[Draft--5/6/98]
LA PETITE ACADEMY, INC.
VESTAR/LPA INVESTMENT CORP.
$145,000,000
10% Senior Notes due 2008
PURCHASE AGREEMENT
May 6, 1998
CHASE SECURITIES INC.
NATIONSBANC MONTGOMERY
SECURITIES LLC
c/o Chase Securities Inc.
270 Park Avenue, 4th floor
New York, New York 10017
Ladies and Gentlemen:
Vestar/LPA Investment Corp., a Delaware corporation ("Parent"), and La
Petite Academy, Inc., a Delaware corporation and a wholly owned subsidiary of
Parent (the "Company" and, together with Parent, the "Issuers"), propose to
issue and sell $145,000,000 aggregate principal amount of their 10% Senior Notes
due 2008 (the "Securities"). The Securities will be issued pursuant to an
Indenture to be dated as of May 11, 1998 (the "Indenture") among the Issuers ,
LPA Services, Inc. (the "Guarantor") and PNC Bank, National Association, as
trustee (the "Trustee") and will be guaranteed on an unsecured senior basis by
the Guarantor. The Issuers and the Guarantor hereby confirm their agreement with
Chase Securities Inc. ("CSI") and NationsBanc Montgomery Securities LLC
(together with CSI, the "Initial Purchasers") concerning the purchase of the
Securities from the Issuers by the several Initial Purchasers.
The Securities will be offered and sold to the Initial Purchasers without
being registered under the Securities Act of 1933, as amended (the "Securities
Act"), in reliance upon an exemption therefrom. The Issuers have prepared a
preliminary offering memorandum dated April 24, 1998 (the "Preliminary Offering
Memorandum"), and an offering memorandum dated the date hereof (the "Offering
Memorandum") setting forth information concerning the Issuers and the
Securities. Copies of the Preliminary Offering Memorandum have been, and copies
of the Offering Memorandum will be, delivered by the Issuers to the Initial
Purchasers pursuant to the terms of this Agreement. Any references herein to the
Preliminary Offering Memorandum and the Offering Memorandum shall be deemed to
include all amendments and supplements thereto, unless otherwise noted. The
Issuers hereby confirm that they have authorized the use of the Preliminary
Offering Memorandum and the Offering Memorandum in connection with the offering
and resale of the Securities by the Initial Purchasers in accordance with
Section 2.
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Holders of the Securities (including the Initial Purchasers and their
direct and indirect transferees) will be entitled to the benefits of an Exchange
and Registration Rights Agreement, substantially in the form attached hereto as
Annex A (the "Registration Rights Agreement"), pursuant to which the Issuers and
the Guarantor will agree to file with the Securities and Exchange Commission
(the "Commission") (i) a registration statement under the Securities Act (the
"Exchange Offer Registration Statement") registering an issue of senior notes of
the Issuers (the "Exchange Securities") that are identical in all material
respects to the Securities (except that the Exchange Securities will not contain
terms with respect to transfer restrictions or liquidated damages) and (ii)
under certain circumstances, a shelf registration statement pursuant to Rule 415
under the Securities Act (the "Shelf Registration Statement").
Capitalized terms used but not defined herein shall have the meanings given
to such terms in the Offering Memorandum.
1. Representations, Warranties and Agreements of the Company. Each of the
Issuers and the Guarantor represents and warrants to, and agrees with, the
several Initial Purchasers on and as of the date hereof and the Closing Date (as
defined in Section 3) that:
(a) Each of the Preliminary Offering Memorandum and the Offering
Memorandum, as of its respective date, did not, and on the Closing Date the
Offering Memorandum will not, contain any untrue statement of a material
fact or omit to state a material fact required to be stated therein or
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading, except for untrue
statements in or omissions from the Preliminary Offering Memorandum that
were corrected in the Offering Memorandum; provided that the Issuers and
the Guarantor make no representation or warranty as to information
contained in or omitted from the Preliminary Offering Memorandum or the
Offering Memorandum in reliance upon and in conformity with written
information relating to the Initial Purchasers furnished to the Issuer by
or on behalf of any Initial Purchaser specifically for use therein (the
"Initial Purchasers' Information").
(b) Each of the Preliminary Offering Memorandum and the Offering
Memorandum, as of its respective date, contains all of the information
that, if requested by a prospective purchaser of the Securities, would be
required to be provided to such prospective purchaser pursuant to Rule
144A(d)(4) under the Securities Act.
(c) Assuming (i) that the Securities are issued, sold and delivered
under the circumstances contemplated by the Offering Memorandum and this
Agreement (ii) the accuracy of the representations and warranties of the
Initial Purchasers contained in Section 2 and their compliance with the
agreements set forth therein and (iii) that each purchaser within the
United States that buys the Securities from the Initial Purchasers is a
Qualified Institutional Buyer (as defined) and that each purchaser outside
the United States who buys the Securities from the Initial Purchasers is
not a U.S. Person (as defined), it is not necessary, in connection with the
issuance and sale of the Securities to the Initial Purchasers and the
offer, resale and delivery of the Securities by the Initial Purchasers in
the manner contemplated by this Agreement and the Offering 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").
(d) Parent, the Company and the Guarantor have been duly incorporated
and are validly existing as corporations in good standing under the laws of
their respective
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jurisdictions of incorporation, are duly qualified to do business as
foreign corporations in each jurisdiction in which their respective
ownership or lease of property or the conduct of their respective
businesses requires such qualification, and have the power and authority
necessary to own or hold their respective properties and to conduct the
businesses in which they are engaged, except where the failure so to
qualify or have such power or authority would not, singularly or in the
aggregate, have a material adverse effect on the condition (financial or
otherwise), results of operations, business or prospects of Parent, the
Company and the Guarantor taken as a whole (a "Material Adverse Effect").
(e) As of the Closing Date, the Company will have an authorized
capitalization as set forth in the Offering Memorandum under the heading
"Capitalization"; and all of the outstanding shares of capital stock of
Parent have been duly and validly authorized and issued and are fully paid
and non-assessable. All of the outstanding shares of capital stock of the
Company and the Guarantor have been duly and validly authorized and issued,
are fully paid and non-assessable and are owned directly or indirectly by
Parent, free and clear of any lien, charge, encumbrance, security interest,
restriction upon voting or transfer or any other claim of any third party
other than as contemplated by the Credit Agreement.
(f) Each of the Issuers and the Guarantor has the requisite, power and
authority to execute and deliver this Agreement, the Indenture, the
Registration Rights Agreement and the Securities (in the case of the
Issuers only) (collectively, the "Transaction Documents") and to perform
its obligations hereunder and thereunder; and all corporate action required
to be taken for the due and proper authorization, execution and delivery of
each of the Transaction Documents and the consummation of the transactions
contemplated thereby has been duly and validly taken.
(g) This Agreement has been duly authorized, executed and delivered by
the each of the Issuers and the Guarantor and constitutes a valid and
binding agreement of each of the Issuers and the Guarantor, enforceable
against each of the Issuers in accordance with its terms, except to the
extent that (i) such enforceability may be subject to (A) bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium and other
similar laws now or hereafter in effect relating to or affecting creditors'
rights generally and (B) general principles of equity (regardless of
whether enforceability is considered in a proceeding in equity or at law)
and (ii) the enforceability of rights to indemnification and contribution
hereunder may be limited by Federal or state securities laws or regulations
or the public policy underlying such laws or regulations.
(h) The Registration Rights Agreement has been duly authorized by each
of the Issuers and the Guarantor and, when duly executed and delivered in
accordance with its terms by each of the parties thereto, will constitute a
valid and binding agreement of each of the Issuers and the Guarantor
enforceable against each of the Issuers and the Guarantor in accordance
with its terms, except to the extent that (i) such enforceability may be
limited by applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and other similar laws now or hereafter in
effect relating to or affecting creditors' rights generally and by general
equitable principles (whether considered in a proceeding in equity or at
law) and (ii) the enforceability of rights to indemnification and
contribution thereunder may be limited by Federal or state securities laws
or regulations or the public policy underlying such laws or regulations.
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(i) The Indenture has been duly authorized by each of the Issuers and
the Guarantor and, when duly executed and delivered in accordance with its
terms by each of the parties thereto, will constitute a valid and binding
agreement of each of the Issuers and the Guarantor enforceable against each
of the Issuers and the Guarantor in accordance with its terms, except to
the extent that such enforceability may be limited by applicable
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium
and other similar laws now or hereafter in effect relating to or affecting
creditors' rights generally and by general equitable principles (whether
considered in a proceeding in equity or at law). On the Closing Date, the
Indenture will conform in all material respects to the requirements of the
Trust Indenture Act and the rules and regulations of the Commission
applicable to an indenture that is qualified thereunder.
(j) The Securities have been duly authorized by each of the Issuers
and the Guarantor and, when duly executed, authenticated, issued and
delivered as provided in the Indenture and paid for as provided herein,
will be duly and validly issued and outstanding and will constitute valid
and binding obligations of each of the Issuers, as joint and several
obligors, and the Guarantor, as guarantor, entitled to the benefits of the
Indenture and enforceable against each of the Issuers, as joint and several
obligors, and the Guarantor, as guarantor, in accordance with their terms,
except to the extent that such enforceability may be limited by applicable
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium
and other similar laws now or hereafter in effect relating to or affecting
creditors' rights generally and by general equitable principles (whether
considered in a proceeding in equity or at law).
(k) Each Transaction Document conforms in all material respects to the
description thereof contained in the Offering Memorandum.
