Exhibit 4.2
EXECUTION COPY
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COMMUNICATIONS INSTRUMENTS, INC.
$95,000,000
10% SENIOR SUBORDINATED NOTES DUE 2004
PURCHASE AGREEMENT
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September 12, 1997
BANCAMERICA SECURITIES, INC.
SALOMON BROTHERS INC
c/o BancAmerica Securities, Inc.
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▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
Communications Instruments, Inc., a North Carolina corporation (the
"Company"), and the subsidiary guarantors listed in Schedule 1 attached hereto
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(the "Guarantors") each hereby confirm its agreement with you (the "Initial
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Purchasers"), as set forth below.
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1. The Securities. Subject to the terms and conditions herein
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contained, the Company proposes to issue and sell to the Initial Purchasers
$95,000,000 aggregate principal amount of their 10% Senior Subordinated Notes
due 2004 (the "Notes"). The Notes will be guaranteed (the "Guarantees", and
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together with the Notes, the "Securities") by the Guarantors on a senior
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subordinated basis. The Securities are to be issued under an indenture (the
"Indenture") to be dated as of September 18, 1997 by and among the Company, the
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Guarantors and Norwest Bank Minnesota National Association, as trustee (the
"Trustee").
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The Securities will be offered and sold to the Initial Purchasers
without being registered under the Securities Act of 1933, as amended (the
"Securities Act"), in reliance on exemptions therefrom.
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In connection with the sale of the Securities, the Company has
prepared a preliminary offering memorandum dated August 25, 1997 (the
"Preliminary Memorandum"), and the Company will prepare a final offering
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memorandum dated September 12, 1997 (the "Final Memorandum"; the Preliminary
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Memorandum and the Final Memorandum each herein being referred to as a
"Memorandum") setting forth or including a description of the terms of the
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Securities, the terms of the offering of the Securities, a description of the
Company and the Company's subsidiaries listed in Schedule 2 attached hereto (the
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"Subsidiaries") and any material developments relating to the Company and the
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Subsidiaries occurring after the
date of the most recent historical financial statements included therein.
The Initial Purchasers and their direct and indirect transferees of
the Securities will be entitled to the benefits of the Registration Rights
Agreement, substantially in the form attached hereto as Exhibit A (the
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"Registration Rights Agreement"), pursuant to which the Company and the
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Guarantors have agreed, among other things, to file a registration statement
(the "Registration Statement") with the Securities and Exchange Commission (the
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"Commission") in order to register the Securities or the Exchange Securities (as
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defined in the Registration Rights Agreement) under the Securities Act.
Each of the Company and the Guarantors shall have joint and several
liability in respect of all obligations hereunder. Each of the Company and the
Guarantors hereby acknowledges that this Agreement is the independent and
several obligation of each of the Company and the Guarantors and may be enforced
against any of the Company or the Guarantors separately, whether or not
enforcement of any right or remedy hereunder has been sought against the Company
or any other Guarantor. Each of the Company and the Guarantors hereby expressly
waives, with respect to any of the amounts owing hereunder by the Company or
other Guarantor in respect of the obligations (collectively, the "Other Issuer
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Obligations"), diligence, presentment, demand of payment, protest and all
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notices whatsoever, and any requirement that the Initial Purchasers exhaust any
right, power or remedy or proceed against the Company and/or such other
Guarantor under this Agreement, or any other agreement or instrument referred to
herein or therein, or against any other person under any other guarantee of, or
security for, any of such Other Issuer Obligations.
2. Representations and Warranties. The Company and the Guarantors,
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jointly and severally, represent and warrant to and agree with, on the date
hereof, each of the Initial Purchasers that:
(a) Neither the Final Memorandum nor any amendment or supplement
thereto as of the date thereof and at all times subsequent thereto up to the
Closing Date (as defined in Section 3 below) contained or contains any untrue
statement of a material fact or omitted or omits to state a material fact
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading, except that the representations and
warranties set forth in this Section 2(a) do not apply to statements or
omissions made in reliance upon and in conformity with information relating to
any of the Initial Purchasers furnished to the Company in writing by or on
behalf of such Initial Purchaser expressly for use in the Final Memorandum or
any amendment or supplement thereto.
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(b) As of the dates set forth therein, the authorized capitalization
of the Company is set forth in the Final Memorandum; the Subsidiaries constitute
all of the subsidiaries of the Company; the Guarantors constitute all of the
subsidiaries of the Company organized under the laws of the United States or any
state thereof or the District of Columbia; all of the outstanding Equity
Interests (as defined below) of the Company and the Subsidiaries have been, and
as of the Closing Date will be, duly authorized and validly issued, are fully
paid and non-assessable and were not issued in violation of any preemptive or
similar rights; as of the Closing Date, all of the outstanding Equity Interests
of each of the Company and the Subsidiaries will be free and clear of all liens,
encumbrances, equities and claims or restrictions on voting or transferability
(other than those imposed by the Senior Credit Facility (as defined in the Final
Memorandum) or by the Securities Act and the securities or "Blue Sky" laws of
certain jurisdictions); except as set forth in the Final Memorandum, there are
no (i) options, warrants or other rights to purchase from any of the Company or
the Subsidiaries, (ii) agreements or other obligations of any of the Company or
the Subsidiaries to issue or (iii) other rights to convert any obligation into,
or exchange any securities for, Equity Interests in any of the Company or the
Subsidiaries outstanding. As used herein "Equity Interest" of any person means
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any and all shares, interests, rights to purchase, warrants, options,
participations or other equivalents of or interests in (however designated)
corporate stock or other equity participations, including partnership interests,
whether general or limited, of such person.
(c) Each of the Company and the Subsidiaries has been duly organized,
is validly existing and is in good standing under the laws of the jurisdiction
of its organization, with all requisite power and authority to own its
properties and conduct its business as now conducted, and as described in the
Final Memorandum; each of the Company and the Subsidiaries is duly qualified to
do business as a foreign corporation or partnership in good standing in all
other jurisdictions where the ownership or leasing of its properties or the
conduct of its business requires such qualification, except where the failure to
be so qualified, individually or in the aggregate, would not (i) have a material
adverse effect on the general affairs, management, business, condition
(financial or otherwise), prospects or results of operations of the Company and
the Subsidiaries, taken as a whole, or (ii) materially impair either of the
Company's or any Subsidiary's ability to perform the obligations contemplated by
the Transaction Documents (as defined below) to which it is a party and the
transactions contemplated to be performed by it described in the Final
Memorandum, any such event, a "Material Adverse Effect").
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(d) The Company has all requisite power and authority to execute,
deliver and perform each of its obligations under the Notes, the Exchange Notes
(as defined in the Final Memorandum) and
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the notes constituting Private Exchange Securities (as defined in the
Registration Rights Agreement). The Notes, the Exchange Notes and the Private
Exchange Securities have each been duly and validly authorized by the Company
and, when executed by the Company and authenticated by the Trustee in accordance
with the provisions of the Indenture and, in the case of the Notes, when
delivered to and paid for by the Initial Purchasers in accordance with the terms
of this Agreement, will have been duly executed, issued and delivered and will
constitute valid and legally binding obligations of the Company, entitled to the
benefits of the Indenture and enforceable against the Company in accordance with
their terms, except that the enforcement thereof may be subject to (i)
bankruptcy, insolvency, reorganization, fraudulent conveyance, moratorium or
other similar laws now or hereafter in effect relating to creditors' rights
generally, and (ii) general principles of equity and the discretion of the court
before which any proceeding with respect thereto may be brought.
(e) Each of the Company and the Guarantors has all requisite power and
authority to execute, deliver and perform its obligations under the Indenture.
The Indenture meets the requirements for qualification under the Trust Indenture
Act of 1939, as amended (the "TIA"). The Indenture has been duly and validly
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authorized by each of the Company and the Guarantors and, when executed and
delivered by the Company and the Guarantors (assuming the due authorization,
execution and delivery by the Trustee), will constitute a valid and legally
binding agreement of the Company and each of the Guarantors, enforceable against
each of the Company and the Guarantors in accordance with its terms, except that
the enforcement thereof may be subject to (i) bankruptcy, insolvency,
reorganization, fraudulent conveyance, moratorium or other similar laws now or
hereafter in effect relating to creditors' rights generally and (ii) general
principles of equity and the discretion of the court before which any proceeding
with respect thereto may be brought.
(f) Each of the Company and the Guarantors have all requisite power
and authority to execute, deliver and perform their obligations under each of
the following to the extent it is a party thereto: (i) this Agreement; (ii) the
Registration Rights Agreement; and (iii) the Senior Credit Facility. When
executed and delivered by the Company and, if a party thereto, the Guarantors,
(assuming the due authorization, execution and delivery by each other party
thereto) each of this Agreement, the Registration Rights Agreement and the
Senior Credit Facility will constitute valid and legally binding agreements of
each of the Company and such Guarantors enforceable against each of such persons
in accordance with its terms, except that (A) the enforcement thereof may be
subject to (i) bankruptcy, insolvency, reorganization, fraudulent conveyance,
moratorium or other similar laws now or hereafter in effect relating to
creditors' rights generally and (ii) general principles of equity and the
discretion of the court
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before which any proceeding relating thereto may be brought and (B) any rights
to indemnity or contribution thereunder may be limited by federal or state
securities laws or public policy considerations. This Agreement, the Indenture,
the Securities, the Registration Rights Agreement and the Senior Credit Facility
are referred to herein as the "Transaction Documents."
