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Exhibit 1.1
$175,000,000
PREMIUM STANDARD FARMS, INC.
9-1/4% SENIOR NOTES DUE 2011
PLACEMENT AGREEMENT
June 4, 2001
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June 4, 2001
Morgan Stanley & Co. Incorporated
J.P. Morgan Securities Inc.
c/o Morgan Stanley & Co. Incorporated
1585 Broadway
New York, New York 10036
Dear Sirs and Mesdames:
Premium Standard Farms, Inc., a Delaware corporation (the
"COMPANY"), proposes to issue and sell to the several purchasers named in
Schedule I hereto (the "PLACEMENT AGENTS") $175,000,000 principal amount of its
9-1/4% Senior Notes due 2011 (the "SECURITIES") to be issued pursuant to the
provisions of an Indenture to be dated as of June 7, 2001 (the "INDENTURE")
among the Company, PSF Group Holdings, Inc. ("PSF HOLDINGS"), the subsidiaries
of the Company listed in Schedule II hereto (the "SUBSIDIARY GUARANTORS", and
together with PSF Holdings, the "GUARANTORS") and Wilmington Trust Company, as
Trustee (the "TRUSTEE"). The obligations of the Company under the Securities and
the Indenture will be unconditionally guaranteed on a senior unsecured basis by
the Guarantors pursuant to the terms of the Indenture (the "GUARANTEES").
The Securities will be offered without being registered under
the Securities Act of 1933, as amended (the "SECURITIES ACT"), to qualified
institutional buyers in compliance with the exemption from registration provided
by Rule 144A under the Securities Act and in offshore transactions in reliance
on Regulation S under the Securities Act ("REGULATION S").
The Placement Agents and their direct and indirect transferees
will be entitled to the benefits of a Registration Rights Agreement dated the
date hereof among the Company, the Guarantors and the Placement Agents (the
"REGISTRATION RIGHTS AGREEMENT").
In connection with the sale of the Securities, the Company has
prepared a preliminary offering memorandum (the "PRELIMINARY MEMORANDUM") and
will prepare a final offering memorandum (the "FINAL MEMORANDUM" and, with the
Preliminary Memorandum, each a "MEMORANDUM") including a description of the
terms of the Securities and the Guarantees, the terms of the offering and a
description of the Company and the Guarantors.
1. Representations and Warranties. The Company and the
Guarantors, jointly and severally, represent and warrant to, and agree with, you
that:
(a) The Preliminary Memorandum does not contain and the Final
Memorandum, in the form used by the Placement Agents to confirm sales and on the
Closing Date (as defined in Section 4), will not contain any untrue statement of
a material fact or omit to state a material fact necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading, except that the representations and warranties set
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forth in this paragraph do not apply to statements or omissions in either
Memorandum based upon information relating to any Placement Agent furnished to
the Company in writing by such Placement Agent through you expressly for use
therein.
(b) The Company has been duly incorporated, is validly
existing as a corporation in good standing under the laws of the jurisdiction of
its incorporation, has the corporate power and authority to own its property and
to conduct its business as described in each Memorandum and is duly qualified to
transact business and is in good standing in each jurisdiction in which the
conduct of its business or its ownership or leasing of property requires such
qualification, except to the extent that the failure to be so qualified or be in
good standing would not have a material adverse effect on the Company and its
subsidiaries, taken as a whole.
(c) PSF Holdings has been duly incorporated, is validly
existing as a corporation in good standing under the laws of the jurisdiction of
its incorporation, has the corporate power and authority to own its property and
to conduct its business as described in each Memorandum and is duly qualified to
transact business and is in good standing in each jurisdiction in which the
conduct of its business or its ownership or leasing of property requires such
qualification, except to the extent that the failure to be so qualified or be in
good standing would not have a material adverse effect on it; all of the issued
shares of capital stock of the Company have been duly and validly authorized and
issued, are fully paid and non-assessable and are owned directly by PSF
Holdings, free and clear of all liens, encumbrances, equities or claims, except
for the lien and security interest (the "PIK NOTE LIEN") of the trustee under
the Indenture dated September 17, 1996 among the Company, PSF Holdings and Fleet
National Bank relating to the 11% Senior Secured Notes (Partial Pay-In-Kind),
due September 17, 2003 (the "PIK NOTES"), as subsequently amended and
supplemented (the "PIK NOTE INDENTURE"), and the security documents described
therein (collectively the "PIK NOTE AGREEMENTS").
(d) Each subsidiary of the Company has been duly incorporated,
is validly existing as a corporation in good standing under the laws of the
jurisdiction of its incorporation, has the corporate power and authority to own
its property and to conduct its business as described in each Memorandum and is
duly qualified to transact business and is in good standing in each jurisdiction
in which the conduct of its business or its ownership or leasing of property
requires such qualification, except to the extent that the failure to be so
qualified or be in good standing would not have a material adverse effect on the
Company and its subsidiaries, taken as a whole; each subsidiary of the Company
and the percentage of capital stock of each such subsidiary owned by the Company
is set forth on Schedule III hereto and all of the issued shares of capital
stock of each subsidiary of the Company owned by the Company have been duly and
validly authorized and issued, are fully paid and non-assessable and are owned
directly or indirectly by the Company, free and clear of all liens,
encumbrances, equities or claims, except for the PIK Note Lien with respect to
the shares of capital stock of The Lundy Packing Company, Premium Standard Farms
of North Carolina, Inc., and Lundy International, Inc.
(e) This Agreement has been duly authorized, executed and
delivered by the Company and the Guarantors.
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(f) The Securities have been duly authorized and, when
executed and authenticated in accordance with the provisions of the Indenture
and delivered to and paid for by the Placement Agents in accordance with the
terms of this Agreement, will be valid and binding obligations of the Company,
enforceable in accordance with their terms, subject to applicable bankruptcy,
insolvency or similar laws affecting creditors' rights generally and general
principles of equity, and will be entitled to the benefits of the Indenture and
the Registration Rights Agreement.
(g) The Guarantees have been duly authorized by each of the
Guarantors and, upon execution and delivery of the Indenture by the Guarantors
and the Company, will be valid and binding obligations of each Guarantor,
enforceable in accordance with their terms, subject to applicable bankruptcy,
insolvency or similar laws affecting creditors' rights generally and general
principles of equity.
(h) The Indenture has been duly authorized and, when executed
and delivered by the Company and each Guarantor, will be a valid and binding
agreement of the Company and each Guarantor, enforceable in accordance with its
terms, subject to applicable bankruptcy, insolvency or similar laws affecting
creditors' rights generally and general principles of equity.