(l) The execution, delivery and performance by each of the Issuers and
the Guarantor of each of the Transaction Documents to which it is a party,
the issuance, authentication, sale and delivery of the Securities and
compliance by each of the Issuers and the Guarantor with the terms thereof
and the consummation of the transactions contemplated by the Transaction
Documents will not conflict with or result in a breach or violation of any
of the terms or provisions of, or constitute a default under, or result in
the creation or imposition of any lien, charge or encumbrance upon any
property or assets of Parent, the Company or the Guarantor pursuant to, any
material indenture, mortgage, deed of trust, loan agreement or other
material agreement or instrument to which Parent, the Company or the
Guarantor is a party or by which Parent, the Company or the Guarantor is
bound or to which any of the property or assets of Parent, the Company or
the Guarantor is subject except for such conflicts, breaches, violations or
defaults that would not have a Material Adverse Effect or a material
adverse effect on the ability of Parent, the Company or the Guarantor to
perform their respective obligations under the Transaction Documents, nor
will such actions result in any violation of the provisions of the charter
or by-laws of Parent, the Company or the Guarantor or any statute or any
judgment, order, decree, rule or regulation of any court or arbitrator or
governmental agency or body having jurisdiction over Parent, the Company or
the Guarantor or any of their properties or assets; and no consent,
approval, authorization or order of, or filing or registration with, any
such court or arbitrator or governmental agency or body under any such
statute, judgment, order, decree, rule or regulation is required for the
execution, delivery and performance by each of the Issuers and the
Guarantor of each of the Transaction Documents to which it is a party, the
issuance, authentication, sale and delivery of the Securities and
compliance by each of the Issuers and the Guarantor with the terms thereof
and the consummation of the transactions contemplated by the Transaction
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Documents, except for such consents, approvals, authorizations, filings,
registrations or qualifications (i) that shall have been obtained or made
prior to the Closing Date, (ii) as may be required to be obtained or made
under the Securities Act and applicable state securities laws as provided
in the Registration Rights Agreement or (iii) the failure of which to
obtain would not restrain, prevent or impose burdensome conditions on the
transactions contemplated by the Transaction Documents.
(o) Deloitte & Touche LLP are independent certified public accountants
with respect to Parent, the Company and the Guarantor within the meaning of
Rule 101 of the Code of Professional Conduct of the American Institute of
Certified Public Accountants ("AICPA") and its interpretations and rulings
thereunder. The historical financial statements (including the related
notes) contained in the Offering Memorandum have been prepared in
accordance with generally accepted accounting principles consistently
applied throughout the periods covered thereby and fairly present the
financial position of the entities purported to be covered thereby at the
respective dates indicated and the results of their operations and their
cash flows for the respective periods indicated; and the financial
information contained in the Offering Memorandum under the headings
"Summary--Summary Historical and Unaudited Pro Forma Consolidated Financial
Data", "Capitalization", "Selected Historical Consolidated Financial and
Other Data", "Management's Discussion and Analysis of Financial Condition
and Results of Operations" and "Management--Compensation of Directors and
Executive Officers" are derived from the accounting records of Parent, the
Company and the Guarantor and fairly present the information purported to
be shown thereby. The pro forma financial information contained in the
Offering Memorandum has been prepared on a basis consistent with the
historical financial statements contained in the Offering Memorandum
(except for the pro forma adjustments specified therein), includes all
material adjustments to the historical financial information required by
Rule 11-02 of Regulation S-X under the Securities Act and the Exchange Act
to reflect the transactions described in the Offering Memorandum, and are
based on good faith estimates and assumptions believed by the Company to be
reasonable and the adjustments used therein are appropriate to give effect
to the transactions contemplated by the Offering Memorandum. The other
historical financial and statistical information and data included in the
Offering Memorandum are, in all material respects, fairly presented.
(p) There are no legal or governmental proceedings pending to which
Parent, the Company or the Guarantor is a party or of which any property or
assets of Parent, the Company or the Guarantor is the subject that, (A)
singularly or in the aggregate, if determined adversely to Parent, the
Company or the Guarantor, could reasonably be expected to have a Material
Adverse Effect or (B) question the validity or enforceability of any of the
Transaction Documents or any action taken or to be taken pursuant thereto;
and to the best knowledge of Parent and the Company, no such proceedings
are threatened or contemplated by governmental authorities or threatened by
others.
(q) To the best knowledge of the Issuers and the Guarantor, no action
has been taken and no statute, rule, regulation or order has been enacted,
adopted or issued by any governmental agency or body that prevents the
issuance of the Securities or suspends the sale of the Securities in any
jurisdiction; no injunction, restraining order or order of any nature by
any federal or state court of competent jurisdiction has been issued with
respect to Parent, the Company or the Guarantor that would prevent or
suspend the issuance or sale of the Securities or the use of the
Preliminary Offering Memorandum or the Offering Memorandum in any
jurisdiction; no action, suit or proceeding is pending against or, to the
best knowledge
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of Parent, the Company and the Guarantor, threatened against or affecting
Parent, the Company or the Guarantor before any court or arbitrator or any
governmental agency, body or official, domestic or foreign, that could
reasonably be expected to interfere with or adversely affect the issuance
of the Securities or in any manner draw into question the validity or
enforceability of any of the Transaction Documents or any action taken or
to be taken pursuant thereto; and Parent and the Company have complied with
any and all requests by any securities authority in any jurisdiction for
additional information to be included in the Preliminary Offering
Memorandum and the Offering Memorandum.
(r) None of Parent, the Company or the Guarantor is (i) in violation
of its charter or by-laws, (ii) in default in any material respect, and no
event has occurred that, with notice or lapse of time or both, would
constitute such a 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 property
or assets is subject or (iii) in violation in any material respect of any
law, ordinance, governmental rule, regulation or court decree to which it
or its property or assets may be subject.
(s) Each of Parent, the Company and the Guarantor possesses all
material licenses, certificates, authorizations and permits issued by, and
has made all declarations and filings with, the appropriate federal or
state regulatory agencies or bodies that are necessary or desirable for the
ownership of its properties or the conduct of its business as described in
the Offering Memorandum, except where the failure to possess or make the
same would not, singularly or in the aggregate, have a Material Adverse
Effect, and none of Parent, the Company or the Guarantor has received
notification of any revocation or modification of any such license,
certificate, authorization or permit or has any reason to believe that any
such license, certificate, authorization or permit will not be renewed in
the ordinary course.
(t) Each of Parent, the Company and the Guarantor has filed all
federal, state and local income and franchise tax returns required to be
filed through the date hereof and has paid all taxes due thereon, and no
tax deficiency has been determined adversely to Parent, the Company or the
Guarantor that has had (nor does Parent, the Company or the Guarantor have
any knowledge of any tax deficiency that, if determined adversely to
Parent, the Company or the Guarantor, could reasonably be expected to have)
a Material Adverse Effect.
(u) None of Parent, the Company or the Guarantor is (i) an "investment
company" or a company "controlled by" an investment company within the
meaning of the Investment Company Act of 1940, as amended (the "Investment
Company Act"), and the rules and regulations of the Commission thereunder
or (ii) a "holding company" or a "subsidiary company" of a holding company
or an "affiliate" thereof within the meaning of the Public Utility Holding
Company Act of 1935, as amended.
(v) Each of Parent, the Company and the Guarantor maintains a system
of internal accounting controls sufficient to provide reasonable assurance
that (i) transactions are executed in accordance with management's general
or specific authorizations; (ii) transactions are recorded as necessary to
permit preparation of financial statements in
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conformity with generally accepted accounting principles and to maintain
asset accountability; (iii) access to assets is permitted only in
accordance with management's general or specific authorization; and (iv)
the recorded accountability for assets is compared with the existing assets
at reasonable intervals and appropriate action is taken with respect to any
differences.
(w) Each of Parent, the Company and the Guarantor has insurance
covering its properties, operations, personnel and businesses, which
insurance is in amounts and insures against such losses and risks as are
adequate to protect it and its businesses. None of Parent, the Company or
the Guarantor has received notice from any insurer or agent of such insurer
that capital improvements or other expenditures are required or necessary
to be made in order to continue such insurance.
(x) Each of Parent, the Company and the Guarantor 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 businesses; and the conduct of its businesses will not conflict
with, and it has not received any notice of any claim of conflict with, any
such rights of others, except for any such conflicts or claims that would
not, individually or in the aggregate, have a Material Adverse Effect.
(y) Each of Parent, the Company and the Guarantor has good and
marketable title in fee simple to, or has valid rights to lease or
otherwise use, all items of real and personal property that are material to
its business, free and clear of all liens, encumbrances, claims and defects
and imperfections of title except such as (i) do not materially interfere
with the use made and proposed to be made of such property by it or (ii)
could not reasonably be expected to have a Material Adverse Effect.
(z) No labor disturbance by or dispute with the employees of Parent,
the Company or the Guarantor exists or, to the best knowledge of Parent or
the Company, is contemplated or threatened.
(aa) No "prohibited transaction" (as defined in Section 406 of the
Employee Retirement Income Security Act of 1974, as amended, including the
regulations and published interpretations thereunder ("ERISA"), or Section
4975 of the Internal Revenue Code of 1986, as amended from time to time
(the "Code")) or "accumulated funding deficiency" (as defined in Section
302 of ERISA) or any of the events set forth in Section 4043(b) of ERISA
(other than events with respect to which the 30-day notice requirement
under Section 4043 of ERISA has been waived) has occurred with respect to
any employee benefit plan of Parent, the Company or the Guarantor that
could reasonably be expected to have a Material Adverse Effect; each such
employee benefit plan is in compliance in all material respects with
applicable law, including ERISA and the Code; Parent, the Company and the
Guarantor have not incurred and do not expect to incur material liability
under Title IV of ERISA with respect to the termination of, or withdrawal
from, any pension plan for which Parent, the Company or the Guarantor would
have any liability; and each such pension plan that is intended to be
qualified under Section 401(a) of the Code is so qualified in all material
respects and nothing has occurred, whether by action or by failure to act,
which could reasonably be expected to have a Material Adverse Effect.
