Exhibit 1.1
JORDAN INDUSTRIES, INC.
$120,000,000 10 3/8% Series A Senior Notes due 2007
PURCHASE AGREEMENT
July 21, 1997
XXXXXXXXX & COMPANY, INC.
XXXXXXXXX, LUFKIN & XXXXXXXX
SECURITIES CORPORATION
c/x Xxxxxxxxx & Company, Inc.
00000 Xxxxx Xxxxxx Xxxxxxxxx
00xx Xxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Ladies and Gentlemen:
Jordan Industries, Inc., an Illinois corporation (the "Issuer"),
hereby agrees with you as follows:
1. Issuance of Securities. The Issuer proposes to issue and sell to
Xxxxxxxxx & Company, Inc. and Xxxxxxxxx, Lufkin & Xxxxxxxx Securities
Corporation (each a "Purchaser" and together, the "Purchasers") $120,000,000
aggregate principal amount of 10 3/8% Series A Senior Notes due 2007 (the
"Senior Notes"). The Senior Notes will be issued pursuant to an indenture (the
"Indenture"), to be dated as of July 25, 1997, between the Issuer and First
Trust National Association, as trustee (the "Trustee").
The Senior Notes will be offered and sold to the Purchasers pursuant
to an exemption from the registration requirements under the Securities Act of
1933, as amended (the "Act"). The Issuer has prepared a preliminary offering
circular, dated June 25, 1997 (the "Preliminary Offering Circular"), and a final
offering circular, dated July 21, 1997 (the "Offering Circular"), relating to
the offer and sale of the Senior Notes (the "Offering").
The Offering is a part of the Company's Recapitalization and
Repositioning Plan (the "Plan"), as described in the Offering Circular, and
contemporaneously with the Offering, the Company and certain of its subsidiaries
and affiliates (collectively, the "Jordan Entities")
have implemented or will implement certain other transactions including the JTP
Recapitalization, the M&G Recapitalization, the Xxxxxx May Refinancing, the New
Credit Agreement, the Tender Offer and Consent Solicitation for the Old Senior
Notes and the Consent Solicitation for the Discount Debentures (each as defined
or described in the Offering Circular). Collectively, the Offering and the other
transactions described in the Offering Circular under the caption
"Recapitalization and Repositioning Plan" are herein referred to as the
"Transactions."
Upon original issuance thereof, and until such time as the same is
no longer required under the applicable requirements of the Act, the Senior
Notes shall bear the following legend:
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "ACT") OR ANY STATE SECURITIES LAWS. NEITHER
THIS SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE
REOFFERED, SOLD, AS SIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR
OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR UNLESS
SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, REGISTRATION.
THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF AGREES TO
OFFER, SELL OR OTHERWISE TRANSFER SUCH SECURITY, PRIOR TO THE DATE
THAT IS TWO YEARS (OR SUCH SHORTER PERIOD THAT MAY HEREAFTER BE
PROVIDED UNDER RULE 144(K) AS PERMITTING RESALES BY NON-AFFILIATES
OF RESTRICTED SECURITIES WITHOUT RESTRICTION) AFTER THE LATER OF
THE ORIGINAL ISSUE DATE HEREOF AND THE LAST DATE ON WHICH JORDAN
INDUSTRIES, INC. (THE "ISSUER") OR ANY AFFILIATE OF THE ISSUER WAS
THE OWNER OF THIS SECURITY (OR ANY PREDECESSOR OF SUCH SECURITY)
ONLY (A) TO THE ISSUER, (B) PURSUANT TO A REGISTRATION STATEMENT
WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE ACT, (C) FOR SO LONG AS
THE SECURITIES ARE ELIGIBLE FOR RESALE PURSUANT TO RULE 144A, TO A
PERSON IT REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER"
(AS DEFINED IN RULE 144A UNDER THE ACT) THAT PURCHASES FOR ITS OWN
ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO
WHOM NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE IN RELIANCE ON
RULE 144A, (D) TO AN INSTITUTIONAL "ACCREDITED INVESTOR" WITHIN THE
MEANING OF RULE
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501(A)(l), (2), (3) OR (7) UNDER THE ACT THAT IS PURCHASING THE
SECURITY FOR ITS OWN ACCOUNT, OR FOR THE ACCOUNT OF SUCH AN
INSTITUTIONAL "ACCREDITED INVESTOR," FOR INVESTMENT PURPOSES AND
NOT WITH A VIEW TO, OR FOR OFFER OR SALE IN CONNECTION WITH, ANY
DISTRIBUTION IN VIOLATION OF THE ACT OR (E) PURSUANT TO ANOTHER
AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE ACT,
SUBJECT TO THE ISSUER'S AND THE TRUSTEE'S RIGHT PRIOR TO ANY SUCH
OFFER, SALE OR TRANSFER PURSUANT TO CLAUSE (D) OR (E) TO REQUIRE
THE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATIONS AND/OR OTHER
INFORMATION SATISFACTORY TO EACH OF THEM AND, IN EACH OF THE
FOREGOING CASES, A CERTIFICATE OF TRANSFER IN THE FORM APPEARING ON
THIS SECURITY IS COMPLETED AND DELIVERED BY THE TRANSFEROR TO THE
TRUSTEE.
2. Agreements to Sell and Purchase. On the basis of the
representations, warranties and agreements contained herein, and subject to the
terms and conditions hereof, the Issuer shall issue and sell to the Purchasers
and each Purchaser, severally and not jointly, shall purchase from the Issuer,
the principal amount of Senior Notes set forth opposite the names of the
Purchasers in Schedule I hereto. The purchase price for the Senior Notes shall
be 98% of the principal amount thereof.
3. Terms of Offering. The Purchasers have advised the Issuer that
the Purchasers will make offers to sell (the "Exempt Resales") some or all of
the Senior Notes purchased by the Purchasers hereunder on the terms set forth in
the Offering Circular, as amended or supplemented, solely to (i) persons whom
the Purchasers reasonably believe to be "qualified institutional buyers" as
defined in Rule 144A under the Act ("QIBs") and (ii) a limited number of
institutional "accredited investors," as defined in Rule 501(a)(1), (2), (3) or
(7) under the Act ("Accredited Investors") (such persons specified in clauses
(i) and (ii) being referred to herein as the "Eligible Purchasers").
Holders of the Senior Notes (including subsequent transferees) will
have the registration rights set forth in the registration rights agreement (the
"Registration Rights Agreement"), to be executed on and dated as of the Closing
Date. Pursuant to the Registration Rights Agreement, the Issuer will agree,
among other things, to file with the Securities and Exchange Commission (the
"Commission") (i) a registration statement under the Act (the "Exchange Offer
Registration Statement") relating to, among other things, the 10 3/8% Series B
Senior Notes due 2007, of the Issuer (the "Exchange Notes" and, together with
the Senior Notes, the "Notes"), identical in all material respects to the Senior
Notes (except that the Exchange Notes
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shall have been registered pursuant to such registration statement) to be
offered in exchange for the Senior Notes (such offer to exchange being referred
to as the "Registered Exchange Offer") and/or (ii) under certain circumstances,
a shelf registration statement pursuant to Rule 415 under the Act (the "Shelf
Registration Statement") relating to the resale by certain holders of the Senior
Notes.
This Agreement, the Indenture, the Registration Rights Agreement,
the Notes and all other documents or instruments executed by the Issuer or any
of the other Jordan Entities in connection with the Transactions are referred to
herein as the "Documents."
4. Delivery and Payment. Delivery to the Purchasers of and payment
for the Senior Notes shall be made at a Closing (the "Closing") to be held at
8:00 a.m., Chicago time, on July 25, 1997 (the" Closing Date") at the offices of
Xxxxx, Xxxxx & Xxxxx, 000 Xxxxx XxXxxxx Xxxxxx, Xxxxxxx, Xxxxxxxx 00000-00. The
Closing Date and the location of delivery of and the form of payment for the
Senior Notes may be varied by agreement between the Purchasers and the Issuer.
The Issuer shall deliver to the Purchasers (i) one or more
certificates representing the Senior Notes (the "Global Notes"), each in
definitive form, registered in the name of Cede & Co., as nominee of The
Depository Trust Company ("DTC"), or such other names as the Purchasers may
request upon at least one business day's notice to the Issuer, in an amount
corresponding to the aggregate principal amount of the Senior Notes sold
pursuant to Exempt Resales to QIBs, and (ii) one or more certificates
representing the Senior Notes (the "Individual Notes"), in definitive form,
registered in such names and denominations as the Purchasers may so request, in
an aggregate amount corresponding to the aggregate principal amount of Senior
Notes sold pursuant to Exempt Resales to Accredited Investors, in each case
against payment by the Purchasers of the purchase price therefor by immediately
available Federal funds bank wire transfer to such bank account as the Issuer
shall designate at least two business days prior to the Closing.
