EXHIBIT 1.1
ADVANCE STORES COMPANY, INCORPORATED
LARALEV, INC.
$200,000,000
10.25% SENIOR SUBORDINATED NOTES DUE 2008
PURCHASE AGREEMENT
APRIL 7, 1998
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
CHASE SECURITIES, INC.
$200,000,000
10.25% Senior Subordinated Notes due 2008
of Advance Stores Company, Incorporated
PURCHASE AGREEMENT
April 7, 1998
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
CHASE SECURITIES INC.
c/o Donaldson, Lufkin & Jenrette
Securities Corporation
277 Park Avenue
New York, New York 10172
Dear Sirs:
Advance Stores Company, Incorporated, a Virginia corporation (the
"COMPANY"), proposes to issue and sell to Donaldson, Lufkin & Jenrette
Securities Corporation and Chase Securities Inc. (each, an "INITIAL PURCHASER"
and, collectively, the "INITIAL PURCHASERS") an aggregate of $200,000,000 in
principal amount of its 10.25% Senior Subordinated Notes due 2008 (the "SERIES A
NOTES"), subject to the terms and conditions set forth herein (the "OFFERING").
The Series A Notes are to be issued pursuant to the provisions of an indenture
(the "INDENTURE"), to be dated as of the Closing Date (as defined below), among
the Company, the Guarantor (as defined below) and United States Trust Company of
New York, as trustee (the "TRUSTEE"). The Series A Notes and the Series B Notes
(as defined below) issuable in exchange therefor are collectively referred to
herein as the "NOTES." The Notes will be guaranteed (the "SUBSIDIARY
GUARANTEE") by the entities listed on Schedule A hereto (the "GUARANTOR").
----------
Capitalized terms used but not defined herein shall have the meanings given to
such terms in the Indenture.
The Notes are being issued and sold in connection with the Recapitalization
(as defined below) of the Company's parent, Advance Holding Corporation, a
Virginia corporation ("HOLDING"). In connection with the Recapitalization,
Holding and AHC Corporation ("AHC"), a corporation wholly-owned by an investment
fund organized by Freeman Spogli & Co. Incorporated ("FS&CO."), entered into an
Agreement and Plan of Merger dated as of March 4, 1998 (the "MERGER AGREEMENT")
pursuant to which AHC will merge into Holding (the "MERGER"),
2
with Holding to continue as the surviving corporation. Upon the consummation of
the Merger, the outstanding shares of the equity securities of Holding will be
converted into the right to receive an aggregate of approximately $351 million,
other than certain shares of Holding's Common Stock, par value $100.00 per share
(the "HOLDING COMMON STOCK"), which will continue to be held by certain existing
stockholders and which will represent approximately 14% of the outstanding
shares of Holding Common Stock immediately following the transaction.
Immediately prior to the Merger, FS&Co. will purchase approximately $82.5
million of the Common Stock of AHC, which will be converted in the Merger into
approximately 66% of the outstanding Holding Common Stock. Immediately following
the Merger, $20.0 million of Holding Common Stock will be purchased by
Ripplewood Partners, L.P. ("RIPPLEWOOD") or its affiliates, constituting
approximately 16% of the outstanding Holding Common Stock (the investments by
FS&Co. and Ripplewood are collectively referred to herein as the "EQUITY
INVESTMENT"). In addition, management of the Company is expected to purchase a
minimum of 4% of the outstanding Holding Common Stock. In connection with the
Recapitalization, substantially all of Holding's existing funded debt
obligations will be repaid, and the Company will repay its intercompany
obligations to Holding and will pay a dividend to Holding.
Cash funding requirements for the Recapitalization are $492.5 million and
will be satisfied as follows: (i) the Equity Investment; (ii) the purchase by
management of the Company of Holding Common Stock with a value of $5.0 million;
(iii) proceeds of $60.0 million from the issuance and sale by Holding of its
12.875% Senior Discount Debentures due 2009 (the "SENIOR DISCOUNT DEBENTURES
OFFERING" and, together with the Offering, the "OFFERINGS") in a separate
offering in which the Initial Purchasers will act as initial purchasers; (iv)
$200.0 million from the proceeds of the Offering; and (v) $125.0 million of
borrowings by the Company under a new bank credit facility (the "NEW CREDIT
FACILITY").
The Merger, the retirement of Holding's existing debt, the dividend payment
to Holding, the borrowing by the Company of funds under the New Credit Facility
and the Offerings are collectively referred to herein collectively as the
"RECAPITALIZATION", and the documents, agreements and instruments relating
thereto are referred to herein as the "OPERATIVE DOCUMENTS."
SECTION 1. OFFERING MEMORANDUM. The Series A Notes will be offered and
sold to the Initial Purchasers pursuant to one or more exemptions from the
registration requirements under the Securities Act of 1933, as amended (the
"ACT"). The Company and the Guarantor have prepared a preliminary offering
memorandum, dated March 23, 1998 (the "PRELIMINARY OFFERING MEMORANDUM") and a
final offering memorandum, dated April 7, 1998 (the "OFFERING MEMORANDUM"),
relating to the Series A Notes and the Subsidiary Guarantee.
Upon original issuance thereof, and until such time as the same is no
longer required pursuant to the Indenture, the Series A Notes (and all
securities issued in exchange therefor, in substitution thereof or upon
conversion thereof) shall bear the following legend:
3
"THIS NOTE (OR ITS PREDECESSOR) HAS NOT BEEN REGISTERED UNDER THE U.S.
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND,
ACCORDINGLY, MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED
WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S.
PERSONS, EXCEPT AS SET FORTH IN THE THIRD SENTENCE HEREOF. BY ITS
ACQUISITION HEREOF OR OF A BENEFICIAL INTEREST HEREIN, THE HOLDER (1)
REPRESENTS THAT (A) IT IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN
RULE 144A UNDER THE SECURITIES ACT) (A "QIB"), (B) IT IS ACQUIRING THIS
NOTE IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH REGULATION S UNDER THE
SECURITIES ACT OR (C) IT IS AN INSTITUTIONAL "ACCREDITED INVESTOR" (AS
DEFINED IN RULE 501(A)(1), (2), (3) OR (7) OF REGULATION D UNDER THE ACT
(AN "IAI")), (2) AGREES THAT IT WILL NOT RESELL OR OTHERWISE TRANSFER THIS
NOTE EXCEPT (A) TO THE COMPANY OR ANY OF ITS SUBSIDIARIES, (B) TO A PERSON
WHOM THE SELLER REASONABLY BELIEVES IS A QIB PURCHASING FOR ITS OWN ACCOUNT
OR FOR THE ACCOUNT OF A QIB IN A TRANSACTION MEETING THE REQUIREMENTS OF
RULE 144A, (C) IN AN OFFSHORE TRANSACTION MEETING THE REQUIREMENTS OF RULE
903 OR 904 OF THE SECURITIES ACT, (D) IN A TRANSACTION MEETING THE
REQUIREMENTS OF RULE 144 UNDER THE SECURITIES ACT, (E) TO AN IAI THAT,
PRIOR TO SUCH TRANSFER, FURNISHES THE TRUSTEE A SIGNED LETTER CONTAINING
CERTAIN REPRESENTATIONS AND AGREEMENTS RELATING TO THE TRANSFER OF THIS
NOTE (THE FORM OF WHICH CAN BE OBTAINED FROM THE TRUSTEE) AND, IF SUCH
TRANSFER IS IN RESPECT OF AN AGGREGATE PRINCIPAL AMOUNT OF NOTES LESS THAN
$250,000, AN OPINION OF COUNSEL ACCEPTABLE TO THE COMPANY THAT SUCH
TRANSFER IS IN COMPLIANCE WITH THE SECURITIES ACT, (F) IN ACCORDANCE WITH
ANOTHER EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT
(AND BASED UPON AN OPINION OF COUNSEL ACCEPTABLE TO THE COMPANY) OR (G)
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT AND, IN EACH CASE, IN
ACCORDANCE WITH THE APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED
STATES OR ANY OTHER APPLICABLE JURISDICTION AND (3) AGREES THAT IT WILL
DELIVER TO EACH PERSON TO WHOM THIS NOTE OR AN INTEREST HEREIN IS
TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. AS USED
HEREIN, THE TERMS "OFFSHORE TRANSACTION" AND "UNITED STATES" HAVE THE
MEANINGS GIVEN TO THEM BY RULE 902 OF REGULATIONS UNDER THE SECURITIES ACT.
THE INDENTURE CONTAINS A PROVISION REQUIRING THE TRUSTEE TO
4
REFUSE TO REGISTER ANY TRANSFER OF THIS NOTE IN VIOLATION OF THE FOREGOING."
SECTION 2. AGREEMENTS TO SELL AND PURCHASE. On the basis of the
representations, warranties and covenants contained in this Agreement, and
subject to the terms and conditions contained herein, the Company agrees to
issue and sell to the Initial Purchasers, and the Initial Purchasers agree,
severally and not jointly, to purchase from the Company, the principal amount of
Series A Notes set forth opposite the name of such Initial Purchaser on Schedule
--------
C hereto at a purchase price equal to 97.125% of the principal amount thereof
- -
(the "PURCHASE PRICE").
SECTION 3. TERMS OF OFFERING. The Initial Purchasers have advised the
Company that the Initial Purchasers will make offers (the "EXEMPT RESALES") of
the Series A Notes purchased hereunder on the terms set forth in the Offering
Memorandum, as amended or supplemented, solely to (i) persons whom the Initial
Purchasers reasonably believe to be "qualified institutional buyers" as defined
in Rule 144A under the Act ("QIBS") and (ii) persons permitted to purchase the
Series A Notes in offshore transactions in reliance upon Regulation S under the
Act (each, a "REGULATION S PURCHASER") (such persons specified in clauses (i)
and (ii) being referred to herein as the "ELIGIBLE PURCHASERS"). The Initial
Purchasers will offer the Series A Notes to Eligible Purchasers initially at a
price equal to 100% of the principal amount thereof. Such price may be changed
at any time without notice.
Holders (including subsequent transferees) of the Series A Notes will have
the registration rights set forth in the registration rights agreement (the
"REGISTRATION RIGHTS AGREEMENT"), to be dated the Closing Date, in substantially
the form of Exhibit A hereto, for so long as such Series A Notes constitute
---------
"TRANSFER RESTRICTED SECURITIES" (as defined in the Registration Rights
Agreement). Pursuant to the Registration Rights Agreement, the Company and the
Guarantor will agree to file with the Securities and Exchange Commission (the
"COMMISSION") under the circumstances set forth therein, (i) a registration
statement under the Act (the "EXCHANGE OFFER REGISTRATION STATEMENT") relating
to the Company's 10.25% Senior Subordinated Notes Due 2008 (the "SERIES B
NOTES"), to be offered in exchange for the Series A Notes (such offer to
exchange being referred to as the "EXCHANGE OFFER") and the Subsidiary Guarantee
thereof and (ii) under certain circumstances, a shelf registration statement
pursuant to Rule 415 under the Act (the "SHELF REGISTRATION STATEMENT" and,
together with the Exchange Offer Registration Statement, the "REGISTRATION
STATEMENTS") relating to the resale by certain holders of the Series A Notes and
to use its reasonable best efforts to cause such Registration Statements to be
declared and remain effective and usable for the periods specified in the
Registration Rights Agreement and to consummate the Exchange Offer.