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(g) No consent, approval, authorization or order of any court or
governmental agency or body, or third party is required for the performance by
any of the Company or the Guarantors of their respective obligations under the
Transaction Documents or the consummation by the Company or any of the
Guarantors of the transactions contemplated thereby or hereby, except such as
shall have been made or obtained prior to the Closing Date, such as may be
required in connection with the registration of the Securities or the Exchange
Securities under the Securities Act in accordance with the Registration Rights
Agreement, such as may be required under state securities or "Blue Sky" laws and
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such as would not, singularly or in the aggregate, have a Material Adverse
Effect. None of the Company or the Subsidiaries is (i) in violation of its
articles of limited partnership, certificate of incorporation or bylaws (or
similar organizational document), (ii) (assuming compliance with all applicable
state securities or "Blue Sky" laws and assuming the accuracy of the
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representations and warranties of the Initial Purchasers in Section 8 hereof) in
breach or violation of any statute, judgment, decree, order, rule or regulation
applicable to any of them or any of their respective properties or assets,
except for any such breach or violation which, individually or in the aggregate,
would not have a Material Adverse Effect, or (iii) in breach of or default under
(nor has any event occurred which, with notice or passage of time or both, would
constitute a default under) or in violation of any of the terms or provisions of
any partnership agreement, indenture, mortgage, deed of trust, loan agreement,
note, lease, license, franchise agreement, permit, certificate, contract or
other agreement or instrument to which any of them is a party or to which any of
them or their respective properties or assets is subject (collectively,
"Contracts"), except for any such breach, default, violation or event which,
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individually or in the aggregate, would not have a Material Adverse Effect.
(h) The issuance, sale and delivery of the Securities and the
execution, delivery and performance by the Company and the Guarantors of each of
the Transaction Documents, and the consummation by the Company and each of the
Guarantors of the transactions contemplated thereby and hereby, and the
fulfillment of the terms thereof or hereof, will not conflict with or constitute
or result in a breach of or a default under or an event which with notice or
passage of time or both would constitute a default under or violation of (i) any
of the terms or provisions of any Contract, except for any such conflict,
breach, violation, default or event which, individually or in the aggregate,
would not
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have a Material Adverse Effect, (ii) the articles of limited partnership,
certificate of incorporation or bylaws (or similar organizational document) of
any of the Company or the Guarantors, or (iii) (assuming compliance with all
applicable state securities or "Blue Sky" laws and assuming the accuracy of the
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representations and warranties of the Initial Purchasers in Section 8 hereof)
any statute, judgment, decree, order, rule or regulation applicable to any of
the Company or the Guarantors or any of their respective properties or assets,
except for any such conflict, breach or violation which, individually or in the
aggregate, would not have a Material Adverse Effect.
(i) The historical consolidated financial statements of the Company
and the Subsidiaries and the financial statements of Kilovac Corporation and its
subsidiaries (the "Kilovac Entities") and the ▇▇▇▇▇▇▇ Electrical Manufacturing
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Division of Figgie International, Inc. ("▇▇▇▇▇▇▇") included in the Final
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Memorandum present fairly in all material respects the financial position,
results of operations and cash flows of the Company and the Subsidiaries,
Kilovac Entities and ▇▇▇▇▇▇▇, respectively, at the dates and for the periods to
which they relate and have been prepared in accordance with generally accepted
accounting principles applied on a consistent basis. The financial data in the
Final Memorandum under the headings "Offering Memorandum Summary-Summary
Consolidated Financial Data" and "Selected Consolidated Financial Data" present
fairly in all material respects the information purported to be shown therein
and have been prepared and compiled on a basis consistent with the financial
statements included therein, except as otherwise stated therein. Deloitte &
Touche LLP (the "Independent Accountants") is an independent public accounting
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firm with respect to each of the Company, the Kilovac Entities and ▇▇▇▇▇▇▇
within the meaning of Rule 101 of the Code of Professional Conduct of the
American Institute of Certified Public Accountants ("AICPA") and its
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interpretations and rulings thereunder, as of the dates of above-referenced
financial statements.
(j) The pro forma financial statements (including the notes thereto)
and the other pro forma financial information included in the Final Memorandum
(i) comply as to form in all material respects with the applicable requirements
of Regulation S-X promulgated under the Securities Act and the Securities
Exchange Act of 1934, as amended (the "Exchange Act"); (ii) have been prepared
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in all material respects in accordance with the Commission's rules and
guidelines with respect to pro forma financial statements; (iii) have been
properly computed on the bases described therein and the assumptions used in the
preparation of the pro forma financial data and other pro forma financial
information included in the Final Memorandum are reasonable, and the adjustments
used therein are appropriate to give effect to the transactions or circumstances
referred to therein; and (iv) present
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fairly, in all material respects, the information purported to be shown therein.
(k) There is not pending or, to the knowledge of the Company or the
Subsidiaries, threatened any action, suit or proceeding to which any of the
Company or the Subsidiaries is a party, or to which the property or assets of
any of the Company or the Subsidiaries are subject, before or brought by any
court, arbitrator or governmental agency or body which, if determined adversely
to any of the Company or the Subsidiaries, individually or in the aggregate,
would have a Material Adverse Effect or which seeks to restrain, enjoin, prevent
the consummation of or otherwise challenge the issuance or sale of the
Securities to be sold hereunder or the consummation of the other transactions on
the Closing Date contemplated by the Transaction Documents or otherwise
described in the Final Memorandum. Neither the Company nor any Subsidiary has
received any notice or claim of any default (or event, condition or omission
which with notice or lapse of time or both would result in a default) under any
of their respective Contracts, including those referred to in the Final
Memorandum, or any other Transaction Document to which it is a party or has
knowledge of any breach of any of such Contracts by the other party or parties
thereto, except such defaults or breaches as would not reasonably be expected to
result in a Material Adverse Effect.
(l) Each of the Company and the Subsidiaries owns or possesses
adequate licenses or other rights to use all patents, trademarks, service marks,
trade names, copyrights and know-how necessary to conduct the businesses now or
proposed to be operated by it as described in the Final Memorandum except where
the failure to possess or make the same would not have a Material Adverse
Effect, and none of the Company or the Subsidiaries has received any notice of
infringement of or conflict with (or knows of any such infringement of or
conflict with) asserted rights of others with respect to any patents,
trademarks, service marks, trade names, copyrights or know-how which, if such
assertion of infringement or conflict were sustained, individually or in the
aggregate, would have a Material Adverse Effect.
(m) Since the date of the most recent financial statements appearing
in the Final Memorandum, except as described therein or as contemplated by the
Transaction Documents, (i) none of the Company or the Subsidiaries has incurred
any liabilities or obligations, direct or contingent, or entered into or agreed
to enter into any transactions or contracts (written or oral) not in the
ordinary course of business which liabilities, obligations, transactions or
contracts that, individually or in the aggregate, would have a Material Adverse
Effect, (ii) neither the Company nor any of the Subsidiaries has purchased any
of its outstanding Equity Interests, or declared, paid or otherwise made any
dividend or distribution of any kind on its Equity Interests and (iii) there has
not been any change in the long term indebtedness of the
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Company or the Subsidiaries that, individually or in the aggregate, would have a
Material Adverse Effect.
(n) Each of the Company and the Subsidiaries has filed all necessary
federal, state and foreign income and franchise tax returns required to be filed
through the date hereof except where the failure to so file such returns,
individually or in the aggregate, would not have a Material Adverse Effect, and
has paid all taxes shown as due thereon prior to the date upon which penalties
attach thereto, except for taxes which the Company or any Subsidiary is
contesting in good faith for which adequate reserves have been established; and
other than tax deficiencies which the Company or any Subsidiary is contesting in
good faith and for which the Company or such Subsidiary has provided adequate
reserves, there is no tax deficiency that has been asserted against the Company
or any of the Subsidiaries that, individually or in the aggregate, would have a
Material Adverse Effect.
(o) The statements set forth under the heading "Description of the
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Notes" in the Final Memorandum, insofar as such statements purport to summarize
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certain provisions of the Securities and the Indenture, provide a fair summary
of such provisions and information with respect thereto; the statements set
forth under the heading "Description of the Senior Credit Facility" in the Final
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Memorandum, insofar as such statements purport to summarize certain provisions
of the Senior Credit Facility provide a fair summary of such provisions and
information with respect thereto; the statements set forth under the heading
"Certain Relationships and Related Transactions" in the Final Memorandum,
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insofar as such statements purport to summarize certain provisions of the
Management Agreement, the Stockholders Agreement, the Registration Agreement and
the Tax Sharing Agreement (each as defined in the Final Memorandum), provide a
fair summary of such provisions and information with respect thereto; the
statements set forth under the subheading "The Transactions" under the heading
"Offering Memorandum Summary" in the Final Memorandum, insofar as such
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statements purport to summarize certain provisions of the Recapitalization (as
defined in the Final Memorandum), provide a fair summary of such provisions and
information with respect thereto.
(p) The statistical and market-related data included in the Final
Memorandum are based on or derived from sources which the Company and the
Subsidiaries believe to be reliable and accurate.
(q) No part of the proceeds of the sale of the Securities will be
used, directly or indirectly, for any purpose that violates any provision of
Regulation G, T, U or X of the Board of Governors of the Federal Reserve System,
in each case as in effect, or as the same may hereafter be in effect, on the
Closing Date.
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(r) Each of the Company and the Subsidiaries has good and marketable
title in fee simple to, all real property and owns all personal property
described in the Final Memorandum as being owned by it and holds a leasehold
estate in the real and personal property described in the Final Memorandum as
being leased by, in each case, it free and clear of all liens, charges,
encumbrances or restrictions, except (i) liens, encumbrances and claims securing
the Senior Credit Facility, (ii) as described in the Final Memorandum or (iii)
to the extent the failure to have such title or the existence of such liens,
charges, encumbrances or restrictions, individually or in the aggregate, would
not have a Material Adverse Effect. All leases, contracts and agreements to
which any of the Company or the Subsidiaries is a party or by which any of them
is bound are valid and enforceable against such Company or Subsidiary, and, to
the Company's knowledge, are valid and enforceable against the other party or
parties thereto and are in full force and effect with only such exceptions as,
individually or in the aggregate, would not have a Material Adverse Effect.
