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EXHIBIT 10.1
INTERNATIONAL KNIFE & SAW, INC.
$90,000,000 Aggregate Principal Amount of
11-3/8% Senior Subordinated Notes due 2006
PURCHASE AGREEMENT
New York, New York
October 31, 1996
XXXXXXXX XXXXXXXX & CO. INCORPORATED
XXXXX XXXXXX INC.
c/x XXXXXXXX XXXXXXXX & CO. INCORPORATED
Equitable Center
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Ladies and Gentlemen:
International Knife & Saw, Inc., a Delaware corporation (the
"Company"), proposes, subject to the terms and conditions stated herein, to
issue and sell to you (the "Initial Purchasers") $90,000,000 aggregate principal
amount of 11-3/8% Senior Subordinated Notes due 2006 (the "Notes"), to be issued
pursuant to the provisions of an Indenture (the "Indenture") to be entered into
between the Company and United States Trust Company of New York, as trustee (the
"Trustee").
The Notes will be offered without being registered under the
Securities Act of 1933, as amended (the "Securities Act"), in reliance on
exemptions therefrom provided by Section 4(2) of the Securities Act and Rule
144A promulgated thereunder.
In connection with the offering and sale of the Notes (the
"Offering"), the Company has prepared a preliminary offering memorandum (the
"Preliminary Offering Memorandum") and will prepare a final offering memorandum
(the "Final Offering Memorandum" and, together with the Preliminary Offering
Memorandum, each a "Memorandum") setting forth or including a description of the
terms of the Notes, the terms of the Offering, a description of the Company and
any material developments relating to the Company occurring after the date of
the most recent financial statements included therein.
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You and your direct and indirect transferees will be entitled to the
benefits of a Registration Rights Agreement to be entered into between the
Company and the Initial Purchasers substantially in the form attached hereto as
Exhibit A (the "Registration Rights Agreement"), pursuant to which the Company
will agree to use its best efforts to file and have declared effective a
registration statement (an "Exchange Offer Registration Statement") with the
Securities and Exchange Commission (the "Commission") registering the offer and
sale of the Notes, Private Exchange Notes or the Exchange Notes (each as defined
in the Registration Rights Agreement) under the Securities Act. This Agreement,
the Notes, the Indenture and the Registration Rights Agreement are referred to
herein as the "Offering Documents."
The Offering is being made in connection with a recapitalization of
the Company (the "Recapitalization") under that certain Agreement and Plan of
Recapitalization dated September 17, 1996 (the "Recapitalization Agreement") by
and among Citicorp Venture Capital Ltd., The Klingelnberg Corporation ("IKS
Holdings") and certain stockholders of IKS Holdings and of the Company.
In connection with the Offering and the Recapitalization, the
Company will repay approximately $5.3 million of its existing indebtedness and
enter into a new $20.0 million revolving credit facility, and a German
subsidiary of the Company will repay approximately $9.3 million of its existing
indebtedness and enter into a new $5.0 million revolving credit facility
(together, the "New Credit Facilities").
The Recapitalization Agreement (including the agreements attached as
exhibits thereto), the agreements evidencing the New Credit Facilities and the
Offering Documents are referred to herein as the "Transaction Documents." The
Offering and the application of the proceeds therefrom, the Recapitalization and
the entering into the New Credit Facilities are referred to herein as the
"Transactions".
This is to confirm the agreement concerning the purchase by you of
the Notes from the Company.
1. The Company represents and warrants to and agrees with you that:
(a) The Preliminary Offering Memorandum, as of its date, did not
contain any untrue statement of a material fact or omit to state a
material fact (except for pricing terms and other financial terms
intentionally left blank) necessary to make the statements therein, in the
light of the circumstances under which they were made, not misleading, and
the Final Offering Memorandum, as of its date did not, and as of the
Delivery Date will not,
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contain any untrue statement of a material fact or omit to state a
material fact necessary, in the light of the circumstances under which
they were made, not misleading, except that the representations and
warranties set forth in this Section 1(a) do not apply to statements or
omissions contained in any Memorandum made in reliance upon and in
conformity with information relating to the Initial Purchasers furnished
by the Initial Purchasers to the Company in writing expressly for use in
either Memorandum or any amendment or supplement thereto.
(b) Neither the Company nor any of the Subsidiaries (as defined
below) has sustained, since the date of the most recent financial
statements included in the Final Offering Memorandum, any loss or
interference with its business from fire, explosion, flood or other
calamity, whether or not covered by insurance, or from any labor dispute
or court or governmental action, order or decree, which loss or
interference is material to the Company and the Subsidiaries, taken as a
whole. Since the respective dates as of which information is given in the
Final Offering Memorandum there has not been any change in the capital
stock or short-term debt (other than in the ordinary course of business)
or long-term debt of the Company or any of the Subsidiaries, or any change
or development which could reasonably be expected to have a material
adverse effect upon the business, operations, assets, condition (financial
or otherwise) or prospects of the Company and the Subsidiaries, taken as a
whole, or an adverse effect on the ability of the Company to perform its
obligations under the Offering Documents (a "Material Adverse Effect"),
otherwise than as set forth or contemplated in the Final Offering
Memorandum.
(c) The Company and the Subsidiaries have good and marketable title
in fee simple to all real property and good and marketable title to all
personal property owned by them, in each case, free and clear of all
liens, adverse claims, encumbrances, security interests (collectively,
"Liens") and defects except those that are described or contemplated by
the Final Offering Memorandum or those that do not materially affect the
value of such property and do not interfere with the use made or proposed
to be made (as described in the Final Offering Memorandum) of such
property by the Company and the Subsidiaries. Any real property and
buildings held under lease by the Company and the Subsidiaries are held by
them under valid, subsisting and enforceable leases with such exceptions
as are not material and do not interfere with the use made or proposed to
be made (as described in the Final Offering Memorandum) of such real
property and buildings by the Company and the Subsidiaries.
