set forth below:
(i) the Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of Delaware,
is duly qualified to do business and is in good standing as a foreign
corporation in each jurisdiction in which its ownership or lease of
property or the conduct of its businesses requires such qualification,
and has all power and authority necessary to own or hold its properties
and to conduct the businesses in which it is engaged (except where the
failure to so qualify or have such power or authority would not,
singularly or in the aggregate, have a Material Adverse Effect);
(ii) the Company has an authorized capitalization as set forth
in the Offering Memorandum, and all of the outstanding shares of
capital stock of the Company have been duly and validly authorized and
issued and are fully paid and non-assessable;
(iii) the descriptions in the Offering Memorandum of statutes,
legal and govern mental proceedings and contracts and other documents
set forth under the headings "Summary-The Transactions," "The
Transactions," "Summary-The Offering," "Risk Factors-Restrictive Loan
Covenants," "Risk Factors-Legal Proceedings," "Risk Factors-
Environmental Regulation", "Business-Environmental Matters", "
Business-Legal Proceedings," "Principal Shareholders-Right of First
Offer; Tag-Along Rights," "Certain Transactions-Agreements with Certain
Shareholders" and "The New Credit Facility" are accurate in all
material respects; the statements in the Offering Memorandum under the
heading "Certain Federal Income Tax Consequences," to the extent that
they constitute summaries of matters of law or regulation or legal
conclusions, have been reviewed by such counsel and fairly summarize
the matters described therein in all material respects; and such
counsel does not have actual knowledge of any current or pending legal
or governmental actions, suits or proceedings which would be required
to be described in the Offering Memorandum if the Offering Memorandum
were a prospectus included in a registration statement on Form S-1
which are not described as so required;
(iv) the Indenture conforms in all material respects with the
requirements of the Trust Indenture Act and the rules and regulations
of the Commission applicable to an indenture which is qualified
thereunder;
(v) the Company and each of the Guarantors incorporated under
the DGCL (the "Delaware Guarantors") have full right, power and
authority to execute and deliver each of the Transaction Documents and
to perform its obligations thereunder; and all corporate action
required to be taken by the Company and the Delaware Guarantors for the
due and proper authorization, execution and delivery of each of the
Transaction Documents and the consummation of the transactions
contemplated thereby have been duly and validly taken;
(vi) each of the Purchase Agreement and the Registration
Rights Agreement has been duly authorized, executed and delivered by
the Company and each of the Delaware Guarantors and constitutes a valid
and legally binding agreement of the
33
2
Company and each of the Delaware Guarantors enforceable against the
Company and each of the Delaware Guarantors in accordance with its
terms, except to the extent that such enforceability may be limited by
applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and other similar laws affecting creditors'
rights generally including, without limitation, the effect of statutory
or other laws regarding fraudulent conveyances or transfers,
preferential transfers, and of laws affecting distributions by
corporations to stockholders, and by general equitable principles
including, without limitation, concepts of materiality, reasonableness,
good faith and fair dealing (whether considered in a proceeding in
equity or at law) and except to the extent that the indemnification
provisions thereof may be unenforceable;
(vii) the Indenture has been duly authorized, executed and
delivered by the Company and each of the Delaware Guarantors and,
assuming due authorization, execution and delivery thereof by the
Trustee and the Guarantors (other than the Delaware Guarantors), the
Indenture constitutes a valid and legally binding agreement of the
Company and each of the Delaware Guarantors enforceable against the
Company and each of the Delaware Guarantors in accordance with its
terms, except to the extent that such enforceability may be limited by
applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and other similar laws affecting creditors'
rights generally including, without limitation, the effect of statutory
or other laws regarding fraudulent conveyances or transfers,
preferential transfers, and of laws affecting distributions by
corporations to stockholders and by general equitable principles
including, without limitation, concepts of materiality, reasonableness,
good faith and fair dealing (whether considered in a proceeding in
equity or at law);
(viii) the Securities have been duly authorized and issued by
the Company and, assuming due authentication thereof by the Trustee and
upon payment and delivery in accordance with the Purchase Agreement,
will constitute valid and legally binding obligations of the Company
entitled to the benefits of the Indenture and enforceable against the
Company in accordance with their terms, except to the extent that such
enforceability may be limited by applicable bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and other similar
