Exhibit 10.2
INVACARE CORPORATION
$175,000,000 9 3/4 % Senior Notes due 2015
PURCHASE AGREEMENT
dated February 7, 2007
Banc of America Securities LLC
KeyBanc Capital Markets, a Division of McDonald Investments
Inc.
BMO Capital Markets Corp.
SunTrust Capital Markets, Inc.
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<table>
<caption>
Table of Contents
<s>
<c>
Section 1.
Representations, Warranties and Covenants of the
Company...................................3
(a)
No
Registration
Required...................................................................3
(b)
No
Integration of Offerings or General
Solicitation........................................3
(c)
Eligibility for Resale under Rule
144A.....................................................4
(d)
The
Offering
Memorandum....................................................................4
(e) Incorporated
Documents.....................................................................4
(f)
The
Purchase
Agreement.....................................................................5
(g)
The
Registration Rights
Agreement..........................................................5
(h)
The
DTC
Agreement..........................................................................5
(i)
Authorization of the Notes, the Exchange Notes and the
Guarantees..........................5
(j)
Authorization of the
Indenture.............................................................6
(k)
Description of the Securities and the
Indenture............................................6
(l)
No
Material Adverse
Change.................................................................6
(m)
Independent
Accountants....................................................................6
(n)
Preparation of the Financial
Statements....................................................7
(o)
Incorporation and Good Standing of the Company and the Subsidiary
Guarantors...............7
(p)
Capitalization and Other Capital Stock
Matters.............................................7
(q)
Stock Exchange
Listing.....................................................................8
(r)
Non-Contravention of Existing Instruments; No Further
Authorizations or Approvals
Required...................................................................................8
(s)
No
Material Actions or
Proceedings.........................................................9
(t)
Intellectual Property
Rights...............................................................9
(u)
All
Necessary Permits,
etc................................................................10
(v)
Title to
Properties.......................................................................10
(w)
Tax
Law
Compliance........................................................................10
(x)
Not
an Investment
Company.................................................................11
(y)
Insurance.................................................................................11
(z)
No
Price Stabilization or
Manipulation....................................................11
(aa)
Solvency..................................................................................11
(bb)
Compliance
with
Sarbanes-Oxley............................................................11
(cc)
Company's
Accounting
System...............................................................11
(dd)
Disclosure
Controls and
Procedures........................................................12
(ee)
Compliance
with Environmental
Laws........................................................12
(ff)
ERISA
Compliance..........................................................................13
(gg)
Compliance
with Labor
Laws................................................................14
(hh)
Related
Party
Transactions................................................................14
(ii)
No
Unlawful Contributions or Other
Payments...............................................14
(jj)
Compliance
with Regulation
S..............................................................14
(kk)
No
Outstanding Registration
Rights........................................................15
(ll)
Forward
Looking Statements and Market-Related and Statistical
Data........................15
(mm)
Senior
Credit
Facilities..................................................................15
(nn)
Convertible
Debentures....................................................................15
Section 2.
Purchase, Sale and Delivery of the
Securities.............................................15
(a)
The
Securities............................................................................15
(b)
The
Closing
Date..........................................................................16
(c)
Delivery of the
Securities................................................................16
(d)
Initial Purchasers as Qualified Institutional
Buyers......................................16
Section 3.
Additional Covenants of the Company and the Subsidiary
Guarantors.........................16
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(a)
Preparation of Final Offering Memorandum; Initial Purchasers'
Review of Proposed
Amendments and
Supplements................................................................16
(b)
Amendments and Supplements to the Final Offering Memorandum and
Other Securities Act
Matters...................................................................................17
(c)
Copies of the Offering
Memorandum.........................................................17
(d)
Blue
Sky
Compliance.......................................................................17
(e)
Use
of
Proceeds...........................................................................18
(f)
The
Depository............................................................................18
(g)
Additional Issuer
Information.............................................................18
(h)
Agreement Not To Offer or Sell Additional
Securities......................................18
(i)
Future Reports to the Initial
Purchasers..................................................18
(j)
No
Integration............................................................................19
(k)
No
Restricted
Resales.....................................................................19
(l)
Legended
Securities.......................................................................19
(m)
PORTAL....................................................................................19
(n)
Final Term
Sheet..........................................................................19
(o)
Written Information Concerning the
Offering...............................................19
(p)
No
Manipulation of
Price..................................................................19
Section 4.
Payment of
Expenses.......................................................................20
Section 5.
Conditions of the Obligations of the Initial
Purchasers...................................21
(a)
Accountants' Comfort
Letter...............................................................21
(b)
No
Material Adverse Change or Ratings Agency
Change.......................................21
(c)
Opinion of Counsel for the
Company........................................................21
(d)
Opinion of Counsel for the Initial
Purchasers.............................................22
(e)
Officers'
Certificate.....................................................................22
(f)
Chief Financial Officer's
Certificate.....................................................22
(g)
PORTAL
Listing............................................................................22
(h)
Registration Rights Agreement and
Indenture...............................................22
(i)
Concurrent
Transactions...................................................................23
(j)
Additional
Documents......................................................................23
Section 6.
Reimbursement of Initial Purchasers'
Expenses.............................................23
Section 7.
Offer, Sale and Resale
Procedures.........................................................23
Section 8.