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(bb) There has been no storage, generation, transportation, handling,
treatment, disposal, discharge, emission or other release of any kind of
toxic or other wastes or other hazardous substances by, due to or caused by
Parent, the Company or the Guarantor (or, to the best knowledge of Parent
or the Company, any other entity (including any predecessor) for whose acts
or omissions Parent, the Company or the Guarantor is or could reasonably be
expected to be liable) upon any of the property now or previously owned or
leased by Parent, the Company or the Guarantor, or upon any other property,
in violation of any statute or any ordinance, rule, regulation, order,
judgment, decree or permit or which would, under any statute or any
ordinance, rule (including rule of common law), regulation, order,
judgment, decree or permit, give rise to any liability, except for any
violation or liability that could not reasonably be expected to have,
singularly or in the aggregate with all such violations and liabilities, a
Material Adverse Effect; and there has been no disposal, discharge,
emission or other release of any kind onto such property or into the
environment surrounding such property of any toxic or other wastes or other
hazardous substances with respect to which Parent, the Company or the
Guarantor has knowledge, except for any such disposal, discharge, emission
or other release of any kind that could not reasonably be expected to have,
singularly or in the aggregate with all such discharges and other releases,
a Material Adverse Effect.
(cc) None of Parent, the Company, the Guarantor or, to the best
knowledge of Parent, the Company and the Guarantor, any director, officer,
agent, employee or other person associated with or acting on behalf of
Parent, the Company or the Guarantor has (i) used any corporate funds for
any unlawful contribution, gift, entertainment or other unlawful expense
relating to political activity; (ii) made any direct or indirect unlawful
payment to any foreign or domestic government official or employee from
corporate funds; (iii) violated or is in violation of any provision of the
Foreign Corrupt Practices Act of 1977; or (iv) made any bribe, rebate,
payoff, influence payment, kickback or other unlawful payment.
(dd) On and immediately after the Closing Date, each of Parent and the
Company (after giving effect to the issuance of the Securities and to the
other transactions related thereto as described in the Offering Memorandum)
will be Solvent. As used in this paragraph, the term "Solvent" means, with
respect to a particular date, that on such date (i) the present fair market
value (or present fair saleable value) of the assets of Parent or the
Company, as the case may be, is not less than the total amount required to
pay the probable liabilities of Parent or the Company, as applicable, on
its total existing debts and liabilities (including contingent liabilities)
as they become absolute and matured, (ii) Parent or the Company, as
applicable, is able to realize upon its assets and pay its debts and other
liabilities, contingent obligations and commitments as they mature and
become due in the normal course of business, (iii) assuming the sale of the
Securities as contemplated by this Agreement and the Offering Memorandum,
neither Parent nor the Company is incurring debts or liabilities beyond its
ability to pay as such debts and liabilities mature and (iv) neither Parent
nor the Company is engaged in any business or transaction, and is about to
engage in any business or transaction, for which its property would
constitute unreasonably small capital after giving due consideration to the
prevailing practice in the industry in which it is engaged. 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 the 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.
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(ee) None of the proceeds from the sale of the Securities will be
used, whether directly or indirectly, and whether immediately, incidentally
or ultimately, for any purpose that entails a violation of, or that is
inconsistent with, the provisions of the Regulations of the Board of
Governors of the Federal Reserve Board, including Regulation T, U or X.
(ff) None of Parent, the Company or the Guarantor is a party to any
contract, agreement or understanding with any person that would give rise
to a valid claim against Parent, the Company or the Initial Purchasers for
a brokerage commission, finder's fee or like payment in connection with the
offering and sale of the Securities, other than the Initial Purchasers'
discount set forth in Section 2.
(gg) The Securities satisfy the eligibility requirements of Rule
144A(d)(3) under the Securities Act.
(hh None of Parent, the Company, any of their affiliates or any person
acting on their behalf has engaged or will engage in any directed selling
efforts (as such term is defined in Regulation S under the Securities Act
("Regulation S")), and all such persons have complied and will comply with
the offering restrictions requirement of Regulation S to the extent
applicable.
(ii) Assuming the accuracy of the representations and warranties of
the initial Purchasers contained in Section 2 and their compliance with the
agreements set forth therein, none of Parent, the Company or their
affiliates has, directly or through any agent (i) sold, offered for sale,
solicited offers to buy or otherwise negotiated in respect of, any security
(as such term is defined in the Securities Act), which is or will be
integrated with the sale of the Securities in a manner that would require
registration of the Securities under the Securities Act or (ii) engaged, in
connection with the offering of the Securities, in any form of general
solicitation or general advertising within the meaning of Rule 502(c) under
the Securities Act.
(jj) After giving effect to the consummation of the Transactions,
there are no securities of Parent or the Company registered under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), or listed
on a national securities exchange or quoted in a U.S. automated
inter-dealer quotation system other than the Senior Notes and the Exchange
Debentures.
(kk) None of Parent, the Company or the Guarantor has taken or will
take, directly or indirectly, any action prohibited by Regulation M under
the Exchange Act in connection with the offering of the Securities.
(mm) No forward-looking statement (within the meaning of Section 27A
of the Securities Act and Section 21E of the Exchange Act) contained in the
Preliminary Offering Memorandum or the Offering Memorandum has been made or
reaffirmed without a reasonable basis or has been disclosed other than in
good faith other than any statement in the Preliminary Offering Memorandum
that was corrected in the Offering Memorandum.
(nn) None of Parent, the Company or the Guarantor does business with
the government of Cuba or with any person or affiliate located in Cuba
within the meaning of Florida Statutes Section 517.075.
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(oo) To the best knowledge of Parent and the Company, any
reprogramming required to permit the proper functioning, in and following
the year 2000, of (i) the computer systems of the Company and the Guarantor
and (ii) equipment containing embedded microchips (including systems and
equipment supplied by others or with which systems of the Company and the
Guarantor interface) and the testing of all such systems and equipment, as
so reprogrammed, will be completed in all material respects by August 31,
1999. To the best knowledge of Parent and the Company, the cost to the
Company and the Guarantor of such reprogramming and testing and of the
reasonably foreseeable consequences of the year 2000 to the Company and the
Guarantor (including reprogramming errors and the failure of others'
systems or equipment) will not have a Material Adverse Effect.
(pp) Since the date as of which information is given in the Offering
Memorandum, except as otherwise stated therein, (i) there has been no
material adverse change or any development involving a prospective material
adverse change in the condition, financial or otherwise, or in the
earnings, business affairs, management or business prospects of Parent, the
Company or the Guarantor, whether or not arising in the ordinary course of
business, (ii) none of Parent, the Company or the Guarantor has incurred
any material liability or obligation, direct or contingent, other than in
the ordinary course of business, (iii) none of Parent, the Company or the
Guarantor has entered into any material transaction other than in the
ordinary course of business and (iv) there has not been any change in the
capital stock or long-term debt of Parent, the Company or the Guarantor, or
any dividend or distribution of any kind declared, paid or made by Parent,
the Company or the Guarantor on any class of their respective capital
stock.
2. Purchase and Resale of the Securities. (a) On the basis of the
representations, warranties and agreements contained herein, and subject to the
terms and conditions set forth herein, the Issuers agree to issue and sell to
each of the Initial Purchasers, severally and not jointly, and each of the
Initial Purchasers, severally and not jointly, agrees to purchase from the
Issuers, the principal amount of Securities set forth opposite the name of such
Initial Purchaser on Schedule 1 hereto at a purchase price equal to 97% of the
principal amount thereof. The Issuers shall not be obligated to deliver any of
the Securities except upon payment for all of the Securities to be purchased as
provided herein.
(b) The Initial Purchasers have advised the Issuers that they propose to
offer the Securities for resale upon the terms and subject to the conditions set
forth herein and in the Offering Memorandum. Each Initial Purchaser, severally
and not jointly, represents, warrants and agrees that (i) it is a Qualified
Institutional Buyer, (ii) it is purchasing the Securities pursuant to a private
sale exempt from registration under the Securities Act, (iii) it has not
solicited offers for, or offered or sold, and will not solicit offers for, or
offer or sell, the Securities by means of any form of general solicitation or
general advertising within the meaning of Rule 502(c) of Regulation D under the
Securities Act ("Regulation D") or in any manner involving a public offering
within the meaning of Section 4(2) of the Securities Act and (iv) it has
solicited and will solicit offers for the Securities only from, and has offered
or sold and will offer, sell or deliver the Securities, as part of their initial
offering, only (A) within the United States to persons whom it reasonably
believes to be qualified institutional buyers ("Qualified Institutional
Buyers"), as defined in Rule 144A under the Securities Act ("Rule 144A"), or if
any such person is buying for one or more institutional accounts for which
11
such person is acting as fiduciary or agent, only when such person has
represented to it that each such account is a Qualified Institutional Buyer to
whom notice has been given that such sale or delivery is being made in reliance
on Rule 144A and in each case, in transactions in accordance with Rule 144A and
(B) outside the United States to persons other than U.S. persons in reliance on
Regulation S under the Securities Act ("Regulation S").
(c) In connection with the offer and sale of Securities in reliance on
Regulation S, each Initial Purchaser, severally and not jointly, represents,
warrants and agrees that:
(i) the Securities have not been 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 pursuant to an exemption from,
or in transactions not subject to, the registration requirements of the
Securities Act.
(ii) such Initial Purchaser has offered and sold the Securities, and
will offer and sell the Securities, (A) as part of its distribution at any
time and (B) otherwise until 40 days after the later of the commencement of
the offering of the Securities and the Closing Date, only in accordance
with Regulation S or Rule 144A or any other available exemption from
registration under the Securities Act.
(iii) none of such Initial Purchaser or any of its affiliates or any
other person acting on its or their behalf has engaged or will engage in
any directed selling efforts with respect to the Securities, and all such
persons have complied and will comply with the offering restriction
requirements of Regulation S.
