Exhibit 1.1
$165,000,000
VECTOR GROUP
LTD.
11% Senior Secured Notes
due 2015
PURCHASE
AGREEMENT
August 8, 2007
JEFFERIES & COMPANY, INC.
11100 Santa Monica Boulevard, 10th Floor
Los Angeles, California 90025
Ladies
and Gentlemen:
Vector Group Ltd., a Delaware
corporation (the “ Issuer ”), and the Guarantors
(as defined below) hereby agree with you as follows:
1. Issuance of
Notes . Subject to the terms and conditions set forth in
this Purchase Agreement (this “ Agreement ”),
the Issuer proposes to issue and sell to Jefferies & Company,
Inc. (the “ Initial Purchaser ”) an aggregate of
$165,000,000 million principal amount of its 11% Senior
Secured Notes due 2015 (the “ Notes ”). The
Notes will be issued pursuant to an Indenture (the “
Indenture ”) dated as of the Closing Date (as defined
below) between the Issuer, the Guarantors and U.S. Bank, National
Association, as trustee (the “ Trustee ”).
The Notes will be offered and sold to
the Initial Purchaser pursuant to an exemption from the
registration requirements under the Securities Act of 1933, as
amended (the “ Act ”). Upon original issuance
thereof, and until such time as the same is no longer required
under applicable requirements of the Act, the Notes shall bear the
legends set forth in the Indenture. The Issuer and the Guarantors
have prepared (A) the preliminary offering circular dated
August 7, 2007, including the documents incorporated therein
by reference (together with any amendment or supplement thereto,
the “ Preliminary Offering Circular ”) related
to the offer and sale of the Notes and (B) the final offering
circular, dated the date hereof, including the documents
incorporated therein by reference (together with any amendment or
supplement thereto, the “ Final Offering Circular
”). The Preliminary Offering Circular, together with the
final term sheet attached as Schedule I hereto, is
referred to herein as the “ Disclosure Package
.”
2. Terms of
Offering . The Initial Purchaser has advised the Issuer,
and the Issuer understands, that the Initial Purchaser will make
offers (the “ Exempt Resales ”) of the Notes
purchased hereunder on the terms set forth in the Offering Circular
solely to persons (the “ Subsequent Purchasers
”) whom the Initial Purchaser (i) reasonably believes to
be “qualified institutional buyers” as defined in
Rule 144A under the Act (“ QIBs ”) or (ii)
reasonably believes to be non-U.S. persons in reliance upon
Regulation S under the Act (together with QIBs, the “
Eligible Purchasers ”).
Holders of the Notes (including
Subsequent Purchasers) will have the registration rights set forth
in the Registration Rights Agreement applicable to the Notes (the
“ Registration Rights Agreement ”) to be dated
the Closing Date for so long as such Notes constitute “
Transfer Restricted Securities ” (as defined in the
Registration Rights Agreement). Pursuant to the Registration Rights
Agreement, the Issuer will agree, among other things, to file with
the Securities and Exchange Commission (“ SEC ”)
under the circumstances set forth therein (i) a registration
statement (the “ Exchange Registration Statement
”) relating to an offer (the “ Exchange Offer
”) to exchange the Notes for debt securities substantially
identical to the Notes (the “ Exchange Notes ”),
and the Guarantors’ unconditional guarantee of the Exchange
Notes (the “ Exchange Note Guarantees ”), that
have been registered pursuant to an effective registration
statement under the Act and (ii) under certain circumstances,
a shelf registration statement pursuant to Rule 415 under the
Act (the “Shelf Registration Statement ” and,
together with the Exchange Offer Registration Statement, the
“ Registration Statements ”) relating to the
resale by certain holders of the Notes.
Pursuant to the Indenture, on the
Closing Date the subsidiaries of the Issuer listed on
Schedule II hereto and denoted with an asterisk (*)
shall fully and unconditionally guarantee, to each holder of the
Notes and the Trustee, the full performance of the Issuer’s
obligations under the Indenture and the Notes (each such subsidiary
being referred to herein as a “ Guarantor ” and
each such guarantee being referred to herein as a “
Guarantee ”). Certain of the Guarantors (the “
Secured Guarantors ”), which are denoted with a pound
sign (#) on Schedule II hereto, have agreed to secure
their Guarantees by granting to U.S. Bank National Association, as
collateral agent (the “ Collateral Agent ”), for
the benefit of the holders of the Notes and the Trustee
(collectively, the “ Secured Parties ”),
security interests in or pledges of (the “ Security
Interests ”) the Collateral (as such term is defined in
the Description of Notes section of the Final Offering Circular).
On the Closing Date, the Issuer and the Secured Guarantors will
enter into the collateral agreements listed on
Schedule III hereto (the “ Security
Agreements ”), which will provide for the grant of the
Security Interests. Substantially concurrently with the sale of the
Notes, Liggett Group LLC proposes to enter into an amended senior
secured credit facility by and among Liggett Group LLC, 100 Maple
LLC and Wachovia Bank, National Association providing for up to
$50.0 million of revolving credit borrowings by Liggett Group
LLC (the “ Credit Facility ”). In connection
with the execution and delivery of the Credit Facility, Liggett
Group LLC, Wachovia Bank, National Association, the Trustee and the
Collateral Agent will enter into an Intercreditor and Subordination
Agreement, which shall be dated as of the Closing Date ( as
defined below) (the “ Intercreditor Agreement ”
and, together with the Security Agreements, the “
Collateral Documents ”).
The following documents are
hereinafter collectively referred to as “ Operative
Documents ”: (i) this Agreement, (ii) the
Indenture, (iii) the Notes, (iv) the Guarantees, (v) the
Registration Rights Agreement and (vi) the Collateral
Documents.
