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Exhibit 1.1
EXECUTION COPY
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KINGPIN MERGER SUB, INC.
(a Delaware corporation)
(to be merged with and into
AMF Bowling Worldwide, Inc.
at the time of the Merger)
$150,000,000
10% Senior Subordinated Notes due 2010
PURCHASE AGREEMENT
Dated: February 19, 2004
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SECTION 1. Representations and Warranties .................................................................3
(a) Representations and Warranties by the Company ..................................................3
(i) Offering Memorandum ..................................................................3
(ii) Independent Accountants ..............................................................3
(iii) Financial Statements .................................................................3
(iv) No Material Adverse Change in Business ...............................................4
(v) Good Standing of AMF and the Company .................................................4
(vi) Good Standing of Subsidiaries ........................................................4
(vii) Capitalization .......................................................................4
(viii) Authorization of Purchase Agreement and Registration Rights Agreement. ...............4
(ix) Authorization of the Joinder Agreements ..............................................5
(x) Authorization of the Indenture .......................................................5
(xi) Authorization of the Securities ......................................................5
(xii) Authorization of the Escrow Agreement ................................................6
(xiii) Authorization of the Merger Agreement ................................................6
(xiv) Authorization of the New Senior Secured Credit Facility ..............................6
(xv) Authorization of the Sale-Leaseback Facility .........................................6
(xvi) Power and Authority ..................................................................6
(xvii) Description of the Securities, the Indenture, the Escrow Agreement, the
Registration Rights Agreement, the New Senior Secured Credit Facility, the
Sale-Leaseback Facility and the Merger Agreement .....................................6
(xviii) Absence of Defaults and Conflicts ....................................................6
(xix) Absence of Labor Dispute .............................................................7
(xx) Absence of Proceedings ...............................................................7
(xxi) Absence of Manipulation ..............................................................8
(xxii) Possession of Intellectual Property ..................................................8
(xxiii) Absence of Further Requirements ......................................................8
(xxiv) Possession of Licenses and Permits ...................................................8
(xxv) Title to Property ....................................................................8
(xxvi) Environmental Laws ...................................................................9
(xxvii) Investment Company Act ...............................................................9
(xxviii) Similar Offerings ....................................................................9
(xxix) Rule 144A Eligibility ................................................................9
(xxx) No General Solicitation .............................................................10
(xxxi) No Registration Required ............................................................10
(xxxii) No Directed Selling Efforts .........................................................10
(xxxiii) Accounting Controls .................................................................10
(xxxiv) Disclosure Controls .................................................................10
(xxxv) Related Party Transactions ..........................................................10
(xxxvi) Tax Returns .........................................................................11
(xxxvii) Insurance ...........................................................................11
(xxxviii) Solvency ............................................................................11
(xxxix) Suppliers ...........................................................................11
(x1) AMF's Representation and Warranties in the Merger Agreement .........................11
(x1i) Foreign Corrupt Practices ...........................................................11
(b) Officers' Certificates ........................................................................11
SECTION 2. Sale and Delivery to Initial Purchasers; Closing ..............................................12
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(a) Securities ....................................................................................12
(b) Payment .......................................................................................12
(c) Denominations; Registration ...................................................................12
SECTION 3. Covenants of the Company ......................................................................12
(a) Offering Memorandum ...........................................................................12
(b) Notice and Effect of Material Events ..........................................................12
(c) Amendment to Offering Memorandum and Supplements ..............................................13
(d) Qualification of Securities for Offer and Sale ................................................13
(e) Rating of Securities ..........................................................................13
(f) DTC ...........................................................................................13
(g) Use of Proceeds ...............................................................................13
(h) Restriction on Sale of Securities .............................................................13
(i) PORTAL Designation ............................................................................13
(j) Reporting Requirements ........................................................................13
(k) Rule 144A Information .........................................................................14
(l) Joinder Agreements and Supplemental Indenture .................................................14
(m) Legends .......................................................................................14
SECTION 4. Payment of Expenses ...........................................................................14
(a) Expenses ......................................................................................14
(b) Termination of Agreement ......................................................................15
SECTION 5. Conditions of Initial Purchasers' Obligations .................................................15
(a) Opinion of Counsel for Company, AMF and the Guarantors ........................................15
(b) Opinion of Counsel for Initial Purchasers .....................................................15
(c) Additional Opinions ...........................................................................15
(d) Officers' Certificate .........................................................................15
(e) Accountants' Comfort Letter ...................................................................16
(f) Bring-down Comfort Letter .....................................................................16
(g) Maintenance of Rating .........................................................................16
(h) PORTAL ........................................................................................16
(i) Financial Officer's Certificate ...............................................................16
(j) Registration Rights Agreement and Indenture ...................................................16
(k) Escrow Agreement ..............................................................................16
(1) New Senior Secured Credit Facility ............................................................16
(m) Consent Solicitation and Tender Offer .........................................................17
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(n) Sale-Leaseback Facility .......................................................................17
(o) The Merger Agreement ..........................................................................17
(p) Purchase Agreement Joinder Agreement ..........................................................17
(q) Additional Documents ..........................................................................17
(r) Termination of Agreement ......................................................................17
SECTION 6. Subsequent Offers and Resales of the Securities ...............................................17
(a) Offer and Sale Procedures .....................................................................17
(i) Offers and Sales ....................................................................17
(ii) No General Solicitation .............................................................17
(iii) Purchases by Non-Bank Fiduciaries ...................................................18
(iv) Subsequent Purchaser Notification ...................................................18
(v) Minimum Principal Amount ............................................................18
(b) Covenants of the Company ......................................................................18
(i) Integration .........................................................................18
(ii) Rule 144A Information ...............................................................18
(iii) Restriction on Repurchases ..........................................................18
(c) Resale Pursuant to Rule 903 of Regulation S or Rule 144A ......................................18
(d) Qualified Institutional Buyer .................................................................19
SECTION 7. Indemnification. ..............................................................................19
(a) Indemnification of Initial Purchasers .........................................................19
(b) Indemnification of Company ....................................................................20
(c) Actions against Parties; Notification .........................................................20
(d) Settlement without Consent if Failure to Reimburse ............................................20
SECTION 8. Contribution ..................................................................................20
SECTION 9. Representations, Warranties and Agreements to Survive .........................................21
SECTION 10. Termination of Agreement ......................................................................22
(a) Termination; General ..........................................................................22
(b) Liabilities ...................................................................................22
SECTION 11. Default by One or More of the Initial Purchasers ..............................................22
SECTION 12. Tax Disclosure ................................................................................23
SECTION 13. Notices .......................................................................................23
SECTION 14. Parties .......................................................................................23
SECTION 15. Mergers .......................................................................................23
SECTION 16. Governing Law .................................................................................23
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SECTION 17. Time ..........................................................................................23
SECTION 18. Counterparts ..................................................................................24
SECTION 19. Effect of Headings ............................................................................24
Schedule A -- Initial Purchasers
Schedule B -- List of Guarantors
Schedule C -- Notes
Exhibit A -- Form of Opinion of Kirkland & Ellis LLP
Exhibit B -- Form of Opinion of Fried, Frank, Harris, Shriver & Jacobson LLP
Exhibit C -- Form of Purchase Agreement Joinder Agreement
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KINGPIN MERGER SUB, INC.
(a Delaware corporation)
(to be merged with and into
AMF Bowling Worldwide, Inc.
at the time of the Merger)
$150,000,000
PURCHASE AGREEMENT
February 19, 2004
MERRILL LYNCH & CO.
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
Credit Suisse First Boston LLC
as Representatives of the several Initial Purchasers
c/o Merrill Lynch & Co.
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
4 World Financial Center
New York, New York 10080
Ladies and Gentlemen:
Kingpin Merger Sub, Inc., a Delaware corporation (the "Company") (which
will be merged with and into AMF Bowling Worldwide, Inc., a Delaware corporation
("AMF"), upon consummation of the Merger (as defined below) with AMF as the
survivor of the Merger), confirms its agreement with Merrill Lynch & Co.,
Merrill Lynch, Pierce, Fenner & Smith Incorporated ("Merrill Lynch") and each of
the other Initial Purchasers named in Schedule A hereto (collectively, the
"Initial Purchasers," which term shall also include any initial purchaser
substituted as hereinafter provided in Section 11 hereof), for whom Merrill
Lynch and Credit Suisse First Boston LLC ("CSFB") are acting as representatives
(in such capacity, the "Representatives"), with respect to (i) the issue and
sale by the Company and the purchase by the Initial Purchasers, acting severally
and not jointly, of the respective principal amounts set forth in said Schedule
A of $150,000,000 aggregate principal amount of the Company's 10% Senior
Subordinated Notes due 2010 (the "Notes") and (ii) the issue and sale by the
Guarantors listed on Schedule B hereto (each a "Guarantor" and collectively, the
"Guarantors") and the purchase by the Initial Purchasers, acting severally and
not jointly, of the senior subordinated guarantees (the "Guarantees") of the
Company's obligations under the Notes. The Notes and the Guarantees are
collectively referred to as the "Securities." The Securities are to be issued
pursuant to an indenture to be dated as of February 27, 2004 (the "Indenture")
by and among, the Company, Wilmington Trust Company, a Delaware banking
corporation, as trustee (the "Trustee"), and other parties from time to time
signatories thereto, including each of the Guarantors. Securities issued in
book-entry form will be issued to Cede & Co. as nominee of The Depository Trust
Company ("DTC") pursuant to a letter agreement, to be dated before or as of the
Closing Time (as defined in Section 2(b)) (the "DTC Agreement"), between the
Company and DTC.
The Securities are being issued as part of the financing to effect the
acquisition of AMF and its subsidiaries by the merger (the "Merger") of the
Company, with and into AMF, whereby AMF will be the surviving corporation of the
Merger. The Merger will be effected pursuant to the Agreement and Plan of Merger
(the "Merger Agreement"), dated as of November 26, 2003, among Kingpin Holdings
LLC ("Kingpin
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Holdings"), a Delaware limited liability company, the Company, a direct wholly
owned subsidiary of Kingpin Holdings, and AMF.
In connection with the consummation of the Merger, the Merger Agreement and
related documents contemplate the occurrence of the following acquisition and
related financing transactions including the issuance of the Securities pursuant
to this Agreement: (i) investment (the "Equity Investment") by Code Hennessy &
Simmons IV LP, a Delaware limited partnership, certain of its co-investors and
certain members of AMF's management team (collectively, the "Equity Investors")
in Kingpin Holdings totaling approximately $135 million; (ii) payment of $25.00
in cash by the Company for each share of AMF common stock (the "Merger
Consideration"); (iii) refinancing of approximately $334 million of AMF's net
existing indebtedness (including repayment of indebtedness under existing credit
facilities (the "Existing Credit Facilities") and the consummation of AMF's
consent solicitation and tender offer to purchase the outstanding 13.00% senior
subordinated notes of AMF, due 2008 (the "Consent Solicitation and Tender
Offer")); (iv) borrowing by AMF of approximately $135 million in term loans
under a new senior secured credit facility (the "New Senior Secured Credit
Facility"); (v) sale of certain of AMF's real estate under a sale-leaseback
arrangement for aggregate proceeds of $250 million (the "Sale-Leaseback
Facility"); and (vi) payment of certain fees and expenses incurred in connection
with the foregoing acquisition and related financing transactions (clauses (i)
through (vi), collectively, the "Transactions" and documents executed in
connection therewith, the "Transaction Documents").
The Company understands that the Initial Purchasers propose to make an
offering of the Securities on the terms and in the manner set forth herein and
agree that the Initial Purchasers may resell, subject to the conditions set
forth herein, all or a portion of the Securities to purchasers ("Subsequent
Purchasers") at any time after this Agreement has been executed and delivered.
The Securities are to be offered and sold through the Initial Purchasers without
being registered under the Securities Act of 1933, as amended (the "1933 Act"),
in reliance upon exemptions therefrom. Pursuant to the terms of the Securities
and the Indenture, investors that acquire Securities may only resell or
otherwise transfer such Securities if such Securities are hereafter registered
under the 1933 Act or if an exemption from the registration requirements of the
1933 Act is available (including the exemption afforded by Rule 144A ("Rule
144A") or Regulation S ("Regulation S") of the rules and regulations promulgated
under the 1933 Act by the Securities and Exchange Commission (the
"Commission")).
The Company has prepared and delivered to each Initial Purchaser copies of
a preliminary offering memorandum dated February 6, 2004 (the "Preliminary
Offering Memorandum") and has prepared and will deliver to each Initial
Purchaser, on the date hereof or the next succeeding day, copies of a final
offering memorandum dated February 19, 2004 (the "Final Offering Memorandum"),
each for use by such Initial Purchaser in connection with its solicitation of
purchases of, or offering of, the Securities. "Offering Memorandum" means, with
respect to any date or time referred to in this Agreement, the most recent
offering memorandum (whether the Preliminary Offering Memorandum or the Final
Offering Memorandum, or any amendment or supplement to either such document),
which has been prepared and delivered by the Company to the Initial Purchasers
in connection with their solicitation of purchases of, or offering of, the
Securities.
The holders of the Securities will be entitled to the benefits of the
registration rights agreement to be dated as of the; Closing Time (the
"Registration Rights Agreement"), by and among the Company, the Guarantors and
the Initial Purchasers, pursuant to which the Company will agree, subject to the
terms and conditions thereof, to file a registration statement with the
Commission registering the Exchange Securities (as defined in the Registration
Rights Agreement), and the Guarantees with respect thereto, under the 1933 Act;
PROVIDED, HOWEVER, that if the Merger has not occurred by the Closing Time, the
Guarantors shall not be party to the Registration Rights Agreement until the
Guarantors execute the Registration Rights Joinder Agreement (defined below)
required hereby.
If the Merger is not consummated at the Closing Time, the Company shall
deposit (or cause to be deposited) with the Escrow Agent (as defined below) the
proceeds from the sale of the Securities, together with
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additional funds (collectively, the "Escrow Funds"), pursuant to an Escrow
Agreement to be dated February 27, 2004 (the "Escrow Agreement"), among the
Company, Wilmington Trust Company, a Delaware banking corporation, as escrow
agent (the "Escrow Agent") and the Trustee. Pending consummation of the Merger,
the Escrow Funds will be held by the Escrow Agent in an escrow account (the
"Escrow Account"). AMF will be able to obtain release of the Escrow Funds upon
consummation of the Merger and subject to the conditions set forth in the Escrow
Agreement. If AMF has not obtained the release of the Escrow Funds on or prior
to March 29, 2004 (the "Deadline Date") in accordance with the terms of the
Escrow Agreement, then the Indenture will require that the Company redeem all of
the Securities at 101% of their principal amount plus accrued and unpaid
interest thereon (the "Special Mandatory Redemption"). The Company has a
one-time option to extend the Deadline Date by up to 90 days but in no event may
the Company extend the Deadline Date beyond June 28, 2004. In the event the
Company elects to extend the Deadline Date as provided by the terms of the
Escrow Agreement, the Company shall be required to deposit with the Escrow Agent
an additional amount of cash (which may be invested in Cash Equivalents)
sufficient to fund the accrued and unpaid interest on the Securities for such
additional time period.
SECTION 1. REPRESENTATIONS AND WARRANTIES.
(a) REPRESENTATIONS AND WARRANTIES BY THE COMPANY. The Company represents
and warrants to each Initial Purchaser as of the date hereof and as of the
Closing Time referred to in Section 2(b) hereof, and agrees with each Initial
Purchaser, as follows:
(i) OFFERING MEMORANDUM. The Offering Memorandum does not; and at the
Closing Time will not, include an untrue statement of a material fact or
omit to state a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading; PROVIDED that this representation, warranty and agreement shall
not apply to statements in or omissions from the Offering Memorandum made
in reliance upon and in conformity with written information furnished to
the Company by any Initial Purchaser through Merrill Lynch expressly for
use in the Offering Memorandum.
(ii) INDEPENDENT ACCOUNTANTS. Arthur Andersen LLP, who audited the
financial statements and supporting schedules of AMF and its subsidiaries
as of December 31, 2001 and for the fiscal years ended December 31, 2001,
2000, 1999 and 1998 included in the Offering Memorandum, were independent
certified public accountants with respect to AMF and its respective
subsidiaries within the meaning of Regulation S-X under the 1933 Act at all
times that Arthur Andersen LLP was engaged by AMF. KPMG LLP, who audited
the consolidated financial statements and supporting schedules of AMF and
its subsidiaries as of June 29, 2003 and June 30, 2002, and for the year
ended June 29, 2003 the four months ended June 30, 2002 and the two months
ended February 28, 2002, included in the Offering Memorandum, are
independent certified public accountants with respect to AMF and its
subsidiaries within the meaning of Regulation S-X under the 1933 Act.
(iii) FINANCIAL STATEMENTS. The financial statements, together with
the related schedules and notes, included in the Offering Memorandum
present fairly the financial position of AMF and its consolidated
subsidiaries at the dates indicated and the statement of operations,
stockholders' equity and cash flows of AMF and its consolidated
subsidiaries for the periods specified, said financial statements have been
prepared in conformity with generally accepted accounting principles
("GAAP") applied on a consistent basis throughout the periods involved. The
supporting schedules, if any, included in the Offering Memorandum present
fairly in accordance with GAAP the information required to be stated
therein. The selected financial data and the summary financial information
included in the Offering Memorandum present fairly the information shown
therein and have been compiled on a basis consistent with that of the
audited financial statements included in the Offering Memorandum. The pro
forma financial statements of AMF and its subsidiaries and the related
notes thereto included in the Offering Memorandum present fairly the
information shown therein, have been prepared in accordance
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with the Commission's rules and guidelines with respect to pro forma
financial statements and have been properly compiled on the bases described
therein, and the assumptions used in the preparation thereof are reasonable
and the adjustments used therein are appropriate to give effect to the
transactions and circumstances referred to therein.
(iv) NO MATERIAL ADVERSE CHANGE IN BUSINESS. Since the respective
dates as of which information is given in the Offering Memorandum, except
as otherwise stated therein, (A) there has been no material adverse change
in the condition, financial or otherwise, or in the earnings, business
affairs or business prospects of AMF, the Company, the Guarantors and their
respective subsidiaries considered as one enterprise, whether or not
arising in the ordinary course of business (a "Material Adverse Effect"),
(B) there have been no transactions entered into by AMF, the Company, the
Guarantors or any of their respective subsidiaries, other than those in the
ordinary course of business, which are material with respect to AMF, the
Company, the Guarantors and their respective subsidiaries considered as one
enterprise, and (C) there has been no dividend or distribution of any kind
declared, paid or made by AMF, the Company, the Guarantors or their
respective subsidiaries on any class of their capital stock or other equity
interest.
(v) GOOD STANDING OF AMF AND THE COMPANY. Each of AMF and the Company
has been duly organized and is validly existing as a corporation in good
standing under the laws of the State of Delaware and has corporate power
and authority to own, lease and operate its properties and to conduct its
business as described in the Offering Memorandum and to enter into and
perform its obligations under this Agreement; and each of AMF and the
Company is duly qualified as a foreign corporation to transact business and
is in good standing in each other jurisdiction in which such qualification
is required, whether by reason of the ownership or leasing of property or
the conduct of business, except where the failure so to qualify or to be in
good standing would not result in a Material Adverse Effect.
(vi) GOOD STANDING OF SUBSIDIARIES. Each subsidiary of AMF (each a
"Subsidiary" and collectively the "Subsidiaries") (including each of the
Guarantors) has been duly organized and is validly existing as a
corporation in good standing under the laws of the jurisdiction of its
incorporation, has corporate power and authority to own, lease and operate
its properties and to conduct its business as described in the Offering
Memorandum and is duly qualified as a foreign corporation to transact
business and is in good standing in each jurisdiction in which such
qualification is required, whether by reason of the ownership or leasing of
property or the conduct of business, except where the failure so to qualify
or to be in good standing would not result in a Material Adverse Effect;
except as otherwise disclosed in the Offering Memorandum, all of the issued
and outstanding capital stock of each Subsidiary has been duly authorized
and validly issued, is fully paid and non-assessable and is owned by AMF,
directly or through subsidiaries, free and clear of any security interest,
mortgage, pledge, lien, encumbrance, claim or equity; none of the
outstanding shares of capital stock of the Subsidiaries was issued in
violation of any preemptive or similar rights of any security holder of
such Subsidiary. All the Subsidiaries are listed on Schedule C attached
hereto.
(vii) CAPITALIZATION. The authorized, issued and outstanding capital
stock of the Company is as set forth in the Offering Memorandum. The shares
of issued and outstanding capital stock of the Company has been duly
authorized and validly issued and are fully paid and non-assessable; none
of the outstanding shares of capital stock of the Company was issued in
violation of the preemptive or other similar rights of any securityholder
of the Company.
(viii) AUTHORIZATION OF PURCHASE AGREEMENT AND REGISTRATION RIGHTS
AGREEMENT.
(a) This Agreement has been duly authorized by the Company and
each of the Guarantors. This Agreement has been duly executed and delivered
by the Company and at the Closing Time, assuming due authorization,
execution and delivery by the Initial Purchasers, this Agreement will
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constitute the valid and binding obligation of the Company, enforceable
against the Company in accordance with its terms. At the Closing Time, each
of the Guarantors, if the Merger is consummated, will have duly executed
and delivered this Agreement and, assuming due authorization, execution and
delivery by the Initial Purchasers, this Agreement will constitute the
valid and binding obligation of each of the Guarantors, enforceable against
each of the Guarantors in accordance with its terms.
(b) The Registration Rights Agreement has been duly authorized by
the Company and each of the Guarantors. The Registration Rights Agreement
will be duly executed and delivered by the Company at the Closing Time and
at the Closing Time, assuming due authorization, execution and delivery by
the Initial Purchasers, the Registration Rights Agreement will constitute
the valid and binding obligation of the Company, enforceable against the
Company in accordance with its terms. At the Closing Time, each of the
Guarantors, if the Merger is consummated, will have duly executed and
delivered the Registration Rights Agreement and, assuming due
authorization, execution and delivery by the Initial Purchasers, the
Registration Rights Agreement will constitute the valid and binding
obligation of each of the Guarantors, enforceable against each of the
Guarantors in accordance with its terms.
(ix) AUTHORIZATION OF THE JOINDER AGREEMENTS. The registration rights
joinder agreement (the "Registration Rights Joinder Agreement") and the
purchase agreement joinder agreement (the "Purchase Agreement Joinder
Agreement," together with the Registration Rights Joinder Agreement, the
"Joinder Agreements") have been duly authorized by each of the Guarantors,
and once the Merger is consummated, will be duly executed and delivered by
each of the Guarantors and will constitute the valid and binding
obligations of each of the Guarantors, enforceable against each of the
Guarantors in accordance with their terms.
(x) AUTHORIZATION OF THE INDENTURE. The Indenture has been duly
authorized by the Company and each of the Guarantors. The Indenture will be
duly executed and delivered by the Company at the Closing Time and at the
Closing Time, assuming due authorization, execution and delivery by the
Trustee, the Indenture will constitute the valid and binding obligation of
the Company, enforceable against the Company in accordance with its terms.
At the Closing Time, each of the Guarantors, if the Merger is consummated,
will have duly executed and delivered the Indenture and, assuming due
authorization, execution and delivery by the Trustee, the Indenture will
constitute the valid and binding obligation of each of the Guarantors,
enforceable against each of the Guarantors in accordance with its terms
(xi) AUTHORIZATION OF THE SECURITIES. The Notes have been duly
authorized and, at the Closing Time, will have been duly executed and
delivered by the Company and, when authenticated, issued and delivered in
the manner provided for in the Indenture and delivered against payment of
the purchase price therefor as provided in this Agreement, will constitute
valid and binding obligations of the Company, enforceable against the
Company in accordance with their terms and will be in the form contemplated
by, and entitled to the benefits of, the Indenture.
The Guarantees have been duly authorized by each of the Guarantors
and, once the Merger is consummated, will have been duly executed and
delivered by each of the Guarantors and, when the Notes are, authenticated,
issued and delivered in the manner provided for in the Indenture and
delivered against payment of the purchase price therefor as provided in
this Agreement and once the Merger is consummated, will constitute valid
and binding obligations of each of the Guarantors, enforceable against each
of the Guarantors in accordance with their terms.
The Exchange Securities have been duly authorized by Company, and when
executed and authenticated and issued and delivered by the Company in
exchange for the Notes pursuant to the
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Exchange Offer (as defined in the Registration Rights Agreement), will
constitute valid and binding obligations of the Company, enforceable
against the Company in accordance with their terms.
The guarantees of the Exchange Securities have been duly authorized by
each of the Guarantors and, when the Exchange Securities are authenticated,
issued and delivered in the manner provided for in the Indenture, will
constitute valid and binding obligations of each of the Guarantors,
enforceable against each of the Guarantors in accordance with their terms
and will be in the form contemplated by, and entitled to the benefits of,
the Indenture.
(xii) AUTHORIZATION OF THE ESCROW AGREEMENT. The Escrow Agreement has
been duly authorized by the Company. At the Closing Time if the Merger is
not consummated, the Company will have duly executed and delivered the
Escrow Agreement and assuming due authorization, execution and delivery of
the Escrow Agreement by each other party thereto, the Escrow Agreement will
constitute the valid and binding obligation of the Company, enforceable
against the Company in accordance with its terms.
(xiii) AUTHORIZATION OF THE MERGER AGREEMENT. The Merger Agreement has
been duly authorized executed and delivered by AMF and the Company and
constitutes a valid and binding agreement of AMF and the Company
enforceable against AMF and the Company in accordance with its terms.
(xiv) AUTHORIZATION OF THE NEW SENIOR SECURED CREDIT FACILITY. The New
Senior Secured Credit Facility has been authorized by the Company and each
of the Guarantors which are a party thereto and, when executed and
delivered by the Company and such Guarantors, assuming due authorization,
execution and delivery by each other party thereto, will constitute a valid
and binding agreements of the Company and such Guarantors enforceable
against the Company and such Guarantors in accordance with its terms.
(xv) AUTHORIZATION OF THE SALE-LEASEBACK FACILITY. The Sale-Leaseback
Facility has been authorized by the Company and each of the Guarantors
which are a party thereto and, when executed and delivered by the Company
and such Guarantors, assuming due authorization, execution and delivery by
each other party thereto, will constitute a valid and binding agreements of
the Company and such Guarantors enforceable against the Company and such
Guarantors in accordance with its terms.
(xvi) POWER AND AUTHORITY. AMF, the Company and each of the Guarantors
has all requisite corporate or such other similar power and authority to
enter into and perform its obligations under this Agreement, the
Registration Rights Agreement, the Indenture, the Escrow Agreement, the
Securities, the Dealer Manager Agreement, the Exchange Securities, the New
Senior Secured Credit Facility, the Sale-Leaseback Facility, the Joinder
Agreement, the Merger Agreement and the DTC Agreement, in each case to the
extent a party thereto, and to consummate all the transactions in
connection therewith as contemplated in the Offering Memorandum.
(xvii) DESCRIPTION OF THE SECURITIES, THE INDENTURE, THE ESCROW
AGREEMENT, THE REGISTRATION RIGHTS AGREEMENT, THE NEW SENIOR SECURED CREDIT
FACILITY, THE SALE-LEASEBACK FACILITY AND THE MERGER AGREEMENT. The
Securities, the Indenture, the Escrow Agreement, the Registration Rights
Agreement, the New Senior Secured Credit Facility, the Sale-Leaseback
Facility and the Merger Agreement will conform in all material respects to
the respective descriptions thereof contained in the Offering Memorandum
and will be in substantially the respective forms previously delivered to
the Initial Purchasers prior to the date of this Agreement.
(xviii) ABSENCE OF DEFAULTS AND CONFLICTS. None of AMF, the Company,
the Guarantors or any of their respective subsidiaries is in violation of
its charter or by-laws or in default in the performance or
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observance of any obligation, agreement, covenant or condition contained in
any contract, indenture, mortgage, deed of trust, loan or credit agreement,
note, lease or other agreement or instrument to which AMF, the Company, the
Guarantors or any of their respective subsidiaries is a party or by which
or any of them may be bound, or to which any of the property or assets of
AMF, the Company, the Guarantors or any of their respective subsidiaries is
subject (collectively, "Agreements and Instruments") except for such
defaults that would not result in a Material Adverse Effect; and the
execution, delivery and performance of this Agreement, the Indenture, the
Escrow Agreement and the Securities, the other Transaction Documents and
any other agreement or instrument entered into or issued or to be entered
into or issued by AMF, the Company, the Guarantors or any of their
respective subsidiaries in connection with the transactions contemplated
hereby or thereby or in the Offering Memorandum and the consummation of the
transactions contemplated herein and in the Offering Memorandum (including
the issuance and sale of the Securities and consummation of the other
Transactions and the use of the proceeds from the sale of the Securities as
described in the Offering Memorandum under the caption "Use of Proceeds")
and compliance by the Company with its obligations hereunder have been duly
authorized by all necessary corporate action and do not and will not after
giving effect to the other Transactions, whether with or without the giving
of notice or passage of time or both, conflict with or constitute a breach
of, or default or Repayment Event (as defined below) under, or result in
the creation or imposition of any lien, charge or encumbrance upon any
property or assets of AMF, the Company, the Guarantors or any of their
respective subsidiaries pursuant to, the Agreements and Instruments except
for such conflicts, breaches or defaults or Repayment Events or liens,
charges or encumbrances that, singly or in the aggregate, would not
reasonably be expected to result in a Material Adverse Effect, nor will
such action result in any violation of the provisions of the charter or
by-laws of AMF, the Company, the Guarantors or any of their respective
subsidiaries or any applicable law, statute, rule, regulation, judgment,
order, writ or decree of any government, government instrumentality or
court, domestic or foreign, having jurisdiction over AMF, the Company, the
Guarantors or any of their respective subsidiaries or any of their assets,
properties or operations. As used herein, a "Repayment Event" means any
event or condition which gives the holder of any note, debenture or other
evidence of indebtedness (or any person acting on such holder's behalf) the
right to require the repurchase, redemption or repayment of all or a
portion of such indebtedness by AMF, the Company, the Guarantors or any of
their respective subsidiaries.
(xix) ABSENCE OF LABOR DISPUTE. No labor dispute with the employees of
AMF, the Company, the Guarantors or any of their respective subsidiaries
exists or, to the knowledge of the Company, is imminent, and none of AMF,
the Company, the Guarantors or any of their respective subsidiaries is
aware of any existing or imminent labor disturbance by the employees of any
of AMF's, the Company's, the Guarantors' or any of their respective
subsidiaries' principal suppliers, manufacturers, customers or contractors,
which, in either case, would result in a Material Adverse Effect.
(xx) ABSENCE OF PROCEEDINGS. There is no action, suit, proceeding,
inquiry or investigation before or brought by any court or governmental
agency or body, domestic or foreign, now pending, or, to the knowledge of
the Company, threatened, against or affecting AMF, the Company, the
Guarantors or any of their respective subsidiaries which might result in a
Material Adverse Effect, or which might materially and adversely affect the
properties or assets of AMF, the Company, the Guarantors or any of their
respective subsidiaries or the consummation of the transactions
contemplated by this Agreement or any of the Transactions or the
performance by AMF, the Company, the Guarantors or any of their respective
subsidiaries of their obligations hereunder or under the Securities, the
Exchange Securities, the Escrow Agreement or any of the Transaction
Documents. The aggregate of all pending legal or governmental proceedings
to which AMF, the Company, the Guarantors or any of their respective
subsidiaries is a party or of which any of their respective property or
assets is the subject which are not described in the Offering Memorandum,
including ordinary routine litigation incidental to the business, would not
reasonably be expected to result in a Material Adverse Effect.
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(xxi) ABSENCE OF MANIPULATION. None of AMF, the Company, the
Guarantors or any respective affiliate thereof has taken, nor will take,
directly or indirectly, any action which is designed to or which has
constituted or which would be expected to cause or result in stabilization
or manipulation of the price of any security of AMF, the Company, the
Guarantors or their respective subsidiaries to facilitate the sale or
resale of the Securities.
(xxii) POSSESSION OF INTELLECTUAL PROPERTY. AMF, the Company, the
Guarantors and their respective subsidiaries own or possess, or can acquire
on reasonable terms, adequate 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, trade names or other intellectual
property (collectively, "Intellectual Property") necessary to carry on the
business now operated by them, and none of AMF, the Company, the Guarantors
or any of their respective subsidiaries has received any notice or is
otherwise aware of any infringement of or conflict with asserted rights of
others with respect to any Intellectual Property or of any facts or
circumstances which would render any Intellectual Property invalid or
inadequate to protect the interest of AMF, the Company, the Guarantors or
any of their respective subsidiaries therein, and which infringement or
conflict (if the subject of any unfavorable decision, ruling or finding) or
invalidity or inadequacy, singly or in the aggregate, would result in a
Material Adverse Effect.
(xxiii) ABSENCE OF FURTHER REQUIREMENTS. No filing with, or
authorization, approval, consent, license, order, registration,
qualification or decree of, any court or governmental authority or agency
is necessary or required for the performance by AMF, the Company and each
of the Guarantors of its obligations hereunder, in connection with the
offering, issuance or sale of the Securities hereunder or the consummation
of the transactions contemplated by this Agreement or for the due
execution, delivery or performance of the Indenture by AMF, the Company and
each of the Guarantors, except such as have been already obtained.
(xxiv) POSSESSION OF LICENSES AND PERMITS. AMF, the Company, the
Guarantors and their respective subsidiaries possess such permits,
licenses, approvals, consents and other authorizations (collectively,
"Governmental Licenses") issued by the appropriate federal, state, local or
foreign regulatory agencies or bodies necessary to conduct the business now
operated by them respectively, except where the failure so to possess would
not, singly or in the aggregate, result in a Material Adverse Effect; AMF,
the Company, the Guarantors and their respective subsidiaries are in
compliance with the terms and conditions of all such Governmental Licenses
and with the rules and regulations of all regulatory authorities and
governing bodies having jurisdiction with respect thereto, except where the
failure so to comply would not, singly or in the aggregate, result in a
Material Adverse Effect; all of the Governmental Licenses are valid and in
full force and effect, except, where the invalidity of such Governmental
Licenses or the failure of such Governmental Licenses to be in full force
and effect would not, singly or in the aggregate, result in a Material
Adverse Effect; and none of AMF, the Company, the Guarantors or any of
their respective subsidiaries has received any notice of proceedings
relating to the revocation or modification of any such Governmental
Licenses which, singly or in the aggregate, if the subject of an
unfavorable decision, ruling, or finding, would result in a Material
Adverse Effect.
(xxv) TITLE TO PROPERTY. AMF, the Company, the Guarantors and their
respective subsidiaries have good and marketable title to all real property
owned by AMF, the Company, the Guarantors and their respective subsidiaries
and good title to all other properties owned by them, in each case, free
and clear of all mortgages, pledges, liens, security interests, claims,
restrictions or encumbrances of any kind except such as (a) are described
in the Offering Memorandum or (b) do not, singly or in the aggregate,
materially affect the value of such property and do not interfere with the
use made and proposed to be made of such property by AMF, the Company, the
Guarantors or any of their respective subsidiaries; and all of the leases
and subleases material to the business of AMF, the Company, the Guarantors
and
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their respective subsidiaries, considered as one enterprise, and under
which AMF, the Company, the Guarantors or any of their respective
subsidiaries holds properties described in the Offering Memorandum, are in
full force and effect, and none of AMF, the Company, the Guarantors or any
of their respective subsidiaries has any notice of any claim of any sort
that has been asserted by anyone adverse to the rights of AMF, the Company,
the Guarantors or any of their respective subsidiaries under any of the
leases or subleases mentioned above, or affecting or questioning the rights
of AMF, the Company, the Guarantors or any of their respective subsidiaries
to the continued possession of the leased or subleased premises under any
such lease or sublease, which in either case, would result in a Material
Adverse Effect.
(xxvi) ENVIRONMENTAL LAWS. Except as described in the Offering
Memorandum and except such matters as would not reasonably be expected to,
singly or in the aggregate, result in a Material Adverse Effect, (A) none
of AMF, the Company, the Guarantors or any of their respective subsidiaries
is in violation of any federal, state, local or foreign statute, law, rule,
regulation, ordinance, code, policy or rule of common law or any judicial
or administrative interpretation thereof, including any judicial or
administrative order, consent, decree or judgment, relating to pollution or
protection of human health, the environment (including, without limitation,
ambient air, surface water, groundwater, land surface or subsurface strata)
or wildlife, including, without limitation, laws and regulations relating
to the release or threatened release of chemicals, pollutants,
contaminants, wastes, toxic substances, hazardous substances, petroleum or
petroleum products, asbestos-containing materials or mold (collectively,
"Hazardous Materials") or to the manufacture, processing, distribution,
use, treatment, storage, disposal, transport or handling of Hazardous
Materials (collectively, "Environmental Laws"), (B) AMF, the Company, the
Guarantors and their respective subsidiaries have all permits,
authorizations and approvals required under any applicable Environmental
Laws and are each in compliance with their requirements, (C) there are no
pending or threatened administrative, regulatory or judicial actions,
suits, demands, demand letters, claims, liens, notices of noncompliance or
violation, investigation or proceedings relating to any Environmental Law
against AMF, the Company, the Guarantors or any of their respective
subsidiaries and (D) there are no events or circumstances that would
reasonably be expected to form the basis of an order for clean-up or
remediation, or an action, suit or proceeding by any private party or
governmental body or agency, against or affecting AMF, the Company, the
Guarantors or any of their respective subsidiaries relating to Hazardous
Materials or Environmental Laws.
(xxvii) INVESTMENT COMPANY ACT. None of AMF, the Company, the
Guarantors or any of their respective subsidiaries is required, and upon
issuance and sale of the Securities as herein contemplated and the
application of the net proceeds therefrom as described in the Offering
Memorandum will not be, an "investment company" or an entity "controlled"
by an "investment company" as such terms are defined in the Investment
Company Act of 1940, as amended (the "1940 Act").
(xxviii) SIMILAR OFFERINGS. None of AMF, the Company, the Guarantors
or any of their respective affiliates, as such term is defined in Rule
501(b) under the 1933 Act (each, an "Affiliate"), has, directly or
indirectly, solicited any offer to buy, sold or offered to sell or
otherwise negotiated in respect of, or will, directly or indirectly,
solicit any offer to buy, sell or offer to sell or otherwise negotiate in
respect of, in the United States or to any United States citizen or
resident, any security which is or would be integrated with the sale of the
Securities in a manner that would require the Securities to be registered
under the 1933 Act.
(xxix) RULE 144A ELIGIBILITY. The Securities are eligible for resale
pursuant to Rule 144A and will not be, at the Closing Time, of the same
class as securities listed on a national securities exchange registered
under Section 6 of the Securities and Exchange Act Of 1934, as amended (the
"1934 Act"), or quoted in a U.S. automated interdealer quotation system.
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(xxx) NO GENERAL SOLICITATION. None of AMF, the Company, the
Guarantors or their respective Affiliates or any person acting on its or
any of their behalf (other than the Initial Purchasers, as to whom the
Company make no representation) has engaged or will engage, in connection
with the offering or sale of the Securities, in any form of general
solicitation or general advertising within the meaning of Rule 502(c) under
the 1933 Act.
(xxxi) NO REGISTRATION REQUIRED. Subject to compliance by the Initial
Purchasers with the representations and warranties set forth in Section 2
and the procedures set forth in Section 6 hereof, it is not necessary in
connection with the offer, sale and delivery of the Securities to the
Initial Purchasers and to each Subsequent Purchaser in the manner
contemplated by this Agreement and the Offering Memorandum to register the
Securities under the 1933 Act or to qualify the Indenture under the Trust
Indenture Act of 1939, as amended (the "1939 Act").
(xxxii) NO DIRECTED SELLING EFFORTS. With respect to those Securities
sold in reliance on Regulation S, (A) none of AMF, the Company, the
Guarantors or any of their respective Affiliates or any person acting on
its or their behalf (other than the Initial Purchasers, as to whom the
Company makes no representation) has engaged or will engage in any directed
selling efforts within the meaning of Regulation S and (B) each of AMF, the
Company, the Guarantors, or any of their respective Affiliates and any
person acting on its or their behalf (other than the Initial Purchasers, as
to whom the Company makes no representation) has complied and will comply
with the offering restrictions requirement of Regulation S.
(xxxiii) ACCOUNTING CONTROLS. AMF and its subsidiaries maintain a
system of internal accounting controls sufficient to provide reasonable
assurances that (A) transactions are executed in accordance with
management's authorization; (B) transactions are recorded as necessary to
permit preparation of financial statements in conformity with generally
accepted accounting principles and to maintain accountability for assets;
(C) access to assets is permitted only in accordance with management's
authorization; (D) the recorded accountability for assets is compared with
the existing assets at reasonable intervals and appropriate action is taken
with respect to any differences; (E) material information relating to AMF
and its subsidiaries is promptly made known to the officers responsible for
establishing and maintaining the system of internal accounting controls;
and (F) any significant deficiencies or weaknesses in the design or
operation of internal accounting controls which could adversely affect
AMF's ability to record, process, summarize and report financial data, and
any fraud whether or not material that involves management or other
employees who have a significant role in internal controls, are adequately
and promptly disclosed to AMF's independent auditors and the audit
committee of AMF's board of directors.
(xxxiv) DISCLOSURE CONTROLS. AMF and its subsidiaries employ
disclosure controls and procedures that are designed to ensure that
information required to be disclosed by AMF in the reports that it files or
submits under the Exchange Act is recorded, processed, summarized and
reported, within the time periods specified in the Commission's rules and
forms, and is accumulated and communicated to AMF's management, including
its principal executive officer or officers and principal financial officer
or officers, as appropriate to allow timely decisions regarding disclosure.
(xxxv) RELATED PARTY TRANSACTIONS. No relationship, direct or
indirect, exists between or among any of AMF, the Company, the Guarantors
or their respective subsidiaries or any affiliate of AMF, the Company, the
Guarantors or their respective subsidiaries, on the one hand, and any
former or current director, officer, stockholder, customer or supplier of
any of them, on the other hand, which is required by the 1933 Act or by the
rules and regulations enacted thereunder to be described in a registration
statement on Form S-1 which is not so described or is not described as
required in the Offering Memorandum.
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(xxxvi) TAX RETURNS. All United States federal income tax returns of
AMF and its subsidiaries required by law to be filed have been filed,
except where the failure to file such returns would not, singly or in the
aggregate, reasonably be expected to have a Material Adverse Effect and all
taxes shown by such returns or otherwise assessed, which are due and
payable, have been paid, except amounts being contested in good faith and
as to which adequate reserves have been provided. AMF and its subsidiaries
have filed all other tax returns that are required to have been filed by
them pursuant to applicable foreign, federal, state, local or other law
except insofar as the failure to file such returns would not reasonably be
expected to result in a Material Adverse Effect, and have paid all taxes
due pursuant to such returns or pursuant to any assessment received by AMF
and its subsidiaries, except for such taxes, if any, as are being contested
in good faith and as to which adequate reserves have been provided. The
charges, accruals and reserves on the books of AMF in respect of all
federal, state, local and foreign tax liabilities of AMF and its
subsidiaries for any years not finally determined are adequate to meet any
assessments or re-assessments for additional income tax for any years not
finally determined, except to the extent of any inadequacy that would not
reasonably be expected to result in a Material Adverse Effect.
(xxxvii) INSURANCE. AMF, the Company, the Guarantors and their
respective subsidiaries carry or are entitled to the benefits of insurance
covering such risks as is commercially prudent under the circumstances,
expect where the failure to do so would not singly or in the aggregate,
reasonably be expect to have a Material Adverse Effect.
(xxxviii) SOLVENCY. Each of AMF, the Company, the Guarantors is, and
immediately after the Closing Time and immediately upon consummation of the
Transactions will be, Solvent. As used herein, the term "Solvent" means,
with respect to an entity, on a particular date, that on such date (a) the
fair market value of the assets of such entity is greater than the total
amount of liabilities (including contingent liabilities) of such entity,
(b) the entity is able to pay its debts and other liabilities, including
contingent obligations, as they mature, and (c) the entity does not have
unreasonably small capital.
(xxxix) SUPPLIERS. No supplier of merchandise to AMF, the Company, the
Guarantors or any of their respective subsidiaries has ceased shipments to
AMF, the Company, the Guarantors or any of their respective subsidiaries,
other than in the normal and ordinary course of business consistent with
past practices, which cessation would not reasonably be expected to result
in a Material Adverse Effect.
(x1) AMF'S REPRESENTATION AND WARRANTIES IN THE MERGER AGREEMENT. The
representations and warranties made by AMF in the Merger Agreement are true
and correct.
(x1i) FOREIGN CORRUPT PRACTICES. Neither AMF, nor any of its
Subsidiaries, nor any of their respective directors, officers, agents,
employees or any other persons acting on their behalf has, in connection
with the operation of their respective businesses, (i) used any corporate
or other funds for unlawful contributions, payments, gifts or
entertainment, or made any unlawful expenditures relating to political
activity to government officials, candidates or members of political
parties or organizations, or established or maintained any unlawful of
unrecorded funds in violation of Section 104 of the Foreign Corrupt
Practices Act of 1977, as amended, (the "FCPA") or any other similar
applicable foreign, Federal or state law, (ii) paid, accepted or received
any unlawful contributions, payments, expenditures or gifts, or (iii)
violated or operated in noncompliance with any export restrictions,
anti-boycott regulations, embargo regulations or other applicable domestic
or foreign laws and regulations.
(b) OFFICERS' CERTIFICATES. Any certificate signed by any officer of AMF,
the Company, any Guarantor or any of their respective subsidiaries delivered to
any of the Initial Purchasers or to the Representatives or counsel for the
Initial Purchasers shall be deemed a representation and warranty by AMF, the
Company, such Guarantor or any such subsidiary to each Initial Purchaser as to
the matters covered thereby.
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SECTION 2. SALE AND DELIVERY TO INITIAL PURCHASERS; CLOSING.
(a) SECURITIES. On the basis of the representations and warranties herein
contained and subject to the terms and conditions herein set forth, the Company
agrees to sell to each Initial Purchaser, severally and not jointly, and each
Initial Purchaser, severally and not jointly, agrees to purchase from the
Company, at the price set forth in Schedule D, the aggregate principal amount of
Securities set forth in Schedule A opposite the name of such Initial Purchaser,
plus any additional principal amount of Securities which such Initial Purchaser
may become obligated to purchase pursuant to the provisions of Section 11
hereof.
(b) PAYMENT. Payment of the purchase price for, and delivery of
certificates for, the Securities shall be made at the office of Fried, Frank,
Harris, Shriver & Jacobson LLP, One New York Plaza, New York, NY 10004, or at
such other place as shall be agreed upon by the Representatives and the Company,
at 9:00 A.M. (Eastern time) on February 27, 2004, the sixth business day after
the date hereof (unless postponed in accordance with the provisions of Section
11), or such other time not later than ten business days after such date as
shall be agreed upon by the Representatives and the Company (such time and date
of payment and delivery being herein called the "Closing Time").
Payment shall be made to the Company by wire transfer of immediately
available funds to a bank account designated by the Company (in accordance with
the Escrow Agreement, to the extent that the Merger has not been consummated at
the Closing Time), against delivery to the Representatives for the respective
accounts of the Initial Purchasers of certificates for the Securities to be
purchased by them. It is understood that each Initial Purchaser has authorized
the Representatives, for its account, to accept delivery of, receipt for, and
make payment of the purchase price for, the Securities which it has agreed to
purchase. Merrill Lynch, individually and not as representative of the Initial
Purchasers, may (but shall not be obligated to) make payment of the purchase
price for the Securities to be purchased by any Initial Purchaser whose funds
have not been received by the Closing Time, but such payment shall not relieve
such Initial Purchaser from its obligations hereunder. If the Merger has not
been consummated at the Closing Time, the Company will deposit the Escrow Funds
into the Escrow Account in accordance with the terms of the Escrow Agreement.
(c) DENOMINATIONS; REGISTRATION. Certificates for the Securities shall be
in such denominations ($1,000 or integral multiples of $1,000 in excess thereof)
and registered in such names as the Representatives may request in writing at
least one full business day before Closing Time. The certificates representing
the Securities shall be made available for examination and packaging by the
Initial Purchasers in The City of New York not later than 10:00 A.M. on the last
business day prior to Closing Time.
SECTION 3. COVENANTS OF THE COMPANY. The Company covenants with each
Initial Purchaser as follows:
(a) OFFERING MEMORANDUM. The Company, as promptly as possible, will furnish
to each Initial Purchaser, without charge, such number of copies of the Offering
Memorandum and any amendments and supplements thereto and documents incorporated
by reference therein as such Initial Purchaser may reasonably request prior to
the initial printing thereof.
(b) NOTICE AND EFFECT OF MATERIAL EVENTS. The Company will immediately
notify each Initial Purchaser, and confirm such notice in writing, of (x) any
filing made by AMF, the Company or any Guarantor of information relating to the
offering of the Securities with any securities exchange or any other regulatory
body in the United States or any other jurisdiction, and (y) prior to the
completion of the placement of the offered Securities by the Initial Purchasers
as evidenced by a notice in writing from the Initial Purchasers to the Company,
any material changes in or affecting the condition, financial or otherwise, or
the earnings, business affairs or business prospects of AMF, the Company, the
Guarantors and their respective subsidiaries considered as one enterprise which
(i) make any statement in the Offering Memorandum false or misleading or (ii)
are not disclosed in the Offering Memorandum. In such event or if during such
time any event shall occur as a result of
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which it is necessary, in the reasonable opinion of any of the Company, its
counsel, the Initial Purchasers or counsel for the Initial Purchasers, to amend
or supplement the Offering Memorandum in order that the Offering Memorandum not
include any untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements therein not misleading in the light of
the circumstances then existing, the Company will forthwith amend or supplement
the Offering Memorandum by preparing and furnishing to each Initial Purchaser an
amendment or amendments of, or a supplement or supplements to, the Offering
Memorandum (in form and substance satisfactory in the reasonable opinion of
counsel for the Initial Purchasers) so that, as so amended or supplemented, the
Offering Memorandum will not include an untrue statement of a material fact or
omit to state a material fact necessary in order to make the statements therein,
in the light of the circumstances existing at the time it is delivered to a
Subsequent Purchaser, not misleading.
(c) AMENDMENT TO OFFERING MEMORANDUM AND SUPPLEMENTS. The Company will
advise each Initial Purchaser promptly of any proposal to amend or supplement
the Offering Memorandum and will not effect such amendment or supplement without
the consent of the Initial Purchasers. Neither the consent of the Initial
Purchasers, nor the Initial Purchaser's delivery of any such amendment or
supplement, shall constitute a waiver of any of the conditions set forth in
Section 5 hereof.
(d) QUALIFICATION OF SECURITIES FOR OFFER AND SALE. The Company will use
its best efforts, in cooperation with the Initial Purchasers, to qualify the
Securities for offering and sale under the applicable securities laws of such
states and other jurisdictions as the Initial Purchasers may designate and to
maintain such qualifications in effect as long as required for the sale of the
Securities; PROVIDED, HOWEVER, that the Company shall not be obligated to file
any general consent to service of process or to qualify as a foreign corporation
or as a dealer in securities in any jurisdiction in which it is not so qualified
or to subject itself to taxation in respect of doing business in any
jurisdiction in which it is not otherwise so subject.
(e) RATING OF SECURITIES. The Company shall take all reasonable action
necessary to enable Standard & Poor's Ratings Services, a division of McGraw
Hill, Inc. ("S&P"), and Moody's Investors Service Inc. ("Moody's") to provide
their respective credit ratings of the Securities.
(f) DTC. The Company will cooperate with the Initial Purchasers and will
use its commercially reasonable efforts to permit the offered Securities to be
eligible for clearance and settlement through the facilities of DTC.
(g) USE OF PROCEEDS. The Company will use the net proceeds received by it
from the sale of the Securities and the other Transactions in the manner
specified in the Offering Memorandum under the "Use of Proceeds."
(h) RESTRICTION ON SALE OF SECURITIES. During a period of 180 days from the
date of the Offering Memorandum, none of AMF or the Company or their respective
subsidiaries will, without the prior written consent of Merrill Lynch, directly
or indirectly, issue, sell, offer or agree to sell, grant any option for the
sale of, or otherwise dispose of, any other debt securities of AMF, the Company,
the Guarantors or their respective subsidiaries or securities of AMF, the
Company, the Guarantors or their respective subsidiaries that are convertible
into, or exchangeable for, the offered Securities or such other debt securities.
(i) PORTAL DESIGNATION. The Company will 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.
("NASD") relating to trading in the PORTAL Market.
(j) REPORTING REQUIREMENTS. Until the offering of the Securities is
complete; the Company will file or cause AMF to file all documents required to
be filed with the Commission pursuant to the 1934 Act within the time periods
required by the 1934 Act and the 1934 Act Regulations.
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(k) RULE 144A INFORMATION. The Company agrees that, in order to render the
Securities eligible for resale pursuant to Rule 144A under the 1933 Act, while
any of the Securities remain outstanding, it will make available, upon request,
to any holder of Securities or prospective purchasers of Securities the
information specified in Rule 144A(d)(4), unless AMF, the Company or the
Guarantors furnish information to the Commission pursuant to Section 13 or 15(d)
of the 1934 Act.
(1) JOINDER AGREEMENTS AND SUPPLEMENTAL INDENTURE.
(a) Upon consummation of the Merger, the Company shall cause each of
the Guarantors to execute the Purchase Agreement Joinder Agreement substantially
in the form attached hereto as Exhibit C, pursuant to which each of the
Guarantors shall agree to: (i) be bound by all covenants, agreements,
representations, warranties, and acknowledgements attributable to the Company
(including the Company's obligations as an indemnifying party) in this Agreement
as if made by, and with respect to, each Guarantor signatory to the Purchase
Agreement Joinder Agreement and (ii) jointly and severally, perform all
obligations and duties required of the Company pursuant to this Agreement.
(b) If the Merger is not consummated at the Closing Time, the Company
shall cause each of the Guarantors to execute and deliver a Registration Rights
Agreement Joinder Agreement in the form and substance satisfactory to the
Initial Purchasers and counsel to the Initial Purchasers, pursuant to which each
of the Guarantors shall agree to: (i) be bound by all covenants, agreements, and
acknowledgements attributable to the Company (including the Company's
obligations as an indemnifying party) in the Registration Rights Agreement as if
made by, and with respect to, each Guarantor signatory to the Registration
Rights Agreement Joinder Agreement and (ii) jointly and severally, perform all
obligations and duties required of the Company pursuant to the Registration
Rights Agreement.
(c) If the Merger is not consummated at the Closing Time, the Company
shall cause each of the Guarantors to execute and deliver a supplemental
indenture (the "Supplemental Indenture") in the form and substance satisfactory
to the Initial Purchasers and counsel to the Initial Purchasers. In the event
the Merger is not consummated at the Closing Time, upon consummation of the
Merger, the Company shall cause each of the Guarantors to execute and deliver a
Supplemental Indenture, pursuant to which each of the Guarantors shall become a
party to the Indenture and shall become Guarantors of the Securities and shall
agree to be bound by all covenants, agreements, and other provisions
attributable to the Guarantors in the Indenture.
(m) LEGENDS. Each certificate of the Security will bear the legend
contained in the "Notice to Investors" in the Offering Memorandum for the time
period and upon the terms stated in the Offering Memorandum.
SECTION 4. PAYMENT OF EXPENSES.
(a) EXPENSES. The Company will pay all expenses incident to the performance
of its obligations under this Agreement, including (i) the preparation,
printing, delivery to the Initial Purchasers and any filing of the Offering
Memorandum (including financial statements and any schedules or exhibits) and of
each amendment or supplement thereto, (ii) the preparation, printing and
delivery to the Initial Purchasers of this Agreement, the Registration Rights
Agreement, any Agreement among Initial Purchasers, the Indenture, the Escrow
Agreement and such other documents as may be required in connection with the
offering, purchase, sale, issuance or delivery of the Securities, (iii) the
preparation, issuance and delivery of the certificates for Securities to the
Initial Purchasers, including, any transfer taxes, any stamp or other duties
payable upon the sale, issuance and delivery of the Securities to the Initial
Purchasers and any charges of DTC in connection therewith, (iv) the fees and
disbursements of the Company's and Guarantors' counsel, accountants and other
advisors, (v) the qualification of the Securities under securities laws in
accordance with the provisions of Section 3(d) hereof, including filing fees and
the reasonable fees and disbursements of counsel for the Initial Purchasers (up
to $5,000) in connection therewith and in connection with the preparation of the
Blue Sky Survey, any
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supplement thereto, (vi) the fees and expenses of the Trustee, including the
fees and disbursements of counsel for the Trustee in connection with the
Indenture and the Securities, (vii) the costs and expenses of the Company
relating to investor presentations on any "road show" undertaken in connection
with the marketing 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, travel and lodging expenses of the representatives and officers
of the Company and any such consultants, and 50% of the cost of aircraft and
other transportation chartered in connection with the road show, and (viii) any
fees payable in connection with the rating of the Securities and any fees and
expenses payable in connection with the initial and continued designation of the
Securities as PORTAL securities under the PORTAL Market Rules pursuant to NASD
Rule 5322. The Initial Purchasers will pay fees, costs and expenses of their
counsel.
(b) TERMINATION OF AGREEMENT. If this Agreement is terminated by the
Representatives in accordance with the provisions of Section 5 or Section
10(a)(i) hereof, the Company shall reimburse the Initial Purchasers for all of
their out-of-pocket expenses, including the reasonable fees and disbursements of
counsel for the Initial Purchasers.
SECTION 5. CONDITIONS OF INITIAL PURCHASERS' OBLIGATIONS. The obligations
of the several Initial Purchasers hereunder are subject to the accuracy of the
representations and warranties of the Company contained in Section 1 hereof or
in certificates of any officer of AMF, the Company, the Guarantors or any of
their respective subsidiaries delivered pursuant to the provisions hereof, to
the performance by the Company of its covenants and other obligations hereunder,
and to the following further conditions:
(a) OPINION OF COUNSEL FOR COMPANY, AMF AND THE GUARANTORS. At the Closing
Time, the Representatives shall have received the favorable opinion, dated as of
the Closing Time, of Kirkland and Ellis LLP, counsel for the Company, AMF and
the Guarantors in form set forth in Exhibit A hereto.
(b) OPINION OF COUNSEL FOR INITIAL PURCHASERS. At the Closing Time, the
Initial Purchasers shall have received the favorable opinion, dated as of the
Closing Time, of Fried, Frank, Harris, Shriver & Jacobson LLP, counsel for the
Initial Purchasers, together with signed or reproduced copies of such letter for
each of the other Initial Purchasers, in the form set forth in Exhibit B hereto.
In giving such opinion such counsel may rely, as to all matters governed by the
laws of jurisdictions other than the law of the State of New York and the
federal law of the United States and the General Corporation Law of the State of
Delaware, upon the opinions of counsel satisfactory to the Representatives. Such
counsel may also state that, insofar as such opinion involves factual matters,
they have relies, to the extent they deem proper, upon certificates of officers
of AMF, the Company, the Guarantors and their respective subsidiaries and
certificates of public officials.
(c) ADDITIONAL OPINIONS. At the Closing Time, the Initial Purchasers shall
have received each of the opinions, dated as of the Closing Time, required to be
delivered pursuant to the Merger Agreement, the New Senior Secured Credit
Facility, and the Sale-Leaseback Facility, addressed to each of the Initial
Purchasers, together with signed or reproduced copies of such letter for each of
the other Initial Purchasers.
(d) OFFICERS' CERTIFICATE. At the Closing Time, there shall not have been,
since the date hereof or since the respective dates as of which information is
given in the Final Offering Memorandum (exclusive of any amendments or
supplements thereto subsequent to the date of this Agreement), any material
adverse change in the condition, financial or otherwise, or in the earnings,
business affairs or business prospects of AMF, the Company, the Guarantors and
their subsidiaries considered as one enterprise, whether or not arising in the
ordinary course of business, and the Representatives shall have received a
certificate of the President or a Vice President of AMF, and of the chief
financial or chief accounting officer of AMF, dated as of the Closing Time, to
the effect that (i) there has been no such material adverse change, (ii) the
representations and warranties in Section 1 hereof are true and correct with the
same force and effect as though expressly made at and as of Closing Time, (iii)
pursuant to the Merger Agreement, the Company has merged with and into AMF with
AMF
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as the surviving corporation, and (iv) the Company has complied with all
agreements and satisfied all conditions on its part to be performed or satisfied
at or prior to the Closing Time.
(e) ACCOUNTANTS' COMFORT LETTER. At the time of the execution of this
Agreement, the Initial Purchasers shall have received from KPMG LLP a letter
dated such date, in form and substance satisfactory to the Representatives,
together with signed or reproduced copies of such letter for each of the other
Initial Purchasers, containing statements and information of the type ordinarily
included in accountants' "comfort letters" to Initial Purchasers with respect to
the financial statements and certain financial information contained in the
Offering Memorandum.
(f) BRING-DOWN COMFORT LETTER. At the Closing Time, the Initial Purchasers
shall have received from KPMG LLP a letter, dated as of the Closing Time, to the
effect that they reaffirm the statements made in the letter furnished pursuant
to subsection (e) of this Section, except that the specified date referred to
shall be a date not more than three business days prior to the Closing Time.
(g) MAINTENANCE OF RATING. At the Closing Time, the Securities shall be
rated at least B3 by Moody's and CCC+ by S&P, and the Company shall have
delivered to the Representatives letter dated the Closing Time, from each such
rating agency, or other evidence satisfactory to the Representatives confirming
that the Securities have such ratings; and since the date of this Agreement,
there shall not have occurred a downgrading in the rating assigned to the
Securities or any of the Company's or AMF's other debt instruments (including
the New Senior Secured Credit Facility) by any "nationally recognized
statistical rating agency", as that term is defined by the Commission for
purposes of Rule 436(g)(2) under the 1933 Act, and no such securities rating
agency shall have publicly announced that it has under surveillance or review,
with possible negative implications, its rating of the Securities or any of the
Company's or AMF's other debt instruments (including the New Senior Secured
Credit Facility).
(h) PORTAL. At the Closing Time, the Securities shall have been designated
for trading on PORTAL.
(i) FINANCIAL OFFICER'S CERTIFICATE. At the Closing Time, the Initial
Purchasers shall have received certificates of the Chief Financial Officer (i)
as to certain agreed upon accounting matters and with respect to the solvency of
AMF, the Company and the Guarantors immediately after the consummation of the
Transactions and (ii) with respect to AMF's financial statements and certain
financial information of AMF and its subsidiaries, in each case, in the form and
substance satisfactory to the Initial Purchasers and counsel to the Initial
Purchasers.
(j) REGISTRATION RIGHTS AGREEMENT AND INDENTURE. The Company and each of
the Guarantors shall have duly (i) authorized, the Registration Rights Agreement
and the Indenture; (ii) executed and delivered the Registration Rights Agreement
and the Indenture in form and substance satisfactory to the Initial Purchasers
and counsel to the Initial Purchasers and (iii) executed and delivered the
Indenture to the Trustee; PROVIDED, HOWEVER, that (ii) and (iii) shall only
apply to the Guarantors in the event that the Merger is consummated at the
Closing Time.
(k) ESCROW AGREEMENT. At the Closing Time, if the Merger is not
consummated, the Company shall have duly authorized, executed and delivered the
Escrow Agreement in form and substance satisfactory to the Initial Purchasers
and counsel to the Initial Purchasers and each of the Trustee and the Escrow
Agent shall entered into the Escrow Agreement.
(l) NEW SENIOR SECURED CREDIT FACILITY. If the Merger is consummated at the
Closing Time, (i) AMF shall have closed on the New Secured Senior Credit
Facility in the form and on the terms as set forth in the New Secured Senior
Credit Facility presented to the Initial Purchasers on even date herewith, (ii)
the lenders under the New Senior Credit Facility shall be prepared to fund the
term loan thereunder and to provide the
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revolver thereunder, and (iii) AMF shall be prepared to repay all outstanding
indebtedness under the Existing Credit Facilities.
(m) CONSENT SOLICITATION AND TENDER OFFER. If the Merger is consummated at
the Closing Time, AMF shall be prepared to close on the Consent Solicitation and
Tender Offer on the terms described in the Offering Memorandum and shall have
received the Requisite Consent (as defined in AMF's Offer to Purchase and
Consent Solicitation, dated January 29, 2004) in connection therewith.
(n) SALE-LEASEBACK FACILITY. If the Merger is consummated at the Closing
Time, AMF shall be prepared to close on the Sale-Leaseback Facility in the form
and on the terms as set forth in the Sale-Leaseback Facility presented to the
Initial Purchasers on even date herewith and all conditions to the closing of
the Sale-Leaseback Facility shall be satisfied.
(o) THE MERGER AGREEMENT. If the Merger is consummated at the Closing Time,
AMF shall be prepared to close the Merger Agreement in the form and on the terms
as set forth in the Merger Agreement presented to the Initial Purchasers on even
date herewith and the Merger Agreement shall be in full force and effect and all
conditions to the closing of the Merger Agreement shall be satisfied.
(p) PURCHASE AGREEMENT JOINDER AGREEMENT. Each of the Guarantors shall have
executed the Purchase Agreement Joinder Agreement.
(q) ADDITIONAL DOCUMENTS. At the Closing Time, counsel for the Initial
Purchasers shall have been furnished with such documents as they may require for
the purpose of enabling them to pass upon the issuance and sale of the
Securities as herein contemplated, or in order to evidence the accuracy of any
of the representations or warranties, or the fulfillment of any of the
conditions, herein contained; and all proceedings taken by the Company and the
Guarantors, if the Merger is consummated at the Closing Time, in connection with
the issuance and sale of the Securities as herein contemplated shall be
satisfactory in form and substance to the Representatives and counsel for the
Initial Purchasers.
(r) TERMINATION OF AGREEMENT. If any condition specified in this Section
shall not have been fulfilled when and as required to be fulfilled, this
Agreement may be terminated by the Representatives by notice to the Company at
any time at or prior to the Closing Time, and such termination shall be without
liability of any party to any other party except as provided in Section 4 and
except that Sections 1, 7, 8 and 9 shall survive any such termination and remain
in full force and effect.
SECTION 6. SUBSEQUENT OFFERS AND RESALES OF THE SECURITIES.
(a) OFFER AND SALE PROCEDURES. Each of the Initial Purchasers and the
Company hereby establish and agree to observe the following procedures in
connection with the offer and sale of the Securities:
(i) OFFERS AND SALES. Offers and sales of the Securities shall be made
to such persons and in such manner as is contemplated by the Offering
Memorandum. Each Initial Purchaser severally agrees that it will not offer,
sell or deliver any of the Securities in any jurisdiction outside the
United States except under circumstances that will result in compliance
with the applicable laws thereof, and that it will take at its own expense
whatever action is required to permit its purchase and resale of the
Securities in such jurisdictions.
(ii) NO GENERAL SOLICITATION. No general solicitation or general
advertising (within the meaning of Rule 502(c) under the 1933 Act) will be
used in the United States in connection with the offering or sale of the
Securities.
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(iii) PURCHASES BY NON-BANK FIDUCIARIES. In the case of a non-bank
Subsequent Purchaser of a Security acting as a fiduciary for one or more
third parties, each third party shall, in the judgment of the applicable
Initial Purchaser, be an Institutional Accredited Investor or a "qualified
institutional buyer" within the meaning of Rule 144A under the 1933 Act (a
"Qualified Institutional Buyer") or a non-U.S. person outside the United
States.
(iv) SUBSEQUENT PURCHASER NOTIFICATION. Each Initial Purchaser will
take reasonable steps to inform, and cause each of its U.S. Affiliates to
take reasonable steps to inform, persons acquiring Securities from such
Initial Purchaser or affiliate, as the case may be, in the United States
that the Securities (A) have not been and will not be registered under the
1933 Act, (B) are being sold to them without registration under the 1933
Act in reliance on Rule 144A or in accordance with another exemption from
registration under the 1933 Act, as the case may be, and (C) may not be
offered, sold or otherwise transferred except (1) to the Company, (2)
outside the United States in accordance with Regulation S, or (3) inside
the United States in accordance with (x) Rule 144A to a person whom the
seller reasonably believes is a Qualified Institutional Buyer that is
purchasing such Securities for its own account or for the account of a
Qualified Institutional Buyer to whom notice is given that the offer, sale
or transfer is being made in reliance on Rule 144A or (y) pursuant to
another available exemption from registration under the 1933 Act.
(v) MINIMUM PRINCIPAL AMOUNT. No sale of the Securities to any one
Subsequent Purchaser will be for less than U.S. $1,000 principal amount and
no Security will be issued in a smaller principal amount. If the Subsequent
Purchaser is a non-bank fiduciary acting on behalf of others, each person
for whom it is acting must purchase at least U.S. $1,000 principal amount
of the Securities.
(b) COVENANTS OF THE COMPANY. The Company covenants with each Initial
Purchaser as follows:
(i) INTEGRATION. The Company agrees that it will not and will cause
its Affiliates not to, directly or indirectly, solicit any offer to buy,
sell or make any offer or sale of, or otherwise negotiate in respect of,
securities of the Company of any class if, as a result of the doctrine of
"integration" referred to in Rule 502 under the 1933 Act, such offer or
sale would render invalid (for the purpose of (i) the sale of the offered
Securities by the Company to the Initial Purchasers, (ii) the resale of the
offered Securities by the Initial Purchasers to Subsequent Purchasers or
(iii) the resale of the offered Securities by such Subsequent Purchasers
to others) the exemption from the registration requirements of the 1933
Act, provided by Section 4(2) thereof or by Rule 144A or by Regulation S
thereunder or otherwise.
(ii) RULE 144A INFORMATION. The Company agrees that, in order to
render the offered Securities eligible for resale pursuant to Rule 144A
under the 1933 Act, while any of the offered Securities remain outstanding,
it will make available, upon request, to any holder of offered Securities
or prospective purchasers of Securities the information specified in Rule
144A(d)(4), unless the Company furnishes information to the Commission
pursuant to Section 13 or 15(d) of the 1934 Act.
(iii) RESTRICTION ON REPURCHASES. Until the expiration of two years
after the original issuance of the offered Securities, the Company will
not, and will cause its Affiliates not to, resell any offered Securities
which are "restricted securities" (as such term is defined under Rule
144(a)(3) under the 1933 Act), whether as beneficial owner or otherwise
(except as agent acting as a securities broker on behalf of and for the
account of customers in the ordinary course of business in unsolicited
broker's transactions).
(c) RESALE PURSUANT TO RULE 903 OF REGULATION S OR RULE 144A. Each Initial
Purchaser understands that the offered Securities have not been and will not be
registered under the 1933 Act and may not be offered or sold within the United
States or to, or for the account of benefit of, U.S. persons except in
accordance with Regulation S under the 1933 Act or pursuant to an exemption from
the registration requirements of the
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1933 Act. Each Initial Purchaser severally represents and agrees, that, except
as permitted by Section 6(a) above, it has offered and sold Securities and will
offer and sell Securities (i) as part of their distribution at any time and (ii)
otherwise until forty days after the later of the date upon which the offering
of the Securities commences and Closing Time, only in accordance with Rule 903
of Regulation S, Rule 144A under the 1933 Act or another applicable exemption
from the registration requirements of the 1933 Act. Accordingly, neither the
Initial Purchasers, their affiliates nor any persons acting on their behalf have
engaged or will engage in any directed selling efforts with respect to
Securities sold hereunder pursuant to Regulation S, and the Initial Purchasers,
their affiliates and any person acting on their behalf have complied and will
comply with the offering restriction requirements of Regulation S. Each Initial
Purchaser severally agrees that, at or prior to confirmation of a sale of
offered Securities pursuant to Regulation S it will have sent to each
distributor, dealer or person receiving a selling concession, fee or other
remuneration that purchases offered Securities from it or through it during the
restricted period a confirmation or notice to substantially the following
effect:
"The Securities covered hereby have not been registered under the
United States Securities Act of 1933 (the "Securities Act") and may
not be offered or sold within the United States or to or for the
account or benefit of U.S. persons (i) as part of their distribution
at any time and (ii) otherwise until forty days after the later of the
date upon which the offering of the Securities commenced and the date
of closing, except in either case in accordance with Regulation S or
Rule 144A under the Securities Act. Terms used above have the meaning
given to them by Regulation S."
Terms used in the above paragraph have the meanings given to them by
Regulation S.
(d) QUALIFIED INSTITUTIONAL BUYER. Each Initial Purchaser severally and not
jointly represents and warrants to, and agrees with, the Company that it is a
Qualified Institutional Buyer and an "accredited investor" within the meaning of
Rule 501(a) under the 1933 Act (an "Accredited Investor").
SECTION 7. INDEMNIFICATION.
(a) INDEMNIFICATION OF INITIAL PURCHASERS. The Company agrees to indemnify
and hold harmless each Initial Purchaser, its affiliates, as such term is
defined in Rule 50l(b) under the 1933 Act (each, an "Affiliate"), its selling
agents and each person, if any, who controls any Initial Purchaser within the
meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act as follows:
(i) against any and all loss, Liability, claim, damage and expense
whatsoever, as incurred, arising out of any untrue statement or alleged
untrue statement of a material fact contained in any Preliminary Offering
Memorandum or the Final Offering Memorandum (or any amendment or supplement
thereto), or the omission or alleged omission therefrom of a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading;
(ii) against any and all loss, liability, claim, damage, and expense
whatsoever, as incurred, to the extent of the aggregate amount paid in
settlement of any litigation, or any investigation or proceeding by any
governmental agency or body, commenced or threatened, or of any claim
whatsoever based upon any such untrue statement or omission, or any such
alleged untrue statement or omission; PROVIDED that (subject to Section
7(d) below) any such settlement is effected with the written consent of the
Company; and
(iii) against any and all expense whatsoever, as incurred (including
the fees and disbursements of counsel chosen by Merrill Lynch), reasonably
incurred in investigating, preparing or
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defending against any litigation, or any investigation or proceeding by any
governmental agency or body, commenced or threatened, or any claim
whatsoever based upon any such untrue statement or omission, or any such
alleged untrue statement or omission, to the extent that any such expense
is not paid under (i) or (ii) above;
PROVIDED, HOWEVER, that this indemnity agreement shall not apply to any loss,
liability, claim, damage or expense to the extent arising out of any untrue
statement or omission or alleged untrue statement or omission made in reliance
upon and in conformity with written information furnished to AMF, the Company or
the Guarantors by any Initial Purchaser through Merrill Lynch expressly for use
in the Offering Memorandum (or any amendment thereto).
(b) INDEMNIFICATION OF COMPANY. Each Initial Purchaser severally agrees to
indemnify and hold harmless the Company and each person, if any, who controls,
the Company or the Guarantors within the meaning of Section 15 of the 1933 Act
or Section 20 of the 1934 Act against any and all loss, liability, claim, damage
and expense described in the indemnity contained in subsection (a) of this
Section, as incurred, but only with respect to untrue statements or omissions,
or alleged untrue statements or omissions, made in the Offering Memorandum in
reliance upon and in conformity with written information furnished to the
Company by such Initial Purchaser through Merrill Lynch expressly for use in the
Offering Memorandum.
(c) ACTIONS AGAINST PARTIES; NOTIFICATION. Each indemnified party shall
give notice as promptly as reasonably practicable to each indemnifying party of
any action commenced against it in respect of which indemnity may be sought
hereunder, but failure to so notify an indemnifying party shall not relieve such
indemnifying party from any liability hereunder to the extent it is not
materially prejudiced as a result thereof and in any event shall not relieve it
from any liability which it may have otherwise than on account of this indemnity
agreement. In the case of parties indemnified pursuant to Section 7(a) above,
counsel to the indemnified parties shall be selected by Merrill Lynch, and, in
the case of parties indemnified pursuant to Section 7(b) above, counsel to the
indemnified parties shall be selected by the Company. An indemnifying party may
participate at its own expense in the defense of any such action; PROVIDED,
HOWEVER, that counsel to the indemnifying party shall not (except with the
consent of the indemnified party) also be counsel to the indemnified party. In
no event shall the indemnifying parties be liable for fees and expenses of more
than one counsel (in addition to any local counsel) separate from their own
counsel for all indemnified parties in connection with any one action or
separate but similar or related actions in the same jurisdiction arising out of
the same general allegations or circumstances. No indemnifying party shall,
without the prior written consent of the indemnified parties, settle or
compromise or consent to the entry of any judgment with respect to any
litigation, or any investigation or proceeding by any governmental agency or
body, commenced or threatened, or any claim whatsoever in respect of which
indemnification or contribution could be sought under this Section or Section 8
hereof (whether or not the indemnified parties are actual or potential parties
thereto), unless such settlement, compromise or consent (i) includes an
unconditional release of each indemnified party from all liability arising out
of such litigation, investigation, proceeding or claim and (ii) does not include
a statement as to or an admission of fault, culpability or a failure to act by
or on behalf of any indemnified party.
(d) SETTLEMENT WITHOUT CONSENT IF FAILURE TO REIMBURSE. If at any time an
indemnified party shall have requested an indemnifying party to reimburse the
indemnified party for fees and expenses of counsel, such indemnifying party
agrees that it shall be liable for any settlement of the nature contemplated by
Section 7(a)(ii) effected without its written consent if (i) such settlement is
entered into more than 45 days after receipt by such indemnifying party of the
aforesaid request, (ii) such indemnifying party shall have received notice of
the terms of such settlement at least 30 days prior to such settlement being
entered into and (iii) such indemnifying party shall not have reimbursed such
indemnified party in accordance with such request prior to the date of such
settlement.
SECTION 8. CONTRIBUTION. If the indemnification provided for in Section 7
hereof is for any reason unavailable to or insufficient to hold harmless an
indemnified party in respect of any losses, liabilities, claims,
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damages or expenses referred to therein, then each indemnifying party shall
contribute to the aggregate amount of such losses, liabilities, claims, damages
and expenses incurred by such indemnified party, as incurred, (i) in such
proportion as is appropriate to reflect the relative benefits received by the
Company on the one hand and the Initial Purchasers on the other hand from the
offering of the Securities pursuant to this Agreement or (ii) if the allocation
provided by clause (i) is not permitted by applicable law, in such proportion as
is appropriate to reflect not only the relative benefits referred to in clause
(i) above but also the relative fault of the Company on the one hand and of the
Initial Purchasers on the other hand in connection with the statements or
omissions which resulted in such losses, liabilities, claims, damages or
expenses, as well as any other relevant equitable considerations.
The relative benefits received by the Company on the one hand and the
Initial Purchasers on the other hand in connection with the offering of the
Securities pursuant to this Agreement shall be deemed to be in the same
respective proportions as the total net proceeds from the offering of the
Securities pursuant to this Agreement (before deducting expenses) received by
the Company and the total underwriting discount received by the Initial
Purchasers, bear to the aggregate initial offering price of the Securities.
The relative fault of the Company on the one hand and the Initial
Purchasers on the other hand shall be determined by reference to, among other
things, whether any such untrue or alleged untrue statement of a material fact
or omission or alleged omission to state a material fact relates to information
supplied by the Company, by the Initial Purchasers and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission.
The Company and the Initial Purchasers agree that it would not be just and
equitable if contribution pursuant to this Section were determined by pro rata
allocation (even if the Initial Purchasers were treated as one entity for such
purpose) or by any other method of allocation which does not take account of the
equitable considerations referred to above in this Section. The aggregate amount
of losses, liabilities, claims, damages and expenses incurred by an indemnified
party and referred to above in this Section shall be deemed to include any legal
or other expenses reasonably incurred by such indemnified party in
investigating, preparing or defending against any litigation, or any
investigation or proceeding by any governmental agency or body, commenced or
threatened, or any claim whatsoever based upon any such untrue or alleged untrue
statement or omission or alleged omission.
Notwithstanding the provisions of this Section, no Initial Purchaser shall
be required to contribute any amount in excess of the amount by which the total
price at which the Securities purchased and sold by it hereunder exceeds the
amount of any damages which such Initial Purchaser 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 ll(f) of me 1933 Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation.
For purposes of this Section, each person, if any, who controls an Initial
Purchaser within the meaning of Section 15 of the 1933 Act or Section 20 of the
1934 Act and each Initial Purchaser's Affiliates and selling agents shall have
the same rights to contribution as such Initial Purchaser, and each person, if
any, who controls the Company within the meaning of Section 15 of the 1933 Act
or Section 20 of the 1934 Act shall have the same rights to contribution as the
Company. The Initial Purchasers' respective obligations to contribute pursuant
to this Section are several in proportion to the principal amount of Securities
set forth opposite their respective names in Schedule A hereto and not joint.
SECTION 9. REPRESENTATIONS, WARRANTIES AND AGREEMENTS TO SURVIVE. All
representations, warranties and agreements contained in this Agreement or in
certificates of officers of AMF, the Company, the Guarantors or any of their
respective subsidiaries submitted pursuant hereto, shall remain operative and in
full force and effect, regardless of (i) any investigation made by or on behalf
of any Initial Purchaser or its Affiliates
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or selling agents, any person controlling any Initial Purchaser, its officers or
directors or any person controlling AMF, the Company the Guarantors or their
respective subsidiaries and (ii) delivery of and payment for the Securities.
SECTION 10. TERMINATION OF AGREEMENT.
(a) TERMINATION; GENERAL. The Representatives may terminate this Agreement,
by notice to the Company, at any time at or prior to the Closing Time (i) if
there has been, since the time of execution of this Agreement or since the
respective dates as of which information is given in the Final Offering
Memorandum (exclusive of any amendments or supplements thereto subsequent to the
date of this Agreement), any material adverse change in the condition, financial
or otherwise, or in the earnings, business affairs or business prospects of AMF,
the Company and the Guarantors and their respective subsidiaries considered as
one enterprise, whether or not arising in the ordinary course of business, or
(ii) if there has occurred any material adverse change in the financial markets
in the United States or the international financial markets, any outbreak of
hostilities or escalation thereof or other calamity or crisis or any change or
development involving a prospective change in national or international
political, financial or economic conditions, in each case the effect of which is
such as to make it, in the judgment of the Representatives, impracticable or
inadvisable to market the Securities or to enforce contracts for the sale of the
Securities, or (iii) if trading generally on the American Stock Exchange or the
New York Stock Exchange or in the NASDAQ System has been suspended or materially
limited, or minimum or maximum prices for trading have been fixed, or maximum
ranges for prices have been required, by any of said exchanges or by such system
or by order of the Commission, the National Association of Securities Dealers,
Inc. or any other governmental authority, or (iv) a material disruption has
occurred in commercial banking or securities settlement or clearance services in
the United States, or (v) if a banking moratorium has been declared by either
Federal or New York authorities.
(b) LIABILITIES. If this Agreement is terminated pursuant to this Section,
such termination shall be without liability of any party to any other party
except as provided in Section 4 hereof, and provided further that Sections 1, 7,
8 and 9 shall survive such termination and remain in full force and effect.
SECTION 11. DEFAULT BY ONE OR MORE OF THE INITIAL PURCHASERS. If one or
more of the Initial Purchasers shall fail at the Closing Time to purchase the
Securities which it or they are obligated to purchase under this Agreement (the
"Defaulted Securities"), the Representatives shall have the right, within 24
hours thereafter, to make arrangements for one or more of the non-defaulting
Initial Purchasers, or any other initial purchasers, to purchase all, but not
less than all, of the Defaulted Securities in such amounts as may be agreed upon
and upon the terms herein set forth; if, however, the Representatives shall not
have completed such arrangements within such 24-hour period, then:
(a) if the number of Defaulted Securities does not exceed 10% of the
aggregate principal amount of the Securities to be purchased hereunder, each of
the non-defaulting Initial Purchasers shall be obligated, severally and not
jointly, to purchase the full amount thereof in the proportions that their
respective underwriting obligations hereunder bear to the underwriting
obligations of all non-defaulting Initial Purchasers, or
(b) if the number of Defaulted Securities exceeds 10% of the aggregate
principal amount of the Securities to be purchased hereunder, this Agreement
shall terminate without liability on the part of any non-defaulting Initial
Purchaser.
No action taken pursuant to this Section shall relieve any defaulting
Initial Purchaser from liability in respect of its default.
In the event of any such default which does not result in a termination of
this Agreement, either the Representatives or the Company shall have the right
to postpone the Closing Time for a period not exceeding seven days in order to
effect any required changes in the Offering Memorandum or in any other documents
or
22
<Page>
arrangements. As used herein, the term "Initial Purchaser" includes any person
substituted for an Initial Purchaser under this Section.
SECTION 12. TAX DISCLOSURE. Notwithstanding any other provision of this
Agreement, from the commencement of discussions with respect to the transactions
contemplated hereby, the Company (and each employee, representative or other
agent of the Company) may disclose to any and all persons, without limitation of
any kind, the tax treatment and tax structure (as such terms are used in
Sections 6011, 6111 and 6112 of the U.S. Code and the Treasury Regulations
promulgated thereunder) of the transactions contemplated by this Agreement and
all materials of any kind (including, opinions or other tax analyses) that are
provided relating to such tax treatment and tax structure.
SECTION 13. NOTICES. All notices and other communications hereunder shall
be in writing and shall be deemed to have been duly given if mailed or
transmitted by any standard form of telecommunication. Notices to the Initial
Purchasers shall be directed to the Representatives at 4 World Financial Center,
New York, New York 10080, attention of Anand Melvani, Facsimile: (212) 738-2279,
with a copy to Fried, Frank, Harris, Shriver & Jacobson LLP, One New York Plaza,
New. York, New York 10004, attention Valerie Ford Jacob, Esq., Facsimile: (212)
859-8589, notices to the Company shall be directed to it at Code Hennessy &
Simmons LLC, 10 South Wacker Drive, Suite 3175 Chicago, IL 60606, attention of
Thomas J. Formolo, Facsimile: (312) 876-3854, with a copy to Kirkland & Ellis,
LLP at AON Centers, 200 East Randolph Drive, Chicago, Illinois 60601, attention
Gerald T. Nowak, Esq., Facsimile: (312) 861-2200.
SECTION 14. PARTIES. This Agreement shall inure to the benefit of and be
binding upon the Initial Purchasers and the Company and their respective
successors (including AMF as the successor to the Company but solely upon
consummation of the Merger). Upon execution of the Purchase Agreement Joinder
Agreement by each Guarantor and the consummation of the Merger, all obligations
herein of the Company shall become the joint and several obligations of AMF and
each of the Guarantors as if AMF and each of the Guarantors had been a party to
this Agreement. Nothing expressed or mentioned in this Agreement is intended or
shall be construed to give any person, firm or corporation, other than the
Initial Purchasers and the Company and their respective successors and the
controlling persons and officers and directors referred to in Sections 7 and 8
and their heirs and legal representatives, any legal or equitable right, remedy
or claim under or in respect of this Agreement or any provision herein,
contained. This Agreement and all conditions and provisions hereof are intended
to be for the sole and exclusive benefit of the Initial Purchasers and the
Company and their respective successors, and said controlling persons and
officers and directors and their heirs and legal representatives, and for the
benefit of no other person, firm or corporation. No purchaser of Securities from
any Initial Purchaser shall be deemed to be a successor by reason merely of such
purchase.
SECTION 15. MERGERS. Any corporation into which the Company may be merged
or converted or with which it may be consolidated, or any corporation resulting;
from any merger, conversion or consolidation to which the Company shall be a
party, or any corporation succeeding to the business of the Company shall be the
successor of the Company hereunder without the execution or filing of any paper
with any party hereto or any further act on the part of any of the parties
hereto except where an instrument of transfer or assignment is required by law
to effect such succession, anything herein to the contrary notwithstanding.
SECTION 16. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING
EFFECT TO THE CONFLICTS OF LAWS PRINCIPLES THEREOF.
SECTION 17. TIME. TIME SHALL BE OF THE ESSENCE OF THIS AGREEMENT. EXCEPT AS
OTHERWISE SET FORTH HEREIN, SPECIFIED TIMES OF DAY REFER TO NEW YORK CITY TIME.
23
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SECTION 18. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, but all such
counterparts shall together constitute one and the same Agreement.
SECTION 19. EFFECT OF HEADINGS. The Section headings herein are for
convenience only and shall not affect the construction hereof.
24
<Page>
If the foregoing is in accordance with your understanding of our agreement,
please sign and return to the Company a counterpart hereof, whereupon this
instrument, along with all counterparts, will become a binding agreement between
the Initial Purchasers and the Company in accordance with its terms.
Very truly yours,
KINGPIN MERGER SUB, INC.
By
---------------------------------------------
Title:
CONFIRMED AND ACCEPTED,
as of the date first above written:
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
CREDIT SUISSE FIRST BOSTON LLC
By: MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
By: /s/ [ILLEGIBLE]
-----------------------------------
Authorized Signatory
For themselves and as Representatives of the other Initial Purchasers named
in Schedule A hereto.
<Page>
If the foregoing is in accordance with your understanding of our agreement,
please sign and return to the Company a counterpart hereof, whereupon this
instrument, along with all counterparts, will become a binding agreement between
the Initial Purchasers and the Company in accordance with its terms.
Very truly yours,
KINGPIN MERGER SUB, INC.
By /s/ Richard A. Lobo
---------------------------------------------
Title: Vice President and Assistant Secretary
CONFIRMED AND ACCEPTED,
as of the date first above written:
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
CREDIT SUISSE FIRST BOSTON LLC
By: MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
By:
-----------------------------------------------
Authorized Signatory
For themselves and as Representatives of the other Initial Purchasers named
in Schedule A hereto.
<Page>
SCHEDULE A
<Table>
<Caption>
PRINCIPAL
AMOUNT OF
NAME OF INITIAL PURCHASER NOTES
--------------
Merrill Lynch Pierce, Fenner & Smith Incorporated ............ $ 82,500,000
Credit Suisse First Boston LLC ............................... $ 67,500,000
--------------
Total ........................................................ $ 150,000,000
==============
</Table>
A-1
<Page>
SCHEDULE B
GUARANTORS
<Table>
<Caption>
NAME JURISDICTION OF INCORPORATION OR
ORGANIZATION
--------------
AMF Bowling Products, Inc. Virginia
AMF Bowling Centers Holdings Inc. Delaware
AMF Worldwide Bowling Centers Holdings Inc. Delaware
American Recreation Centers, Inc. Virginia
AMF Bowling Centers, Inc. Virginia
AMF Beverage Company of Oregon, Inc. Oregon
AMF Beverage Company of W. VA., Inc. West Virginia
King Louie Lenexa, Inc. Kansas
300, Inc. Texas
Bush River Corporation South Carolina
AMF Bowling Centers (Aust) International Inc. Virginia
AMF Bowling Centers International Inc. Virginia
AMF Bowling Mexico Holding, Inc. Delaware
Boliches AMF, Inc. Virginia
</Table>
B-1
<Page>
SCHEDULE C
KINGPIN MERGER SUB, INC.
$150,000,000
Senior Subordinated Notes due 2010
1. The initial public offering price of the Securities shall be 100% of the
principal amount thereof, plus accrued interest, if any, from the date of
issuance.
2. The purchase price to be paid by the Initial Purchasers for the
Securities shall be 97.25% of the principal amount thereof.
3. The interest rate on the Securities shall be 10% per annum.
4. The interest payment dates of the Notes shall be March 1 and September 1
of each year, commencing September 1, 2004.
5. The Securities will be subject to redemption at any time after March 1,
2007, at the option of the Company and the Guarantors, at the following
redemption prices (expressed as percentages of the principal amount), if
redeemed during the 12-month period beginning March 1 of the years indicated
below:
<Table>
<Caption>
REDEMPTION
YEAR PRICE
-----
2007 105.00%
2008 102.50%
2009 and thereafter 100.00%
</Table>
of the principal amount, in each case, together with accrued and unpaid
interest, if any, to the redemption date (subject to the rights of holders of
record on relevant record dates to receive interest due on an interest payment
date).
6. In addition, at any time prior to March 1, 2007, the Company and the
Guarantors, at their option, may use the net proceeds of one or more Public
Equity Offerings (as defined in the Offering Memorandum) to redeem up to an
aggregate of 35% of the aggregate principal amount of the Securities originally
issued under the Indenture at a redemption price equal to 110% of the aggregate
principal amount of the Securities redeemed, plus accrued and unpaid interest
thereon, if any, to the redemption date. At least 65% of the initial aggregate
principal amount of the Securities must remain outstanding immediately after the
occurrence of such redemption.
C-1
<Page>
EXHIBIT A
FORM OF OPINION OF COMPANY'S COUNSEL
TO BE DELIVERED PURSUANT TO
SECTION 5(a)
A-1
<Page>
EXHIBIT B
FORM OF OPINION OF FRIED, FRANK, HARRIS, SHRIVER & JACOBSON LLP
TO BE DELIVERED PURSUANT TO
SECTION 5(b)
B-1
<Page>
EXHIBIT C
FORM OF PURCHASE AGREEMENT JOINDER AGREEMENT
WHEREAS, Kingpin Merger Sub, Inc. (the "Company"), and the Initial
Purchasers heretofore executed and delivered a Purchase Agreement ("Purchase
Agreement") dated as of February 19, 2004, providing for the issuance and sale
by the Company and purchase by the Initial Purchasers of $150,000,000 10% Senior
Subordinated Notes due 2010 of the Company (the "Notes") and senior subordinated
guarantees of the Company's obligations under the Notes (the "Guarantees,"
together with the Notes, the "Securities"). All capitalized terms used herein
but not defined, shall have the meaning assigned thereto in the Purchase
Agreement;
WHEREAS, as a condition to the consummation of the offering of the
Securities, the Guarantors, none of which was originally party to the Purchase
Agreement, have agreed to join the Purchase Agreement upon consummation of the
Merger and the Transactions, on terms described below;
NOW, THEREFORE, each Guarantor hereby agrees for the benefit of the
Initial Purchasers, as follows:
(a) Each of the undersigned hereby acknowledges that it has received and
reviewed a copy of the Purchase Agreement and all other documents it deems fit
to enter into this Agreement, and acknowledges and agrees to (i) join and become
a party to the Purchase Agreement as indicated by its signature below; (ii) be
bound by all covenants, agreements, representations, warranties and
acknowledgments attributable to the Company (including the Company's obligations
as an indemnifying party) in the Purchase Agreement as if made by, and with
respect to, each signatory hereto; and (iii) jointly and severally, perform all
obligations and duties required of the Company pursuant to the Purchase
Agreement.
(b) Each of the undersigned hereby represents and warrants to and agrees
with the Initial Purchasers that it has all the requisite corporate power and
authority and the legal right to execute, deliver and perform its obligations
under this Joinder Agreement, that performance of this Joinder Agreement does
not and will not violate any provisions of its charter, by-laws or other similar
document, or, except as could not reasonably be expected to result in a material
adverse effect, any contractual obligations binding on it; and that when this
Joinder Agreement is executed and delivered, it will constitute a valid and
legally binding agreement enforceable against each of the undersigned in
accordance with its terms.
THIS JOINDER AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, WIHOUT GIVING EFFECT TO THE
CONFLICTS OF LAWS PRINCIPLES THEREOF.
IN WITNESS WHEREOF, the undersigned has executed this agreement this
[ ] day of [ ], 2004.
GUARANTORS OF AMF BOWLING WORLDWIDE, INC.:
AMF BOWLING PRODUCTS, INC.
AMF BOWLING CENTERS HOLDINGS INC.
AMF WORLDWIDE BOWLING CENTERS HOLDINGS INC.
C-1
<Page>
AMERICAN RECREATION CENTERS, INC.
AMF BOWLING CENTERS, INC.
AMF BEVERAGE COMPANY OF OREGON, INC.
AMF BEVERAGE COMPANY OF W. VA., INC.
KING LOUIE LENEXA, INC.
300, INC.
BUSH RIVER CORPORATION
AMF BOWLING CENTERS (AUST) INTERNATIONAL INC.
AMF BOWLING CENTERS INTERNATIONAL INC.
AMF BOWLING MEXICO HOLDING, INC.
BOLICHES AMF, INC.
By:
-----------------------------------------
Name:
Title:
C-2