EXECUTION COPY
$75,000,000
AMERICAN PACIFIC CORPORATION
9 1/4% SENIOR NOTES DUE 2005
PURCHASE AGREEMENT
March 6, 1998
Credit Suisse First Boston Corporation,
Eleven Madison Avenue,
New York, N.Y. 10010-3629
Dear Sirs:
1. Introductory. American Pacific Corporation, a Delaware
corporation (the "Company"), proposes, subject to the terms and conditions
stated herein, to issue and sell to Credit Suisse First Boston Corporation (the
"Purchaser") $75,000,000 principal amount of its 9 1/4% Senior Notes Due 2005
(the "Offered Securities") to be issued under an Indenture dated as of March 1,
1998 (the "Indenture"), between the Company and United States Trust Company of
New York, as Trustee, on a private placement basis pursuant to an exemption
under Section 4(2) of the United States Securities Act of 1933 (the "Securities
Act").
The Offered Securities are being issued and sold in connection
with the consummation of the transactions contemplated by the Asset Purchase
Agreement, dated as of October 10, 1997 (the "Asset Purchase Agreement"),
between Ampac Inc., a Nevada corporation and a subsidiary of the Company
("AMPAC"), and Xxxx- XxXxx Chemical Corporation, a Delaware corporation,
pursuant to which AMPAC has agreed, subject to certain conditions, to acquire
rights to certain intangible assets related to the production of ammonium
perchlorate (the "Acquisition"). In connection with the Acquisition, the Company
entered into a pricing arrangement with Thiokol Corporation, a Delaware
corporation, on December 12, 1997 (the "Thiokol Agreement"), and an amended
pricing arrangement with Alliant Techsystems, Inc., a Delaware corporation, on
November 24, 1997 (the "Alliant Agreement"). Concurrently with the consummation
of the Acquisition and the Offering, the Company proposes to repurchase or
defease its outstanding 11% noncallable subordinated secured notes (the "Azide
Notes").
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Holders of the Notes (including the Purchaser and its direct
and indirect transferees) will be entitled to the benefits of a Registration
Rights Agreement of even date hereof between the Issuer and the Purchaser (the
"Registration Rights Agreement"), pursuant to which the Company will be
obligated to file with the Commission (i) a registration statement under the
Securities Act (the "Exchange Offer Registration Statement") registering an
issue of senior notes of the Company (the "Exchange Notes") which shall be
identical in all material respects to the Notes (except that the Exchange Notes
will not contain terms with respect to transfer restrictions) and (ii) under
certain circumstances, a shelf registration statement pursuant to Rule 415 under
the Securities Act.
2. Representations and Warranties of the Company. The Company
represents and warrants to, and agrees with, the Purchaser that:
(a) A preliminary offering circular and an offering circular
relating to the Offered Securities have been prepared by the Company. Such
preliminary offering circular and offering circular, as supplemented as of the
date of this Agreement, together with any other document approved by the Company
for use in connection with the contemplated resale of the Offered Securities,
are hereinafter collectively referred to as the "Offering Document." On the date
of this Agreement, the Offering Document does not include any untrue statement
of a material fact or omit to state any 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. The preceding
sentence does not apply to statements in or omissions from the Offering Document
based upon written information furnished to the Company by the Purchaser
specifically for use therein, it being understood and agreed that the only such
information is that described as such in Section 7(b). Except as disclosed in
the Offering Document, on the date of this Agreement, the Company's Annual
Report on Form 10-K most recently filed with the Securities and Exchange
Commission (the "Commission") and all subsequent reports (collectively, the
"Exchange Act Reports") that have been filed by the Company with the Commission
or sent to stockholders pursuant to the Securities Exchange Act of 1934, as
amended (the "Exchange Act") do not include any untrue statement of a material
fact or omit to state any material fact necessary to make the statements
therein, in the light of the circumstances under which they were made, not
misleading. Such documents, when they were filed with the Commission, conformed
in all material respects to the requirements of
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the Exchange Act and the rules and regulations of the Commission thereunder.
(b) The Company has been duly incorporated and is an existing
corporation in good standing under the laws of the State of Delaware, with power
and authority (corporate and other) to own its properties and conduct its
business as described in the Offering Document; and the Company is duly
qualified to do business as a foreign corporation in good standing in all other
jurisdictions in which its ownership or lease of property or the conduct of its
business requires such qualification.
(c) Each subsidiary of the Company has been duly incorporated
and is an existing corporation in good standing under the laws of the
jurisdiction of its incorporation, with power and authority (corporate and
other) to own its properties and conduct its business as described in the
Offering Document; and each subsidiary of the Company is duly qualified to do
business as a foreign corporation in good standing in all other jurisdictions in
which its ownership or lease of property or the conduct of its business requires
such qualification; all of the issued and outstanding capital stock of each
subsidiary of the Company has been duly authorized and validly issued and is
fully paid and nonassessable; and the capital stock of each subsidiary owned by
the Company, directly or through subsidiaries, is owned free from liens,
encumbrances and defects.
(d) The Indenture has been duly authorized; the Offered
Securities have been duly authorized; and when the Offered Securities are
delivered and paid for pursuant to this Agreement on the Closing Date (as
defined below), the Indenture will have been duly executed and delivered, such
Offered Securities will have been duly executed, authenticated, issued and
delivered and will conform to the description thereof contained in the Offering
Document, and the Indenture and such Offered Securities will constitute valid
and legally binding obligations of the Company, enforceable in accordance with
their terms, subject to bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and similar laws of general applicability relating to
or affecting creditors' rights and to general equity principles.
(e) Except as disclosed in the Offering Document, there are no
contracts, agreements or understandings between the Company and any person that
would give rise to a valid claim against the Company or the Purchaser for a
brokerage commission, finder's fee or other like payment in connection
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with the issuance and sale of the Offered Securities by the Company to the
Purchaser.