3. Agreement to
Sell and Purchase . On the basis of the representations,
warranties and covenants and subject to the terms and conditions
contained in this Agreement, the Issuer agrees to issue and sell to
the Initial Purchaser, and the Initial Purchaser agrees to purchase
from the Issuer, the Notes at a purchase price equal to 96.5% of
the principal amount thereof (the “ Purchase Price
”).
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4. Delivery and
Payment . Delivery of, and payment of the Purchase Price
for, the Notes (the “ Closing ”), shall be made
at 7:00 a.m., Pacific time, on August 16, 2007 (the “
Closing Date ”), at the offices of Latham &
Watkins LLP, 633 W. Fifth Street, Suite 4000, Los Angeles,
California 90071, or such other time or place as the Initial
Purchaser and the Issuer shall designate.
One or more of the Notes in
definitive global form, registered in the name of Cede & Co.,
as nominee of, and deposited with the Trustee as custodian for, The
Depository Trust Company (“ DTC ”), having an
aggregate principal amount corresponding to the aggregate principal
amount of the Notes (collectively, the “ Global Note
”), shall be delivered by the Issuer to the Initial Purchaser
(or as the Initial Purchaser directs) in each case with any
transfer taxes thereon duly paid by the Issuer against payment by
the Initial Purchaser of the Purchase Price therefor by wire
transfer in same day funds to the order of the Issuer,
provided that the Issuer shall give at least two business
days’ prior written notice of the information required to
effect such wire transfer. The Global Note shall be made available
to the Initial Purchaser for inspection not later than
10:00 a.m., Pacific time, on the business day immediately
preceding the Closing Date.
5. Agreements of
the Issuer and Guarantors . The Issuer and each of the
Guarantors jointly and severally hereby agree with the Initial
Purchaser as follows:
(a) To advise the Initial
Purchaser promptly after obtaining knowledge (and, if requested by
the Initial Purchaser, confirm such advice in writing) of
(i) the issuance by any state securities commission of any
stop order suspending the qualification or exemption from
qualification of any Notes for offering or sale in any jurisdiction
designated by the Initial Purchaser pursuant to Section 5(e)
hereof, or the initiation of any proceeding by any state securities
commission or other federal or state regulatory authority for such
purpose or (ii) the happening of any event during the period
referred to in Section 5(c) hereof as a result of which the
Preliminary Offering Circular or the Final Offering Circular would
include an untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements therein, in
light of the circumstances under which they were made, not
misleading. To use their commercially reasonable efforts to prevent
the issuance of any stop order or order suspending the
qualification or exemption of any of the Notes under any state
securities or Blue Sky laws, and if at any time any state
securities commission or other federal or state regulatory
authority shall issue an order suspending the qualification or
exemption of any Notes under any state securities or Blue Sky laws,
to use their commercially reasonable efforts to obtain the
withdrawal or lifting of such order at the earliest possible
time.
(b) To furnish the Initial
Purchaser and those persons identified by the Initial Purchaser to
the Issuer as many copies of the Preliminary Offering Circular and
the Final Offering Circular, and any amendments or supplements
thereto, as the Initial Purchaser may reasonably request during the
time period referred to in Section 5(c) hereof. Subject to the
Initial Purchaser’s compliance with its representations and
warranties and agreements set forth in Section 7 hereof, the
Issuer and Guarantors consent to the use of the Disclosure Package
and the Final Offering Circular, and any amendments and supplements
thereto required pursuant hereto, by the Initial Purchaser in
connection with Exempt Resales.
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(c) During such period as, in
the reasonable opinion of counsel for the Initial Purchaser, a
Final Offering Circular is required by law to be delivered in
connection with Exempt Resales by the Initial Purchaser and in
connection with market-making activities of the Initial Purchaser
permitted under the Securities Exchange Act of 1934, as amended,
and the rules and regulations promulgated thereunder (the “
Exchange Act ”) for so long as any Notes are
outstanding (i) not to make any amendment or supplement to the
Final Offering Circular of which the Initial Purchaser shall not
previously have been advised or to which the Initial Purchaser
shall reasonably object after being so advised and (ii) to
prepare promptly upon the Initial Purchaser’s reasonable
request, any amendment or supplement to the Final Offering Circular
which may be necessary or advisable in connection with such Exempt
Resales or such market-making activities.
(d) If, during the period
referred to in Section 5(c) above, any event shall occur or
condition shall exist as a result of which, in the reasonable
judgment of counsel to the Initial Purchaser, the Disclosure
Package or the Final Offering Circular would 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, or
if, in the reasonable judgment of counsel to the Initial Purchaser,
it is necessary to amend or supplement the Disclosure Package or
the Final Offering Circular to comply with any applicable law,
forthwith to notify the Initial Purchaser and to prepare an
appropriate amendment or supplement so that, as so amended or
supplemented, the Disclosure Package and the Final Offering
Circular will not include any 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, or so that such Disclosure Package
or the Final Offering Circular will comply with applicable law, and
to furnish to the Initial Purchaser and such other persons as the
Initial Purchaser may designate such number of copies thereof as
the Initial Purchaser may reasonably request.
(e) Prior to the sale of all
Notes pursuant to Exempt Resales as contemplated hereby, to
cooperate with the Initial Purchaser and counsel to the Initial
Purchaser in connection with the registration or qualification of
the Notes for offer and sale to the Initial Purchaser and pursuant
to Exempt Resales under the securities or Blue Sky laws of such
jurisdictions as the Initial Purchaser may request and to continue
such registration or qualification in effect so long as required
for Exempt Resales and to file such consents to service of process
or other documents as may be necessary in order to effect such
registration or qualification; provided , however ,
that the Issuer shall not be required in connection therewith to
register or qualify as a foreign corporation in any jurisdiction in
which it is not now so qualified or to take any action that would
subject it to general consent to service of process or taxation in
any jurisdiction in which it is not now so subject.