(iv) at or prior to the confirmation of sale of any Securities sold in
reliance on Regulation S, it will have sent to each distributor, dealer or
other 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, as amended (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 of the Securities and the date of
original issuance of the Securities, except in accordance with
Regulation S or Rule 144A or any other available exemption from
registration under the Securities Act. Terms used above have the
meanings given to them by Regulation S."
(v) it has not 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
Issuers.
Terms used in this Section 2(c) have the meanings given to them by Regulation S.
(d) Each Initial Purchaser, severally and not jointly, represents, warrants
and agrees that (i) it has not offered or sold and prior to the date six months
after the Closing Date will not offer or sell any Securities to persons in the
United Kingdom except to persons whose ordinary activities involve them in
acquiring, holding, managing or disposing of investments (as principal or agent)
for the purposes of their businesses or otherwise in circumstances that have not
resulted and
12
will not result in an offer to the public in the United Kingdom within the
meaning of the Public Offers of Securities Regulations 1995; (ii) it has
complied and will comply with all applicable provisions of the Financial
Services Act 1986 and the Public Offers of Securities Regulations 1995 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 11(3) of the Financial Services Act 1986 (Investment
Advertisements) (Exemptions) Order 1996 or is a person to whom such document may
otherwise lawfully be issued or passed on.
(e) Each Initial Purchaser, severally and not jointly, agrees that, prior
to or simultaneously with the confirmation of sale by such Initial Purchaser to
any purchaser of any of the Securities purchased by such Initial Purchaser from
the Issuers pursuant hereto, such Initial Purchaser shall furnish to that
purchaser a copy of the Offering Memorandum (and any amendment or supplement
thereto that the Issuers shall have furnished to such Initial Purchaser prior to
the date of such confirmation of sale). In addition to the foregoing, each
Initial Purchaser acknowledges and agrees that the Issuers and, for purposes of
the opinions to be delivered to the Initial Purchasers pursuant to Sections 5(d)
and (e), counsel for the Issuers and for the Initial Purchasers, respectively,
may rely upon the accuracy of the representations and warranties of the Initial
Purchasers and their compliance with their agreements contained in this Section
2, and each Initial Purchaser hereby consents to such reliance.
(f) Each of the Issuers and the Guarantor acknowledge and agree that the
Initial Purchasers may sell Securities to any affiliate of an Initial Purchaser
and that any such affiliate may sell Securities purchased by it to an Initial
Purchaser.
3. Delivery of and Payment for the Securities. (a) Delivery of and payment
for the Securities shall be made at the offices of O'Sullivan Graev and
Karabell, LLP, New York, New York, or at such other place as shall be agreed
upon by the Initial Purchasers and the Company, at 10:00 A.M., New York City
time, on May 11, 1998, or at such other time or date, not later than seven full
business days thereafter, as shall be agreed upon by the Initial Purchasers and
the Issuers (such date and time of payment and delivery being referred to herein
as the "Closing Date").
(b) On the Closing Date, payment of the purchase price for the Securities
shall be made to the Issuers by wire or book-entry transfer of same-day funds to
such account or accounts as the Issuers shall specify prior to the Closing Date
or by such other means as the parties hereto shall agree prior to the Closing
Date against delivery to the Initial Purchasers of the certificates evidencing
the Securities. Time shall be of the essence, and delivery at the time and place
specified pursuant to this Agreement is a further condition of the obligations
of the Initial Purchasers hereunder. Upon delivery, the Securities shall be in
global form, registered in such names and in such denominations as CSI on behalf
of the Initial Purchasers shall have requested in writing not less than two full
business days prior to the Closing Date. The Issuers agree to make one or more
global certificates evidencing the Securities available for inspection by CSI on
behalf of the Initial Purchasers in New York, New York at least 24 hours prior
to the Closing Date.
4. Further Agreements of the Issuers and the Guarantor. Each of the Issuers
and the Guarantor agrees with each of the several Initial Purchasers:
(a) to advise the Initial Purchasers promptly and, if requested,
confirm such advice in writing, of the happening of any event that makes
any statement of a material fact made
13
in the Offering Memorandum untrue or that requires the making of any
additions to or changes in the Offering Memorandum (as amended or
supplemented from time to time) in order to make the statements therein, in
the light of the circumstances under which they were made, not misleading;
to advise the Initial Purchasers promptly of any order preventing or
suspending the use of the Preliminary Offering Memorandum or the Offering
Memorandum, of any suspension of the qualification of the Securities for
offering or sale in any jurisdiction and of the initiation or threatening
of any proceeding for any such purpose; and to use its best efforts to
prevent the issuance of any such order preventing or suspending the use of
the Preliminary Offering Memorandum or the Offering Memorandum or
suspending any such qualification and, if any such suspension is issued, to
obtain the lifting thereof at the earliest possible time;
(b) to furnish promptly to each of the Initial Purchasers and counsel
for the Initial Purchasers, without charge, as many copies of the
Preliminary Offering Memorandum and the Offering Memorandum (and any
amendments or supplements thereto) as may be reasonably requested;
(c) prior to making any amendment or supplement to the Offering
Memorandum, to furnish a copy thereof to each of the Initial Purchasers and
counsel for the Initial Purchasers and not to effect any such amendment or
supplement to which the Initial Purchasers shall reasonably object by
notice to the Issuers after a reasonable period to review, unless the
Company is advised by counsel that such amendment or supplement is legally
required;
(d) if, at any time prior to completion of the resale of the
Securities by the Initial Purchasers, any event shall occur or condition
exist as a result of which it is necessary, in the opinion of counsel for
the Initial Purchasers or counsel for the Issuers, to amend or supplement
the Offering Memorandum in order that the Offering Memorandum will not
include an untrue statement of a material fact or omit to state a material
fact necessary in order to make the statements therein, in the light of the
circumstances existing at the time it is delivered to a purchaser, not
misleading, or if it is necessary to amend or supplement the Offering
Memorandum to comply with applicable law, promptly to prepare such
amendment or supplement as may be necessary to correct such untrue
statement or omission or so that the Offering Memorandum, as so amended or
supplemented, will comply with applicable law;
(e) for so long as the Securities are outstanding and are "restricted
securities" within the meaning of Rule 144(a)(3) under the Securities Act,
to furnish to holders of the Securities and prospective purchasers of the
Securities designated by such holders, upon request of such holders or such
prospective purchasers, the information required to be delivered pursuant
to Rule 144A(d)(4) under the Securities Act, unless the Issuers are then
subject to and in compliance with Section 13 or 15(d) of the Exchange Act
(the foregoing agreement being for the benefit of the holders from time to
time of the Securities and prospective purchasers of the Securities
designated by such holders);
(f) for a period of two years following the Closing Date, to furnish
to the Initial Purchasers copies of any annual reports, quarterly reports
and current reports filed by either of the Issuers with the Commission on
Forms 10-K, 10-Q and 8-K, or such other similar forms as may be designated
by the Commission, and such other documents, reports and information as
shall be furnished by the Issuers to the Trustee or to the holders of the
Securities pursuant to the Indenture or the Exchange Act or any rule or
regulation of the
14
Commission thereunder;
(g) to promptly take from time to time such actions as the Initial
Purchasers may reasonably request to qualify the Securities for offering
and sale under the securities or Blue Sky laws of such jurisdictions as the
Initial Purchasers may designate and to continue such qualifications in
effect for so long as required for the resale of the Securities; provided
that none of Parent, the Company and the Guarantor shall be obligated to
qualify as foreign corporations in any jurisdiction in which they are not
so qualified to file a general consent to service of process in any
jurisdiction or to subject themselves to the payment of taxes in any
jurisdiction in which they are not otherwise subject;
(h) to assist the Initial Purchasers in arranging for the Securities
to be designated Private Offerings, Resales and Trading through Automated
Linkages ("PORTAL") Market securities in accordance with the rules and
regulations adopted by the National Association of Securities Dealers, Inc.
("NASD") relating to trading in the PORTAL Market and for the Securities to
be eligible for clearance and settlement through The Depository Trust
Company ("DTC");
(i) not to, and to cause its affiliates not to, sell, offer for sale
or solicit offers to buy or otherwise negotiate in respect of any security
(as such term is defined in the Securities Act) that could be integrated
with the sale of the Securities in a manner that would require registration
of the Securities under the Securities Act;
(j) except following the effectiveness of the Exchange Offer
Registration Statement or the Shelf Registration Statement, as the case may
be, not to, and to cause its affiliates not to, and not to authorize or
knowingly permit any person acting on their behalf to, solicit any offer to
buy or offer to sell the Securities by means of any form of general
solicitation or general advertising within the meaning of Regulation D or
in any manner involving a public offering within the meaning of Section
4(2) of the Securities Act; and not to 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 to cease to be
applicable to the offering and sale of the Securities as contemplated by
this Agreement and the Offering Memorandum;
(k) for a period of 90 days from the date of the Offering Memorandum,
not to offer for sale, contract to sell or otherwise dispose of, directly
or indirectly, or file a registration statement for, or announce any offer,
sale, contract for sale of or other disposition of any debt securities
issued or guaranteed by Parent, the Company or the Guarantor (other than
the Securities) without the prior written consent of the Initial
Purchasers;
(l) during the period from the Closing Date until two years after the
Closing Date, without the prior written consent of the Initial Purchasers,
not to, and not permit any of its affiliates (as defined in Rule 144 under
the Securities Act) to, resell any of the Securities that have been
reacquired by them, except for Securities purchased by Parent, the Company
or any of their affiliates and resold in a transaction registered under the
Securities Act and except for Securities purchased and resold by CSI in
connection with its market making activities, if any;
(m) not to, for so long as the Securities are outstanding, be or
become, or be or become owned by, an open-end investment company, unit
investment trust or face-amount
15
certificate company that is or is required to be registered under Section 8
of the Investment Company Act, and to not be or become, or be or become
owned by, a closed-end investment company required to be registered, but
not registered thereunder;
(n) in connection with the offering of the Securities, until CSI on
behalf of the Initial Purchasers shall have notified the Issuers of the
completion of the resale of the Securities, not to, and to cause their
affiliated purchasers (as defined in Regulation M under the Exchange Act)
not to, either alone or with one or more other persons, bid for or
purchase, for any account in which their or any of their affiliated
purchasers has a beneficial interest, any Securities, or attempt to induce
any person to purchase any Securities; and not to, and to cause their
affiliated purchasers not to, make bids or purchase for the purpose of
creating actual, or apparent, active trading in or of raising the price of
the Securities provided, however, that the Issuers shall not be responsible
for any such activities by CSI;
(o) in connection with the offering of the Securities, to make its
officers, employees, independent accountants and legal counsel reasonably
available upon request by the Initial Purchasers;
(p) to do and perform all things required to be done and performed by
it under this Agreement that are within its control prior to or after the
Closing Date, and to use its best efforts to satisfy all conditions
precedent on its part to the delivery of the Securities;
(q) to not take any action prior to the execution and delivery of the
Indenture that, if taken after such execution and delivery, would have
violated any of the covenants contained in the Indenture;
(r) to not take any action prior to the Closing Date that would
require the Offering Memorandum to be amended or supplemented pursuant to
Section 4(d);
(s) prior to the Closing Date, not to issue any press release or other
communication directly or indirectly or hold any press conference with
respect to Parent or the Company, their condition, financial or otherwise,
or earnings, business affairs or business prospects (except for routine
oral marketing communications in the ordinary course of business and
consistent with the past practices of Parent and the Company and of which
the Initial Purchasers are notified), without the prior written consent of
the Initial Purchasers, unless in the judgment of Parent, the Company and
their counsel, and after notification to the Initial Purchasers, such press
release or communication is reasonably necessary or advisable; and
(t) to apply the net proceeds from the sale of the Securities as set
forth in the Offering Memorandum under the heading "Use of Proceeds".