(f) No consent, approval, authorization or order of, or filing
with, any governmental agency or body or any court is required for the
consummation of the transactions contemplated by this Agreement in connection
with the issuance and sale of the Offered Securities by the Company.
(g) The execution, delivery and performance of the Indenture,
this Agreement and the Registration Rights Agreement and the issuance and sale
of the Offered Securities and compliance with the terms and provisions thereof
will not result in a breach or violation of any of the terms and provisions of,
or constitute a default under, any statute, any rule, regulation or order of any
governmental agency or body or any court, domestic or foreign, having
jurisdiction over the Company or any subsidiary of the Company or any of their
properties, or any agreement or instrument to which the Company or any such
subsidiary is a party or by which the Company or any such subsidiary is bound or
to which any of the properties of the Company or any such subsidiary is subject,
or the charter or by-laws of the Company or any such subsidiary, and the Company
has full power and authority to authorize, issue and sell the Offered Securities
as contemplated by this Agreement.
(h) This Agreement and the Registration Rights Agreement have
been duly authorized, executed and delivered by the Company.
(i) Except as disclosed in the Offering Document, the Company
and its subsidiaries have good and marketable title to all real properties and
all other properties and assets owned by them, in each case free from liens,
encumbrances and defects that would materially affect the value thereof or
materially interfere with the use made or to be made thereof by them; and except
as disclosed in the Offering Document, the Company and its subsidiaries hold any
leased real or personal property under valid and enforceable leases with no
exceptions that would materially interfere with the use made or to be made
thereof by them.
(j) The Company and its subsidiaries possess adequate
certificates, authorities or permits issued by appropriate governmental agencies
or bodies necessary to conduct the business now operated by them and have not
received any notice of proceedings relating to the revocation or modification of
any such certificate, authority or permit that, if determined adversely to the
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Company or any of its subsidiaries, would individually or in the aggregate have
a material adverse effect on the Company and its subsidiaries taken as a whole.
(k) No labor dispute with the employees of the Company or any
subsidiary exists or, to the knowledge of the Company, is imminent that might
have a material adverse effect on the Company and its subsidiaries taken as a
whole.
(l) The Company and its subsidiaries own, possess or can
acquire on reasonable terms, adequate trademarks, trade names and other rights
to inventions, know-how, patents, copyrights, confidential information and other
intellectual property (collectively, "intellectual property rights") necessary
to conduct the business now operated by them, or presently employed by them, and
have not received any notice of infringement of or conflict with asserted rights
of others with respect to any intellectual property rights that, if determined
adversely to the Company or any of its subsidiaries, would individually or in
the aggregate have a material adverse effect on the Company and its subsidiaries
taken as a whole.
(m) The execution, delivery and performance by the Company and
its subsidiaries of the Asset Purchase Agreement, the Thiokol Agreement and the
Alliant Agreement (collectively, the "Acquisition Agreements") will not result
in a breach or violation of any of the terms and provisions of, or constitute a
default under, any statute, rule, regulation or order of any governmental agency
or body or any court, domestic or foreign, having jurisdiction over the Company
or any subsidiary of the Company or any of their properties, or any agreement or
instrument to which the Company or any such subsidiary is a party or by which
the Company or any such subsidiary is bound or to which any of the properties of
the Company or any such subsidiary is subject, or the charter or by-laws of the
Company or any such subsidiary.
(n) The Acquisition Agreements have been duly authorized,
executed and delivered by the Company or AMPAC, as the case may be, and conform
in all material respects to the descriptions thereof in the Offering Document.
(o) The Acquisition Agreements, assuming due execution and
delivery by the other parties thereto, constitute valid and legally binding
obligations of each of the Company and AMPAC, as the case may be, and are
enforceable against each of the Company and AMPAC, as the case may be, in
accordance with their terms, subject to bankruptcy, insolvency, fraudulent
transfer, reorganization,
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moratorium and similar laws of general applicability relating to or affecting
creditors' rights and to general equity principles.
(p) The Company has delivered to the Purchaser true and
correct copies of the Acquisition Agreements, in each case, in the form as
originally executed, and there have been no amendments or waivers thereto or in
the exhibits or schedules thereto other than those as to which the Purchaser
shall have been advised.
(q) The repurchase or defeasance of the Azide Notes has been
duly authorized and will not result in a breach or violation of any of the terms
and provisions of, or constitute a default under, any statute, any rule,
regulation or order of any governmental agency or body or any court, domestic or
foreign, having jurisdiction over the Company or any subsidiary of the Company
or any of their properties, or any agreement or instrument to which the Company
or any such subsidiary is a party or by which the Company or any subsidiary is a
party or by which the Company or any subsidiary is bound or to which any of the
properties of the Company or any subsidiary is subject, or the charter or
by-laws of the Company or any such subsidiary.
(r) Except as disclosed in the Offering Document, neither the
Company nor any of its subsidiaries is in violation of any statute, any rule,
regulation, decision or order of any governmental agency or body or any court,
domestic or foreign, relating to the use, disposal or release of hazardous or
toxic substances or relating to the protection or restoration of the environment
or human exposure to hazardous or toxic substances (collectively, "environmental
laws"), owns or operates any real property contaminated with any substance that
is subject to any environmental laws, is liable for any off-site disposal or
contamination pursuant to any environmental laws, or is subject to any claim
relating to any environmental laws, which violation, contamination, liability or
claim would individually or in the aggregate have a material adverse effect on
the Company and its subsidiaries taken as a whole; and the Company is not aware
of any pending investigation which might lead to such a claim.
(s) Except as disclosed in the Offering Document, there are no
pending actions, suits or proceedings against or affecting the Company, any of
its subsidiaries or any of their respective properties that, if determined
adversely to the Company or any of its subsidiaries, would individually or in
the aggregate have a material adverse effect on the condition (financial or
other), business, properties or
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results of operations of the Company and its subsidiaries taken as a whole, or
would materially and adversely affect the ability of the Company to perform its
obligations under the Indenture, the Acquisition Agreements, this Agreement or
the Registration Rights Agreement, or which are otherwise material in the
context of the sale of the Offered Securities; and no such actions, suits or
proceedings are threatened or, to the Company's knowledge, contemplated.