laws affecting creditors' rights generally including, without
limitation, the effect of statutory or other laws regarding fraudulent
conveyances or transfers, preferential transfers, and of laws affecting
distributions by corporations to stockholders, and by general equitable
principles including, without limitation, concepts of materiality,
reasonableness, good faith and fair dealing (whether considered in a
proceeding in equity or at law);
(ix) assuming that the Recapitalization Agreement has been
duly authorized, executed and delivered by Holding , the
Recapitalization Agreement constitutes a valid and legally binding
agreement of Holding enforceable against Holding in accordance with its
terms, except to the extent that such enforceability may be limited by
applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and other similar laws affecting creditors'
rights generally including, without limitation, the effect of statutory
or other laws regarding fraudulent conveyances or transfers,
preferential transfers, and of laws affecting distributions by
corporations to stockholders, and by general equitable principles
including, without limitation, concepts of materiality, reasonableness,
good faith and fair dealing (whether considered in a proceeding in
equity or at law);
(x) each Transaction Document conforms in all material
respects to the description thereof contained in the Offering
Memorandum;
(xi) except as disclosed in Schedule 2(q) to the Purchase
Agreement, the execution and delivery by the Company and each of the
Guarantors of each of the
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Transaction Documents, the performance of the payment obligations
thereunder and the issuance, authentication, sale and delivery of the
Securities will not materially conflict with or result in a material
breach or violation of any of the terms or provisions of, or constitute
a material default under, or result in the creation or imposition of
any lien, charge or encumbrance upon any property or assets of Holding
or any of its subsidiaries pursuant to, any indenture, mortgage, deed
of trust, loan agreement or other agreement or instrument to which
Holding or any of its subsidiaries is a party or by which Holding or
any of its subsidiaries is bound or to which any of the property or
assets of Holding or any of its subsidiaries is subject and that has
been identified to such counsel as material to Holding and its
subsidiaries, taken as a whole, nor will such actions result in any
material violation of the provisions of the charter or by-laws of
Holding, the Company or any Delaware Guarantor or any New York statute,
law or regulation that in our experience is generally applicable to the
transactions of the type contemplated hereby or the DGCL or, to our
actual knowledge, any judgment, injunction, order or decree applicable
to Holding or any of its Subsidiaries or any of their respective
properties; and no consent, approval, authorization or order of, or
filing or registration with, any such court or arbitrator or
governmental agency or body under any such statute, judgment, order,
decree, rule or regulation is required for the execution, or delivery
by the Company and each of the Guarantors of each of the Transaction
Documents, the performance of the payment obligations thereunder and
the issuance, authentication, sale and delivery of the Securities,
except for such consents, approvals, authorizations, filings,
registrations or qualifications (i) which have been obtained or made
prior to the Closing Date and (ii) as may be required to be obtained or
made under the Securities Act and applicable state securities laws as
provided in the Registration Rights Agreement;
(xii) to the best knowledge of such counsel, there are no
pending actions or suits or judicial, arbitral, rule-making,
administrative or other proceedings to which Holding or any of its
subsidiaries is a party or of which any property or assets of Holding
or any of its subsidiaries is the subject which (A) singularly or in
the aggregate could reasonably be expected to have a Material Adverse
Effect or (B) questions the validity or enforceability of any of the
Transaction Documents or any action taken or to be taken pursuant
thereto;
(xiii) neither Holding nor any of its subsidiaries is an
"investment company" or, to the best of such counsel's knowledge, a
company "controlled by" an investment company within the meaning of the
Investment Company Act and the rules and regulations of the Commission
thereunder;
(xiv) neither the consummation of the transactions
contemplated by this Agreement nor the sale, issuance, execution or
delivery of the Securities will violate Regulation G, T, U or X of the
Federal Reserve Board; and
(xv) assuming the accuracy of the representations and
warranties and compliance with the agreements of the Company, the
Guarantors and the Initial Purchasers contained in the Purchase
Agreement, no registration of the Securities under the Securities Act
or qualification of the Indenture under the Trust Indenture Act is
required in connection with the issuance and sale of the Securities by
the Company to the Initial Purchasers and the offer, resale and
delivery of the Securities by the Initial Purchasers in the manner
contem plated by the Purchase Agreement and the Offering.