(f) To apply the proceeds from
the sale of the Notes as set forth under the caption “Use of
Proceeds” in the Final Offering Circular.
(g) So long as any Notes are
outstanding, (i) to mail and make generally available as soon
as practicable after the end of each fiscal year to the record
holders of the Notes a financial report of the Issuer on a
consolidated basis, all such financial reports to include a
consolidated balance sheet, a consolidated statement of operations,
a consolidated statement of cash flows and
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a
consolidated statement of shareholders’ equity as of the end
of and for such fiscal year, together with comparable information
as of the end of and for the preceding year, certified by the
Issuer’s independent public accountants and (ii) to make
generally available as soon as practicable after the end of each
quarterly period (except for the last quarterly period of each
fiscal year) to such holders, a consolidated balance sheet, a
consolidated statement of operations and a consolidated statement
of cash flows (and similar financial reports of all unconsolidated
subsidiaries, if any) as of the end of and for such period, and for
the period from the beginning of such year to the close of such
quarterly period, together with comparable information for the
corresponding periods of the preceding year. Notwithstanding the
foregoing, the filing of information required herein with the SEC
on its EDGAR database system within prescribed time periods (taking
into account allowable extensions) shall satisfy the requirements
of this Section 5(g).
(h) So long as the Notes are
outstanding, to furnish to the Initial Purchaser as soon as
reasonably practicable, copies of all reports or other
communications (A) furnished by the Issuer to its security
holders, (B) furnished to or filed with the SEC or any
national securities exchange on which any class of securities of
the Issuer is listed or (C) delivered pursuant to the
Indenture and such other publicly available information concerning
the Issuer as the Initial Purchaser may reasonably request;
provided , however , that any such report,
communication or information available on the SEC’s EDGAR
database system need not be furnished pursuant to this
Section 5(h).
(i) So long as any of the Notes
remain outstanding and during any period in which the Issuer is not
subject to Section 13 or 15(d) of the Exchange Act to make
available to any holder of Notes in connection with any sale
thereof and any prospective purchaser of such Notes from such
holder, the information (“ Rule 144A Information
”) required by Rule 144A(d)(4) under the Act.
(j) Whether or not the
transactions contemplated by this Agreement are consummated or this
Agreement is terminated, to pay or cause to be paid all expenses
incident to the performance of the obligations of the Issuer and
the Guarantors under this Agreement, including: (i) the fees,
disbursements and expenses of counsel to the Issuer and accountants
of the Issuer and the Guarantors in connection with the sale and
delivery of the Notes and the Guarantees to the Initial Purchaser
and pursuant to Exempt Resales, and all other fees or expenses of
the Issuer and the Guarantors incurred in connection with the
preparation, printing, filing and distribution of the Disclosure
Package and the Final Offering Circular and all amendments and
supplements to any of the foregoing (including financial
statements) specified in Section 5(c) and 5(d) prior to or during
the period specified in Section 5(c), including the mailing
and delivering of copies thereof to the Initial Purchaser and
persons designated by it in the quantities specified herein,
(ii) all costs and expenses related to the transfer and
delivery of the Notes and the Guarantees to the Initial Purchaser
and pursuant to Exempt Resales, including any transfer or other
taxes payable thereon, (iii) all costs of printing or
producing this Agreement, the other Operative Documents and any
other agreements or documents in connection with the offering,
purchase, sale or delivery of the Notes and the Guarantees,
(iv) all expenses in connection with the registration or
qualification of the Notes for offer and sale under the securities
or Blue Sky laws of the several states and all costs of printing or
producing any preliminary and supplemental Blue Sky memoranda in
connection therewith (including the filing
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fees and
fees and disbursements of counsel for the Initial Purchaser in
connection with such registration or qualification and memoranda
relating thereto), (v) the cost of printing certificates
representing the Notes and the Guarantees, (vi) all expenses
and listing fees in connection with the application for quotation
of the Notes on the Private Offerings, Resales and Trading through
Automated Linkages (“ PORTAL ”) system of NASD,
Inc. (“ NASD ”), (vii) the fees and expenses of
the Trustee and the Trustee’s counsel in connection with the
Indenture and the Notes and the Guarantees, (viii) the fees
and expenses of the Collateral Agent and the Collateral
Agent’s counsel in connection with the Security Interests,
the Collateral, the Indenture, the Notes and the Guarantees,
(viii) the costs and charges of any transfer agent, registrar
or depositary (including DTC), (ix) all costs and expenses of
the Exchange Offer and any Registration Statement, as set forth in
the Registration Rights Agreement, (x) the fees, disbursements
and expenses of the Initial Purchaser incident to the performance
of the obligations of the Initial Purchaser under this Agreement
(including, but not limited to, fees of counsel for the Initial
Purchaser) in an amount not to exceed $500,000 and (xi) all
other costs and expenses incident to the performance of the
obligations of the Issuer and Guarantors under this Agreement and
the other Operative Documents for which provision is not otherwise
made in this Section 5(j). In addition, on the Closing Date
the Issuer agrees to pay to the Initial Purchaser an advisory fee
equal to 1.75% of the aggregate principal amount of the
Notes.
(k) To use commercially
reasonable efforts to effect the inclusion of the Notes on PORTAL
and to maintain the listing of the Notes on PORTAL for so long as
any Notes are outstanding.