(s) Except as described in the Final Memorandum or as, individually or
in the aggregate, would not have a Material Adverse Effect (A) each of the
Company and the Subsidiaries is in compliance with and not subject to liability
under applicable Environmental Laws (as defined below), (B) each of the Company
and the Subsidiaries has made all filings and provided all notices required
under any applicable Environmental Law, and has and is in compliance with all
permits required under any applicable Environmental Laws and each of them is in
full force and effect, (C) there is no civil, criminal or administrative action,
suit, demand, claim, hearing, notice of violation, investigation, proceeding,
notice or demand letter or request for information pending or, to the knowledge
of the Company or any of the Subsidiaries, threatened against the Company or any
of the Subsidiaries under any Environmental Law, (D) no lien, charge,
encumbrance or restriction has been recorded under any Environmental Law with
respect to any assets, facility or property owned, operated, leased or
controlled by any of the Company or the Subsidiaries, (E) none of the Company or
the Subsidiaries has received notice that it has been identified as a
potentially responsible party under the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended ("CERCLA") or any comparable
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state law, (F) no property or facility of any of the Company or the Subsidiaries
is (i) listed or proposed for listing on the National Priorities List under
CERCLA or is (ii) listed in the Comprehensive Environmental Response,
Compensation, Liability Information System List promulgated pursuant to CERCLA,
or on any comparable list maintained by any state or local governmental
authority.
For purposes of this Agreement, "Environmental Laws" means the common
law and all applicable federal, state and local laws or regulations, codes,
orders, decrees, judgments or
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injunctions issued, promulgated, approved or entered thereunder, relating to
pollution or protection of public or employee health and safety or the
environment, including, without limitation, laws relating to (i) emissions,
discharges, releases or threatened releases of hazardous materials, into the
environment (including, without limitation, ambient air, surface water, ground
water, land surface or subsurface strata), (ii) the manufacture, processing,
distribution, use, generation, treatment, storage, disposal, transport or
handling of hazardous materials, and (iii) underground and above ground storage
tanks, and related piping, and emissions, discharges, releases or threatened
releases therefrom.
(t) There is no strike, labor dispute, slowdown or work stoppage with
the employees of any of the Company or the Subsidiaries which is pending or, to
the knowledge of the Company or any of the Subsidiaries, threatened in any case,
which would have a Material Adverse Effect. Except as described in the Final
Memorandum, no employees of the Company or any Subsidiaries are covered by a
collective bargaining agreement nor is any union organizing effort or campaign
pending or, to the knowledge of the Company or any of the Subsidiaries,
threatened with respect to any such employees.
(u) Each of the Company and the Subsidiaries maintains reasonably
adequate insurance covering the conduct of its business and the value of its
properties.
(v) None of the Company or the Subsidiaries has any liability for any
prohibited transaction or funding deficiency or any complete or partial
withdrawal liability with respect to any pension, profit sharing or other plan
which is subject to the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), to which any of the Company or the Subsidiaries makes or ever
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has made a contribution and in which any employee of the Company or of any
Subsidiary is or has ever been a participant. With respect to such plans, the
Company and each Subsidiary is in compliance in all material respects with all
applicable provisions of ERISA.
(w) Each of the Company and the Subsidiaries (i) makes and keeps
accurate books and records and (ii) maintains internal accounting controls which
provide reasonable assurance that (A) transactions are executed in accordance
with management's general or specific authorizations, (B) transactions are
recorded as necessary to permit preparation of its financial statements and to
maintain accountability for its assets, (C) access to its assets is permitted
only in accordance with management's general or specific authorizations and (D)
the reported accountability for its assets is compared with existing assets at
reasonable intervals and appropriate action has been taken with respect to any
differences.
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(x) None of the Company or the Subsidiaries is or will be an
"investment company" or "promoter" or "principal underwriter" for an "investment
company," as such terms are defined in the Investment Company Act of 1940, as
amended, and the rules and regulations thereunder.
(y) Neither of the Company nor the Subsidiaries does business with
the government of Cuba or with any person or affiliate located in Cuba within
the meaning of Section 517.075, Florida Statutes 1985, as amended, and all
regulations promulgated thereunder.
(z) No condition, omission, event or act has occurred with respect to
any of the Company or the Subsidiaries which, had the Indenture already been
executed and delivered, would (or, with the giving of notice and/or the lapse of
time and/or the issue of a certificate, could) constitute a Default (as defined
in the Indenture).
(aa) Except as described in the Final Memorandum, no holder of
securities of any of the Company or the Subsidiaries will be entitled to have
such securities registered under the registration statement required to be filed
by the Company pursuant to the Registration Rights Agreement other than as
expressly permitted thereby.
(bb) Immediately after the consummation of the transactions
contemplated by this Agreement, the fair value and present fair saleable value
of the assets of each of the Company and the Guarantors (each on a consolidated
basis) will exceed the sum of its stated liabilities and identified contingent
liabilities; none of the Company or the Guarantors (each on a consolidated
basis) is, nor will any of the Company or the Guarantors (each on a consolidated
basis) be, after giving effect to the execution, delivery and performance of
this Agreement, and the consummation of the transactions contemplated hereby
including, in the case of the Guarantors, honoring the guaranty obligation of
such person,(a) left with unreasonably small capital with which to carry on its
business as it is proposed to be conducted, or (b) unable to pay its debts
(contingent or otherwise) as they mature.
(cc) Assuming the accuracy of the representations and warranties of
the Initial Purchasers contained in Section 8 hereof and their compliance with
the agreements set forth therein, none of the Company, the Subsidiaries or any
of their respective Affiliates (as defined in Rule 501(b) of Regulation D under
the Securities Act) has directly, or through any authorized 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
solicitation or
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general advertising (as those terms are used in Rule 502(C) under the Securities
Act) in connection with the offering of the Notes or in any manner involving a
public offering within the meaning of Section 4(2) of the Securities Act.
(dd) Assuming the accuracy of the representations and warranties of
the Initial Purchasers in Section 8 hereof and their compliance with the
agreements set forth therein, it is not necessary in connection with the offer,
sale and delivery of the Securities to the Initial Purchasers in the manner
contemplated by this Agreement to register any of the Securities under the
Securities Act or to qualify the Indenture under the TIA.
(ee) No securities of the Company or the Subsidiaries are of the same
class (within the meaning of Rule 144A under the Securities Act) as the
Securities and listed on a national securities exchange registered under Section
6 of the Exchange Act, or quoted in a United States automated inter-dealer
quotation system.
(ff) None of the Company or the Subsidiaries has taken, nor will any
of them take, directly or indirectly, any action designed to, or that might be
reasonably expected to, cause or result in stabilization or manipulation of the
price of the Securities in violation of Regulation M under the Exchange Act.
Any certificate signed by any officer of any of the Company or the
Guarantors and delivered to any Initial Purchaser or to counsel for the Initial
Purchasers shall be deemed a joint and several representation and warranty by
each of the Company and the Guarantors to each Initial Purchaser as to the
matters covered thereby.
3. Purchase, Sale and Delivery of the Securities. On the basis of
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the representations, warranties, agreements and covenants herein contained and
subject to the terms and conditions herein set forth, the Company agrees to
issue and sell to the Initial Purchasers, and the Initial Purchasers, acting
severally and not jointly, agree to purchase from the Company in the respective
amounts of Securities set forth opposite its name on Schedule 3 hereto at 97.0%
----------
of their principal amount. One or more certificates in definitive form for the
Securities that the Initial Purchasers have agreed to purchase hereunder, and in
such denomination or denominations and registered in such name or names as the
Initial Purchasers request upon notice to the Company at least thirty-six (36)
hours prior to the Closing Date, shall be delivered by or on behalf of the
Company to the Initial Purchasers on the Closing Date, against payment by or on
behalf of the Initial Purchasers of the purchase price therefor by wire transfer
(same day funds), net of the overnight cost of such funds, to such account or
accounts as the Company shall specify prior to the Closing Date, or by such
means as the parties hereto shall agree
-12-
prior to the Closing Date. The Securities will be represented by one or more
definitive global securities in book-entry form which will be deposited by or on
behalf of the Company with The Depository Trust Company or its designated
custodian. For purposes of Rule 15c6-1 under the Exchange Act, the Closing Date
shall be the date for payment of funds and delivery of securities for all the
Securities sold pursuant to the offering of the Securities. Such delivery of and
payment for the Securities shall be made at the offices of Winston & ▇▇▇▇▇▇, ▇▇
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, at 10:00 A.M., Chicago time, on September
18, 1997, or at such other place, time or date as the Initial Purchasers, on the
one hand, and the Company, on the other hand, may agree upon, such time and date
of delivery against payment being herein referred to as the "Closing Date." The
------------
Company will make such certificate or certificates for the Securities available
for checking and packaging by the Initial Purchasers at the offices Winston &
▇▇▇▇▇▇ of in Chicago, Illinois, or at such other place as BancAmerica
Securities, Inc. may designate, at least twenty-four (24) hours prior to the
Closing Date.
It is understood that each certificate evidencing the Securities shall
bear a legend to the following effect, unless the Company and the Trustee
determine otherwise consistent with applicable law:
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE UNITED STATED
SECURITIES ACT OF 1933 AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE
OR FOREIGN SECURITIES LAWS. NEITHER THIS SECURITY NOR ANY INTEREST OR
PARTICIPATION HEREIN MAY BE REOFFERED, ASSIGNED, TRANSFERRED, PLEDGED,
ENCUMBERED, SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH
REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM. EACH PURCHASER OF
THIS NOTE IS HEREBY NOTIFIED THAT THE SELLER OF THIS NOTE MAY BE
RELYING ON THE EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE
SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER.
THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF AGREES TO
OFFER, SELL OR OTHERWISE TRANSFER SUCH SECURITY, PRIOR TO THE DATE
(THE "RESALE RESTRICTION TERMINATION DATE") WHICH IS TWO YEARS AFTER
THE LATER OF THE ORIGINAL ISSUE DATE HEREOF AND THE LAST DATE ON WHICH
THE COMPANY OR ANY AFFILIATE OF THE COMPANY WAS THE OWNER OF THIS
SECURITY (OR ANY PREDECESSOR OF SUCH SECURITY), ONLY (A) TO THE
COMPANY (B) PURSUANT TO A REGISTRATION STATEMENT THAT HAS BEEN
DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (C) FOR SO LONG AS
-13-
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 SECURITIES ACT THAT PURCHASES FOR ITS
OWN ACCOUNT OR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM
NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE IN RELIANCE ON RULE
144A, (D) PURSUANT TO OFFERS AND SALES THAT OCCUR OUTSIDE THE UNITED
STATES WITHIN THE MEANING OF REGULATION S UNDER THE SECURITIES ACT,
(E) TO AN INSTITUTIONAL ACCREDITED INVESTOR WITHIN THE MEANING OF RULE
501(A)(1), (2), (3) OR (7) UNDER THE SECURITIES ACT THAT IS ACQUIRING
THE SECURITY FOR ITS OWN ACCOUNT, OR FOR THE ACCOUNT OF SUCH AN
INSTITUTIONAL ACCREDITED INVESTOR, IN EACH CASE IN A MINIMUM PRINCIPAL
AMOUNT OF THE SECURITIES OF $100,000, FOR INVESTMENT PURPOSES AND NOT
WITH A VIEW TO OR FOR OFFER OR SALE IN CONNECTION WITH ANY
DISTRIBUTION IN VIOLATION OF THE SECURITIES ACT, OR (F) PURSUANT TO
ANOTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT, SUBJECT TO THE COMPANY'S AND THE TRUSTEE'S RIGHT PRIOR
TO ANY SUCH OFFER, SALE OR TRANSFER (i) PURSUANT TO CLAUSES (C), (D),
(E) OR (F) TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL,
CERTIFICATION AND/OR OTHER INFORMATION SATISFACTORY TO EACH OF THEM,
AND (ii) IN THE CASE OF THE FOREGOING CLAUSE (E), TO REQUIRE THAT A
TRANSFER NOTICE IS COMPLETED AND DELIVERED BY THE TRANSFEROR TO THE
COMPANY AND THE TRUSTEE. THIS LEGEND WILL BE REMOVED UPON THE REQUEST
OF THE HOLDER AFTER THE RESALE RESTRICTION TERMINATION DATE.
The Company hereby agrees, to pay any transfer taxes payable in
connection with the initial delivery to the Initial Purchasers of the
Securities.
4. Offering by the Initial Purchasers. The Initial Purchasers
----------------------------------
propose to make an offering of the Securities at the price and upon the terms
set forth in the Final Memorandum, as soon as practicable after this Agreement
is entered into and as in the judgment of the Initial Purchasers is advisable.
5. Covenants of the Company and the Guarantors. Each of the Company
-------------------------------------------
and the Guarantors, jointly and severally, covenants and agrees with each of the
Initial Purchasers that:
-14-
(a) The Company and the Subsidiaries will not amend or supplement the
Final Memorandum or any amendment or supplement thereto of which the Initial
Purchasers shall not previously have been advised and furnished a copy for a
reasonable period of time prior to the proposed amendment or supplement and as
to which the Initial Purchasers shall have objected to by notice to the Company,
unless the Company is advised by counsel that such amendment or supplement is
legally required. The Company and the Subsidiaries will promptly, upon the
reasonable request of the Initial Purchasers or counsel for the Initial
Purchasers, make any amendments or supplements to the Preliminary Memorandum or
the Final Memorandum that may be necessary or advisable in connection with the
resale of the Securities by the Initial Purchasers.
(b) The Company and the Subsidiaries will cooperate with the Initial
Purchasers in arranging for the qualification of the Securities for offering and
sale under the securities or "Blue Sky" laws of which jurisdictions as the
--------
Initial Purchasers may reasonably designate and will continue such
qualifications in effect for as long as may be necessary to complete the resale
of the Securities; provided, however, that in connection herewith, neither the
-------- -------
Company nor any of the Subsidiaries shall be required to qualify as a foreign
entity or to execute a general consent to service of process in any jurisdiction
or subject itself to taxation in any such jurisdiction where it is not then so
subject or qualified.
(c) If, at any time prior to the completion of the resale by the
Initial Purchasers of the Securities, any event occurs or information becomes
known as a result of which, in the reasonable opinion of counsel for the
Company, the Final 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 and at the time made, not misleading, or if for any other reason
it is necessary, in the reasonable opinion of counsel for the Company, at any
time to amend or supplement the Final Memorandum to comply with applicable law,
the Company and the Subsidiaries will promptly notify the Initial Purchasers
thereof and will prepare, at the expense of the Company and the Subsidiaries, an
amendment or supplement to the Final Memorandum that corrects such statement or
omission or effects such compliance.
(d) The Company and the Subsidiaries will, without charge, provide to
the Initial Purchasers and to counsel for the Initial Purchasers as many copies
of the Preliminary Memorandum and the Final Memorandum or any amendment or
supplement thereto as the Initial Purchasers may reasonably request.
(e) For and during the period commencing on the date hereof and ending
on the date that no Securities are outstanding,
-15-
the Company and the Subsidiaries will furnish to the Initial Purchasers copies
of all reports and other communications (financial or otherwise) furnished by
any of the Company or the Subsidiaries to the Trustee, or the holders of the
Securities and, as soon as available, copies of any reports or financial
statements furnished to or filed by the Company or the Subsidiaries with the
Commission or any national securities exchange or governing body of any
automated quotation system on which any class of securities of any of the
Company or the Subsidiaries may be listed.
(f) Prior to the Closing Date, the Company and the Subsidiaries will
furnish to the Initial Purchasers, as soon as they are available to the Company,
a copy of any unaudited interim financial statements of the Company and the
Subsidiaries, for any period subsequent to the period covered by the most recent
financial statements appearing in the Final Memorandum.
(g) None of the Company, the Subsidiaries or any of their Affiliates
will 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 Securities in a manner which would require the
registration under the Securities Act of the Securities.
(h) None of the Company or its Subsidiaries shall, for a period of
120 days following the date hereof, without the prior written consent of the
Initial Purchasers, offer, sell, contract to sell or otherwise dispose of,
directly or indirectly, any debt securities of any of the Company or
Subsidiaries, other than the Securities, Exchange Securities, the Private
Exchange Securities, and debt securities evidencing indebtedness under the
Senior Credit Facility, indebtedness otherwise permitted under the Senior Credit
Facility or indebtedness under a loan or similar agreement entered into between
the Company or any Subsidiary and banks or banking or other financial
institutions or otherwise relating to receivables or inventory financings
entered into by the Company or any Subsidiary.
(i) Prior to the effectiveness of the Exchange Registration Statement
(as defined in the Registration Rights Agreement) or the Shelf Registration
Statement (as defined in the Registration Rights Agreement), as the case may be,
and thereafter only to the extent contemplated by such registration statements,
none of the Company or the Subsidiaries will engage in any form of general
solicitation or general advertising (as those terms are used in Regulation D
under the Securities Act) in connection with the offering of the Securities or
in any manner involving a public offering within the meaning of Section 4(2) of
the Securities Act.
(j) For so long as any of the Securities remain outstanding and are
"restricted securities" within the meaning of Rule 144(a)(3) under the
Securities Act, the Company and the
-16-
Subsidiaries will make available, upon request, to any holder of such Securities
the information specified in Rule 144A(d)(4) under the Act, unless the Company
or any of its Subsidiaries are then subject to Section 13 or 15(d) of the
Exchange Act.
(k) Each of the Company and the Subsidiaries will use its best
efforts to (i) permit the Securities to be designated PORTAL securities in
accordance with the rules and regulations adopted by the National Association of
Securities Dealers (the "NASD") relating to trading in the Private Offerings,
----
Resales and Trading through Automated Linkages Market (the "Portal Market") and
-------------
(ii) permit the Securities to be eligible for clearance and settlement through
The Depository Trust Company and its participants.
6. Expenses. The Company and the Guarantors agree, jointly and
--------
severally, to pay all costs and expenses incident to the performance of their
obligations under this Agreement, whether or not the transactions contemplated
herein are consummated or this Agreement is terminated pursuant to Section 11
hereof, including all costs and expenses incident to (i) the printing, word
processing or other production of documents with respect to the transactions
contemplated hereby, including any costs of printing the Preliminary Memorandum
and the Final Memorandum and any amendment or supplement thereto, and any "Blue
Sky" memoranda, (ii) all arrangements relating to the delivery to the Initial
Purchasers of copies of the foregoing documents, (iii) the fees and
disbursements of the counsel, the accountants and any other experts or advisors
retained by the Company and the Guarantors, (iv) preparation (including
printing), issuance and delivery to the Initial Purchasers of the Securities,
(v) the qualification of the Securities under state securities and "Blue Sky"
laws, including filing fees and reasonable fees and expenses of counsel for the
Initial Purchasers relating thereto, (vi) reasonable fees and expenses of the
Trustee including reasonable fees and expenses of counsel thereto, (vii) all
expenses and listing fees incurred in connection with the application for
quotation of the Securities on the PORTAL Market and (viii) any fees charged by
investment rating agencies for the rating of the Securities; provided, however,
-------- -------
that except as expressly provided in the last sentence of this Section 6, the
Initial Purchasers shall pay their own costs and expenses. If this Agreement is
terminated by reason of the default of one or more of the Initial Purchasers,
none of the Company nor any of its Subsidiaries shall be obligated to reimburse
any Initial Purchaser on account of such expenses. If the sale of the
Securities provided for herein is not consummated because any condition to the
obligations of the Initial Purchasers set forth in Section 7 hereof is not
satisfied, because this Agreement is terminated pursuant to Section 11 hereof or
because of any failure, refusal or inability on the part of any of the Company
or the Guarantors to perform all obligations and satisfy all conditions on their
part to be performed or satisfied hereunder (other than solely by reason of a
-17-
default by either of the Initial Purchasers of its obligations hereunder after
all conditions hereunder have been satisfied in accordance herewith), the
Company and the Guarantors, jointly and severally, agree to promptly reimburse
the Initial Purchasers upon demand for all out-of-pocket expenses (including
reasonable fees and expenses of Winston & ▇▇▇▇▇▇, counsel for the Initial
Purchasers) that shall have been incurred by the Initial Purchasers in
connection with the proposed purchase and sale of the Securities.