Such counsel shall also state that they have participated in
conferences with representatives of the Company and the Guarantors,
representatives of Holding's independent accountants and counsel and
representatives of the Initial Purchasers and their counsel at which
35
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conferences the contents of the Preliminary Offering Memorandum and the Offering
Memorandum and any amendment and supplement thereto and related matters were
discussed and, although such counsel assumes no responsibility for the accuracy,
completeness or fairness of the Offering Memorandum or any amendment or
supplement thereto (except as expressly provided above), nothing has come to the
attention of such counsel to cause such counsel to believe that the Offering
Memorandum or any amendment or supplement thereto (other than the financial
statements (including the schedules and notes thereto) and other financial and
statistical information contained therein, as to which such counsel need express
no belief), as of the date thereof and as of the Closing Date, contained or
contains any untrue statement of a material fact or omitted or omits to state a
material fact necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
In rendering such opinion, such counsel may rely as to matters
of fact, to the extent such counsel deems reasonably proper, on certificates of
responsible officers of the Company, any Guarantor and public officials which
are furnished to the Initial Purchasers.
36
ANNEX C
Rider to Opinion of ▇▇▇▇ ▇▇▇▇▇▇, Esq.
9. to the best of my knowledge, there are no pending actions
or suits or judicial, arbitral, rule-making, administrative or other
proceedings to which Holding or any of its subsidiaries is a party or
of which any property or assets of Holding or any of its subsidiaries
is the subject and no such proceedings are threatened or contemplated
by governmental authorities or threatened by others, in each case which
(A) singularly or in the aggregate, if determined adversely to Holding
or any of its subsidiaries, could reasonably be expected to have a
Material Adverse Effect or (B) questions the validity or enforceability
of any of the Documents or any action taken or to be taken pursuant
thereto.
37
ANNEX D
Form of Opinion of Pennsylvania Counsel
Outside counsel to the Company qualified to give Pennsylvania
law opinions and reasonably acceptable to the Initial Purchasers shall have
furnished to the Initial Purchasers their written opinion, as Pennsylvania
counsel to the Company, addressed to the Initial Purchasers and dated the
Closing Date, in form and substance and subject to additional qualifications, in
each case reasonably satisfactory to the Initial Purchasers, substantially to
the effect set forth below:
(i) Holding has an authorized capitalization as set forth in
the Offering Memorandum; and the capital stock of Holding conforms in
all material respects to the description thereof contained in the
Offering Memorandum;
(ii) each of the Guarantors incorporated in jurisdictions
other than Delaware (the "Non-Delaware Guarantors") have full right,
power and authority to execute and deliver each of the Transaction
Documents and to perform its obligations thereunder; and all corporate
action required to be taken by the Non-Delaware Guarantors for the due
and proper authorization, execution and delivery of each of the
Transaction Documents and the consummation of the transactions
contemplated thereby have been duly and validly taken;
(iii) each of the Purchase Agreement and the Registration
Rights Agreement has been duly authorized, executed and delivered by
the Non-Delaware Guarantors and constitutes a valid and legally binding
agreement of each of the Non-Delaware Guarantors enforceable against
each of the Non-Delaware Guarantors in accordance with its terms,
except to the extent that such enforceability may be limited by
applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and other similar laws affecting creditors'
rights generally including, without limitation, the effect of statutory
or other laws regarding fraudulent conveyances or transfers,
preferential transfers, and of laws affecting distributions by
corporations to stockholders, and by general equitable principles
including, without limitation, concepts of materiality, reasonableness,
good faith and fair dealing (whether considered in a proceeding in
equity or at law) and except to the extent that the indemnification
provisions thereof may be unenforceable;
(iv) the Indenture has been duly authorized, executed and
delivered by each of the Non-Delaware Guarantors and, assuming due
authorization, execution and delivery thereof by the Trustee,
constitutes a valid and legally binding agreement of each of the
Non-Delaware Guarantors enforceable against each of the Non-Delaware
Guarantors in accordance with its terms, except to the extent that such
enforceability may be limited by applicable bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and other similar
laws affecting creditors' rights generally including, without
limitation, the effect of statutory or other laws regarding fraudulent
conveyances or transfers, preferential transfers, and of laws affecting
distributions by corporations to stockholders, and by general equitable
principles including, without limitation, concepts of materiality,