(l) To obtain the approval of
DTC for “book-entry” transfer of the Notes, and to
comply with all agreements set forth in the representation letters
of the Issuer to DTC relating to the approval of the Notes by DTC
for “book-entry” transfer.
(m) During the period beginning
on the date hereof and continuing to and including the Closing
Date, not to offer, sell, contract to sell, grant any option to
purchase or otherwise transfer or dispose of any debt securities of
the Issuer or any warrants, rights or options to purchase or
otherwise acquire debt securities of the Issuer substantially
similar to the Notes (other than the Notes), without the prior
written consent of the Initial Purchaser.
(n) To not, and to ensure that
no affiliate (as defined in Rule 501(b) of the Act) of the Issuer
will, sell, offer for sale or solicit offers to buy or otherwise
negotiate in respect of any “security” (as defined in
the Act) that would be integrated with the sale of the Notes to the
Initial Purchaser of pursuant to Exempt Resales in a manner that
would require the registration under the Act of the sale of the
Notes to the Initial Purchaser or the Subsequent Purchasers.
(o) To the extent it may
lawfully do so, not to voluntarily claim, and to actively resist
any attempts to claim, the benefit of any usury laws against the
holders of any Notes.
(p) During the period beginning
on the date of this Agreement and continuing to and including the
Closing Date, not to offer, sell, contract to sell or otherwise
transfer or dispose of any debt securities of the Issuer or its
Subsidiaries or any warrants, rights or options to purchase or
otherwise acquire debt securities of the Issuer or its Subsidiaries
substantially similar to the Notes (other than the Notes), without
the prior written consent of the Initial Purchaser.
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(q) To cause the Exchange Offer
to be made in the appropriate form to permit the Exchange Notes
registered pursuant to the Act to be offered in exchange for the
Notes and to comply with all applicable federal and state
securities laws in connection with the Exchange Offer.
(r) To comply with all of their
agreements set forth in the Registration Rights Agreement.
(s) To validly execute and
deliver the Indenture, the Notes, the Registration Rights
Agreement, each of the Guarantees and each of the Collateral
Documents, such Operative Documents to conform to the descriptions
thereof contained in the Disclosure Package and the Final Offering
Circular.
(t) The Issuer shall not be or
become, at any time prior to the expiration of three years after
the Closing Date, an open-end investment company, unit investment
trust, closed-end investment company or face-amount certificate
company that is or is required to be registered under
Section 10 of the Investment Company Act of 1940, as
amended.
(u) During the period for two
years after the Closing Date (or such shorter period as may be
provided for in Rule 144(k) under the Act, as the same may be in
effect from time to time), to not, and not permit any
“affiliates” (as defined in Rule 144 under the
Act) to, resell any of the Notes which constitute “restricted
securities” under Rule 144 that have been reacquired by
any of them except pursuant to an effective registration statement
under the Act.
(v) To not, and to not authorize
or permit any person acting on the Issuer’s behalf to (i)
distribute any offering material in connection with the offer and
sale of the Notes, other than the Disclosure Package and the Final
Offering Circular and any amendments and supplements thereto
prepared in compliance with this Agreement, (ii) solicit any
offer to buy or offer to sell the Notes by means of any form of
general solicitation or general advertising (including, without
limitation, as such terms are used in Regulation D under the
Act) or in any manner involving a public offering within the
meaning of Section 4(2) of the Act or (iii) make any
offer relating to the Notes by means of any “written
communication” (within the meaning of the Act) prepared by or
on behalf of the Issuer, or used or referred to by the Issuer, that
constitutes an offer to sell or a solicitation of an offer to buy
the Notes, other than the Disclosure Package and the Final Offering
Circular and any amendments or supplements thereto, including,
without limitation, any road show relating to the Notes that
constitutes such a written communication.
(w) To pay all stamp,
documentary and transfer taxes and other duties, if any, which may
be imposed by the United States or any political subdivision
thereof or taxing authority thereof or therein with respect to the
issuance of the Notes or the sale thereof to the Initial
Purchaser.
(x) To use their commercially
reasonable efforts to do and perform all things required or
necessary to be done and performed under the Operative Documents
prior to the Closing Date and to satisfy all conditions precedent
to the delivery of the Notes.
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(y) To use their commercially
reasonable efforts to complete on or prior to the Closing Date all
filings and similar actions required in connection with the
perfection of Security Interests as and to the extent contemplated
by the Collateral Documents.
6.
Representations and Warranties of the Issuer and the
Guarantors . Certain of the provisions contained in this
Agreement refer to the “knowledge of the Issuer or the
Guarantors.” For purposes of this Agreement “knowledge
of the Issuer or the Guarantors” and similar phrases shall
mean the actual knowledge of the individuals identified as
executive officers or directors of the Issuer and the Guarantors in
the SEC Documents (as defined below).
As of the date hereof and as of the
Closing Date, the Issuer and each of the Guarantors jointly and
severally represent and warrant to, and agree with, the Initial
Purchaser that:
(a) Offering Circular .
The Disclosure Package, as of 4:00 p.m. (New York Time) on the date
hereof, did not contain any untrue statement of material fact or
omit to state any material fact necessary to make the statements
therein, in the light of the circumstances under which they were
made, not misleading; the Offering Circular, as of its date and as
of the Closing Date did not and will not contain any untrue
statement of a material fact or omit to state a material fact
necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading;
provided , however , that the Issuer and the
Guarantors make no representations or warranties as to information
contained in or omitted from the Disclosure Package or the Offering
Circular or any amendment or supplement thereto in reliance upon,
and in conformity with, written information furnished to the Issuer
by or on behalf of the Initial Purchaser specifically for use in
the preparation thereof. The documents incorporated or deemed to be
incorporated by reference in the Disclosure Package and the Final
Offering Circular at the time they were or hereafter are filed with
the SEC complied and will comply in all material respects with the
requirements of the Exchange Act and the rules and regulations of
the SEC thereunder. No injunction or order has been issued that
either (i) asserts that any of the transactions contemplated
by the Operative Documents is subject to the registration
requirements of the Act or (ii) would prevent or suspend the
issuance or sale of any of the Notes or the use of the Disclosure
Package or the Offering Circular, or any amendment or supplement
thereto, in any jurisdiction.
(b) Organization and
Qualification . The Issuer and its “ Subsidiaries
” (which for purposes of this Agreement means any entity in
which the Issuer, directly or indirectly, owns capital stock or
holds an equity or similar interest that equals or exceeds 50% of
the aggregate outstanding equity or similar interests of such
entity) are entities duly organized and validly existing in good
standing under the laws of the jurisdiction in which they are
formed, and have the requisite power and authorization to own their
material properties and to carry on their business as now being
conducted in all material respects. Each of the Issuer and its
Subsidiaries is duly qualified as a foreign entity to do business
and is in good standing in every jurisdiction in which its
ownership of property or the nature of the business conducted by it
makes such qualification necessary, except to the extent that the
failure to be so qualified or be in good standing would not
reasonably be expected to have a Material Adverse Effect. As used
in this Agreement, “ Material Adverse Effect ”
means any material adverse effect on the business, assets, results
of operations, or condition (financial or otherwise) of the Issuer
and its Subsidiaries, taken as a whole, or the Guarantors, taken as
whole, or on the transactions contemplated hereby and
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the
other Operative Documents taken as a whole or by the agreements and
instruments to be entered into in connection herewith or therewith,
or on the authority or ability of the Issuer and the Guarantors to
perform their obligations under the Operative Documents. The Issuer
has no subsidiaries except as set forth on Schedule II
hereto. The corporate structure chart, together with the footnotes
thereto, included in the Offering Circular under the section
”Offering Circular Summary-Corporate Structure”
reflects the true and complete ownership structure of the Issuer
and its Subsidiaries.
(c) Authorization;
Enforcement; Validity . The Issuer and each of the Guarantors
that is a corporation has the requisite corporate power and
authority, and each of the Guarantors that is a limited liability
company has the requisite limited liability company power and
authority, to enter into and perform its obligations under each of
the Operative Documents and, in the case of the Issuer, to issue
the Notes and the Exchange Notes, and, in the case of the
Guarantors, to enter into the Guarantees and the Exchange Note
Guarantees, in accordance with the terms hereof and thereof. The
execution and delivery of the Operative Documents by the Issuer and
the Guarantors, as applicable, and the consummation by the Issuer
and the Guarantors of the transactions contemplated hereby and
thereby, including, without limitation, the issuance and sale of
the Notes, the Guarantees, the Exchange Notes and the Exchange Note
Guarantees, have been duly authorized by the Issuer’s and
Guarantors’ respective Boards of Directors or managers or
managing members and (other than the filing with the SEC of one or
more Registration Statements as may be required by federal and
state securities laws with respect to the Issuer’s
obligations under the Registration Rights Agreement) no further
consent or authorization is required by the Issuer or the
Guarantors, their respective Boards of Directors or managers or
managing members or their stockholders or members, as applicable.
This Agreement has been duly authorized, executed and delivered by
the Issuer and each of the Guarantors and is, and upon execution
and delivery of the Operative Documents by the Issuer and the
Guarantors, each of the Operative Documents will be, the legal,
valid and binding obligations of the Issuer and the Guarantors (to
the extent parties thereto), enforceable against them in accordance
with their respective terms, except as such enforceability may be
limited by general principles of equity or applicable bankruptcy,
insolvency, reorganization, moratorium, liquidation or similar laws
relating to, or affecting generally, the enforcement of applicable
creditors’ rights and remedies.
(d) Issuance of the
Notes . The Notes have been duly and validly authorized and, on
the Closing Date, will have been validly executed and delivered by
the Issuer. When the Notes have been issued, executed and
authenticated in accordance with the provisions of the Indenture
and delivered to and paid for by the Initial Purchaser in
accordance with the terms of this Agreement, the Notes will be
entitled to the benefits of the Indenture and will be valid and
binding obligations of the Issuer, enforceable against the Issuer
in accordance with their terms, except as (i) the
enforceability thereof may be limited by bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium or similar laws
affecting creditors’ rights generally and (ii) rights of
acceleration and the availability of equitable remedies may be
limited by equitable principles of general applicability. On the
Closing Date, the Notes will conform in all material respects to
the description thereof contained in the Disclosure Package and the
Final Offering Circular. The Notes shall be free from all taxes,
liens and charges with respect to the issue thereof.
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(e) Issuance of the
Guarantees . The Guarantees have been duly and validly
authorized by the Guarantors and when duly executed and delivered
by the Guarantors in accordance with the terms of the Indenture and
upon the due execution, authentication and delivery of the Notes in
accordance with the Indenture and the issuance of the Notes and the
sale to the Initial Purchaser contemplated by this Agreement, will
constitute valid and binding obligations of the Guarantors,
enforceable against them in accordance with their terms, except as
(i) the enforceability thereof may be limited by bankruptcy,
insolvency or similar laws affecting creditors’ rights
generally and (ii) rights of acceleration and the availability
of equitable remedies may be limited by equitable principles of
general applicability.
(f) Issuance of the Exchange
Notes . The Exchange Notes have been duly authorized by the
Issuers. When the Exchange Notes are issued, executed and
authenticated in accordance with the terms of the Exchange Offer
and the Indenture, the Exchange Notes will be entitled to the
benefits of the Indenture and will be valid and binding obligations
of the Company, enforceable against the Company in accordance with
their terms, except as (i) the enforceability thereof may be
limited by bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium or similar laws affecting
creditors’ rights generally and (ii) rights of
acceleration and the availability of equitable remedies may be
limited by equitable principles of general applicability.
(g) Issuance of the Exchange
Note Guarantees . The Exchange Note Guarantees have been duly
and validly authorized by the Guarantors and when duly executed and
delivered by the Guarantors in accordance with the terms of the
Indenture and upon the due execution and authentication of the
Exchange Notes in accordance with the Indenture and the issuance
and delivery of the Exchange Notes in the circumstances
contemplated by the Registration Rights Agreement, will constitute
valid and binding obligations of the Guarantors, enforceable
against them in accordance with their terms, except as (i) the
enforceability thereof may be limited by bankruptcy, insolvency or
similar laws affecting creditors’ rights generally and
(ii) rights of acceleration and the availability of equitable
remedies may be limited by equitable principles of general
applicability.
(h) Security Interests .
Upon execution and delivery of the Collateral Documents by the
parties thereto and completion of the filings and recordings
identified therein or possession of the Collateral as provided
therein, the Security Interests created for the benefit of the
Trustee pursuant to the Collateral Documents, such Security
Interests will constitute valid, perfected security interests and
liens on collateral subject thereto, except as permitted by the
Collateral Documents, and subject to no prior liens except liens
expressly permitted by the Indenture.
(i) Security Filings .
All notice filings to be made pursuant to the Collateral Documents
(including without limitation all UCC financing statements required
to be filed pursuant to the Collateral Documents) are in proper
form to be filed in order to perfect a security interest in the
Collateral described therein and no stamp or similar tax is payable
in connection therewith.
(j) No Conflicts . The
execution, delivery and performance of this Agreement and the other
Operative Documents by the Issuer and the Guarantors (to the extent
parties thereto) and the consummation by the Issuer and the
Guarantors of the transactions contemplated hereby and
10
thereby
(including, without limitation, the issuance of the Notes) will not
(i) result in a violation of the Charter Documents (as defined
in Section 6(x)), (ii) conflict with, or constitute a
default (or an event which with notice or lapse of time or both
would become a default) under, or give to others any rights of
termination, amendment, acceleration or cancellation of, any
agreement, indenture or instrument to which the Issuer or any of
its Subsidiaries is a party, or (iii) (so long as the Issuer
obtains all consents, authorizations and orders and makes all
filings and registrations specified in Section 6(k) below) result
in a violation of any law, rule, regulation, order, judgment or
decree (including federal and state securities laws and
regulations) applicable to the Issuer or any of its Subsidiaries or
by which any property or asset of the Issuer or any of its
Subsidiaries is bound or affected, except, in the case of clauses
(ii) and (iii), such conflicts, defaults, rights, or
violations that would not reasonably be expected to have a Material
Adverse Effect.
(k) Consents . The
Issuer and the Guarantors are not required to obtain any consent,
authorization or order of, or make any filing or registration with,
any court, governmental agency or any regulatory or self-regulatory
agency or any other Person in order for the Issuer and the
Guarantors to execute, deliver or perform any of their respective
obligations under or contemplated by the Operative Documents, in
each case in accordance with the terms hereof or thereof, other
than as may be required by federal and state securities laws with
respect to the Issuer’s obligations under the Registration
Rights Agreement. All consents, authorizations, orders, filings and
registrations which the Issuer and the Guarantors are required to
obtain or make pursuant to the preceding sentence have been
obtained or made on or prior to the Closing Date.
(l) No General
Solicitation . Neither the Issuer nor any of its affiliates or
other person acting on behalf of the Issuer has offered or sold the
Notes by means of any general solicitation or general advertising
within the meaning of Rule 502(c) under the Act or, with respect to
Notes sold outside the United States to non-U.S. persons (as
defined in Rule 902 under the Act), by means of any directed
selling efforts within the meaning of Rule 902 under the Act,
and the Issuer, any affiliate of the Issuer and any person acting
on behalf of the Issuer have complied with and will implement the
“offering restrictions” within the meaning of such
Rule 902; provided that no representation is made in
this subsection with respect to the actions of the Initial
Purchaser.
(m) No Broker’s
Fees . The Issuer has not engaged any broker, finder,
commission agent or other person (other than the Initial Purchaser)
in connection with the offering of the Notes or any of the
transactions contemplated in the Operative Documents, and the
Issuer is not under any obligation to pay any broker’s fee or
commission in connection with such transactions (other than
commissions or fees to the Initial Purchaser).
(n) Trust Indenture Act
. On the Closing Date, the Indenture will conform in all material
respects to the requirements of the Trust Indenture Act of 1939, as
amended (the “ TIA ”), and the rules and
regulations of the SEC applicable to an indenture which is required
to be qualified thereunder.
(o) SEC Documents; Financial
Statements . During the two (2) years prior to the date
hereof, the Issuer has filed all reports, schedules, forms,
statements and other documents required to be filed by it with the
SEC pursuant to the reporting requirements of the Exchange Act (all
of
11
the
foregoing filed prior to the date hereof and all exhibits included
therein and financial statements, notes and schedules thereto and
documents incorporated by reference therein being hereinafter
referred to as the “ SEC Documents ”). As of
their respective dates, the SEC Documents, as they may have been
subsequently amended by filings made by the Issuer with the SEC
prior to the date hereof, complied in all material respects with
the requirements of the Exchange Act and the rules and regulations
of the SEC promulgated thereunder applicable to the SEC Documents.
As of their respective dates, the financial statements of the
Issuer included in the SEC Documents complied as to form in all
material respects with applicable accounting requirements and the
published rules and regulations of the SEC with respect thereto.
Such financial statements have been prepared in accordance with
generally accepted accounting principles, consistently applied,
during the periods involved (except (i) as may be otherwise
indicated in such financial statements or the notes thereto, or
(ii) in the case of unaudited interim statements, to the
extent they may exclude footnotes or may be condensed or summary
statements) and fairly present in all material respects the
financial position of the Issuer as of the dates thereof and the
results of its operations and cash flows for the periods then ended
(subject, in the case of unaudited statements, to normal year-end
audit adjustments).
(p) Absence of Certain
Changes . Except as disclosed in the Disclosure Package and the
Final Offering Circular, since December 31, 2006,
(i) there has been no change or development that has had a
Material Adverse Effect, (ii) the Issuer has not declared or
paid any dividends other than the dividends paid on March 29,
2007 to the stockholders of record as of March 19, 2007 and
the dividends paid on June 29, 2007 to the stockholders of
record as of June 20, 2007, (iii) neither the Issuer nor any
of its Subsidiaries has sold any assets, individually or in the
aggregate, in excess of $1,000,000 outside of the ordinary course
of business and (iv) neither the Issuer nor any of its
Subsidiaries has made any capital expenditures, individually or in
the aggregate, in excess of $5,000,000. Neither the Issuer nor any
of its Subsidiaries has taken any steps to seek protection pursuant
to any bankruptcy law nor does the Issuer have knowledge that
either its or its Subsidiaries’ respective creditors intend
to initiate involuntary bankruptcy proceedings or knowledge of any
fact which would reasonably lead a creditor to do so. The Issuer is
not as of the date hereof, and after giving effect to the
transactions contemplated hereby to occur at the Closing will not
be, Insolvent (as defined below). For purposes of this
Section 6(p), “ Insolvent ” means
(i) the present fair saleable value of the Issuer’s
assets is less than the amount required to pay the Issuer’s
total Indebtedness, (ii) the Issuer is unable to pay its debts
and liabilities, subordinated, contingent or otherwise, as such
debts and liabilities become absolute and matured or (iii) the
Issuer has unreasonably small capital with which to conduct the
business in which it is engaged as such business is now conducted.
“ Indebtedness ” of any Person means, without
duplication (A) all indebtedness for borrowed money,
(B) all obligations issued, undertaken or assumed as the
deferred purchase price of property or services (other than trade
payables entered into in the ordinary course of business),
(C) all reimbursement or payment obligations with respect to
letters of credit, surety bonds and other similar instruments,
(D) all obligations evidenced by notes, bonds, debentures or
similar instruments, including obligations so evidenced incurred in
connection with the acquisition of property, assets or businesses,
(E) all indebtedness created or arising under any conditional
sale or other title retention agreement, or incurred as financing,
in either case with respect to any property or assets acquired with
the proceeds of such indebtedness (even though the rights and
remedies of the seller or bank under such agreement in the event of
default are limited to repossession or sale of such property),
(F) all monetary obligations under any leasing or similar
arrangement which, in connection with
12
generally accepted accounting principles, consistently applied for
the periods covered thereby, is classified as a capital lease,
(G) all indebtedness referred to in clauses (A) through
(F) above secured by (or for which the holder of such
Indebtedness has an existing right, contingent or otherwise, to be
secured by) any mortgage, lien, pledge, charge, security interest
or other encumbrance upon or in any property or assets (including
accounts and contract rights) owned by any Person, even though the
Person which owns such assets or property has not assumed or become
liable for the payment of such indebtedness, and (H) all
Contingent Obligations in respect of indebtedness or obligations of
others of the kinds referred to in clauses (A) through
(G) above; and (y) “ Contingent Obligation
” means, as to any Person, any direct or indirect liability,
contingent or otherwise, of that Person with respect to any
indebtedness, lease, dividend or other obligation of another Person
if the primary purpose or intent of the Person incurring such
liability, or the primary effect thereof, is to provide assurance
to the obligee of such liability that such liability will be paid
or discharged, or that any agreements relating thereto will be
complied with, or that the holders of such liability will be
protected (in whole or in part) against loss with respect
thereto.
(q) No Undisclosed Events,
Liabilities, Developments or Circumstances . No event,
liability, development or circumstance has occurred or exists with
respect to the Issuer or its Subsidiaries or their respective
businesses, properties, operations or condition (financial or
otherwise), that would be required to be disclosed by the Issuer
under applicable securities laws on a registration statement on
Form S-1 filed with the SEC relating to an issuance and sale by the
Issuer of its Common Stock and which has not been publicly
announced.
(r) Conduct of Business;
Regulatory Permits . Neither the Issuer nor any of its
Subsidiaries is in violation of (x) any term of or in default
under its Charter Documents or (y) any judgment, decree or order or
any statute, ordinance, rule or regulation applicable to the Issuer
or its Subsidiaries, except, in either of the foregoing cases, for
possible violations which would not, individually or in the
aggregate, reasonably be expected to have a Material Adverse
Effect. The Issuer and its Subsidiaries possess all certificates,
authorizations and permits issued by the appropriate regulatory
authorities necessary to conduct their respective businesses,
except where the failure to possess such certificates,
authorizations or permits would not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect, and
neither the Issuer nor any such Subsidiary has received any written
notice of proceedings relating to the revocation or modification of
any such certificate, authorization or permit.
(s) Foreign Corrupt
Practices . Neither the Issuer, nor any of its Subsidiaries,
nor any director, officer, agent, employee or other Person acting
on behalf of the Issuer or any of its Subsidiaries has, in the
course of its actions for, or on behalf of, the Issuer
(i) used any corporate funds for any unlawful contribution,
gift, entertainment or other unlawful expenses relating to
political activity; (ii) made any direct or indirect unlawful
payment to any foreign or domestic government official or employee
from corporate funds; (iii) violated or is in violation of any
provision of the U.S. Foreign Corrupt Practices Act of 1977, as
amended; or (iv) made any unlawful bribe, rebate, payoff,
influence payment, kickback or other unlawful payment to any
foreign or domestic government official or employee.
13
(t) Sarbanes-Oxley Act .
There is and has been no failure on the part of the Issuer or any
of the Issuer’s directors or executive officers, in their
capacities as such, to comply in all material respects with any
provision of the Sarbanes-Oxley Act of 2002, as in effect at the
applicable time, and the rules and regulations promulgated in
connection therewith (the “ Sarbanes-Oxley Act
”), including Section 402 related to loans and
Sections 302 and 906 related to certifications.
(u) Disclosure Controls and
Procedures . The chief executive officer and chief financial
officer of the Issuer are responsible for establishing and
maintaining disclosure controls and procedures (as defined in
Rules 13a-15(e) and 15d-15(e) of the rules and regulations of
the SEC under the Exchange Act) for the Issuer and have
(i) designed such disclosure controls and procedures, or
caused such disclosure controls and procedures to be designed under
their supervision, to ensure that material information relating to
the Issuer and its Subsidiaries is made known to the chief
executive officer and chief financial officer by others within the
Issuer and its Subsidiaries, particularly during the end of the
period (the “ Evaluation Date ”) covered by each
of the most recent annual and quarterly report of the Issuer (each
a “ Report ”), (ii) evaluated the
effectiveness of the Issuer’s disclosure controls and
procedures and presented in each Report their conclusions about the
effectiveness of the disclosure controls and procedures as of the
Evaluation Date covered by each Report based on such evaluation and
(iii) disclosed in each Report any change in the
Issuer’s internal control over financial reporting that
occurred during the period covered by the Report that has
materially affected, or is reasonably likely to materially affect,
the Issuer’s internal controls over financial reporting. The
chief executive officer and chief financial officer of the Issuer
have disclosed, based upon their most recent evaluation of the
internal controls over financial reporting, to the Issuer’s
auditors and the Audit Committee of the Issuer’s Board of
Directors (x) all material weaknesses in the design or
operation of internal controls over financial reporting which are
reasonably likely to adversely affect the Issuer’s ability to
record, process, summarize and report financial information, and
(y) any fraud, whether or not material, that involves
management or other employees who have a significant role in the
Issuer’s internal controls.
(v) Internal Accounting
Controls . The Issuer and each of its Subsidiaries maintain a
system of internal accounting controls sufficient to provide
reasonable assurance that (i) transactions are executed in
accordance with management’s general or specific
authorizations, (ii) transactions are recorded as necessary to
permit preparation of financial statements in conformity with
generally accepted accounting principles and to maintain asset and
liability accountability, (iii) access to assets or incurrence
of liabilities is permitted only in accordance with
management’s general or specific authorization and
(iv) the recorded accountability for assets and liabilities is
compared with the existing assets and liabilities at reasonable
intervals and appropriate action is taken with respect to any
difference.
(w) Transactions With
Affiliates . Except as disclosed in the Disclosure Package and
the Final Offering Circular, none of the officers, directors or
employees of the Issuer is presently a party to any transaction
with the Issuer or any of its Subsidiaries (other than for ordinary
course services as employees, officers or directors), including any
contract, agreement or other arrangement providing for the
furnishing of services to or by, providing for rental of real or
personal property to or from, or otherwise requiring payments to or
from any such officer, director or employee or, to the knowledge of
the Issuer, any corporation, partnership, trust or other entity in
which any such officer, director, or employee has a substantial
interest or is an officer, director, trustee or partner, which is
required by the rules and regulations of the SEC under the Exchange
Act to be so disclosed in the SEC Documents.
14
(x) Equity
Capitalization . All outstanding shares of capital stock of or
membership interests in, as applicable, the Issuer and the
Subsidiaries have been duly authorized and validly issued and are
fully paid, non-assessable and not subject to any preemptive or
similar rights. There are no outstanding subscriptions, rights,
warrants, options, calls, convertible securities, commitments of
sale or liens granted or issued by the Issuer or any of the
Subsidiaries relating to or entitling any person to purchase or
otherwise to acquire any shares of the capital stock of or
membership interests in, as applicable, the Issuer or any of the
Subsidiaries, except as otherwise disclosed in the SEC Documents.
The Issuer and each of the Subsidiaries has furnished to the
Initial Purchaser correct and complete copies of its Certificate of
Incorporation, limited liability company agreement, bylaws and
other organizational documents, as applicable, as amended and as in
effect on the date hereof (the “ Charter Documents
”).
(y) Absence of
Litigation . Except as set forth in the Preliminary Offering
Circular and the Final Offering Circular, there is no action, suit
or proceeding before or by the Principal Market, any court, public
board, government agency, self-regulatory organization or body
pending or, to the knowledge of the Issuer, threatened against or
affecting the Issuer or any of the Issuer’s Subsidiaries or
any of the Issuer’s or the Issuer’s Subsidiaries’
officers or directors in their capacities as such that would
reasonably be expected to have a Material Adverse Effect. The SEC
Documents set forth all litigation matters which are required to be
disclosed in such SEC Documents.
(z) Insurance . The
Issuer and each of its Subsidiaries are insured by insurers of
recognized financial responsibility against such losses and risks
and in such amounts as management of the Issuer believes to be
prudent and customary for the businesses in which th
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