The Global Notes and the Individual Notes in definitive form shall
be made available to the Purchasers for inspection at the New York offices of
Xxxxx, Xxxxx & Xxxxx (or such other place as shall be acceptable to the
Purchasers) not later than 9:30 a.m. on the business day immediately preceding
the Closing Date.
5. Agreements of the Issuer. The Issuer hereby agrees:
(a) To (i) advise the Purchasers promptly after obtaining
knowledge (and, if requested by the Purchasers, confirm such advice in
writing) of (A) the issuance by any state securities commission of any
stop order suspending the qualification or
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exemption from qualification of any of the Notes for offering or sale in
any jurisdiction, or the initiation of any proceeding for such purpose by
any state securities commission or other regulatory authority, or (B) the
happening of any event, during the period that is reasonably necessary for
Exempt Resales, that makes any statement of a material fact made in the
Offering Circular untrue or that requires the making of any additions to
or changes in the Offering Circular in order to make the statements
therein, in the light of the circumstances under which they are made, not
misleading, (ii) use reasonable efforts to prevent the issuance of any
stop order or order suspending the qualification or exemption from
qualification of any of the Notes under any state securities or Blue Sky
laws, and (iii) if at any time any state securities commission or other
regulatory authority shall issue an order suspending the qualification or
exemption from qualification of any of the Notes under any such laws, use
its reasonable efforts to obtain the withdrawal or lifting of such order
at the earliest possible time.
(b) To (i) furnish the Purchasers, without charge, as many
copies of the Offering Circular, and any amendments or supplements
thereto, as the Purchasers may reasonably request and (ii) promptly
prepare, upon the Purchasers' request, any amendment or supplement to the
Offering Circular that the Purchasers deem may be reasonably necessary in
connection with Exempt Resales (and the Issuer hereby consents to the use
of the Preliminary Offering Circular and the Offering Circular, and any
amendments and supplements thereto, by the Purchasers in connection with
Exempt Resales).
(c) Not to amend or supplement the Offering Circular prior to
the Closing Date unless the Purchasers shall previously have been advised
thereof and shall not have objected thereto in writing within five
business days after being furnished a copy thereof (unless in the opinion
of counsel to the Issuer such amendment or supplement is required by law).
(d) For so long as is reasonably necessary for Exempt Resales,
(i) if any event shall occur as a result of which, in the reasonable
judgment of the Issuer or the Purchasers, it becomes necessary or
advisable to amend or supplement the Offering Circular in order to make
the statements therein, in the light of the circumstances under which they
were made, not misleading, or if it is necessary to amend or supplement
the Offering Circular to comply with Applicable Law (defined below),
forthwith to prepare an appropriate amendment or supplement to the
Offering Circular (in form and substance reasonably satisfactory to the
Purchasers) so that (A) as so amended or supplemented the Offering
Circular will not include an untrue statement of material fact or omit to
state a material fact necessary in order to make the statements therein,
in the light of the circumstances under which they were made, not
misleading, and (B) the Offering Circular will comply with Applicable Law
and (ii) if it becomes necessary or advisable
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to amend or supplement the Offering Circular so that the Offering Circular
will contain all of the information specified in, and meet the
requirements of, Rule 144A(d)(4) of the Act, forthwith to prepare an
appropriate amendment or supplement to the Offering Circular (in form and
substance reasonably satisfactory to the Purchasers) so that the Offering
Circular, as so amended or supplemented, will contain the information
specified in, and meet the requirements of, such rule.
(e) To cooperate with the Purchasers and their counsel in
connection with the qualification of the Notes under the securities or
Blue Sky laws of such jurisdictions as the Purchasers may request and
continue such qualification in effect so long as reasonably required for
Exempt Resales; provided, that the Issuer shall not be required in
connection therewith to file any general consent to service of process or
to qualify as a foreign corporation in any jurisdiction where it is not
now so qualified or to subject itself to taxation in respect of doing
business in any jurisdiction in which it is not otherwise so subject.
(f) Whether or not any of the Transactions are consummated or
this Agreement is terminated, to pay (i) all costs, expenses, fees and
taxes incident to (A) the preparation, printing and distribution of the
Preliminary Offering Circular and the Offering Circular and all amendments
and supplements thereto (including, without limitation, financial
statements and exhibits), (B) the printing and delivery of all preliminary
and final Blue Sky memoranda and all other agreements, memoranda,
correspondence and other documents prepared and delivered in connection
herewith, (C) the issuance and delivery of the Senior Notes, including the
fees of the Trustee and the cost of its personnel, (D) furnishing such
copies of the Preliminary Offering Circular and the Offering Circular, and
all amendments and supplements thereto, as may reasonably be requested for
use by the Purchasers, and (E) the preparation of the Senior Notes
(including, without limitation, printing and engraving thereof), (ii) all
fees and expenses of the Issuer's counsel and accountants, (iii) all
expenses and listing fees in connection with the application for quotation
of the Senior Notes in the National Association of Securities Dealers,
Inc. ("NASD") Automated Quotation System - PORTAL ("PORTAL"), (iv) all
fees and expenses (including fees and expenses of counsel) in connection
with approval of the Senior Notes by DTC for "book-entry" transfer and (v)
all fees charged by rating agencies in connection with the rating of the
Notes, if any.
(g) To use the proceeds from the sale of the Senior Notes,
together with the proceeds from certain other Transactions, in the manner
described in the Offering Circular under the caption "Use of Proceeds."
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(h) To the extent it may lawfully do so, not to insist upon,
plead, or in any manner whatsoever claim or take the benefit or advantage
of, any stay, extension, usury or other law, wherever enacted, now or at
any time hereafter in force, that would prohibit or forgive the payment of
all or any portion of the principal of or interest on the Notes, or that
may affect the covenants or the performance of the Indenture (and, to the
extent it may lawfully do so, the Issuer hereby expressly waives all
benefit or advantage of any such law, and covenants that it shall not, by
resort to any such law, hinder, delay or impede the execution of any power
granted to the Trustee in the Indenture but shall suffer and permit the
execution of every such power as though no such law had been enacted).
(i) To use its best efforts to do and perform all things
required to be done and performed by the Issuer under this Agreement prior
to and after the Closing Date.
(j) Not to, and to ensure that none of its affiliates (as
defined in Rule 501(b) of the Act) will, sell, offer for sale or solicit
offers to buy or otherwise negotiate in respect of any "security" (as
defined in the Act) that would be integrated with the sale of the Senior
Notes in a manner that would require the registration under the Act of the
sale to the Purchasers or to the Eligible Purchasers of the Senior Notes.
(k) For so long as any of the Senior Notes remain outstanding,
during any period in which the Issuer is not subject to Section 13 or
15(d) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), to make available, upon request, to any owner of the Senior Notes
in connection with any sale thereof and any prospective Eligible Purchaser
of such Senior Notes from such owner, the information required by Rule
144A(d)(4) under the Act.
(l) To comply with the representation letter of the Issuer to
DTC relating to the approval of the Notes by DTC for "book entry"
transfer.
(m) To use its best efforts to effect the inclusion of the
Senior Notes in PORTAL.
(n) Except in connection with the Registered Exchange Offer or
the filing of the Shelf Registration Statement, not to, and not to
authorize or permit any person acting on its behalf to, (i) distribute any
offering material in connection with the offering and sale of the Senior
Notes other than the Preliminary Offering Circular and the Offering
Circular and any amendments and supplements to the Offering Circular
prepared in compliance with Section 5(c) hereof or (ii) solicit any offer
to buy or offer to sell the Senior Notes by means of any form of general
solicitation or general advertising
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(including, without limitation, as such terms are used in Regulation D
under the Act) or in any manner involving a public offering within the
meaning of Section 4(2) of the Act.
6. Representations and Warranties of the Issuer. The Issuer
represents and warrants to the Purchasers that:
(a) The Preliminary Offering Circular as of its date did not,
and the Offering Circular as of its date does not and as of the Closing
Date will not, and each supplement or amendment thereto as of its date
will not, contain any untrue statement of a material fact or omit to state
any material fact (except, in the case of the Preliminary Offering
Circular, for pricing terms and other financial terms intentionally left
blank) necessary in order to make the statements therein, in the light of
the circumstances under which they were made, not misleading, other than
information furnished in writing to the Issuer by such Purchaser expressly
for use in the Offering Circular or the Preliminary Offering Circular. No
injunction or order has been issued that either (i) asserts that any of
the Transactions is subject to the registration requirements of the Act or
(ii) would prevent or suspend the issuance or sale of the Senior Notes or
the use of the Preliminary Offering Circular, the Offering Circular, or
any amendment or supplement thereto, in any jurisdiction. Each of the
Preliminary Offering Circular and the Offering Circular, as of their
respective dates contained, and the Offering Circular as amended or
supplemented as of the Closing Date will contain, all the information
specified in, and meet the requirements of, Rule 144A(d)(4) under the Act,
if applicable. Except as disclosed in the Offering Circular, there are no
related party transactions that would be required to be disclosed in the
Offering Circular if the Offering Circular were a prospectus included in a
Registration Statement on Form S-1 under the Act.
