EXHIBIT 1.1
EXECUTION COPY
CENTURY MAINTENANCE SUPPLY, INC.
280,000 Shares of 13.250%
Senior Exchangeable PIK Preferred Stock due 2010
PURCHASE AGREEMENT
New York, New York
July 1, 1998
▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇ Brothers Inc
c/o Salomon Brothers Inc
Seven World Trade Center
New York, New York 10048
Ladies and Gentlemen:
Century Maintenance Supply, Inc., a Delaware corporation (the
"Company") proposes to issue and sell to Salomon Brothers Inc (the "Purchaser"),
280,000 shares of the Company's 13.250% Senior Exchangeable PIK Preferred Stock
due 2010 (the "Preferred Stock"). The Preferred Stock is exchangeable at the
Company's option, subject to certain conditions, in whole but not in part, for
the Company's[ ]% Subordinated Exchange Debentures due 2010 (the "Exchange
Debentures" and, together with the Preferred Stock, the "Securities").
The sale of the Preferred Stock to you will be made without
registration of the Securities under the Securities Act of 1933, as amended (the
"Securities Act"), in reliance upon the exemption from the registration
requirements of the Securities Act provided by Section 4(2) thereof. You have
advised the Company that you will make an offering of the Preferred Stock
purchased by you hereunder in accordance with Section 4 hereof as soon as you
deem advisable after the execution and delivery of this Agreement.
In connection with the sale of the Preferred Stock, the Company has
prepared a preliminary offering
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memorandum, dated June 17, 1998, relating to the offering of the Preferred Stock
(the "Preliminary Memorandum"), and a final offering memorandum, dated July 1,
1998, relating to the offering of the Preferred Stock (the "Final Memorandum").
Each of the Preliminary Memorandum and the Final Memorandum sets forth certain
information concerning the Company and the Securities. The Company hereby
confirms that it has authorized the use of the Preliminary Memorandum and the
Final Memorandum, and any amendment or supplement thereto, in connection with
the offer and sale of the Preferred Stock by the Purchaser. Unless stated to the
contrary, all references herein to the Final Memorandum are to the Final
Memorandum at the Execution Time (as defined below) and are not meant to include
any amendment or supplement thereto subsequent to the Execution Time.
The holders of the Securities will be entitled to the benefits of the
Registration Agreement dated the Closing Date, between the Company and the
Purchaser (the "Registration Agreement").
Capitalized terms used herein without definition have the respective
meanings assigned to them in the Final Memorandum.
1. Representations and Warranties. The Company represents and
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warrants to, and agrees with, the Purchaser as set forth below in this Section
1.
(a) The Preliminary Memorandum, at the date thereof, did not contain
any untrue statement of a material fact or omit to state any material fact
(other than pricing terms and other financial terms for the Securities
intentionally left blank) necessary to make the statements therein, in the light
of the circumstances under which they were made, not misleading. The Final
Memorandum, at the date hereof, does not contain any untrue statement of a
material fact or omit to state any material fact necessary to make the
statements therein, in the light of the circum stances under which they were
made, not misleading; provided, however, that no representation or warranty is
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made as to the information contained in or omitted from the Preliminary
Memorandum or the Final Memorandum, or any amendment or supplement thereto, in
reliance upon and in conformity with information furnished in writing to the
Company by or on behalf of the Purchaser specifically for inclusion therein, it
being understood that the only such information is that described in Section
8(b) hereof.
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(b) The Company has not taken and will not take, directly or
indirectly, any action prohibited by Regulation M under the Exchange Act of
1934, as amended (the "Exchange Act"), in connection with the offering of the
Securities.
(c) Neither the Company nor any of its Affiliates (as defined in Rule
501(b) of Regulation D under the Securities Act ("Regulation D")), or any person
acting on their behalf, has (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 Preferred Stock in a
manner that would require the registration of the Preferred Stock under the
Securities Act or (ii) engaged in any form of general solicitation or general
advertising (within the meaning of Regulation D) in connection with any offer or
sale of the Preferred Stock in the United States.
(d) The Preferred Stock satisfy the eligibility requirements of Rule
144A(d)(3) under the Securities Act.
(e) Neither the Company nor any of its Affiliates or any person
acting on their behalf has engaged in any directed selling efforts with respect
to the Securities, and each of them has complied with the offering restrictions
requirement of Regulation S ("Regulation S") under the Securities Act. Terms
used in this paragraph have the meanings given to them by Regulation S.
(f) The Company is not an "investment company" within the meaning of
the Investment Company Act of 1940, as amended (the "Investment Company Act"),
without taking account of any exemption arising out of the number of holders of
the Company's securities.
(g) The Company and all of its Subsidiaries have been duly
incorporated and are validly existing as corporations in good standing under the
laws of their respective jurisdictions of organization, with full corporate
power and authority to own or lease, as the case may be, their properties and
conduct their business as described in the Final Memorandum, and are duly
qualified to do business as foreign corporations and are in good standing under
the laws of all jurisdictions in which their ownership or lease of property or
the conduct of their business requires such qualification except where the
failure to be so qualified would not, individually or in the aggregate, have a
Material Adverse Effect (as defined below). The
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Company has full corporate power and authority to enter into this Agreement, the
Registration Agreement, the Agreement and Plan of Merger dated as of May 5,
1998, among the Company, Century Acquisition Corporation and the shareholders of
the Company (the "Merger Agreement"), the Credit Agreement dated as of the
Closing Date among the Company, certain lenders named therein, Salomon Brothers
Inc, as arranger and Citicorp (USA) Inc., as administrative agent (the "New
Credit Facility"), the Indenture governing the Exchange Debentures (the
"Exchange Indenture") and the Securities and to perform the transactions
contemplated hereby and thereby (the "Transactions"). This Agreement and the
Registration Agreement have been duly authorized, executed and delivered by the
Company. The execution and delivery of the Merger Agreement, the New Credit
Facility and the Exchange Indenture have been duly authorized by the Company
and, when duly executed and delivered by the parties thereto (assuming the due
authorization, execution and delivery of the Exchange Indenture by the Trustee),
each of the Merger Agreement, the New Credit Facility and the Exchange Indenture
will constitute a valid and binding obligation of the Company, enforceable
against the Company in accordance with its terms, subject to applicable
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and
similar laws affecting creditors' rights and remedies generally and to general
principles of equity (regardless of whether enforcement is sought in a
proceeding at law or in equity).
(h) All the outstanding shares of capital stock of the Company have
been duly and validly authorized and issued and are fully paid and
nonassessable, and, except as otherwise set forth in the Final Memorandum, as of
the Closing Date, all outstanding ownership interests of the Subsidiaries will
be owned, directly or indirectly, by the Company free and clear of any perfected
security interest and any other security interests, claims or encumbrances,
except for security interests, claims and encumbrances under the New Credit
Facility.