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(d) The Company has been duly incorporated and is validly existing
as a corporation in good standing under the laws of the State of Delaware,
with all necessary corporate power and authority to own its properties and
to conduct its business as described in the Final Offering Memorandum. The
Company has been duly qualified as a foreign corporation for the
transaction of business and is in good standing under the laws of each
other jurisdiction in which it owns or leases property, or conducts any
business, so as to require such qualification (except where the failure to
so qualify, singly or in the aggregate with all other such failures, would
not have a Material Adverse Effect). Each of the Company's subsidiaries
(the "Subsidiaries") is listed on Schedule I hereto. Except as described
in the Final Offering Memorandum, each of the Subsidiaries is wholly owned
directly or indirectly by the Company. Each of the Subsidiaries has been
duly incorporated and is validly existing as a corporation in good
standing under the laws of its jurisdiction of incorporation, with all
necessary corporate power and authority to own its properties and conduct
its business as described in the Final Offering Memorandum.
(e) The Company had at the date indicated in the Final Offering
Memorandum the capitalization set forth in the column entitled "Actual"
under the caption "Capitalization" as set forth in the Final Offering
Memorandum and, based on the assumptions stated in the Final Offering
Memorandum, the Company would have had on the date indicated the adjusted
capitalization as set forth in the column entitled "Pro Forma" under the
caption "Capitalization" as set forth in the Final Offering Memorandum.
Except as described in the Final Offering Memorandum, all of the issued
and outstanding shares of capital stock of each Subsidiary have been duly
and validly authorized and issued, are fully paid and non-assessable and
are owned by the Company free and clear of all Liens. There are no
outstanding options, warrants or other rights to acquire, or instruments
convertible into or options to acquire, or instruments convertible into or
exchangeable for, any shares of capital stock of any Subsidiary.
(f) This Agreement has been duly authorized, executed and
delivered by the Company.
(g) The Indenture has been duly authorized by the Company and, when
executed and delivered by the Company on the Delivery Date (assuming due
authorization, execution and delivery by, and enforceability against, the
Trustee), will be a legally valid and binding agreement of the Company,
enforceable against the Company in accordance with its terms, except that
(i) the enforceability thereof
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may be limited by applicable bankruptcy, insolvency, reorganization,
moratorium, fraudulent transfer or other similar laws relating to or
affecting creditors' rights generally and (ii) the availability of
equitable remedies may be limited by equitable principles of general
applicability (regardless of whether in a proceeding in equity or at law).
The Indenture will conform in all material respects to the description
thereof in the Final Offering Memorandum.
(h) The Notes have been duly and validly authorized by the Company,
and, when executed and authenticated in accordance with the terms of the
Indenture and delivered to and paid for by the Initial Purchasers in
accordance with the terms of this Agreement, will be legally valid and
binding obligations of the Company, entitled to the benefits of the
Indenture and enforceable against the Company in accordance with their
terms, except that (i) the enforceability thereof may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent
transfer or other similar laws relating to or affecting creditors' rights
generally and (ii) the availability of equitable remedies may be limited
by equitable principles of general applicability (regardless of whether
considered in a proceeding in equity or at law). The Notes will conform in
all material respects to the description thereof contained in the Final
Offering Memorandum.
(i) The Exchange Notes and the Private Exchange Notes have been duly
and validly authorized by the Company, and, when executed, authenticated
and delivered in accordance with the terms of the Indenture and the
Registration Rights Agreement, will be legally valid and binding
obligations of the Company, entitled to the benefits of the Indenture and
enforceable against the Company in accordance with their terms, except
that (i) the enforceability thereof may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer or
other similar laws relating to or affecting creditors' rights generally
and (ii) the availability of equitable remedies may be limited by
equitable principles of general applicability (regardless of whether
considered in a proceeding in equity or at law).
(j) The Registration Rights Agreement has been duly and validly
authorized by the Company and, when executed and delivered by the Company
on the Delivery Date (assuming due authorization, execution and delivery
by, and enforceability against, the Initial Purchasers), will be a legally
valid and binding agreement of the Company, enforceable against the
Company in accordance with its terms, except that (i) the enforceability
thereof may be
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limited by applicable bankruptcy, insolvency, reorganization, moratorium,
fraudulent transfer or other similar laws relating to or affecting
creditors' rights generally, (ii) the availability of equitable remedies
may be limited by equitable principles of general applicability
(regardless of whether considered in a proceeding in equity or at law) and
(iii) rights to indemnity may be limited by state or federal laws relating
to securities or by policies underlying such laws. The Registration Rights
Agreement will conform in all material respects to the description thereof
contained in the Final Offering Memorandum.
(k) The Recapitalization Agreement has been duly and validly
authorized by each of the parties thereto and is a legally valid and
binding agreement of each such party, enforceable against each such party
in accordance with its terms, except that (i) the enforceability thereof
may be limited by applicable bankruptcy, insolvency, reorganization,
moratorium, fraudulent transfer or other similar laws relating to or
affecting creditors' rights generally and (ii) the availability of
equitable remedies may be limited by equitable principles of general
applicability (regardless of whether in a proceeding in equity or at law).
The representations and warranties set forth in Article II of the
Recapitalization Agreement are true and correct in all material respects
as of the date of such agreement and will be true and correct in all
material respects on the Delivery Date.