(b) The Senior Notes are eligible for trading under Rule 144A.
(c) Each of the Issuer and each Subsidiary (as defined below)
(i) have been duly organized, is validly existing and is in good standing
under the laws of its jurisdiction of organization, (ii) has all requisite
power and authority to carry on its business and to own, lease and operate
its properties and assets as described in the Offering Circular and (iii)
is duly qualified or licensed to do business and is in good standing as a
foreign corporation authorized to do business in each jurisdiction in
which the nature of such businesses or the ownership or leasing of such
properties requires such qualification, except where the failure to be in
good standing or so qualified could not, singly or in the aggregate, have
a material adverse effect on (i) the properties, business, prospects,
operations, earnings, assets, liabilities or condition (financial or
otherwise) of the Issuer and the Subsidiaries, taken as a whole or (ii)
the ability of any Jordan Entity
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to perform its obligations under any of the Documents (a "Material Adverse
Effect").
(d) Immediately following the Closing, (i) the only direct or
indirect subsidiaries of the Issuer of which the Issuer owns, directly or
indirectly, more than 50% of the voting power (collectively, the
"Subsidiaries"), will be the corporations identified on Schedule 6(d), and
(ii) except as set forth in Schedule 6(d), Part 1, the Issuer will
directly or indirectly beneficially own 100% of the outstanding shares of
capital stock of each Subsidiary, free and clear of Liens (as defined in
the Indenture) other than any Liens pursuant to the New Credit Agreement,
and all of such shares of capital stock will be duly authorized and
validly issued, fully paid and nonassessable and not issued in violation
of, or subject to, any preemptive or similar rights. Except as expressly
disclosed in the Offering Circular, there are no outstanding (x)
securities convertible into or exchangeable for any capital stock of the
Issuer or any of the Subsidiaries, (y) options, warrants or other rights
to purchase or subscribe to capital stock of the Issuer or any of the
Subsidiaries or securities convertible into or exchangeable for capital
stock of the Issuer or any of the Subsidiaries or (z) contracts,
commitments, agreements, understandings, arrangements, calls or claims of
any kind relating to the issuance of any capital stock of the Issuer or
any of the Subsidiaries, any such convertible or exchangeable securities
or any such options, warrants or rights. Immediately following the
Closing, the Issuer will not directly or indirectly own any capital stock
or other equity interest in any person other than as set forth in Schedule
6(d) Part 1 and Part 2.
(e) The table under the caption "Capitalization" in the
Offering Circular (including the footnotes thereto) presents fairly, as of
its date, (i) the capitalization of the Issuer and its Subsidiaries on a
consolidated basis, and (ii) the pro forma capitalization of the Issuer
and its Subsidiaries on a consolidated basis after giving effect to the
Transactions. Except as set forth in such table, immediately following the
Closing, neither the Issuer nor any of the Subsidiaries shall have any
liabilities, absolute, accrued or contingent other than (x) liabilities
that are reflected in the Financial Statements (defined below), or (y)
liabilities incurred subsequent to the date thereof in the ordinary course
of business, consistent with past practice, that could not, singly or in
the aggregate, reasonably be expected to have a Material Adverse Effect.
(f) Neither the Issuer nor any of the Subsidiaries has entered
into any agreement that conflicts with or will in any way impair the
rights granted to the Purchasers pursuant to the Registration Rights
Agreement.
(g) Each Jordan Entity has or will have all requisite power
and authority to enter into, deliver and perform its obligations under the
Documents to which it is a party and to consummate the Transactions. Each
of the Documents has been or will be
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duly and validly authorized by each Jordan Entity that is, or will be, a
party thereto, and this Agreement is, and when executed and delivered on
the Closing Date each other Document will be, a legal, valid and binding
obligation of each Jordan Entity that is a party hereto or thereto,
enforceable against each such person in accordance with its terms, except
as such enforceability may be (i) subject to applicable bankruptcy,
insolvency, moratorium, reorganization or similar laws, (ii) limited by
general principles of equity (whether considered in a proceeding at law or
equity) and (iii) limited by securities laws prohibiting or limiting the
availability of, and public policy against, indemnification or
contribution. When executed and delivered, each Document will conform in
all material respects to the description thereof in the Offering Circular.
On the Closing Date, the Indenture will conform to the requirements of the
Trust Indenture Act of 1939, as amended (the "TIA"), applicable to an
indenture that is required to be qualified under the TIA.
(h) The Senior Notes have been duly and validly authorized by
the Issuer for issuance and sale to the Purchasers pursuant to this
Agreement and, when executed and authenticated in accordance with the
terms of the Indenture and delivered to and paid for by the Purchasers in
accordance with the terms hereof, will be legal, valid and binding
obligations of the Issuer, enforceable against the Issuer in accordance
with their terms, except as such enforceability may be (i) subject to
applicable bankruptcy, insolvency, moratorium, reorganization or similar
laws, (ii) limited by general principles of equity (whether considered in
a proceeding at law or equity) and (iii) limited by securities laws
prohibiting or limiting the availability of, and public policy against,
indemnification or contribution. The Exchange Notes have been duly and
validly authorized by the Issuer and, when executed, authenticated and
delivered in accordance with the terms of the Indenture and the
Registration Rights Agreement, will be legal, valid and binding
obligations of the Issuer, enforceable against the Issuer in accordance
with their terms, except as such enforceability may be (i) subject to
applicable bankruptcy, insolvency, moratorium, reorganization or similar
laws, (ii) limited by general principles of equity (whether considered in
a proceeding at law or equity) and (iii) limited by securities laws
prohibiting or limiting the availability of, and public policy against,
indemnification or contribution.
(i) Neither the Issuer nor any of the Subsidiaries is (i) in
violation of its respective charter or by-laws (collectively, "Charter
Documents"), (ii) other than violations that are not reasonably likely to,
singly or in the aggregate, result in a Material Adverse Effect, in
violation of any Federal, state, local or foreign statute, law (including,
without limitation, common law) or ordinance, or any judgment, decree,
rule, regulation or order (collectively, "Applicable Law") of any
government, governmental or regulatory agency or body, court or
arbitrator, domestic or foreign (each, a "Govern-
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mental Authority") or (iii) other than breaches or defaults that are not
reasonably likely to, singly or in the aggregate, result in a Material
Adverse Effect, in breach of or default under (with the passage of time or
otherwise) any bond, debenture, note or other evidence of indebtedness,
indenture, mortgage, deed of trust, lease or any other agreement or
instrument to which any such person is a party or by which any of them or
their respective property is bound (collectively, "Applicable
Agreements"). There exists no condition that, with the passage of time or
otherwise, would constitute a violation of such Charter Documents or
Applicable Laws or a breach of or default under any Applicable Agreement
or result in the imposition of any penalty or the acceleration of any
indebtedness, other than breaches, violations, penalties, defaults or
conditions which are not reasonably likely to, singly or in the aggregate,
result in a Material Adverse Effect.
(j) Neither the execution, delivery or performance of the
Documents nor the consummation of the Transactions shall conflict with,
violate, constitute a breach of or a default (with the passage of time or
otherwise) under, require the consent of any person (other than consents
already obtained) under, result in the imposition of a Lien (other than
under the New Credit Agreement) on any assets of the Issuer or any of the
Subsidiaries, or result in an acceleration of indebtedness pursuant to (i)
the Charter Documents of the Issuer or any of the Subsidiaries, (ii) any
Applicable Agreement, other than such breaches, violations or defaults
that are not reasonably likely to, singly or in the aggregate, result in a
Material Adverse Effect or (iii) any Applicable Law, other than such
breaches, violation or defaults that are not reasonably likely to, singly
or in the aggregate, result in a Material Adverse Effect. The execution,
delivery and performance of this Agreement, the Registration Rights
Agreement and the Indenture by the Issuer, compliance by the Issuer with
the provisions of this Agreement, the Indenture, the Registration Rights
Agreement and the Senior Notes and the issuance, sale and subsequent
registration of the Senior Notes, will not conflict with or constitute a
breach of any of the terms or provisions of, or a default under, or result
in the imposition of a lien or encumbrance on any properties of the Issuer
or any of the Subsidiaries, or an acceleration of indebtedness pursuant
to, (i) the charter or by-laws of the Issuer or any of the Subsidiaries,
(ii) any bond, debenture, note, indenture, mortgage, deed of trust or
other agreement or instrument to which the Issuer or any of the
Subsidiaries is a party or by which any of them or their property is
bound, or (iii) any law or administrative regulation applicable to the
Issuer or any of the Subsidiaries or any of their assets or properties, or
any judgment, order or decree of any court or governmental agency or
authority to which the Issuer or any of the Subsidiaries was or is now a
party or to which any of them or their respective properties are subject.