(i) (i) The Preferred Stock has been duly and validly authorized for
issuance and sale by the Company to the Purchaser, and when the Preferred
Stock has been delivered and paid for in accordance with the terms of this
Agreement, the Preferred Stock will be validly issued, fully paid and
nonassessable; and the issuance of the Preferred Stock is not subject to
preemptive or other similar rights.
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(ii) The Exchange Debentures have been duly authorized for issuance
in exchange for Preferred Stock by the Company; and upon execution and
delivery of the Exchange Indenture, and, when the Exchange Debentures are
issued and authenticated in accordance with the Exchange Indenture and
delivered in exchange for the Preferred Stock, the Exchange Debentures will
constitute valid and binding obligations of the Company enforceable against
the Company in accordance with their terms and entitled to the benefits of
the Exchange Indenture, subject to applicable bankruptcy, insolvency,
reorganization, fraudulent transfer, moratorium, and similar laws affecting
creditors' rights and remedies generally and to general principles of
equity (regardless of whether enforcement is sought in a proceeding at law
or in equity).
(j) The Securities conform, in all material respects, to the
description thereof contained in the Preliminary Memorandum and Final
Memorandum.
(k) The execution, delivery and performance of this Agreement, the
Registration Agreement, the Merger Agreement, the New Credit Facility, the
Exchange Indenture, the Preferred Stock and the Exchange Debentures by the
Company, and the consummation of the Transactions, will not conflict with or
result in a breach or violation of any of the terms and provisions of, or
constitute a default under, (i) the articles of incorporation, by-laws or other
organizational documents of the Company or any Subsidiary, (ii) any statute,
rule or regulation applicable to the Company or any Subsidiary or any order of
any governmental agency or body or any court having jurisdiction over the
Company, any Subsidiary or any of their respective properties, (iii) any
agreement or instrument relating to borrowed money to which the Company or any
Subsidiary is a party or by which the Company or any Subsidiary is bound or to
which any of their respective properties is subject or (iv) any other material
agreement or instrument to which the Company or any Subsidiary is a party or by
which the Company or any Subsidiary is bound or to which any of their respective
properties is subject, except in the cases of clauses (ii), (iii) or (iv) for
conflicts, breaches, violations or defaults which would not reasonably be
expected to have a Material Adverse Effect. Assuming the Securities are sold as
described in this Agreement, no consent, approval, authorization or other order
of any court, regulatory body, administrative agency or other
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governmental body which has not already been obtained is required for the
execution and delivery of this Agreement, the Registration Agreement, the Merger
Agreement, the New Credit Facility, the Exchange Indenture or the Securities or
for the consummation of the Transactions, except for compliance with state
securities or blue sky laws and the Securities Act and Trust Indenture Act in
connection with the Registration Rights Agreement.
(l) Except as disclosed in the Final Memorandum, (i) there are no
legal or governmental actions, suits or proceedings pending or, to the best of
the Company's knowledge, threatened to which the Company, or any Subsidiary is,
or to the best of the Company's knowledge, is threatened to be made a party or
of which property owned or leased by the Company or any Subsidiary is or, to the
best of the Company's knowledge, threatened to be made the subject, which
actions, suits or proceedings could, individually or in the aggregate, have a
material adverse effect on the condition (financial or otherwise), properties,
business, results of operations or prospects of the Company and the
Subsidiaries, taken as a whole, or materially and adversely affect the ability
of the Company to perform its obligations under this Agreement, the Registration
Agreement, the Merger Agreement, the New Credit Facility, the Exchange Indenture
or the Securities or to consummate the Transactions (a "Material Adverse
Effect"), and (ii) no labor disturbance by the employees of the Company, or any
Subsidiary exists or, to the best of the Company's knowledge is imminent, in
either case which could have a Material Adverse Effect. Neither the Company nor
any of its Subsidiaries is a party or subject to the provisions of any
injunction, judgment, decree or order of any court, regulatory body,
administrative agency or other governmental body the violation of which could
have, or could reasonably be expected to have, a Material Adverse Effect.
(m) The Company has not paid or agreed to pay to any person any
compensation for soliciting another to purchase any securities of the Company
(except as contemplated by this Agreement).
(n) The Company and each Subsidiary are conducting business in
compliance with all applicable laws, rules and regulations of the jurisdictions
in which they are conducting business, and all applicable environmental laws and
regulations, except where the failure to be so in compliance would not have a
Material Adverse Effect.
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(o) Neither the Company nor any Subsidiary (i) is in violation of its
charter, by-laws or other constituent documents or (ii) is in default in any
material respect, and no event has occurred which, with notice or lapse of time
or both, would constitute such default, in the due performance or observance of
any term, covenant or condition contained in any material indenture, mortgage,
deed of trust, loan agreement or other material agreement or instrument to which
it is a party or by which it is bound or to which any of its properties or
assets is subject which violation or default would cause a Material Adverse
Effect.
(p) There are no defects in title to the owned properties or
encumbrances upon the leased properties of the Company or any Subsidiary or the
assets or facilities used by the Company or any Subsidiary, (except any such
defects that are in the ordinary course of business of the Company or such
Subsidiary) which, individually or in the aggregate, have a Material Adverse
Effect.
(q) Except as set forth in the Final Memorandum each of the Company
and each Subsidiary owns or possesses adequate rights to use all material
patents, patent applications, trademarks, service marks, trade names, trademark
registrations, service mark registrations, copyrights, licenses and know-how
(including trade secrets and other unpatented and/or unpatentable proprietary or
confidential information, systems or procedures) necessary for the conduct of
its respective business, except where the failure to own or possess such rights
would not have a Material Adverse Effect, and has no reason to believe that the
conduct of its business will conflict with any such rights of others which is
reasonably likely to have a Material Adverse Effect, and has not received any
notice of any claim of conflict with any such rights of others which is
reasonably likely to have a Material Adverse Effect.
(r) (i) The consolidated financial statements with respect the
Company included in the Final Memorandum present fairly in all material
respects the consolidated financial position of the Company, and its
consolidated Subsidiaries as of the dates shown and their results of
operations and cash flows for the periods shown, and such consolidated
financial statements have been prepared in conformity with the generally
accepted accounting principles in the United States applied on a consistent
basis.
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(ii) The pro forma financial statements of the Company included in the
Final Memorandum are based upon reasonable assumptions for presenting the
significant effects of the Transactions, give appropriate effect to those
assumptions, and reflect the proper application of those adjustments to the
historical consolidated financial statement amounts in the consolidated
financial statements of the Company.
(s) On the Closing Date (after giving effect to the issuance of the
Preferred Stock and the consummation of the Transactions) the Company will be
Solvent. As used in this paragraph, the term "Solvent" means, with respect to a
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particular date, that on such date (i) the aggregate fair value or present fair
salable value of the assets of the Company is not less than its total existing
debts and liabilities (including identified contingent liabilities) as they
become absolute and matured in the normal course of business, (ii) the Company
is able to pay its debts and other liabilities, contingent obligations and
commitments as they mature and become due in the normal course of business and
(iii) the Company does not have an unreasonably small amount of capital with
which to conduct its business. In computing the amount of such contingent
liabilities at any time, it is intended that such liabilities will be computed
at the amount that, in light of all the facts and circumstances existing at such
time, represents the amount that can reasonably be expected to become an actual
or matured liability.
(t) Since the date of the latest audited consolidated financial
statements of the Company included in the Final Memorandum, there has been no
material adverse change, nor to the Company's knowledge any development or event
involving a prospective material adverse change, in the condition (financial or
other), business, properties or results of operations of Company and its
Subsidiaries taken as a whole, and, except as disclosed in the Final Memorandum,
since the date of the latest audited consolidated financial statements of the
Company included in the Final Memorandum, there has been no dividend or
distribution of any kind declared, paid or made by the Company on any class of
its capital stock.
(u) Assuming the accuracy of the representations and warranties
contained in Section 4, it is not necessary in connection with the offer, sale
and delivery of the Preferred Stock in the manner contemplated by this Agreement
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and the Final Memorandum to register the Securities under the Securities Act or
to qualify the Exchange Indenture under the Trust Indenture act of 1939, as
amended (the "Trust Indenture Act").
(v) The Company has agreed to permit the Securities to be designated
Portal eligible securities, will pay the requisite fees related thereto and have
provided all necessary information to the National Association of Securities
Dealers, Inc., in order to ensure that the Securities are designated Portal
eligible securities.
(w) The Company has made a preliminary determination that the
computer hardware and software used by the Company and each Subsidiary are and
will be able to process all date information prior to and after December 31,
1999 without any errors, aborts, delays or other interruptions in operations
arising from the inability of computer hardware and software to recognize and
properly execute date sensitive function involving certain dates prior to and
any dates after December 31, 1999 (the "Year 2000 Problem") which could
reasonably be expected to result in a Material Adverse Effect.
2. Purchase and Sale. Subject to the terms and conditions and in
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reliance upon the representations and warranties herein set forth, the Company
agrees, to sell to the Purchaser and the Purchaser agrees to purchase from the
Company 280,000 shares of Preferred Stock at a purchase price of $96.50 per
share, plus accrued dividends, if any, with respect to the Preferred Stock from
July 8, 1998, to the Closing Date.
3. Delivery and Payment. Delivery of and payment for the Preferred
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Stock shall be made at 10:00 AM, New York City time, on July 8, 1998, or such
later date as the Purchaser may agree or as provided in Section 9 hereof (such
date and time of delivery and payment for the Preferred Stock being herein
called the "Closing Date"). Delivery of the Preferred Stock shall be made to
the Purchaser against payment by the Purchaser of the purchase price thereof to
or upon the order of the Company by wire transfer in Federal (same day) funds to
the U.S. dollar account previously designated by the Company. Delivery of the
Preferred Stock shall be made at the office of Cravath, Swaine & ▇▇▇▇▇ ("Counsel
for the Purchaser"), ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇. Certificates for
the Preferred Stock shall be registered in such names and in such denominations
as the
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Purchaser may request not less than two full business days in advance of the
Closing Date.
The Company agrees to have the Preferred Stock available for
inspection, checking and packaging by the Purchaser in New York, New York, not
later than 1:00 PM on the business day prior to the Closing Date.
4. Offering of Securities. The Purchaser (i) acknowledges that the
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Preferred Stock has not been registered under the Securities Act and may not be
offered or sold except pursuant to an exemption from, or in a transaction not
subject to, the registration requirements of the Securities Act or pursuant to
an effective registration statement under the Securities Act and (ii) represents
and warrants to and agrees with the Company that:
(a) It has not offered or sold, and will not offer or sell, any
Preferred Stock except (i) to those it reasonably believes to be qualified
institutional buyers (as defined in Rule 144A under the Securities Act) and
that, in connection with each such sale, it has taken or will take
reasonable steps to ensure that the purchaser of such Preferred Stock is
aware that such sale is being made in reliance on Rule 144A or (ii) in
accordance with the restrictions set forth in Exhibit A hereto.
(b) Neither it nor any person acting on its behalf has made or will
make offers or sales of the Preferred Stock in the United States by means
of any form of general solicitation or general advertising (within the
meaning of Regulation D) in the United States, except pursuant to a
registered public offering, whether an exchange offer or shelf
registration, as provided in the Registration Agreement.
5. Agreements. The Company agrees with the Purchaser that:
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(a) The Company will furnish to the Purchaser and Cravath, Swaine &
▇▇▇▇▇, without charge, as many copies of the Final Memorandum and any
supplements or amendments thereof or thereto as the Purchaser may
reasonably request, and will pay the expenses of printing or other
production of all documents relating to the offerings.
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(b) The Company will not amend or supplement the Final Memorandum
without the prior consent of the Purchaser.
(c) If at any time prior to the completion of the sale of the
Preferred Stock by the Purchaser, any event occurs as a result of which the
Final Memorandum, as then amended or supplemented, would include any untrue
statement of a material fact or omit to state any material fact necessary
to make the statements therein, in the light of the circumstances under
which they were made, not misleading, or if it shall be necessary to amend
or supplement the Final Memorandum to comply with the Exchange Act or the
rules thereunder or other applicable law, the Company promptly will notify
the Purchaser of the same and, subject to paragraph (b) of this Section 5,
will prepare and provide to the Purchaser pursuant to paragraph (a) of this
Section 5 an amendment or supplement which will correct such statement or
omission or effect such compliance.
(d) The Company will arrange for the qualifica tion of the Preferred
Stock for sale under the laws of such U.S. jurisdictions as the Purchaser
may designate and will maintain such qualifications in effect so long as
required for the sale of the Preferred Stock provided that Company will not
be obligated to qualify as foreign corporations or to execute a general
consent to service of process in any jurisdiction or to take any other
action that would subject them to general service of process or taxation in
any jurisdiction in which they are not otherwise subject. The Company will
promptly advise the Purchaser of the receipt by it of any notification with
respect to the suspension of the qualification of the Preferred Stock for
sale in any jurisdiction or the initiation or threatening of any proceeding
for such purpose.
(e) The Company will not, nor will it permit any of its Affiliates
to, resell any shares of Preferred Stock which constitute "restricted
securities" under Rule 144 that have been reacquired by any of them.
(f) None of the Company, any of its Affiliates, or any person acting
on their behalf will, directly or indirectly, make offers or sales of any
security, or solicit offers to buy any security, under circumstances
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that would require the registration of the Preferred Stock under the
Securities Act.
(g) None of the Company, any of its Affiliates or any person acting
on their behalf will engage in any form of general solicitation or general
advertising (within the meaning of Regulation D) in connection with any
offer or sale of the Preferred Stock in the United States, except pursuant
to a registered public offering, whether an exchange offer or shelf
registration, as provided in the Registration Agreement.
(h) So long as any shares of Preferred Stock are "restricted
securities" within the meaning of Rule 144(a)(3) under the Securities Act,
the Company will, during any period in which it is not subject to and in
compliance with Section 13 or 15(d) of the Exchange Act, provide to each
holder of such restricted securities and to each prospective purchaser (as
designated by such holder) of such restricted securities, upon the request
of such holder or prospective purchaser, any information required to be
provided by Rule 144A(d)(4) under the Securities Act. This covenant is
intended to be for the benefit of the holders, and the prospective
purchasers designated by such holders, from time to time of such restricted
securities.
(i) None of the Company, any of its Affiliates, or any person acting
on their behalf will engage in any directed selling efforts with respect to
the Preferred Stock except pursuant to a registered public offering as
provided in the Registration Agreement and each of them will comply with
the offering restrictions requirement of Regulation S. Terms used in this
paragraph have the meanings given to them by Regulation S.
(j) The Company will cooperate with the Purchaser and use its
reasonable best efforts to permit the Securities to be eligible for
clearance and settlement through The Depository Trust Company.
(k) The Company hereby agrees to permit the Preferred Stock to be
designated Portal eligible securities, to pay the requisite fees related
thereto and the Company has been advised by the Portal Market
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that the Securities have or will be designated Portal eligible securities
in accordance with the rules and regulations of the National Association of
Securities Dealers, Inc.
(l) The Company will not take, directly or indirectly, any action
prohibited by Regulation M under the Exchange Act, in connection with the
offering of the Preferred Stock.
(m) The Company will not, until 90 days following the Closing Date,
without the prior written consent of Salomon Brothers Inc, offer, sell or
contract to sell, or otherwise dispose of, directly or indirectly, or
announce the offering of, or file a registration statement for, any debt
securities or capital stock which is preferred as to payment of dividends,
or as to distribution upon liquidation, over any other class of capital
stock issued or guaranteed by the Company ("preferred stock") (other than
(i) the Preferred Stock and (ii) pursuant to a registered public offering
as provided in the Registration Agreement).
(n) The Company will apply the net proceeds from the sale of the
Preferred Stock sold by them substantially in accordance with the
statements under the caption "Use of Proceeds" in the Final Memorandum.
6. Conditions to the Obligations of the Purchaser. The obligations
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of the Purchaser to purchase the Securities shall be subject to the accuracy of
the representations and warranties on the part of the Company contained herein
at the date and time that this Agreement is executed and delivered by the
parties hereto (the "Execution Time") and the Closing Date, to the accuracy of
the statements of the Company made in any certificates pursuant to the
provisions hereof, to the performance by the Company of its obligations
hereunder and to the following additional conditions:
(a) The Company shall have caused ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, counsel for the
Company, to have furnished to the Purchaser their opinion dated the Closing
Date and addressed to the Purchaser, to the effect that:
(i) the information contained in the Final Memorandum under the
headings "Description of New Credit Facility" and "Certain Federal
Income Tax
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Considerations", fairly summarizes the matters therein described in
all material respects;
(ii) the Exchange Indenture complies as to form in all material
respects with the requirements of the Trust Indenture Act of 1939, as
amended (the "Trust Indenture Act"), and the rules and regulations of
the Commission applicable to an indenture which is qualified
thereunder;
(iii) provided the Securities are sold in the manner contemplated
by the Purchase Agreement and Final Memorandum, no consent, approval,
authorization or order of, or filing or registration with, any court
or governmental agency or body organized under the laws of the state
of California or the Federal laws of the United States is required for
the execution, delivery and performance of this Agreement, the
Exchange Indenture, the Registration Agreement and the Securities or
for the consummation of the Transactions contemplated thereby, except
such as may be required under the blue sky or securities laws of any
jurisdiction and such other approvals (specified in such opinion) as
have been obtained and except such as may be required under the
Securities Act and the Trust Indenture Act with respect to the
Registration Agreement and the transactions contemplated thereunder;
(iv) all corporate action required to be taken by the Company for
the due and proper authorization, execution and delivery of the
Exchange Indenture, the New Credit Facility, the Securities, the
Registration Agreement and this Agreement and for the consummation of
the transactions contemplated thereby has been duly and validly taken;
(v) this Agreement and the Registration Agreement have been duly
authorized, executed and delivered by the Company;
(vi) to such counsel's knowledge, the issuance of the Preferred
Stock is not subject to preemptive or other similar rights; and the
statements set forth under the heading "Description of the Preferred
Stock" in the Final
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Memorandum, insofar as such statements purport to summarize certain
provisions of the Preferred Stock, provide a fair summary of such
provisions in all material respects;
(vii) each of the Exchange Indenture and the Exchange Debentures
has been duly and validly authorized by the Company; and the
statements set forth under the heading "Description of Exchange
Debentures" in the Final Memorandum, provide a fair summary of such
provisions insofar as such statements purport to summarize certain
provisions of the Exchange Debentures and Exchange Indenture in all
material respects;
(viii) to such counsel's knowledge there is no pending or
threatened action or suit or judicial, arbitral or other
administrative proceeding to which the Company or any of its
Subsidiaries is a party or of which any property or assets of the
Company or any of its Subsidiaries is the subject that, singly or in
the aggregate, questions the validity of this Agreement, the
Registration Agreement, the Exchange Indenture, the Securities, the
Transactions or any action taken or to be taken pursuant hereto or
thereto;
(ix) assuming the accuracy of the representations and warranties
and compliance with the agreements contained herein, no registration
of the Securities under the Securities Act is required, and no
qualification of the Exchange Indenture under the Trust Indenture Act
is necessary, for the offer, sale and delivery of the Securities in
the manner contemplated by this Agreement; and
(x) the Company is not an "investment company" within the meaning
of the Investment Company Act of 1940, as amended (the "Investment
Company Act"), without taking account of any exemption arising out of
the number of holders of the Company's securities.
Such counsel shall also state that such counsel has participated in
conferences with officers and other representatives of the Company,
representatives of the independent public accountants for the Company and
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representatives of the Purchaser at which the contents of the Final
Memorandum and related matters were discussed. Such counsel shall state
that although such counsel has made no independent check or verification
of, and need not pass upon or assume any responsibility for, the accuracy,
completeness or fairness of the statements made in the Final Memorandum
(except as set forth in paragraphs 6(i), 6(vi), and 6(vii) above) on the
basis of the foregoing (relying as to materiality to a large extent upon
the statements of officers and other representatives of the Company) no
facts have come to such counsel's attention that have caused such counsel
to believe that the Final Memorandum as of its date and as of the Closing
Date contained or contains an untrue statement of a material fact or
omitted or omits to state a material fact necessary in order to make the
statements therein, in light of the circumstances under which they were
made, not misleading (it being understood that such counsel need express no
opinion on the financial statements or other financial and statistical data
included in the Final Memorandum).
In rendering such opinion, such counsel may rely (A) as to matters
involving the application of laws of any jurisdiction other than the State
of California and the federal laws of the United States 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 purchaser and (B) as to matters of fact, to
the extent they deem proper, on certificates of responsible officers of the
Company and public officials, copies of which shall be provided to the
Purchaser.
Such counsel may deliver the opinions relating to the Merger Agreement
and the New Credit Facility set forth in paragraphs 6(i) and 6(iv) above by
delivering letters dated the Closing Date permitting the Purchaser to rely
upon separate opinion letters dated the Closing Date rendered to the
parties to the Merger Agreement and the New Credit Facility and containing
substantially similar opinions.
All references in this Section 6(a) to the Final Memorandum shall be
deemed to include any amendment or supplement thereto at the Closing Date.
17
(b) The Company shall have caused ▇▇▇▇▇▇ & ▇▇▇▇▇▇, counsel for the Company, to
have furnished to the Purchaser their opinion dated the Closing Date and
addressed to the Purchaser, to the effect that:
(i) the Company and each of its Subsidiaries have been duly
incorporated and are validly existing as corporations in good standing
under the laws of the jurisdiction in which it has been organized,
with full corporate power and authority to own or lease, as the case
may be, its properties and conduct its business as it is now being
conducted;
(ii) all the outstanding shares of capital stock of each
Subsidiary have been duly and validly authorized and issued and are
fully paid and nonassessable, and, except as otherwise set forth on
Schedule I to such opinion, all outstanding shares of capital stock of
each Subsidiary are owned of record by the Company either directly or
through wholly owned subsidiaries free and clear of (A) any security
interest which has been perfected by control of such capital stock
(and to such counsel's knowledge there are no adverse claims to such
capital stock), and (B) to such counsel's knowledge, any other
security interest, claims, liens or encumbrances. As used in such
opinion, the terms "control" and "notice of an adverse claim" have the
meanings given to them in Sections 8.106 and 8.105 of the Texas
Business and Commerce Code;
(iii) the authorized equity capitalization of the Company
effective upon the consummation of the Recapitalization is 15,000,000
shares of common stock, $.001 par value per share, and 2,000,000
shares of preferred stock, $.001 par value per share;
(iv) except as set forth on Schedule I to such opinion, none of
the issue and sale of the Securities, the execution and delivery of
this Agreement, the Registration Agreement, the Merger Agreement, the
New Credit Facility or the Exchange Indenture, the fulfillment of the
terms hereof or
18
thereof or the consummation of the transactions contemplated thereby
will conflict with, result in a breach or violation of, or constitute
a default under any law or the charter or by-laws of the Company or
the terms of any material indenture or other material agreement or
instrument in each case identified in an officer's certificate as
material to the Company and to which the Company or any Subsidiary is
a party or bound or any judgment, order or decree, in each case
identified in an officer's certificate, of any court, regulatory body,
administrative agency, governmental body or arbitrator having
jurisdiction over the Company, provided that such counsel need not
express any opinion as to whether or not any default or violation
exists with respect to any covenant containing any financial ratio or
like test;
(v) the Company has full corporate right, power and authority to
execute and deliver the Securities, the Registration Agreement, the
Merger Agreement, the New Credit Facility, the Exchange Indenture and
this Agreement and to perform its obligations thereunder; and all
corporate action required to be taken by the Company for the due and
proper authorization, execution and delivery of the Merger Agreement
and for the consummation of the transactions contemplated thereby has
been duly and validly taken;
(vi) the Merger Agreement has been duly authorized, executed and
delivered by the Company and Century Acquisition Corporation, and
constitutes a legal, valid and binding instrument enforceable against
the Company and Century Acquisition Corporation in accordance with its
terms (subject, as to the enforcement of remedies, to applicable
bankruptcy, reorganization, insolvency, moratorium or other laws
affecting creditors' rights generally from time to time in effect);
(vii) to such counsel's knowledge there is no pending or
threatened action or suit or judicial, arbitral or other
administrative proceeding to which the Company or any of its
Subsidiaries is a party or of which any property or assets of the
19
Company or any of its Subsidiaries is the subject that, singly or in
the aggregate, questions the validity of this Agreement, the
Registration Agreement, the Exchange Indenture, the Securities, the
Transactions or any action taken or to be taken pursuant hereto or
thereto.
In rendering such opinion, such counsel may rely (A) on the opinion of
▇▇▇▇▇▇ ▇▇▇▇▇▇, Esq., general counsel to the Company and (B) as to matters
of fact, to the extent they deem proper, on certificates of responsible
officers of the Company and public officials, copies of which shall be
provided to the Purchaser.
Such counsel may deliver the opinions relating to the Merger Agreement
and the New Credit Facility set forth above by delivering letters dated the
Closing Date permitting the Purchaser to rely upon separate opinion letters
dated the Closing Date rendered to the parties to the Merger Agreement and
the New Credit Facility and containing substantially similar opinions.
Such opinion will relate solely to the laws of the State of Texas; the
Delaware General Corporation Law and applicable United States federal law.
(c) The Company shall have caused ▇▇▇▇▇▇▇▇ & ▇'▇▇▇▇, special New York
counsel for the Company, to have furnished to the Purchaser their opinion
dated the Closing Date and addressed to the Purchaser, to the effect that:
(i) the New Credit Facility has been duly authorized, executed
and delivered by the Company and constitutes a legal, valid and
binding instrument enforceable against the Company in accordance with
its terms (subject, as to the enforcement of remedies, to applicable
bankruptcy, reorganization, insolvency, moratorium or other laws'
affecting creditors' rights generally from time to time in effect).
(d) the Company shall have caused ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ & Finger, special
Delaware counsel for the Company, to have furnished to the Purchaser their
opinion dated the Closing Date and addressed to the Purchaser, to the
effect that:
20
(i) the Preferred Stock has been duly and validly authorized by
the Company and when the Preferred Stock has been delivered by the
Company, countersigned by the Transfer Agent, and paid for in
accordance with the terms of this Agreement, the Preferred Stock will
be validly issued, fully paid and nonassessable.
(e) The Purchaser shall have received from Cravath, Swaine & ▇▇▇▇▇
such opinion or opinions, dated the Closing Date, with respect to the
issuance and sale of the Securities, the Final Memorandum (as amended or
supplemented at the Closing Date) and other related matters as the
Purchaser may reasonably require, and the Company shall have furnished to
such counsel such documents as they request for the purpose of enabling
them to pass upon such matters.
(f) The Company shall have furnished to the Purchaser certificates of
the Company signed by the President of the Company and the Chief Financial
Officer of the Company, dated the Closing Date, to the effect that the
signers of such certificate have examined the Final Memorandum, any
amendment or supplement to the Final Memorandum and this Agreement and the
Registration Agreement and that:
(i) the representations and warranties of the Company in this
Agreement and the Registration Agreement are true and correct in all
material respects on and as of the Closing Date with the same effect
as if made on the Closing Date, and the Company has complied in all
material respects with all the agreements and satisfied all the
conditions on their part to be performed or satisfied hereunder or
thereunder at or prior to the Closing Date; and
(ii) since the date of the most recent financial statements
included in the Final Memorandum, there has been no material adverse
change in the condition (financial or otherwise), properties,
business, results of operations or prospects of the Company or any of
its Subsidiaries, taken as a whole, whether or not arising from
transactions in the ordinary course of business, except as disclosed
in the Final
21
Memorandum (exclusive of any amendment or supplement thereto).
(g) At the Execution Time and at the Closing Date, the Company shall
have caused Ernst & Young LLP to have furnished to the Purchaser a letter
or letters, dated respectively as of the Execution Time and as of the
Closing Date, in form and substance satisfactory to the Purchaser,
confirming that they are independent accountants within the meaning of the
Securities Act and the Exchange Act and the applicable rules and
regulations thereunder and Rule 101 of the Code of Professional Conduct of
the American Institute of Certified Public Accountants (the "AICPA") and
stating in effect that:
(i) in their opinion the audited financial statements of the
Company included in the Final Memorandum and reported on by them,
comply in form in all material respects with the applicable accounting
requirements and the related published rules and regulations that
would apply to the Final Memorandum if the Final Memorandum were a
prospectus included in a registration statement on Form S-1 under the
Securities Act;
(ii) on the basis of a reading of the unaudited pro forma
financial statements of the Company included in the Final Memorandum;
carrying out certain specified procedures; inquiries of certain
officials of the Company who have responsibility for financial and
accounting matters; and proving the arithmetic accuracy of the
application of the pro forma adjustments to the historical amounts in
such unaudited pro forma financial statements, nothing came to their
attention which causes them to believe that such pro forma financial
statements do not comply as to form in all material respects with the
applicable requirements of Rule 11-02 of Regulation S-X and that the
pro forma adjustments have not been properly applied to the historical
amounts in the compilation of such pro forma financial statements;
(iii) based upon the procedures detailed in such letter with
respect to the period subsequent to the date of the latest audited
financial
22
statements included in the Final Memorandum, including the reading of
the minutes and inquiries of certain officials of the Company who have
responsibility for the financial and accounting matters and certain
other limited procedures requested by the Purchaser and described in
detail in such letter, nothing has come to their attention that causes
them to believe that:
(A) any unaudited financial statements of the Company
included as to the Final Memorandum do not comply as to form in
all material respects with applicable accounting requirements of
the Securities Act that would apply to the Final Memorandum if
the Final Memorandum were a prospectus included in a registration
statement on Form S-1 under the Securities Act; or that such
unaudited financial statements are not, in all material respects,
in conformity with generally accepted accounting principles
applied on a basis substantially consistent with that of the
audited financial statements of the Company included or
incorporated by reference in the Final Memorandum; or
(B) with respect to the period subsequent to April 30, 1998,
there were any changes, at a specified date not more than five
business days prior to the date of the letter, in the long-term
debt of the Company and any of its Subsidiaries or capital stock
of the Company or decreases in the stockholders' equity of the
Company or decreases in working capital of the Company, and any
of its Subsidiaries, as compared with the amounts shown on the
March 31, 1998 consolidated balance sheet included in the Final
Memorandum, or for the period from April 30, 1998, to such
specified date there were any decreases, as compared with the
corresponding period in the preceding year in total revenues, net
income before income taxes, net income or EBITDA, as defined in
the Final Memorandum, except in all instances for changes or
decreases set forth in such letter, in which case the letter
shall be accompanied by an explanation by the Company
23
as to the significance thereof unless said explanation is not
deemed necessary by the Purchaser; and
(iv) they have performed certain other specified procedures as a
result of which they determined that certain information of an
accounting, financial or statistical nature (which is limited to
accounting, financial or statistical information derived from the
general accounting records of the Company or any of its Subsidiaries)
set forth in the Final Memorandum, including the information set forth
under the captions "Offering Memorandum Summary", "the
Recapitalization", "Risk Factors", "Use of Proceeds",
"Capitalization", "Selected Historical and Pro Forma Consolidated
Financial Information", "Management's Discussion and Analysis of
Financial Condition and Results of Operations", "Business",
"Management" and "Description of New Credit Facility" in the Final
Memorandum, agrees with the accounting records of the Company, or any
of their Subsidiaries, excluding any questions of legal
interpretation.
All references in this Section 6(g) to the Final Memorandum shall be
deemed to include any amendment or supplement thereto at the date of the
letter.
(h) Subsequent to the Execution Time or, if earlier, the dates as of
which information is given in the Final Memorandum, there shall not have
been (i) any change or decrease specified in the letter or letters referred
to in paragraph (g)(iii)(B) of this Section 6 or (ii) any change, or any
development involving a prospective change, in or affecting the business or
properties of the Company or any of its Subsidiaries the effect of which,
in any case referred to in clause (i) or (ii) above, is not disclosed in
the Final Memorandum and is, in the judgment of the Purchaser, so material
and adverse as to make it impractical or inadvisable to market the
Securities as contemplated by the Final Memorandum.
(i) Subsequent to the Execution Time, there shall not have been (i)
any decrease in the rating of any of the Securities or any other debt
securities or preferred stock of the Company by any "nationally recognized
statistical rating organization" (as defined
24
for purposes of Rule 436(g) under the Securities Act) or (ii) any notice
given of any intended or potential decrease in any such rating or that such
organization has under surveillance or review (other than any such notice
with positive implications of a possible upgrading) its rating of any of
the Securities or any other debt securities or preferred stock of the
Company.
(j) On or prior to the Closing Date, the Registration Agreement shall
have been executed substantially in the form hereto delivered to you and
shall have been delivered to you.
(k) Each of the New Credit Facility and the Merger Agreement shall
have been executed and delivered by the parties thereto. The terms of the
New Credit Facility and the Merger Agreement shall be reasonably
satisfactory to the Purchaser, and the Purchaser shall have received
executed copies of the New Credit Facility and the Merger Agreement and all
other documents and agreements entered into and received in connection
therewith certified by the Secretary of the Company as being true, complete
and correct. There shall exist at and as of the Closing Date (after giving
effect to the Transactions) no condition that would constitute a default or
an event of default (or an event that with notice or lapse of time, or
both, would constitute a default or an event of default) under the New
Credit Facility.
(l) The Purchaser shall have received evidence, reasonably
satisfactory to them, that (A) the merger of Century Acquisition
Corporation with and into the Company shall have been consummated in
accordance with the terms of the Merger Agreement, (B) the initial funding
shall have occurred under the New Credit Facility, and (C) ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ &
Co. shall have made a $67.6 million cash investment in the Company on the
terms described in the Final Memorandum and otherwise reasonably
satisfactory to the Purchaser.
(m) Prior to the Closing Date, the Company shall have furnished to
the Purchaser such further information, certificates and documents as the
Purchaser may reasonably request.
25
If any of the conditions specified in this Section 6 shall not have
been fulfilled in all material respects when and as provided in this Agreement,
or if any of the opinions and certificates mentioned above or elsewhere in this
Agreement shall not be in all material respects reasonably satisfactory in form
and substance to the Purchaser and Counsel for the Purchaser, this Agreement and
all obligations of the Purchaser hereunder may be canceled at, or at any time
prior to, the Closing Date by the Purchaser. Notice of such cancelation shall
be given to the Company in writing or by telephone confirmed in writing.
The documents required to be delivered by this Section 6 will be
delivered at the office of Counsel for the Purchaser, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇
▇▇▇▇, ▇▇▇ ▇▇▇▇, on the Closing Date.
7. Reimbursement of Expenses. If the sale of the Securities provided
--------------------------
for herein is not consummated because any condition to the obligations of the
Purchaser set forth in Section 6 hereof is not satisfied or because of any
refusal, inability or failure on the part of the Company to perform any
agreement herein or comply with any provision hereof, in each case other than by
reason of a default by the Purchaser, the Company will reimburse the Purchaser
upon demand for all reasonable out-of-pocket expenses (including reasonable fees
and disbursements of counsel) that shall have been incurred by them in
connection with the proposed purchase and sale of the Securities.
8. Indemnification and Contribution. (a) The Company agrees to
---------------------------------
indemnify and hold harmless the Purchaser, each director, officer, employee and
agent of the Purchaser and each other person, if any, who controls the Purchaser
within the meaning of Section 15 of the Securities Act or Section 20 of the
Exchange Act against any and all losses, claims, damages or liabilities, joint
or several, to which they or any of them may become subject under the Securities
Act, the Exchange Act or other Federal or state statutory law or regulation, at
common law or otherwise, insofar as such losses, claims, damages or liabilities
(or actions in respect thereof) arise out of or are based upon any untrue
statement or alleged untrue statement of a material fact contained in the
Preliminary Memorandum, the Final Memorandum, or in any amendments thereof or
supplements thereto, or arise out of or are based upon the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements
26
therein, in the light of the circumstances under which they were made, not
misleading, and agrees to reimburse each such indemnified party, as incurred,
for any legal or other expenses reasonably incurred by them in connection with
investigating or defending any such loss, claim, damage, liability or action;
provided, however, that the Company will not be liable in any such case to the
-------- -------
extent that any such loss, claim, damage or liability arises out of or is based
upon any such untrue statement or alleged untrue statement or omission or
alleged omission made in the Preliminary Memorandum or the Final Memorandum, or
in any amendment thereof or supplement thereto, in reliance upon and in
conformity with written information furnished to the Company by or on behalf of
the Purchaser specifically for inclusion therein, it being understood that the
only such information is that described in Section 8(b); provided further,
----------------
however, that the indemnity agreement contained in this Section 8(a) shall not
-------
inure to the benefit of any indemnified party to the extent that it is
determined by a final, non-appealable judgment that (i) the Preliminary
Memorandum contained an untrue statement of a material fact or omitted to state
therein a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading, (ii) the sale to the person asserting any such losses, claims,
damages or liabilities was an initial resale of the Securities by the Purchaser,
(iii) any such loss, claim, damage or liability of such indemnified party
results from the fact that there was not sent or given to such person, at or
prior to the written confirmation of the sale of such Securities to such person,
a copy of any revised Preliminary Memorandum, the Final Memorandum or the Final
Memorandum as amended or supplemented, and the Company had previously furnished
copies thereof to the Purchaser and (iv) the revised Preliminary Memorandum, the
Final Memorandum or the Final Memorandum as amended or supplemented corrected
such untrue statement or omission. This indemnity agreement will be in addition
to any liability that the Company may otherwise have.
(b) The Purchaser agrees to indemnify and hold harmless the Company,
its directors and officers, and each other person, if any, who controls the
Company within the meaning of either Section 15 of the Securities Act or Section
20 of the Exchange Act, to the same extent as the foregoing indemnity from the
Company to the Purchaser, but only with reference to written information
relating to the Purchaser furnished to the Company by or on behalf of the
27
Purchaser specifically for inclusion in the Preliminary Memorandum or the Final
Memorandum (or in any amendment thereof or supplement thereto). This indemnity
agreement will be in addition to any liability which the Purchaser may otherwise
have. The Company acknowledges that the statements set forth in the last
paragraph of the cover page and under the heading "Plan of Distribution" in the
Preliminary Memorandum and the Final Memorandum (or in any amendment or
supplement thereto) constitute the only information furnished in writing by or
on behalf of the Purchaser for inclusion in the Preliminary Memorandum or the
Final Memorandum (or in any amendment thereof or supplement thereto).
(c) Promptly after receipt by an indemnified party under this Section
8 of notice of the commencement of any action, such indemnified party will, if a
claim in respect thereof is to be made against the indemnifying party under this
Section 8, notify the indemnifying party in writing of the commencement thereof;
but the failure so to notify the indemnifying party (i) will not relieve it from
liability under paragraph (a) or (b) above unless and to the extent it did not
otherwise learn of such action and 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 paragraph (a) or (b)
above. The indemnifying party shall be entitled to participate therein, and to
the extent it may wish, to assume the defense thereof with counsel of the
indemnifying party's choice at the indemnifying party's expense to represent the
indemnified party in any action for which indemnification is sought (in which
case the indemnifying party shall not thereafter be responsible for the fees and
expenses of any separate counsel retained by the indemnified party or parties
except as set forth below); provided, however, that such counsel shall be
-------- -------
satisfactory to the indemnified party. Notwithstanding the indemnifying party's
election to appoint counsel to represent the indemnified party in an action, the
indemnified party shall have the right to employ separate counsel (including
local counsel), and the indemnifying party shall bear the reasonable fees, costs
and expenses of such separate counsel, 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 actual or potential defendants in, or
targets of, any such action include both the indemnified party and the
28
indemnifying party and the indemnified party shall have reasonably concluded
that there may be legal defenses available to it and/or other indemnified
parties which are different from or additional to those available to the
indemnifying party, (iii) the indemnifying party shall not have employed counsel
satisfactory to the indemnified party to represent the indemnified party within
a reasonable time after notice of the institution of such action or (iv) the
indemnifying party shall authorize the indemnified party to employ separate
counsel at the expense of the indemnifying party; provided that the indemnifying
party shall not be responsible for the expenses of more than one separate
counsel (in addition to one local counsel in each relevant jurisdiction) in any
one action. An indemnifying party will not, without the prior written consent
of the indemnified parties, settle or compromise or consent to the entry of any
judgment with respect to any pending or threatened claim, action, suit or
proceeding in respect of which indemnification or contribution may be sought
hereunder (whether or not the indemnified parties are actual or potential
parties to such claim or action) unless such settlement, compromise or consent
includes an unconditional release of each indemnified party from all liability
arising out of such claim, action, suit or proceeding. An indemnified party
will not, without the prior written consent of the indemnifying party, which
consent will not be unreasonably withheld, settle or compromise or consent to
the entry of any judgment with respect to any pending or threatened claim,
action, suit or proceeding in respect of which indemnification or contribution
may be sought hereunder.
(d) In the event that the indemnity provided in paragraph (a) or (b)
of this Section 8 is unavailable to or insufficient to hold harmless an
indemnified party for any reason (other than as provided in paragraph (a)), the
Company and the Purchaser agree to contribute to the aggregate losses, claims,
damages and liabilities (including legal or other expenses reasonably incurred
in connection with investigating or defending same) (collectively "Losses") to
which the Company and the Purchaser may be subject in such proportion as is
appropriate to reflect the relative benefits received by the Company on the one
hand and by the Purchaser on the other from the offering of the Securities;
provided, however, that in no case shall the Purchaser be responsible for any
-------- -------
amount in excess of the purchase discount or commission applicable to the
Securities purchased by such the Purchaser hereunder. If the
29
allocation provided by the immediately preceding sentence is unavailable for any
reason, the Company and the Purchaser shall contribute in such proportion as is
appropriate to reflect not only such relative benefits but also the relative
fault of the Company on the one hand and of the Purchaser on the other in
connection with the statements or omissions which resulted in such Losses as
well as any other relevant equitable considerations. Benefits received by the
Company shall be deemed to be equal to the total net proceeds from the offering
of the Securities (before deducting expenses), and benefits received by the
Purchaser shall be deemed to be equal to the total purchase discounts and
commissions, in each case as set forth on the cover page of the Final
Memorandum. Relative fault shall be determined by reference to whether any
alleged untrue statement or omission relates to information provided by the
Company on the one hand or the Purchaser on the other. The Company and the
Purchaser agree that it would not be just and equitable if contribution were
determined by pro rata allocation or any other method of allocation which does
not take account of the equitable considerations referred to above.
Notwithstanding the provisions of this paragraph (d), 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 Section 8,
each person who controls the Purchaser within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act and each director, officer,
employee and agent of the Purchaser shall have the same rights to con tribution
as the Purchaser, and each person who controls the Company within the meaning of
either the Securities Act or the Exchange Act and each officer and director of
the Company shall have the same rights to contribution as the Company, subject
in each case to the applicable terms and conditions of this paragraph (d).
9. Termination. This Agreement shall be subject to termination in
------------
the absolute discretion of the Purchaser, by notice given to the Company prior
to delivery of and payment for the Securities, if prior to such time (i) trading
in securities generally on the New York Stock Exchange shall have been suspended
or limited or minimum prices shall have been established on such Exchange, (ii)
a banking moratorium shall have been declared either by Federal or New York
State authorities or (iii) there shall have occurred any outbreak or escalation
of hostilities, declaration by the United States of a national emergency or
30
war or other calamity or crisis the effect of which on financial markets of the
United States is such as to make it, in the judgment of the Purchaser,
impracticable or inadvisable to proceed with the offering or delivery of the
Securities as contemplated by the Final Memorandum.
10. Representations and Indemnities to Survive. The respective
-------------------------------------------
agreements, representations, warranties, indemnities and other statements of the
Company or its officers and of the Purchaser set forth in this Agreement will
remain in full force and effect, regardless of any investigation made by or on
behalf of the Purchaser, the Company or any of the officers, directors or
controlling persons referred to in Section 8 hereof, and will survive delivery
of and payment for the Securities. The provisions of Sections 7 and 8 hereof
shall survive the termination or cancelation of this Agreement.
11. Notices. All communications hereunder will be in writing and
--------
effective only on receipt, and, if sent to the Purchaser, will be mailed,
delivered or sent by fax and confirmed to them, at ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇
▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇▇▇; or, if sent to the Company, will be mailed, delivered or
telegraphed and confirmed to it at ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇, ▇▇▇▇▇.
12. Successors. This Agreement will inure to the benefit of and be
-----------
binding upon the parties hereto and their respective successors and the officers
and directors and controlling persons referred to in Section 8 hereof, and,
except as expressly set forth in Section 5(h) hereof, no other person will have
any right or obligation hereunder.
13. APPLICABLE LAW. THIS AGREEMENT WILL BE GOVERNED BY AND CONSTRUED
---------------
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK (WITHOUT REGARD TO THE
CONFLICT OF LAW PROVISIONS THEREOF).
14. Business Day. For purposes of this Agreement, "business day"
-------------
means each Monday, Tuesday, Wednesday, Thursday and Friday that is not a day on
which banking institutions in the City of New York, New York are authorized or
obligated by law, executive order or regulation to close.
15. Counterparts. This Agreement may be executed in one or more
-------------
counterparts, each of which will be deemed to
31
be an original, but all such counterparts will together constitute one and the
same instrument.
32
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to us the enclosed duplicate hereof, whereupon
this Agreement and your acceptance shall represent a binding agreement between
the Company and the Purchaser.
Very truly yours,
CENTURY MAINTENANCE SUPPLY, INC.
by
/s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
-----------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: President
by
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-----------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Vice President
33
The foregoing Agreement is hereby
confirmed and accepted as of the
date first above written.
SALOMON BROTHERS INC
by /s/ ▇. ▇▇▇▇▇ ▇▇▇▇▇
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Name: ▇. ▇▇▇▇▇ ▇▇▇▇▇
Title: Director