(l) The execution, delivery and performance by the Company of the
Offering Documents and the consummation of the Transactions and the other
transactions contemplated thereby will not (i) conflict with, or result in
a breach or violation of, any of the terms or provisions of, or constitute
a default under, any indenture, mortgage, deed of trust, license, permit,
loan agreement, lease or other material agreement or instrument to which
the Company or any of the Subsidiaries is a party or by which any of them
or any of their respective properties or assets is bound or or is subject,
(ii) violate any provision of the certificate of incorporation or the
by-laws of the Company or any of the Subsidiaries or any material statute
or any material order, rule or regulation of any court or governmental
agency or body having jurisdiction over the Company or any of the
Subsidiaries or any of their properties or assets, or (iii) result in or
require the creation or imposition of any Lien, upon or with respect to
any of the properties of the Company or any of the Subsidiaries, except as
permitted by the terms of the Indenture. No consent, approval,
authorization, order, registration or qualification of or with any court
of governmental agency or body is required for the issue and sale of the
Notes or the consummation of the other
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Transactions, except such consents, approvals, authorizations,
registrations or qualifications as (x) may be required under state
securities or Blue Sky laws in connection with the offer and sale of the
Notes, (y) have been obtained and are in full force and effect or (z) as
may be required by the National Association of Securities Dealers, Inc.
(m) Except as set forth in the Final Offering Memorandum, there are
no legal or governmental proceedings pending to which the Company or any
of the Subsidiaries is a party or of which any of their respective
properties or assets is the subject which, if determined adversely, would
singly or in the aggregate have a Material Adverse Effect. To the
Company's best knowledge, no such proceedings are threatened or
contemplated by any governmental agency or body or any other person.
(n) The Company and the Subsidiaries have all material licenses,
permits and other approvals or authorizations of and from governmental
agencies and bodies ("Permits") as are necessary under applicable law to
own their respective properties and to conduct their respective businesses
in the manner now being conducted as described in the Final Offering
Memorandum. The Company and the Subsidiaries have fulfilled and performed
in all material respects all of their respective obligations with respect
to such material Permits, and no event has occurred which allows, or after
notice or lapse of time would allow, revocation or termination thereof or
result in any other material impairment of the rights of the holder of any
such material Permits.
(o) Ernst & Young LLP, who have certified certain financial
statements of the Company, are independent public accountants under rule
101 of AICPA's Code of Professional Conduct and its interpretation and
rulings.
(p) The consolidated financial statements of the Company and the
Subsidiaries included in the Final Offering Memorandum present fairly the
financial condition, the results of operations and the cash flows of the
Company and the Subsidiaries as of the dates and for the periods therein
specified in conformity with generally accepted accounting principles
consistently applied throughout the periods involved, except as otherwise
stated therein. The unaudited pro forma financial statements included in
the Final Offering Memorandum have been prepared in accordance with the
rules and guidelines of the Commission with respect to pro forma financial
statements and in the Company's opinion, the assumptions used in the
preparation thereof are reasonable and the adjustments used therein are
appropriate to give effect to the transactions or circumstances referred
to therein.
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(q) Except as set forth in the Final Offering Memorandum, there is
no presently existing dispute or controversy between the Company or any of
the Subsidiaries and any of their respective employees which has had or is
likely to have, and the Company has no reason to believe that the
relationship of the Company and the Subsidiaries with their unions or
employees is likely to have, a Material Adverse Effect.
(r) To the Company's best knowledge, the Company and the
Subsidiaries own or possess adequate patents, patent rights, inventions,
trademarks, service marks, trade names and copyrights necessary to conduct
their business as presently conducted as described in the Final Offering
Memorandum. Neither the Company nor any of the Subsidiaries has received
any notice of infringement of or conflict with asserted rights of others
with respect to any material patent, patent rights, inventions,
trademarks, service marks, trade names or copyrights.
(s) Neither the Company nor any of the Subsidiaries is in violation
of any provision of their respective certificate of incorporation or
by-laws. Except as described in the Final Offering Memorandum, the Company
and each of the Subsidiaries is in compliance with all laws, rules,
regulations, orders, judgments, writs and decrees applicable to them other
than those which, singly or in the aggregate, could not reasonably be
expected to have a Material Adverse Effect.
(t) No default exists, and no event has occurred which with notice
or lapse of time, or both, would constitute a default in the due
performance and observance of any term, covenant or condition of any
indenture, mortgage, deed of trust, license, permit, loan agreement, lease
or other agreement or instrument to which the Company or any of the
Subsidiaries is a party or by which any of them or any of their respective
properties or assets is bound or is subject, which default, singly or in
the aggregate, could reasonably be expected to have a Material Adverse
Effect.
(u) The Company and the Subsidiaries have timely filed all federal
income and other material tax returns and notices. The Company has no
knowledge of any tax deficiencies which would have a Material Adverse
Effect. The Company and its Subsidiaries have paid all federal, state,
local and foreign taxes of any nature which are shown on its returns to be
due, in each case except as may be set forth or adequately reserved for in
the financial statements included in the Final Offering Memorandum in
accordance with GAAP. The amounts currently set up as provisions for taxes
or otherwise by the Company and the Subsidiaries on their books and
records are sufficient for
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the payment of all their unpaid federal, foreign, state, county and local
taxes accrued through the dates as of which they relate, and for which the
Company and the Subsidiaries may be liable in their own right, or as a
transferee of the assets of, or as successor to any other corporation,
association, partnership, joint venture or other entity.
(v) Since the date as of which information is given in the
Preliminary Offering Memorandum through the date hereof, and except as may
otherwise be disclosed in the Final Offering Memorandum, neither the
Company nor any of the Subsidiaries has sold or otherwise disposed of any
capital stock of the Company or the Subsidiaries, directly or indirectly.
(w) The Company maintains a system of internal accounting controls
sufficient to provide reasonable assurances that (i) transactions are
executed in accordance with management's general or specific
authorization; (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with generally accepted
accounting principles and to maintain accountability for assets; (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 existing assets at reasonable intervals and appropriate
action is taken with respect to any differences.