7. Conditions of the Initial Purchasers' Obligations. The obligation
-------------------------------------------------
of the Initial Purchasers to purchase and pay for the Securities shall, in their
sole discretion, be subject to the satisfaction or waiver of the following
conditions on or prior to the Closing Date:
(a) On the Closing Date, the Initial Purchasers shall have received
the opinion, dated as of the Closing Date and addressed to the Initial
Purchasers, of ▇▇▇▇▇▇▇, Wood & ▇▇▇▇▇▇▇▇, P.A., counsel for the Company, in form
and substance satisfactory to counsel for the Initial Purchasers, to the effect
that:
(i) The Company is duly organized, validly existing and in good
standing under the laws of the jurisdiction of its organization and has all
requisite power and authority to own, lease and operate its properties and
to conduct its business as described in the Final Memorandum.
(ii) The Company has the authorized capitalization set forth in the
Final Memorandum under the caption "Capitalization." The Parent (as
defined in the Final Memorandum) owns of record all of the outstanding
stock of the Company. For purposes of this opinion, such counsel has
assumed that such shares are duly authorized and validly issued and has
based this opinion solely on such counsel's review of the stock ledger of
the Company (which such counsel has assumed, with the Initial Purchasers'
permission, to be accurate and complete in all respects).
(iii) Except as set forth in the Final Memorandum, to the knowledge of
such counsel, (A) no options, warrants or other rights to purchase Equity
Interests in the Company are outstanding, (B) no agreements or other
obligations of the Company to issue, or other rights to cause the Company
to convert, any obligation into, or exchange any securities for, Equity
Interests in the Company are outstanding and (C) no holder of securities of
the Company is entitled to have such securities registered under a
registration statement filed by the Company pursuant to the Registration
Rights Agreement except as expressly permitted thereby.
-18-
(iv) The Company has all requisite power and authority to execute,
deliver and perform its respective obligations under the Indenture, the
Securities, the Exchange Securities and the Private Exchange Securities;
the Indenture has been duly and validly authorized, executed and delivered
by each of the Company.
(v) The Notes have each been duly and validly authorized, executed
and delivered by the Company.
(vi) The Exchange Securities and the Private Exchange Securities
have been duly and validly authorized by the Company.
(vii) The Company has all requisite power and authority to execute,
deliver and perform their obligations under each of this Agreement and the
Registration Rights Agreement; each of this Agreement and the Registration
Rights Agreement have been duly and validly authorized, executed and
delivered by the Company.
(viii) The issuance, sale and delivery of the Securities, the
execution and delivery of the Transaction Documents, and the consummation
of the transactions contemplated thereby and by the Final Memorandum
(including, without limitation, the issuance and sale of the Securities to
the Initial Purchasers) will not conflict with or constitute or result in a
breach or a default under (or an event which with notice or passage of time
or both would constitute a default under) or violation of any of (i) the
certificate of incorporation or bylaws (or similar organizational document)
of any of the Company or the Subsidiaries, or (ii) (assuming compliance
with all applicable state securities or "Blue Sky" laws and assuming the
--------
accuracy of the representations and warranties of the Initial Purchasers in
Section 8 hereof) any statute, judgment, decree, order, rule or regulation
known to such counsel to be applicable to any of the Company or the
Subsidiaries or any of their respective properties or assets, except for
any such conflict, breach or violation which, individually or in the
aggregate, would not have a Material Adverse Effect.
In rendering such opinion, counsel may (A) rely as to matters
involving the application of laws of any jurisdiction other than the laws of the
State of North Carolina or the laws of the United States of America, to the
extent they deem proper and specified in such opinion, upon the opinion of other
counsel of good standing whom they believe to be reliable and who are
satisfactory to counsel for the Initial Purchasers, and (B) rely as to all
matters of fact relevant to such opinion on certificates and written statements
of officers and employees of the Company provided, however, that all such
certificates and statements shall
-19-
be satisfactory to the Initial Purchasers in all material respects and attached
to such counsel's opinion.
References to the Final Memorandum in this subsection (a) shall
include any amendment or supplement thereto prepared in accordance with the
provisions of this Agreement at the Closing Date.
(b) On the Closing Date, the Initial Purchasers shall have received
the opinion, dated as of the Closing Date and addressed to the Initial
Purchasers, of ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇, counsel for the Company and the Guarantors, in
form and substance satisfactory to counsel for the Initial Purchasers, to the
effect that:
(i) Each of the Guarantors is existing and in good standing under
the laws of the State of California and has the corporate power and
authority to own, lease and operate its properties and to conduct its
business as described in the Final Memorandum. Each of the Company and the
Guarantors is duly qualified as a foreign partnership or corporation and in
good standing in each jurisdiction identified on a schedule to such opinion
that is in form and substance satisfactory to the Initial Purchasers and
their counsel.
(ii) The Company owns of record all of the outstanding stock of each
Guarantor. For purposes of this opinion, such counsel has assumed that
such shares are duly authorized and validly issued and has based this
opinion solely on such counsel's review of the stock ledgers of the
Guarantors (which such counsel has assumed, with the Initial Purchasers'
permission, to be accurate and complete in all respects).
(iii) Each of the Guarantors has the corporate power and authority to
enter into and perform its respective obligations under the Indenture, the
Securities, the Exchange Securities and the Private Exchange Securities.
The Indenture conforms in all material respects with the requirements of
the TIA. Each Guarantor's Board of Directors has adopted by requisite vote
the resolutions necessary to authorize such Guarantor's execution, delivery
and performance of the Indenture, each of the Guarantors has duly executed
and delivered the Indenture and (assuming the due authorization, execution
and delivery thereof by the Trustee) the Indenture will constitute the
valid and legally binding agreement of the Company and each of the
Guarantors, enforceable against each of such persons in accordance with its
terms.
(iv) When paid for by the Initial Purchasers in accordance with the
terms of this Agreement (assuming the due authorization, execution and
delivery of the Indenture by the Trustee and due authentication and
delivery of the Notes by
-20-
the Trustee in accordance with the Indenture), the Notes will constitute
the valid and legally binding obligations of the Company, entitled to the
benefits of the Indenture, and enforceable against the Company in
accordance with their terms.
(v) Each Guarantor's Board of Directors has adopted by requisite
vote the resolutions necessary to authorize such Guarantor's execution,
delivery and performance of the Guarantee to be executed by such Guarantor
and (assuming the due authorization, execution and delivery of the
Indenture by the Trustee) when the Notes are duly executed, authenticated,
issued and delivered as provided for in the Indenture and paid for as
provided for in the Purchase Agreement, such Guarantee will constitute the
valid and legally binding obligation of such Guarantor, entitled to the
benefits of the Indenture, and enforceable against such Guarantor in
accordance with its terms.
(vi) Each Guarantor's Board of Directors has adopted by requisite
vote the resolutions necessary to authorize such Guarantor's execution,
delivery and performance of the Exchange Securities and the Private
Exchange Securities and when the Exchange Securities and the Private
Exchange Securities have been duly executed, authenticated, issued and
delivered by the Company and each of the Guarantors in accordance with the
terms of the Indenture (assuming the due authorization, execution and
delivery of the Indenture by the Trustee and due authentication and
delivery of the Exchange Securities and the Private Exchange Securities by
the Trustee in accordance with the Indenture), the Exchange Securities and
the Private Exchange Securities will constitute the valid and legally
binding obligations of the Company and each of the Guarantors, entitled to
the benefits of the Indenture, and enforceable against each of the Company
and the Guarantors in accordance with their terms.
(vii) Each of the Guarantors has the corporate power and authority to
enter into and perform its obligations under each of this Agreement and the
Registration Rights Agreement. Each Guarantor's Board of Directors has
adopted by requisite vote the resolutions necessary to authorize such
Guarantor's execution, delivery and performance of this Agreement and the
Registration Rights Agreement, each of the Guarantors has duly executed and
delivered such agreements and (assuming the due authorization, execution
and delivery thereof by the other parties thereto) each such agreement
constitutes the valid and legally binding agreement of the Company and each
of the Guarantors, enforceable against each of such persons in accordance
with their terms.
-21-
(viii) The statements set forth under the heading "Description of
Notes" in the Final Memorandum, insofar as such statements purport to
summarize certain provisions of the Securities and the Indenture, in all
material respects provide a fair summary of such provisions and information
with respect thereto; the statements set forth under the heading
"Description of the Senior Credit Facility" in the Final Memorandum,
insofar as such statements purport to summarize certain provisions of the
Senior Credit Facility in all material respects provide a fair summary of
such provisions and information with respect thereto.
(ix) To such counsel's actual knowledge, no legal or governmental
proceedings are pending against any of the Company or its Subsidiaries
which seeks to restrain, enjoin, prevent the consummation of or otherwise
challenge the issuance or sale of the Securities to be sold hereunder or
the consummation of the other transactions described in the Final
Memorandum under the caption "Use of Proceeds." Such counsel confirms that
it has not been engaged to represent the Company or any Subsidiary in any
litigation which on the date of this opinion is pending against the Company
or any Subsidiary with a court or being actively threatened against the
Company or any Subsidiary.
(x) The issuance, sale and delivery of the Securities, the
execution and delivery of the Transaction Documents, and the consummation
of the transactions contemplated thereby (including, without limitation,
the issuance and sale of the Securities to the Initial Purchasers) will not
conflict with or constitute or result in a breach or a default under (or an
event which with notice or passage of time or both would constitute a
default under) or violation of (i) any of the terms or provisions of any
Contract identified on a schedule to such opinion that is in form and
substance satisfactory to the Initial Purchasers and their counsel, except
for any such conflict, breach, violation, default or event which,
individually or in the aggregate, would not have a Material Adverse Effect,
(ii) the certificate of incorporation or bylaws (or similar organizational
document) of any of the Company or the Subsidiaries, or (iii) (assuming
compliance with all applicable state securities or "Blue Sky" laws and
--------
assuming the accuracy of the representations and warranties of the Initial
Purchasers in Section 8 hereof) any statute or governmental rule or
regulation which, in such counsel's experience, is normally applicable both
to general business corporations that are not engaged in regulated business
activities and to transactions of the type contemplated by the Final
Memorandum (but without our having made any special investigation as to
other laws and provided that such counsel expresses no opinion in this
paragraph with respect to (a) any laws, rules or regulations to which the
Company or any
-22-
Guarantor may be subject as a result of the Initial Purchasers' legal or
regulatory status or the involvement of the Initial Purchasers in such
transactions or (b) any laws, rules or regulations relating to disclosure,
misrepresentations or fraud), except for any such conflict, breach or
violation which, individually or in the aggregate, would not have a
Material Adverse Effect.