(t) The financial statements included in the Offering Document
present fairly the financial position of the Company and its consolidated
subsidiaries as of the dates shown and their results of operations and cash
flows for the periods shown, and such financial statements have been prepared in
conformity with generally accepted accounting principles in the United States
applied on a consistent basis; and the assumptions used in preparing the pro
forma financial statements included in the Offering Document provide a
reasonable basis for presenting the significant effects directly attributable to
the transactions or events described therein, the related pro forma adjustments
give appropriate effect to those assumptions, and the pro forma columns therein
reflect the proper application of those adjustments to the corresponding
historical financial statement amounts.
(u) Except as disclosed in the Offering Document, since the
date of the latest audited financial statements included in the Offering
Document there has been no material adverse change, nor any development or event
involving a prospective material adverse change, in the condition (financial or
other), business, properties or results of operations of the Company and its
subsidiaries taken as a whole, and, except as disclosed in or contemplated by
the Offering Document, there has been no dividend or distribution of any kind
declared, paid or made by the Company on any class of its capital stock.
(v) The Company is not 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 United States Investment Company Act of 1940,
as amended (the "Investment Company Act"); and the Company is not and, after
giving effect to the offering and sale of the Offered Securities and the
application of the proceeds thereof as described in the Offering Document, will
not be an "investment company" as defined in the Investment Company Act.
(w) No securities of the same class (within the meaning of
Rule 144A(d)(3) under the Securities Act) as the
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Offered Securities are listed on any national securities exchange registered
under Section 6 of the Exchange Act or quoted in an automated inter-dealer
quotation system.
(x) The offer and sale of the Offered Securities by the
Company to the Purchaser in the manner contemplated by this Agreement will be
exempt from the registration requirements of the Securities Act by reason of
Section 4(2) and Regulation S ("Regulation S") thereof; and it is not necessary
to qualify an indenture in respect of the Offered Securities under the United
States Trust Indenture Act of 1939, as amended (the "Trust Indenture Act").
(y) Neither the Company, nor any of its affiliates, nor any
person acting on its or their behalf (i) has, within the six-month period prior
to the date hereof, offered or sold in the United States or to any person (as
such terms are defined in Regulation S under the Securities Act) the Offered
Securities or any security of the same class or series as the Offered Securities
or (ii) has offered or will offer or sell the Offered Securities (A) in the
United States by means of any form of general solicitation or general
advertising within the meaning of Rule 502(c) under the Securities Act or (B)
with respect to any securities sold in reliance on Rule 903 of Regulation S, by
means of any directed selling efforts within the meaning of Rule 902(b) of
Regulation S.
(z) The Company is subject to Section 13 or 15(d) under
the Exchange Act.
3. Purchase, Sale and Delivery of Offered Securities. On the
basis of the representations, warranties and agreements herein contained, but
subject to the terms and conditions herein set forth, the Company agrees to sell
to the Purchaser, and the Purchaser agrees to purchase from the Company, at a
purchase price of 97% of the principal amount thereof plus accrued interest from
March 12, 1998 to the Closing Date, $75,000,000 principal amount of the Offered
Securities.
The Company will deliver against payment of the purchase price
the Offered Securities in the form of one or more permanent global securities in
definitive form (the "Global Securities") deposited with the Trustee as
custodian for The Depository Trust Company ("DTC") and registered in the name of
Cede & Co., as nominee for DTC. Interests in any permanent Global Securities
will be held only in book-entry form through DTC, except in the limited
circumstances described in the Offering Document. Payment for the Offered
Securities shall be made by the Purchaser in Federal (same
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day) funds by wire transfer to an account or accounts at a bank acceptable to
the Purchaser drawn to the order of American Pacific Corporation at the office
of Cravath, Swaine & Xxxxx at 10:00 a.m. (New York time), on March 12 , 1998, or
at such other time not later than seven full business days thereafter as the
Purchaser and the Company determine, such time being herein referred to as the
"Closing Date," against delivery to the Trustee as custodian for DTC of the
Global Securities representing all of the Offered Securities. The Global
Securities will be made available for checking at the above office of Cravath,
Swaine & Xxxxx at least 24 hours prior to the Closing Date.
4. Representations by Purchaser; Resale by Purchaser. (a) The
Purchaser represents and warrants to the Company that it is an "accredited
investor" within the meaning of Regulation D under the Securities Act.
(b) The Purchaser acknowledges that the Offered Securities
have not been registered under the Securities Act and may not be offered or sold
within the United States or to, or for the account or benefit of, U.S. persons
except in accordance with Regulation S or pursuant to an exemption from the
registration requirements of the Securities Act. The Purchaser represents and
agrees that it has offered and sold the Offered Securities and will offer and
sell the Offered Securities (i) as part of its distribution at any time and (ii)
otherwise until the later of the commencement of the offering and the Closing
Date, only in accordance with Rule 144A ("Rule 144A") or Rule 903 under the
Securities Act. Accordingly, neither the Purchaser nor its affiliates, nor any
persons acting on its or their behalf, have engaged or will engage in any
directed selling efforts with respect to the Offered Securities, and the
Purchaser, its affiliates and all persons acting on its or their behalf have
complied and will comply with the offering restrictions requirement of
Regulation S.
Terms used in this subsection (b) have the meanings given to
them by Regulation S.
(c) The Purchaser agrees that it and each of its affiliates
has not entered and will not enter into any contractual arrangement with respect
to the distribution of the Offered Securities except with the prior written
consent of the Company.
