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Exhibit 4.2
EXECUTION COPY
$126,530,000
VICORP RESTAURANTS, INC.
10-1/2% Senior Notes due 2011
Purchase Agreement
April 6, 2004
J.P. Morgan Securities Inc.
As Representative of the
several Initial Purchasers
listed
in Schedule 1 hereto
c/o J.P. Morgan Securities Inc.
270 Park Avenue
New York, New York 10017
Ladies and Gentlemen:
VICORP Restaurants, Inc., a Colorado corporation (the
"Company"),
proposes to issue and sell to the several
Initial Purchasers listed in Schedule
1 hereto (the "Initial Purchasers"), for
whom you are acting as representative
(the "Representative"), $126,530,000
principal amount of its 10-1/2% Senior
Notes due 2011 (the "Securities"). The
Securities will be issued pursuant to an
Indenture to be dated as of April 14, 2004
(the "Indenture") among the Company,
VI Acquisition Corp., a Delaware
corporation (the "Parent"), Village Inn Pancake
House of Albuquerque, Inc., a New Mexico
corporation ("VI New Mexico" and
together with the Parent, the "Guarantors")
and Wells Fargo Bank, National
Association, as trustee (the "Trustee"),
and will be guaranteed on an unsecured
senior basis by each of the Guarantors (the
"Guarantees").
The Securities will be sold to the Initial Purchasers without
being
registered under the Securities Act of
1933, as amended (the "Securities Act"),
in reliance upon an exemption therefrom.
The Company has prepared a preliminary
offering memorandum dated March 22, 2004
(the "Preliminary Offering Memorandum")
and will prepare an offering memorandum
dated the date hereof (the "Offering
Memorandum") setting forth information
concerning the Company and the
Securities. Copies of the Preliminary
Offering Memorandum have been, and copies
of the Offering Memorandum will be,
delivered by the Company to the Initial
Purchasers pursuant to the terms of this
Agreement. The Company hereby confirms
that it has authorized the use of the
Preliminary Offering Memorandum and the
Offering Memorandum in connection with the
offering and resale of the Securities
by the Initial Purchasers in the manner
contemplated by this Agreement.
Capitalized terms used but not defined
herein shall have the meanings given to
such terms in the Offering Memorandum.
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Holders of the Securities (including the Initial Purchasers and
their direct and indirect transferees) will
be entitled to the benefits of a
Registration Rights Agreement, to be dated
the Closing Date (as defined below)
and substantially in the form attached
hereto as Exhibit A (the "Registration
Rights Agreement"), pursuant to which the
Company and the Guarantors will agree
to file one or more registration statements
with the Securities and Exchange
Commission (the "Commission") providing for
the registration under the
Securities Act of the Securities or the
Exchange Securities referred to (and as
defined) in the Registration Rights
Agreement.
The Company hereby confirms its agreement with the several
Initial
Purchasers concerning the purchase and
resale of the Securities, as follows:
1.
Purchase and Resale of the Securities. (a) The Company agrees
to issue and sell the Securities to the
several Initial Purchasers as provided
in this Agreement, and each Initial
Purchaser, on the basis of the
representations, warranties and agreements
set forth herein and subject to the
conditions set forth herein, agrees,
severally and not jointly, to purchase from
the Company the respective principal amount
of Securities set forth opposite
such Initial Purchaser's name in Schedule 1
hereto at a price equal to 96.4002%
of the principal amount thereof plus
accrued interest, if any, from April 14,
2004 to the Closing Date. The Company will
not be obligated to deliver any of
the Securities except upon payment for all
the Securities to be purchased as
provided herein.
(a) The Company
understands that the Initial Purchasers intend to
offer the Securities for resale on the
terms set forth in the Offering
Memorandum. Each Initial Purchaser,
severally and not jointly, represents,
warrants and agrees that:
(i) it is a
qualified institutional buyer within the meaning
of Rule 144A under the Securities Act (a "QIB") and an
accredited
investor within the meaning of Rule 501(a) under the Securities
Act;
(ii) it has not
solicited offers for, or offered or sold, and
will not solicit offers for, or offer or sell, the Securities
by
means of any form of general solicitation or general
advertising
within the meaning of Rule 502(c) of Regulation D under the
Securities Act ("Regulation D") or in any manner involving a
public
offering within the meaning of Section 4(2) of the Securities
Act;
and
(iii) it has not solicited offers for, or offered or sold, and
will not solicit offers for, or offer or sell, the Securities
as
part
of their initial offering except:
(A) within the
United States to persons whom it
reasonably believes to be QIBs in transactions pursuant to
Rule 144A under the Securities Act ("Rule 144A") and in
connection with each such sale, it has taken or will take
reasonable steps to ensure
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that the purchaser of the Securities is aware that such sale
is being made in reliance on Rule 144A; or
(B) in
accordance with the restrictions set forth in
Annex A hereto.
(b) Each Initial
Purchaser acknowledges and agrees that the
Company and, for purposes of the opinions
to be delivered to the Initial
Purchasers pursuant to Section 5(f),
counsel for the Company and counsel for the
Initial Purchasers, respectively, may rely
upon the accuracy of the
representations and warranties of the
Initial Purchasers, and compliance by the
Initial Purchasers with their agreements,
contained in paragraph (b) above
(including Annex A hereto), and each
Initial Purchaser hereby consents to such
reliance.
(c) The Company
acknowledges and agrees that the Initial
Purchasers may offer and sell Securities to
or through any affiliate of an
Initial Purchaser and that any such
affiliate may offer and sell Securities
purchased by it to or through any Initial
Purchaser, in each case in accordance
with the agreements in paragraph (b) above
(including Annex A hereto).