(xi) No consent, approval, authorization or order of any court or
governmental agency or body is required for the performance by the Company
and each of the Guarantors of their respective obligations under the
Transaction Documents or the consummation by the Company and each any of
the Guarantors of the transactions contemplated thereby or hereby, except
such as have been obtained or made, such as may be required under the
Securities Act, the TIA or the securities or Blue Sky laws of the various
states (and the rules and regulations thereunder), as to which such counsel
expresses no opinion in this paragraph, and such as may be required with
respect to the Registration Rights Agreement under the laws referred to
above or under the Exchange Act.
(xii) To such counsel's actual knowledge, when the Securities are
issued and delivered pursuant to this Agreement, the Securities will not be
of the same class (within the meaning of Rule 144A under the Securities
Act) as securities of the Company and the Subsidiaries, if any, which are
listed on a national securities exchange registered under Section 6 of the
Exchange Act and the rules and regulations of the Commission promulgated
thereunder or quoted in a U.S. automated interdealer quotation system;
accordingly, the offer and sale of the Securities in the manner
contemplated by this Agreement and the Final Memorandum will be in
compliance with paragraph (d)(3) of Rule 144A under the Securities Act.
(xiii) None of the Company or the Subsidiaries is, or immediately
after the sale of the Securities to be sold hereunder and the application
of the proceeds from such sale (as described in the Final Memorandum under
the caption "Use of Proceeds") will be, an "investment company" as such
term is defined in the Investment Company Act of 1940, as amended.
(xiv) No registration under the Securities Act of the Securities is
required in connection with the sale of the Securities to the Initial
Purchasers as contemplated by this Agreement and the Final Memorandum or in
connection with the initial resale of the Securities by the Initial
Purchasers in accordance with Section 3 of this Agreement, and prior to the
commencement of the Exchange Offer (as defined in the Registration Rights
Agreement) or the effectiveness of the Shelf Registration Statement (as
defined in the Registration Rights Agreement), the Indenture is not
required to be
-23-
qualified under the TIA, in each case assuming (i) that the purchasers who
buy such Securities in the initial resale thereof are qualified
institutional buyers as defined in Rule 144A promulgated under the
Securities Act ("QIBs") or accredited investors as defined in Rule 501(a)
----
(1), (2), (3) or (7) of Regulation D promulgated under the Securities Act
("Accredited Investors"), (ii) the accuracy and completeness of the Initial
--------------------
Purchasers' representations in Section 8 hereof and those of the Company
and the Guarantors contained in this Agreement regarding the absence of a
general solicitation in connection with the sale of such Securities to the
Initial Purchasers and the initial resale thereof, (iii) the due
performance by the Initial Purchasers of the agreements set forth in
Section 8 hereof and (iv) the accuracy of the representations made by each
Accredited Investor who purchased Securities in the initial resale as set
forth in the Final Memorandum.
(xv) Neither the sale, issuance, execution or delivery of the Notes
nor the application of the net proceeds therefrom as described in the Final
Memorandum under the caption "Use of Proceeds" will contravene Regulation G
(12 C.F.R. Part 207), 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.
At the time the foregoing opinion is delivered, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇ shall
additionally state that it has participated in conferences with officers and
other representatives of the Company and the Subsidiaries, representatives of
the independent public accountants for the Company and Subsidiaries,
representatives of the Initial Purchasers and counsel for the Initial
Purchasers, at which conferences the contents of the Final Memorandum and
related matters were discussed, and, although it has not independently verified
and is not passing upon and assumes no responsibility for the accuracy,
completeness or fairness of the statements contained in the Final Memorandum
(except to the extent specified in subsection 7(b)(ix), it has no actual
knowledge which would lead it to believe that the Final Memorandum, on the date
thereof or at the Closing Date, contained an untrue statement of a material fact
or omitted to state a material fact required to be stated therein or necessary
to make the statements contained therein, in the light of the circumstances
under which they were made, not misleading (it being understood that such firm
need express no opinion with respect to the financial statements and related
notes thereto and the other financial statistical and accounting data included
in or omitted therefrom). The opinion of ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇ described in this
Section shall be rendered to the Initial Purchasers at the request of the
Company and the Subsidiaries and shall so state therein.
-24-
In rendering such opinion, counsel may (A) rely as to matters
involving the application of laws of any jurisdiction other than the laws of the
State of New York, the corporation laws of the State of Delaware, the
corporation laws of the State of California or the laws of the United States of
America, to the extent they deem proper and specified in such opinion, upon the
opinion of other counsel of good standing whom they believe to be reliable and
who are satisfactory to counsel for the Initial Purchasers, and (B) rely as to
all matters of fact relevant to such opinion on certificates and written
statements of officers and employees of the Company and the Guarantors;
provided, however, that all such certificates and statements shall be
satisfactory to the Initial Purchasers in all material respects and attached to
such counsel's opinion.
References to the Final Memorandum in this subsection (b) shall
include any amendment or supplement thereto prepared in accordance with the
provisions of this Agreement at the Closing Date.
(c) On the Closing Date, the Initial Purchasers shall have received
the opinion, in form and substance satisfactory to the Initial Purchasers, dated
as of the Closing Date and addressed to the Initial Purchasers, of Winston &
▇▇▇▇▇▇, counsel for the Initial Purchasers, with respect to certain legal
matters relating to this Agreement and such other related matters as the Initial
Purchasers may reasonably require. In rendering such opinion, Winston & ▇▇▇▇▇▇
shall have received and may rely upon such certificates and other documents and
information as it may reasonably request to pass upon such matters.
(d) The Initial Purchasers shall have received from the Independent
Accountants a comfort letter or letters dated the date hereof and the Closing
Date, in form and substance reasonably satisfactory to counsel for the Initial
Purchasers.
(e) The representations and warranties of the Company and the
Guarantors contained in this Agreement shall be true and correct on and as of
the date hereof and on and as of the Closing Date as if made on and as of the
Closing Date; the statements of the Company's and the Guarantors' officers made
pursuant to any certificate delivered in accordance with the provisions hereof
shall be true and correct and as of the date made and on and as of the Closing
Date; the Company and the Guarantors shall have performed all covenants and
agreements and satisfied all conditions on their part to be performed or
satisfied hereunder at or prior the Closing Date; and, except as described in
the Final Memorandum (exclusive of any amendment or supplement thereto after the
date hereof), subsequent to the date of the most recent financial statements in
such Final Memorandum, there shall have been no event or development that,
individually or in the aggregate, has or would have a Material Adverse Effect.
-25-
(f) The sale of the Securities hereunder shall not be enjoined
(temporarily or permanently) on the Closing Date.
(g) Subsequent to the date of the most recent financial statements
in the Final Memorandum (exclusive of any amendment or supplement thereto after
the date hereof), the conduct of the business and operations of any of the
Company or the Subsidiaries shall not have been interfered with by strike, fire,
flood, hurricane, accident or other calamity (whether or not insured) or by any
court or governmental action, order or decree, and, except as otherwise stated
therein, the properties of the Company or any of the Subsidiaries shall not have
sustained any loss or damage (whether or not insured) as a result of any such
occurrence, except any such interference, loss or damage which, individually or
in the aggregate, would not have a Material Adverse Effect.
(h) The Initial Purchasers shall have received certificates of each
of the Company and the Guarantors, dated the Closing Date, signed by their
respective Chairman of the Board, President or any Senior Vice President and the
Chief Financial Officer (or the corresponding officer of their respective
general partners), to the effect that:
(i) The representations and warranties of the Company and each of
the Guarantors contained in this Agreement are true and correct as of the
date hereof and as of the Closing Date, and the Company and each of the
Guarantors have performed all covenants and agreements and satisfied all
conditions on their part to be performed or satisfied hereunder at or prior
to the Closing Date;
(ii) At the Closing Date, since the date hereof or since the date of
the most recent financial statements in the Final Memorandum (exclusive of
any amendment or supplement thereto after the date hereof), no event or
events have occurred, no information has become known nor does any
condition exist that, individually or in the aggregate, would have a
Material Adverse Effect;
(iii) The sale of the Securities hereunder has not been enjoined
(temporarily or permanently); and
(iv) The Related Transactions have been consummated or are being
consummated on the Closing Date concurrently with the closing hereunder.
As used herein, "Related Transactions" means(i) the recapitalization of the
Parent (as defined in the Final Memorandum) pursuant to the
Recapitalization Agreement (as defined below), (ii) the entry by the
Company into the Senior Credit Facility and the initial borrowing by the
Company of approximately $6.0 million thereunder, (iii) the repayment of
all outstanding obligations under the Old Credit Facility (as defined in
the Final Memorandum), including a
-26-
success fee of approximately $1.6 million, and certain other liabilities as
contemplated in the Final Memorandum and the release of all liens on
property of the Company and its Subsidiaries granted in connection
therewith (the "Refinancing"), (iv) the Kilovac Purchase (as defined in the
Final Memorandum) and (v) the dividend of approximately $55.4 million by
the Company to the Parent which Parent will, in turn, use to consummate the
Recapitalization and repay certain liabilities of the Parent. As used
herein, the Recapitalization Agreement means the Recapitalization Agreement
dated as of August 6, 1997, by and among the Parent, the New Investors (as
defined therein), the Redeeming Stockholders (as defined therein) and Code,
▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ III, L.P. as amended through the date hereof.
(i) On the Closing Date, the Initial Purchasers shall have received
the Registration Rights Agreement executed by the Company and the Guarantors and
such agreement shall be in full force and effect at all times from and after the
Closing Date except as otherwise terminated in accordance with its terms.