SECTION 4. DELIVERY AND PAYMENT. (a) Delivery of, and payment of the
Purchase Price for, the Series A Notes shall be made at the offices of Cravath,
Swaine & Moore, 825 Eighth Avenue, New York, New York 10019 or such other
location as may be mutually acceptable. Such delivery and payment shall be made
at 9:00 a.m. New York City time, on April 15, 1998 or at such other time on the
same date or such other date as shall be agreed upon by the Initial
5
Purchasers and the Company in writing. The time and date of such delivery and
the payment for the Series A Notes are herein called the "CLOSING DATE."
(b) One or more of the Series A Notes in definitive global form,
registered in the name of Cede & Co., as nominee of the Depository Trust Company
("DTC"), having an aggregate principal amount corresponding to the aggregate
principal amount of the Series A Notes (collectively, the "GLOBAL NOTE"), shall
be delivered by the Company to the Initial Purchasers (or as the Initial
Purchasers direct) in each case with any transfer taxes thereon duly paid by the
Company against payment by the Initial Purchasers of the Purchase Price thereof
by wire transfer in same day funds to the order of the Company. The Global Note
shall be made available to the Initial Purchasers for inspection not later than
9:30 a.m., New York City time, on the business day immediately preceding the
Closing Date.
SECTION 5. AGREEMENTS OF THE COMPANY AND THE GUARANTOR. Each of the
Company and the Guarantor hereby agrees with the Initial Purchasers as follows:
(a) To advise the Initial Purchasers promptly and, if requested by the
Initial Purchasers, confirm such advice in writing, (i) of the issuance by
any state securities commission of any stop order suspending the
qualification or exemption from qualification of any Series A Notes for
offering or sale in any jurisdiction designated by the Initial Purchasers
pursuant to Section 5(e) hereof, or the initiation of any proceeding by any
state securities commission or any other federal or state regulatory
authority for such purpose and (ii) of the happening of any event during
the period referred to in Section 5(c) below that makes any statement of a
material fact made in the Preliminary Offering Memorandum or the Offering
Memorandum untrue or that requires any additions to or changes in the
Preliminary Offering Memorandum or the Offering Memorandum in order to make
the statements therein not misleading. The Company shall use its best
efforts to prevent the issuance of any stop order or order suspending the
qualification or exemption of any Series A Notes under any state securities
or Blue Sky laws and, if at any time any state securities commission or
other federal or state regulatory authority shall issue an order suspending
the qualification or exemption of any Series A Notes under any state
securities or Blue Sky laws, the Company shall use its best efforts to
obtain the withdrawal or lifting of such order at the earliest possible
time.
(b) To furnish the Initial Purchasers and those persons identified by
the Initial Purchasers to the Company, without charge, as many copies of
the Preliminary Offering Memorandum and the Offering Memorandum, and any
amendments or supplements thereto, as the Initial Purchasers may reasonably
request. Subject to the Initial Purchasers' compliance with its
representations and warranties and agreements set forth in Section 7
hereof, the Company consents to the use of the Preliminary Offering
Memorandum and the Offering Memorandum, and any amendments and supplements
thereto required pursuant hereto, by the Initial Purchasers in connection
with Exempt Resales.
6
(c) During such period as in the opinion of counsel for the Initial
Purchasers an Offering Memorandum is required by law to be delivered in
connection with Exempt Resales by the Initial Purchasers and until
completion of the distribution of the Series A Notes, but in no event later
than one year from the date hereof, (i) not to make any amendment or
supplement to the Offering Memorandum of which the Initial Purchasers shall
not previously have been advised or to which the Initial Purchasers shall
reasonably object promptly after being so advised and (ii) to prepare
promptly upon the Initial Purchasers' reasonable request, any amendment or
supplement to the Offering Memorandum which may be necessary or advisable
in connection with such Exempt Resales.
(d) If, during the period referred to in Section 5(c) above, any event
shall occur or condition shall exist as a result of which, in the opinion
of counsel to the Initial Purchasers, it becomes necessary to amend or
supplement the Offering Memorandum in order to make the statements therein,
in the light of the circumstances when such Offering Memorandum is
delivered to an Eligible Purchaser, not misleading, or if, in the opinion
of counsel to the Initial Purchasers, it is necessary to amend or
supplement the Offering Memorandum to comply with any applicable law,
forthwith to prepare an appropriate amendment or supplement to such
Offering Memorandum so that the statements therein, as so amended or
supplemented, will not contain any untrue statement of material fact or
omit to state a material fact necessary to make the statements therein, in
the light of the circumstances when it is so delivered, not misleading, or
so that such Offering Memorandum will otherwise comply with applicable law,
and to furnish to the Initial Purchasers and such other persons as the
Initial Purchasers may designate such number of copies thereof as the
Initial Purchasers may reasonably request.
(e) Prior to the sale of all Series A Notes pursuant to Exempt Resales
as contemplated hereby, to cooperate with the Initial Purchasers and
counsel to the Initial Purchasers in connection with the registration or
qualification of the Series A Notes for offer and sale to the Initial
Purchasers and pursuant to Exempt Resales under the securities or Blue Sky
laws of such jurisdictions as the Initial Purchasers may request and to
continue such registration or qualification in effect so long as required
for Exempt Resales and to file such consents to service of process or other
documents as may be necessary in order to effect such registration or
qualification; provided, however, that neither the Company nor the
Guarantor shall be required in connection therewith to register or qualify
as a foreign corporation in any jurisdiction in which it is not now so
qualified or to take any action that would subject it to general consent to
service of process or taxation other than as to matters and transactions
relating to the Preliminary Offering Memorandum, the Offering Memorandum or
Exempt Resales, in any jurisdiction in which it is not now so subject.
(f) So long as the Notes are outstanding, to mail and make generally
available, within 90 days after the end of the Company's fiscal year and
within 45 days after the end
7
of each fiscal quarter, (i) all quarterly and annual financial information
that would be required to be contained in a filing with the Commission on
Forms 10-Q and 10-K if the Company were required to file such Forms,
including a "Management's Discussion and Analysis of Financial Condition
and Results of Operations" that describes the financial condition and
results of operation of the Company and its consolidated subsidiaries and,
with respect to the annual information only, a report thereon by the
Company's certified independent accountants and (ii) all current reports
that would be required to be filed with the Commission on Form 8-K if the
Company were required to file such reports in each case within the time
periods set forth in the Commission's rules and regulations. In addition,
whether or not required by the rules and regulations of the Commission, the
Company shall file a copy of all such information and reports with the
Commission for public availability (unless the Commission will not accept
such a filing).
(g) For five years from the date hereof, to furnish to the Initial
Purchasers as soon as available copies of all reports or other
communications furnished by the Company or the Guarantor to its security
holders or furnished to or filed with the Commission or any national
securities exchange on which any class of securities of the Company or the
Guarantor is listed and such other publicly available information
concerning the Company and/or its subsidiaries as the Initial Purchasers
may reasonably request.
(h) So long as any of the Series A Notes remain outstanding and during
any period in which the Company and the Guarantor are not subject to
Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended (the
"EXCHANGE ACT"), to make available to any holder of Series A Notes in
connection with any sale thereof and any prospective purchaser of such
Series A Notes from such holder, the information ("RULE 144A INFORMATION")
required by Rule 144A(d)(4) under the Act; provided, however, that the
Company's obligations under this Section 5(h) shall terminate upon the
earlier of (i) the date the Exchange Offer is concluded and the exchange of
the Series B Notes for the Series A Notes is consummated or (ii) the date
the Shelf Registration Statement is declared effective by the Commission;
provided further that, notwithstanding the foregoing proviso, the Company
shall be obligated to deliver, upon request, any Rule 144A Information to
prospective purchasers of the Notes during any period during which,
pursuant to the Registration Rights Agreement, the Shelf Registration
Statement is required to be effective, but such effectiveness has been
suspended or revoked for any reason.
(i) Whether or not the transactions contemplated in this Agreement are
consummated or this Agreement is terminated, to pay or cause to be paid all
expenses incident to the performance of the obligations of the Company and
the Guarantor under this Agreement, including: (i) the fees, disbursements
and expenses of counsel to the Company and the Guarantor and accountants of
the Company and the Guarantor in connection with the sale and delivery of
the Series A Notes to the Initial Purchasers and pursuant to Exempt
Resales, and all other fees and expenses in connection with the
preparation, printing, filing and distribution of the Preliminary Offering
Memorandum,
8
the Offering Memorandum and all amendments and supplements to any of the
foregoing (including financial statements), including the mailing and
delivering of copies thereof to the Initial Purchasers and persons
designated by them in the quantities specified herein, (ii) all costs and
expenses related to the transfer and delivery of the Series A Notes to the
Initial Purchasers and pursuant to Exempt Resales, including any transfer
or other taxes payable thereon, (iii) all costs of printing or producing
this Agreement, the other Operative Documents and any other agreements or
documents in connection with the offering, purchase, sale or delivery of
the Series A Notes, (iv) all expenses in connection with the registration
or qualification of the Series A Notes and the Subsidiary Guarantee for
offer and sale under the securities or Blue Sky laws of the several states
and all costs of printing or producing any preliminary and supplemental
Blue Sky memoranda in connection therewith (including the filing fees and
reasonable fees and disbursements of counsel for the Initial Purchasers in
connection with such registration or qualification and memoranda relating
thereto), (v) the cost of printing certificates representing the Series A
Notes and the Subsidiary Guarantee, (vi) all expenses and listing fees in
connection with the application for quotation of the Series A Notes in the
National Association of Securities Dealers, Inc. ("NASD") Automated
Quotation System - PORTAL ("PORTAL"), (vii) the fees and expenses of the
Trustee and the Trustee's counsel in connection with the Indenture, the
Notes and the Subsidiary Guarantee, (viii) the costs and charges of any
transfer agent, registrar and/or depositary (including DTC), (ix) any fees
charged by rating agencies for the rating of the Notes, (x) all costs and
expenses of the Exchange Offer and any Registration Statement, as set forth
in the Registration Rights Agreement, and (xi) all other costs and expenses
incident to the performance of the obligations of the Company and the
Guarantor hereunder for which provision is not otherwise made in this
Section.