No consent, approval, authorization or order of, or filing or registration
with, any regulatory body, administrative agency, or other governmental
agency (except as securities or blue sky laws of the
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various states may require) that has not been made or obtained is required
for the execution, delivery and performance of this Agreement, the
Indenture and the Registration Rights Agreement and sale of the Senior
Notes pursuant to this Agreement. No consents or waivers from any person
are required to consummate the issuance, sale and subsequent registration
of the Exchange Notes pursuant to this Agreement and the Registration
Rights Agreement other than such consents and waivers as have been or will
be obtained. After giving effect to the Transactions, no Default or Event
of Default (as defined in the Indenture) will exist.
(k) No permit, authorization, approval, consent, license or
order of, or filing, registration or qualification with, any Governmental
Authority (collectively, "Permits") and no approval or consent of any
other person, is required in connection with, or as a condition to, the
execution, delivery or performance of any of the Documents or the
consummation of any of the Transactions, other than such Permits (i) as
have been made or obtained on or prior to the Closing Date, (ii) as are
not required to be made or obtained on or prior to the Closing Date that
will be made or obtained when required, (iii) the failure of which to make
or obtain is not reasonably likely, singly or in the aggregate, to result
in a Material Adverse Effect or (iv) as may be required under the
securities or Blue Sky laws of any jurisdiction other than the Federal
jurisdiction of the United States.
(l) Except as adequately disclosed in the Offering Circular,
there is no action, claim, suit or proceeding (including, without
limitation, an investigation or partial proceeding, such as a deposition),
domestic or foreign (collectively, "Proceedings"), pending or threatened,
that either (i) seeks to restrain, enjoin, prevent the consummation of, or
otherwise challenge any of the Documents or any of the Transactions, or
(ii) could, singly or in the aggregate, reasonably be expected to have a
Material Adverse Effect. Neither the Issuer nor any of the Subsidiaries is
subject to any judgment, order, decree, rule or regulation of any
Governmental Authority that is reasonably likely to, singly or in the
aggregate, have a Material Adverse Effect.
(m) The Issuer and each of the Subsidiaries has such Permits
as are necessary to own, lease and operate the properties and to conduct
the businesses described in the Offering Circular other than those the
failure of which is not reasonably likely, singly or in the aggregate, to
result in a Material Adverse Effect. All such Permits are in full force
and effect. No event has occurred which allows, or after notice or lapse
of time would allow, the imposition of any material penalty, revocation or
termination by the issuer thereof or which results in any material
impairment of the rights of the holder of any such Permits. Neither the
Issuer nor any of the Subsidiaries has any
12
reason to believe that any issuer is considering limiting, suspending or
revoking any such Permit.
(n) Except as set forth in the Offering Circular, or with such
exceptions as, singly or in the aggregate, are not reasonably likely to
have a Material Adverse Effect, (i) the Issuer and each of the
Subsidiaries has good and marketable title, free and clear of all liens,
claims, encumbrances and restrictions except liens for taxes not yet due
and payable, to all property and assets described in the Offering Circular
as being owned by them and (ii) the Issuer and the Subsidiaries enjoy
peaceful and undisturbed possession under all such leases to which any of
them is a party as lessee. All Applicable Agreements are in full force and
effect and are legal, valid and binding obligations, and no default has
occurred or is continuing thereunder, other than such defaults that are
not reasonably likely to, singly or in the aggregate, have a Material
Adverse Effect. The Issuer and the Subsidiaries maintain insurance
covering their properties, operations, personnel and businesses against
such losses and risks as they reasonably deem adequate in accordance with
customary industry practice. Any such insurance is outstanding and duly in
force.
(o) All material tax returns required to be filed by the
Issuer and the Subsidiaries in any jurisdiction (including foreign
jurisdictions) have been filed (other than Forms 5500, the failure of
which to timely file is not reasonably likely to result in any material
penalty) and, when filed, all such returns were true, correct and complete
in all material respects, and all taxes, assessments, fees and other
charges (including, without limitation, withholding taxes, penalties,
interest and additions to taxes) shown on such returns have been paid,
other than those being contested in good faith by appropriate proceedings,
or those that are currently payable without penalty or interest and, in
each case, for which an adequate reserve or accrual has been established
on the books and records of the Issuer in accordance with generally
accepted accounting principles of the United States, consistently applied
("GAAP"). There are no actual or proposed additional tax assessments for
any fiscal period against the Issuer or any of the Subsidiaries that are
reasonably likely to, singly or in the aggregate, have a Material Adverse
Effect. The charges, accruals and reserves on the books of each of the
Issuer and the Subsidiaries in respect of any tax liability for any years
not finally determined are adequate to meet any assessments or
re-assessments for additional income tax for any years not finally
determined.
(p) The Issuer and the Subsidiaries own, or are licensed
under, and have the right to use, all patents, inventions, copyrights,
know-how (including trade secrets and other unpatented and/or unpatentable
proprietary or confidential information, systems or procedures),
trademarks, service marks and trade names (collectively, "Intellectual
13
Property") currently used in, or necessary for the conduct of, their
businesses as set forth in the Offering Circular, with such exceptions as
are not reasonably likely, singly or in the aggregate, to have a Material
Adverse Effect. No claims have been asserted by any person and there is no
proceeding pending or, to the Issuer's knowledge, threatened before any
court or Governmental Authority, challenging the use of any such
Intellectual Property by the Issuer or any of the Subsidiaries or
questioning the validity or enforceability of any item of Intellectual
Property owned or used by Issuer or any Subsidiary, or license or other
agreement related thereto, and there is no valid basis for any such claim
(other than any claims that are not reasonably likely to, singly or in the
aggregate, have a Material Adverse Effect). The loss of any Intellectual
Property asset, other than the DURA-LINE and SILICORE trademarks or the
patent or manufacturing trade secrets covering the solid co-extruded
polymer lubricant lining used in connection with the SILICORE technology
would not have a Material Adverse Effect. All Intellectual Property assets
which are material to the businesses of the Issuer and the Subsidiaries as
currently conducted and as described in the Offering Circular are valid
and enforceable. To the Issuer's knowledge, the conduct of the businesses
of the Issuer and the Subsidiaries as currently conducted and as described
in the Offering Circular does not infringe on the Intellectual Property
rights of any other person, and no Person is infringing upon the
Intellectual Property rights of the Issuer or any Subsidiary, in any
material respect.
(q) Each of the Issuer and the Subsidiaries maintains a system
of internal accounting controls sufficient to provide reasonable assurance
that (i) material transactions are executed in accordance with
management's general or specific authorization, (ii) material transactions
are recorded as necessary to permit preparation of financial statements in
conformity with GAAP, 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 material differences.
(r) Each of (i) the audited consolidated financial statements
of the Issuer and related notes contained in the Offering Circular (the
"Audited Financial Statements") and (ii) the unaudited historical
consolidated financial statements of the Issuer and related notes
contained in the Offering Circular (the "Interim Financial Statements"
and, together with the Audited Financial Statements, the "Financial
Statements") present fairly in all material respects the consolidated
financial position, results of operations and cash flows of the Issuer and
its Subsidiaries on a consolidated basis, as of the respective dates and
for the respective periods to which they apply, and have been prepared in
accordance with GAAP, and the requirements of Regulation S-X that would be
applicable
14
if the Offering Circular were a prospectus included in a registration
statement on Form S-1 filed under the Act, except as disclosed therein.
The summary and selected historical financial data included in the
Offering Circular have been prepared on a basis consistent with that of
the Financial Statements and present fairly in all material respects the
consolidated financial position and results of operations of the Issuer
and the Subsidiaries on a consolidated basis as of the respective dates
and for the respective periods indicated. Each of (i) the audited
consolidated financial statements of persons other than the Issuer and
related notes contained in the Offering Circular and (ii) the unaudited
historical consolidated financial statements of such persons and related
notes contained in the Offering Circular present fairly in all material
respects the consolidated financial position, results of operations and
cash flows of such persons on a consolidated or combined basis, as of the
respective dates and for the respective periods to which they apply, and
have been prepared in accordance with GAAP and the requirements of
Regulation S-X that would be applicable if the Offering Circular were a
prospectus included in a registration statement on Form S-1 filed under
the Act, except as disclosed therein. The pro forma consolidated financial
statements and related notes included in the Offering Circular on a
consolidated basis (i) comply in all material respects with the rules and
guidelines of the Commission with respect to pro forma financial
statements except as disclosed in the Offering Circular, (ii) present
fairly in all material respects the pro forma financial position and
results of operations of the Issuer and its Subsidiaries on a combined
basis as of the dates and for the periods indicated, after giving effect
to the Transactions, (iii) have been prepared on a basis consistent with
the Financial Statements, except for the pro forma adjustments specified
therein, and (iv) are based on good faith, reasonable estimates and
assumptions of the Issuer. The summary pro forma financial information
included in the Offering Circular has been derived from such pro forma
financial statements and present fairly in all material respects the pro
forma combined financial position and results of operations of the Issuer
and its Subsidiaries on a consolidated basis as of the respective dates
and for the respective periods indicated. All other financial and
statistical data included in the Offering Circular are fairly and
accurately presented in all material respects and are derived from and
prepared on a basis consistent with, the Financial Statements and the
books and records of the Issuer and its Subsidiaries. Ernst & Young LLP
are independent public accountants with respect to the Issuer and its
Subsidiaries.