(x) The Company, immediately before and after the consummation of
the Transactions, will be Solvent. As used herein, the term "Solvent"
means, with respect to any such entity on a particular date (i) the fair
market value of the assets of such entity is greater than the total amount
of liabilities (including contingent liabilities) of such entity, (ii) the
present fair saleable value of the assets of such entity is greater than
the amount that will be required to pay the probable liabilities of such
entity on its debts as they become absolute and matured, (iii) such entity
is able to realize upon its assets and pay its debts and other
liabilities, including contingent obligations, as they mature and (iv)
such entity does not have an unreasonably small capital.
(y) Neither the Company nor any of its affiliates (as defined in
Rule 501(b) of Regulation D under the Securities Act, an "Affiliate") has
directly, or through any agent, (i) sold, offered for sale, solicited
offers to buy or otherwise negotiated in respect of, any security (as
defined in the Securities Act) which is or will be integrated with the
sale of the Notes in a manner that would require the registration under
the Securities Act of the Notes or (ii) engaged in any form of general
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solicitation or general advertising in connection with the offering of the
Notes (as those terms are used in Regulation D under the Securities Act)
or in any manner involving a public offering within the meaning of Section
4(2) of the Securities Act.
(z) Neither the Company nor any of the Subsidiaries is, or will be
after giving effect to the Offering and the application of the proceeds
therefrom and the other transactions contemplated by the Documents, an
"investment company" or an entity "controlled" by an "investment company,"
as such terms are defined in the Investment Company Act of 1940, as
amended (the "Investment Company Act").
(aa) Assuming the representations and warranties of the Initial
Purchasers are true and correct, it is not necessary in connection with
the offer, sale and delivery of the Notes to the Initial Purchasers in the
manner contemplated by this Agreement to register the Notes under the
Securities Act or to qualify the Indenture under the Trust Indenture Act
of 1939, as amended.
(bb) The Company and the Subsidiaries (i) are in compliance with all
applicable foreign, federal, state and local laws and regulations relating
to the protection of human health and safety, the environment or hazardous
or toxic substances or wastes, pollutants or contaminants ("Environmental
Laws"), (ii) have received all permits, licenses or other approvals
required of them under applicable Environmental Laws to conduct their
respective businesses and (iii) are in compliance with all terms and
conditions of any such permit, license or approval, except where such
noncompliance with Environmental Laws, failure to receive required
permits, licenses or other approvals or failure to comply with the terms
and conditions of such permits, licenses or approvals would not
individually or in the aggregate result in a Material Adverse Effect.
(cc) When the Notes are issued and delivered pursuant to this
Agreement, the Notes will not be of the same class (within the meaning of
Rule 144A under the Securities Act) as securities of the Company which are
listed on a national securities exchange registered under Section 6 of the
Securities Exchange Act of 1934, as amended, and the rules and regulations
of the Commission promulgated thereunder (collectively, the "Exchange
Act"), or quoted in a U.S. automated interdealer quotation system.
(dd) The Company and each of its subsidiaries maintains insurance
covering their properties, operations, personnel and businesses. Such
insurance insures against such losses and risks as are adequate in
accordance with
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customary industry practice to protect the Company and the
Subsidiaries and their businesses.
2. On the basis of the representations and warranties contained in
this Agreement, and subject to the terms and conditions herein set forth, the
Company agrees to issue and sell to the several Initial Purchasers, and the
Initial Purchasers agree, severally, to purchase from the Company, at a purchase
price of 97.0% of the principal amount thereof, (i) $54,000,000 aggregate
principal amount of Notes, in the case of Xxxxxxxx Xxxxxxxx & Co. Incorporated,
and (ii) $36,000,000 aggregate principal amount of Notes, in the case of Xxxxx
Xxxxxx Inc.
3. Certificates in definitive form for the Notes to be purchased by
you hereunder shall be delivered by or on behalf of the Company to you for your
account against payment by you of the purchase price therefor by wire transfer
of immediately available funds to an account specified by the Company by written
notice to the Initial Purchasers (given at least two business days prior to the
Delivery Date), for the purchase price of the Notes being sold by the Company in
New York, New York, at 9:30 A.M., New York City time, on November 6, 1996, or at
such other time, date and place as you and the Company may agree upon in
writing, such time and date being herein called the "Delivery Date."
Certificates for the Notes so to be delivered will be in good
delivery form, and in such denominations and registered in such names as you may
request not less than 48 hours prior to the Delivery Date. Such certificates
will be made available for checking and packaging in New York, New York, at
least 24 hours prior to the Delivery Date.
4. The Initial Purchasers acknowledge that the Notes have not been
registered under the Securities Act and may not be sold except pursuant to an
exemption from, or in a transaction not subject to, the registration
requirements of the Securities Act or pursuant to an effective registration
statement under the Securities Act. Accordingly, the Initial Purchasers propose
to offer the Notes for resale only to certain investors (as further described in
subparagraph (a) of this Paragraph 4) upon the terms and conditions set forth in
this Agreement and the Final Offering Memorandum at the purchase price initially
set forth on the cover page of the Final Offering Memorandum. Each of the
Initial Purchasers hereby severally represents and warrants to, and agrees with
the Company, that:
(a) It is an institutional "accredited investor" (as defined in
501(a)(1), (2), (3) or (7) under the Securities Act) and will offer or
sell the Notes only (i) inside the United States, to persons who it
reasonably believes are "qualified institutional buyers" within the
meaning of
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Rule 144A in transactions meeting the requirements of Rule 144A and (ii)
inside the United States, to a limited number of institutional "accredited
investors" (as defined in Rule 501(a)(1), (2), (3) or (7) under the
Securities Act) that, prior to their purchase of the Notes, deliver to the
Initial Purchasers and the Company a letter substantially in the form
attached to each Memorandum as Annex A; and
(b) It has not and will not offer or sell the Notes by any form of
general solicitation or general advertising, including but not limited to,
the methods described in Rule 502(c) under the Securities Act.