(j) To use its best efforts to effect the inclusion of the Series A
Notes in PORTAL and to maintain the listing of the Series A Notes on PORTAL
for so long as the Series A Notes are outstanding.
(k) To use its best efforts to obtain the approval of DTC for "book-
entry" transfer of the Notes, and to comply with all of its agreements set
forth in the representation letters of the Company and the Guarantor to DTC
relating to the approval of the Notes by DTC for "book-entry" transfer.
(l) Except as disclosed in or contemplated by the Offering Memorandum,
during the period beginning on the date hereof and continuing to and
including the Closing Date, not to offer, sell, contract to sell or
otherwise transfer or dispose of any debt securities of the Company or the
Guarantor or any warrants, rights or options to purchase or otherwise
acquire debt securities of the Company or the Guarantor substantially
similar to the Notes and the Subsidiary Guarantee (other than (i) the Notes
and the Subsidiary Guarantee and (ii) commercial paper issued in the
ordinary course of business), without the prior written consent of the
Initial Purchasers.
9
(m) Not to sell, offer for sale or solicit offers to buy or otherwise
negotiate in respect of any security (as defined in the Act) that would be
integrated with the sale of the Series A Notes to the Initial Purchasers or
pursuant to Exempt Resales in a manner that would require the registration
of any such sale of the Series A Notes under the Act.
(n) Not to voluntarily claim, and to actively resist any attempts to
claim, the benefit of any usury laws against the holders of any Notes and
the related Subsidiary Guarantee.
(o) To cause the Exchange Offer to be made in the appropriate form to
permit Series B Notes and guarantees thereof by the Guarantor registered
pursuant to the Act to be offered in exchange for the Series A Notes and
the Subsidiary Guarantee and to comply with all applicable federal and
state securities laws in connection with the Exchange Offer.
(p) To comply with all of its agreements set forth in the Registration
Rights Agreement.
(q) To use its best efforts to do and perform all things required or
necessary to be done and performed under this Agreement and the Operative
Documents by it prior to the Closing Date and to satisfy all conditions
precedent to the delivery of the Series A Notes and the Subsidiary
Guarantee.
SECTION 6. REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF THE COMPANY AND
THE GUARANTOR. As of the date hereof, each of the Company and the Guarantor
represents and warrants to, and agrees with, the Initial Purchasers that:
(a) The Preliminary Offering Memorandum, at the date thereof, did not,
and the Offering Memorandum, at the date hereof, does not, and any
supplement or amendment to them will not, contain any untrue statement of a
material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading, except that the
representations and warranties contained in this paragraph (a) shall not
apply to (i) pricing terms and other financial terms intentionally left
blank in the Preliminary Offering Memorandum or (ii) statements in or
omissions from the Preliminary Offering Memorandum or the Offering
Memorandum (or any supplement or amendment thereto) based upon information
relating to the Initial Purchasers furnished to the Company in writing by
the Initial Purchasers expressly for use therein.
(b) Each of the Company and its subsidiaries has been duly
incorporated, is validly existing as a corporation in good standing under
the laws of its jurisdiction of incorporation and has the corporate power
and authority to carry on its business as described in the Preliminary
Offering Memorandum and the Offering Memorandum and to own, lease and
operate its properties, and each is duly qualified and is in good standing
10
as a foreign corporation authorized to do business in the jurisdictions set
forth on Schedule D, which jurisdictions are the ones in which the nature
----------
of its business or its ownership or leasing of property requires such
qualification, except where the failure to be so qualified would not have a
material adverse effect on the business, prospects, financial condition or
results of operations of the Company and its subsidiaries, taken as a whole
or draw into question the validity of this Agreement or the other Operative
Documents (a "MATERIAL ADVERSE EFFECT").
(c) All outstanding shares of capital stock of the Company have been
duly authorized and validly issued and are fully paid, non-assessable and
not subject to any preemptive or similar rights and are owned by Holding
free and clear of any security interest, claim, lien, encumbrance or
adverse interest of any nature (each, a "LIEN"), other than (i) liens
existing on the indebtedness outstanding on the date hereof which will be
repaid upon the consummation of the Recapitalization and (ii) the pledge of
the shares of the Company to secure the obligations of Holding under the
New Credit Facility.
(d) The entities listed on Schedule B hereto are the only
----------
subsidiaries, direct or indirect, of the Company. All of the outstanding
shares of capital stock of each of the Company's subsidiaries have been
duly authorized and validly issued and are fully paid and non-assessable,
and are owned by the Company, directly or indirectly through one or more
subsidiaries, free and clear of any Lien, other than (i) liens existing on
the indebtedness outstanding on the date hereof which will be repaid upon
the consummation of the Recapitalization and (ii) the pledge of the shares
of each subsidiary of the Company to secure the obligations of the Company
under the New Credit Facility.
(e) This Agreement has been duly authorized, executed and delivered by
the Company and the Guarantor.
(f) The Indenture has been duly authorized by the Company and the
Guarantor and, on the Closing Date, will have been validly executed and
delivered by the Company and the Guarantor. When the Indenture has been
duly executed and delivered by the Company and the Guarantor (assuming the
due authorization, execution and delivery by the Trustee), the Indenture
will be a valid and binding agreement of the Company and the Guarantor,
enforceable against the Company and the Guarantor in accordance with its
terms, except as the enforceability thereof may be limited by (i)
bankruptcy, insolvency, reorganization, fraudulent conveyance, moratorium
or similar laws affecting creditors' rights generally and (ii) general
principles of equity and the discretion of the court before which any
proceeding therefor may be brought (regardless of whether such enforcement
is considered in a proceeding at law or in equity). On the Closing Date,
the Indenture will conform in all material respects to the requirements of
the Trust Indenture Act of 1939, as amended (the "TIA" or "TRUST INDENTURE
ACT"), and the rules and regulations of the Commission applicable to an
indenture which is qualified thereunder.
11
(g) The Series A Notes have been duly authorized and, on the Closing
Date, will have been validly executed and delivered by the Company. When
the Series A Notes have been issued, executed and authenticated in
accordance with the provisions of the Indenture and delivered to and paid
for by the Initial Purchasers in accordance with the terms of this
Agreement, the Series A Notes will be entitled to the benefits of the
Indenture and will be valid and binding obligations of the Company,
enforceable in accordance with their terms, except as the enforceability
thereof may be limited by (i) bankruptcy, insolvency, reorganization,
fraudulent conveyance, moratorium or similar laws affecting creditors'
rights generally and (ii) general principles of equity and the discretion
of the court before which any proceeding therefor may be brought
(regardless of whether such enforcement is considered in a proceeding at
law or in equity). On the Closing Date, the Series A Notes will conform in
all material respects to the description thereof contained in the Offering
Memorandum.
(h) On the Closing Date, the Series B Notes will have been duly
authorized by the Company. When the Series B Notes are issued, executed
and authenticated in accordance with the terms of the Exchange Offer and
the Indenture, the Series B Notes will be entitled to the benefits of the
Indenture and will be the valid and binding obligations of the Company,
enforceable against the Company in accordance with their terms, except as
the enforceability thereof may be limited by (i) bankruptcy, insolvency,
reorganization, fraudulent conveyance, moratorium or similar laws affecting
creditors' rights generally and (ii) general principles of equity and the
discretion of the court before which any proceeding therefor may be brought
(regardless of whether such enforcement is considered in a proceeding at
law or in equity). When the Series B Notes are issued, authenticated and
delivered, the Series B Notes will conform in all material respects to the
description thereof contained in the Offering Memorandum.
(i) The Subsidiary Guarantee to be endorsed on the Series A Notes by
the Guarantor has been duly authorized by the Guarantor and, on the Closing
Date, will have been duly executed and delivered by the Guarantor. When
the Series A Notes have been issued, executed and authenticated in
accordance with the Indenture and delivered to and paid for by the Initial
Purchasers in accordance with the terms of this Agreement, the Subsidiary
Guarantee of the Guarantor endorsed thereon will be entitled to the
benefits of the Indenture and will be the valid and binding obligation of
the Guarantor, enforceable against the Guarantor in accordance with its
terms, except as the enforceability thereof may be limited by (i)
bankruptcy, insolvency, reorganization, fraudulent conveyance, moratorium
or similar laws affecting creditors' rights generally and (ii) general
principles of equity and the discretion of the court before which any
proceeding therefor may be brought (regardless of whether such enforcement
is considered in a proceeding at law or in equity). On the Closing Date,
the Subsidiary Guarantee to be endorsed on the Series A Notes will conform
in all material respects to the description thereof contained in the
Offering Memorandum.
12
(j) The Subsidiary Guarantee to be endorsed on the Series B Notes by
the Guarantor has been duly authorized by the Guarantor and, when issued,
will have been duly executed and delivered by the Guarantor. When the
Series B Notes have been issued, executed and authenticated in accordance
with the terms of the Exchange Offer and the Indenture, the Subsidiary
Guarantee of the Guarantor endorsed thereon will be entitled to the
benefits of the Indenture and will be the valid and binding obligation of
the Guarantor, enforceable against the Guarantor in accordance with its
terms, except as the enforceability thereof may be limited by (i)
bankruptcy, insolvency, reorganization, fraudulent conveyance, moratorium
or similar laws affecting creditors' rights generally and (ii) general
principles of equity and the discretion of the court before which any
proceeding therefor may be brought (regardless of whether such enforcement
is considered in a proceeding at law or in equity). When the Series B
Notes are issued, authenticated and delivered, the Subsidiary Guarantee to
be endorsed on the Series B Notes will conform in all material respects to
the description thereof in the Offering Memorandum.
(k) The Registration Rights Agreement has been duly authorized by the
Company and the Guarantor and, on the Closing Date, will have been duly
executed and delivered by the Company and the Guarantor. When the
Registration Rights Agreement has been duly executed and delivered, the
Registration Rights Agreement will be a valid and binding agreement of the
Company and the Guarantor, enforceable against the Company and the
Guarantor in accordance with its terms, except as the enforceability
thereof may be limited by (i) bankruptcy, insolvency, reorganization,
fraudulent conveyance, moratorium or similar laws affecting creditors'
rights generally and (ii) general principles of equity and the discretion
of the court before which any proceeding therefor may be brought
(regardless of whether such enforcement is considered in a proceeding at
law or in equity), and except as any rights to indemnity or contribution
thereunder may be limited by federal and state securities laws and public
policy considerations. On the Closing Date, the Registration Rights
Agreement will conform in all material respects to the description thereof
in the Offering Memorandum.
(l) Neither the Company nor any of its subsidiaries is (i) in
violation of its respective charter or by-laws or (ii) in default in the
performance of any obligation, agreement, covenant or condition contained
in any indenture, loan agreement, mortgage, lease or other agreement or
instrument that is material to the Company and its subsidiaries, taken as a
whole, to which the Company or any of its subsidiaries is a party or by
which the Company or any of its subsidiaries or their respective property
is bound which default would have a Material Adverse Effect.