(s) Subsequent to the respective dates as of which information
is given in the Offering Circular, except as adequately disclosed in the
Offering Circular, (i) neither the Issuer nor any of the Subsidiaries has
incurred any liabilities, direct or contingent, that are material, singly
or in the aggregate, to the Issuer and the Subsidiaries on a consolidated
basis, or has entered into any material transactions not in the ordinary
course of business, (ii) there has not been any decrease in the capital
stock of any of
15
them or any increase in long-term indebtedness or any material increase in
short-term indebtedness of the Issuer and the Subsidiaries on a
consolidated basis, or any payment of or declaration to pay any dividends
or any other distribution by the Issuer, and (iii) there has not been any
material adverse change in the properties, business, prospects,
operations, earnings, assets, liabilities or condition (financial or
otherwise) of the Issuer and the Subsidiaries taken as a whole (each of
clauses (i), (ii) and (iii), a "Material Adverse Change"). There is no
event known to the Issuer that is reasonably likely to occur, which if it
were to occur, would be reasonably likely to, singly or in the aggregate,
have a Material Adverse Effect, except such events that have been
adequately disclosed in the Offering Circular.
(t) Prior to and after the issuance of the Senior Notes and
after giving effect to the Transactions, (i) the present fair salable
value of the assets of the Issuer exceeded and will exceed the amount that
will be required to be paid on, or in respect of, the Issuer's debts and
other liabilities (including contingent liabilities) as they become
absolute and matured, (ii) the assets of the Issuer do not constitute and
will not constitute unreasonably small capital to carry out its business
as conducted or as proposed to be conducted, and (iii) the Issuer does not
intend to, and does not believe that it will, incur debts or other
liabilities beyond its ability to pay such debts and liabilities as they
mature. The Issuer does not intend to permit any of the Subsidiaries to
incur debts or other liabilities beyond their respective ability to pay
such debts and liabilities as they mature.
(u) Except as contemplated by this Agreement, neither the
Issuer nor any of its Affiliates has (i) taken, directly or indirectly,
any action designed to cause or to result in, or that has constituted or
which might reasonably be expected to constitute, the stabilization or
manipulation of the price of any security of any of them to facilitate the
sale or resale of any of the Senior Notes or (ii) except as disclosed in
the Offering Circular, (A) sold, bid for, purchased, or paid anyone any
compensation for soliciting purchases of, any of the Senior Notes or (B)
paid or agreed to pay to any person any compensation for soliciting
another to purchase any other securities of any of them.
(v) No registration under the Act and no qualification of the
Indenture under the TIA is required for the sale of the Senior Notes to
the Purchasers as contemplated hereby or for the Exempt Resales, assuming
(i) that the Eligible Purchasers who buy the Senior Notes in the Exempt
Resales are QIBs or Accredited Investors, (ii) the accuracy of the
Purchasers' representations contained herein regarding the absence of
general solicitation in connection with the sale of the Senior Notes to
the Purchasers and the Exempt Resales, and (iii) the accuracy of the
representations made by each Accredited Investor who purchases the Senior
Notes pursuant to an Exempt Resale as set forth in the letters of
representation in the form of Annex A to the Offering Circular.
16
No form of general solicitation or general advertising was used by the
Issuer or any of its Affiliates or any of their representatives (other
than the Purchasers) in connection with the offer and sale of any of the
Senior Notes or in connection with Exempt Resales. No securities of the
same class as any of the Senior Notes have been offered, issued or sold by
the Issuer or any of its Affiliates within the six-month period
immediately prior to the date hereof.
(w) No condition exists or event or transaction has occurred
in connection with any employee benefit plan that could result in the
Issuer or any such "Affiliate" incurring any liability, fine or penalty
that could, singly or in the aggregate, have a Material Adverse Effect.
With respect to any employee pension benefit plan that is subject to Title
IV of the Employee Retirement Income Security Act of 1974, as amended, or
the rules and regulations promulgated thereunder ("ERISA"), (i) the fair
market value of the assets of such employee pension benefit plan equals or
exceeds the present value of the liabilities of such pension plan (as
determined in accordance with the actuarial methods and assumptions set
forth in the latest actuarial report for such employee pension benefit
plan), except where the failure to so equal or exceed would not, singly or
in the aggregate, have a Material Adverse Effect and (ii) there exists no
accumulated funding deficiency which could, singly or in the aggregate,
have a Material Adverse Effect. The terms "employee benefit plan,"
"employee pension benefit plan," and "party in interest" shall have the
meanings assigned to such terms in Section 3 of ERISA, the term
"Affiliate" shall have the meaning assigned to such term in Section
407(d)(7) of ERISA, and the term "disqualified person" shall have the
meaning assigned to such term in section 4975 of the Internal Revenue Code
of 1986, as amended, or the rules, regulations and published
interpretations promulgated thereunder (the "Code")
(x) None of the Transactions will violate or result in a
violation of Section 7 of the Exchange Act (including, without limitation,
Regulation T (12 C.F.R. Part 220), Regulation U (12 C.F.R. Part 221) or
Regulation X (12 C.F.R. Part 224) of the Board of Governors of the Federal
Reserve System). Neither the Issuer nor any of the Subsidiaries is subject
to regulation, or shall become subject to regulation upon the consummation
of the Transactions, under the Investment Company Act of 1940, as amended,
and the rules and regulations and interpretations promulgated thereunder,
the Public Utility Holding Company Act of 1935, as amended, the Federal
Power Act, the Interstate Commerce Act, the Commodity Exchange Act or any
Federal or state statute or regulation limiting its ability to incur or
assume indebtedness for borrowed money.
(y) Neither the Issuer nor any of the Subsidiaries has dealt
with any broker, finder, commission agent or other person (other than the
Purchasers) in connection with the Transactions and neither the Issuer nor
any of the Subsidiaries is under any obli-
17
gation to pay any broker's fee or commission in connection with such
transactions (other than commissions and fees to the Purchasers as set
forth in the Offering Circular).
(z) Neither the Issuer nor any Subsidiary is engaged in any
unfair labor practice. Except as adequately disclosed in the Offering
Circular, there is (i) no unfair labor practice complaint or other
proceeding pending or, to the knowledge of the Issuer after due inquiry,
threatened against the Issuer or any of the Subsidiaries before the
National Labor Relations Board or any state, local or foreign labor
relations board or any industrial tribunal, and no grievance or
arbitration proceeding arising out of or under any collective bargaining
agreement is so pending or threatened, (ii) no strike, labor dispute,
slowdown or stoppage pending or, to the knowledge of the Issuer after due
inquiry, threatened against the Issuer or any of the Subsidiaries, and
(iii) no union representation question existing with respect to the
employees of the Issuer or any of the Subsidiaries, and, to the Issuer's
knowledge after due inquiry, no union organizing activities are taking
place that could, singly or in the aggregate, reasonably be expected to
have a Material Adverse Effect.
(aa) Except as adequately disclosed in the Offering Circular
is not reasonably likely to, singly or in the aggregate, have a Material
Adverse Effect:
(1) each of the Issuer and the Subsidiaries (i) has
obtained all Permits that are required with respect to the operation
of its business, property and assets under the Environmental Laws
(as defined below) and are in material compliance with all terms and
conditions of such required Permits, and (ii) is in material
compliance with all Environmental Laws (including, without
limitation compliance with standards, schedules and timetables
therein);
(2) no real property or facility presently, or to the
Issuer's knowledge, formerly owned, used, operated, leased, managed
or controlled by the Issuer or any of the Subsidiaries is listed or
proposed for listing on the National Priorities List or the
Comprehensive Environmental Response, Compensation, and Liability
Information System, both promulgated under the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as
amended ("CERCLA"), or on any other state or local list established
pursuant to any Environmental Law, and neither the Issuer nor any of
the Subsidiaries has received any notification of potential or
actual liability or request for information under CERCLA or any
comparable state or local law;
18
(3) there have been no releases (i.e., any past or
present releasing, spilling, leaking, pumping, pouring, emitting,
emptying, discharging, injecting, escaping, leaching, disposing or
dumping, on-site or, to the knowledge of the Issuer and the
Subsidiaries after due inquiry, off-site) of Hazardous Materials (as
defined below) by the Issuer or any of the Subsidiaries at, on,
under, from or into any facility or real property owned, operated,
leased, managed or controlled by any such person that are likely to
give rise to a material liability under any Environmental Law;
(4) to the Issuer's knowledge, there are no events,
activities, practices, incidents, investigations, notices,
contractual obligations or actions or conditions, circumstances or
plans that may interfere with or prevent compliance by the Issuer or
any of the Subsidiaries with any Environmental Law, or that may give
rise to any material liability under any Environmental Laws; and
(5) in the ordinary course of their businesses, the
Issuer and each of the Subsidiaries conduct a periodic review of the
effect of Environmental Laws on the business, operations and
properties of the Issuer and each of the Subsidiaries in the course
of which they identify and evaluate associated costs and liabilities
(including, without limitation, any capital or operating
expenditures required for cleanup, closure of properties or
compliance with Environmental Laws or any permit, license or
approval, any related constraints on operating activities and any
potential liabilities to third parties). On the basis of such
review, the Issuer and each of the Subsidiaries have reasonably
concluded that such associated costs and liabilities could not
reasonably be expected, singly or in the aggregate, to have a
Material Adverse Effect on the Issuer and each of the Subsidiaries,
taken as a whole.