5. In consideration of the agreements of the several Initial
Purchasers contained in this Agreement, the Company covenants and agrees as
follows:
(a) The Company will furnish to you, without charge, as many copies
of the Final Offering Memorandum and any supplements and amendments
thereto as you may reasonably request.
(b) Before amending or supplementing the Final Offering Memorandum
subsequent to the execution of this Agreement, the Company will furnish to
you a copy of each such proposed amendment or supplement and not to use
any such proposed amendment or supplement to which you reasonably object.
(c) If, at any time prior to the completion of the distribution of
the Notes to persons that are not your affiliates (as determined by you),
any event occurs as a result of which the Final Offering Memorandum as
then amended or supplemented would include any untrue statement of a
material fact, or omit to state a material fact necessary to make the
statements therein, in the light of the circumstances under which they
were made, not misleading, or if for any other reason it is necessary at
any time to amend or supplement the Final Offering Memorandum to comply
with applicable law, the Company will notify you thereof and will prepare,
at the expense of the Company, an amendment or supplement to the Final
Offering Memorandum that corrects such statement or omission or effects
such compliance.
(d) The Company will endeavor to qualify the Notes for offer and
sale under the securities or Blue Sky laws of such jurisdictions in the
United States as you shall reasonably request; provided, however, that the
Company shall not be obligated to file any general consent to service of
process or to qualify as a foreign corporation or as a dealer in
securities in any jurisdiction in which it is not so qualified or to
subject itself to taxation in
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respect of doing business in any jurisdiction in which it is not otherwise
so subject. The Company will file such statements and reports as may be
required by the laws of each jurisdiction in which the Notes have been
qualified as above provided. The Company will also supply you with such
information as is necessary for the determination of the legality of the
Notes in such jurisdictions as you may request.
(e) The Company will not, and will not permit any of its Affiliates
to, sell, offer for sale or solicit offers to buy or otherwise negotiate
in respect of any security (as defined in the Securities Act) which could
be integrated with the sale of the Notes in a manner which would require
the registration under the Securities Act of the Notes.
(f) Except following the effectiveness of the Exchange Offer
Registration Statement, the Company will not solicit any offer to buy or
offer to sell the Notes by means of any form of general solicitation or
general advertising (as those terms are used in Regulation D under the
Securities Act) or in any manner involving a public offering within the
meaning of Section 4(2) of the Securities Act.
(g) While any of the Notes remain outstanding and are "restricted
securities" within the meaning of Rule 144(a)(3) under the Securities Act,
to make available, upon request, to any holder or beneficial owner of
outstanding Notes the information specified in Rule 144A(d)(4) under the
Securities Act, unless the Company is then subject to Section 13 or 15(d)
of the Exchange Act.
(h) The Company will use its best efforts to permit the Notes to be
designated PORTAL securities in accordance with the rules and regulations
adopted by the National Association of Securities Dealers, Inc. relating
to trading in the PORTAL Market and to permit the Notes to be eligible for
clearance and settlement through the Depository Trust Company.
(i) For a period of five years following the Delivery Date, the
Company will furnish to the Initial Purchasers copies of any annual
reports, quarterly reports and current reports filed with the Commission
on Forms 10-K, 10-Q and 8-K, or such other similar forms as may be
designated by the Commission, and such other documents, reports and
information as shall be furnished by the Company to the Trustee or to the
holders of the Notes pursuant to the Indenture.
(j) During the period of three years following the Delivery Date,
the Company will not, and will not permit
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any of its Affiliates to, resell any Notes that have been acquired by any
of them, except for any such Note resold in a transaction registered under
the Securities Act.
(k) The Company will use the proceeds from the sale of the Notes in
the manner set forth in the Final Offering Memorandum and in a manner that
will not result in the Company becoming an investment company within the
meaning of the Investment Company Act, and the rules and regulations of
the Commission thereunder.
(l) The Company will not, and will cause each of the Subsidiaries
not to, offer, sell, contract to sell or grant any option to purchase or
otherwise transfer or dispose of any debt security, or any security
convertible into or in exchange for, any such debt security of the Company
or any such Subsidiary (other than (x) any private loan, credit or
financing agreement with a bank or similar institution and (y) the Notes,
the Exchange Notes and the Private Exchange Notes), for a period of 180
days after the date of this Agreement, without your prior written consent.
6. The Company covenants and agrees that the Company will pay or
cause to be paid: (i) the fees, disbursements and expenses of counsel and
accountants for the Company and the Trustee and its counsel, and all other
expenses, in connection with the preparation and printing of each Memorandum and
amendments and supplements thereto and the furnishing of copies thereof,
including charges for mailing, air freight and delivery and counting and
packaging thereof to the Initial Purchasers and dealers; (ii) all expenses in
connection with the qualification of the Notes for offering and sale under state
securities laws as provided in Section 5(d) hereof, including disbursements and
expenses for counsel for the Initial Purchasers in connection with such
qualification and in connection with Blue Sky surveys; (iii) any fees charged by
rating agencies for the rating of the Notes; (iv) the costs and expenses in
connection with the preparation and delivery of the Notes; and (v) all other
costs and expenses incident to the performance of its obligations hereunder
which are not otherwise specifically provided for in this Section 6, including
the fees, if any, incurred in connection with the admission of the Notes for
trading in any appropriate market systems, the cost of the Company's personnel
and other internal costs, the cost of printing and engraving the certificates
representing the Notes and all expenses and property, excise and similar taxes
incident to the sale and delivery of the Notes to be sold by the Company to the
Initial Purchasers hereunder.