(m) The execution, delivery and performance of this Agreement and the
other Operative Documents by the Company and the Guarantor, compliance by
the Company and the Guarantor with all provisions hereof and thereof and
the consummation of the transactions contemplated hereby and thereby will
not (i) assuming the Notes are sold in the manner described in this
Agreement, require any consent, approval, authorization or
13
other order of, or qualification with, any court or governmental body or
agency (except such as have been obtained or may be required under the
securities or Blue Sky laws of the various states and, with respect to the
Registration Rights Agreement, the Securities Act and Trust Indenture Act),
(ii) conflict with or constitute a breach of any of the terms or provisions
of, or a default under, the charter or by-laws of the Company or any of its
subsidiaries or any indenture, loan agreement, mortgage, lease or other
agreement or instrument that is material to the Company and its
subsidiaries, taken as a whole, to which the Company or any of its
subsidiaries is a party or by which the Company or any of its subsidiaries
or their respective property is bound, (iii) violate or conflict with any
applicable material law or any rule, regulation, judgment, order or decree
of any court or any governmental body or agency having jurisdiction over
the Company, any of its subsidiaries or their respective property, (iv)
result in the imposition or creation of (or the obligation to create or
impose) a Lien under, any agreement or instrument to which the Company or
any of its subsidiaries is a party or by which the Company or any of its
subsidiaries or their respective property is bound, or (v) result in the
termination, suspension or revocation of any Authorization (as defined
below) of the Company or any of its subsidiaries or result in any other
impairment of the rights of the holder of any such Authorization, except,
with respect to clauses (ii), (iv) and (v) above, for violation, conflict,
breach, default, Lien, termination, suspension, revocation or impairment
which would not, individually or in the aggregate, have a Material Adverse
Effect.
(n) There are no legal or governmental proceedings pending or, to the
Company's knowledge, threatened to which the Company or any of its
subsidiaries is a party or to which any of their respective property is
subject, which might result, singly or in the aggregate, in a Material
Adverse Effect.
(o) Neither the Company nor any of its subsidiaries has violated any
foreign, federal, state or local law or regulation relating to the
protection of human health and safety, the environment or hazardous or
toxic substances or wastes, pollutants or contaminants ("ENVIRONMENTAL
LAWS"), any provisions of the Employee Retirement Income Security Act of
1974, as amended ("ERISA"), or any provisions of the Foreign Corrupt
Practices Act or the rules and regulations promulgated thereunder, except
for such violations which, singly or in the aggregate, would not have a
Material Adverse Effect.
(p) There are no costs or liabilities associated with Environmental
Laws (including, without limitation, any capital or operating expenditures
required for clean-up, closure of properties or compliance with
Environmental Laws or any Authorization, any related constraints on
operating activities and any potential liabilities to third parties) which
would, singly or in the aggregate, have a Material Adverse Effect.
(q) Each of the Company and its subsidiaries has such permits,
licenses, consents, exemptions, franchises, authorizations and other
approvals (each, an "AUTHORIZATION") of, and has made all filings with and
notices to, all governmental or
14
regulatory authorities and self-regulatory organizations and all courts and
other tribunals, including without limitation, under any applicable
Environmental Laws, as are necessary to own, lease, license and operate its
respective properties and to conduct its business, except where the failure
to have any such Authorization or to make any such filing or notice would
not, singly or in the aggregate, have a Material Adverse Effect. Each such
Authorization is valid and in full force and effect and each of the Company
and its subsidiaries is in compliance with all the terms and conditions
thereof and with the rules and regulations of the authorities and governing
bodies having jurisdiction with respect thereto; and no event has occurred
(including, without limitation, the receipt of any notice from any
authority or governing body) which allows or, after notice or lapse of time
or both, would allow, revocation, suspension or termination of any such
Authorization or results or, after notice or lapse of time or both, would
result in any other impairment of the rights of the holder of any such
Authorization; and such Authorizations contain no restrictions that are
burdensome to the Company or any of its subsidiaries; except where such
failure to be valid and in full force and effect or to be in compliance,
the occurrence of any such event or the presence of any such restriction
would not, singly or in the aggregate, have a Material Adverse Effect.
(r) The Company's accountants, Arthur Andersen LLP, that have
certified the financial statements and supporting schedules included in the
Preliminary Offering Memorandum and the Offering Memorandum are independent
public accountants with respect to the Company and the Guarantor, as
required by the Act and the Exchange Act. The historical financial
statements, together with related schedules and notes, set forth in the
Preliminary Offering Memorandum and the Offering Memorandum comply as to
form in all material respects with the requirements applicable to
registration statements on Form S-1 under the Act.
(s) The historical financial statements, together with related
schedules and notes forming part of the Offering Memorandum (and any
amendment or supplement thereto), present fairly the consolidated financial
position, results of operations and changes in financial position of the
Company and its subsidiaries on the basis stated in the Offering Memorandum
at the respective dates or for the respective periods to which they apply;
such statements and related schedules and notes have been prepared in
accordance with generally accepted accounting principles consistently
applied throughout the periods involved, except as disclosed therein; and
the other financial and statistical information and data set forth in the
Offering Memorandum (and any amendment or supplement thereto) are, in all
material respects, accurately presented and prepared on a basis consistent
with such financial statements and the books and records of the Company.
(t) The pro forma financial statements included in the Preliminary
Offering Memorandum and the Offering Memorandum have been prepared on a
basis consistent with the historical financial statements of the Company
and its subsidiaries and give effect to reasonable assumptions used in the
preparation thereof (as of the date of the Offering
15
Memorandum) and present fairly the historical and proposed transactions
contemplated by the Preliminary Offering Memorandum and the Offering
Memorandum; and such pro forma financial statements comply as to form in
all material respects with the requirements applicable to pro forma
financial statements included in registration statements on Form S-1 under
the Act. The other pro forma financial and statistical information and data
included in the Offering Memorandum are, in all material respects,
accurately presented and prepared on a basis consistent with the pro forma
financial statements.
(u) The Company is not and, after giving effect to the offering and
sale of the Series A Notes and the Recapitalization, will not be, an
"investment company," as such term is defined in the Investment Company Act
of 1940, as amended.
(v) There are no contracts, agreements or understandings between the
Company or the Guarantor and any person granting such person the right to
require the Company or the Guarantor to include any securities of the
Company with the Notes and Subsidiary Guarantee registered pursuant to any
Registration Statement.
(w) Neither the Company nor any of its subsidiaries nor any agent
thereof acting on the behalf of them has taken, and none of them will take,
any action that might cause this Agreement or the issuance or sale of the
Series A Notes to violate Regulation G (12 C.F.R. Part 207), Regulation T
(12 C.F.R. Part 220), Regulation U (12 C.F.R. Part 221) or Regulation X (12
C.F.R. Part 224) of the Board of Governors of the Federal Reserve System.
(x) No "nationally recognized statistical rating organization" as such
term is defined for purposes of Rule 436(g)(2) under the Act (i) has
imposed (or has informed the Company or the Guarantor that it is
considering imposing) any condition (financial or otherwise) on the
Company's or the Guarantor's retaining any rating assigned as of the date
hereof to the Company, the Guarantor or any securities of the Company or
the Guarantor or (ii) has indicated to the Company or the Guarantor that it
is considering the downgrading, suspension, or withdrawal of, or any review
for a possible change that does not indicate the direction of the possible
change in, any rating so assigned.
(y) Since the respective dates as of which information is given in the
Offering Memorandum other than as set forth in the Offering Memorandum
(exclusive of any amendments or supplements thereto subsequent to the date
of this Agreement), (i) there has not occurred any material adverse change
or any development involving a prospective material adverse change in the
condition, financial or otherwise, or the earnings, business, management or
operations of the Company and its subsidiaries, taken as a whole, (ii)
there has not been any material adverse change or any development involving
a prospective material adverse change in the capital stock or in the long-
term debt of the Company or
16
any of its subsidiaries and (iii) neither the Company nor any of its
subsidiaries has incurred any material liability or obligation, direct or
contingent.
(z) Each of the Preliminary Offering Memorandum and the Offering
Memorandum, as of its date, contains all the information specified in, and
meeting the requirements of, Rule 144A(d)(4) under the Act.
(aa) When the Series A Notes and the Subsidiary Guarantee are issued
and delivered pursuant to this Agreement, neither the Series A Notes nor
the Subsidiary Guarantee will be of the same class (within the meaning of
Rule 144A under the Act) as any security of the Company or the Guarantor
that is listed on a national securities exchange registered under Section 6
of the Exchange Act or that is quoted in a United States automated inter-
dealer quotation system.
(bb) No form of general solicitation or general advertising (as
defined in Regulation D under the Act) was used by the Company, the
Guarantor or any of their respective representatives (other than the
Initial Purchasers, as to whom the Company and the Guarantor make no
representation) in connection with the offer and sale of the Series A Notes
contemplated hereby, including, but not limited to, articles, notices or
other communications published in any newspaper, magazine, or similar
medium or broadcast over television or radio, or any seminar or meeting
whose attendees have been invited by any general solicitation or general
advertising. No securities of the same class as the Series A Notes have
been issued and sold by the Company within the six-month period immediately
prior to the date hereof.
(cc) Assuming the Notes are sold in the manner contemplated by this
Agreement, prior to the effectiveness of any Registration Statement, the
Indenture is not required to be qualified under the TIA.
(dd) None of the Company, the Guarantor nor any of their respective
affiliates or any person acting on its or their behalf (other than the
Initial Purchasers, as to whom the Company and the Guarantor make no
representation) has engaged or will engage in any directed selling efforts
within the meaning of Regulation S under the Act ("REGULATION S") with
respect to the Series A Notes or the Subsidiary Guarantee.
(ee) The sale of the Series A Notes pursuant to Regulation S is not
part of a plan or scheme to evade the registration provisions of the Act.
(ff) The Company, the Guarantor and their respective affiliates and
all persons acting on their behalf (other than the Initial Purchasers, as
to whom the Company and the Guarantor make no representation) have complied
with and will comply with the offering restrictions requirements of
Regulation S applicable to them in connection with the
17
offering of the Series A Notes outside the United States and, in connection
therewith, the Offering Memorandum will contain the disclosure required by
Rule 902(h).
(gg) No registration under the Act of the Series A Notes or the
Subsidiary Guarantee is required for the sale of the Series A Notes and the
Subsidiary Guarantee to the Initial Purchasers as contemplated hereby or
for the Exempt Resales assuming the accuracy of the Initial Purchasers'
representations and warranties and agreements set forth in Section 7
hereof.