(d) The Purchaser agrees that it and each of its affiliates
will not offer or sell the Offered Securities by means of any form of general
solicitation or general advertising, within the meaning of Rule 502(c) under the
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Securities Act, including, but not limited to (i) any advertisement, article,
notice or other communication published in any newspaper, magazine or similar
media or broadcast over television or radio, or (ii) any seminar or meeting
whose attendees have been invited by any general solicitation or general
advertising. The Purchaser agrees, with respect to resales made in reliance on
Rule 144A of any of the Offered Securities, to deliver either with the
confirmation of such resale or otherwise prior to settlement of such resale a
notice to the effect that the resale of such Offered Securities has been made in
reliance upon the exemption from the registration requirements of the Securities
Act provided by Rule 144A.
(e) The Purchaser represents and agrees that (i) it has not
offered or sold and prior to the date six months after the date of issue of the
Offered Securities will not offer or sell any Offered 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 Xxx 0000 with respect to anything done by it in relation to the Offered
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 Offered
Securities to a person who is of a kind described in Article 11(3) of the
Financial Services Xxx 0000 (Investment Advertisements)(Exemptions) Order 1996
or is a person to whom such document may otherwise lawfully be issued or passed
on.
5. Certain Agreements of the Company. The Company agrees with
the Purchaser that:
(a) The Company will advise the Purchaser promptly of any
proposal to amend or supplement the Offering Document and will not effect such
amendment or supplement without the Purchaser's consent. If, at any time prior
to the completion of the resale of the Offered Securities by the Purchaser any
event occurs as a result of which the Offering Document as then amended or
supplemented would include an untrue statement of a material fact or omit to
state any material fact necessary in order to make the statements therein, in
the light of the circumstances under which they were made, not misleading, the
Company promptly will notify the Purchaser of such event and promptly
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will prepare, at its own expense, an amendment or supplement which will correct
such statement or omission. Neither the Purchaser's consent to, nor the
Purchaser's delivery to offerees or investors of, any such amendment or
supplement shall constitute a waiver of any of the conditions set forth in
Section 6.
(b) The Company will furnish to the Purchaser copies of any
preliminary offering circular, the Offering Document and all amendments and
supplements to such documents, in each case as soon as available and in such
quantities as the Purchaser requests, and the Company will furnish to the
Purchaser on the date hereof two copies of the Offering Document signed by a
duly authorized officer of the Company, one of which will include the
independent accountants' reports therein manually signed by such independent
accountants. At any time when the Company is not subject to Section 13 or 15(d)
of the Exchange Act, the Company will promptly furnish or cause to be furnished
to the Purchaser and, upon request of holders and prospective purchasers of the
Offered Securities, to such holders and purchasers, copies of the information
required to be delivered to holders and prospective purchasers of the Offered
Securities pursuant to Rule 144A(d)(4) under the Securities Act (or any
successor provision thereto) in order to permit compliance with Rule 144A in
connection with resales by such holders of the Offered Securities. The Company
will pay the expenses of printing and distributing all such documents.
(c) The Company will arrange for the qualification of the
Offered Securities for sale and the determination of their eligibility for
investment under the laws of such states in the United States as the Purchaser
designates and will continue such qualifications in effect so long as required
for the resale of the Offered Securities by the Purchaser provided that the
Company will not be required to qualify as a foreign corporation, to file a
general consent to service of process or to take any action that would subject
it to taxation in any such state where it is not then so subject.
(d) During the period of five years hereafter, the Company
will furnish to the Purchaser as soon as practicable after the end of each
fiscal year, a copy of its annual report to stockholders for such year; and the
Company will furnish to the Purchaser (i) as soon as available, a copy of each
report and any definitive proxy statement of the Company filed with the
Commission under the Exchange Act or mailed to stockholders, and (ii) from time
to time, such
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other information concerning the Company as the Purchaser may reasonably
request.
(e) During the period of two years after the Closing Date, the
Company will, upon request, furnish to the Purchaser and any holder of Offered
Securities a copy of the restrictions on transfer applicable to the Offered
Securities.
(f) The Company will not, and will not permit any of its
affiliates (as defined in Rule 144 under the Securities Act) to, resell any of
the Offered Securities that have been reacquired by any of them.
(g) During the period of two years after the Closing Date, the
Company will not be or become 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.
(h) The Company will pay all expenses incidental to the
performance of its obligations under this Agreement and the Indenture,
including: (i) the fees and expenses of the Trustee and its professional
advisers; (ii) all expenses in connection with the execution, issue,
authentication, packaging and initial delivery of the Offered Securities, the
preparation and printing of this Agreement, the Offered Securities, the Offering
Document and amendments and supplements thereto, and any other document relating
to the issuance, offer, sale and delivery of the Offered Securities; (iii) the
cost of qualifying the Offered Securities for trading in The Portal(sm) Market
("PORTAL") of The Nasdaq Stock Market, Inc. and any expenses incidental thereto,
(iv) the cost of any advertising approved by the Company in connection with the
issue of the Offered Securities, (v) any expenses (including fees and
disbursements of counsel) incurred in connection with qualification of the
Offered Securities for sale under the laws of such jurisdictions as the
Purchaser designates and the printing of memoranda relating thereto, (vi) any
fees charged by investment rating agencies for the rating of the Offered
Securities and (vii) expenses incurred in distributing preliminary offering
circulars and the Offering Document (including any amendments and supplements
thereto) to the Purchaser. The Company will reimburse the Purchaser for all
travel expenses of the Purchaser and the Company's officers and employees and
any other expenses of the Purchaser and the Company in connection with attending
or hosting meetings with prospective purchasers of the Offered Securities.
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(i) In connection with the offering of the Offered Securities,
until the Purchaser shall have notified the Company of the completion of the
resale of the Offered Securities, neither the Company nor any of its affiliates
has or will, either alone or with one or more other persons, bid for or purchase
for any account in which it or any of its affiliates has a beneficial interest
any Offered Securities or attempt to induce any person to purchase any Offered
Securities; and neither it nor any of its affiliates will make bids or purchases
for the purpose of creating actual, or apparent, active trading in, or of
raising the price of, the Offered Securities.