(j) The Parent shall have received an investment from the New
Investors (as defined in the Final Memorandum) and certain Existing Stockholders
(as defined in the Final Memorandum) in the aggregate amount of $25.0 million
(the "Gross Proceeds") through a cash investment of approximately $22.0 million
--------------
and the retention of capital stock of the Parent which, for purposes of the
Recapitalization, is valued at approximately $3.0 million.
(k) The Related Transactions shall have been consummated, or shall be
consummated on the Closing Date concurrently with the closing hereunder, and
counsel to the Initial Purchasers shall have received such documents relating
thereto and other evidence thereof as they may request in form and substance
reasonably satisfactory to such counsel.
(l) On the Closing Date, the Initial Purchasers shall have received
copies of the Tax Sharing Agreement and the Management Agreement, each executed
by the Company and the other signatories thereto and in form and substance
reasonably satisfactory to the Initial Purchasers, and such agreements shall
being full force and effect at all times from and after the Closing Date except
as otherwise terminated in accordance with its terms.
On or before the Closing Date, the Initial Purchasers and counsel for
the Initial Purchasers shall have received such further documents, opinions,
certificates, letters and schedules or instruments relating to the business,
corporate, legal and financial affairs of the Company and the Subsidiaries as
they shall have heretofore reasonably requested from the Company and the
Guarantors.
-27-
All such documents, opinions, certificates, letters, schedules or
instruments delivered pursuant to this Agreement will comply with the provisions
hereof only if they are reasonably satisfactory in all material respects to the
Initial Purchasers and counsel for the Initial Purchasers. The Company and the
Guarantors shall furnish to the Initial Purchasers such conformed copies of such
documents, opinions, certificates, letters, schedules and instruments in such
quantities as the Initial Purchasers shall reasonably request.
8. Offering of Securities; Restrictions on Transfer. Each of the
------------------------------------------------
Initial Purchasers agrees with the Company and the Subsidiaries (as to itself
only) that (i) it has not and will not solicit offers for, or offered or sold,
or offer or sell, the Securities by 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; and (ii) it has and will solicit offers for the Notes
only from, and has offered or sold and will offer, sell or deliver, the
Securities only to (A) in the case of offers inside the United States, (x)
persons whom the Initial Purchasers reasonably believe to be QIBs or, if any
such person is buying for one or more institutional accounts for which such
person is acting as fiduciary or agent, only when such person has represented to
the Initial Purchasers that each such account is a QIB, to whom notice has been
given that such sale or delivery is being made in reliance on Rule 144A, and, in
each case, in transactions under Rule 144A or (y) a limited number of other
institutional investors reasonably believed by the Initial Purchasers to be
Accredited Investors that, prior to their purchase of the Securities, deliver to
the Initial Purchasers a letter containing the representations and agreements
set forth in Annex A to the Final Memorandum and (B) in the case of offers
outside the United States, to persons other than U.S. persons, in each case, in
compliance with Regulation S under the Securities Act ("foreign purchasers,"
------------------
which term shall include dealers or other professional fiduciaries in the United
States acting on a discretionary basis for foreign beneficial owners (other than
an estate or trust)); provided, however, that, in the case of this clause (B),
-------- -------
in purchasing such Securities such persons are deemed to have represented and
agreed as provided under the caption "Transfer Restrictions" contained in the
Final Memorandum.
9. Indemnification and Contribution. (a) The Company and the
--------------------------------
Guarantors, jointly and severally, agree to indemnify and hold harmless the
Initial Purchasers, and each person, if any, who controls any Initial Purchaser
within the meaning of Section 15 of the Securities Act or Section 20 of the
Exchange Act, against any losses, claims, damages or liabilities to which any
Initial Purchaser or such controlling person may become subject under the
Securities Act, the Exchange Act or otherwise, insofar as any such
-28-
losses, claims, damages or liabilities (or actions in respect thereof) arise out
of or are based upon:
(i) any untrue statement or alleged untrue statement of any material
fact contained in any Memorandum or any amendment or supplement thereto or
any application, or any amendment or supplement thereto, executed by any of
the Company or the Subsidiaries or based upon written information furnished
by or on behalf of the Company or the Subsidiaries filed in any
jurisdiction in order to qualify the Notes under the securities or "Blue
Sky" laws thereof or filed with any securities association or securities
exchange (each an "Application"); or
-----------
(ii) the omission or alleged omission to state, in any Memorandum or
any amendment or supplement thereto or any Application, a material fact
required to be stated therein or necessary to make the statements therein
in light of the circumstances in which they were made, not misleading,
and will reimburse, promptly after demand, the Initial Purchasers and each such
controlling person for any reasonable legal or other expenses reasonably
incurred by the Initial Purchasers or such controlling person in connection with
investigating, defending against or appearing as a third-party witness in
connection with any such loss, claim, damage, liability or action as such
expenses are incurred; provided, however, neither the Company nor the Guarantors
-------- -------
will be liable in any such case to the extent that any such loss, claim, damage,
or liability arises out of or is based upon any untrue statement or alleged
untrue statement or omission or alleged omission made in any Memorandum or any
amendment or supplement thereto or any Application in reliance upon and in
conformity with written information concerning the Initial Purchasers furnished
to the Company or the Guarantors by the Initial Purchasers specifically for use
therein. This indemnity agreement will be in addition to any liability that the
Company and the Guarantors may otherwise have to the indemnified parties.
Neither the Company nor the Guarantors shall be liable under this Section 9 for
any settlement of such claim or action effected without their consent, which
shall not be unreasonably withheld.
(b) Each of the Initial Purchasers severally agrees to indemnify and
hold harmless the Company, the Guarantors, their directors, their officers,
employees, representatives, affiliates and agents and each person, if any, who
controls the Company or the Guarantors within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act against any losses, claims,
damages or liabilities to which the Company or the Guarantors or any such
director, officer, employees, representatives, affiliates and agents or
controlling person may become subject under the Securities Act, the Exchange Act
or otherwise, insofar as such losses, claims, damages or liabilities (or actions
in respect
-29-
thereof) arise out of or are based upon (i) any untrue statement or alleged
untrue statement of any material fact contained in any Memorandum or any
amendment or supplement thereto or any Application, or (ii) the omission or the
alleged omission to state therein a material fact required to be stated in any
Memorandum or any amendment or supplement thereto or any Application, or
necessary to make the statements therein not in light of the circumstances in
which they were made, misleading, in each case to the extent, but only to the
extent, that such untrue statement or alleged untrue statement or omission or
alleged omission was made in reliance upon and in conformity with written
information concerning such Initial Purchaser, furnished to the Company or the
Guarantors by or on behalf of such Initial Purchaser specifically for use
therein; and subject to the limitation set forth immediately preceding this
clause, will reimburse, promptly after demand, any reasonable legal or other
expenses reasonably incurred by the Company, the Guarantors or any such
director, officer, employees, representatives, affiliates and agent or
controlling person in connection with investigating or defending against or
appearing as a third party witness in connection with any such loss, claim,
damage, liability or action in respect thereof. This indemnity agreement will
be in addition to any liability that the Initial Purchasers may otherwise have
to the indemnified parties. The Initial Purchasers shall not be liable under
this Section 9 for any settlement of any claim or action effected without their
consent, which shall not be unreasonably withheld.
(c) Promptly after receipt by an indemnified party under this Section
9 of notice of the commencement of any action for which such indemnified party
is entitled to indemnification under this Section 9, such indemnified party
will, if a claim in respect thereof is to be made against the indemnifying party
under this Section 9, notify the indemnifying party of the commencement thereof
in writing; but the omission to so notify the indemnifying party (i) will not
relieve it from any liability under paragraph (a) or (b) above unless and to the
extent such failure results in the forfeiture by the indemnifying party of
substantial rights and defenses and (ii) will not, in any event, relieve the
indemnifying party from any obligations to any indemnified party other than the
indemnification obligation provided in paragraphs (a) and (b) above. In case
any such action is brought against any indemnified party, and it notifies the
indemnifying party of the commencement thereof, the indemnifying party will be
entitled to participate therein and, to the extent that it may wish, jointly
with any other indemnifying party similarly notified, to assume the defense
thereof, with counsel reasonably satisfactory to such indemnified party;
provided, however, that if (i) the use of counsel chosen by the indemnifying
-------- -------
party to represent the indemnified party would present such counsel with a
conflict of interest, (ii) the defendants in any such action include both the
indemnified party and the indemnifying party and the indemnified party shall
have been advised by counsel that there may be one or more legal
-30-
defenses available to it and/or other indemnified parties that are different
from or additional to those available to the indemnifying party, or (iii) the
indemnifying party shall not have employed counsel reasonably satisfactory to
the indemnified party to represent the indemnified party within a reasonable
time after receipt by the indemnifying party of notice of the institution of
such action, then, in each such case, the indemnifying party shall not have the
right to direct the defense of such action on behalf of such indemnified party
or parties and such indemnified party or parties shall have the right to select
separate counsel to defend such action on behalf of such indemnified party or
parties. After notice from the indemnifying party to such indemnified party of
its election so to assume the defense thereof and approval by such indemnified
party of counsel appointed to defend such action (which approval shall not be
unreasonably withheld), the indemnifying party will not be liable to such
indemnified party under this Section 9 for any legal or other expenses, other
than reasonable costs of investigation, subsequently incurred by such
indemnified party in connection with the defense thereof, unless (i) the
indemnified party shall have employed separate counsel in accordance with the
proviso to the immediately preceding sentence (it being understood, however,
that in connection with such action the indemnifying party shall not be liable
for the expenses of more than one separate counsel (in addition to local
counsel) in any one action or separate but substantially similar actions in the
same jurisdiction arising out of the same general allegations or circumstances,
designated by the Initial Purchasers in the case of paragraph (a) of this
Section 9 or the Company or any of the Guarantors in the case of paragraph (b)
of this Section 9, representing the indemnified parties under such paragraph (a)
or paragraph (b), as the case may be, who are parties to such action or actions)
or (ii) the indemnifying party has authorized in writing the employment of
counsel for the indemnified party at the expense of the indemnifying party.