"Environmental Laws" means all Applicable Laws, now in
effect, relating to pollution or protection of human health or the
environment, including, without limitation, laws relating to (1)
emissions, discharges, releases or threatened releases of
pollutants, contaminants, chemicals, or industrial, toxic or
hazardous constituents, substances or wastes, including, without
limitation, asbestos or asbestos-containing materials,
polychlorinated biphenyls, petroleum or any constituents relating to
or arising out of any oil production activities, including crude oil
or any fraction thereof, or any petroleum product or other wastes,
chemicals or substances regulated by any Environmental Law
(collectively referred to as "Hazardous Materials"), into the
environment (including, without limitation, ambient air, surface
water, ground water, land surface or subsurface strata), (2) the
manufacture, processing, distribution, use, generation, treatment,
19
storage, disposal, transport or handling of Hazardous Materials and
(3) under-ground storage tanks, and related piping, and emissions,
discharges, releases or threatened releases therefrom.
(bb) No statement, representation or warranty made by the
Issuer or any of the Subsidiaries, in any of the Documents or in any certificate
or document required by any of the Documents to be delivered to the Purchasers
was or will be, when made, inaccurate, untrue or incorrect in any material
respect.
7. Representations and Warranties of the Purchasers. Each of the
Purchasers, jointly and severally, represents and warrants with respect to
itself only that:
(a) It is a QIB.
(b) It (i) is not acquiring the Senior Notes with a view to
any distribution thereof that would violate the Act or the securities laws
of any state of the United States or any other applicable jurisdiction and
(ii) will be soliciting offers for the Senior Notes only from, and will be
reoffering and reselling the Senior Notes only to (A) persons in the
United States whom it reasonably believes to be QIBs in reliance on the
exemption from the registration requirements of the Act provided by Rule
144A, and (B) a limited number of Accredited Investors that execute and
deliver to the Issuer and the Purchasers a letter containing certain
representations and agreements in the form attached as Annex A to the
Offering Circular.
(c) No form of general solicitation or general advertising in
violation of the Act has been or will be used by such Purchasers or any of
their representatives in connection with the offer and sale of any of the
Senior Notes.
(d) In connection with the Exempt Resales, it will solicit
offers to buy the Senior Notes only from, and will offer and sell the
Senior Notes only to, Eligible Purchasers who, in purchasing such Senior
Notes, will be deemed to have represented and agreed (i) if such Eligible
Purchasers are QIBs, that they are purchasing the Senior Notes for their
own accounts or accounts with respect to which they exercise sole
investment discretion and that they or such accounts are QIBs, (ii) that
such Senior Notes will not have been registered under the Act and may be
resold, pledged or otherwise transferred only (A) to a person who the
seller reasonably believes is a QIB in a transaction meeting the
requirements of Rule 144A, in a transaction meeting the requirements of
Rule 144 or in accordance with another exemption from the registration
requirements of the Act, (B) to the Issuer and (C) pursuant to an
effective registration statement and, in each case, in accordance with any
applicable securities laws of any state of the United
20
States or any other applicable jurisdiction, and (iii) that the holder
will, and each subsequent holder is required to, notify any purchaser from
it of the security evidenced thereby of the resale restrictions set forth
in (ii) above.
8. Indemnification.
(a) The Issuer shall, without limitation as to time, indemnify
and hold harmless each Purchaser and each person, if any, who controls
(within the meaning of Section 15 of the Act or Section 20(a) of the
Exchange Act) either Purchaser (any of such persons being hereinafter
referred to as a "controlling person"), and the respective officers,
directors, partners, employees, representatives and agents of the
Purchasers and any such controlling person (collectively, the "Issuer
Indemnified Parties"), to the fullest extent lawful, from and against any
and all losses, claims, damages, liabilities, costs (including, without
limitation, costs of preparation and reasonable attorneys' fees) and
expenses (including, without limitation, costs and expenses incurred in
connection with investigating, preparing, pursuing or defending against
any of the foregoing) (collectively, "Losses"), as incurred, directly or
indirectly caused by, related to, based upon, arising out of or in
connection with (i) any untrue statement or alleged untrue statement of a
material fact contained in the Preliminary Offering Circular or the
Offering Circular (or any amendment or supplement thereto), or any
omission or alleged omission to state therein a material fact required to
be stated therein or necessary to make the statements therein, in the
light of the circumstances under which they were made, not misleading or
(ii) any act, omission, transaction or event contemplated by the
Documents; provided, that the Issuer shall not be liable to any Issuer
Indemnified Party for any Losses that (i) arise solely from the gross
negligence or willful misconduct of such Issuer Indemnified Party, (ii)
are caused by any such untrue statement or omission or alleged untrue
statement or omission based upon information relating to such Purchaser
furnished in writing to the Issuer (or reviewed and approved in writing)
by a Purchaser expressly for use in the Preliminary Offering Circular or
the Offering Circular, (iii) result solely from an untrue statement or
alleged untrue statement or omission or alleged omission made in the
Preliminary Offering Circular or the Offering Circular and such Issuer
Indemnified Party or the related Purchaser failed to send a copy of the
Offering Circular, as then amended or supplemented, with or prior to the
delivery of written confirmation of the sale by such Purchaser to the
person asserting the claim from which such Losses arise, the Offering
Circular, as then amended or supplemented, would have corrected such
untrue statement or alleged untrue statement or omission or alleged
omission and the Issuer has delivered the Offering Circular, as then
amended or supplemented, to the Purchasers pursuant to this Agreement, or
(iv) result from the use by the Issuer Indemnified Party or the related
Purchaser of the Offering Circular when the Issuer has notified such
Purchaser in writing that the Offering Circular contains an
21
untrue statement or omission of a fact or circumstance requiring an
amendment to the Offering Circular. The Issuer shall notify the Purchasers
promptly of the institution, threat or assertion of any Proceeding of
which the Issuer or any Subsidiary is aware in connection with the matters
addressed by this Agreement which involves the Issuer, any of the
Subsidiaries or any of the indemnified parties.
(b) Each Purchaser shall, severally and not jointly, without
limitation as to time, indemnify and hold harmless the Issuer, and its
directors, officers, and any person controlling the Issuer (within the
meaning of Section 15 of the Act or Section 20 of the Exchange Act) (any
such persons being hereinafter referred to as a "controlling person"), and
the directors and officers of such controlling persons (the "Purchaser
Indemnified Parties" and together with the Issuer Indemnified Parties, the
"Indemnified Parties"), to the fullest extent lawful, from and against any
and all Losses arising out of or based upon any untrue or alleged untrue
statement of a material fact contained in the Preliminary Offering
Circular or the Offering Circular (or any amendment or supplement
thereto), or any omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading, but only with respect to information relating to such
Purchaser furnished in writing (or reviewed and approved in writing) by
such Purchaser expressly for use in the Preliminary Offering Circular or
the Offering Circular (or any amendment or supplement thereto); provided,
however, that in no event shall the liability of each such Purchaser
exceed the total discounts and commissions received by such Purchaser with
respect to the Senior Notes purchased by it.
(c) If any Proceeding shall be brought or asserted against any
person entitled to indemnification hereunder, such Indemnified Party shall
give prompt written notice to the indemnifying party; provided, that the
failure to so notify the indemnifying party shall not relieve the
indemnifying party from any obligation or liability except to the extent
(but only to the extent) that it shall be finally determined by a court of
competent jurisdiction (which determination is not subject to appeal) that
the indemnifying party has been prejudiced materially by such failure.