(j) For a period of 180 days after the date of the initial
offering of the Offered Securities by the Purchaser, the Company will not offer,
sell, contract to sell, pledge or otherwise dispose of, directly or indirectly,
any United States dollar-denominated debt securities issued or guaranteed by the
Company and having a maturity of more than one year from the date of issue. The
Company will not at any time offer, sell, contract to sell, pledge or otherwise
dispose of, directly or indirectly, any securities under circumstances where
such offer, sale, pledge, contract or disposition would cause the exemption
afforded by Section 4(2) of the Securities Act to cease to be applicable to the
offer and sale of the Offered Securities.
6. Conditions of the Obligation of the Purchaser. The
obligation of the Purchaser to purchase and pay for the Offered Securities will
be subject to the accuracy of the representations and warranties on the part of
the Company herein, to the accuracy of the statements of officers of the Company
made pursuant to the provisions of this Section 6, to the performance by the
Company of its obligations hereunder and to the following additional conditions
precedent:
(a) The Purchaser shall have received a letter, dated the date
of this Agreement, of Deloitte & Touche LLP confirming that they are independent
public accountants within the meaning of the Securities Act and the applicable
published rules and regulations thereunder ("Rules and Regulations") and to the
effect that:
(i) in their opinion the financial statements examined by them
and included in the Offering Document and in the Exchange Act Reports
comply as to form in all material respects with the applicable
accounting requirements of the Securities Act and the related published
Rules and Regulations;
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(ii) they have performed the procedures specified by the
American Institute of Certified Public Accountants for a review of
interim financial information as described in Statement of Auditing
Standards No. 71, Interim Financial Information, on the unaudited
financial statements included in the Offering Document and in the
Exchange Act Reports;
(iii) on the basis of the review referred to in clause (ii)
above, a reading of the latest available interim financial statements
of the Company, inquiries of officials of the Company who have
responsibility for financial and accounting matters and other specified
procedures, nothing came to their attention that caused them to believe
that:
(A) the unaudited financial statements included in
the Offering Document or in the Exchange Act Reports do not
comply as to form in all material respects with the applicable
accounting requirements of the Securities Act and the related
published Rules and Regulations or any material modifications
should be made to such unaudited financial statements for them
to be in conformity with generally accepted accounting
principles;
(B) each of the unaudited consolidated net sales, net
operating income, net income and ratio of earnings to fixed
charges amounts for (i) the three-month period ended December
1997, (ii) the fiscal year of the Company ended September 30,
1997 and (iii) the twelve-month period ended December 31,
1997, included in the Offering Document do not agree with the
amounts set forth in the unaudited consolidated financial
statements for those same periods or were not determined on a
basis substantially consistent with that of the corresponding
amounts in the audited statements of income;
(C) at the date of the latest available balance sheet
read by such accountants, or at a subsequent specified date
not more than three business days prior to the date of this
Agreement, there was any change in the capital stock or any
increase in short-term indebtedness or long-term debt of the
Company and its consolidated subsidiaries or, at the date of
the latest available balance sheet read by such accountants,
there was any decrease in consolidated net current
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assets or net assets, as compared with amounts shown on the
latest balance sheet included in the Offering Document; or
(D) for the period from the closing date of the
latest income statement included in the Offering Document to
the closing date of the latest available income statement read
by such accountants there were any decreases, as compared with
the corresponding period of the previous year and with the
period of corresponding length ended the date of the latest
income statement included in the Offering Document, in
consolidated net sales, net operating income or in the total
or per share amounts of consolidated income before
extraordinary items or net income or in the ratio of earnings
to fixed charges;
except in all cases set forth in clauses (C) and (D) above for changes,
increases or decreases which the Offering Document disclose have
occurred or may occur and which are described in such letter; and
(iv) they have compared specified dollar amounts (or
percentages derived from such dollar amounts) and other financial
information contained in the Offering Document and the Exchange Act
Reports (in each case to the extent that such dollar amounts,
percentages and other financial information are derived from the
general accounting records of the Company and its subsidiaries subject
to the internal controls of the Company's accounting system or are
derived directly from such records by analysis or computation) with the
results obtained from inquiries, a reading of such general accounting
records and other procedures specified in such letter and have found
such dollar amounts, percentages and other financial information to be
in agreement with such results, except as otherwise specified in such
letter.
(b) Subsequent to the execution and delivery of this
Agreement, there shall not have occurred (i) a change in U.S. or international
financial, political or economic conditions or currency exchange rates or
exchange controls as would, in the judgment of the Purchaser, be likely to
prejudice materially the success of the proposed issue, sale or distribution of
the Offered Securities, whether in the primary market or in respect of dealings
in the secondary market, or (ii) (A) any change, or any development or event
involving a prospective change, in the condition (financial or other), business,
properties or results of operations of
16
the Company or its subsidiaries which, in the judgment of the Purchaser
is material and adverse and makes it impractical or inadvisable to
proceed with completion of the offering or the sale of and payment for
the Offered Securities; (B) any downgrading in the rating of any debt
securities or preferred stock of the Company by any "nationally
recognized statistical rating organization" (as defined for purposes of
Rule 436(g) under the Securities Act), or any public announcement that
any such organization has under surveillance or review its rating of
any debt securities or preferred stock of the Company (other than an
announcement with positive implications of a possible upgrading, and no
implication of a possible downgrading, of such rating); (C) any
suspension or limitation of trading in securities generally on the New
York Stock Exchange or any setting of minimum prices for trading on
such exchange, or any suspension of trading of any securities of the
Company on any exchange or in the over-the-counter market; (D) any
banking moratorium declared by Federal or New York authorities; or (E)
any outbreak or escalation of major hostilities in which the United
States is involved, any declaration of war by Congress or any other
substantial national or international calamity or emergency if, in the
judgment of the Purchaser, the effect of any such outbreak, escalation,
declaration, calamity or emergency makes it impractical or inadvisable
to proceed with completion of the offering or sale of and payment for
the Offered Securities.