(hh) Each certificate signed by any officer of the Company or the
Guarantor and delivered to the Initial Purchasers or counsel for the
Initial Purchasers shall be deemed to be a representation and warranty by
the Company or the Guarantor to the Initial Purchasers as to the matters
covered thereby.
(ii) The Company and its subsidiaries have good and marketable title
in fee simple to all real property and good and marketable title to all
personal property owned by them which is material to the business of the
Company and its subsidiaries, in each case free and clear of all Liens and
defects, except such as are described in the Offering Memorandum or such as
do not have a Material Adverse Effect; and any real property and buildings
held under lease by the Company and its subsidiaries are held by them under
valid, subsisting and enforceable leases with such exceptions as would not
have a Material Adverse Effect, in each case except as described in the
Offering Memorandum.
(jj) The Company and its subsidiaries own or possess all patents,
patent rights, licenses, inventions, copyrights, know-how (including trade
secrets and other unpatented and/or unpatentable proprietary or
confidential information, systems or procedures), trademarks, service marks
and trade names ("INTELLECTUAL PROPERTY") currently employed by them in
connection with the business now operated by them except where the failure
to own or possess or otherwise be able to acquire such intellectual
property would not, singly or in the aggregate, have a Material Adverse
Effect; and neither the Company nor any of its subsidiaries has received
any notice of infringement of or conflict with asserted rights of others
with respect to any of such intellectual property which, singly or in the
aggregate, if the subject of an unfavorable decision, ruling or finding,
would have a Material Adverse Effect.
(kk) Except as disclosed in the Offering Memorandum, no relationship,
direct or indirect, exists between or among the Company or any of its
subsidiaries on the one hand, and the directors, officers, stockholders,
customers or suppliers of the Company or any of its subsidiaries on the
other hand, which would be required by the Act to be described in the
Offering Memorandum if the Offering Memorandum were a prospectus included
in a registration statement on Form S-1 filed with the Commission.
18
(ll) There is no (i) significant unfair labor practice complaint,
grievance or arbitration proceeding pending or, to the Company's knowledge,
threatened against the Company or any of its subsidiaries before the
National Labor Relations Board or any state or local labor relations board,
(ii) strike, labor dispute, slowdown or stoppage pending or, to the
Company's knowledge, threatened against the Company or any of its
subsidiaries or (iii) union representation question existing with respect
to the employees of the Company or any of its subsidiaries, except in the
case of clauses (i), (ii) and (iii) for such actions which, singly or in
the aggregate, would not have a Material Adverse Effect. To the best
knowledge of the Company, no collective bargaining organizing activities
are taking place with respect to the Company or any of its subsidiaries.
(mm) The Company and each of its subsidiaries 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 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.
(nn) All material tax returns required to be filed by the Company and
each of its subsidiaries in any jurisdiction have been filed, other than
those filings being contested in good faith, and all material taxes,
including withholding taxes, penalties and interest, assessments, fees and
other charges due pursuant to such returns or pursuant to any assessment
received by the Company or any of its subsidiaries have been paid, other
than those being contested in good faith and for which adequate reserves
have been provided.
(oo) The indebtedness represented by the Series A Notes is being
incurred for proper purposes and in good faith and each of the Company and
the Guarantor will be on the Closing Date (after giving effect to the
application of the proceeds from the issuance of the Series A Notes)
solvent, and will have on the Closing Date (after giving effect to the
application of the proceeds from the issuance of the Series A Notes)
sufficient capital for carrying on their respective businesses and will be
on the Closing Date (after giving effect to the application of the proceeds
from the issuance of the Series A Notes) able to pay their respective debts
as they mature.
(pp) Upon consummation of the Recapitalization (including the issuance
of the Notes), the present fair salable value of the assets of the Company
and the Guarantor, taken as a whole, will exceed the amount that will be
required to be paid on or in respect of its existing debts and other
liabilities (including contingent liabilities) as they become absolute and
matured. The assets of the Company and the Guarantor, taken as a whole,
upon the issuance of the Notes, will not constitute unreasonably small
capital to carry out
19
their businesses as now conducted, including the capital needs of the
Company and the Guarantor, taking into account the projected capital
requirements and capital availability of the Company and the Guarantor.
Neither the Company nor the Guarantor (i) is entering into the
Recapitalization with the intent to hinder, delay or defraud any entity to
which it is or will in the Recapitalization become indebted or (ii) will
receive less than reasonably equivalent value in exchange for entering into
the Recapitalization.
The Company acknowledges that the Initial Purchasers and, for purposes
of the opinions to be delivered to the Initial Purchasers pursuant to Section 9
hereof, counsel to the Company and the Guarantor and counsel to the Initial
Purchasers will rely upon the accuracy and truth of the foregoing
representations and hereby consents to such reliance.
SECTION 7. INITIAL PURCHASER'S REPRESENTATIONS AND WARRANTIES. Each of
the Initial Purchasers, severally and not jointly, represents and warrants to
the Company and the Guarantor, and agrees that:
(a) Such Initial Purchaser is a QIB with such knowledge and experience
in financial and business matters as is necessary in order to evaluate the
merits and risks of an investment in the Series A Notes.
(b) Such Initial Purchaser (A) is not acquiring the Series A Notes
with a view to any distribution thereof or with any present intention of
offering or selling any of the Series A Notes in a transaction that would
violate the Act or the securities laws of any state of the United States or
any other applicable jurisdiction and (B) will be reoffering and reselling
the Series A Notes only to (x) QIBs in reliance on the exemption from the
registration requirements of the Act provided by Rule 144A and (y) in
offshore transactions in reliance upon Regulation S under the Act.
(c) Such Initial Purchaser agrees that no form of general solicitation
or general advertising (within the meaning of Regulation D under the Act)
has been or will be used by such Initial Purchaser or any of its
representatives in connection with the offer and sale of the Series A Notes
pursuant hereto, including, but not limited to, articles, notices or other
communications published in any newspaper, magazine or similar medium or
broadcast over television or radio, or any seminar or meeting whose
attendees have been invited by any general solicitation or general
advertising.
(d) Such Initial Purchaser agrees that, in connection with Exempt
Resales, such Initial Purchaser will solicit offers to buy the Series A
Notes only from, and will offer to sell the Series A Notes only to,
Eligible Purchasers. Each Initial Purchaser further agrees that it will
offer to sell the Series A Notes only to, and will solicit offers to buy
the Series A Notes only from (A) Eligible Purchasers that such Initial
Purchaser reasonably believes are QIBs and (B) Regulation S Purchasers, in
each case, that agree that (x) the Series A Notes purchased by them may be
resold, pledged or otherwise transferred within
20
the time period referred to under Rule 144(k) (taking into account the
provisions of Rule 144(d) under the Act, if applicable) under the Act, as
in effect on the date of the transfer of such Series A Notes, only (I) to
the Company or any of its subsidiaries, (II) to a person whom the seller
reasonably believes is a QIB purchasing for its own account or for the
account of a QIB in a transaction meeting the requirements of Rule 144A
under the Act, (III) in an offshore transaction (as defined in Rule 902
under the Act) meeting the requirements of Rule 904 of the Act, (IV) in a
transaction meeting the requirements of Rule 144 under the Act, (V) to an
Accredited Institution that, prior to such transfer, furnishes the Trustee
a signed letter containing certain representations and agreements relating
to the registration of transfer of such Series A Note (the form of which is
substantially the same as Exhibit A to the Indenture) and, if such transfer
---------
is in respect of an aggregate principal amount of Series A Notes less than
$250,000, an opinion of counsel acceptable to the Company that such
transfer is in compliance with the Act, (VI) in accordance with another
exemption from the registration requirements of the Act (and based upon an
opinion of counsel acceptable to the Company) or (VII) pursuant to an
effective registration statement and, in each case, in accordance with the
applicable securities laws of any state of the United States or any other
applicable jurisdiction and (y) they will deliver to each person to whom
such Series A Notes or an interest therein is transferred a notice
substantially to the effect of the foregoing.
(e) Such Initial Purchaser and its affiliates or any person acting on
its or their behalf have not engaged or will not engage in any directed
selling efforts within the meaning of Regulation S with respect to the
Series A Notes or the Subsidiary Guarantee (it being understood that the
Company may make sales to the Initial Purchasers and offers and sales in
reliance upon Rule 144A under the Act).
(f) The Series A Notes offered and sold by such Initial Purchaser
pursuant hereto in reliance on Regulation S have been and will be offered
and sold only in offshore transactions.
(g) The sale of the Series A Notes offered and sold by such Initial
Purchaser pursuant hereto in reliance on Regulation S is not part of a plan
or scheme to evade the registration provisions of the Act.
(h) Such Initial Purchaser agrees that it has not offered or sold and
will not offer or sell the Series A Notes in the United States or to, or
for the benefit or account of, a U.S. Person (other than a distributor), in
each case, as defined in Rule 902 under the Act (i) as part of its
distribution at any time and (ii) otherwise until 40 days after the later
of the commencement of the offering of the Series A Notes pursuant hereto
and the Closing Date, other than in accordance with Regulation S of the Act
or another exemption from the registration requirements of the Act. Such
Initial Purchaser agrees that, during such 40-day restricted period, it
will not cause any advertisement with respect to the Series A Notes
(including any "tombstone" advertisement) to be published in any newspaper
or
21
periodical or posted in any public place and will not issue any circular
relating to the Series A Notes, except such advertisements as permitted by
and include the statements required by Regulation S.
(i) Such Initial Purchaser agrees that, at or prior to confirmation of
a sale of Series A Notes by it to any distributor, dealer or person
receiving a selling concession, fee or other remuneration during the 40-day
restricted period referred to in Rule 903(c)(3) under the Act, it will send
to such distributor, dealer or person receiving a selling concession, fee
or other remuneration notice stating that such distributor, dealer or
person receiving a selling concession, fee or other remuneration is subject
to certain restrictions during such 40-day restricted period.
(j) Such Initial Purchaser agrees that the Series A Notes offered and
sold in reliance on Regulation S will be represented upon issuance by a
global security that may not be exchanged for definitive securities until
the expiration of the 40-day restricted period referred to in Rule
903(c)(3) of the Act and only upon certification of beneficial ownership of
such Series A Notes by non-U.S. persons or U.S. persons who purchased such
Series A Notes in transactions that were exempt from the registration
requirements of the Act.
Such Initial Purchaser acknowledges that the Company and the Guarantor and,
for purposes of the opinions to be delivered to each Initial Purchaser pursuant
to Section 9 hereof, counsel to the Company and the Guarantor and counsel to the
Initial Purchasers will rely upon the accuracy and truth of the foregoing
representations and such Initial Purchaser hereby consents to such reliance.