5. Conditions of Initial Purchasers' Obligations. The respective
obligations of the several Initial Purchasers hereunder are subject to the
accuracy, on and as of the date hereof and the Closing Date, of the
representations and warranties of each of the Issuers and the Guarantor
contained herein, to the accuracy of the statements of each of the Issuers and
the Guarantor and their respective officers made in any certificates delivered
pursuant hereto, to the performance by each of the Issuers and the Guarantor of
their respective obligations hereunder, and to each of the following additional
terms and conditions:
(a) The Offering Memorandum (and any amendments or supplements
thereto) shall
16
have been printed and copies distributed to the Initial Purchasers as
promptly as practicable on or following the date of this Agreement or at
such other date and time as to which the Initial Purchasers may agree; and
no stop order suspending the sale of the Securities in any jurisdiction
shall have been issued and no proceeding for that purpose shall have been
commenced or shall be pending or threatened.
(b) None of the Initial Purchasers shall have discovered and disclosed
to the Issuers on or prior to the Closing Date that the Offering Memorandum
or any amendment or supplement thereto contains an untrue statement of a
fact that, in the opinion of counsel for the Initial Purchasers, is
material or omits to state any fact that, in the opinion of such counsel,
is material and is required to be stated therein or is necessary to make
the statements therein, in light of the circumstances under which they were
made, not misleading.
(c) All corporate proceedings and other legal matters incident to the
authorization, form and validity of each of the Transaction Documents and
the Offering Memorandum, and all other legal matters relating to the
Transaction Documents and the transactions contemplated thereby, shall be
satisfactory in all material respects to the Initial Purchasers, and the
Issuers shall have furnished to the Initial Purchasers all documents and
information that they or their counsel may reasonably request to enable
them to pass upon such matters.
(d) O'Sullivan Graev & Karabell, LLP shall have furnished to the
Initial Purchasers their written opinion, as counsel to the Company,
addressed to the Initial Purchasers and dated the Closing Date, in form and
substance reasonably satisfactory to the Initial Purchasers, substantially
to the effect set forth in Annex B hereto.
(e) The Initial Purchasers shall have received from Cravath, Swaine &
Moore, counsel for the Initial Purchasers, such opinion or opinions, dated
the Closing Date, with respect to such matters as the Initial Purchasers
may reasonably require, and the Issuers shall have furnished to such
counsel such documents and information as they request for the purpose of
enabling them to pass upon such matters.
(f) The Issuers shall have furnished to the Initial Purchasers a
letter (the "Initial Letter") of Deloitte & Touche LLP, addressed to the
Initial Purchasers and dated the date hereof, in form and substance
satisfactory to the Initial Purchasers, substantially to the effect set
forth in Annex C hereto.
(g) The Issuers shall have furnished to the Initial Purchasers a
letter (the "Bring-Down Letter") of Deloitte & Touche LLP, addressed to the
Initial Purchasers and dated the Closing Date (i) confirming that they are
independent public accountants with respect to Parent, the Company and the
Guarantor within the meaning of Rule 101 of the Code of Professional
Conduct of the AICPA and its interpretations and rulings thereunder, (ii)
stating, as of the date of the Bring-Down Letter (or, with respect to
matters involving changes or developments since the respective dates as of
which specified financial information is given in the Offering Memorandum,
as of a date not more than three business days prior to the date of the
Bring-Down Letter), that the conclusions and findings of such accountants
with respect to the financial information and other matters covered by the
Initial Letter are accurate and (iii) confirming in all material respects
the conclusions and findings set forth in the Initial Letter.
(h) Each of the Issuers shall have furnished to the Initial Purchasers
a certificate,
17
dated the Closing Date, of its chief executive officer and its chief
financial officer stating that (A) such officers have carefully examined
the Offering Memorandum, (B) as of the Closing Date, the representations
and warranties of each of the Issuers and the Guarantor in this Agreement
are true and correct in all material respects (including, without
limitation, the representation and warranty set forth in Section 1(a)),
each of the Issuers and Guarantor have complied in all material respects
with all agreements and satisfied all conditions on its part to be
performed or satisfied hereunder on or prior to the Closing Date, and (C)
subsequent to the date of the most recent financial statements contained in
the Offering Memorandum, there has been no material adverse change in the
financial position or results of operation of Parent, the Company or the
Guarantor, or any change, or any development including a prospective
change, in or affecting the condition (financial or otherwise), results of
operations, business or prospects of Parent, the Company and the Guarantor
taken as a whole.
(i) The Initial Purchasers shall have received a counterpart of the
Registration Rights Agreement which shall have been executed and delivered
by a duly authorized officer of each of the Issuers and the Guarantor.
(j) The Indenture shall have been duly executed and delivered by
Parent, the Company, the Guarantor and the Trustee, and the Securities
shall have been duly executed and delivered by the Issuers and duly
authenticated by the Trustee.
(k) If any event shall have occurred that requires the Issuers under
Section 4(d) to prepare an amendment or supplement to the Offering
Memorandum, such amendment or supplement shall have been prepared, the
Initial Purchasers shall have been given a reasonable opportunity to
comment thereon, and copies thereof shall have been delivered to the
Initial Purchasers reasonably in advance of the Closing Date.
(l) Subsequent to the execution and delivery of this Agreement or, if
earlier, the dates as of which information is given in the Offering
Memorandum (exclusive of any amendment or supplement thereto), there shall
not have been any change in the capital stock or long-term debt or any
change, or any development involving a prospective change, in or affecting
the condition (financial or otherwise), results of operations, business or
prospects of Parent, the Company and the Guarantor taken as a whole, the
effect of which, in any such case described above, is, in the reasonable
judgment of the Initial Purchasers, so material and adverse as to make it
impracticable or inadvisable to proceed with the sale or delivery of the
Securities on the terms and in the manner contemplated by this Agreement
and the Offering Memorandum (exclusive of any amendment or supplement
thereto).
(m) No action shall have been taken and no statute, rule, regulation
or order shall have been enacted, adopted or issued by any governmental
agency or body that would, as of the Closing Date, prevent the issuance or
sale of the Securities; and no injunction, restraining order or order of
any other nature by any federal or state court of competent jurisdiction
shall have been issued as of the Closing Date that would prevent the
issuance or sale of the Securities.
(n) Subsequent to the execution and delivery of this Agreement (i) no
downgrading shall have occurred in the rating accorded the Securities or
any of Parent's or the Company's other debt securities or preferred stock
by any "nationally recognized statistical rating organization", as such
term is defined by the Commission for purposes of Rule 436(g)(2) of
18
the rules and regulations of the Commission under the Securities Act and
(ii) no such organization shall have publicly announced that it has under
surveillance or review (other than an announcement with positive
implications of a possible upgrading), its rating of the Securities or any
of Parent's or the Company's other debt securities or preferred stock.
(o) Subsequent to the execution and delivery of this Agreement there
shall not have occurred any of the following: (i) trading in securities
generally on the New York Stock Exchange, the American Stock Exchange or
the over-the-counter market shall have been suspended or limited, or
minimum prices shall have been established on any such exchange or market
by the Commission, by any such exchange or by any other regulatory body or
governmental authority having jurisdiction, or trading in any securities of
Parent or the Company on any exchange or in the over-the-counter market
shall have been suspended or (ii) any moratorium on commercial banking
activities shall have been declared by federal or New York state
authorities or (iii) an outbreak or escalation of hostilities or a
declaration by the United States of a national emergency or war or (iv) a
material adverse change in general economic, political or financial
conditions (or the effect of international conditions on the financial
markets in the United States shall be such) the effect of which, in the
case of this clause (iv), is, in the judgment of the Initial Purchasers, so
material and adverse as to make it impracticable or inadvisable to proceed
with the sale or the delivery of the Securities on the terms and in the
manner contemplated by this Agreement and in the Offering Memorandum
(exclusive of any amendment or supplement thereto).
