EXHIBIT 1.1
$250,000,000
DRESSER, INC.
9 3/8% SENIOR SUBORDINATED NOTES DUE 2011
PLACEMENT AGREEMENT
March 20, 2002
March 20, 2002
Morgan Stanley & Co. Incorporated
Credit Suisse First Boston Corporation
c/o Morgan Stanley & Co. Incorporated
1585 Broadway
New York, New York 10036
Dear Sirs and Mesdames:
Dresser, Inc., a Delaware corporation (the "COMPANY"),
proposes to issue and sell to the several purchasers named in Schedule I hereto
(the "PLACEMENT AGENTS") $250,000,000 principal amount of its 9 3/8% Senior
Subordinated Notes due 2011 (the "SECURITIES") to be issued pursuant to the
provisions of an Indenture dated as of April 10, 2001, as supplemented by the
First Supplemental Indenture dated June 4, 2001 and by the Second Supplemental
Indenture dated June 12, 2001, (the "INDENTURE") among the Company, as issuer,
and certain subsidiaries of the Company listed in Schedule II hereto
(collectively, the "GUARANTORS"), as guarantors, and State Street Bank and Trust
Company, as Trustee (the "TRUSTEE"). The obligations of the Company under the
Securities and the Indenture will be unconditionally guaranteed on a senior
subordinated 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 and
the Guarantors have 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, the terms of the offering and a
description of the Company and the Guarantors.
1. Representations and Warranties. The Company
represents and warrants to, and agrees with you and each of the Guarantors,
jointly and severally, represents and warrants to, and agree with you, effective
as of the date hereof, 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
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representations and warranties set 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) 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;
all of the issued shares of capital stock of each subsidiary of the
Company have been duly and validly authorized and issued, are fully
paid and non-assessable and are owned directly by the Company, free and
clear of all liens, encumbrances, equities or claims, except as
disclosed in the Final Memorandum.
(d) This Agreement has been duly authorized, executed and
delivered by the Company and the Guarantors.
(e) 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.
(f) 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, and will be entitled
to the benefits of the Indenture and the Registration Rights Agreement.
(g) 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
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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.
(h) 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.
(i) 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 or any of its
subsidiaries that is material to the Company and its subsidiaries,
taken as a whole, or any judgment, order or decree of any governmental
body, agency or court having jurisdiction over the Company or any of
its subsidiaries, 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) or 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 by Federal and
state securities laws with respect to the Company's and each
Guarantor's obligations under the Registration Rights Agreement.
(j) 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, from
that set forth in the Final Memorandum.
(k) There are no legal or governmental proceedings
pending or threatened to which the Company or any of its subsidiaries
is a party or to which any of the properties of 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 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.
(l) 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,
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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 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.
(m) 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 would, singly or in the aggregate,
have a material adverse effect on the Company and its subsidiaries,
taken as a whole.
(n) 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.
(o) Neither the Company, any Guarantor nor 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 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.
(p) 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 Guarantors 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.
(q) 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.
(r) The Securities and the Guarantees satisfy the
requirements set forth in Rule 144A(d)(3) under the Securities Act.
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(s) 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."
(t) The Amendment No. 1 to the Credit Agreement dated
April 10, 2001, among the Company, Morgan Stanley Senior Funding, Inc.
(as administrative agent) and Credit Suisse First Boston, Cayman
Islands Branch (as syndication agent), and others (the "CREDIT
AGREEMENT") (i) has been duly authorized by the Company and each
subsidiary and affiliate of the Company that is a party thereto and on
the Closing Date has been duly executed and delivered by the Company
and each subsidiary and affiliate of the Company that is a party
thereto and is a valid and binding agreement of the Company and each
subsidiary and affiliate of the Company that is a party thereto,
enforceable in accordance with its terms, except to the extent that
such enforceability may be limited by applicable bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium or
similar laws affecting creditors rights generally and general
principles of equity whether considered in a proceeding in equity or at
law and (ii) conforms to the description thereof contained in each
Memorandum.
(u) There are no agreements to which the Company or any
of its subsidiaries is a party, or to which any of their respective
businesses or assets is subject, that are material to the financial
condition or results of operations of the Company and its subsidiaries
taken as a whole, other than the agreements listed on Schedule III
hereto.
(v) The orders, judgments and decrees listed in Schedule
IV hereto, constitute all of the orders, judgments and decrees issued
by any federal or New York governmental agency or body that are
material to the financial condition or results of operations of the
Company and its subsidiaries taken as a whole (collectively the "Court
Orders").
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 100.31% 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 (other than the sale of the Securities
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.
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4. Payment and Delivery. Payment for the Securities
shall be made to the Company 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 March 25,
2002, or at such other time on the same or such other date, not later than April
10, 2002, 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
operations of the Company and its subsidiaries, taken as a whole, 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 that
the representations and warranties of the Company and each Guarantor
contained in this Agreement are true and correct as of the Closing Date
and the Company and each Guarantor has 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 a certificate signed by an executive officer of the
Company with respect to calculations under the Indenture in respect of
the incurrence of additional debt.
(d) The Placement Agents shall have received on the
Closing Date an opinion of Latham & Watkins, 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
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Placement Agents at the request of the Company and the Guarantors and
shall so state therein.
(e) 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.
(f) The Placement Agents shall have received on each of
the date hereof and the Closing Date a letter, dated the date hereof or
the Closing Date, as the case may be, in form and substance
satisfactory to the Placement Agents, from Arthur Andersen LLP,
independent public accountants, 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 letter delivered on the Closing Date shall use a "cut-off date" not
earlier than the date hereof.
(g) The Placement Agents shall have received such other
documents and certificates as are reasonably requested by you or your
counsel.
(h) 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.
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.
(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
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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 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 and the Guarantees
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 and the Guarantees, (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 and the Guarantors 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 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, 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 Guarantors hereunder for which
provision is not otherwise made in this Section. It is understood,
however, that except as provided in this Section, Section 8, and the
last paragraph of Section 10, 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.
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(f) Neither the Company, the Guarantors nor any Affiliate
will 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 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
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, 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 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) Until the earlier of (1) two years after the Closing
Date and (2) the consummation of the Exchange Offer under the
Registration Rights Agreement, the Company and the Guarantors will not,
and will not permit any of their affiliates (as defined in Rule 144
under the Securities Act) to resell any of the Securities which
constitute "restricted securities" under Rule 144 that have been
reacquired by any of them, unless such Securities are held in the form
of a non-global note.
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 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))
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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
will offer and sell the Securities (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 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 expiry of the period of six months from the issue date of
the Securities, will not offer or sell any Securities to persons in the
United Kingdom except to persons whose ordinary activities involve them
in acquiring, holding, managing or disposing of investments (as
principal or agent) for the purposes of their businesses or otherwise
in circumstances which have not resulted and will not result in an
offer to the public in the United Kingdom within the meaning of the
Public Offers of Securities Regulations 1995 (as amended); (B) has only
communicated or caused to be communicated and will only communicate or
cause to be communicated an invitation or inducement to engage in
investment activity (within the meaning of Section 21 of the FSMA)
received by it in connection with the issue or sale of any Securities
in circumstances in which Section 21(1) of the FSMA does not apply to
the Company or the Guarantors; and (C) has complied and will comply
with all
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applicable provisions of the FSMA with respect to anything done by it
in relation to the Securities in, from or otherwise involving the
United Kingdom.
(vi) such Placement Agent understands that neither the
Securities nor the Guarantees have been or will 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 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, it will have sent to each
distributor, dealer or person receiving a selling concession, fee or
other remuneration that purchases Securities from it during the
restricted period a confirmation or notice to substantially the
following effect:
"The Securities and the 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. 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 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
12
reference to information relating to such Placement Agent furnished to the
Company 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 8(a) or 8(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 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 8(a), and by the Company, in the case of
parties indemnified pursuant to Section 8(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.
Notwithstanding the foregoing sentence, if at any time an indemnified party
shall have requested an indemnifying party to reimburse the indemnified party
for fees and expenses of counsel as contemplated by the second and third
sentences of this paragraph, the indemnifying party agrees that it shall be
liable for any settlement of any proceeding effected without its written consent
if (i) such settlement is entered into more than 30 days after receipt by such
indemnifying party of the aforesaid request and (ii) such indemnifying party
shall not have reimbursed the indemnified party in accordance with such request
prior to the date of such settlement. 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 8(a) or 8(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
13
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 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 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 shall
be deemed to be in the same respective proportions as the net proceeds from the
offering of the Securities (before deducting expenses) received by the Company
and the Guarantors and the total discounts and commissions received by the
Placement Agents in respect thereof, bear to the aggregate offering price of the
Securities. 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 8 are several in proportion to the respective principal amount of
Securities 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 8 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
to in Section 8(d). The amount paid or payable by an indemnified party as a
result of the losses, claims, damages and liabilities referred to in Section
8(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 8, 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 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 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.
(f) The indemnity and contribution provisions contained
in this Section 8 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.
14
9. 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, the American Stock Exchange, the
National Association of Securities Dealers, Inc., the Chicago Board of Options
Exchange, the Chicago Mercantile Exchange or the Chicago Board of Trade, (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 material
disruption in securities settlement, payment or clearance services in the United
States shall have occurred, (iv) any moratorium on commercial banking activities
shall have been declared by Federal or New York State authorities or (v) 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 which, singly or together with any other event specified in this
clause (v), makes it, in your judgment, impracticable or inadvisable to proceed
with the offer, sale or delivery of the Securities on the terms and in the
manner contemplated in the Final Memorandum.
10. 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
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 10 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. 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
15
terms or to fulfill any of the conditions of this Agreement, or if for any
reason the Company or any Guarantor shall be unable to perform its obligations
under this Agreement, the Company and the Guarantors 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, but without any further obligation on the part of the Company or any
Guarantor for loss of profits or otherwise.
11. [deleted.]
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 15455 Dallas Parkway, Suite 1100, Addison, TX 75001,
attention: James Nattier, Chief Financial Officer, facsimile number (972) 361
9903.
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.
14. Applicable Law. This Agreement shall be governed by
and construed in accordance with the laws of the State of New York.
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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.
Very truly yours,
DRESSER, INC.
By: ___________________________
Name:
Title:
17
DRESSER INTERNATIONAL, INC.
By: ___________________________
Name:
Title:
DRESSER RUSSIA, INC.
By: ___________________________
Name:
Title:
DRESSER RE, INC.
By: ___________________________
Name:
Title:
DRESSER ENTECH, INC.
By: ___________________________
Name:
Title:
RING-O VALVE, INCORPORATED
By: ___________________________
Name:
Title:
LVF HOLDING CORPORATION
By: ___________________________
Name:
Title:
Accepted as of the date hereof
MORGAN STANLEY & CO. INCORPORATED
CREDIT SUISSE FIRST BOSTON CORPORATION
Acting severally on behalf of themselves and
the several Placement Agents named in
Schedule I hereto.
By: Morgan Stanley & Co. Incorporated
By: ____________________________
Name:
Title:
18
SCHEDULE I
PLACEMENT AGENT PRINCIPAL AMOUNT OF
SECURITIES TO BE PURCHASED
Morgan Stanley & Co. Incorporated $137,500,000
Credit Suisse First Boston Corporation $112,500,000
Total: $250,000,000
19
SCHEDULE II
GUARANTORS
Dresser International Inc.
Dresser Russia, Inc.
Dresser RE, Inc.
Dresser Entech, Inc.
Ring-O Valve, Incorporated
LVF Holding Corporation
20
SCHEDULE III
MATERIAL AGREEMENTS
Credit Agreement
Indenture
Sponsor Rights Agreement
Investor Rights Agreement
21
SCHEDULE IV
COURT ORDERS
None.
22
EXHIBIT A
See attached.
23