SECTION 8. INDEMNIFICATION. (a) The Company and the Guarantor
agree, jointly and severally, to indemnify and hold harmless the Initial
Purchasers, their respective directors and officers and each person, if any, who
controls such Initial Purchasers within the meaning of Section 15 of the Act or
Section 20 of the Exchange Act, from and against any and all losses, claims,
damages, liabilities and judgments (including, without limitation, any
reasonable legal or other expenses incurred in connection with investigating or
defending any matter, including any action, that could give rise to any such
losses, claims, damages, liabilities or judgments) caused by any untrue
statement or alleged untrue statement of a material fact contained in the
Offering Memorandum (or any amendment or supplement thereto), the Preliminary
Offering Memorandum or any Rule 144A Information provided by the Company or the
Guarantor to any holder or prospective purchaser of Series A Notes pursuant to
Section 5(h) or caused by any omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances in which they were made, not misleading,
except insofar as such losses, claims, damages, liabilities or judgments are
caused by any such untrue statement or omission or alleged untrue statement or
omission based upon information relating to an Initial Purchaser furnished in
writing to the Company by such Initial Purchaser; provided, however, that the
foregoing indemnity agreement with respect to any Preliminary
22
Offering Memorandum shall not inure to the benefit of any Initial Purchaser who
failed to deliver a Final Offering Memorandum, as then amended or supplemented,
(so long as the Final Offering Memorandum and any amendment or supplement
thereto was provided by the Company to the several Initial Purchasers in the
requisite quantity and on a timely basis to permit proper delivery on or prior
to the Closing Date) to the person asserting any losses, claims, damages,
liabilities or judgements caused by any untrue statement or alleged untrue
statement of a material fact contained in any Preliminary Offering Memorandum,
or caused by any omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading, if such material misstatement or omission or alleged material
misstatement or omission was cured in the Final Offering Memorandum, as so
amended or supplemented.
(b) Each of the Initial Purchasers agrees, severally and not jointly, to
indemnify and hold harmless the Company and the Guarantor, and their respective
directors and officers and each person, if any, who controls (within the meaning
of Section 15 of the Act or Section 20 of the Exchange Act) the Company or the
Guarantor, to the same extent as the foregoing indemnity from the Company and
the Guarantor to the Initial Purchasers but only with reference to information
relating to an Initial Purchaser furnished in writing to the Company by such
Initial Purchaser expressly for use in the Preliminary Offering Memorandum or
the Final Offering Memorandum.
(c) In case any action or proceeding shall be commenced involving any
person in respect of which indemnity may be sought pursuant to Section 8(a) or
8(b) (the "INDEMNIFIED PARTY"), the indemnified party shall promptly notify the
person against whom such indemnity may be sought (the "INDEMNIFYING PARTY") in
writing and the indemnifying party shall assume the defense of such action,
including the employment of counsel reasonably satisfactory to the indemnified
party and the payment of all fees and expenses of such counsel, as incurred
(except that in the case of any action in respect of which indemnity may be
sought pursuant to both Sections 8(a) and 8(b), the Initial Purchasers shall not
be required to assume the defense of such action pursuant to this Section 8(c),
but may employ separate counsel and participate in the defense thereof, but the
fees and expenses of such counsel, except as provided below, shall be at the
expense of the Initial Purchasers). Any indemnified party shall have the right
to employ separate counsel in any such action and participate in the defense
thereof, but the fees and expenses of such counsel shall be at the expense of
the indemnified party unless (i) the employment of such counsel shall have been
specifically authorized in writing by the indemnifying party, (ii) the
indemnifying party shall have failed to assume the defense of such action or
employ counsel reasonably satisfactory to the indemnified party or (iii) the
named parties to any such action (including any impleaded parties) include both
the indemnified party and the indemnifying party, and the indemnified party
shall have been advised by such counsel that either (i) there may be one or more
legal defenses available to it which are different from or additional to those
available to the indemnifying party or (ii) a conflict may exist between such
indemnifying party and the indemnified party (in which case the indemnifying
party shall not have the right to assume the defense of such action on behalf of
the indemnified party). In any such case, the indemnifying party shall not, in
connection with any one action or separate but substantially similar or related
actions in the same jurisdiction arising out of the same general allegations or
circumstances, be
23
liable for the fees and expenses of more than one separate firm of attorneys (in
addition to any local counsel) for all indemnified parties and all such fees and
expenses shall be reimbursed as they are incurred. Such firm shall be designated
in writing by Donaldson, Lufkin & Jenrette Securities Corporation, in the case
of the parties indemnified pursuant to Section 8(a), and by the Company, in the
case of parties indemnified pursuant to Section 8(b). The indemnifying party
shall indemnify and hold harmless the indemnified party from and against any and
all losses, claims, damages, liabilities and judgments by reason of any
settlement of any action (i) effected with its written consent or (ii) effected
without its written consent if the settlement is entered into more than twenty
business days after the indemnifying party shall have received a request from
the indemnified party for reimbursement for the reasonable fees and expenses of
counsel (in any case where such fees and expenses are at the expense of the
indemnifying party) and, prior to the date of such settlement, the indemnifying
party shall have failed to comply with such reimbursement request. No
indemnifying party shall, without the prior written consent of the indemnified
party, effect any settlement or compromise of, or consent to the entry of
judgment with respect to, any pending or threatened action in respect of which
the indemnified party is or could have been a party and indemnity or
contribution may be or could have been sought hereunder by the indemnified
party, unless such settlement, compromise or judgment (i) includes an
unconditional release of the indemnified party from all liability on claims that
are or could have been the subject matter of such action and (ii) does not
include a statement as to or an admission of fault, culpability or a failure to
act, by or on behalf of the indemnified party.
(d) To the extent the indemnification provided for in this Section 8 is
unavailable to an indemnified party or insufficient in respect of any losses,
claims, damages, liabilities or judgments referred to therein (except as
provided in Section 8(a)), then each indemnifying party, in lieu of indemnifying
such indemnified party, shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, claims, damages, liabilities and
judgments (i) in such proportion as is appropriate to reflect the relative
benefits received by the Company and the Guarantor, on the one hand, and the
Initial Purchasers, on the other hand, from the offering of the Series A Notes
or (ii) if the allocation provided by clause 8(d)(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 8(d)(i) above but also the relative
fault of the Company and the Guarantor, on the one hand, and the Initial
Purchasers, on the other hand, in connection with the statements or omissions
which resulted in such losses, claims, damages, liabilities or judgments, as
well as any other relevant equitable considerations. The relative benefits
received by the Company and the Guarantor, on the one hand, and the Initial
Purchasers, on the other hand, shall be deemed to be in the same proportion as
the total net proceeds from the offering of the Series A Notes (after
underwriting discounts and commissions, but before deducting expenses) received
by the Company, and the total discounts and commissions received by the Initial
Purchasers, bear to the total price to investors of the Series A Notes, in each
case as set forth in the table on the cover page of the Offering Memorandum.
The relative fault of the Company and the Guarantor, on the one hand, and the
Initial Purchasers, on the other hand, shall be determined by reference to,
among other things, whether the untrue or alleged untrue statement of a material
fact or the omission or alleged omission to state a material fact relates to
information supplied by the
24
Company or the Guarantor, on the one hand, or the Initial Purchasers, on the
other hand, and the parties' relative intent, knowledge, access to information
and opportunity to correct or prevent such statement or omission.
The Company and the Guarantor, and the Initial Purchasers agree that it
would not be just and equitable if contribution pursuant to this Section 8(d)
were determined by pro rata allocation (even if the Initial Purchasers were
treated as one entity for such purpose) or by any other method of allocation
which does not take account of the equitable considerations referred to in the
immediately preceding paragraph. The amount paid or payable by an indemnified
party as a result of the losses, claims, damages, liabilities or judgments
referred to in the immediately preceding paragraph shall be deemed to include,
subject to the limitations set forth above, any legal or other expenses incurred
by such indemnified party in connection with investigating or defending any
matter, including any action, that could have given rise to such losses, claims,
damages, liabilities or judgments. Notwithstanding the provisions of this
Section 8, the Initial Purchasers shall not be required to contribute any amount
in excess of the amount by which the total discounts and commissions received by
such Initial Purchasers exceeds the amount of any damages which the Initial
Purchasers have otherwise been required to pay by reason of such 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 Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. The Initial Purchasers' obligations to contribute
pursuant to this Section 8(d) are several in proportion to the respective
principal amount of Series A Notes purchased by each of the Initial Purchasers
hereunder and not joint.
(e) The remedies provided for in this Section 8 are not exclusive and shall
not limit any rights or remedies which may otherwise be available to any
indemnified party at law or in equity.
SECTION 9. CONDITIONS OF INITIAL PURCHASERS' OBLIGATIONS. The obligations
of the Initial Purchasers to purchase the Series A Notes under this Agreement
are subject to the satisfaction of each of the following conditions:
(a) All the representations and warranties of the Company and the
Guarantor contained in this Agreement shall be true and correct on the
Closing Date with the same force and effect as if made on and as of the
Closing Date.
(b) On or after the date hereof, (i) there shall not have occurred any
downgrading, suspension or withdrawal of, nor shall any notice have been
given of any potential or intended downgrading, suspension or withdrawal
of, or of any review (or of any potential or intended review) for a
possible change that does not indicate the direction of the possible change
in, any rating of the Company or the Guarantor or any securities of the
Company or the Guarantor (including, without limitation, the placing of any
of the foregoing ratings on credit watch with negative or developing
implications or under review with an uncertain direction) by any
"nationally recognized statistical rating organization" as such term is
defined for purposes of Rule 436(g)(2) under the Act, (ii) there shall not
25
have occurred any adverse change, nor shall notice have been given of any
potential or intended adverse change, in the outlook for any rating of the
Company or the Guarantor or any securities of the Company or the Guarantor
by any such rating organization and (iii) no such rating organization shall
have given notice that it has assigned (or is considering assigning) a
lower rating to the Notes than that on which the Notes were marketed.
(c) Since the respective dates as of which information is given in the
Offering Memorandum other than as set forth in the Offering Memorandum
(exclusive of any amendments or supplements thereto subsequent to the date
of this Agreement), (i) there shall not have occurred any change or any
development involving a prospective change in the condition, financial or
otherwise, or the earnings, business, management or operations of the
Company and its subsidiaries, taken as a whole, (ii) there shall not have
been any change or any development involving a prospective change in the
capital stock or in the long-term debt of the Company or any of its
subsidiaries and (iii) neither the Company nor any of its subsidiaries
shall have incurred any liability or obligation, direct or contingent, the
effect of which, in any such case described in clause 9(c)(i), 9(c)(ii) or
9(c)(iii), in your judgment, is material and adverse and, in your judgment,
makes it impracticable to market the Series A Notes on the terms and in the
manner contemplated in the Offering Memorandum.