(p) All conditions to the consummation of each of the Transactions
(including, without limitation, the execution of the Credit Agreement and
the consummation of the transactions contemplated by the Merger Agreement),
other than the offering of the Securities, shall have been satisfied and
each of such Transactions shall be consummated substantially concurrently
with the sale of the Securities hereunder.
All opinions, letters, evidence and certificates mentioned above or
elsewhere in this Agreement shall be deemed to be in compliance with the
provisions hereof only if they are in form and substance reasonably satisfactory
to counsel for the Initial Purchasers.
6. Termination. The obligations of the Initial Purchasers hereunder may be
terminated by the Initial Purchasers, in their absolute discretion, by notice
given to and received by the Issuers prior to delivery of and payment for the
Securities if, prior to that time, any of the events described in Section 5(m),
(n), (o), (p) or (q) shall have occurred and be continuing.
7. Defaulting Initial Purchasers. (a) If, on the Closing Date, any Initial
Purchaser defaults in the performance of its obligations under this Agreement,
the non-defaulting Initial Purchasers may make arrangements for the purchase of
the Securities which such defaulting Initial Purchaser agreed but failed to
purchase by other persons satisfactory to the Issuers and the non-defaulting
Initial Purchasers, but if no such arrangements are made within 36 hours after
such default, this Agreement shall terminate without liability on the part of
the non-defaulting Initial Purchasers or the Issuers, except that the Issuers
and the Guarantor will continue to be liable for the payment of expenses to the
extent set forth in Sections 8 and 12 and except that the provisions of Sections
9 and 10 shall not terminate and shall remain in effect. As used in this
Agreement, the term "Initial Purchasers" includes, for all purposes of this
Agreement unless the context otherwise requires, any party not listed in
Schedule 1 hereto that, pursuant to this Section 7, purchases Securities that a
defaulting Initial Purchaser agreed but failed to purchase.
19
(b) Nothing contained herein shall relieve a defaulting Initial Purchaser
of any liability it may have to the Issuers or any non-defaulting Initial
Purchaser for damages caused by its default. If other persons are obligated or
agree to purchase the Securities of a defaulting Initial Purchaser, either the
non-defaulting Initial Purchasers or the Issuers may postpone the Closing Date
for up to seven full business days in order to effect any changes that in the
opinion of counsel for the Issuers or counsel for the Initial Purchasers may be
necessary in the Offering Memorandum or in any other document or arrangement,
and the Issuers agree promptly to prepare any amendment or supplement to the
Offering Memorandum that effects any such changes.
8. Reimbursement of Initial Purchasers' Expenses. If (a) this Agreement
shall have been terminated pursuant to Section 6 or 7, (b) the Issuers shall
fail to tender the Securities for delivery to the Initial Purchasers for any
reason permitted under this Agreement or (c) the Initial Purchasers shall
decline to purchase the Securities for any reason permitted under this
Agreement, the Issuers and the Guarantor shall reimburse the Initial Purchasers
for such out-of-pocket expenses (including reasonable fees and disbursements of
counsel) as shall have been reasonably incurred by the Initial Purchasers in
connection with this Agreement and the proposed purchase and resale of the
Securities. If this Agreement is terminated pursuant to Section 7 by reason of
the default of one or more of the Initial Purchasers, none of the Issuers and
the Guarantor shall be obligated to reimburse any defaulting Initial Purchaser
on account of such expenses.
9. Indemnification. (a) Each of the Issuers and the Guarantor shall jointly
and severally indemnify and hold harmless each Initial Purchaser, its
affiliates, its officers, directors, employees, representatives and agents, and
each person, if any, who controls each Initial Purchaser within the meaning of
the Securities Act or the Exchange Act (collectively referred to for purposes of
this Section 9(a) and Section 10 as an Initial Purchaser), from and against any
loss, claim, damage or liability, joint or several, or any action in respect
thereof (including, without limitation, any loss, claim, damage, liability or
action relating to purchases and sales of the Securities), to which that Initial
Purchaser may become subject, whether commenced or threatened, under the
Securities Act, the Exchange Act, any other federal or state statutory law or
regulation, at common law or otherwise, insofar as such loss, claim, damage,
liability or action arises out of, or is based upon, (i) any untrue statement or
alleged untrue statement of a material fact contained in the Preliminary
Offering Memorandum or the Offering Memorandum or in any amendment or supplement
thereto or in any information provided by the Issuers pursuant to Section 4(e)
or (ii) the omission or alleged omission to state therein a material fact
required to be stated therein or necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading, and shall reimburse each Initial Purchaser promptly upon demand for
any legal or other expenses reasonably incurred by that Initial Purchaser in
connection with investigating or defending or preparing to defend against or
appearing as a third party witness in connection with any such loss, claim,
damage, liability or action as such expenses are incurred; provided, however,
that none of the Issuers and the Guarantor shall be liable in any such case to
the extent that any such loss, claim, damage, liability or action arises out of,
or is based upon, an untrue statement or alleged untrue statement in or omission
or alleged omission from any of such documents in reliance upon and in
conformity with any Initial Purchasers' Information; and provided, further, that
with respect to any such untrue statement in or omission from the Preliminary
Offering Memorandum, the indemnity agreement contained in this Section 9(a)
shall not inure to the benefit of any such Initial Purchaser to the extent that
the sale to the person asserting any such loss, claim, damage, liability or
action was an initial resale by such Initial Purchaser and any such loss, claim,
damage, liability or action of or with respect to such Initial Purchaser results
from the fact that both (A) to the extent required by applicable law, a copy of
the Offering Memorandum was not sent or given to such person at or prior to the
written confirmation of the sale of such Securities to such person and (B) the
untrue statement
20
in or omission from the Preliminary Offering Memorandum was corrected in the
Offering Memorandum unless, in either case, such failure to deliver the Offering
Memorandum was a result of non-compliance by the Issuers with Section 4(b).
(b) Each Initial Purchaser, severally and not jointly, shall indemnify and
hold harmless the Issuers, their affiliates, their respective officers,
directors, employees, representatives and agents, and each person, if any, who
controls the Issuers within the meaning of the Securities Act or the Exchange
Act (collectively referred to for purposes of this Section 9(b) and Section 10
as the Issuers), from and against any loss, claim, damage or liability, joint or
several, or any action in respect thereof, to which the Issuers may become
subject, whether commenced or threatened, under the Securities Act, the Exchange
Act, any other federal or state statutory law or regulation, at common law or
otherwise, insofar as such loss, claim, damage, liability or action arises out
of, or is based upon, (i) any untrue statement or alleged untrue statement of a
material fact contained in the Preliminary Offering Memorandum or the Offering
Memorandum or in any amendment or supplement thereto or (ii) the omission or
alleged omission to state therein a material fact required to be stated therein
or necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading, but in each case only
to the extent that the untrue statement or alleged untrue statement or omission
or alleged omission was made in reliance upon and in conformity with any Initial
Purchasers' Information, and shall reimburse the Issuers for any legal or other
expenses reasonably incurred by the Issuers in connection with investigating or
defending or preparing to defend against or appearing as a third party witness
in connection with any such loss, claim, damage, liability or action as such
expenses are incurred.
(c) Promptly after receipt by an indemnified party under this Section 9 of
notice of any claim or the commencement of any action, the indemnified party
shall, if a claim in respect thereof is to be made against the indemnifying
party pursuant to Section 9(a) or 9(b), notify the indemnifying party in writing
of the claim or the commencement of that action; provided, however, that the
failure to notify the indemnifying party shall not relieve it from any liability
that it may have under this Section 9 except to the extent that it has been
materially prejudiced (through the forfeiture of substantive rights or defenses)
by such failure; and, provided, further, that the failure to notify the
indemnifying party shall not relieve it from any liability that it may have to
an indemnified party otherwise than under this Section 9. If any such claim or
action shall be brought against an indemnified party, and it shall notify the
indemnifying party thereof, the indemnifying party shall be entitled to
participate therein and, to the extent that it wishes, jointly with any other
similarly notified indemnifying party, to assume the defense thereof with
counsel reasonably satisfactory to the indemnified party. After notice from the
indemnifying party to the indemnified party of its election to assume the
defense of such claim or action, the indemnifying party shall not be liable to
the indemnified party under this Section 9 for any legal or other expenses
subsequently incurred by the indemnified party in connection with the defense
thereof other than reasonable costs of investigation; provided, however, that an
indemnified party shall have the right to employ its own counsel in any such
action, but the fees, expenses and other charges of such counsel for the
indemnified party will be at the expense of such indemnified party unless (1)
the employment of counsel by the indemnified party has been authorized in
writing by the indemnifying party, (2) the indemnified party has reasonably
concluded (based upon advice of counsel to the indemnified party) that there may
be legal defenses available to it or other indemnified parties that are
different from or in addition to those available to the indemnifying party, (3)
a conflict or potential conflict exists (based upon advice of counsel to the
indemnified party) between the indemnified party and the indemnifying party (in
which case the indemnifying party will not have the right to direct the defense
of such action on behalf of the indemnified party) or (4) the indemnifying party
has not in fact employed counsel reasonably satisfactory to the indemnified
party to assume the defense of such action within a
21
reasonable time after receiving notice of the commencement of the action, in
each of which cases the reasonable fees, disbursements and other charges of
counsel will be at the expense of the indemnifying party or parties. It is
understood that the indemnifying party or parties shall not, in connection with
any proceeding or related proceedings in the same jurisdiction, be liable for
the reasonable fees, disbursements and other charges of more than one separate
firm of attorneys (in addition to any local counsel) at any one time for all
such indemnified party or parties. Each indemnified party, as a condition of the
indemnity agreements contained in Sections 9(a) and 9(b), shall use all
reasonable efforts to cooperate with the indemnifying party in the defense of
any such action or claim. No indemnifying party shall be liable for any
settlement of any such action effected without its written consent (which
consent shall not be unreasonably withheld), but if settled with its written
consent or if there be a final judgment for the plaintiff in any such action,
the indemnifying party agrees to indemnify and hold harmless any indemnified
party from and against any loss or liability by reason of such settlement or
judgment. No indemnifying party shall, without the prior written consent of the
indemnified party (which consent shall not be unreasonably withheld), effect any
settlement of any pending or threatened proceeding in respect of which any
indemnified party is or could have been a party and indemnity could have been
sought hereunder by such indemnified party unless such settlement includes an
unconditional release of such indemnified party from all liability on claims
that are the subject matter of such proceeding.