(i) The Registration Rights Agreement has been duly
authorized, executed and delivered by, and is a valid and binding agreement of,
the Company and each Guarantor, enforceable in accordance with its terms,
subject to applicable bankruptcy, insolvency or similar laws affecting
creditors' rights generally and general principles of equity and except as
rights to indemnification and contribution under the Registration Rights
Agreement may be limited under applicable law.
(j) The execution and delivery by the Company and each
Guarantor of, and the performance by the Company and each Guarantor of their
respective obligations under, this Agreement, the Indenture, the Registration
Rights Agreement, the Securities (in the case of the Company) and the Guarantees
(in the case of the Guarantors) will not contravene any provision of applicable
law or the certificate of incorporation or by-laws of the Company or any
Guarantor or any agreement or other instrument binding upon the Company, any of
its subsidiaries or any Guarantor that is material to the Company and its
subsidiaries, taken as a whole, or PSF Holdings, other than the PIK Note
Agreements, or any judgment, order or decree of any governmental body, agency or
court having jurisdiction over the Company, any subsidiary or any Guarantor, and
no consent, approval, authorization or order of, or qualification with, any
governmental body or agency is required for the performance by the Company or
the Guarantors of their respective obligations under this Agreement, the
Indenture, the Registration Rights Agreement, the Securities (in the case of the
Company) and the Guarantees (in the case of the Guarantors), except such as may
be required by the securities or Blue Sky laws of the various states in
connection with the offer and sale of the Securities and the Guarantees and by
Federal and state securities laws with respect to the Company's and each
Guarantor's obligations under the Registration Rights Agreement.
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(k) There has not occurred any material adverse change, or any
development involving a prospective material adverse change, in the condition,
financial or otherwise, or in the earnings, business or operations of the
Company and its subsidiaries, taken as a whole, or PSF Holdings from that set
forth in the Final Memorandum.
(l) There are no legal or governmental proceedings pending or
threatened to which PSF Holdings, the Company or any of its subsidiaries is a
party or to which any of the properties of PSF Holdings, the Company or any of
its subsidiaries is subject other than proceedings accurately described in all
material respects in each Memorandum and proceedings that would not have a
material adverse effect on the Company and its subsidiaries, taken as a whole,
or PSF Holdings or on the power or ability of the Company or the Guarantors to
perform their respective obligations under this Agreement, the Indenture, the
Registration Rights Agreement, the Securities (in the case of the Company) or
the Guarantees (in the case of the Guarantors) or to consummate the transactions
contemplated by the Final Memorandum.
(m) PSF Holdings, the Company and its subsidiaries (i) are in
compliance with any and all applicable foreign, federal, state and local laws
and regulations relating to the protection of human health and safety, the
environment or hazardous or toxic substances or wastes, pollutants or
contaminants ("ENVIRONMENTAL LAWS"), (ii) have received all permits, licenses or
other approvals required of them under applicable Environmental Laws to conduct
their respective businesses and (iii) are in compliance with all terms and
conditions of any such permit, license or approval, except as are accurately
described in all materials respects in the Final Memorandum and except where
such noncompliance with Environmental Laws, failure to receive required permits,
licenses or other approvals or failure to comply with the terms and conditions
of such permits, licenses or approvals would not, singly or in the aggregate,
have a material adverse effect on the Company and its subsidiaries, taken as a
whole or PSF Holdings.
(n) 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 permit, license or approval, any related constraints
on operating activities and any potential liabilities to third parties) which
are not accurately described in all material respects in the Final Memorandum or
which would, singly or in the aggregate, have a material adverse effect on the
Company and its subsidiaries, taken as a whole or PSF Holdings.
(o) Neither the Company nor any Guarantor is, nor after giving
effect to the offering and sale of the Securities and the application of the
proceeds thereof as described in the Final Memorandum, will be an "investment
company" as such term is defined in the Investment Company Act of 1940, as
amended.
(p) None of the Company, any Guarantor or any affiliate (as
defined in Rule 501(b) of Regulation D under the Securities Act, an "AFFILIATE")
of the Company or any Guarantor has directly, or through any agent, (i) sold,
offered for sale, solicited offers to buy or otherwise negotiated in respect of,
any security (as defined in the Securities Act) which is or will be integrated
with the sale of the Securities in a manner that would require the registration
under
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the Securities Act of the Securities or (ii) engaged in any form of general
solicitation or general advertising in connection with the offering of the
Securities (as those terms are used in Regulation D under the Securities Act),
or in any manner involving a public offering within the meaning of Section 4(2)
of the Securities Act.
(q) None of the Company, any Guarantor, their Affiliates or
any person acting on its or their behalf has engaged or will engage in any
directed selling efforts (within the meaning of Regulation S) with respect to
the Securities and the Company, any Guarantor and their Affiliates and any
person acting on its or their behalf have complied and will comply with the
offering restrictions requirement of Regulation S. For the purposes of this
paragraph and paragraph (p) above, the Company and the Guarantors make no
representation or warranty in respect of the Placement Agents.
(r) It is not necessary in connection with the offer, sale and
delivery of the Securities to the Placement Agents in the manner contemplated by
this Agreement to register the Securities or the Guarantees under the Securities
Act or to qualify the Indenture under the Trust Indenture Act of 1939, as
amended.
(s) The Securities and the Guarantees satisfy the requirements
set forth in Rule 144A(d)(3) under the Securities Act.
(t) The Securities and the Guarantees conform in all material
respects to the description thereof contained in the Final Memorandum under the
heading "Description of the Notes."
(u) Subsequent to the respective dates as of which information
is given in the Final Memorandum, (i) none of the Company or any of its
subsidiaries or PSF Holdings have incurred any material liability or obligation,
direct or contingent, nor entered into any material transaction not in the
ordinary course of business; (ii) neither the Company nor any of its
subsidiaries nor PSF Holdings has purchased any of its outstanding capital
stock, nor declared, paid or otherwise made any dividend or distribution of any
kind on its capital stock other than ordinary and customary dividends; and (iii)
there has not been any material change in the capital stock, short-term debt or
long-term debt of the Company and its subsidiaries or PSF Holdings, except in
each case as described in the Final Memorandum.
(v) 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, encumbrances and
defects except for the PIK Note Lien and such as are described in the Final
Memorandum or such as do not materially affect the value of such property and do
not interfere with the use made and proposed to be made of such property by the
Company and its subsidiaries; 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 are not material and
do not interfere with the use made and proposed to be made of such
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property and buildings by the Company and its subsidiaries, in each case except
as described in the Final Memorandum.