(d) You shall have received on the Closing Date a certificate dated
the Closing Date, signed by the President and Chief Executive Officer and
the Senior Vice President and Chief Financial Officer of the Company,
confirming the matters set forth in Sections 6(y), 9(a) and 9(b) and
stating that each of the Company and the Guarantor has complied with all
the agreements and satisfied all of the conditions herein contained and
required to be complied with or satisfied on or prior to the Closing Date.
(e) You shall have received on the Closing Date an opinion
(satisfactory to you and counsel for the Initial Purchasers), dated the
Closing Date, of Riordan & McKinzie, a Professional Corporation, special
counsel for the Company and the Guarantor, to the effect that:
(i) the statements under the captions "Description of the New
Credit Facility," "Description of Notes," "Description of Holding
Indebtedness" and "Certain Federal Income Tax Considerations" in the
Offering Memorandum, insofar as such statements constitute a summary
of the legal matters, documents or proceedings referred to therein,
fairly present in all material respects such legal matters, documents
and proceedings;
(ii) the execution, delivery and performance of this Agreement
and the other Operative Documents by the Company and the Guarantor,
the compliance by the Company and the Guarantor with all provisions
hereof and thereof and the consummation of the transactions
contemplated hereby and thereby will not
26
(A) require any consent, approval, authorization or other order of, or
qualification with, any court or governmental body or agency (except
such as have been obtained or may be required under the securities or
Blue Sky laws of the various states, and, with respect to the
Registration Rights Agreement, the Securities Act and the TIA), (B)
conflict with or constitute a breach of any of the terms or provisions
of, or a default under, the charter or by-laws of the Company or any
of its subsidiaries, (C) violate or conflict with any applicable law
or any rule or regulation or (D) violate or conflict with any
judgment, order or decree of any court or any governmental body or
agency having jurisdiction over the Company, any of its subsidiaries
or their respective property which has been identified to such counsel
by the Company on an officer's certificate, except for such matters
listed in clauses (A), (C) or (D) above that would not have a Material
Adverse Effect;
(iii) except as set forth in the Offering Memorandum, such
counsel does not know of any legal or governmental proceedings pending
or threatened to which the Company or any of its subsidiaries is a
party or to which any of their respective property is subject, which
would reasonably be expected to result, singly or in the aggregate, in
a Material Adverse Effect;
(iv) the Company is not and, after giving effect to the
offering and sale of the Series A Notes and the application of the net
proceeds thereof as described in the Offering Memorandum, will not be,
an "investment company" as such term is defined in the Investment
Company Act of 1940, as amended; and
(v) the Indenture complies as to form in all material respects
with the requirements of the TIA, and the rules and regulations of the
Commission applicable to an indenture which is qualified thereunder.
Assuming the accuracy of the representations and warranties of the
Company and the Guarantor contained in paragraphs (dd) through (ff) of
Section 6, and the Initial Purchasers' representations and warranties
contained in Section 7 of this Agreement, and assuming compliance by
the Company with the covenants of the Company contained in Section 5
and by the Initial Purchasers with the agreements contained in Section
7 of this Agreement, and further assuming that each Initial Purchaser
is a QIB or a Regulation S Purchaser, the issuance and sale of the
Series A Notes to the Initial Purchasers and the offering, resale and
delivery of the Series A Notes by the Initial Purchasers, in each case
in the manner contemplated in the Offering Memorandum, are exempt from
the registration requirements of the Securities Act and it is not
necessary to qualify the Indenture under the TIA.
In addition, Riordan & McKinzie shall state that although such counsel has
not undertaken to investigate or verify independently, and is not passing upon
and does not assume any responsibility for the accuracy, completeness or
fairness of the statements contained in the Offering Memorandum (except as set
forth in clause (i) above), during the course of such
27
counsel's participation in conferences with officers and other representatives
of the Company and the Guarantor, representatives of the independent public
accountants for the Company and the Guarantor and the Initial Purchasers, at
which the contents of the Offering Memorandum were discussed, no facts have come
to the attention of such counsel which cause it to believe that (except for
financial statements, notes thereto, financial statements schedules and other
financial data included therein as to which such counsel need not express any
belief) the Offering Memorandum, as of the date thereof and as of the date
hereof, contained an untrue statement of a material fact or omitted to state a
material fact necessary in order to make the statements therein, in the light of
the circumstances under which they were made, not misleading (relying as to
materiality to the extent such counsel deems appropriate upon the statements of
officers and other representatives of the Company and the Guarantor).
The opinion of Riordan & McKinzie, a Professional Corporation, described in
Section 9(e) above shall be rendered to you at the request of the Company and
the Guarantor and shall so state therein. In rendering such opinion, Riordan &
McKinzie shall have received and may rely upon one or more opinions of local
counsel reasonably acceptable to the Initial Purchasers, as they may reasonably
request to pass upon such matters.
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
and other representatives of the Company, certificates of public officials, and
certificates or other written statements of officers of departments of various
jurisdictions having custody of documents respecting the corporate existence or
good standing of the Company and the Guarantor provided that copies of any such
statements or certificates shall be delivered or otherwise made available to
counsel for the Initial Purchasers. In addition, such counsel shall not be
required to express any opinion as to the enforceability, binding nature or
validity of any provision in this Agreement, the Indenture or the Registration
Rights Agreement regarding rights of indemnification or contribution.
(f) You shall have received on the Closing Date an opinion
(satisfactory to you and counsel for the Initial Purchasers), dated the
Closing Date, of Flippin, Densmore, Morse, Rutherford & Jesse, special
counsel for the Company and the Guarantor, to the effect that:
(i) each of the Company and the Guarantor has been duly
incorporated, is validly existing as a corporation in good standing
under the laws of its jurisdiction of incorporation and has the
corporate power and authority to carry on its business and to own,
lease and operate its properties as described in the Offering
Memorandum;
(ii) all the outstanding shares of capital stock of the Company
have been duly authorized and validly issued and are fully paid, non-
assessable and, except as described in the Offering Memorandum, not
subject to any preemptive or similar rights;
28
(iii) all of the outstanding shares of capital stock of the
Guarantor have been duly authorized and validly issued and are fully
paid and non-assessable, and are owned by the Company, free and clear
of any Lien other than the pledge of the shares of the Guarantor to
secure the obligations of the Company under the New Credit Facility;
(iv) the Series A Notes have been duly authorized;
(v) the Subsidiary Guarantee has been duly authorized;
(vi) the Indenture has been duly authorized, executed and
delivered by the Company and the Guarantor;
(vii) this Agreement has been duly authorized, executed and
delivered by the Company and the Guarantor;
(viii) The Registration Rights Agreement has been duly
authorized, executed and delivered by the Company and the Guarantor;
(ix) the Series B Notes have been duly authorized; and
(x) the execution, delivery and performance of this Agreement
and the other Operative Documents by the Company and the Guarantor,
the compliance by the Company and the Guarantor with all provisions
hereof and thereof and the consummation of the transactions
contemplated hereby and thereby will not (A) require any consent,
approval, authorization or other order of, or qualification with, any
court or governmental body or agency (except such as have been
obtained or may be required under the securities or Blue Sky laws of
the various states, and, with respect to the Registration Rights
Agreement, the Securities Act and the TIA), (B) conflict with or
constitute a breach of any of the terms or provisions of, or a default
under, the charter or by-laws of the Company or any of its
subsidiaries or any indenture, loan agreement, mortgage, lease or
other agreement or instrument that is material to the Company and its
subsidiaries, taken as a whole, to which the Company or any of its
subsidiaries is a party or by which the Company or any of its
subsidiaries or their respective property is bound which has been
identified to such counsel by the Company on an officer's certificate,
(C) violate or conflict with any applicable law or any rule or
regulation, (D) violate or conflict with any judgment, order or decree
of any court or any governmental body or agency having jurisdiction
over the Company, any of its subsidiaries or their respective property
which has been identified to such counsel by the Company on an
officer's certificate, or (E) result in the imposition or creation of
(or the obligation to create or impose) a Lien under, any agreement or
instrument to which the Company or any of its subsidiaries is a party
or by which the Company or any
29
of its subsidiaries or their respective property is bound which has
been identified to such counsel by the Company on an officer's
certificate, except for such matters listed above that would not,
singly or in the aggregate, have a Material Adverse Effect.
The opinion of Flippin, Densmore, Morse, Rutherford & Jesse described in
Section 9(f) above shall be rendered to you at the request of the Company and
the Guarantor and shall so state therein.
(g) You shall have received on the Closing Date an opinion
(satisfactory to you and counsel for the Initial Purchasers), dated the
Closing Date, of Richards & O'Neil LLP, special counsel for the Company and
the Guarantor, to the effect that:
(i) the Series A Notes, when executed and authenticated in
accordance with the provisions of the Indenture and delivered to and
paid for by the Initial Purchasers in accordance with the terms of
this Agreement, will be entitled to the benefits of the Indenture and
will be valid and binding obligations of the Company, enforceable in
accordance with their terms except as the enforceability thereof may
be limited by (i) bankruptcy, insolvency, reorganization, fraudulent
conveyance, moratorium or similar laws affecting creditors' rights
generally and (ii) general principles of equity and the discretion of
the court before which any proceeding therefor may be brought
(regardless whether such enforcement is considered in a proceeding at
law or in equity);
(ii) when the Series A Notes are executed and authenticated in
accordance with the provisions of the Indenture and delivered to and
paid for by the Initial Purchasers in accordance with the terms of
this Agreement, the Subsidiary Guarantee endorsed thereon will be
entitled to the benefits of the Indenture and will be valid and
binding obligations of the Guarantor, enforceable in accordance with
their terms except as the enforceability thereof may be limited by (i)
bankruptcy, insolvency, reorganization, fraudulent conveyance,
moratorium or similar laws affecting creditors' rights generally and
(ii) general principles of equity and the discretion of the court
before which any proceeding therefor may be brought (regardless
whether such enforcement is considered in a proceeding at law or in
equity);
(iii) the Indenture is a valid and binding agreement of the
Company and the Guarantor, enforceable against the Company and the
Guarantor in accordance with its terms except as the enforceability
thereof may be limited by (i) bankruptcy, insolvency, reorganization,
fraudulent conveyance, moratorium or similar laws affecting creditors'
rights generally and (ii) general principles of equity and the
discretion of the court before which any proceeding therefor may be
brought
30
(regardless whether such enforcement is considered in a proceeding at
law or in equity);
(iv) the Registration Rights Agreement is a valid and binding
agreement of the Company and the Guarantor, enforceable against the
Company and the Guarantor in accordance with its terms, except as the
enforceability thereof may be limited by (i) bankruptcy, insolvency,
reorganization, fraudulent conveyance, moratorium or similar laws
affecting creditors' rights generally and (ii) general principles of
equity and the discretion of the court before which any proceeding
therefor may be brought (regardless whether such enforcement is
considered in a proceeding at law or in equity).