The obligations of each of the Issuers, the Guarantor and the Initial
Purchasers in this Section 9 and in Section 10 are in addition to any other
liability that each of the Issuers, the Guarantor or the Initial Purchasers, as
the case may be, may otherwise have, including in respect of any breaches of
representations, warranties and agreements made herein by any such party.
10. Contribution. If the indemnification provided for in Section 9 is
unavailable or insufficient to hold harmless an indemnified party under Section
9(a) or 9(b), then each indemnifying party shall, in lieu of indemnifying such
indemnified party, contribute to the amount paid or payable by such indemnified
party as a result of such loss, claim, damage or liability, or action in respect
thereof, (i) in such proportion as shall be appropriate to reflect the relative
benefits received by the Issuers and the Guarantor on the one hand and the
Initial Purchasers on the other from the offering of the Securities or (ii) if
the allocation provided by clause (i) above is not permitted by applicable law,
in such proportion as is appropriate to reflect not only the relative benefits
referred to in clause (i) above but also the relative fault of the Issuers and
the Guarantor on the one hand and the Initial Purchasers on the other with
respect to the statements or omissions that resulted in such loss, claim, damage
or liability, or action in respect thereof, as well as any other relevant
equitable considerations. The relative benefits received by the Issuers and the
Guarantor on the one hand and the Initial Purchasers on the other with respect
to such offering shall be deemed to be in the same proportion as the total net
proceeds from the offering of the Securities purchased under this Agreement
(before deducting expenses) received by or on behalf of the Issuers and the
Guarantor, on the one hand, and the total discounts and commissions received by
the Initial Purchasers with respect to the Securities purchased under this
Agreement, on the other, bear to the total gross proceeds from the sale of the
Securities under this Agreement, in each case as set forth in the table on the
cover page of the Offering Memorandum. The relative fault shall be determined by
reference to, among other things, whether the untrue or alleged untrue statement
of a material fact or the omission or alleged omission to state a material fact
relates to the Issuers or information supplied by the Issuers and the Guarantor
on the one hand or to any Initial Purchasers' Information on the other, the
intent of the parties and their relative knowledge, access to information and
opportunity to correct or prevent such untrue statement or omission. Each of the
Issuers, the Guarantor and the Initial Purchasers agree that it would not be
just and equitable if contributions pursuant to this Section 10 were to be
determined by pro rata allocation (even if the Initial Purchasers were treated
22
as one entity for such purpose) or by any other method of allocation that does
not take into account the equitable considerations referred to herein. The
amount paid or payable by an indemnified party as a result of the loss, claim,
damage or liability, or action in respect thereof, referred to above in this
Section 10 shall be deemed to include, for purposes of this Section 10, any
legal or other expenses reasonably incurred by such indemnified party in
connection with investigating or defending or preparing to defend any such
action or claim. Notwithstanding the provisions of this Section 10, no Initial
Purchaser shall be required to contribute any amount in excess of the amount by
which the total discounts and commissions received by such Initial Purchaser
with respect to the Securities purchased by it under this Agreement exceeds the
amount of any damages that such Initial Purchaser has otherwise paid or become
liable to pay by reason of any untrue or alleged untrue statement or omission or
alleged omission. 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. The Initial Purchasers' obligations to contribute as provided
in this Section 10 are several in proportion to their respective purchase
obligations and not joint.
11. Persons Entitled to Benefit of Agreement. This Agreement shall inure to
the benefit of and be binding upon the Initial Purchasers, the Issuers, the
Guarantor and their respective successors. This Agreement and the terms and
provisions hereof are for the sole benefit of only those persons, except as
provided in Sections 9 and 10 with respect to affiliates, officers, directors,
employees, representatives, agents and controlling persons of the Issuers, the
Guarantor and the Initial Purchasers and in Section 4(e) with respect to holders
and prospective purchasers of the Securities. Nothing in this Agreement is
intended or shall be construed to give any person, other than the persons
referred to in this Section 11, any legal or equitable right, remedy or claim
under or in respect of this Agreement or any provision contained herein.
12. Expenses. Each of the Issuers and the Guarantor agree with the Initial
Purchasers to pay (a) the costs incident to the authorization, issuance, sale,
preparation and delivery of the Securities and any taxes payable in that
connection; (b) the costs incident to the preparation, printing and distribution
of the Preliminary Offering Memorandum, the Offering Memorandum and any
amendments or supplements thereto; (c) the costs of reproducing and distributing
each of the Transaction Documents; (d) the costs incident to the preparation,
printing and delivery of the certificates evidencing the Securities, including
stamp duties, stock exchange taxes, value added taxes, withholding taxes or
similar duties or taxes, if any, payable upon authorization, issuance, sale or
delivery of the Securities; (e) the fees and expenses of the Issuers' counsel
and independent accountants; (f) the fees and expenses of qualifying the
Securities under the securities laws of the several jurisdictions as provided in
Section 4(h) and of preparing, printing and distributing Blue Sky Memoranda
(including related fees and expenses of counsel for the Initial Purchasers); (g)
any fees charged by rating agencies for rating the Securities; (h) the fees and
expenses of the Trustee and any paying agent (including related fees and
expenses of any counsel to such parties); (i) all expenses and application fees
incurred in connection with the application for the inclusion of the Securities
on the PORTAL Market, the approval of the Securities for book-entry transfer
through DTC, Euroclear and Cedel and the listing of the Securities on any
securities exchange; (j) 50% of the expenses incurred by the Issuers and the
Initial Purchasers in connection with the airplane used during the "road show";
and (k) all other costs and expenses incident to the performance of the
obligations of the Issuers under this Agreement that are not otherwise
specifically provided for in this Section 12; provided, however, that except as
provided in this Section 12 and Section 8, the Initial Purchasers shall pay
their own costs and expenses.
13. Survival. The respective indemnities, rights of contribution,
representations,
23
warranties and agreements of each of the Issuers, the Guarantor and the Initial
Purchasers contained in this Agreement or made by or on behalf of each of the
Issuers, the Guarantor or the Initial Purchasers pursuant to this Agreement or
any certificate delivered pursuant hereto shall survive the delivery of and
payment for the Securities and shall remain in full force and effect, regardless
of any termination or cancelation of this Agreement or any investigation made by
or on behalf of any of them or any of their respective affiliates, officers,
directors, employees, representatives, agents or controlling persons.
14. Notices, etc.. All statements, requests, notices and agreements
hereunder shall be in writing, and:
(a) if to the Initial Purchasers, shall be delivered or sent by mail
or telecopy transmission to Chase Securities Inc., 270 Park Avenue, New
York, New York 10017, Attention: Mr. David Fass (telecopier no.: (212)
270-0994); or
(b) if to the Issuers, shall be delivered or sent by mail or telecopy
transmission to the address of the Company set forth in the Offering
Memorandum, Attention: Mr. James R. Kahl, 14 Corporate Woods, 8717 West
110th Street, Suite 300, Overland Park, KS 66201 (telecopier no.: (913)
345-9601);
provided that any notice to an Initial Purchaser pursuant to Section 9(c) shall
also be delivered or sent by mail to such Initial Purchaser at its address set
forth on the signature page hereof. Any such statements, requests, notices or
agreements shall take effect at the time of receipt thereof. The Issuers shall
be entitled to act and rely upon any request, consent, notice or agreement given
or made on behalf of the Initial Purchasers by CSI.
15. Definition of Terms. For purposes of this Agreement, (a) the term
"business day" means any day on which the New York Stock Exchange, Inc. is open
for trading, (b) the term "subsidiary" has the meaning set forth in Rule 405
under the Securities Act and (c) except where otherwise expressly provided, the
term "affiliate" has the meaning set forth in Rule 405 under the Securities Act.
16. Initial Purchasers' Information. The parties hereto acknowledge and
agree that, for all purposes of this Agreement, the Initial Purchasers'
Information consists solely of the following information in the Preliminary
Offering Memorandum and the Offering Memorandum: (i) the last paragraph on the
front cover page concerning the terms of the offering by the Initial Purchasers;
(ii) the first paragraph on page "i" concerning over-allotment and trading
activities by the Initial Purchasers; and (iii) the statements concerning the
Initial Purchasers contained in the third, fourth, fifth, seventh, ninth and
eleventh paragraphs under the heading "Plan of Distribution".
17. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
18. Counterparts. This Agreement may be executed in one or more
counterparts (which may include counterparts delivered by telecopier) and, if
executed in more than one counterpart, the executed counterparts shall each be
deemed to be an original, but all such counterparts shall together constitute
one and the same instrument.
19. Amendments. No amendment or waiver of any provision of this Agreement,
nor
24
any consent or approval to any departure therefrom, shall in any event be
effective unless the same shall be in writing and signed by the parties hereto.
20. Headings. The headings herein are inserted for convenience of reference
only and are not intended to be part of, or to affect the meaning or
interpretation of, this Agreement.
25
If the foregoing is in accordance with your understanding of our agreement,
kindly sign and return to us a counterpart hereof, whereupon this instrument
will become a binding agreement among each of the Issuers, the Guarantor and the
Initial Purchasers in accordance with its terms.
Very truly yours,
LA PETITE ACADEMY, INC.,
By______________________________
Name:
Title:
VESTAR/LPA INVESTMENT CORP.,
By_______________________________
Name:
Title:
26
LPA SERVICES INC.,
By_______________________________
Name:
Title:
Accepted:
CHASE SECURITIES INC.