(c) The Purchaser shall have received an opinion, dated the
Closing Date, of Xxxxxx Xxxxxxxx Frome & Xxxxxxxxxx LLP, counsel for the
Company, that:
(i) The Company has been duly incorporated and is an existing
corporation in good standing under the laws of the State of Delaware,
with corporate power and authority to own its properties and conduct
its business as described in the Offering Document; and the Company is
duly qualified to do business as a foreign corporation in good standing
in all other jurisdictions in which its ownership or lease of property
or the conduct of its business requires such qualification, except to
the extent that the failure to be so qualified would not have a
material adverse effect on the properties, assets, condition (financial
or other), business or operations of the Company and its subsidiaries,
taken as a whole;
(ii) The Indenture has been duly authorized, executed and
delivered by the Company; the Offered Securities have been duly
authorized, executed, authenticated, issued and delivered and conform
to the
17
description thereof contained in the Offering Document; and the
Indenture and the Offered Securities constitute valid and legally
binding obligations of the Company enforceable against the Company in
accordance with their terms, subject to bankruptcy, insolvency,
fraudulent transfer, reorganization, moratorium and similar laws of
general applicability relating to or affecting creditors' rights and to
general equity principles;
(iii) The Company is not and, after giving effect to the
offering and sale of the Offered Securities and the application of the
proceeds thereof as described in the Offering Document, will not be an
"investment company" as defined in the Investment Company Act.
(iv) No consent, approval, authorization or order of, or
filing with, any governmental agency or body or any court is required
for the consummation of the transactions contemplated by this Agreement
in connection with the issuance or sale of the Offered Securities by
the Company, except such as may be required under the securities or
Blue Sky laws of the various states of the United States of America or
the laws of foreign jurisdictions;
(v) No consent, approval, authorization or order of, or filing
with, any governmental agency or body or any court is required for the
consummation of the Asset Purchase Agreement, except such as have been
obtained or made prior to the date hereof;
(vi) The execution, delivery and performance by the Company of
the Indenture, this Agreement and the Registration Rights Agreement and
the issuance and sale of the Offered Securities and compliance by the
Company with the terms and provisions thereof will not result in a
breach or violation of any of the terms and provisions of, or
constitute a default under, (A) any statute, rule or regulation, (B) to
such counsel's knowledge, any order of any governmental agency or body
or any court having jurisdiction over the Company or any subsidiary of
the Company or any of their properties, (C) any agreement or instrument
listed on Schedule A hereto to which the Company or any such subsidiary
is a party or by which the Company or any such subsidiary is bound or
to which any of the properties of the Company or any such subsidiary is
subject, or (D) the charter or by-laws of the Company or any such
subsidiary, and the Company has full corporate power and authority to
authorize, issue and
18
sell the Offered Securities as contemplated by this Agreement;
(vii) The execution, delivery and performance by the Company
and its subsidiaries of the Acquisition Agreements will not result in a
breach or violation of any of the terms and provisions of, or
constitute a default under, (A) any statute, rule or regulation, (B) to
such counsel's knowledge, any order of any governmental agency or body
or any court, domestic or foreign, having jurisdiction over the Company
or any subsidiary of the Company or any of their properties, (C) any
agreement or instrument to which the Company or any such subsidiary is
a party or by which the Company or any such subsidiary is bound or to
which any of the properties of the Company or any such subsidiary is
subject, or (D) the charter or by-laws of the Company or any such
subsidiary;
(viii) The Acquisition Agreements have been duly authorized,
executed and delivered by the Company and AMPAC, as the case may be,
and conform in all material respects to the descriptions thereof in the
Offering Document;
(ix) The Acquisition Agreements, assuming due execution and
delivery by the other parties thereto, constitute valid and legally
binding obligations of each of the Company and AMPAC, as the case may
be, and are enforceable against each of the Company and AMPAC in
accordance with their terms, subject to bankruptcy, insolvency,
fraudulent transfer, reorganization, moratorium and similar laws of
general applicability relating to or affecting creditors' rights and to
general equity principles;
(x) The repurchase or defeasance of the Azide Notes has been
duly authorized and will not result in a breach or violation of any of
the terms and provisions of, or constitute a default under, (A) any
statute, rule or regulation, (B) to such counsel's knowledge, any order
of any governmental agency or body or any court, domestic or foreign,
having jurisdiction over the Company or any subsidiary of the Company
or any of their properties, (C) any agreement or instrument listed on
Schedule A hereto to which the Company or any such subsidiary is a
party or by which the Company or any such subsidiary is bound or to
which any of the properties of the Company or any such subsidiary is
subject, or (D) the charter or by-laws of the Company or any such
subsidiary;
19
(xi) Such counsel has no reason to believe that the Offering
Document, or any amendment or supplement thereto, or any Exchange Act
Report as of the date hereof and as of the Closing Date, contained any
untrue statement of a material fact or omitted to state any material
fact necessary to make the statements therein not misleading; the
descriptions in the Offering Document and the Exchange Act Reports of
statutes, legal and governmental proceedings and contracts and other
documents are accurate in all material respects and fairly present the
information required to be shown; it being understood that such counsel
need express no opinion as to the financial statements or other
financial or accounting data contained in the Offering Document and the
Exchange Act Reports;
(xii) This Agreement and the Registration Rights Agreement
have been duly authorized, executed and delivered by the Company; and
(xiii) It is not necessary in connection with (i) the offer,
sale and delivery of the Offered Securities by the Company to the
Purchaser pursuant to this Agreement or (ii) the resales of the Offered
Securities by the Purchaser in the manner contemplated hereby, to
register the Offered Securities under the Securities Act or to qualify
an indenture in respect thereof under the Trust Indenture Act.