No indemnifying party shall consent to entry of any judgment
in or enter into any settlement of any pending or threatened Proceeding in
respect of which indemnification or contribution may be sought hereunder
(whether or not any Indemnified Party is a party thereto) unless such
judgment or settlement includes, as an unconditional term thereof, the
giving by the claimant or plaintiff to each Indemnified Party of a
release, in form and substance satisfactory to the Indemnified Party, from
all Losses that
22
may arise from such Proceeding or the subject matter thereof (whether or
not any Indemnified Party is a party thereto)
(d) If the indemnification provided for in this Section 8 is
unavailable to an Indemnified Party or is insufficient to hold such
Indemnified Party harmless for any Losses in respect of which this Section
8 would otherwise apply by its terms (other than by reason of exceptions
provided in this Section 8), then each indemnifying party, in lieu of
indemnifying such Indemnified Party, shall contribute to the amount paid
or payable by such Indemnified Party as a result of such Losses (i) in
such proportion as is appropriate to reflect the relative benefits
received by the Issuer, on the one hand, and the Purchasers, on the other
hand, from the offering of the Senior Notes or (ii) if the allocation
provided by clause (i) above is not permitted by applicable law, in such
pro-portion as is appropriate to reflect not only the relative benefits
referred to in clause (i) above but also the relative fault of the Issuer,
on the one hand, and the Purchasers, on the other hand, in connection with
the actions, statements or omissions that resulted in such Losses, as well
as any other relevant equitable considerations. The relative benefits
received by the Issuer, on the one hand, and the Purchasers, on the other
hand, shall be deemed to be in the same proportion as the total net
proceeds from the offering (before deducting expenses) received by the
Issuer, and the total discounts and commissions received by the
Purchasers, bear to the total price of the Senior Notes in Exempt Resales
in each case as set forth in the table on the cover page of the Offering
Circular. The relative fault of the Issuer, on the one hand, and the
Purchasers, on the other hand, shall be determined by reference to, among
other things, whether any untrue or alleged untrue statement of a material
fact or omission or alleged omission to state a material fact relates to
information supplied by the Issuer, on the one hand, or the Purchasers, on
the other hand, and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or
omission. The amount paid or payable by an Indemnified Party as a result
of any Losses shall be deemed to include any legal or other fees or
expenses incurred by such party in connection with any Proceeding, to the
extent such party would have been indemnified for such fees or expenses if
the indemnification provided for in this Section 8 was available to such
party.
Each party hereto agrees that it would not be just and
equitable if contribution pursuant to this Section 8(c) were determined by
pro rata allocation or by any other method of allocation which does not
take account of the equitable considerations referred to in the
immediately preceding paragraph. Notwithstanding the provisions of this
Section 8(c), neither Purchaser shall be required to contribute, in the
aggregate, any amount in excess of the amount by which the total discounts
and commissions received by such Purchaser with respect to the Senior
Notes exceeds the amount of any damages that such Purchaser has otherwise
been required to pay by reason of such untrue or alleged untrue
23
statement or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Act) shall
be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation.
(e) The indemnity and contribution agreements contained in
this Section 8 are in addition to any liability that the indemnifying
party may otherwise have to the Indemnified Parties.
9. Conditions.
(a) The obligation of the Purchasers to purchase the Senior
Notes under this Agreement is subject to the satisfaction or waiver of
each of the following conditions:
(i) All the representations and warranties of the
Company contained in this Agreement shall be true and correct in all
material respects (other than representations and warranties with a
materiality qualifier, which shall be true and correct as written) at and
as of the Closing Date after giving effect to the Transactions with the
same force and effect as if made on and as of such date. On or prior to
the Closing Date, each of the Jordan Entities and, to the knowledge of the
Issuer, each other party to the Documents (other than the Purchasers)
shall have performed or complied in all material respects with all of the
agreements and satisfied in all material respects all conditions on their
respective parts to be performed, complied with or satisfied at or prior
to the Closing Date pursuant to the Documents.
(ii) The Offering Circular shall have been printed and
copies made available to the Purchasers not later than 12:00 noon, New
York City time, on the second business day following the date of this
Agreement or at such later date and time as Xxxxxxxxx & Company, Inc. may
approve.
(iii) No injunction, restraining order or order of any
nature by a Governmental Authority shall have been issued as of the
Closing Date that would prevent or interfere with the consummation of any
of the Transactions; and no stop order suspending the qualification or
exemption from qualification of any of the Senior Notes in any
jurisdiction shall have been issued and no Proceeding for that purpose
shall have been commenced or be pending or contemplated.
(iv) No action shall have been taken and no Applicable
Law shall have been enacted, adopted or issued that would, as of the
Closing
24
Date, prevent the consummation of any of the Transactions. No Proceeding
shall be pending or threatened other than Proceedings that (A) if
adversely determined could not, singly or in the aggregate, adversely
affect the issuance or marketability of the Senior Notes and (B) could not
be expected to have a Material Adverse Effect.
(v) Since the date as of which information is given in
the Offering Circular, there shall not have been any Material Adverse
Change.
(vi) The Notes shall have (A) been designated PORTAL
securities in accordance with the rules and regulations adopted by the
NASD relating to trading in the PORTAL market, and (B) received a rating
of B+ and B3 from Standard & Poor's Corporation and Xxxxx'x Investors
Service, Inc., respectively, which ratings shall be in effect on the
Closing Date and shall not have been amended or made subject to any notice
of potential downgrade or action of similar import.
(vii) The Purchasers shall have received on the Closing
Date (A) certificates dated the Closing Date, signed by (1) the Chief
Executive Officer and (2) the principal financial or accounting officer of
the Issuer, on behalf of the Issuer, (x) confirming the matters set forth
in paragraphs (i) through (v) and (xi) of this Section 9(a) and (y)
certifying as to such other matters as the Purchasers may reasonably
request, (B) a certificate, dated the Closing Date, signed by the
Secretary of the Issuer, certifying such matters as the Purchasers may
reasonably request and (C) a certificate of solvency, dated the Closing
Date, signed by the principal financial or accounting officer of the
Issuer substantially in the form previously approved by the Purchasers.
(viii) The Purchasers shall have received:
(1) an opinion of Xxxxx, Xxxxx & Xxxxx, special counsel
to the Issuer ("Xxxxx, Xxxxx"), dated the Closing Date, in the form
of Exhibit A hereto;
(2) an opinion of Xxxxx Xxxx LLP, special counsel to the
Issuer ("Xxxxx Xxxx"), dated the Closing Date, in the form of
Exhibit B hereto; and
(3) an opinion of Skadden, Arps, Slate, Xxxxxxx & Xxxx
LLP, dated the Closing Date, in form and substance reasonably
satisfactory to the Purchasers covering such matters as are
customarily covered in such opinions.
25
(ix) The Purchasers shall have received from Ernst &
Young LLP (A) a customary comfort letter, dated the date of the Offering
Circular, in form and substance reasonably satisfactory to the Purchasers,
with respect to the financial statements and certain financial information
contained in the Offering Circular, and (B) a customary comfort letter,
dated the Closing Date, in form and substance reasonably satisfactory to
the Purchasers, to the effect that they reaffirm the statements made in
the letter furnished pursuant to clause (A), except that the specified
date referred to shall be a date not more than five days prior to the
Closing Date.
(x) The Documents to be executed and delivered on or
prior to the Closing Date shall have been executed and delivered by all
parties thereto and the Purchasers shall have received a fully executed
original or a copy of the fully executed original of each Document.
(xi) On or prior to the Closing Date, the Transactions
to be consummated on or prior to the Closing Date shall have been duly
consummated. The Purchasers shall have received copies of all opinions
delivered by Xxxxx, Xxxxx and Xxxxx Xxxx under or in connection with the
Transactions consummated on the Closing Date, and letters to the effect
that the Purchasers may rely on such opinions, as if addressed to the
Purchasers.
(xii) Counsel to the Purchasers shall have been
furnished with such documents as they may reasonably require for the
purpose of enabling them to review or pass upon the matters referred to in
this Section 9.
(b) The obligation of the Issuer to sell the Senior Notes
under this Agreement is subject to the satisfaction or waiver of each of
the following conditions:
(i) The Purchasers shall have delivered payment to the
Issuer for the Senior Notes pursuant to Sections 2 and 4 of this
Agreement.
(ii) All of the representations and warranties of the
Purchasers in this Agreement shall be true and correct in all material
respects at and as of the Closing Date, with the same force and effect as
if made on and as of such date.
(iii) No injunction, restraining order or order of any
nature by a Governmental Authority shall have been issued as of the
Closing Date that would prevent or interfere with the issuance and sale of
the Senior Notes; and no
26
stop order suspending the qualification or exemption from qualification
of any of the Senior Notes in any jurisdiction shall have been issued and
no Proceeding for that purpose shall have been commenced or be pending or
contemplated as of the Closing Date.