By____________________________
Authorized Signatory
Address for notices pursuant to Section 9(c):
1 Chase Plaza, 25th floor
New York, New York 10081
Attention: Legal Department
NATIONSBANC MONTGOMERY SECURITIES LLC
By____________________________
Authorized Signatory
Address for notices pursuant to Section 9(c):
Attention:
SCHEDULE 1
Initial Purchasers Principal Amount of Securities
Chase Securities $116,000,000
NationsBanc Montgomery
Securities LLC $29,000,000
-----------
Total $145,000,000
ANNEX A
[Form of Exchange and Registration Rights Agreement]
ANNEX B
Form of Opinion of O'Sullivan Graev & Karabell, LLP
O'Sullivan Graev & Karabell, LLP shall have furnished to the Initial
Purchasers their written opinion, as counsel to the Issuers, addressed to the
Initial Purchasers and dated the Closing Date, in form and substance reasonably
satisfactory to the Initial Purchasers, substantially to the effect set forth
below:
(i) Parent, the Company and the Guarantor have been duly incorporated
and are validly existing as corporations in good standing under the laws of
their respective jurisdictions of incorporation, are duly qualified to do
business as foreign corporations in each jurisdiction set forth opposite
the name of each entity on Schedule I attached hereto, which Schedule I
contains all locations identified to us in the attached Officers'
Certificate as locations in which the Company or the Guarantor operates
Academics;
(ii) as of the Closing Date, the Company will have an authorized
capitalization as set forth in the Offering Memorandum, and all of the
outstanding shares of capital stock of Parent and the Company have been
duly and validly authorized and issued and are fully paid and
non-assessable;
(iii) the descriptions in the Offering Memorandum of statutes, legal
and governmental proceedings and contracts and other documents and the
statements in the Offering Memorandum under the heading "Certain United
States Federal Income Tax Considerations", to the extent that they
constitute summaries of matters of law or regulation or legal conclusions,
are accurate summaries and fairly present, in all material respects, the
information called for with respect to such matters;
(iv) the Indenture conforms 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;
(v) each of the Issuers and the Guarantor has the requisite corporate
power to execute and deliver each of the Transaction Documents to which it
a party and to perform its obligations thereunder; and all corporate action
required to be taken for the due and proper authorization, execution and
delivery of each of the Transaction Documents and the consummation of the
transactions contemplated thereby have been duly and validly taken;
(vi) the Purchase Agreement has been duly authorized, executed and
delivered by each of the Issuers and the Guarantor;
(vii) the Registration Rights Agreement has been duly authorized,
executed and delivered by each of the Issuers and the Guarantor and
constitutes a valid and binding agreement of each of the Issuers and the
Guarantor enforceable against each of the Issuers and the Guarantor in
accordance with its terms;
(viii) the Indenture has been duly authorized, executed and delivered
by each of the Issuers and the Guarantor and, assuming due authorization,
execution and delivery thereof
2
by the Trustee, constitutes a valid and binding agreement of each of the
Issuers and the Guarantor, enforceable against each of the Issuers and the
Guarantor in accordance with its terms;
(ix) the Securities have been duly authorized by each of the Issuers
and the Guarantor and, assuming due authentication thereof by the Trustee
and upon payment therefor by the Initial Purchasers in accordance with the
Purchase Agreement, will constitute valid and legally binding obligations
of each of the Issuers, as joint and several obligors, and the Guarantor,
as guarantor, entitled to the benefits of the Indenture and enforceable
against each of the Issuers, as joint and several obligors, and the
Guarantor, as guarantor, in accordance with their terms;
(x) each Transaction Document conforms in all material respects to the
description thereof contained in the Offering Memorandum;
(xi) the execution, delivery and performance by each of the Issuers
and the Guarantor of each of the Transaction Documents to which it is a
party, the issuance, authentication, sale and delivery of the Securities
and compliance by each of the Issuers and the Guarantor with the terms
thereof and the consummation of the transactions contemplated by the
Transaction Documents do not and will not (A) result in a breach or
violation of any of the terms or provisions of, or constitute a default
under, or, with notice or lapse of time or both, constitute a default
under, or result in the creation or imposition of any lien, charge or
encumbrance upon any property or assets of either of the Issuers or the
Guarantor pursuant to, any agreement or instruments listed on Schedule II
attached hereto, which Schedule II contains all agreements and instruments
of the Issuers and the Guarantor identified to us in the attached Officer's
Certificate as material to either of the Issuers or the Guarantor or (B)
result in any violation of the provisions of the certificate of
incorporation or bylaws of either of the Issuers or the Guarantor or (C)
our actual knowledge and other than with respect to the federal securities
laws (as to which we express no opinion in this paragraph (xi) and as to
which we express certain opinions in paragraph (xvi) below), result in any
violation of any statute or any judgment, order, decree, rule or regulation
of any court or arbitrator or governmental agency or body having
jurisdiction over either Issuer or the Guarantor or any of their properties
or assets, except for such violations that would not, individually or in
the aggregate, have a Material Adverse Effect or restrain, prevent or
impose burdensome conditions on the transactions contemplated by the
Transaction Documents;
(xii) Except for such consents, approvals or authorizations of, or
registrations or qualifications with, Governmental Authorities as may be
required under the Securities Act and the rules and regulations thereunder
or applicable state securities or Blue Sky laws in connection with the
purchase and distribution of the Securities by the Initial Purchasers and
as set forth in the Registration Rights Agreement, no consent, approval,
authorization or order of, or filing or registration with, any Governmental
Authority, is required in connection with the execution and delivery by the
Issuers and the Guarantor of the Purchase Agreement, the Indenture and the
Registration Rights Agreement, the consummation by the Issuers and the
Guarantors of the transactions contemplated thereby, and the issuance and
sale of the Securities by the Issuers.
(xiii) to our actual knowledge, there are no legal or governmental
proceedings pending or threatened to which Parent, the Company or the
Guarantor is a party or of which any property or assets of Parent, the
Company or the Guarantor is the subject that (A) would
3
be required under the Securities Act to be described in a registration
statement or a prospectus delivered at the time of the confirmation of the
sale of an offering of securities registered under the Securities Act and
are not described in the Offering Memorandum, (B) question the validity or
enforceability of any of the Transaction Documents or any action taken or
to be taken pursuant thereto or (C) singularly or in the aggregate, if
determined adversely to Parent, the Company or the Guarantor, could
reasonably be expected to have a Material Adverse Effect;
(xiv) None of Parent, the Company or the Guarantor is (A) subject to
registration and regulation as an "investment company" or a company
"controlled by" an "investment company" within the meaning of the
Investment Company Act and the rules and regulations of the Commission
thereunder or (B) a "holding company" or a "subsidiary company" of a
holding company or an "affiliate" thereof within the meaning of the Public
Utility Holding Company Act of 1935, as amended;
(xv) neither the issuance or sale of the Securities nor the
application of the net proceeds thereof as set forth in the Offering
Memorandum will violate Regulation T, U or X of the Federal Reserve Board;
and
(xvi) Assuming, without independent investigation, (A) that the
Securities are sold to the Initial Purchasers, and initially resold by the
Initial Purchasers, in accordance with the terms of, and in the manner
contemplated by, the Purchase Agreement and the Offering Memorandum, (B)
the accuracy of the representations and warranties of the Issuers and the
Guarantor set forth in the Purchase Agreement and in those certain
certificates delivered at the Closing, (C) the accuracy of the Initial
Purchasers' representations and warranties set forth in the Purchase
Agreement, (D) the due performance by the Issuers, the Guarantor and the
Initial Purchasers of their respective covenants and agreements set forth
in the Purchase Agreement, (E) the Initial Purchasers' compliance with the
Offering Memorandum and the transfer procedures and restriction described
in the Offering Memorandum, (F) the accuracy of any representations and
warranties made in accordance with the Purchase Agreement, if any, and in
the Offering Memorandum by each purchaser to whom the Initial Purchasers
initially resell the Securities and (G) that each Purchaser to whom the
Initial Purchasers initially resell Securities receives a copy of the
Offering Memorandum, if required by such purchaser prior to such sale, the
offer, issuance, sale and delivery of the Securities to the Initial
Purchasers, and the resale and delivery of the Securities by the Initial
Purchasers, in each case as contemplated by the Purchase Agreement and the
Offering Memorandum, do not require registration under the Act, or
qualification of the Indenture under the Trust Indenture Act, it being
understood that no opinion is expressed is to any subsequent resale of
Securities or any resale of Securities by any person other than the Initial
Purchasers.
In the course of the preparation of the Offering Memorandum, we have
participated in conferences with certain officers and other representatives of
the Issuers, representatives of the independent public accountants for the
Issuers, representatives of the Initial Purchasers and counsel for the Initial
Purchasers, at which conferences we made inquiries of such officers,
representatives, accountants and counsel and discussed the contents of the
Offering Memorandum and related matters and, although we are not passing upon
and do not assume any responsibility for the accuracy, completeness or fairness
of the statements contained in the Offering Memorandum and have not made any
independent verification thereof, on the basis of the foregoing, in the course
of our examination of the Offering Memorandum and our discussions in the
above-referenced conferences, no facts have come to our attention that lead us
to believe
4
that either the Offering Memorandum as of its date or the Closing Date,
contained or contains an untrue statement of a material fact or omitted or omits
to state a material fact necessary to make the statements therein, in the light
of the circumstances under which they were made, not misleading (it being
understood that we express no opinion and make no statement of belief with
respect to the financial statements and schedules and other financial and
statistical data included therein).
In rendering such opinion, such counsel may rely as to matters of fact, to
the extent such counsel deems proper, on certificates of responsible officers of
the Issuers and the Guarantor and public officials which are furnished to the
Initial Purchasers.
ANNEX C
[Form of Initial Comfort Letter]