The opinion of Richards & O'Neil LLP described in Section 9(g) above shall
be rendered to you at the request of the Company and the Guarantor and shall so
state therein.
(h) The Initial Purchasers shall have received on the Closing Date an
opinion, dated the Closing Date, of King & Spalding, counsel for the
Initial Purchasers, in form and substance reasonably satisfactory to the
Initial Purchasers.
(i) The Initial Purchasers shall have received, at the time this
Agreement is executed and at the Closing Date, letters dated the date
hereof or the Closing Date (in the latter case constituting an affirmation
of the statements set forth in the former, based on limited procedures), as
the case may be, in form and substance satisfactory to the Initial
Purchasers from Arthur Andersen LLP, independent public accountants,
containing the information and statements of the type ordinarily included
in accountants' "comfort letters" to the Initial Purchasers with respect to
the financial statements and certain financial information contained in the
Offering Memorandum.
(j) The Series A Notes shall have been approved by the NASD for
trading and duly listed in PORTAL.
(k) The Initial Purchasers shall have received a counterpart,
conformed as executed, of the Indenture which shall have been entered into
by the Company, the Guarantor and the Trustee.
(l) The Company and the Guarantor shall have executed the Registration
Rights Agreement and the Initial Purchasers shall have received an original
copy thereof, duly executed by the Company and the Guarantor.
(m) The Equity Investment shall have been consummated as described in
the Preliminary Offering Memorandum and the Offering Memorandum.
31
(n) Each condition to closing contemplated by the purchase agreement
relating to the Senior Discount Debenture Offering by Holding (other than
the issuance and sale of the Series A Notes pursuant hereto) shall have
been satisfied or waived. On the Closing Date, the closing under the
purchase agreement relating to the Senior Discount Debenture Offering by
Holding shall have been consummated on terms that conform in all material
respects to the description thereof in the Offering Memorandum.
(o) Each condition to closing contemplated by the New Credit Facility
(other than the issuance and sale of the Series A Notes pursuant hereto)
shall have been satisfied or waived. There shall exist at and as of the
Closing Date (after giving effect to the transactions contemplated by this
Agreement and the other Operative Documents) no conditions that would
constitute a default (or an event that with notice or the lapse of time, or
both, would constitute a default) under the New Credit Facility. On the
Closing Date, the closing under the New Credit Facility shall have been
consummated on terms that conform in all material respects to the
description thereof in the Offering Memorandum and the Initial Purchasers
shall have received evidence satisfactory to it of the consummation
thereof.
(p) Each condition to closing contemplated by each of the other
Operative Documents (other than the issuance and sale of the Series A Notes
pursuant hereto) shall have been satisfied or waived. There shall exist at
and as of the Closing Date (after giving effect to the transactions
contemplated by this Agreement and the other Operative Documents) no
conditions that would constitute a default (or an event that with notice or
the lapse of time, or both, would constitute a default), breach or
violation of any of the Operative Documents. On the Closing Date, each of
the Operative Documents shall have been entered into on terms that conform
in all material respects to the description thereof in the Offering
Memorandum and the Initial Purchasers shall have received evidence
satisfactory to it of the execution thereof and the consummation of the
transactions contemplated thereby.
(q) Each condition to closing contemplated by the Merger Agreement
shall have been satisfied or waived. There shall exist at and as of the
Closing Date no conditions that would constitute a default (or an event
that with notice or the lapse of time, or both, would constitute a default)
under the Merger Agreement. On the Closing Date, the Merger shall have
been consummated on terms that conform in all material respects to the
description thereof in the Offering Memorandum and the Initial Purchasers
shall have received evidence satisfactory to it of the consummation
thereof.
(r) On the Closing Date, all existing funded indebtedness of Holding
and the Company will be prepaid in full and the Initial Purchasers shall
have received evidence of such repayment.
32
(s) The Company shall not have failed at or prior to the Closing Date
to perform or comply with any of the agreements herein contained and
required to be performed or complied with by the Company at or prior to the
Closing Date.
SECTION 10. EFFECTIVENESS OF AGREEMENT AND TERMINATION. This Agreement
shall become effective upon the execution and delivery of this Agreement by the
parties hereto.
This Agreement may be terminated at any time on or prior to the Closing
Date by the Initial Purchasers by written notice to the Company if any of the
following has occurred: (i) any outbreak or escalation of hostilities involving
the United States or other national or international calamity or crisis
involving the United States or change in economic conditions or in the financial
markets of the United States or elsewhere that, in the Initial Purchasers'
judgment, is material and adverse and, in the Initial Purchasers' judgment,
makes it impracticable to market the Series A Notes on the terms and in the
manner contemplated in the Offering Memorandum, (ii) the suspension or material
limitation of trading in securities on the New York Stock Exchange, the American
Stock Exchange or the Nasdaq National Market or limitation on prices for
securities or other instruments on any such exchange or the Nasdaq National
Market, (iii) the suspension of trading of any securities of the Company or the
Guarantor on any exchange or in the over-the-counter market, (iv) the enactment,
publication, decree or other promulgation of any federal or state statute,
regulation, rule or order of any court or other governmental authority which in
your opinion materially and adversely affects, or will materially and adversely
affect, the business, prospects, financial condition or results of operations of
the Company and its subsidiaries, taken as a whole, (v) the declaration of a
banking moratorium by either federal or New York State authorities or (vi) the
taking of any action by any federal, state or local government or agency in
respect of its monetary or fiscal affairs which in your opinion has a material
adverse effect on the financial markets in the United States and would, in the
Initial Purchasers' judgment, make it impracticable to market the Series A Notes
on the terms and in the manner contemplated.
If on the Closing Date any one or more of the Initial Purchasers shall fail
or refuse to purchase the Series A Notes which it or they have agreed to
purchase hereunder on such date and the aggregate principal amount of the Series
A Notes which such defaulting Initial Purchaser or Initial Purchasers, as the
case may be, agreed but failed or refused to purchase is not more than one-tenth
of the aggregate principal amount of the Series A Notes to be purchased on such
date by all Initial Purchasers, each non-defaulting Initial Purchaser shall be
obligated severally, in the proportion which the principal amount of the Series
A Notes set forth opposite its name in Schedule C bears to the aggregate
----------
principal amount of the Series A Notes which all the non-defaulting Initial
Purchasers, as the case may be, have agreed to purchase, or in such other
proportion as you may specify, to purchase the Series A Notes which such
defaulting Initial Purchaser or Initial Purchasers, as the case may be, agreed
but failed or refused to purchase on such date; provided that in no event shall
the aggregate principal amount of the Series A Notes which any Initial Purchaser
has agreed to purchase pursuant to Section 2 hereof be increased pursuant to
this Section 10 by an amount in excess of one-ninth of such principal amount of
the Series A Notes without the written consent of such Initial Purchaser. If on
the Closing Date any
33
Initial Purchaser or Initial Purchasers shall fail or refuse to purchase the
Series A Notes and the aggregate principal amount of the Series A Notes with
respect to which such default occurs is more than one-tenth of the aggregate
principal amount of the Series A Notes to be purchased by all Initial Purchasers
and arrangements satisfactory to the Initial Purchasers and the Company for
purchase of such Series A Notes are not made within 48 hours after such default,
this Agreement will terminate without liability on the part of any non-
defaulting Initial Purchaser and the Company. In any such case which does not
result in termination of this Agreement, either you or the Company shall have
the right to postpone the Closing Date, but in no event for longer than seven
days, in order that the required changes, if any, in the Offering Memorandum or
any other documents or arrangements may be effected. Any action taken under this
paragraph shall not relieve any defaulting Initial Purchaser from liability in
respect of any default of any such Initial Purchaser under this Agreement.
SECTION 11. MISCELLANEOUS. Notices given pursuant to any provision of
this Agreement shall be addressed as follows: (i) if to the Company or the
Guarantor, to Advance Stores Company, Incorporated, 5673 Airport Road, Roanoke,
Virginia 24012, Attention: Chief Financial Officer and (ii) if to the Initial
Purchasers, to Donaldson, Lufkin & Jenrette Securities Corporation, 277 Park
Avenue, New York, New York 10172, Attention: Syndicate Department, or in any
case to such other address as the person to be notified may have requested in
writing.
The respective indemnities, contribution agreements, representations,
warranties and other statements of the Company, the Guarantor and the Initial
Purchasers set forth in or made pursuant to this Agreement shall remain
operative and in full force and effect, and will survive delivery of and payment
for the Series A Notes, regardless of (i) any investigation, or statement as to
the results thereof, made by or on behalf of the Initial Purchasers, the
officers or directors of each of the Initial Purchasers, any person controlling
the Initial Purchasers, the Company, the Guarantor, the officers or directors of
the Company or the Guarantor, or any person controlling the Company or the
Guarantor, (ii) acceptance of the Series A Notes and payment for them hereunder
and (iii) termination of this Agreement.
If this Agreement shall be terminated by the Initial Purchasers because of
the failure or refusal on the part of the Company or the Guarantor to comply
with the terms or to fulfill any of the conditions of this Agreement (other than
as a result of any termination of this Agreement pursuant to Section 10), the
Company and the Guarantor, jointly and severally, agree to reimburse the Initial
Purchasers for all out-of-pocket expenses (including the fees and disbursements
of counsel) incurred by them. Notwithstanding any termination of this
Agreement, the Company shall be liable for all expenses which it has agreed to
pay pursuant to Section 5(i) hereof.
Except as otherwise provided, this Agreement has been and is made solely
for the benefit of and shall be binding upon the Company, the Guarantor, the
Initial Purchasers, the Initial Purchasers' directors and officers, any
controlling persons referred to herein, the directors of the Company and the
Guarantor and their respective successors and assigns, all as and to the extent
provided in this Agreement, and no other person shall acquire or have any right
under or by virtue
34
of this Agreement. The term "successors and assigns" shall not include a
purchaser of any of the Series A Notes from the Initial Purchasers merely
because of such purchase.
This Agreement shall be governed and construed in accordance with the laws
of the State of New York.
This Agreement may be signed in various counterparts which together shall
constitute one and the same instrument.
Please confirm that the foregoing correctly sets forth the agreement among
the Company, the Guarantor and the Initial Purchasers.
Very truly yours,
ADVANCE STORES COMPANY,
INCORPORATED
By: /s/ J. O'Neil Leftwich
_________________________________________
Name: J. O'Neil Leftwich
Title: Senior Vice President and Chief
Financial Officer, Secretary and
Treasurer
LARALEV, INC.
By: /s/ Andrew T. Panaccione
_________________________________________
Name: Andrew T. Panaccione
Title: Secretary
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
By: /s/ William S. Oglesby
____________________________
Name: William S. Oglesby
Title: Managing Director
CHASE SECURITIES INC.
By: /s/ Jeffrey Blumin
_____________________________
Name: Jeffrey Blumin
Title: Vice President