reasonableness, good faith and fair dealing (whether considered in a
proceeding in equity or at law);
(v) the Recapitalization Agreement has been duly authorized,
executed and delivered by Holding and constitutes a valid and legally
binding agreement of Holding enforceable against Holding in accordance
with its terms, except to the extent that such enforceability may be
limited by applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and other similar laws affecting creditors'
rights generally including, without limitation, the effect of statutory
or other laws
38
regarding fraudulent conveyances or transfers, preferential transfers,
and of laws affecting distributions by corporations to stockholders,
and by general equitable principles including, without limitation,
concepts of materiality, reasonableness, good faith and fair dealing
(whether considered in a proceeding in equity or at law);
In rendering such opinion, such counsel may (i) rely as to
matters of fact, to the extent such counsel deems reasonably proper, on
certificates of responsible officers of the Company, any Guarantor and public
officials which are furnished to the Initial Purchasers and (ii) may assume that
the corporate laws of any jurisdiction (other than Pennsylvania) under which any
Non-Delaware Guarantor is organized are identical to the laws of Pennsylvania.
39
ANNEX E
[Form of Initial Comfort Letter]
The Company shall have furnished to the Initial Purchasers a
letter of Ernst & Young LLP, addressed to the Initial Purchasers and dated the
date of the Purchase Agreement, in form and substance satisfactory to the
Initial Purchasers, substantially to the effect set forth below:
(i) they are independent certified public accountants with
respect to Holding and its subsidiaries within the meaning of Rule 101
of the Code of Professional Conduct of the AICPA and its
interpretations and rulings;
(ii) in their opinion, the audited financial statements and
pro forma financial information included in the Offering Memorandum and
reported on by them comply in form in all material respects with the
accounting requirements of the Exchange Act and the related published
rules and regulations of the Commission thereunder that would apply to
the Offering Memorandum if the Offering Memorandum were a prospectus
included in a registration statement on Form S-1 under the Securities
Act (except that certain supporting schedules are omitted);
(iii) based upon a reading of the latest unaudited financial
statements made available by Holding, 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 Holding who have responsibility for financial and
accounting matters and certain other limited procedures requested by
the Initial Purchasers and described in detail in such letter, nothing
has come to their attention that causes them to believe that (A) any
unaudited financial statements included in the Offering Memorandum do
not comply as to form in all material respects with applicable
accounting requirements, (B) any material modifications should be made
to the unaudited financial statements included in the Offering
Memorandum for them to be in conformity with generally accepted
accounting principles applied on a basis substantially consistent with
that of the audited financial statements included in the Offering
Memorandum or (C) the information included under the headings
"Summary-- Summary Historical and Pro Forma Financial Information",
"Capitalization", "Selected Consolidated Historical Financial Data",
"Management's Discussion and Analysis of Results of Operations and
Financial Condition" and "Management-- Executive Compensation" is not
in conformity with the disclosure requirements of Regulation S-K that
would apply to the Offering Memorandum if the Offering Memorandum were
a prospectus included in a registration statement on Form S-1 under the
Securities Act;
(iv) based upon the procedures detailed in such letter with
respect to the period subsequent to the date of the last available
balance sheet, including reading of minutes and inquiries of certain
officials of Holding 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 December 31, 1996
unaudited balance sheet included in the Offering Memorandum or (B) for
the period from [ ], 199[ ] to a specified date not
more than three business days prior to the date of such letter, there
were any decreases, as compared with the corresponding period in the
preceding year, in net sales, income from operations, EBITDA or
net income, except in all instances for changes, increases or
decreases that the Offering Memorandum discloses have occurred or
which are set forth in such letter, in which case the letter shall be
accompanied by an explanation by Holding as to the significance
thereof unless said explanation is not deemed necessary by the Initial
Purchasers;
40
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(v) they have performed certain other specified procedures as
a result of which they determined that certain information of an
accounting, financial or statistical nature (which is limited to
accounting, financial or statistical information derived from the
general accounting records of Holding) set forth in the Offering
Memorandum agrees with the accounting records of Holding, excluding any
questions of legal interpretation.