The opinions set forth in clauses (iv), (v) and (vi), as they
relate to antitrust matters, may be given by Xxxx Xxxxxxx Xxxxxxx Xxxxx &
Handler, counsel to the Company on antitrust matters, and the opinions set forth
in clauses (i), (v), (vii) and (ix) may be given by Xxxxxx & Xxxxxx, counsel to
the Company.
(d) The Purchaser shall have received from Cravath, Swaine &
Xxxxx, counsel for the Purchaser, such opinion or opinions (or where
appropriate, a statement), dated the Closing Date, with respect to the
incorporation of the Company, the validity of the Offered Securities, the
Offering Document, the exemption from registration for the offer and sale of the
Offered Securities by the Company to the Purchaser and the resales by the
Purchaser as contemplated hereby and other related matters as the Purchaser may
require, and the Company shall have furnished to such counsel such documents as
they request for the purpose of enabling them to pass upon such matters.
(e) The Purchaser shall have received a certificate, dated
such Closing Date, of the President or
20
any Vice President and a principal financial or accounting officer of the
Company in which such officers, to the best of their knowledge after reasonable
investigation, shall state that the representations and warranties of the
Company in this Agreement are true and correct, that the Company has complied
with all agreements and satisfied all conditions on its part to be performed or
satisfied hereunder at or prior to the Closing Date, and that, subsequent to the
date of the most recent financial statements in the Offering Document, there has
been no material adverse change, nor any development or event involving a
prospective material adverse change, in the condition (financial or other),
business, properties or results of operations of the Company and its
subsidiaries taken as a whole except as set forth in or contemplated by the
Offering Document or as described in such certificate.
(f) The Purchaser shall have received a letter, dated the
Closing Date, of Deloitte & Touche LLP which meets the requirements of
subsection (a) of this Section, except that the specified date referred to in
such subsection will be a date not more than three business days prior to the
Closing Date for the purposes of this subsection.
(g) Concurrently with or prior to the issuance and sale of the
Offered Securities, each condition precedent to the Asset Purchase Agreement
(other than the delivery of original bills of sale and original opinions of
counsel) shall have been satisfied, excluding the payment of the Acquisition
Consideration (as defined in the Offering Document).
(h) Immediately following issuance and sale of the Offered
Securities by the Company, the Acquisition shall be consummated on terms that
conform in all material respects to the description thereof in the Offering
Document, and the Purchaser shall receive true and correct copies of all
documents pertaining thereto and evidence reasonably satisfactory to the
Purchaser of such consummation.
The Company will furnish the Purchaser with such conformed
copies of such opinions, certificates, letters and documents as the Purchaser
reasonably requests.
7. Indemnification and Contribution. (a) The Company will
indemnify and hold harmless the Purchaser against any losses, claims, damages or
liabilities, to which the Purchaser may become subject, under the Securities Act
or the Exchange Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect
21
thereof) arise out of or are based upon any untrue statement or alleged untrue
statement of any material fact contained in the Offering Document, or any
amendment or supplement thereto, or any related preliminary offering circular or
the Exchange Act Reports, or arise out of or are based upon 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 light of the
circumstances under which they were made, not misleading, and will reimburse the
Purchaser for any legal or other expenses reasonably incurred by the Purchaser
in connection with investigating or defending any such loss, claim, damage,
liability or action as such expenses are incurred; PROVIDED, HOWEVER, that the
Company will not be liable in any such case to the extent that any such loss,
claim, damage or liability arises out of or is based upon 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 written information furnished
to the Company by the Purchaser specifically for use therein, it being
understood and agreed that the only such information consists of the information
described as such in subsection (b) below.
(b) The Purchaser will indemnify and hold harmless the Company
against any losses, claims, damages or liabilities to which the Company may
become subject, under the Securities Act or the Exchange Act or otherwise,
insofar as such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon any untrue statement or alleged untrue
statement of any material fact contained in the Offering Document, or any
amendment or supplement thereto, or any related preliminary offering circular,
or arise out of or are based upon the omission or the alleged omission to state
therein a material fact necessary in order to make the statements therein, in
the light of the circumstances under which they were made, not misleading, in
each case to the extent, but only to the extent, that such untrue statement or
alleged untrue statement or omission or alleged omission was made in reliance
upon and in conformity with written information furnished to the Company by the
Purchaser specifically for use therein, and will reimburse any legal or other
expenses reasonably incurred by the Company in connection with investigating or
defending any such loss, claim, damage, liability or action as such expenses are
incurred, it being understood and agreed that the only such information
furnished by the Purchaser consists of the following information in the Offering
Document furnished on behalf of the Purchaser: the last paragraph at the bottom
of the cover page concerning the terms of the offering by the
22
Purchaser, the legend concerning over-allotments and stabilizing on the inside
front cover page and the second sentence of the second paragraph, the fourth
paragraph and the third sentence of the sixth paragraph and the material
relationship disclosure contained in the last paragraph under the caption "Plan
of Distribution."
(c) Promptly after receipt by an indemnified party under this
Section of notice of the commencement of any action, such indemnified party
will, if a claim in respect thereof is to be made against the indemnifying party
under subsection (a) or (b) above, notify the indemnifying party of the
commencement thereof; but the omission so to notify the indemnifying party will
not relieve it from any liability which it may have to any indemnified party
otherwise than under subsection (a) or (b) above. In case any such action is
brought against any indemnified party and it notifies the indemnifying party of
the commencement thereof, the indemnifying party will be entitled to participate
therein and, to the extent that it may wish, jointly with any other indemnifying
party similarly notified, to assume the defense thereof, with counsel
satisfactory to such indemnified party (who shall not, except with the consent
of the indemnified party, be counsel to the indemnifying party), and after
notice from the indemnifying party to such indemnified party of its election so
to assume the defense thereof, the indemnifying party will not be liable to such
indemnified party under this Section for any legal or other expenses
subsequently incurred by such indemnified party in connection with the defense
thereof other than reasonable costs of investigation. No indemnifying party
shall, without the prior written consent of the indemnified party, effect any
settlement of any pending or threatened action 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 any claims
that are the subject matter of such action.