7. Your obligations hereunder shall be subject, in your
discretion, to the following additional conditions:
15
(a) The representations and warranties of the Company contained in
this Agreement shall be true and correct as of the date hereof and as of
the Delivery Date. The Company shall have performed in all material
respects all covenants and agreements and satisfied in all material
respects all conditions on its part to be performed or satisfied hereunder
at or prior to the Delivery Date.
(b) The sale of the Notes by the Company hereunder shall not be
enjoined (temporarily or permanently) on the Delivery Date.
(c) Subsequent to the date as of which information is given in the
Final Offering Memorandum, except in each case as described in or as
contemplated by the Final Offering Memorandum, the Company and the
Subsidiaries shall not have incurred any liabilities or obligations,
direct or contingent that are material to the Company and the Subsidiaries
taken as a whole or entered into any transactions that are material to the
business, condition (financial or other), results of operations or
prospects of the Company and the Subsidiaries taken as a whole.
(d) Subsequent to the date of this Agreement and prior to the
Delivery Date, there shall not have occurred any downgrading, nor shall
any notice have been given of any intended or potential downgrading or of
any review for a possible change that does not indicate the direction of
the possible change, in the rating accorded any of the Company's
securities, including the Notes, by any "nationally recognized statistical
rating organization" as such term is defined for purposes of Rule
436(g)(2) under the Securities Act.
(e) You shall have received on the Delivery Date a certificate of
the Company dated the Delivery Date and signed by its Chief Executive
Officer, President or any Vice President and by the Vice
President-Finance, to the effect set forth in clauses (a), (b), (c) and
(d) above.
(f) Dechert Price & Xxxxxx, counsel to the Company, shall have
furnished to you their written letters, each dated the Delivery Date, in
substantially the forms attached hereto as Exhibits B-1 and B-2,
respectively.
(g) Xxxxxx Xxxxxx & Xxxxxxx, counsel to the Initial Purchasers,
shall have furnished to the Initial Purchasers a written opinion, dated
the Delivery Date, in form and substance satisfactory to you, and such
counsel shall have received such papers and information as they may
reasonably request to enable them to pass upon the matters covered by such
opinion.
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(h) You shall have received on each of the date hereof and the
Delivery Date a letter, dated the date hereof or the Delivery Date, as the
case may be, in form and substance reasonably satisfactory to you, from
Ernst & Young LLP, the Company's independent public accountants.
(i) (i) Since the date of this Agreement, neither the Company nor
any of the Subsidiaries shall have sustained any loss or interference with
its business from fire, explosion, flood or other calamity, whether or not
covered by insurance, or from any labor dispute or court or governmental
action, order or decree; and (ii) since the respective dates as of which
information is given in the Final Offering Memorandum, there shall not
have been any change in the capital stock or short-term debt (other than
in the ordinary course of business) or long-term debt of the Company or
any of the Subsidiaries nor any change which could reasonably be expected
to have a Material Adverse Effect otherwise than as set forth or
contemplated in the Final Offering Memorandum, the effect of which, in any
such case described in clause (i) or (ii), is in your judgment so material
and adverse as to make it impracticable or inadvisable to proceed with the
Offering or the delivery of the Notes on the terms and in the manner
contemplated in the Final Offering Memorandum.
(j) Subsequent to the execution and delivery of this Agreement, (i)
there shall have been no declaration of war by the Government of the
United States, (ii) there shall not have occurred any material adverse
change in the financial or securities markets in the United States or in
political, financial or economic conditions in the United States or any
outbreak or material escalation of hostilities or other calamity or
crisis, the effect of which is such as to make it, in the judgment of the
Initial Purchasers, impracticable to market the Notes or to enforce
contracts for the resale of Notes and (iii) no event shall have occurred
resulting in (A) trading in securities generally on the New York Stock
Exchange, the American Stock Exchange or the Nasdaq National Market being
suspended or limited or minimum or maximum prices being generally
established on such exchange or market, or (B) additional material
governmental restrictions, not in force on the date of this Agreement,
being imposed upon trading in securities generally by such exchange or by
order of the Commission or any court or other governmental authority or
(C) a general banking moratorium being declared by either Federal or New
York authorities.
(k) The Company shall have furnished or caused to be furnished to
you at the Delivery Date any additional certificates signed by officers of
the Company, satisfactory to you as to such matters as you may reasonably
request.
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(l) The Company and the Initial Purchasers shall have entered into
the Registration Rights Agreement.
(m) All of the Transactions (other than the Offering and the
application of the proceeds therefrom) shall have been consummated in
accordance with the Transaction Documents.
8. (a) The Company agrees to indemnify and hold harmless the
Initial Purchasers against any losses, claims, damages or liabilities
("Losses"), joint or several, to which any of the Initial Purchasers may become
subject, under the Securities Act, the Exchange Act, any other federal or state
statutory law or regulation, at common law or otherwise, insofar as such Losses
(or actions in respect thereof) arise out of or are based upon any untrue
statement or alleged untrue statement of a material fact contained in any
Memorandum, or any amendment or supplement thereto, or the omission or alleged
omission to state therein a material fact necessary to make the statements
therein, in the light of the circumstances under which they were made, not
misleading, and will reimburse the Initial Purchasers for any legal or other
expenses reasonably incurred by the Initial Purchasers in connection with
investigating, preparing to defend, defending or appearing as a third-party
witness in connection with any such action or claim; provided, however, that
the Company shall not be liable to any Initial Purchaser in any such case to
the extent that any such Loss arises out of or is based upon an untrue
statement or alleged untrue statement or omission or alleged omission relating
to such Initial Purchaser made in any Memorandum, or such amendment or
supplement in reliance upon and in conformity with written information
furnished to the Company by or on behalf of such Initial Purchaser expressly
for use therein; provided, however, that the foregoing indemnity with respect
to the Preliminary Offering Memorandum shall not inure to the benefit of any
Initial Purchaser from whom the person asserting such losses, claims, damages
or liabilities purchased Notes if (x) it is established in the related
proceeding that such Initial Purchaser failed to send or give a copy of the
Final Offering Memorandum to such person with or prior to the written
confirmation of such sale and (y) the untrue statement or omission or alleged
untrue statement or omission was completely corrected in the Final Offering
Memorandum and the Final Offering Memorandum does not contain any other untrue
statement or omission or alleged untrue statement or omission that was the
subject matter of the related proceeding.