(vi) on the basis of a reading of the unaudited pro forma
financial information included in the Offering Memorandum, carrying out
certain specified procedures, reading of minutes and inquiries of
certain officials of Holding who have responsibility for financial and
accounting matters and proving the arithmetic accuracy of the
application of the pro forma adjustments to the historical amounts in
the pro forma financial information, nothing came to their attention
which caused them to believe that the pro forma financial information
does not comply in form in all material respects with the applicable
accounting requirements of Rule 11-02 of Regulation S-X or that the pro
forma adjustments have not been properly applied to the historical
amounts in the compilation of such information.
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Schedule 2(q) to Purchase Agreement
1. Amended and Restated Senior Revolving Credit and Term Loan Agreement
dated as of July 31, 1995, as amended, and related documentation thereunder, by
and between National City Bank and the Banks set forth therein and ▇▇▇▇▇▇ Co.
and Olympus Properties, Inc. The credit facility is guaranteed by the Company
and other related entities pursuant to an Amended and Restated Parent Guarantee.
Pursuant to Section 11(m) of the Guarantee, the Company is not permitted to
enter into any merger transaction or sell or transfer all or any material part
of its business except in certain limited situations. Any breach of this section
is deemed an Event of Default under Section 5(c) of the Amended and Restated
Senior Revolving Credit and Term Loan Agreement and the Agent may, after first
obtaining the consent of Banks holding at least two-thirds in aggregate
principal amount of the loans, declare the entire amount outstanding under the
credit facility immediately due and payable. All amounts outstanding under this
Agreement will be repaid on or prior to the Closing Date.
2. Amended and Restated Note Purchase Agreement dated as of October 1,
1991, as amended, and related documentation thereunder, by and between
Prudential Insurance Company of America and PRUCO Life Insurance Company and
▇.▇. ▇▇▇▇▇▇ Co., Inc. and Olympus Properties, Inc. The outstanding principal
amount of the Notes as of August 1, 1997, is $3,571,000. The Notes are due May
25, 1998, and are guaranteed by the Company and other related entities. The
Notes may be prepaid at any time upon 10 business days prior notice. Pursuant to
Section 9(b)(4) of the Second Amended and Restated Parents Guarantee, the
Company is not permitted to enter into any merger transaction or sale of assets
except in certain limited situations. Any breach of this section is deemed an
Event of Default under the Notes and the holders of two-thirds in principal
amount of the Notes can declare all of the Notes to be immediately due and
payable. All amounts outstanding under this Agreement will be repaid on or prior
to the Closing Date.
3. Trust Indenture dated as of September 1, 1990, entered into between
the County of ▇▇▇▇▇▇▇, Kentucky ("Issuer") and Dai-Ichi Kangyo Trust Company
pursuant to which the Issuer issued its Variable Rate Demand Industrial Building
Revenue Bonds (Kentucky Ladder Company Project) (the "Bonds") in the aggregate
principal amount of $5,000,000. Pursuant to the Indenture, a Bond holder may
instruct the remarketing agent to sell the Bonds and if the remarketing agent
notifies the Trustee that no sale can be made, Kentucky Ladder Company ("KLC")
is obligated to purchase the Bonds from a draw under a Letter of Credit provided
by National City Bank. KLC has entered into a Reimbursement Agreement dated as
of October 1, 1994, with National City Bank whereby it is obligated to repay any
amounts drawn upon the Letter of Credit. Under Section 8 of the Reimbursement
Agreement, any default under the Amended and Restated Senior Revolving Credit
and Term Loan agreement (as described in paragraph 1 above), is an Event of
Default under the reimbursement Agreement. Upon the occurrence of such Event of
Default, National City Bank may, in its sole discretion, notify the Trustee to
declare a default under the Bonds.