After such notice from the indemnifying party to such indemnified party, the
indemnifying party will not be liable for the costs and expenses of any
settlement of such action effected by such indemnified party without the prior
written consent of the indemnifying party (which consent shall not be
unreasonably withheld), unless such indemnified party waived in writing its
rights under this Section 9, in which case the indemnified party may effect such
a settlement without such consent.
(d) In circumstances in which the indemnity agreement provided for
in the preceding paragraphs of this Section 9 is unavailable to, or insufficient
to hold harmless, an indemnified party in respect of any losses, claims, damages
or liabilities (or actions in respect thereof), each indemnifying party, in
order to provide for just and equitable contribution, shall contribute to the
amount paid or payable by such indemnified party as a result of such losses,
claims, damages or liabilities (or actions in respect thereof) in such
proportion as is appropriate to reflect (i) the
-31-
relative benefits received by the indemnifying party or parties on the one hand
and the indemnified party on the other from the offering of the Securities or
(ii) if the allocation provided by the foregoing clause (i) is not permitted by
applicable law, not only such relative benefits but also the relative fault of
the indemnifying party or parties on the one hand and the indemnified party on
the other in connection with the statements or omissions or alleged statements
or omissions that resulted in such losses, claims, damages or liabilities (or
actions in respect thereof). The relative benefits received by the Company and
the Guarantors on the one hand and any Initial Purchaser on the other shall be
deemed to be in the same proportion as the total net proceeds from the offering
(before deducting expenses) received by the Company and the Guarantors and the
total discounts and commissions received by such Initial Purchaser on the other
hand, bear to the total gross proceeds from the sale of the Securities. The
relative fault of the parties shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by the Company or the Guarantors on the one hand, or such Initial
Purchaser on the other, the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission or
alleged statement or omission, and any other equitable considerations
appropriate in the circumstances. The Company, the Guarantors and the Initial
Purchasers agree that it would not be equitable if the amount of such
contribution were determined by pro rata or per capita allocation or by any
other method of allocation that does not take into account the equitable
considerations referred to in the first sentence of this paragraph (d).
Notwithstanding any other provision of this paragraph (d), no Initial Purchaser
shall be obligated to make contributions hereunder that in the aggregate exceed
the total discounts, commissions and other compensation received by such Initial
Purchaser under this Agreement, less the aggregate amount of any damages that
such Initial Purchaser has otherwise been required to pay by reason of the
untrue or alleged untrue statements or the omissions or alleged omissions to
state a material fact, and no person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. For purposes of this paragraph (d), each person, if any, who
controls an Initial Purchaser within the meaning of Section 15 of the Securities
Act or Section 20 of the Exchange Act shall have the same rights to contribution
as the Initial Purchasers, and each director of the Company and the Guarantors,
each officer, employee, representative, affiliate and agent of the Company and
the Guarantors and each person, if any, who controls the Company or the
Guarantors within the meaning of Section 15 of the Securities Act or Section 20
of the Exchange Act, shall have the same rights to contribution as the Company
and the Guarantors.
-32-
10. Survival Clause. The respective representations, warranties,
---------------
agreements, covenants, indemnities and other statements of the Company and the
Guarantors, their respective officers and the Initial Purchasers set forth in
this Agreement or made by or on behalf of them pursuant to this Agreement shall
remain in full force and effect until termination of this Agreement, except as
set forth in the following sentence, regardless of (i) any investigation made by
or on behalf of the Company and the Guarantors, any of their respective officers
or directors, the Initial Purchasers or any controlling person referred to in
Section 9 hereof and (ii) delivery of and payment for the Securities. The
respective agreements, covenants, indemnities and other statements set forth in
Sections 6, 9 and 15 hereof shall remain in full force and effect, regardless of
any termination or cancellation of this Agreement.
11. Termination. (a) This Agreement may be terminated in the sole
-----------
discretion of the Initial Purchasers by notice to the Company given prior to the
Closing Date in the event that any of the Company or the Guarantors shall have
failed, refused or been unable to perform all obligations and satisfy all
conditions on their respective part to be performed or satisfied hereunder at or
prior thereto or, if on and after the date hereof and at or prior to the Closing
Date:
(i) any of the Company or the Subsidiaries shall have sustained any
loss or interference with respect to its businesses or properties from
fire, flood, hurricane, accident or other calamity, whether or not covered
by insurance, or from any strike, labor dispute, slowdown or work stoppage
or any legal or governmental proceeding, which loss or interference, in the
sole judgment of the Initial Purchasers, has had or has a Material Adverse
Effect, or there shall have been, in the sole judgment of the Initial
Purchasers, any event or development that, individually or in the
aggregate, has or could be reasonably likely to have a Material Adverse
Effect (including without limitation a change in control of any of the
Company or the Subsidiaries), except in each case as described in the Final
Memorandum (exclusive of any amendment or supplement thereto);
(ii) trading in securities generally on the New York Stock Exchange,
American Stock Exchange or the Nasdaq National Market System shall have
been suspended or minimum or maximum prices shall have been established on
any such exchange or market;
(iii) a banking moratorium shall have been declared by New York or
United States authorities;
(iv) there shall have been (A) an outbreak or escalation of
hostilities between the United States and any foreign
-33-
power, or (B) an outbreak or escalation of any other insurrection or armed
conflict involving the United States or any other national or international
calamity or emergency, or (C) any material change in the financial markets
of the United States which, in the case of (A), (B) or (C) above and in the
sole judgment of the Initial Purchasers, makes it impracticable or
inadvisable to proceed with the public offering or the delivery of the
Securities as contemplated by the Final Memorandum; or
(v) any securities of the Company shall have been downgraded or
placed on any "watch list" for possible downgrading by any nationally
recognized statistical rating organization.
(b) Termination of this Agreement pursuant to this Section 11 shall
be without liability of any party to any other party except as provided in
Section 10 hereof.
12. Information Supplied by the Initial Purchasers. The statements
----------------------------------------------
set forth (i) in the last paragraph on the front cover page of the Final
Memorandum , (ii) in the first paragraph on page 3 of the Final Memorandum and
(iii) in the third, fifth and seventh paragraphs and in the second sentence of
the fourth paragraph under the heading "Plan of Distribution" of the Final
Memorandum constitute the only information furnished by the Initial Purchasers
to the Company for the purposes of Sections 2(a) and 9 hereof.
13. Notices. All communications hereunder shall be in writing and,
-------
if sent to the Initial Purchasers, shall be mailed or delivered to (i)
BancAmerica Securities, Inc., ▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, with a copy to Winston & ▇▇▇▇▇▇,
▇▇ ▇. ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇; if sent to
the Company, shall be mailed or delivered to ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇, with a copy to ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇, Attention: Chief
Financial Officer; with a copy to ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇▇▇ Perl.
All such notices and communications shall be deemed to have been duly
given: when delivered by hand, if personally delivered; five business days after
being deposited in the mail, postage prepaid, if mailed; and one business day
after being timely delivered to a next-day air courier.
14. Successors. This Agreement shall inure to the benefit of and be
----------
binding upon the Initial Purchasers, the Company and the Guarantors and their
respective successors and legal representatives, and nothing expressed or
mentioned in this Agreement is intended or shall be construed to give any other
person any legal or equitable right, remedy or claim under or in respect of this
Agreement, or any provisions herein contained; this
-34-
Agreement and all conditions and provisions hereof being intended to be and
being for the sole and exclusive benefit of such persons and for the benefit of
no other person except that (i) the indemnities of the Company and the
Guarantors contained in Section 9 of this Agreement shall also be for the
benefit of any person or persons who control the Initial Purchasers within the
meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act
and (ii) the indemnities of the Initial Purchasers contained in Section 9 of
this Agreement shall also be for the benefit of the directors of the Company and
the Guarantors and officers, employees, representatives, affiliates and agents
and any person or persons who control the Company or the Guarantors within the
meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act.
No purchaser of Notes from the Initial Purchasers will be deemed a successor
because of such purchase.
15. APPLICABLE LAW. THE VALIDITY AND INTERPRETATION OF THIS
--------------
AGREEMENT, AND THE TERMS AND CONDITIONS SET FORTH HEREIN SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO
CONTRACTS MADE AND TO BE PERFORMED WHOLLY THEREIN, WITHOUT GIVING EFFECT TO ANY
PROVISIONS THEREOF RELATING TO CONFLICTS OF LAW OTHER THAN SECTION 5-1401 OF THE
NEW YORK GENERAL OBLIGATIONS LAW.
16. Counterparts. This Agreement may be executed in two or more
------------
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
[Signature pages follow]
-35-
If the foregoing correctly sets forth our understanding, please indicate
your acceptance thereof in the space provided below for that purpose, whereupon
this letter shall constitute a binding agreement among the Company, the
Guarantors and the Initial Purchasers.
Very truly yours,
COMMUNICATIONS INSTRUMENTS, INC., a North Carolina
corporation
By:_________________________________
Name:
Title:
KILOVAC CORPORATION, a California
corporation
By:_________________________________
Name:
Title:
KILOVAC INTERNATIONAL, INC., a
California corporation
By:_________________________________
Name:
Title:
-36-
The foregoing Agreement is
hereby confirmed and accepted
as of the date first above written.
BANCAMERICA SECURITIES, INC.
By: _________________________
SALOMON BROTHERS INC
By: _________________________
-37-
SCHEDULE 1
----------
Guarantors
----------
Jurisdiction of
Name Organization
---- ---------------
Kilovac Corporation California
Kilovac International, Inc. California
-38-
SCHEDULE 2
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The Company's Subsidiaries
--------------------------
Jurisdiction of
Name Organization
---- ---------------
Kilovac Corporation California
Kilovac International, Inc. California
Electro-Mech, S.A. Mexico
Kilovac International FSC Ltd., Inc. Cayman Islands
-39-
SCHEDULE 3
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Principal
Amount of
Initial Purchasers Notes
------------------ --------------
BancAmerica Securities, Inc. . . . . $76,000,000
Salomon Brothers Inc.. . . . . . . . . $19,000,000
Total . . . . . . . . . . . . . . . $95,000,000
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-40-