(b) In addition to any obligations of the Company under Section
8(a), the Company agrees that it shall perform its indemnification obligations
under Section 8(a) (as modified by the last paragraph of this Section 8(b)),
with respect to counsel fees and expenses and other expenses reasonably incurred
by making payments within 45 days to the Initial
18
Purchasers in the amount of the statements of the Initial Purchasers' counsel or
other statements which shall be forwarded by the Initial Purchasers, and that
they shall make such payments notwithstanding the absence of a judicial
determination as to the propriety and enforceability of the obligation to
reimburse the Initial Purchasers for such expenses and the possibility that such
payments might later be held to have been improper by a court and a court orders
return of such payments.
The indemnity agreement in Section 8(a) 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 any of the Initial
Purchasers within the meaning of the Securities Act or the Exchange Act, and to
the officers, directors, partners, employees, representatives and agents of any
of the Initial Purchasers or any such control person.
(c) Each of the Initial Purchasers will, severally and not jointly,
indemnify and hold harmless the Company against any Losses to which the Company
may become subject, under the Securities Act, the Exchange Act, any federal or
state statutory law or regulation, at common law or otherwise, insofar as such
Losses (or actions in respect thereof) arise out of or are based upon an untrue
statement or alleged untrue statement of a material fact contained in any
Memorandum, or any amendment or supplement thereto, or the omission or alleged
omission to state therein a material fact necessary 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 any Memorandum or such amendment or supplement in reliance upon and in
conformity with written information furnished to the Company by or on behalf of
such Initial Purchaser relating to such Initial Purchaser expressly for use
therein, and will reimburse the Company for any legal or other expenses
reasonably incurred by the Company in connection with investigating, preparing
to defend, defending or appearing as a third-party witness in connection with
any such action or claim.
The indemnity agreement in this Section 8(c) shall be in addition to
any liability which the Initial Purchasers 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, and to the
officers, directors, partners, employees, representatives and agents of the
Company or any such control person.
(d) Promptly after receipt by an indemnified party under Section
8(a) or 8(c) of notice of the commencement of any
19
action (including any governmental investigation), such indemnified party shall,
if a claim in respect thereof is to be made against the indemnifying party under
such subsection, notify the indemnifying party in writing of the commencement
thereof; but the omission so to notify the indemnifying party shall not relieve
it from any liability which it may have to any indemnified party under Section
8(a) or 8(c) except to the extent it was unaware of such action and has been
prejudiced in any material respect by such failure or from any liability which
it may have to any indemnified party otherwise than under such Section 8(a) or
8(c). In case any such action shall be brought against any indemnified party and
it shall notify the indemnifying party of the commencement thereof, the
indemnifying party shall be entitled to participate therein and, to the extent
that it shall wish, jointly with any other indemnifying party similarly
notified, to assume the defense thereof, with counsel reasonably satisfactory to
such indemnified party, and after notice from the indemnifying party to such
indemnified party of its election so to assume the defense thereof, the
indemnifying party shall not be liable to such indemnified party under such
subsection for any legal or other expenses subsequently incurred by such
indemnified party in connection with the defense thereof other than reasonable
costs of investigation. If, however, (i) the indemnifying party has not
authorized the employment of counsel for the indemnified party at the expense of
the indemnifying party or (ii) an indemnified party shall have reasonably
concluded that representation of such indemnified party and the indemnifying
party by the same counsel would be inappropriate under applicable standards of
professional conduct due to actual or potential differing interests between them
and the indemnified party so notifies the indemnifying party, then the
indemnified party shall be entitled to employ counsel different from counsel for
the indemnifying party at the expense of the indemnifying party and the
indemnifying party shall not have the right to assume the defense of such
indemnified party. In no event shall the indemnifying parties be liable for fees
and expenses or more than one counsel (in addition to local counsel) for all
indemnified parties in connection with any one action or separate but similar or
related actions in the same jurisdiction arising out of the same set of
allegations or circumstances. The counsel with respect to which fees and
expenses shall be so reimbursed shall be designated in writing by Xxxxxxxx
Xxxxxxxx & Co. Incorporated in the case of parties indemnified pursuant to
Section 8(a) and by the Company in the case of parties indemnified pursuant to
Section 8(c).
The Company shall not be liable for any settlement of any such
action or proceeding effected without its prior written consent (not to be
unreasonably withheld) and if settled with its written consent or if there is a
final judgment for the plaintiff, the Company agrees to indemnify and hold
harmless the Initial Purchaser and each other person referred to in Section 8(b)
to the extent provided herein.
20
Without limiting the generality of the foregoing, no indemnifying party shall,
without the prior written consent of the indemnified party, effect any
settlement of any pending or threatened proceeding in respect of which any such
indemnified party is or has been threatened to be made a party and to which the
indemnity herein is applicable; provided, however, that an indemnifying party
may effect such a settlement without the consent of the indemnified party if
such settlement includes an unconditional release of such indemnified party from
all liability for claims that are the subject matter of such proceeding or the
indemnifying party indemnifies the indemnified party in writing and posts a bond
for an amount equal to the maximum liability for all such claims as contemplated
above.