(w) The Company and its subsidiaries own or possess, or can
acquire on reasonable terms, all material 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 currently employed by
them in connection with the business now operated by them, 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 the foregoing
which, singly or in the aggregate, if the subject of an unfavorable decision,
ruling or finding, would have a material adverse effect on the Company and its
subsidiaries, taken as a whole, in each case except as accurately described in
all material respects in the Final Memorandum.
(x) No material labor dispute with the employees of the
Company or any of its subsidiaries exists, or, to the knowledge of the Company,
is imminent; and the executive officers of the Company are not aware of any
existing, threatened or imminent labor disturbance by the employees of any of
the Company's principal suppliers, manufacturers or contractors that could have
a material adverse effect on the Company and its subsidiaries, taken as a whole,
in each case except as described in the Final Memorandum.
(y) The Company and its subsidiaries are insured by insurers
of recognized financial responsibility against such losses and risks and in such
amounts as are prudent and customary in the businesses in which they are
engaged; neither the Company nor any of its subsidiaries has been refused any
insurance coverage sought or applied for; and neither the Company nor any of its
subsidiaries has any reason to believe that it will not be able to renew its
existing insurance coverage as and when such coverage expires or to obtain
similar coverage from similar insurers as may be necessary to continue its
business at a cost that would not have a material adverse effect on the Company
and its subsidiaries, taken as a whole, except as described in the Final
Memorandum.
(z) The Company and its subsidiaries possess all certificates,
authorizations and permits issued by the appropriate federal, state or foreign
regulatory authorities necessary to conduct their respective business, and
neither the Company nor any of its subsidiaries has received any notice of
proceedings relating to the revocation or modification of any such certificate,
authorization or permit which, singly or in the aggregate, if the subject of an
unfavorable decision, ruling or finding, would have a material adverse effect on
the Company and its subsidiaries, taken as a whole, except as described the
Final Memorandum.
(aa) PSF Holdings and each of its subsidiaries maintain 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
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recorded accountability for assets is compared with the existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences.
2. Agreements to Sell and Purchase. The Company hereby agrees
to sell to the several Placement Agents, and each Placement Agent, upon the
basis of the representations and warranties herein contained, but subject to the
conditions hereinafter stated, agrees, severally and not jointly, to purchase
from the Company the respective principal amount of Securities set forth in
Schedule I hereto opposite its name at a purchase price of 97.194% of the
principal amount thereof (the "PURCHASE PRICE") plus accrued interest, if any,
to the Closing Date.
The Company and each of the Guarantors hereby agree that,
without the prior written consent of Morgan Stanley & Co. Incorporated on behalf
of the Placement Agents, it will not, during the period beginning on the date
hereof and continuing to and including the Closing Date, offer, sell, contract
to sell or otherwise dispose of any debt of the Company or any of the Guarantors
or warrants to purchase debt of the Company or any of the Guarantors
substantially similar to the Securities and the Guarantees (other than the sale
of the Securities and the Guarantees under this Agreement).
3. Terms of Offering. You have advised the Company and the
Guarantors that the Placement Agents will make an offering of the Securities
purchased by the Placement Agents hereunder on the terms to be set forth in the
Final Memorandum, as soon as practicable after this Agreement is entered into as
in your judgment is advisable.
4. Payment and Delivery. Payment for the Securities shall be
made to the Company at such bank and account as the Company shall designate in
Federal or other funds immediately available in New York City against delivery
of such Securities for the respective accounts of the several Placement Agents
at 10:00 a.m., New York City time, on June 7, 2001, or at such other time on the
same or such other date, not later than June 14, 2001, as shall be designated in
writing by you. The time and date of such payment are hereinafter referred to as
the "CLOSING DATE."
Certificates for the Securities shall be in definitive form or
global form, as specified by you, and registered in such names and in such
denominations as you shall request in writing not later than one full business
day prior to the Closing Date. The certificates evidencing the Securities shall
be delivered to you on the Closing Date for the respective accounts of the
several Placement Agents, with any transfer taxes payable in connection with the
transfer of the Securities to the Placement Agents duly paid, against payment of
the Purchase Price therefor plus accrued interest, if any, to the date of
payment and delivery.
5. Conditions to the Placement Agents' Obligations. The
several obligations of the Placement Agents to purchase and pay for the
Securities on the Closing Date are subject to the following conditions:
(a) Subsequent to the execution and delivery of this Agreement
and prior to the Closing Date, there shall not have occurred any change, or any
development involving a prospective change, in the condition, financial or
otherwise, or in the earnings, business or
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operations of the Company and its subsidiaries, taken as a whole, or PSF
Holdings from that set forth in the Final Memorandum (exclusive of any
amendments or supplements thereto subsequent to the date of this Agreement)
that, in your judgment, is material and adverse and that makes it, in your
judgment, impracticable to market the Securities on the terms and in the manner
contemplated in the Final Memorandum.
(b) The Placement Agents shall have received on the Closing
Date certificates, dated the Closing Date and signed by an executive officer of
the Company and each Guarantor, to the effect set forth in Section 5(a) and to
the effect that the representations and warranties of the Company and such
Guarantor contained in this Agreement are true and correct as of the Closing
Date and the Company and such Guarantor have complied with all of the agreements
and satisfied all of the conditions on its part to be performed or satisfied
hereunder on or before the Closing Date. The officer signing and delivering such
certificate may rely upon the best of his or her knowledge as to proceedings
threatened.
(c) The Placement Agents shall have received on the Closing
Date an opinion of Blackwell Sanders Peper Martin LLP, outside counsel for the
Company and the Guarantors, dated the Closing Date, to the effect set forth in
Exhibit A. Such opinion shall be rendered to the Placement Agents at the request
of the Company and the Guarantors and shall so state therein.
(d) The Placement Agents shall have received on the Closing
Date an opinion of Gerard J. Schulte, general counsel for the Company and the
Guarantors, dated the Closing Date, to the effect set forth in Exhibit B.
(e) The Placement Agents shall have received on the Closing
Date an opinion of Sidley Austin Brown & Wood; outside counsel for the Company
and the Guarantors, dated the Closing Date, to the effect set forth in Exhibit
C. Such opinion shall be rendered to the Placement Agents at the request of the
Company and the Guarantors and shall so state therein.
(f) The Placement Agents shall have received on the Closing
Date an opinion of Ward and Smith, P.A., outside counsel for the Company and the
Guarantors, dated as of the Closing Date, to the effect set forth in Exhibit D.
Such opinion shall be rendered to the Placement Agents at the request of the
Company and the Guarantors and shall so state therein.
(g) The Placement Agents shall have received on the Closing
Date an opinion of Shearman & Sterling, counsel for the Placement Agents, dated
the Closing Date, in form and substance satisfactory to you.
(h) The Placement Agents shall have received on each of the
date hereof and the Closing Date letters, dated the date hereof or the Closing
Date, as the case may be, in form and substance satisfactory to the Placement
Agents, from Arthur Anderson LLP, independent public accountants for the
Company, containing statements and information of the type ordinarily included
in accountants' "comfort letters" to underwriters with respect to the financial
statements and certain financial information contained in the Final Memorandum;
provided that the letters delivered on the Closing Date shall use a "cut-off
date" not earlier than the date hereof.
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(i) The Placement Agents shall have received on the date
hereof a letter, dated the date hereof, in form and substance satisfactory to
the Placement Agents from KPMG LLP, independent accountants for The Lundy
Packing Company, containing statements and information of the type ordinarily
included in accountants' "comfort letters" to underwriters with respect to the
financial statements and certain financial information for The Lundy Packing
Company contained in the Final Memorandum.
(j) The Placement Agents shall have received such other
documents and certificates as are reasonably requested by you or your counsel.
(k) The Securities shall have been designated PORTAL
securities in accordance with the rules and regulations adopted by the National
Association of Securities Dealers, Inc. relating to trading in the PORTAL
Market.
(l) The Company shall have received a consent, in form and
substance satisfactory to you, pursuant to which the Company is granted consent
to offer the Securities notwithstanding any provision to the contrary contained
in the Credit Agreement among the Company, U.S. Bancorp, AG Credit, Inc. and the
other Lenders named therein dated as of August 27, 1997, as amended, and such
consent shall be in full force and effect on the Closing Date.
(m) Arrangements satisfactory to you shall have been made for
delivery, immediately upon confirmation of the purchase and sale of the
Securities, of a notice of redemption, in form and substance satisfactory to
you, to each holder of the PIK Notes for redemption of all such holder's PIK
Notes on the date set forth in such notice (the "REDEMPTION DATE").
(n) The Company shall have directed the Placement Agents in
writing to irrevocably deposit with a trustee, in trust on terms satisfactory to
you, the proceeds of the Securities in an amount required to redeem the
aggregate principal amount outstanding of PIK Notes and shall have made
arrangements satisfactory to you for the transfer of said funds to the trustee
for the holders of the PIK Notes on or before the Redemption Date.
6. Covenants of the Company and each Guarantor. In further
consideration of the agreements of the Placement Agents contained in this
Agreement, each of the Company and the Guarantors, jointly and severally
covenants with each Placement Agent as follows:
(a) To furnish to you in New York City, without charge, prior
to 10:00 a.m. New York City time on the business day next succeeding the date of
this Agreement and during the period mentioned in Section 6(c), as many copies
of the Final Memorandum and any supplements and amendments thereto as you may
reasonably request.
(b) Before amending or supplementing either Memorandum, to
furnish to you a copy of each such proposed amendment or supplement and not to
use any such proposed amendment or supplement to which you reasonably object.
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(c) If, during such period after the date hereof and prior to
the date on which all of the Securities shall have been sold by the Placement
Agents, any event shall occur or condition exist as a result of which it is
necessary to amend or supplement the Final Memorandum in order to make the
statements therein, in the light of the circumstances when the Final Memorandum
is delivered to a purchaser, not misleading, or if, in the opinion of counsel
for the Placement Agents, it is necessary to amend or supplement the Final
Memorandum to comply with applicable law, forthwith to prepare and furnish, at
its own expense, to the Placement Agents, either amendments or supplements to
the Final Memorandum so that the statements in the Final Memorandum as so
amended or supplemented will not, in the light of the circumstances when the
Final Memorandum is delivered to a purchaser, be misleading or so that the Final
Memorandum, as amended or supplemented, will comply with applicable law.
(d) To endeavor to qualify the Securities and the Guarantees
for offer and sale under the securities or Blue Sky laws of such jurisdictions
as you shall reasonably request.
(e) 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 its obligations under this
Agreement, including: (i) the fees, disbursements and expenses of the Company's
and the Guarantors' counsel and the Company's and the Guarantors' accountants
and KPMG LLP in connection with the issuance and sale of the Securities and all
other fees or expenses in connection with the preparation of each Memorandum and
all amendments and supplements thereto, including all printing costs associated
therewith, and the delivering of copies thereof to the Placement Agents, in the
quantities herein above specified, (ii) all costs and expenses related to the
transfer and delivery of the Securities to the Placement Agents, including any
transfer or other taxes payable thereon, (iii) the cost of printing or producing
any Blue Sky or legal investment memorandum in connection with the offer and
sale of the Securities under state securities laws and all expenses in
connection with the qualification of the Securities for offer and sale under
state securities laws as provided in Section 6(d) hereof, including filing fees
and the reasonable fees and disbursements of counsel for the Placement Agents in
connection with such qualification and in connection with the Blue Sky or legal
investment memorandum, (iv) any fees charged by rating agencies for the rating
of the Securities, (v) all document production charges and expenses of counsel
to the Placement Agents (but not including their fees for professional services)
in connection with the preparation of this Agreement, (vi) the fees and
expenses, if any, incurred in connection with the admission of the Securities
for trading in PORTAL or any appropriate market system, (vii) the costs and
charges of the Trustee and any transfer agent, registrar or depositary, (viii)
the cost of the preparation, issuance and delivery of the Securities, (ix) the
costs and expenses of the Company relating to investor presentations on any
"road show" undertaken in connection with the marketing of the offering of the
Securities, including, without limitation, expenses associated with the
production of road show slides and graphics, fees and expenses of any
consultants (excluding the Placement Agents) engaged in connection with the road
show presentations with the prior approval of the Company, travel and lodging
expenses of the representatives and officers of the Company, the Guarantors and
any such consultants (excluding the Placement Agents), and the cost of any
aircraft chartered in connection with the road show, and (x) all other costs and
expenses incident to the performance of the obligations of the Company and the
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Guarantors hereunder for which provision is not otherwise made in this Section.
It is understood, however, that except as provided in this Section, Section 9,
and the last paragraph of Section 11, the Placement Agents will pay all of their
costs and expenses, including fees and disbursements of their counsel, transfer
taxes payable on resale of any of the Securities by them and any advertising
expenses connected with any offers they may make.
(f) Not to sell, offer for sale or solicit offers to buy or
otherwise negotiate in respect of any security (as defined in the Securities
Act) which could be integrated with the sale of the Securities or the Guarantees
in a manner which would require the registration under the Securities Act of the
Securities or the Guarantees.
(g) Not to solicit any offer to buy or offer or sell the
Securities by means of any form of general solicitation or general advertising
(as those terms are used in Regulation D under the Securities Act) or in any
manner involving a public offering within the meaning of Section 4(2) of the
Securities Act.
(h) While any of the Securities remain "restricted securities"
within the meaning of the Securities Act, to make available, upon request, to
any seller of the Securities the information specified in Rule 144A(d)(4) under
the Securities Act, unless the Company is then subject to Section 13 or 15(d) of
the Securities Exchange Act of 1934 (the "EXCHANGE ACT").
(i) To use its best efforts to permit the Securities to be
designated PORTAL securities in accordance with the rules and regulations
adopted by the National Association of Securities Dealers, Inc. relating to
trading in the PORTAL Market.
(j) None of the Company, the Guarantors, its or their
Affiliates or any person acting on its or their behalf (other than the Placement
Agents) will engage in any directed selling efforts (as that term is defined in
Regulation S) with respect to the Securities, and the Company, the Guarantors
and its or their Affiliates and each person acting on its or their behalf (other
than the Placement Agents) will comply with the offering restrictions
requirement of Regulation S.
(k) During the period of two years after the Closing Date, the
Company and the Guarantors will not, and will not permit any direct or indirect
parent of the Company or the Guarantors, as the case may be, to resell any of
the Securities which constitute "restricted securities" under Rule 144 that have
been reacquired by any of them.
(l) To redeem the PIK Notes in whole on the Redemption Date
subject to the sale of the Securities to the Placement Agents.
7. Offering of Securities; Restrictions on Transfer. (a) Each
Placement Agent, severally and not jointly, represents and warrants that such
Placement Agent is a qualified institutional buyer as defined in Rule 144A under
the Securities Act (a "QIB"). Each Placement Agent, severally and not jointly,
agrees with the Company and the Guarantors that (i) it will not solicit offers
for, or offer or sell, such Securities by any form of general solicitation or
general advertising (as those terms are used in Regulation D under the
Securities Act) or in any manner involving a public offering within the meaning
of Section 4(2) of the Securities Act and (ii) it
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will solicit offers for such Securities only from, and will offer such
Securities only to, persons that it reasonably believes to be (A) in the case of
offers inside the United States, QIBs and (B) in the case of offers outside the
United States, to persons other than U.S. persons ("FOREIGN PURCHASERS," which
term shall include dealers or other professional fiduciaries in the United
States acting on a discretionary basis for foreign beneficial owners (other than
an estate or trust)) in reliance upon Regulation S under the Securities Act
that, in each case, in purchasing such Securities are deemed to have represented
and agreed as provided in the Final Memorandum under the caption "Transfer
Restrictions."
(b) Each Placement Agent, severally and not jointly,
represents, warrants, and agrees with respect to offers and sales outside the
United States that:
(i) such Placement Agent understands that no action has been
or will be taken in any jurisdiction by the Company or any of the
Guarantors that would permit a public offering of the Securities, or
possession or distribution of either Memorandum or any other offering
or publicity material relating to the Securities, in any country or
jurisdiction where action for that purpose is required;
(ii) such Placement Agent will comply with all applicable laws
and regulations in each jurisdiction in which it acquires, offers,
sells or delivers Securities or has in its possession or distributes
either Memorandum or any such other material, in all cases at its own
expense;
(iii) neither the Securities nor the Guarantees have been
registered under the Securities Act and may not be offered or sold
within the United States or to, or for the account or benefit of, U.S.
persons except in accordance with Rule 144A or Regulation S under the
Securities Act or pursuant to another exemption from the registration
requirements of the Securities Act;
(iv) such Placement Agent has offered the Securities and the
Guarantees and will offer and sell the Securities and the Guarantees
(A) as part of their distribution at any time and (B) otherwise until
40 days after the later of the commencement of the offering and the
Closing Date, only in accordance with Rule 903 of Regulation S or as
otherwise permitted in Section 7(a); accordingly, neither such
Placement Agent, its Affiliates nor any persons acting on its or their
behalf have engaged or will engage in any directed selling efforts
(within the meaning of Regulation S) with respect to the Securities and
the Guarantees, and any such Placement Agent, its Affiliates and any
such persons have complied and will comply with the offering
restrictions requirement of Regulation S;
(v) such Placement Agent has (A) not offered or sold and,
prior to the date six months after the Closing Date, will not offer or
sell any Securities or Guarantees to persons in the United Kingdom
except to persons whose ordinary activities involve them in acquiring,
holding, managing or disposing of investments (as principal or agent)
for the purposes of their businesses or otherwise in circumstances
which have not resulted and will not result in an offer to the public
in the United Kingdom within the meaning of
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the Public Offers of Securities Regulations 1995; (B) complied and will
comply with all applicable provisions of the Financial Services Act
1986 with respect to anything done by it in relation to the Securities
or Guarantees in, from or otherwise involving the United Kingdom, and
(C) only issued or passed on and will only issue or pass on in the
United Kingdom any document received by it in connection with the issue
of the Securities or Guarantees to a person who is of a kind described
in Article 11(3) of the Financial Services Act 1986 (Investment
Advertisements) (Exemptions) Order 1996 or is a person to whom such
document may otherwise lawfully be issued or passed on;
(vi) such Placement Agent understands that neither the
Securities nor the Guarantees have been or will not be registered under
the Securities and Exchange Law of Japan, and represents that it has
not offered or sold, and agrees not to offer or sell, directly or
indirectly, any Securities or Guarantees in Japan or for the account of
any resident thereof except pursuant to any exemption from the
registration requirements of the Securities and Exchange Law of Japan
and otherwise in compliance with applicable provisions of Japanese law;
and
(vii) such Placement Agent agrees that, at or prior to
confirmation of sales of the Securities and the Guarantees, it will
have sent to each distributor, dealer or person receiving a selling
concession, fee or other remuneration that purchases Securities and the
Guarantees from it during the restricted period a confirmation or
notice to substantially the following effect:
"The Securities and Guarantees covered hereby have not been
registered under the U.S. Securities Act of 1933 (the "Securities Act")
and may not be offered and sold within the United States or to, or for
the account or benefit of, U.S. persons (i) as part of their
distribution at any time or (ii) otherwise until 40 days after the
later of the commencement of the offering and the closing date, except
in either case in accordance with Regulation S (or Rule 144A if
available) under the Securities Act. Terms used above have the meaning
given to them by Regulation S."
Terms used in this Section 7(b) have the meanings given to
them by Regulation S.
8. Market-Making. Each of the Company and the Guarantors,
jointly and severally, for the sole benefit of Morgan Stanley & Co. Incorporated
("MORGAN STANLEY"), agrees that:
(a) prior to the consummation of the Exchange Offer (as
defined in the Registration Rights Agreement) or the effectiveness of a Shelf
Registration Statement (as defined in the Registration Rights Agreement) if, in
the reasonable judgment of Morgan Stanley, it or any of its affiliates (as such
term is defined in the rules and regulations under the 1933 Act) is required to
deliver an offering memorandum in connection with sales of, or market-making
activities with respect to, the Securities and the Guarantees (i) to
periodically amend or supplement the Final Memorandum so that the information
contained in the Final Memorandum complies with the requirements of Rule 144A of
the 1933 Act, (ii) to amend or supplement the
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Final Memorandum when necessary to reflect any material changes in the
information provided therein so that the Final Memorandum will not contain any
untrue statement of a material fact or omit to state any material fact necessary
in order to make the statements therein, in light of the circumstances existing
as of the date the Final Memorandum is so delivered, not misleading and (iii) to
provide Morgan Stanley with copies of each such amended or supplemented Final
Memorandum, as Morgan Stanley may reasonably request;
(b) following the consummation of the Exchange Offer or the
effectiveness of a Shelf Registration Statement and for so long as the
Securities or the Exchange Securities are outstanding, if, in the judgement of
Morgan Stanley, it or any of its affiliates (as such term is defined in the
rules and regulations under the 1933 Act) is required to deliver a prospectus in
connection with sales of, or market-making activities with respect to, such
securities, (i) to periodically amend the applicable registration statement so
that the information contained therein complies with the requirements of Section
10(a) of the 1933 Act, (ii) if reasonably requested by Morgan Stanley, within 45
days following the end of the Company's most recent fiscal quarter (other than
the Company's final fiscal quarter in each fiscal year), to file a supplement to
the prospectus included in the applicable registration statement which sets
forth the financial results of the Company and the Guarantors for the previous
fiscal quarter, (iii) if reasonably requested by Morgan Stanley, within 90 days
following the end of the Company's most recent fiscal year, to amend the
applicable registration statement to set forth the financial results of the
Company and the Guarantors for the previous fiscal year, (iv) to amend the
applicable registration statement or supplement the related prospectus when
necessary to reflect any material changes in the information provided therein so
that the registration statement and the prospectus will not contain any untrue
statement of a material fact or omit to state any material fact necessary in
order to make the statements therein, in light of the circumstances existing as
of the date the prospectus is so delivered, not misleading and (v) to provide
Morgan Stanley with copies of each such amendment or supplement as Morgan
Stanley may reasonably request;
(c) notwithstanding clauses (a) and (b) above, (i) prior to
amending the Final Memorandum or to filing any post-effective amendment to any
registration statement or to supplementing any related prospectus, to furnish to
Morgan Stanley and its counsel, copies of all such documents proposed to be
amended, filed or supplemented, and (ii) neither the Company nor any Guarantor
will issue any amendment to the Final Memorandum, any post-effective amendment
to a registration statement or any supplement to a prospectus to which Morgan
Stanley or its counsel shall reasonably object;
(d) to notify Morgan Stanley and its counsel and (if requested
by any such person) confirm such advice in writing, (i) when any amendment to
the Final Memorandum has been issued, when any prospectus supplement or
amendment or post-effective amendment has been filed, and, with respect to any
post-effective amendment, when the same has become effective, (ii) of any
request by the Securities and Exchange Commission (the "SEC") for any
post-effective amendment or supplement to a registration statement, any
supplement or amendment to a prospectus or for additional information, (iii) the
issuance by the SEC of any stop order suspending the effectiveness of a
registration statement or the initiation of any proceedings for that purpose,
(iv) of the receipt by it of any notification with respect to the
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suspension of the qualification of the Securities or the Exchange Securities for
sale in any jurisdiction or the initiation or threatening of any proceedings for
such purpose and (v) of the happening of any event which makes any statement
made in the Final Memorandum, a registration statement, a prospectus or any
amendment or supplement thereto untrue or which requires the making of any
change in the Final Memorandum, a registration statement, a prospectus or any
amendment or supplement thereto, in order to make the statements therein not
misleading;
(e) the Company and each Guarantor consents to the use of the
Final Memorandum and any prospectus referred to in this Section 8 or any
amendment or supplement thereto by Morgan Stanley and its affiliates in
connection with the offering and sale of the Securities and the Guarantees or
the Exchange Securities, as the case may be; provided that upon receipt of any
notice from the Company of the happening of any event of the kind described in
clause (d)(v) of this Section 8, Morgan Stanley and its affiliates will
forthwith discontinue disposition of such Securities or Exchange Securities
pursuant to any such Final Memorandum or prospectus until Morgan Stanley and its
affiliates receive copies of a supplemented or amended Final Memorandum or
prospectus referred to in this Section 8; any such suspensions may not exceed 60
days in any 365-day period; any notices to Morgan Stanley pursuant to this
clause (e) shall be sent to Morgan Stanley & Co. Incorporated, 1585 Broadway,
New York, NY, 10036, Attention: High Yield New Issues Group, facsimile number:
(212) 761-0587, with a copy to the Control Group, Manager, facsimile number
(212) 761-9709, and shall be deemed to have been duly given or made only upon
receipt.
(f) in connection with any amendment or supplement to the
Final Memorandum or the effectiveness of the Shelf Registration Statement or any
amendment thereto or supplemental prospectus, in each case including any Form
10-K or Form 10-Q that is incorporated by reference in such Final Memorandum or
Shelf Registration Statement required by this Section 8, the Company and the
Guarantors will cause to be provided to Morgan Stanley an opinion of counsel
(covering matters customarily covered in opinions delivered in underwritten
offerings) and a "cold comfort" letter from the Company's independent public
accountants (covering matters customarily covered in "cold comfort" letters
delivered in underwritten offerings) and such documents and certificates as may
be reasonably requested by Morgan Stanley.
(g) the Company and the Guarantors will comply with the
provisions of this Section 8 at their own expense and will reimburse Morgan
Stanley for its expenses associated with this Section 8 (including reasonable
fees of counsel); and
(h) the Company and the Guarantors hereby expressly
acknowledge that the indemnification and contribution provisions of Section 9 of
this Agreement shall be specifically applicable and relate to each offering
memorandum, registration statement, prospectus, amendment or supplement referred
to in this Section 8 except with respect to losses, claims or liabilities
resulting from the delivery of any offering memorandum or prospectus to the
extent that it is established that such offering memorandum or prospectus was
delivered by Morgan
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Stanley after it received notice to discontinue using it in accordance with
clause (e) of this Section 8.
9. Indemnity and Contribution. (a) Each of the Company and the
Guarantors agrees, jointly and severally, to indemnify and hold harmless each
Placement Agent and each person, if any, who controls any Placement Agent within
the meaning of either Section 15 of the Securities Act or Section 20 of the
Exchange Act from and against any and all losses, claims, damages and
liabilities (including, without limitation, any legal or other expenses
reasonably incurred in connection with defending or investigating any such
action or claim) caused by any untrue statement or alleged untrue statement of a
material fact contained in either Memorandum (as amended or supplemented if the
Company or any of the Guarantors shall have furnished any amendments or
supplements thereto), or caused by any omission or alleged omission to state
therein a material fact necessary to make the statements therein in the light of
the circumstances under which they were made not misleading, except insofar as
such losses, claims, damages or liabilities are caused by any such untrue
statement or omission or alleged untrue statement or omission based upon
information relating to any Placement Agent furnished to the Company and the
Guarantors in writing by such Placement Agent through you expressly for use
therein.
(b) Each Placement Agent agrees, severally and not jointly, to
indemnify and hold harmless the Company, the Guarantors, their directors, their
officers and each person, if any, who controls the Company and the Guarantors
within the meaning of either Section 15 of the Securities Act or Section 20 of
the Exchange Act to the same extent as the foregoing indemnity from the Company
and the Guarantors to such Placement Agent, but only with reference to
information relating to such Placement Agent furnished to the Company and the
Guarantors in writing by such Placement Agent through you expressly for use in
either Memorandum or any amendments or supplements thereto.
(c) In case any proceeding (including any governmental
investigation) shall be instituted involving any person in respect of which
indemnity may be sought pursuant to Section 9(a) or 9(b), such person (the
"INDEMNIFIED PARTY") shall promptly notify the person against whom such
indemnity may be sought (the "INDEMNIFYING PARTY") in writing and the
indemnifying party, upon request of the indemnified party, shall retain counsel
reasonably satisfactory to the indemnified party to represent the indemnified
party and any others the indemnifying party may designate in such proceeding and
shall pay the fees and disbursements of such counsel related to such proceeding.
In any such proceeding, any indemnified party shall have the right to retain its
own counsel, but the fees and expenses of such counsel shall be at the expense
of such indemnified party unless (i) the indemnifying party and the indemnified
party shall have mutually agreed to the retention of such counsel or (ii) the
named parties to any such proceeding (including any impleaded parties) include
both the indemnifying party and the indemnified party and representation of both
parties by the same counsel would be inappropriate due to actual or potential
differing interests between them. It is understood that the indemnifying party
shall not, in respect of the legal expenses of any indemnified party in
connection with any proceeding or related proceedings in the same jurisdiction,
be liable for the fees and expenses of more than one separate firm (in addition
to any local counsel) for all such indemnified parties
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and that all such fees and expenses shall be reimbursed as they are incurred.
Such firm shall be designated in writing by Morgan Stanley & Co. Incorporated,
in the case of parties indemnified pursuant to Section 9(a), and by the Company,
in the case of parties indemnified pursuant to Section 9(b). The indemnifying
party shall not be liable for any settlement of any proceeding effected without
its written consent, but if settled with such consent or if there be a final
judgment for the plaintiff, the indemnifying party agrees to indemnify the
indemnified party from and against any loss or liability by reason of such
settlement or judgment. No indemnifying party shall, without the prior written
consent of the indemnified party, effect any settlement of any pending or
threatened proceeding in respect of which any indemnified party is or could have
been a party and indemnity could have been sought hereunder by such indemnified
party, unless such settlement includes an unconditional release of such
indemnified party from all liability on claims that are the subject matter of
such proceeding.
(d) To the extent the indemnification provided for in Section
9(a) or 9(b) is unavailable to an indemnified party or insufficient in respect
of any losses, claims, damages or liabilities referred to therein, then each
indemnifying party under such paragraph, in lieu of indemnifying such
indemnified party thereunder, shall contribute to the amount paid or payable by
such indemnified party as a result of such losses, claims, damages or
liabilities (i) in such proportion as is appropriate to reflect the relative
benefits received by the Company and the Guarantors on the one hand and the
Placement Agents on the other hand from the offering of the Securities or (ii)
if the allocation provided by clause 9(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 9(d)(i) above but also the relative
fault of the Company and the Guarantors on the one hand and of the Placement
Agents on the other hand in connection with the statements or omissions that
resulted in such losses, claims, damages or liabilities, as well as any other
relevant equitable considerations. The relative benefits received by the Company
and the Guarantors on the one hand and the Placement Agents on the other hand in
connection with the offering of the Securities and the Guarantees shall be
deemed to be in the same respective proportions as the net proceeds from the
offering of the Securities and the Guarantees (before deducting expenses)
received by the Company and the total discounts and commissions received by the
Placement Agents in respect thereof, bear to the aggregate offering price of the
Securities and the Guarantors. The relative fault of the Company and the
Guarantors on the one hand and of the Placement Agents 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 Company and the
Guarantors or by the Placement Agents and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission. The Placement Agents' respective obligations to
contribute pursuant to this Section 9 are several in proportion to the
respective principal amount of Securities and Guarantees they have purchased
hereunder, and not joint.
(e) The Company, the Guarantors and the Placement Agents agree
that it would not be just or equitable if contribution pursuant to this Section
9 were determined by pro rata allocation (even if the Placement Agents were
treated as one entity for such purpose) or by any other method of allocation
that does not take account of the equitable considerations referred
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to in Section 9(d). The amount paid or payable by an indemnified party as a
result of the losses, claims, damages and liabilities referred to in Section
9(d) shall be deemed to include, subject to the limitations set forth above, any
legal or other expenses reasonably incurred by such indemnified party in
connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this Section 9, no Placement Agent shall be
required to contribute any amount in excess of the amount by which the total
price at which the Securities resold by it in the initial placement of such
Securities and Guarantees were offered to investors exceeds the amount of any
damages that such Placement Agent has 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 Securities Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation. The remedies provided
for in this Section 9 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.
(f) The indemnity and contribution provisions contained in
this Section 9 and the representations, warranties and other statements of the
Company and the Guarantors contained in this Agreement shall remain operative
and in full force and effect regardless of (i) any termination of this
Agreement, (ii) any investigation made by or on behalf of any Placement Agent or
any person controlling any Placement Agent or by or on behalf of the Company or
the Guarantors, their respective, officers or directors or any person
controlling the Company or the Guarantors and (iii) acceptance of and payment
for any of the Securities and the Guarantees.
10. Termination. This Agreement shall be subject to
termination by notice given by you to the Company, if (a) after the execution
and delivery of this Agreement and prior to the Closing Date (i) trading
generally shall have been suspended or materially limited on or by, as the case
may be, any of the New York Stock Exchange or the National Association of
Securities Dealers, Inc., (ii) trading of any securities of the Company or the
Guarantors shall have been suspended on any exchange or in any over-the-counter
market, (iii) a general moratorium on commercial banking activities in New York
shall have been declared by either Federal or New York State authorities or (iv)
there shall have occurred any outbreak or escalation of hostilities or any
change in financial markets or any calamity or crisis that, in your judgment, is
material and adverse and (b) in the case of any of the events specified in
clauses 10(a)(i) through 10(a)(iv), such event, singly or together with any
other such event, makes it, in your judgment, impracticable to market the
Securities and the Guarantees on the terms and in the manner contemplated in the
Final Memorandum.
11. Effectiveness; Defaulting Placement Agents. This Agreement
shall become effective upon the execution and delivery hereof by the parties
hereto.
If, on the Closing Date, any one or more of the Placement
Agents shall fail or refuse to purchase Securities that it or they have agreed
to purchase hereunder on such date, and the aggregate principal amount of
Securities which such defaulting Placement Agent or Placement Agents agreed but
failed or refused to purchase is not more than one tenth of the aggregate
principal amount of Securities to be purchased on such date, the other Placement
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Agents shall be obligated severally in the proportions that the principal amount
of Securities set forth opposite their respective names in Schedule I bears to
the aggregate principal amount of Securities set forth opposite the names of all
such non-defaulting Placement Agents, or in such other proportions as you may
specify, to purchase the Securities which such defaulting Placement Agent or
Placement Agents agreed but failed or refused to purchase on such date; provided
that in no event shall the principal amount of Securities that any Placement
Agent has agreed to purchase pursuant to this Agreement be increased pursuant to
this Section 11 by an amount in excess of one-ninth of such principal amount of
Securities without the written consent of such Placement Agent. If, on the
Closing Date any Placement Agent or Placement Agents shall fail or refuse to
purchase Securities which it or they have agreed to purchase hereunder on such
date and the aggregate principal amount of Securities with respect to which such
default occurs is more than one-tenth of the aggregate principal amount of
Securities to be purchased on such date, and arrangements satisfactory to you
and the Company for the purchase of such Securities are not made within 36 hours
after such default, this Agreement shall terminate without liability on the part
of any non-defaulting Placement Agent or of the Company or the Guarantors, and
the Company and the Guarantors shall have no liability whatsoever to reimburse
any Placement Agent for any of its out-of-pocket expenses incurred by such
Placement Agent in connection with this Agreement or the offering contemplated
hereunder. In any such case 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 Final Memorandum or in any other
documents or arrangements may be effected. Any action taken under this paragraph
shall not relieve any defaulting Placement Agent from liability in respect of
any default of such Placement Agent under this Agreement.
If this Agreement shall be terminated by the Placement Agents,
or any of them, because of any failure or refusal on the part of the Company or
any Guarantor to comply with the terms or to fulfill any of the conditions of
this Agreement, or if for any reason the Company shall be unable to perform its
obligations under this Agreement, the Company will reimburse the Placement
Agents or such Placement Agents as have so terminated this Agreement with
respect to themselves, severally, for all out-of-pocket expenses (including the
fees and disbursements of their counsel) reasonably incurred by such Placement
Agents in connection with this Agreement or the offering contemplated hereunder.
12. Notices. All notices and other communications under this
Agreement shall be in writing and mailed, delivered or sent by facsimile
transmission to: if sent to the Placement Agents, Morgan Stanley & Co.
Incorporated, 1585 Broadway, New York, New York 10036, attention: High Yield New
Issues Group, facsimile number (212) 761-0587 and if sent to the Company or any
of the Guarantors, to Premium Standard Farms, Inc., 423 West 8th Street, Suite
200, Kansas City, MO 64105, attention: Controller, facsimile number (816)
472-5837.
13. Counterparts. This Agreement may be signed in any number
of counterparts, each of which shall be an original, with the same effect as if
the signatures thereto and hereto were upon the same instrument.
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14. Applicable Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York.
15. Headings. The headings of the sections of this Agreement
have been inserted for convenience of reference only and shall not be deemed a
part of this Agreement.
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Very truly yours,
PREMIUM STANDARD FARMS, INC.
By: /s/ Stephen Lightstone
----------------------------
Name: Stephen Lightstone
Title: Executive Vice President
PSF GROUP HOLDINGS, INC.
By: /s/ Stephen Lightstone
-------------------------------
Name: Stephen Lightstone
Title: Executive Vice President
THE LUNDY PACKING COMPANY
By: /s/ Stephen Lightstone
---------------------------------
Name: Stephen Lightstone
Title: Executive Vice President
PREMIUM STANDARD FARMS OF NORTH CAROLINA, INC.
By: /s/ Stephen Lightstone
---------------------------------
Name: Stephen Lightstone
Title: Executive Vice President
LUNDY INTERNATIONAL, INC.
By: /s/ Stephen Lightstone
---------------------------------
Name: Stephen Lightstone
Title: Executive Vice President
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Accepted as of the date hereof
MORGAN STANLEY & CO. INCORPORATED
Acting severally on behalf of themselves and the several Placement Agents named
in Schedule I hereto.
By: Morgan Stanley & Co. Incorporated
By: /s/ William Blais
-----------------------------
Name: William Blais
Title: Principal
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SCHEDULE I
PLACEMENT AGENT PRINCIPAL AMOUNT OF SECURITIES
TO BE PURCHASED
- --------------------------------------------------------------------------------
Morgan Stanley & Co. Incorporated $140,000,000
- --------------------------------------------------------------------------------
J.P. Morgan Securities Inc. $35,000,000
- --------------------------------------------------------------------------------
Total: $175,000,000
================================================================================
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SCHEDULE II
SUBSIDIARY GUARANTORS
The Lundy Packing Company
Premium Standard Farms of North Carolina, Inc.
Lundy International, Inc.
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SCHEDULE III
SUBSIDIARIES
PERCENT OF CAPITAL STOCK OWNED BY
NAME PREMIUM STANDARD FARMS
- -------------------------------------------------- ---------------------------------
The Lundy Packing Company 100%
Premium Standard Farms of North Carolina, Inc. 100%
Lundy International, Inc. 100%
L&S Farms 60%
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