10. Termination. (a) The Purchasers may terminate this Agreement at
any time prior to the Closing Date by written notice to the Issuer if any of the
following has occurred:
(i) since the date as of which information is given in
the Offering Circular, any material adverse effect or development
involving a prospective adverse effect on the properties, business,
prospects, operations, earnings, assets, liabilities or condition
(financial or otherwise), of the Issuer or any Subsidiary, whether or not
arising in the ordinary course of business, that could, in the Purchasers'
judgment, (i) make it impracticable or inadvisable to proceed with the
offering or delivery of the Senior Notes on the terms and in the manner
contemplated in the Offering Circular or (ii) materially impair the
investment quality of any of the Notes;
(ii) the failure of the Issuer to satisfy the conditions
contained in Section 9(a) hereof on or prior to the Closing Date;
(iii) any outbreak or escalation of hostilities or other
national or international calamity or crisis or material adverse change in
economic conditions in or the financial markets of the United States or
elsewhere, if the effect of such outbreak, escalation, calamity, crisis or
material adverse change in the economic conditions in or in the financial
markets of the United States or elsewhere could make it, in the
Purchasers' judgment, impracticable or inadvisable to market or proceed
with the offering or delivery of the Senior Notes on the terms and in the
manner contemplated in the Offering Circular or to enforce contracts for
the sale of any of the Senior Notes;
(iv) the suspension or limitation of trading generally
in securities on the New York Stock Exchange, the American Stock Exchange
or the Nasdaq National Market or any setting of limitations on prices for
securities on any such exchange or Nasdaq National Market;
(v) the enactment, publication, decree or other
promulgation after the date hereof of any Applicable Law that in the
Purchasers' opinion materially and adversely affects, or could materially
and adversely affect, the properties, business, prospects, operations,
earnings, assets, liabilities or
27
condition (financial or otherwise) of the Issuer and its Subsidiaries on a
consolidated basis;
(vi) any securities of any Jordan Entity shall have been
downgraded or placed on any "watch list" for possible downgrading by any
"nationally recognized statistical rating organization", as such term is
defined for purposes of Rule 431(g)(2) under the Act; or
(vii) the declaration of a banking moratorium by any
Governmental Authority; or the taking of any action by any Governmental
Authority after the date hereof in respect of its monetary or fiscal
affairs that in the Purchasers' opinion could have a material adverse
effect on the financial markets in the United States or elsewhere.
(b) The indemnities and contribution and expense reimbursement
provisions set forth in or made pursuant to this Agreement shall remain
operative and in full force and effect, and will survive, regardless of (i) any
investigation, or statement as to the results thereof, made by or on behalf of
the Purchasers, (ii) acceptance of the Senior Notes, and payment for them
hereunder, and (iii) any termination of this Agreement (other than pursuant to
Section 11). Without limiting the foregoing, notwithstanding any termination of
this Agreement (other than pursuant to Section 11), the Issuer shall be liable
(i) for all expenses that they have agreed to pay pursuant to Section 5(f)
hereof, and (ii) pursuant to Section 8 hereof.
11. Default by Purchasers. If either of the Purchasers shall fail or
refuse to purchase the Senior Notes that it has agreed to purchase hereunder on
the Closing Date and arrangements satisfactory to the Issuer for the purchase of
such Senior Notes are not made within 36 hours after such default, this
Agreement shall terminate without liability on the part of the Issuer or the
non-defaulting Purchaser, except as otherwise provided in Section 10(b) hereof.
Nothing herein shall relieve a defaulting Purchaser from liability for its
default.
12. Miscellaneous.
(a) Notices given pursuant to any provision of this Agreement
shall be addressed as follows: (i) if to the Issuer, Arborlake Centre,
0000 Xxxx Xxxx Xxxx, Xxxxx 000, Xxxxxxxxx, Xxxxxxxx 00000, Attention:
Chief Executive Officer, with a copy to Xxxxx, Xxxxx & Xxxxx, 000 Xxxxx
XxXxxxx Xxxxxx, Xxxxxxx, Xxxxxxxx 00000, Attention: Xxxxx Xxxxxxx, Esq.
and (ii) if to the Purchasers, to Xxxxxxxxx & Company, Inc., c/x Xxxxxxxxx
& Company, Inc., 00000 Xxxxx Xxxxxx Xxxxxxxxx, 00xx Xxxxx, Xxx Xxxxxxx,
Xxxxxxxxxx 00000, Attention: Xxxxx X. Xxxxx, Esq., with a copy to Skadden,
Arps, Slate, Xxxxxxx & Xxxx LLP, 000 X. Xxxxx Xxxxxx, Xxxxx 0000, Xxx
Xxxxxxx, Xxxxxxxxxx 00000, Atten-
28
tion: Xxxxxxx X. Xxxxxxxx, Esq. (provided that any notice pursuant to
Section 8 hereof will be mailed, delivered, telegraphed or telecopied and
confirmed to the party to be notified and its counsel), or in any case to
such other address as the person to be notified may have requested in
writing.
(b) This Agreement has been and is made solely for the benefit
of and shall be binding upon the Issuer, the Purchasers and, to the extent
provided in Section 8 hereof, the controlling persons, officers,
directors, partners, employees, representatives and agents referred to in
Section 8 and their respective heirs, executors, administrators,
successors and assigns, all as and to the extent provided in this
Agreement, and no other person shall acquire or have any right under or by
virtue of this Agreement. The term "successors and assigns" shall not
include a purchaser of any of the Senior Notes from the Purchasers merely
because of such purchase. Notwithstanding the foregoing, it is expressly
understood and agreed that each purchaser who purchases Senior Notes from
the Purchasers is intended to be a beneficiary of the Issuer's covenants
contained in the Registration Rights Agreement to the same extent as if
the Notes were sold and those covenants were made directly to such
purchaser by the Issuer, and each such purchaser shall have the right to
take action against the Issuer to enforce, and obtain damages for any
breach of, those covenants.
(c) THIS AGREEMENT SHALL BE CONSTRUED, INTERPRETED AND THE
RIGHTS OF THE PARTIES DETERMINED IN ACCORDANCE WITH THE LAWS OF THE STATE
OF NEW YORK, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW.
(d) This Agreement may be signed in various counterparts which
together shall constitute one and the same instrument.
(e) The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
(f) If any term, provision, covenant or restriction of this
Agreement is held by a court of competent jurisdiction to be invalid,
illegal, void or unenforceable, the remainder of the terms, provisions,
covenants and restrictions set forth herein shall remain in full force and
effect and shall in no way be affected, impaired or invalidated, and the
parties hereto shall use their best efforts to find and employ an
alternative means to achieve the same or substantially the same result as
that contemplated by such term, provision, covenant or restriction. It is
hereby stipulated and declared to be the intention of the parties that
they would have executed the remaining terms, provisions, covenants
29
and restrictions without including any of such that may be hereafter
declared invalid, illegal, void or unenforceable.
(g) This Agreement may be amended, modified or supplemented,
and waivers or consents to departures from the provisions hereof may be
given, provided that the same are in writing and signed by each of the
signatories hereto.
(h) The indemnities and contribution and expense reimbursement
provisions set forth in or made pursuant to this Agreement shall remain
operative and in full force and effect, and will survive delivery and
payment for the Senior Notes, regardless of (i) any investigation, or
statement as to the results thereof, made by or on behalf of any party
hereto, (ii) acceptance of the Senior Notes, and payment for them
hereunder, and (iii) any termination of this Agreement (other than
pursuant to Section 11).
30
Please confirm that the foregoing correctly sets forth the
agreement between the Issuer and the Purchasers.
Very truly yours,
JORDAN INDUSTRIES, INC.
By: /s/ Xxxxxx X. Xxxxxx, Xx.
------------------------------------
Name: Xxxxxx X. Xxxxxx, Xx.
Title: Senior Vice President, Treasurer
Accepted and Agreed to:
XXXXXXXXX & COMPANY, INC.
By:
-------------------------------
Name: M. Xxxxx Xxxxxxx
Title: Managing Director
XXXXXXXXX, XXXXXX & XXXXXXXX
SECURITIES CORPORATION
By:
-------------------------------
Name: Xxxxxxx Xxxxxx
Title: Managing Director
Please confirm that the foregoing correctly sets forth the
agreement between the Issuer and the Purchasers.
Very truly yours,
JORDAN INDUSTRIES, INC.
By:
------------------------------------
Name: Xxxxxx X. Xxxxxx, Xx.
Title: Senior Vice President, Treasurer
Accepted and Agreed to:
XXXXXXXXX & COMPANY, INC.
By: /s/ M. Xxxxx Xxxxxxx
-------------------------------
Name: M. Xxxxx Xxxxxxx
Title: Managing Director
XXXXXXXXX, XXXXXX & XXXXXXXX
SECURITIES CORPORATION
By:
-------------------------------
Name: Xxxxxxx Xxxxxx
Title: Managing Director
Please confirm that the foregoing correctly sets forth the
agreement between the Issuer and the Purchasers.
Very truly yours,
JORDAN INDUSTRIES, INC.
By:
------------------------------------
Name: Xxxxxx X. Xxxxxx, Xx.
Title: Senior Vice President, Treasurer
Accepted and Agreed to:
XXXXXXXXX & COMPANY, INC.
By:
-------------------------------
Name: M. Xxxxx Xxxxxxx
Title: Managing Director
XXXXXXXXX, LUFKIN & XXXXXXXX
SECURITIES CORPORATION
By: /s/ Xxxxxxx Xxxxxx
-------------------------------
Name: Xxxxxxx Xxxxxx
Title: Managing Director