(e) In the event that the indemnity provided by Section 8(a) or 8(c)
is unavailable or insufficient to hold harmless an indemnified party for any
reason, the Company and the Initial Purchasers, severally and not jointly, shall
contribute to the aggregate Losses to which they may be subject as an
indemnifying party hereunder (after contribution from others) in such proportion
so that the Initial Purchasers are responsible for the portion represented by
the percentage that the total discounts and commissions paid to the Initial
Purchasers appearing on the cover page of the Final Offering Memorandum bears to
the total proceeds to the Company (net of discounts and commissions of the
Initial Purchasers) appearing thereon and the Company is responsible for the
remaining portion; provided, however, that, in any such case, (x) no Initial
Purchaser shall be required to contribute any amount in excess of such Initial
Purchaser's discount and commission applicable to the Notes and (y) no person
guilty of a fraudulent misrepresentation (within the meaning of Section 11(f) of
the Securities Act) shall be entitled to a contribution from any person who was
not guilty of such fraudulent misrepresentation. The amount paid or payable by
the Initial Purchasers as result of this Section 8(e) shall be deemed to include
any legal or other expenses reasonably incurred preparing to defend or defending
any such claim.
9. The respective indemnities, agreements, representations,
warranties and other statements of the Company and the Initial Purchasers, as
set forth in this Agreement or made by or on behalf of them, respectively,
pursuant to this Agreement, shall remain in full force and effect, regardless of
any investigation (or any statement as to the results thereof) made by or on
behalf of the Initial Purchasers or any controlling person of the Initial
Purchasers, the Company or an officer or director or controlling person of the
Company and shall survive delivery of and payment for the Notes.
10. The obligations of the Initial Purchasers
hereunder may be terminated by the Initial Purchasers by notice
given to and received by the Company prior to delivery of and
21
payment for the Notes, if, prior to that time, any of the events described in
Section 7(d), 7(i), or 7(j) shall have occurred or if the Initial Purchasers
shall decline to purchase the Notes for any other reason permitted under this
Agreement.
11. If (a) the Company shall fail to tender the Notes for delivery
to the Initial Purchasers (other than by reason of a default by the Initial
Purchasers) or (b) the Initial Purchasers shall decline to purchase the Notes
for any reason permitted under this Agreement (including the termination of this
Agreement pursuant to Section 10), the Company shall reimburse the Initial
Purchasers for the reasonable fees and expenses of their counsel and for such
other reasonable out-of-pocket expenses as shall have been incurred by them in
connection with this Agreement and the proposed purchase of the Notes, and upon
demand the Company shall pay the full amount thereof to the Initial Purchasers.
12. If either of the Initial Purchasers shall fail to purchase and
pay for any of the Notes agreed to be purchased by such Initial Purchaser
hereunder and such failure to purchase shall constitute a default in the
performance of its obligations under this Agreement, the non-defaulting Initial
Purchaser shall be obligated to take up and pay for the Notes which the
defaulting Initial Purchaser agreed but failed to purchase; provided, however,
that in the event that the aggregate principal amount of Notes which the
defaulting Initial Purchaser agreed but failed to purchase shall exceed 10% of
the aggregate principal amount of Notes set forth in Section 2 hereof, the
non-defaulting Initial Purchaser shall have the right to purchase all, but shall
not be under any obligation to purchase any, of the Notes as to which such
default occurred, and if such non-defaulting Initial Purchaser does not purchase
all the Notes as to which such default occurred, this Agreement will terminate
without liability to the non-defaulting Initial Purchaser or the Company. In the
event of a default by any Initial Purchaser as set forth in this Section 12, the
Delivery Date shall be postponed for such period, not exceeding seven days, as
the Initial Purchaser shall determine in order that the required changes in the
Final Offering Memorandum or in any other documents or arrangement may be
effected. Nothing contained in this Agreement shall relieve any defaulting
Initial Purchaser of its liability, if any, to the Company or any non-defaulting
Initial Purchaser for damages occasioned by its default hereunder.
13. All statements, requests, notices and agreements hereunder
shall be in writing or by written telecommunication, and shall be sufficient in
all respects if delivered or sent by registered mail, if to the Initial
Purchasers, to Xxxxxxxx Wertheim & Co. Incorporated at 000 Xxxxxxx Xxxxxx, Xxx
Xxxx, Xxx Xxxx 00000, Attention: High Yield Department; and if to the Company
to International Knife & Saw, Inc., 0000 Xxx
00
Xxxxxx, Xxxxxxxx, Xxxxxxxx 00000, Attention: Chief Executive Officer.
14. This Agreement shall be binding upon, and inure solely to the
benefit of, you, the Company and, to the extent provided in Section 8 hereof,
controlling persons, officers, directors, partners, employees, representatives
and agents referred to in Section 8, and their respective heirs, executors,
administrators, successors and assigns, and no other person shall acquire or
have any right under or by virtue of this Agreement. No purchaser of any of the
Notes from the Initial Purchasers shall be deemed a successor or assign by
reason merely of such purchase.
15. Time shall be of the essence of this Agreement.
16. This Agreement shall be governed by and construed in accordance
with the laws of the State of New York (without giving effect to principles of
conflicts of law).
17. This Agreement may be executed by any one or more of the parties
hereto 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
instrument.
23
[SIGNATURE PAGE]
If the foregoing is in accordance with your understanding, please
sign and return to us a counterpart hereof, and upon the acceptance hereof by
you, this letter and such acceptance hereof shall constitute a binding agreement
between you and the Company.
Very truly yours,
INTERNATIONAL KNIFE & SAW, INC.
By:
--------------------------------
Name:
Title:
Accepted as of the date hereof:
XXXXXXXX WERTHEIM & CO.
INCORPORATED
By:
----------------------------
Name:
Title:
XXXXX XXXXXX INC.
By:
----------------------------
Name:
Title:
