LILLY INDUSTRIES, INC.
$100,000,000
7-3/4% Senior Notes due 2007
PURCHASE AGREEMENT
New York, New York
November 5, 1997
To: SALOMON BROTHERS INC
XXXXXX BROTHERS INC.
XXXXXXXX & CO. INC.
In care of:
Salomon Brothers Inc
Seven Xxxxx Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Ladies and Gentlemen:
Lilly Industries, Inc., an Indiana corporation (the
"Company"), proposes to issue and sell to you (the "Purchasers"), $100,000,000
aggregate principal amount of its 7-3/4% Senior Notes due 2007 (the
"Securities"). The Securities are to be issued under an indenture (the
"Indenture") dated as of November 10, 1997, between the Company and Xxxxxx Trust
and Savings Bank, as trustee (the "Trustee").
The sale of the Securities 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 Securities 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 Securities, the Company has
prepared a preliminary offering memorandum, dated October 17, 1997 (the
"Preliminary Memorandum"), and a final offering memorandum, dated November 5,
1997 (the "Final Memorandum"). Each of the Preliminary Memorandum and
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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 Securities by
the Purchasers. 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 and any references herein to the terms "amend",
"amendment" or "supplement" with respect to the Final Memorandum shall be deemed
to refer to and include any information filed under the Securities Exchange Act
of 1934, as amended (the "Exchange Act"), subsequent to the Execution Time which
is incorporated by reference therein.
The holders of the Securities will be entitled to the benefits of the
Registration Agreement dated the date hereof, between the Company and the
Purchasers (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
warrants to, and agrees with, the Purchasers 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 circum stances under which they
were made, not misleading. The Final Memorandum, at the date hereof,
does not, and at the Closing Date (as defined below) will not (and any
amendment or supplement thereto, at the date thereof and at the Closing
Date, will 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 circumstances under which they were made,
not misleading; provided, however, that no representation or warranty
is 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 Purchasers specifically for inclusion therein, it being understood
that the only such information is that described in Section 8(b)
hereof. All documents incorporated by reference in the Preliminary
Memorandum or the Final Memorandum that were filed under the Exchange
Act on or before the Execution Time complied, and all such documents
that are filed under the Exchange Act after the Execution Time and on
or before the Closing Date will comply, in all material respects with
the applicable requirements of the Exchange Act and the rules
thereunder.
(b) The Company has not taken nor will it take, directly or
indirectly, any action prohibited by Regulation M under the Exchange
Act, in connection with the offering of the Securities.
(c) None of the Company, any of its Affiliates (as defined in
Rule 501(b) of Regulation D under the Securities Act ("Regulation D"))
or any person acting on its or 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 Securities in a manner that would require the
registration of the Securities 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
Securities in the United States.
(d) The Securities satisfy the eligibility requirements of
Rule 144A(d)(3) under the Securities Act.
(e) None of the Company, any of its Affiliates or any person
acting on its or 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"
[NYCORP2:438653]
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 has full corporate power and authority to
enter into this Agreement, the Registration Agreement, the 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 Indenture has been duly
authorized by the Company, and the Indenture, when duly executed and
delivered by the parties thereto, will constitute a valid and binding
obligation of the Company, enforceable against the Company in
accordance with its terms, subject to applicable bankruptcy,
insolvency, 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) The Securities have been duly authorized for issuance and
sale by the Company to the Purchasers, and when duly executed,
authenticated, issued and delivered in accordance with the Indenture
and paid for in accor dance with the terms of this Agreement, the
Securities 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 Indenture, subject to applicable
bankruptcy, insolvency, 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).
(i) The execution, delivery and performance of this Agreement,
the Registration Agreement, the Indenture and the Securities 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 of its
Subsidiaries (as defined below), (ii) any material
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 or 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. No consent, approval, authorization
or other order of any court, regulatory body, administrative agency or
other governmental body which has not already been obtained is required
for the execution and delivery of this Agreement, the Registration
Agreement, the Indenture or the Securities or for the consummation of
the Transactions, except such as may be required under the blue sky or
securities laws of any jurisdiction in connection with the purchase and
sale of the Securities by the Purchasers and except such as may be
required under the Securities Act with respect to the Registration
Agreement and the transactions contemplated thereunder. The term
"Subsidiary" means each person of which a majority of the voting equity
securities or other interests is owned, directly or indirectly, by the
Company.
(j) The Company is subject to and in full compli ance with the
reporting requirements of Section 13 or Section 15(d) of the Exchange
Act.
(k) 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 con templated by this Agreement).
(l) The information provided by the Company pur suant to
Section 5(i) hereof will not, at the date thereof, 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 cir
cumstances under which they were made, not misleading.
(m) It is not necessary in connection with the offer, sale and
delivery of the Securities in the
manner contemplated by this Agreement and the Final Memorandum to
register the Securities under the Securities Act or to qualify the
Indenture under the Trust Indenture Act of 1939, as amended (the "Trust
Indenture Act").
(n) The Credit Agreement dated as of October 24, 1997 (the
"Credit Agreement"), among the Company, the lenders listed on Schedule
1 thereto and NBD Bank, N.A., as agent, (including all documents
related thereto), on the terms described in the Final Memorandum, has
been duly executed and delivered by each of the parties thereto and is
in full force and effect.
2. Purchase and Sale. Subject to the terms and conditions and
in reliance upon the representations and warranties herein set forth, the
Company agrees to sell to the Purchasers, and the Purchasers agree to purchase
from the Company, severally and not jointly, at a purchase price of 97.468913%
of the principal amount thereof, plus accrued interest, if any, from November
10, 1997, to the Closing Date, the principal amount of Securities set forth
opposite each Purchaser's name in Schedule I hereto.
3. Delivery and Payment. Delivery of and payment for the
Securities shall be made at 10:00 AM, New York City time, on November 10, 1997,
or such later date as the Purchasers may agree or as provided in Section 9
hereof (such date and time of delivery and payment for the Securities being
herein called the "Closing Date"). Delivery of the Securities shall be made to
the Purchasers against payment by the Purchasers of the purchase price thereof
to or upon the order of the Company by wire transfer in Federal (same day) funds
to a U.S. dollar account in New York previously designated by the Company or
such other manner of payment as may be designated by the Company and agreed to
by the Purchasers not less than two business days prior to the Closing Date.
Delivery of the Securities shall be made at the office of Cravath, Swaine &
Xxxxx ("Counsel for the Purchasers"), 000 Xxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx.
Certificates for the Securities shall be registered in such names and in such
denominations as the Purchasers may request not less than two full business days
in advance of the Closing Date.
The Company agrees to have the Securities available for
inspection, checking and packaging by the
Purchasers in New York, New York, not later than 1:00 PM on the business day
prior to the Closing Date.
4. Offering of Securities. Each Purchaser severally and not
jointly (i) acknowledges that the Securities have not been registered under the
Securities Act and may not be offered or sold except pursuant 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 Securities 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 Securities 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 Securities 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 Purchasers that:
(a) The Company will furnish to the Purchasers, without
charge, as many copies of the Final Memorandum and any supplements or
amendments thereof or thereto as the Purchasers may reasonably request.
The Company will pay the expenses of printing or other production of
all documents relating to the offering.
(b) The Company will not amend or supplement the Final
Memorandum, other than by filing documents under the Exchange Act that
are incorporated by reference therein, without prior consent of the
Purchasers. Prior to the completion of the sale of the Securities by
the Purchasers, the Company will not file any
document under the Exchange Act which is incorporated by reference in
the Final Memorandum unless the Company has furnished to you a copy for
your review prior to filing and will not file any such document to
which you reasonably and timely object within five days of receipt
thereof.
(c) The Company promptly will advise the Purchasers when,
prior to the completion of the sale of the Securities by the
Purchasers, any document filed under the Exchange Act that is
incorporated by reference in the Final Memorandum shall have been filed
with the Securities and Exchange Commission (the "Commission").
(d) If at any time prior to the completion of the sale of the
Securities by the Purchasers, 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
(including any document incorporated by reference therein that was
filed under the Exchange Act) to comply with the Exchange Act or the
rules thereunder or other applica ble law, the Company promptly will
notify the Purchasers of the same and, subject to paragraph (b) of this
Section 5, will prepare and provide to the Purchasers pursuant to
paragraph (a) of this Section 5 an amendment or supplement which will
correct such statement or omission or effect such compliance, and, in
the case of such an amendment or supplement that is to be filed under
the Exchange Act and that is incorporated by reference in the Final
Memorandum, will file such amendment or supplement with the Commission.
(e) The Company will arrange for the qualifica tion of the
Securities for sale under the laws of such jurisdictions as the
Purchasers may designate and will maintain such qualifications in
effect so long as required for the sale of the Securities. The Company
promptly will advise the Purchasers of the receipt by it of any
notification with respect to the suspension of the qualification of the
Securities for sale in any jurisdiction or the initiation or
threatening of any proceeding for such purpose.
(f) The Company will not, and will not permit any of its
Affiliates to, resell any Securities that have been acquired by any of
them.
(g) None of the Company, any of its Affiliates, or any person
acting on its or their behalf will, directly or indirectly, make offers
or sales of any security, or solicit offers to buy any security, under
circumstances that would require the registration of the Securities
under the Securities Act.
(h) None of the Company, any of its Affiliates or any person
acting on its or 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 Securities in the United
States, except pursuant to a registered public offering, whether an
exchange offer or shelf registration, as provided in the Registration
Agreement.
(i) So long as any of the Securities 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
or 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 desig nated by such holder) of such restricted
securities, upon the request of such holder or prospective pur chaser,
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.
(j) None of the Company, any of its Affiliates or any person
acting on its or their behalf will engage in any directed selling
efforts with respect to the Securities 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.
(k) The Company will cooperate with the
Purchasers and use its best efforts to permit the Securities to be
eligible for clearance and settlement through The Depository Trust
Company.
(l) The Company hereby agrees to permit the Securities to be
designated Portal eligible securities, will pay the requisite fees
related thereto and has been advised by The Portal Market 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.
(m) The Company will not, until 180 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 issued or guaranteed by the Company
(other than (i) the Securities and (ii) pursuant to a registered public
offering as provided in the Registration Agreement). The Company will
not at any time offer, sell, contract to sell or otherwise dispose of,
directly or indirectly, any securities under circumstances where such
offer, sale, contract or disposition would cause the exemption afforded
by Section 4(2) of the Securities Act or the safe harbor of Regulation
S thereunder to cease to be applicable to the offer and sale of the
Securities as contemplated by this Agreement and the Final Memorandum.
(n) The Company will apply the net proceeds from the sale of
the Securities sold by it substantially in accordance with its
statements under the caption "Use of Proceeds" in the Final Memorandum.
6. Conditions to the Obligations of the Purchasers. The
obligations of the Purchasers 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 furnished to the Purchasers the
opinion of Xxxxxx & Xxxxxxxxx, counsel for the Company, dated the
Closing Date, to the effect that:
(i) each of the Company and its domestic Subsidiaries
has been duly incorporated and is validly existing as a
corporation under the laws of the respective jurisdiction in
which it is chartered or organized, with full corporate power
and authority to own its properties and conduct its business
as described in the Final Memorandum, and, based on
certificates from applicable government officials, is duly
qualified to do business as a foreign corporation and is in
good standing under the laws of each jurisdiction which
requires such qualification wherein it owns or leases material
properties or conducts material business other than such
jurisdictions where failure to be so qualified would not,
individually or in the aggregate, be required to be disclosed
or incorporated by reference in the Final Memorandum if the
Final Memorandum were a prospectus included in a registration
statement on Form S-3 under the Securities Act;
(ii) all the outstanding shares of capital stock of
the Company and each domestic Subsidiary have been duly and
validly authorized and issued and are fully paid and
nonassessable, and, except as otherwise set forth in the Final
Memorandum, all outstanding shares of capital stock of any
Subsidiary of the Company are owned by the Company either
directly or through wholly owned Subsidiaries free and clear
of any perfected security interest and, to the best of such
counsel's knowledge, any other security interests, claims or
encumbrances;
(iii) the Company's authorized equity capital
ization is as set forth in the Final Memorandum;
(iv) the information contained in the Final
Memorandum under the headings "Risk Factors-- Environmental
Matters", "Management's Discussion and Analysis of Results of
Operations and Financial Condition--Regulatory Issues",
"Business--Environmental Regulation", "Business-- Legal
Proceedings", "Description of Existing Debt and New Bank
Credit Facility" and "Certain United States Federal Income Tax
Considerations", fairly summarizes the matters therein
described;
(v) the Indenture conforms as to form in all material
respects with the requirements of the Trust Indenture Act and
the rules and regulations of the Commission applicable to an
indenture which is qualified thereunder;
(vi) no consent, approval, authorization or order of,
or filing or registration with, any court or governmental
agency or body is required for the execution, delivery and
performance of this Agreement, the Indenture, the Registration
Agreement and the Securities or for the consummation of the
Transactions, except such as may be required under the blue
sky or securities laws of any jurisdiction in connection with
the purchase and sale of the Securities by the Purchasers and
such other approvals (specified in such opinion) as have been
obtained and except such as may be required under the
Securities Act with respect to the Registration Agreement and
the transactions contemplated thereunder;
(vii) none of the issue and sale of the Securities,
the execution and delivery of this Agreement, the Registration
Agreement or the Indenture, the fulfillment of the terms
hereof or thereof or the consummation of the Transactions will
conflict with, result in a breach or xxxxx tion of, or
constitute a default under any law or the articles or by-laws
of the Company or any Subsidiary or the terms of any indenture
or other agreement or instrument known to such counsel and to
which the Company or any Subsidiary is a party or bound or any
judgment, order or decree known to such counsel to be
applicable to the Company or any Subsidiary of any court,
regulatory body, administrative agency, governmental body or
arbitrator having jurisdiction over the Company or any
Subsidiary;
(viii) the Company has full corporate right, power
and authority to execute and deliver the Indenture, the
Securities, the Registration Agreement and this Agreement and
to perform its respective obligations hereunder and
thereunder; and all corporate action required to be taken for
the due and proper authorization, execution and delivery of
the Indenture, the Securities, the Registration Agreement and
this Agreement and for the consummation of the Transactions
has been duly and validly taken;
(ix) this Agreement and the Registration
Agreement have been duly authorized, executed and
delivered by the Company;
(x) the Indenture 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 to applicable bankruptcy,
insolvency, reorganization, fraudulent conveyance, 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); the Securities are in the form contemplated by the
Indenture and have been duly authorized and executed by the
Company and, when authenticated in accordance with the
provisions of the Indenture and delivered to and paid for by
the Purchasers pursuant to this Agreement, will be duly and
validly issued and outstanding and will constitute legal,
valid and binding obligations of the Company entitled to the
benefits of the Indenture and enforceable in accordance with
their terms, subject to applicable bankruptcy, insol vency,
reorganization, fraudulent conveyance, 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);
and 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, provide a fair summary of such provisions;
(xi) to the best knowledge of such counsel, there is
no pending or threatened action, suit or proceeding before any
court or governmental agency, authority or body or any
arbitrator involving the Company or any of the Subsidiaries or
to which any of the properties of the Company or any of the
Subsidiaries is subject that would be required to be disclosed
or incorporated by reference in the Final Memorandum if the
Final Memorandum were a prospectus included in a registration
statement on Form S-3 under the Securities Act, which is not
adequately disclosed in the Final Memorandum;
(xii) the Company is not, and after giving effect to the
offering and sale of the Securities and the application of the
net proceeds therefrom, will not be, an "investment company"
within the meaning of the Investment Company Act and the rules
and regulations of the Commission thereunder, without taking
account of any exemp tion arising out of the number of holders
of the Company's securities; and
(xiii) assuming the accuracy of the representa tions
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 Indenture under
the Trust Indenture Act is necessary, for the offer, sale and
delivery of the Securities in the manner contemplated by this
Agreement.
Such counsel shall also state that they have no
reason to believe that at the Execution Time the Final Memorandum
contained an untrue statement of a material fact or omitted to state a
material fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading
or that the Final Memorandum includes an untrue statement of a material
fact or omits to state a material fact necessary in order to make the
statements therein, in the light of the cir cumstances under which they
were made, not misleading (provided that such counsel shall express no
such belief regarding the financial statements and the notes and
schedules thereto and other financial data contained 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 New York, the State of Indiana or 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 Purchasers and
(B) as to matters of fact, to the extent they deem proper, on
certificates of responsible officers of the Company and public
officials.
All references in this Section 6(a) to the Final
Memorandum shall be deemed to include any amend ment or supplement
thereto at the Closing Date.
(b) The Company shall have furnished to the Purchasers the
opinion of Xxxxxxxx, Xxxxxx, special Canadian counsel for the Company,
dated the Closing Date, to the effect that:
(i) each of the Company's Subsidiaries that is
incorporated in Canada has been duly incorporated and is
validly existing as a corporation in good standing under the
laws of the respective jurisdiction in which it is chartered
or organized, with full corporate power and authority to own
its properties and conduct its business as described in the
Final Memorandum, and is duly qualified to do business as a
foreign corporation and is in good standing under the laws of
each jurisdiction which requires such qualification wherein it
owns or leases material properties or conducts material
business; and
(ii) all the outstanding shares of capital stock of
each of the Company's Subsidiaries that is incorporated in
Canada have been validly confirmed, ratified and approved as
of the date of such opinion.
(c) The Purchasers shall have received from Counsel for the
Purchasers 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 Purchasers 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.
(d) The Company shall have furnished to the Purchasers a
certificate of the Company, signed by the Chairman, President and Chief
Executive Officer and the Vice President, Chief Financial Officer and
Secretary of the Company, dated the Closing Date, to the effect that
the signers of such certificate have carefully examined the Final
Memorandum, any amendment or supplement to the Final Memorandum, 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 with all the agreements and satisfied all
the conditions on its 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 xxxxx cial
statements included or incorporated by reference in the Final
Memorandum (exclusive of any amendment or supplement thereto),
there has been no material adverse change in the condition
(financial or otherwise), properties, business, results of
operations or prospects of the Company and its subsidiaries,
taken as a whole, whether or not arising from transactions in
the ordinary course of business, except as disclosed in the
Final Memorandum (exclusive of any amendment or supplement
thereto).
(e) At the Execution Time and at the Closing Date, Ernst &
Young LLP shall have furnished to the Purchasers a letter or letters,
dated respectively as of the Execution Time and as of the Closing Date,
in form and substance satisfactory to the Purchasers, con firming 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
and financial statement schedules included or incorporated by
reference in the Final Memorandum and reported on by them
comply in form in all material respects with the applicable
accounting requirements of the Exchange Act 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) based upon (x) their review, in accordance with
standards established under Statement on Auditing Standards
No. 71, of the unaudited interim financial information for the
nine-month period ended August 31, 1997, and as at August 31,
1997, and (y) the procedures detailed in such letter with
respect to the period subsequent to the date of the latest
audited financial 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 Purchasers 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 or incorporated by reference in
the Final Memorandum do not comply in form in all
material respects with the 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 and with the
published rules and regulations of the Commission
with respect to financial statements included or
incorporated in quarterly reports on Form 10-Q under
the Exchange 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 subse quent
to August 31, 1997, there were any changes, at a
specified date not more than five business days prior
to the date of the letter, in the total debt of the
Company and 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 its subsidiaries, as compared with the
amounts shown on the August 31, 1997, consolidated
balance sheet included or incorporated by reference
in the Final Memorandum, or for the period from
September 1, 1997, to such specified date there were
any decreases, as compared with the corresponding
period in the preceding year in net sales, cost of
products sold, operating income, 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 as to
the significance thereof unless said explanation is
not deemed necessary by the Purchasers; or
(C) the information included under the
headings "Selected Consolidated Financial Information
and Certain Operating Data" and "Management's
Discussion and Analysis of Results of Operations and
Financial Condition" is not in conformity with the
disclosure requirements of Regulation S-K 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; and
(iii) they have performed certain other speci fied
procedures as a result of which they deter mined that certain
information of an accounting,
financial or statistical nature (which is limited to
accounting, financial or statistical informa tion derived from
the general accounting records of the Company and its
subsidiaries) set forth or incorporated by reference in the
Final Memorandum, including the information set forth under
the captions "Summary", "Risk Factors", "Use of Proceeds",
"Capitalization" "Selected Consolidated Financial Information
and Certain Operating Data", "Management's Discussion and
Analysis of Results of Operations and Financial Condition",
"Business", "Management", "Description of Existing Debt and
New Bank Credit Facility" and "Description of Notes" in the
Final Memorandum, agrees with the accounting records of the
Company and its subsidiaries, excluding any questions of legal
interpretation.
All references in this Section 6(e) to the Final Memorandum
shall be deemed to include any amendment or supplement thereto at the
date of the letter.
(f) Subsequent to the Execution Time or, if ear lier, 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 (e) of this Section 6 or (ii) any
change, or any development involving a pros pective change, in or
affecting the business or prop erties of the Company and its
Subsidiaries the effect of which, in any case referred to in clause (i)
or (ii) above, is, in the judgment of the Purchasers, so material and
adverse as to make it impractical or inad visable to market the
Securities as contemplated by the Final Memorandum.
(g) Subsequent to the Execution Time, there shall not have
been (i) any decrease in the rating of the Securities or any of the
Company's other debt securities by any "nationally recognized
statistical rating organization" (as defined 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 the Securities or any of the Company's other debt securities.
(h) Prior to the Closing Date, the Company shall have
furnished to the Purchasers such further information, certificates and
documents as the Purchasers may reasonably request.
(i) On or prior to the Closing Date, the Company shall have
received funds pursuant to the Credit Agreement in the amounts set
forth in the Final Memorandum.
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 else
where in this Agreement shall not be in all material respects reasonably
satisfactory in form and substance to the Purchasers and Counsel for the
Purchasers, this Agreement and all obligations of the Purchasers hereunder may
be canceled at, or at any time prior to, the Closing Date by the Purchasers.
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 Purchasers, 000 Xxxxxx Xxxxxx, Xxx
Xxxx, Xxx Xxxx, xx 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 Purchasers set forth in Section 6 hereof is not satisfied, because of any
termination pursuant to Section 10 hereof 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
Purchasers, the Company will reimburse the Purchasers upon demand for all
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 each Purchaser, each director, officer, employee and
agent of any Purchaser and each other person, if any, who controls any 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 mate
rial fact contained in the Preliminary Memorandum, the Final Memorandum or any
information provided by the Company to any holder or prospective purchaser of
Securities pursuant to Section 5(i), 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 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 Purchasers specifically for inclusion therein, it
being understood that the only such information is that described in Section
8(b). This indemnity agreement will be in addition to any liability that the
Company may otherwise have.
(b) Each Purchaser severally and not jointly 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 Purchasers, but only
with reference to written information relating to the Purchasers furnished to
the Company by or on behalf of the Purchasers 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 Purchasers 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 Purchasers 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 appoint 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 indemni fying party shall not
thereafter be responsible for the fees and expenses of any separate counsel
retained by the indem nified party or parties except as set forth below); pro
vided, however, that such counsel shall be satisfactory to the indemnified
party. Notwithstanding the indemnifying party's election to appoint counsel to
represent the indem nified 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 reason able 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 indemnifying party and the
indemnified party shall have reasonably concluded that there may be legal
defenses available to it and/or other indemni fied 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. 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 indemnifica tion 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 indemni fied party from all liability
arising out of such claim, action, suit or proceeding.
(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, the Company and the Purchasers 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 Purchasers
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 Purchasers on the
other from the offering of the Securities; provided, however, that in no case
shall the Purchasers be responsible for any amount in excess of the purchase
discount or commission applicable to the Securities purchased by such the
Purchasers hereunder. If the allocation provided by the immediately preceding
sentence is unavailable for any reason, the Company and the Purchasers 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 Purchasers 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 Purchasers 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 or the Purchasers. The Company and the
Purchasers 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 a
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 a
Purchaser shall have the same rights to contribution as such 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. Default by a Purchaser. If any one or more Purchasers shall
fail to purchase and pay for any of the Securities agreed to be purchased by
such Purchaser hereunder and such failure to purchase shall constitute a default
in the performance of its or their obligations under this Agreement, the
remaining Purchasers shall be obligated severally to take up and pay for (in the
respective proportions which the principal amount of Securities set forth
opposite their names in Schedule I hereto bears to the aggregate principal
amount of Securities set forth opposite the names of all the remaining
Purchaser(s)) the Securities that the defaulting Purchaser or Purchasers agreed
but failed to purchase; provided, however, that in the event that the aggregate
principal amount of Securities that the defaulting Purchaser or Purchasers
agreed but failed to purchase shall exceed 10% of the aggregate principal amount
of Securities set forth in Schedule I hereto, the remaining Purchasers shall
have the right to purchase all, but shall not be under any obligation to
purchase any, of the Securities, and if such non-defaulting Purchasers do not
purchase all the Securities, this Agreement will terminate without liability to
any non-defaulting Purchaser or the Company. In the event of a default by any
Purchaser as set forth in this Section 9, the Closing Date shall be postponed
for such period, not exceeding seven days, as the Purchasers shall determine in
order that the required changes in the Final Memorandum or in any other
documents or arrangements may be effected. Nothing contained in this Agreement
shall relieve any defaulting Purchaser of its liability, if any,
to the Company or any non-defaulting Purchaser for damages occasioned by its
default hereunder.
10. Termination. This Agreement shall be subject to
termination in the absolute discretion of the Purchasers, by notice given to the
Company prior to delivery of and payment for the Securities, if prior to such
time (i) trading in any of the Company's securities shall have been suspended by
the Commission or the New York Stock Exchange or 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 war or other
calamity or crisis the effect of which on financial markets is such as to make
it, in the judgment of the Purchasers, impracticable or inadvisable to proceed
with the offering or delivery of the Securities as contemplated by the Final
Memorandum.
11. Representations and Indemnities to Survive. The respective
agreements, representations, warranties, indemnities and other statements of the
Company or its officers and of the Purchasers set forth in or made pursuant to
this Agreement will remain in full force and effect, regardless of any
investigation made by or on behalf of the Purchasers, the Company or any of the
officers, directors, employees, agents 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.
12. Notices. All communications hereunder will be in writing
and effective only on receipt, and, if sent to the Purchasers, will be mailed,
delivered or sent by fax and confirmed to them, care of Salomon Brothers Inc, at
Xxxxx Xxxxx Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx, 00000; or, if sent to the Company,
will be mailed, delivered or telegraphed and confirmed to it at 000 Xxxxx Xxxx
Xxxxxx, Xxxxxxxxxxxx, XX 00000, attention: Xxxx X. Xxxxx.
13. Successors. This Agreement will inure to the benefit of
and be binding upon the parties hereto and their respective successors and the
officers, directors, employees, agents and controlling persons referred to in
Section 8 hereof, and, except as expressly set forth in Section 5(i) hereof, no
other person will have any right or obligation hereunder.
14. 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).
15. 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 author
ized or obligated by law, executive order or regulation to close.
16. Counterparts. This Agreement may be executed in one or
more counterparts, each of which will be deemed to be an original, but all such
counterparts will together constitute one and the same instrument.
If the foregoing is in accordance with your under standing 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 Purchasers.
By: /s/ Xxxx X. Xxxxx
--------------------------
Name: Xxxx X. Xxxxx
Title: Vice President, Chief Financial
Officer and Secretary
The foregoing Agreement is hereby confirmed and accepted as of the date first
above written
SALOMON BROTHERS INC
XXXXXX BROTHERS INC.
XXXXXXXX & CO. INC.
By: SALOMON BROTHERS INC
By: /s/ E. Xxxxxx Xxxxxx
-----------------------
Name: E. Xxxxxx Xxxxxx
Title: Associate
SCHEDULE I
Principal
Amount of
Securities to
Purchasers be Purchased
Salomon Brothers Inc ...................... $ 60,000,000
Xxxxxx Brothers Inc. ...................... 30,000,000
Xxxxxxxx & Co. Inc. ....................... 10,000,000
------------
Total .......... $100,000,000
[NYCORP2:438653]
EXHIBIT A
Selling Restrictions for Offers and
Sales outside the United States
(1)(a) The Securities have not been and will not be registered
under the Securities Act and may not be offered or sold within the United States
or to, or for the account or benefit of, U.S. persons except in accordance with
Regulation S or pursuant to an exemption from the registration requirements of
the Securities Act. Each Purchaser represents and agrees that, except as
otherwise permitted by Section 4(a)(i) of the Agreement to which this is an
exhibit, it has offered and sold the Securities, and will offer and sell the
Securities, (i) as part of their distribution at any time and (ii) otherwise
until 40 days after the later of the commencement of the offering and the
Closing Date, only in accordance with Rule 903 of Regulation S. Accordingly,
each Purchaser represents and agrees that neither it, nor any of its affiliates
nor any person acting on its or their behalf has engaged or will engage in any
directed selling efforts with respect to the Securities, and that it and they
have complied and will comply with the offering restrictions requirement of
Regulation S. Each Purchaser agrees that, at or prior to the confirmation of
sale of Securities (other than a sale of Securities pursuant to Section 4(a)(i)
of the Agreement to which this is an Exhibit), it shall have sent to each
distributor, dealer or person receiving a selling concession, fee or other
remuneration that purchases Securities from it during the restricted period a
confirmation or notice to substantially the following effect:
"The Securities covered hereby have not been
registered under the U.S. Securities Act of 1933 (the
"Securities Act") and may not be offered or sold within the
United States or to, or for the account or benefit of, U.S.
persons (i) as part of their distribution at any time or (ii)
otherwise until 40 days after the later of the commencement of
the offering and November 10, 1997, except in either case in
accordance with Regulation S, Rule 144A or another available
exemption from registration under the Securities Act. Terms
used above have the meanings given to them by Regulation S."
(b) Each Purchaser also represents and agrees that it has not
entered and will not enter into any contractual arrangement with any distributor
with respect to the distribution of the Securities, except with its affiliates
or with the prior written consent of the Company.
(c) Terms used in this Exhibit have the meanings given to them
by Regulation S.
(2) Each Purchaser represents and agrees that (i) it has not
offered or sold, and will not offer or sell, in the United Kingdom, by means of
any document, any Securities other than to persons whose ordinary business it is
to buy or sell shares or debentures, whether as principal or as agent (except in
circumstances which do not constitute an offer to the public within the meaning
of the Companies Xxx 0000 of Great Britain), (ii) it has complied and will
comply with all applicable provisions of the Financial Services Xxx 0000 of the
United Kingdom with respect to anything done by it in relation to the Securities
in, from or otherwise involving the United Kingdom, and (iii) it has only issued
or passed on and will only issue or pass on in the United Kingdom any document
received by it in connection with the issue of the Securities to a person who is
of a kind described in Article 9(3) of the Financial Services Xxx 0000
(Investment Advertisements) (Exemptions) Order 1988 or is a person to whom the
document may otherwise lawfully be issued or passed on.