(d) If the indemnification provided for in this Section is
unavailable or insufficient to hold harmless an indemnified party under
subsection (a) or (b) above, then each indemnifying party shall contribute to
the amount paid or payable by such indemnified party as a result of the losses,
claims, damages or liabilities referred to in subsection (a) or (b) above (i) in
such proportion as is appropriate to reflect the relative benefits received by
the Company on the one hand and the Purchaser on the other from the offering of
the Offered Securities or (ii) if the
23
allocation provided by clause (i) above is not permitted by applicable law, in
such proportion as is appropriate to reflect not only the relative benefits
referred to in clause (i) above but also the relative fault of the Company on
the one hand and the Purchaser on the other in connection with the statements or
omissions which resulted in such losses, claims, damages or liabilities as well
as any other relevant equitable considerations. The relative benefits received
by the Company on the one hand and the Purchaser on the other shall be deemed to
be in the same proportion as the total net proceeds from the offering (before
deducting expenses) received by the Company bear to the total discounts and
commissions received by the Purchaser from the Company under this Agreement. The
relative fault shall be determined by reference to, among other things, whether
the untrue or alleged untrue statement of a material fact or the omission or
alleged omission to state a material fact relates to information supplied by the
Company or the Purchaser and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such untrue statement or
omission. The amount paid by an indemnified party as a result of the losses,
claims, damages or liabilities referred to in the first sentence of this
subsection (d) shall be deemed to include any legal or other expenses reasonably
incurred by such indemnified party in connection with investigating or defending
any action or claim which is the subject of this subsection (d). Notwithstanding
the provisions of this subsection (d), the Purchaser shall not be required to
contribute any amount in excess of the amount by which the total price at which
the Offered Securities purchased by it were resold exceeds the amount of any
damages which the Purchaser has otherwise been required to pay by reason of such
untrue or alleged untrue statement or omission or alleged omission.
(e) The obligations of the Company under this Section shall be
in addition to any liability which the Company may otherwise have and shall
extend, upon the same terms and conditions, to each person, if any, who controls
the Purchaser within the meaning of the Securities Act or the Exchange Act; and
the obligations of the Purchaser under this Section shall be in addition to any
liability which the Purchaser may otherwise have and shall extend, upon the same
terms and conditions, to each person, if any, who controls the Company within
the meaning of the Securities Act or the Exchange Act.
8. Survival of Certain Representations and Obligations. The
respective indemnities, agreements, representations, warranties and other
statements of the Company or its officers and of the Purchaser set forth in or
24
made pursuant to this Agreement will remain in full force and effect, regardless
of any investigation, or statement as to the results thereof, made by or on
behalf of the Purchaser, the Company or any of their respective representatives,
officers or directors or any controlling person, and will survive delivery of
and payment for the Offered Securities. If for any reason the purchase of the
Offered Securities by the Purchaser is not consummated, the Company shall remain
responsible for the expenses to be paid or reimbursed by it pursuant to Section
5(h) and the respective obligations of the Company and the Purchaser pursuant to
Section 7 shall remain in effect. If the purchase of the Offered Securities by
the Purchaser is not consummated for any reason other than solely because of the
occurrence of any event specified in Section 6(b)(i) or clause (C), (D) or (E)
of Section 6(b)(ii), the Company will reimburse the Purchaser for all
out-of-pocket expenses (including fees and disbursements of counsel) reasonably
incurred by it in connection with the offering of the Offered Securities.
9. Notices. All communications hereunder will be in writing
and, if sent to the Purchaser will be mailed, delivered or telegraphed and
confirmed to the Purchaser at Eleven Madison Avenue, New York, New York
10010-3629, Attention: Investment Banking Department - Transactions Advisory
Group, or, if sent to the Company, will be mailed, delivered or telegraphed and
confirmed to it at 0000 Xxxxxx Xxxxxx Xxxxxxx, Xxxxx 000, Xxx Xxxxx, Xxxxxx
00000, Attention: Chief Financial Officer, with a copy to Xxxxxx Xxxxxxxx Frome
& Xxxxxxxxxx LLP, 000 Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Xxxxx X.
Xxxxx, Esq.
10. Successors. This Agreement will inure to the benefit of
and be binding upon the parties hereto and their respective successors and the
controlling persons referred to in Section 7, and no other person will have any
right or obligation hereunder, except that holders of Offered Securities shall
be entitled to enforce the agreements for their benefit contained in the second
and third sentences of Section 5(b) hereof against the Company as if such
holders were parties hereto.
11. Counterparts. This Agreement may be executed in any number
of counterparts, each of which shall be deemed to be an original, but all such
counterparts shall together constitute one and the same Agreement.
12. Applicable Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of New York without regard
to principles of conflicts of laws.
25
If the foregoing is in accordance with the Purchaser's
understanding of our agreement, kindly sign and return to the Company one of the
counterparts hereof, whereupon it will become a binding agreement between the
Company and the Purchaser in accordance with its terms.
Very truly yours,
AMERICAN PACIFIC CORPORATION,
by /s/ Xxxxx X. Xxxx
-----------------------------------
Name: Xxxxx X. Xxxx
Title: Senior Vice President -
Chief Financial Officer
The foregoing Purchase Agreement is hereby confirmed and accepted as of the date
first above written.
CREDIT SUISSE FIRST BOSTON
CORPORATION,
by /s/ Xxxxxx X. Xxxxxxxxxxx
----------------------------
Name: Xxxxxx X. Xxxxxxxxxxx
Title: Attorney-in-Fact
26
SCHEDULE A