Indemnification...........................................................................25
(a)
Indemnification of the Initial
Purchasers.................................................25
(b)
Indemnification of the Company and the Subsidiary
Guarantors..............................25
(c)
Notifications and Other Indemnification
Procedures........................................26
(d)
Settlements...............................................................................27
Section 9.
Contribution..............................................................................28
Section 10.
Termination of this
Agreement.............................................................29
Section 11.
Representations and Indemnities to Survive
Delivery.......................................29
Section 12.
Notices...................................................................................29
Section 13.
Successors................................................................................31
Section 14.
Partial
Unenforceability..................................................................31
Section 15.
Governing Law
Provisions..................................................................31
Section 16.
Default of One or More of the Several Initial
Purchasers..................................32
Section 17. No
Advisory or Fiduciary
Responsibility...................................................32
Section 18.
General
Provisions........................................................................33
</table>
ii
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PURCHASE AGREEMENT
February 7, 2007
BANC OF AMERICA SECURITIES LLC
KEYBANC CAPITAL MARKETS,
A DIVISION OF
MCDONALD INVESTMENTS INC.
BMO CAPITAL MARKETS CORP.
SUNTRUST CAPITAL MARKETS, INC.
As Initial Purchasers
c/o Banc of America Securities LLC
9 West 57th Street
New York, New York
10019
Ladies and Gentlemen:
Introductory. Invacare
Corporation,
an Ohio corporation
(the "Company"),
proposes to issue and sell to the several initial purchasers named
in Schedule A
(the "Initial
Purchasers"), acting
severally and not
jointly, the
respective
amounts set forth in such Schedule A of $175,000,000 aggregate principal amount
of the Company's 9
3/4% Senior Notes due
2015 (the "Notes").
Banc of America
Securities LLC,
KeyBanc Capital
Markets, a Division of McDonald
Investments
Inc., BMO Capital Markets Corp. and SunTrust Capital Markets, Inc. have agreed
to act as the several
Initial Purchasers in
connection
with the offering
and
sale of the Notes.
The
Securities (as defined below) will be issued pursuant to an indenture,
to be dated as of the
Closing Date (as
defined in Section 2 hereof) (the
"Indenture"), among
the Company, the Subsidiary Guarantors (as defined below),
and Wells Fargo Bank, N.A., as trustee (the "Trustee"). The Securities will be
issued only in
book-entry
form in the name of
Cede & Co., as
nominee of The
Depository Trust Company (the "Depository") pursuant to a blanket issuer
letter
of representations,
to be dated on or before the Closing Date (the "DTC
Agreement"), among the Company and the Depository.
The
holders of the Securities will be entitled to the benefits of a
registration rights
agreement,
to be dated as of the Closing Date (the
"Registration Rights Agreement"), among the Company, the Subsidiary
Guarantors
and the Initial
Purchasers, pursuant
to which the Company
and the Subsidiary
Guarantors will agree to file with the Commission (as defined
below), under the
circumstances set
forth therein, (i) a registration statement under the
Securities Act (as defined below) relating to another series of debt
securities
of the Company with terms substantially identical to the Notes (the
"Exchange
Notes") to be offered in exchange for the Notes (the "Exchange
Offer") and (ii)
to the extent required by the Registration Rights Agreement, a shelf
registration statement
pursuant to Rule 415
of the Securities Act
relating to
the resale by certain
holders of the Notes,
and in each case, to
use its best
efforts to cause such registration statements to be declared
effective.
Sch B-1
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The
payment of principal of, premium, if any, and interest on the Notes
and
the Exchange
Notes will be fully
and unconditionally
guaranteed
on a senior
unsecured basis,
jointly and severally,
by the Company and
certain direct and
indirect
subsidiaries of
the Company (collectively, the "Subsidiary
Guarantors"), pursuant to their guarantees (the "Guarantees"). The
Notes and the
Guarantees attached
thereto are herein collectively referred to as the
"Securities;" and the
Exchange Notes and the
Guarantees attached
thereto are
herein collectively referred to as the "Exchange Securities."
The
Securities
are being sold in connection with a refinancing of a
substantial
portion of
the Company's outstanding indebtedness (the
"Recapitalization").
The Company will incur
approximately
$700.0 million of
indebtedness on the Closing Date through:
1. $400.0
million in senior secured credit facilities, (the "Senior
Credit Facilities"), comprising
a. a senior
secured revolving
credit facility in an
amount up
to $150.0 million,
of which $50.0 million
will be drawn on
the Closing Date; and
b. a senior
secured term loan facility aggregating $250.0
million and
2. $175.0 million in proceeds
from the sale of the Securities.
3. $125.0
million in proceeds
from the sale of
convertible senior
subordinated debentures (the "Convertible Debentures").
The proceeds of the Recapitalization shall be used to (i) to pay
existing
indebtedness (including repurchase premiums) and (ii) to pay
related fees and
expenses.
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
in the Pricing Disclosure Package (as defined below) and agrees
that the Initial
Purchasers may resell,
subject to the
conditions
set forth herein,
all or a
portion of the Securities to purchasers (the "Subsequent Purchasers") at any
time after the time this Agreement is executed by the
parties hereto (the "Time
of Execution").
The Securities are to be offered and sold to or through the
Initial Purchasers
without being
registered
with the Securities
and Exchange
Commission (the "Commission") under the Securities Act of 1933,
as amended (the
"Securities Act," which term, as used herein, includes the rules
and regulations
of the Commission promulgated thereunder), in reliance upon exemptions
therefrom. Pursuant to the terms of the Securities and the
Indenture,
investors
who acquire Securities
shall be deemed to
have agreed that Securities may only
be resold or otherwise
transferred, after the
date hereof, if such
Securities
are registered
for sale under the
Securities
Act or if an exemption
from the
registration
requirements of the
Securities
Act is available
(including the
exemptions afforded
by Rule 144A under the
Securities
Act ("Rule 144A") or
Regulation S under the Securities Act ("Regulation S")).
The
Company has prepared and delivered to each Initial Purchaser copies of
a Preliminary Offering
Memorandum,
dated January 23, 2007 (the "Preliminary
Offering Memorandum"),
and has prepared and will deliver to each Initial
Purchaser copies of a Pricing Supplement, dated February 7, 2007 (the
"Pricing
Supplement"),
describing the
terms of the Securities, each for use by such
2
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Initial Purchaser in
connection with its solicitation of offers to purchase the
Securities. The
Preliminary Offering
Memorandum and the Pricing Supplement are
herein referred to as the "Pricing Disclosure Package." Promptly after the
Time
of Execution, the
Company will prepare and deliver to each Initial Purchaser a
final offering
memorandum
dated
the date hereof (the "Final Offering
Memorandum").
All
references
herein to the term
"Pricing Disclosure
Package" shall be
deemed to mean and
include all information filed by the Company under the
Securities Exchange
Act of 1934, as amended (the "Exchange Act," which term, as
used herein, includes
the rules and
regulations of the Commission promulgated
thereunder) prior to
the Time of Execution and incorporated by reference in the
Pricing Disclosure Package (including the Preliminary Offering
Memorandum). All
references to the term "Final Offering Memorandum" shall be deemed to mean and
include all information filed by the Company under the Exchange Act
prior to the
date of the Final Offering Memorandum and incorporated by reference
in the Final
Offering Memorandum.
All references herein to the terms "amend," "amendment" or
"supplement" with
respect to the Final Offering Memorandum shall be deemed to
mean and include all information filed under the Exchange Act after
the Time of
Execution and incorporated by reference in the Final Offering
Memorandum.
The
Company hereby confirms its agreements with the Initial Purchasers as
follows:
SECTION 1.
Representations,
Warranties and Covenants of the Company. Each
of the Company and the
Subsidiary Guarantors,
jointly and
severally,
hereby
represents, warrants
and covenants to each
Initial Purchaser
that, as of the
date hereof and as of
the Closing Date
(references
in this Section 1 to the
"Offering Memorandum"
are to the
Pricing Disclosure Package and the Final
Offering Memorandum, unless the context otherwise requires):
(a) No Registration
Required. Subject to compliance by the Initial
Purchasers with the
representations and
warranties set forth in Section 2
hereof and with the
procedures set forth
in Section 7 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
Securities
Act or, until such time as the
Exchange
Securities are issued pursuant to an effective registration
statement,
to
qualify the Indenture
under the Trust
Indenture Act of 1939, as amended
(the
"Trust Indenture Act," which term, as used herein, includes the rules
and
regulations of the Commission promulgated thereunder).
(b) No Integration of Offerings or General Solicitation. None of the
Company, the Subsidiary Guarantors, or any of their respective
subsidiaries
or
affiliates
(as such term is
defined in Rule 501
under the
Securities
Act)
(each, an "Affiliate"), or any person acting on its or any
of their
behalf (other than the Initial Purchasers, as to whom the Company makes
no
representation or
warranty) has,
directly or
indirectly,
solicited any
offer to buy or offered to sell, or will, directly or indirectly,
solicit
any
offer to buy or offer to sell, 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
3
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Securities to be registered under the Securities Act. None of
the Company,
the
Subsidiary
Guarantors
or any of their respective subsidiaries or
Affiliates, or any
person acting on its or any of their behalf (other than
the
Initial Purchasers,
as to whom the Company
makes no representation or
warranty) has engaged or will engage, in connection with the offering of
the
Securities, in any
form of general solicitation or general advertising
within the meaning of Rule 502 under the Securities Act. With respect to
those Securities
sold in reliance upon Regulation S, (i) none of the
Company, the Subsidiary Guarantors or any of their respective
subsidiaries
or
Affiliates
or any person acting
on its or their behalf (other than the
Initial Purchasers,
as to whom the
Company makes no representation or
warranty) has engaged or will engage in any directed selling
efforts within
the
meaning of Regulation
S and (ii) each of the Company, the Subsidiary
Guarantors and any of their respective subsidiaries and Affiliates and
any
person acting on their its or their behalf (other than the Initial
Purchasers, as to whom the Company makes no representation or
warranty) has
complied and will
comply with the offering restrictions set forth in
Regulation S.
(c) Eligibility
for Resale under Rule 144A. The Securities are
eligible for resale
pursuant to Rule 144A
and will not be, at the Closing
Date, of the same
class as securities listed on a national securities
exchange registered under Section 6 of the Exchange Act or quoted
in a U.S.
automated interdealer quotation system.
(d) The Offering Memorandum. As of the Time of Execution, the
Pricing
Disclosure Package
does not, and at all times subsequent thereto up to the
Closing Date will not, and the Final Offering Memorandum, as of its date,
does
not, and at all times
subsequent thereto up
to the Closing Date will
not,
contain or represent 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 Pricing
Disclosure
Package, the
Final Offering
Memorandum or any
amendment or supplement thereto made in
reliance upon and in conformity with information furnished to the Company
in
writing by any Initial Purchaser through Banc of America
Securities LLC
expressly for use in the Pricing Disclosure Package, the Final Offering
Memorandum or any amendment or supplement thereto, as the case may be.
The
Pricing Disclosure Package contains, and the Final Offering
Memorandum will
contain, all the information specified in, and meeting the
requirements of,
Rule
144A. The Company has not distributed and will not distribute,
prior
to
the later of the Closing Date and the completion of the Initial
Purchasers'
distribution of the Securities (notice of which shall be given
to
the Company by the Initial Purchasers if occurring after the Closing
Date), any offering
material in connection
with the offering and
sale of
the
Securities
other than the
Pricing Disclosure Package and the Final
Offering Memorandum, or any amendment or supplement thereto.
(e) Incorporated Documents. The documents incorporated or deemed to
be
incorporated by reference in the Offering Memorandum at the time they
were
or
hereafter are filed with the Commission (collectively, the
"Incorporated
Documents") complied
and will comply in all
material respects with the
requirements of the Exchange Act.
4
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(f) The Purchase
Agreement. This
Agreement has been duly authorized,
executed and
delivered by the Company and each of the Subsidiary
Guarantors.
(g) The Registration Rights Agreement. The Registration Rights
Agreement has been duly authorized and, on the Closing Date, will
have been
duly
executed and
delivered by, and (assuming the due execution by the
Initial Purchasers)
will constitute a valid and binding agreement of, the
Company and each of
the Subsidiary
Guarantors,
enforceable
against the
Company and each of the Subsidiary Guarantors in accordance with
its terms,
except as the enforcement thereof may be limited by bankruptcy,
insolvency,
reorganization,
moratorium or other
similar laws relating to or affecting
the
rights and remedies of creditors or by general equitable principles
and
except as rights to indemnification, contribution or exculpation under
the
Registration Rights
Agreement may be
limited by applicable
law or public
policy.
(h) The DTC Agreement. The DTC Agreement has been duly authorized
and,
on
the Closing Date,
will have been duly
executed and
delivered by, and
(assuming the due execution by the Depository) will constitute a valid and
binding agreement
of, the Company, enforceable against the Company in
accordance with its terms, except as the enforcement thereof may be
limited
by
bankruptcy, insolvency, reorganization, moratorium or other similar
laws
relating to or affecting the rights and remedies of creditors or by
general
equitable principles.
(i) Authorization of the Notes, the Exchange Notes and the
Guarantees.
(i)
The Notes to be
purchased by the Initial Purchasers from the Company
will
be in the form contemplated by the Indenture, have been duly
authorized for
issuance and sale pursuant to this Agreement and the
Indenture and, at the
Closing Date,
will have been duly
executed by the
Company and, when authenticated in the manner provided for in the
Indenture
and
delivered against payment of the purchase price therefor, will
constitute valid
and binding obligations of the Company, enforceable
against the
Company in accordance with their terms, except as the
enforcement
thereof may
be limited by bankruptcy, insolvency,
reorganization,
moratorium or other
similar laws relating to or affecting
the
rights and remedies of creditors or by general equitable principles
and
will
be entitled to the benefits of the Indenture. (ii) The Exchange Notes
have
been duly and validly authorized for issuance by the Company, and
when
issued and authenticated in accordance with the terms of the
Indenture, the
Registration Rights Agreement and the Exchange Offer, will
constitute valid
and
binding obligations of the Company, enforceable against the Company
in
accordance with their
terms, except as the enforcement thereof may be
limited by bankruptcy, insolvency, reorganization, moratorium, or similar
laws
relating to or
affecting enforcement of the rights and remedies of
creditors or by
general principles
of equity and will be
entitled to the
benefits of the
Indenture.
(iii) The Guarantees of the Notes and the
Exchange Notes
will be in the respective forms contemplated by the
Indenture, have been duly authorized for issuance and sale pursuant
to this
Agreement and the Indenture and, at the Closing Date,
will have been
duly
executed by each of the Subsidiary Guarantors and, when the Notes and the
Exchange Notes have been authenticated in the manner provided for in the
Indenture and
delivered to you against payment of the purchase price
therefor, will
constitute valid and
binding agreements of
the Subsidiary
Guarantors,
enforceable against
the Subsidiary
Guarantors in
accordance
5
<page>
with
their terms, except as the enforcement thereof may be limited by
bankruptcy,
insolvency,
reorganization,
moratorium or other similar laws
relating to or affecting the rights and remedies of creditors or by
general
equitable principles and will be entitled to the benefits of the
Indenture.
(j) Authorization
of the Indenture. The Indenture has been duly
authorized by the Company and the Subsidiary Guarantors and, at the
Closing
Date, will have been duly executed and delivered by, and will
(assuming due
execution and
delivery by the Trustee) constitute a valid and binding
agreement of,
the Company and the Subsidiary Guarantors, enforceable
against the Company and the Subsidiary Guarantors in accordance
with its
terms, except as the
enforcement
thereof may be limited by bankruptcy,
insolvency, reorganization, moratorium or other similar laws
relating to or
affecting the rights
and remedies of
creditors or by general equitable
principles.
(k) Description of the
Securities and the Indenture. The Securities,
the
Exchange Securities
and the Indenture conform, or will conform, in all
material respects to
the descriptions
thereof contained in the Offering
Memorandum.
(l) No Material Adverse Change. Except as otherwise disclosed in the
Offering Memorandum,
subsequent
to the respective dates as of which
information is given
in the Offering
Memorandum:
(i) there has been no
material adverse
change, or any development that could reasonably be
expected to
result in a material adverse change, in the condition,
financial or
otherwise,
or in the earnings, business, or operations,
whether or not
arising from transactions in the ordinary course of
business, of the
Company, the
Subsidiary Guarantors
and their respective
subsidiaries,
considered as one entity (any such change or development is
called a "Material
Adverse Change");
(ii) the Company, the Subsidiary
Guarantors and their
respective
subsidiaries,
considered as one
entity,
have
not incurred any material liability or obligation, indirect, direct
or
contingent, not in the
ordinary course of business nor entered into any
material transaction
or agreement not in the ordinary course of business;
and
(iii) there has been no dividend or distribution of any kind
declared,
paid
or made by the Company or, except for dividends paid to the Company
or
other subsidiaries,
any of its
subsidiaries on any class of capital stock
or
repurchase or
redemption by the Company or any of its subsidiaries of
any
class of capital
stock, and for any
quarterly cash dividend on the
Company's common
shares to the extent that the aggregate cash dividend per
common share related to any fiscal quarter does not exceed
$0.0125, which
amount will be
proportionally
adjusted in the event of any subdivisions,
splits and combinations of the Company's common shares.
(m) Independent
Accountants.
Ernst & Young LLP,
which expressed its
opinion with respect
to the financial
statements
(which term as used
in
this
Agreement includes the related notes thereto) included in the
Offering
Memorandum, are
independent public or
certified public accountants within
the
meaning of Regulation
S-X under the
Securities
Act and the
Exchange
Act,
and any non-audit services provided by Ernst & Young LLP to the
Company or any of the Subsidiary Guarantors have been approved by
the Audit
Committee of the Board of Directors of the Company.
6
<page>
(n) Preparation of the Financial Statements. The financial
statements,
together with the related schedules and notes, included or incorporated by
reference in the
Offering Memorandum present fairly the consolidated
financial position
of the entities to which they relate as
of and at the
dates indicated and the results of their operations and cash flows for
the
periods specified.
Such
financial statements have been prepared in
conformity with
generally accepted accounting principles in the United
States applied
on a consistent basis throughout the periods covered
thereby, except as may
be expressly stated in
the related notes
thereto.
The
financial statements comply in all material respects with the
applicable
requirements of the Exchange Act. The financial information set
forth in the Offering
Memorandum under the captions "Offering Memorandum
Summary - Summary Consolidated Financial Data", "Selected Historical
Consolidated Financial
Data" and "Capitalization" fairly present the
information set
forth therein on a basis consistent with that of the
audited financial statements contained in the Offering
Memorandum.
There
would be no pro forma financial statements required to be included in the
Offering
Memorandum if
the requirements applicable to registration
statements on Form S-1
under the Securities
Act were applicable to the
Offering Memorandum.
(o) Incorporation and
Good Standing of the Company and the Subsidiary
Guarantors. Each of the Company and the Subsidiary Guarantors has
been duly
incorporated or formed
and is validly
existing as a corporation, limited
partnership or
limited liability company, as the case may be, in good
standing under
the laws of the jurisdiction of its incorporation or
formation and has corporate, partnership or company, as the case may be,
power and authority to own, lease and operate its properties and to
conduct
its
business as described
in the Offering
Memorandum and, in the
case of
the
Company and the
Subsidiary Guarantors,
to enter into and
perform its
respective obligations
under each of this Agreement, the Registration
Rights Agreement,
the DTC Agreement, the Securities, the Exchange
Securities and the
Indenture, as the case
may be, to which it is a party.
Each
of the Company and the
Subsidiary Guarantors
is duly qualified as
a
foreign corporation,
limited partnership or
limited liability company, as
the
case may be, to transact business and is in good standing or
equivalent
status 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 for
such jurisdictions where the failure to so qualify or
to
be in good standing would not, individually or in the aggregate,
result
in a
Material Adverse
Change. All of the
issued and outstanding
capital
stock of each
Subsidiary Guarantor
has been duly
authorized and
validly
issued, is fully
paid and nonassessable and is owned by the Company,
directly or through subsidiaries, free and clear of any security
interest,
mortgage, pledge,
lien, encumbrance or
claim. The Company does not own or
control, directly or
indirectly,
any corporation, association or other
entity other than the subsidiaries listed in Exhibit A hereto.
(p) Capitalization and
Other Capital Stock Matters. At September 30,
2006, on an actual
basis, and on an as
adjusted basis,
after giving pro
forma effect to the Recapitalization, the Company would have an
authorized
and
outstanding
capitalization
as set forth in the
Offering Memorandum
under the caption
"Capitalization" (other than for subsequent issuances of
capital stock, if any,
pursuant to employee benefit plans described in the
Offering Memorandum
or upon exercise of
outstanding
options or
warrants
7
<page>
described in the Offering Memorandum). All of the outstanding
common shares
of
the Company (the "Common Shares") have been duly authorized
and validly
issued, are fully paid and nonassessable and have been issued in
compliance
with
federal and state
securities laws.
None of the
outstanding
Common
Shares were issued in violation of any preemptive rights, rights of first
refusal or other similar rights to subscribe for or purchase
securities of
the
Company. There are no
authorized or
outstanding
options, warrants,
preemptive rights,
rights of first refusal or other rights to purchase, or
equity or debt securities convertible into or exchangeable or
exercisable
for,
any capital stock of the Company or any of its subsidiaries other
than
those accurately described in the Offering Memorandum. The description of
the
options or other rights granted and/or exercised under the Company's
stock option
plans set forth in the
Offering Memorandum
accurately
and
fairly describes such options and rights.
(q) Stock Exchange Listing. The Common Shares are registered
pursuant
to
Section 12(b) of the
Exchange Act and are
listed on the New York Stock
Exchange ("NYSE"),
and the Company has taken no action
designed to, or
likely to have the effect of, terminating the registration of the Common
Shares under the Exchange Act or delisting the Common Shares from
the NYSE,
nor
has the Company
received any
notification that the
Commission or the
NYSE
is contemplating terminating such registration or listing.
(r)
Non-Contravention of Existing Instruments; No Further
Authorizations or Approvals Required. None of the Company, the Subsidiary
Guarantors or any
of their respective significant subsidiaries is in
violation of its charter, by-laws, partnership agreement, limited
liability
company agreement or similar constitutive document. Except as specifically
disclosed in the Offering Memorandum, none of the Company, the
Subsidiary
Guarantors or any of their respective subsidiaries is in default (or,
with
the
giving of notice or
lapse of time, would
be in default)
("Default")
under any indenture,
mortgage, loan or
credit agreement,
note, contract,
franchise, lease,
license or other instrument to which the Company, any of
the
Subsidiary
Guarantors or any of
their respective
subsidiaries
is a
party or by which
it or any of them
may be bound or to
which any of the
property or assets of the Company or any of the Subsidiary Guarantors or
any
of their respective subsidiaries is subject (each, an "Existing
Instrument"), except for such Defaults as would not, individually
or in the
aggregate, result in a Material Adverse Change. The execution,
delivery and
performance of this Agreement, the Registration Rights Agreement,
the DTC
Agreement, the
Indenture, the
agreements for the Senior Credit Facilities
(the
"Senior Credit Facilities Transaction Documents") and the agreements
for
the Convertible
Debentures (the
"Convertible
Debentures
Transaction
Documents") offering
by the Company and each Guarantor party thereto, and
the
issuance and delivery of the Securities and the Exchange Securities
and
the
use of proceeds thereof, and the consummation of the
Recapitalization
and
the transactions
contemplated
hereby and thereby and
by the Offering
Memorandum (i) have
been duly authorized by all necessary corporate,
partnership or
company, as the case
may be, action and will not result in
any violation of the provisions of the charter, by-laws, partnership
agreement, operating
agreement or other similar constitutive document of
the
Company, any Subsidiary Guarantor or any of their respective
subsidiaries, (ii)
will not, upon
consummation of the
Recapitalization,
conflict with or
constitute
a breach of, or
Default or a Debt
Repayment
8
<page>
Triggering Event (as
defined below)
under, or result in the creation or
imposition of any lien, charge or encumbrance upon any property or assets
of
the Company,
any Subsidiary Guarantor or any of their respective
subsidiaries pursuant to, or require the consent of any other party
to, any
Existing Instrument, except for such conflicts, breaches, Defaults, liens,
charges or
encumbrances as would
not, individually
or in the
aggregate,
result in a Material
Adverse Change, and (iii) will not result in any
violation of any law, administrative regulation or administrative or
court
decree applicable to the Company, any Subsidiary Guarantor or any of
their
respective
subsidiaries,
except for
such violations as would not,
individually or in the aggregate, result in a Material Adverse
Change. No
consent, approval,
authorization
or other order of, or
registration
or
filing with, any court
or other governmental
or regulatory
authority or
agency, is
required for the Company's and the Subsidiary Guarantors'
execution, delivery
and performance of
this Agreement, the
Registration
Rights Agreement,
the DTC Agreement, the Indenture, the Senior Credit
Facilities Transaction Documents, or the Convertible Debentures
Transaction
Documents to which it
is a party, or the
issuance and delivery of the
Securities or the Exchange Securities and the use of proceeds
thereof, or
consummation of the
Recapitalization
and the transactions contemplated
hereby and thereby and by the Offering Memorandum, except such as
have been
obtained or made by the Company or the Subsidiary Guarantors and are in
full
force and effect under the Securities Act, applicable securities laws
of
the several
states of the
United States or provinces of Canada and
except such as may be required by the securities laws of the
several states
of
the United States or
provinces of Canada with respect to the Company's
obligations under the Registration Rights Agreement. As used herein, a
"Debt Repayment Triggering Event" means any event or condition
which gives,
or
with the giving of notice or lapse of time would give, 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 the
Company, the
Subsidiary Guarantors or any of their respective subsidiaries.
(s) No Material Actions or Proceedings. There are no legal or
governmental actions,
suits, investigations
or proceedings pending or, to
the
Company's or any
Subsidiary
Guarantor's
knowledge,
threatened
(i)
against or affecting the Company, any Subsidiary Guarantor or any of
their
respective
subsidiaries or (ii)
which has as the subject thereof any
property owned or leased by, the Company, the Subsidiary
Guarantors or any
of
their respective subsidiaries, and any such action, suit,
investigation
or
proceeding,
if determined
adversely to the
Company, such
Subsidiary
Guarantor or such subsidiary would result in a Material
Adverse Change or
adversely affect the consummation of the transactions contemplated by this
Agreement. No material
labor dispute with the
employees of the Company or
any
of its subsidiaries exists or, to the Company's knowledge, is
threatened or imminent.
(t) Intellectual
Property
Rights. The Company, the Subsidiary
Guarantors and their
respective
subsidiaries
own, possess or license
sufficient trademarks,
trade names, patent rights, copyrights, licenses,
approvals, trade
secrets
and other similar rights (collectively,
"Intellectual Property
Rights") reasonably necessary to conduct their
businesses as now
conducted except where the failure to own,
possess or
license such Intellectual Property Rights would not, individually
or in the
9
<page>
aggregate, result in a Material Adverse Change; and the expected
expiration
of
any such Intellectual Property Rights, individually or in the
aggregate,
would not result in a Material Adverse Change. None of the Company, the
Subsidiary Guarantors or any of their respective subsidiaries has received
any
notice of infringement or conflict with asserted Intellectual Property
Rights of others,
which infringement
or conflict, if the subject of an
unfavorable decision,
ruling or filing would
result in a Material Adverse
Change. None of the
Company, the
Subsidiary
Guarantors
or any of their
respective
subsidiaries is in
default under the
terms of any license
or
similar agreement related to any Intellectual Property Rights necessary to
conduct their business as now conducted or contemplated except as
would not
result in a Material Adverse Change.
(u) All Necessary
Permits, etc. Each of
the Company, the
Subsidiary
Guarantors and their respective subsidiaries possess such valid and
current
certificates, franchises, grants, authorizations, qualifications,
licenses,
permits, easements, variances, exceptions, certifications, registrations,
consents certificates
or approvals issued by the appropriate local, state,
federal or foreign regulatory agencies or bodies ("Permits")
necessary for
it
to own, lease and
operate the assets and properties or to conduct their
respective businesses
except where the failure to possess
such Permits
would not,
individually or in the aggregate, result in a Material Adverse
Change, and none of the Company, the Subsidiary Guarantors or any of their
respective
subsidiaries has received any notice of proceedings relating to
the
revocation,
cancellation or modification of, or non-compliance with,
any
such certificate, authorization or permit which, either
individually or
in
the aggregate,
if the subject of an
unfavorable
decision, ruling or
finding, could result in a Material Adverse Change.
(v) Title to Properties. The Company, the Subsidiary Guarantors and
each
of their respective subsidiaries have good and marketable title to
all
items of real property
and valid title to all
the properties
and assets
reflected as owned in the financial statements referred to in Section
1(n)
hereof (or elsewhere in the Offering Memorandum), in each case
free, except
for
Permitted Liens (as
defined in the Offering Memorandum) and clear of
any
security interests,
mortgages, liens,
encumbrances,
equities, claims
and other defects,
except such as do not
materially and
adversely affect
the
value of such property
and do not materially
interfere with the use
made
or proposed to be made of such property by the Company, such
Subsidiary Guarantor or such subsidiary. The real property, improvements,
equipment and
personal property held under lease by the Company, any
Subsidiary Guarantor or any subsidiary are held under valid and
enforceable
leases, with such
exceptions
as are not material
and do not
materially
interfere with the use
made or proposed to be made of such real property,
improvements,
equipment or
personal property by the Company, such
Subsidiary Guarantor or such subsidiary.
(w) Tax Law
Compliance. The
Company, the
Subsidiary Guarantors
and
their respective
subsidiaries have filed all necessary federal, state and
foreign income and
franchise tax returns and have paid all taxes required
to
be paid by any of them and, if due and payable, any related or similar
assessment, fine or
penalty levied against
any of them, except
for where
the
failure to file such returns or pay such taxes and any related
10
<page>
assessments,
fines or penalties would not, individually or in the
aggregate, result in a Material Adverse Change.
(x) Not an Investment Company. The Company and the Subsidiary
Guarantors have
been advised of the rules and requirements under the
Investment Company Act
of 1940, as amended (the "Investment Company Act,"
which term, as used
herein, includes the rules and regulations of the
Commission promulgated
thereunder).
The Company and the Subsidiary
Guarantors and their respective subsidiaries are not, and after
receipt of
payment for the Securities will not be, an "investment company" within the
meaning of the Investment Company Act.
(y) Insurance. Each of the Company and its subsidiaries are insured
by
recognized,
financially sound
institutions
(or are self-insured) with
policies in such amounts and with such deductibles and policy limits and
covering such risks as are generally deemed adequate, appropriate and
customary for their businesses.
(z) No Price Stabilization or Manipulation. None of the Company, the
Subsidiary Guarantors
or any of their
respective Affiliates
has taken or
will
take, directly or indirectly, any action designed to or that
might be
reasonably expected to
cause or result in stabilization or manipulation of
the
price of any security of the Company to facilitate the sale or resale
of
the Securities.
(aa) Solvency. The
Company and the Subsidiary Guarantors considered
together on a
consolidated basis
are, and immediately
after the Closing
Date
will be, Solvent.
As used herein,
the term "Solvent" means, with
respect to any person on a particular date, that on such date (i) the
fair
market value of the
assets of such person is greater than the total amount
of
liabilities (including contingent liabilities) of such person, (ii)
the
present fair salable value of the assets of such person is greater
than the
amount that will be required to pay the probable liabilities of
such person
on
its debts as they become absolute and matured, (iii) such person is
able
to
realize upon its assets and pay its debts and other liabilities,
including contingent obligations, as they mature and (iv) such
person does
not
have unreasonably small capital.
(bb) Compliance with Sarbanes-Oxley. The Company and its officers
and
directors are in material compliance with the applicable
provisions of the
Sarbanes-Oxley Act of 2002 (the "Sarbanes-Oxley Act," which term, as used
herein, includes the
rules and regulations
of the Commission
promulgated
thereunder).
(cc) Company's
Accounting System.
The Company maintains
a system of
accounting controls
that is in compliance with the Sarbanes-Oxley Act and
is
sufficient to provide
reasonable assurances
that: (i) transactions are
executed in accordance with management's general or specific
authorization;
(ii)
transactions
are recorded as necessary to permit preparation of
financial statements
in conformity
with generally accepted accounting
principles as applied in the United States and to maintain
accountability
for
assets; (iii) access
to assets is permitted
only in accordance
with
management's general
or specific authorization; and (iv) the recorded
11
<page>
accountability for
assets is compared with existing assets at reasonable
intervals and appropriate action is taken with respect to any
differences.
(dd) Disclosure
Controls and Procedures. The Company has established
and
maintains disclosure
controls and
procedures (as such term is defined
in
Rules 13a-15
and 15d-14 under the Exchange Act); such disclosure
controls and
procedures are
designed to ensure that material information
relating to the
Company and its
subsidiaries
is made known to the
chief
executive officer
and chief financial officer of the Company by others
within the Company or any of its subsidiaries, and such disclosure
controls
and
procedures are reasonably effective to perform the functions
for which
they
were established subject to the limitations of any such control
system; the
Company's auditors and the Audit Committee of the Board of
Directors of the
Company have been advised of: (i) any significant
deficiencies or material weaknesses in the design or
operation of internal
controls which could
adversely affect the Company's ability to record,
process, summarize,
and report financial data; and (ii) any fraud, whether
or
not material,
that involves
management or other
employees who have
a
role
in the Company's
internal controls; and since the date of the most
recent evaluation of
such disclosure
controls and procedures, there have
been
no significant changes
in internal controls
or in other factors that
could significantly
affect internal controls, including any corrective
actions with regard to significant deficiencies and material
weaknesses.
(ee) Compliance
with Environmental Laws. Except as would not,
individually or in the aggregate, result in a Material Adverse
Change: (i)
the
Company, the Subsidiary Guarantors and each of their respective
subsidiaries have all permits, authorizations and approvals
required under
any
Environmental Laws (as
defined below) and are in compliance with their
requirements, (ii) none of the Company, the Subsidiary Guarantors
or any of
their respective
subsidiaries is in violation of any federal, state, local
or
foreign law or
regulation relating to
pollution or protection of human
health or 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 emissions,
discharges, releases
or threatened releases of chemicals, pollutants,
contaminants, wastes, toxic substances, hazardous substances,
petroleum and
petroleum products (collectively, "Materials of Environmental
Concern"), or
otherwise relating
to the manufacture, processing, distribution, use,
treatment, storage,
disposal, transport or handling of Materials of
Environmental Concern
(collectively,
"Environmental
Laws"), nor has
the
Company, any Subsidiary Guarantor or any of their
respective
subsidiaries
12
<page>
received any written communication, whether from a governmental
authority,
citizens group,
employee or otherwise, that alleges that either the
Company, any Subsidiary Guarantor or any of their
respective
subsidiaries
is
in violation of any Environmental Law; (iii) there is no claim,
action
or
cause of action filed with a court or governmental authority, no
investigation with
respect to which the Company has received written
notice, and no written
notice by any person or entity alleging potential
liability for investigatory costs, cleanup costs, governmental responses
costs, natural
resources damages,
property damages,
personal injuries,
attorneys' fees or penalties arising out of, based on or resulting
from the
presence, or release into the environment, of any Material of
Environmental
Concern at any
location owned,
leased or operated by the Company, any
Subsidiary Guarantor or any of their respective subsidiaries, now
or in the
past
(collectively,
"Environmental Claims"), pending or, to the Company's
and
the Subsidiary Guarantors' knowledge, threatened against the
Company,
any
Subsidiary Guarantor
or any of their
respective
subsidiaries or
any
person or entity whose liability for any Environmental Claim the Company,
any
Subsidiary
Guarantor or any of their respective subsidiaries has
retained or assumed either contractually or by operation of law; and
(iv)
to
the Company's and the
Subsidiary Guarantors'
knowledge,
there are no
past
or present actions, activities, circumstances, conditions, events or
incidents, including, without limitation, the