2. Payment
and Delivery. (a) Payment for and delivery of the
Securities will be made at the offices of
Simpson Thacher & Bartlett LLP at
10:00 A.M., New York City time, on April
14, 2004, or at such other time or
place on the same or such other date, not
later than the fifth business day
thereafter, as the Representative and the
Company may mutually agree upon in
writing. The time and date of such payment
and delivery is referred to herein as
the "Closing Date".
(b) Payment for
the Securities shall be made by wire transfer in
immediately available funds to the
account(s) specified by the Company to the
Representative against delivery to the
nominee of The Depository Trust Company,
for the account of the Initial Purchasers,
of one or more global notes
representing the Securities (collectively,
the "Global Note"), with any transfer
taxes payable in connection with the sale
of the Securities duly paid by the
Company. The Global Note will be made
available for inspection by the
Representative not later than 1:00 P.M.,
New York City time, on the business day
prior to the Closing Date.
3.
Representations and Warranties of the Company and the
Guarantors. The Company and the Guarantors
jointly and severally represent and
warrant to each Initial Purchaser that:
(a)
Offering
Memorandum. The Preliminary Offering Memorandum, as of its
date, did not, and the Offering Memorandum,
in the form first used by the
Initial Purchasers to confirm sales of the
Securities and as of the Closing
Date, 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 the light
of the circumstances under which they were
made, not misleading; provided that
the Company and the Guarantors make no
representation or warranty with respect
to any statements or omissions made in
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reliance upon and in conformity with
information relating to any Initial
Purchaser furnished to the Company in
writing by such Initial Purchaser through
the Representative expressly for use in the
Preliminary Offering Memorandum and
the Offering Memorandum.
(b)
Financial Statements. The
financial statements and the related notes
thereto included in the Preliminary
Offering Memorandum and the Offering
Memorandum present fairly in all material
respects the financial position of the
Parent and its subsidiaries as of the dates
indicated and the results of their
operations and the changes in their cash
flows for the periods specified; such
financial statements have been prepared in
conformity with generally accepted
accounting principles applied on a
consistent basis throughout the periods
covered thereby, subject in the case of
interim statements, to normal year-end
adjustments; the other financial
information included in the Preliminary
Offering Memorandum and the Offering
Memorandum has been derived from the
accounting records of the Parent and its
subsidiaries and presents fairly in all
material respects the information shown
thereby; and, other than the inclusion
of a presentation of (i) pro forma
adjustments relating to the offering of the
Securities and the related refinancing and
(ii) pro forma statements of
operations for the twelve month period
ended January 22, 2004, the pro forma
financial information and the related notes
thereto included in the Preliminary
Offering Memorandum and the Offering
Memorandum has been prepared in accordance
with the Commission's rules and guidance
with respect to pro forma financial
information, and the assumptions underlying
the pro forma financial information
presented in the Preliminary Offering
Memorandum and the Offering Memorandum are
reasonable and are set forth in the
Preliminary Offering Memorandum and the
Offering Memorandum.
(c)
No Material
Adverse Change. Since the date of the most recent
financial statements of the Parent included
in the Preliminary Offering
Memorandum and the Offering Memorandum, (i)
there has not been any change in the
capital stock or long-term debt of the
Parent or any of its subsidiaries, or any
dividend or distribution of any kind
declared, set aside for payment, paid or
made by the Parent or the Company on any
class of capital stock, or any material
adverse change, or any development
involving a prospective material adverse
change, in or affecting the business,
properties, management, financial
position, results of operations or
prospects of the Parent and its subsidiaries
taken as a whole; (ii) neither the Parent
nor any of its subsidiaries has
entered into any transaction or agreement
that is material to the Parent and its
subsidiaries taken as a whole or incurred
any liability or obligation, direct or
contingent, that is material to the Parent
and its subsidiaries taken as a
whole; and (iii) neither the Parent nor any
of its subsidiaries has sustained
any material loss or interference with its
business from fire, explosion, flood
or other calamity, whether or not covered
by insurance, or from any labor
disturbance or dispute or any action, order
or decree of any court or arbitrator
or governmental or regulatory authority;
except in each case as otherwise
disclosed in the Preliminary Offering
Memorandum and the Offering Memorandum.
(d)
Organization and
Good Standing. The Parent and each of its
subsidiaries have been duly organized and
are validly existing and in good
standing under the laws
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of their respective jurisdictions of
organization, are duly qualified to do
business and are in good standing in each
jurisdiction in which their respective
ownership or lease of property or the
conduct of their respective businesses
requires such qualification, and have all
power and authority necessary to own
or hold their respective properties and to
conduct the businesses in which they
are engaged, except where the failure to be
so qualified or have such power or
authority would not, individually or in the
aggregate, have a material adverse
effect on the business, properties,
management, financial position, results of
operations or prospects of the Parent and
its subsidiaries taken as a whole or
on the performance by the Company and the
Guarantors of their obligations under
the Securities and the Guarantees (a
"Material Adverse Effect"). The Company has
no Significant Subsidiaries as such term is
defined in Rule 1-02(x) of
Regulation S-X under the Exchange Act.
(e)
Capitalization.
The Parent has an authorized capitalization as set
forth in the Preliminary Offering
Memorandum and the Offering Memorandum under
the heading "Capitalization"; and all the
outstanding shares of capital stock or
other equity interests of each subsidiary
of the Parent have been duly and
validly authorized and issued, are fully
paid and non-assessable and are owned
directly or indirectly by the Parent, free
and clear of any lien, charge,
encumbrance, security interest, restriction
on voting or transfer or any other
claim of any third party (other than those
granted under (i) the existing senior
credit facilities prior to the Closing
Date, which shall be released in
connection with the refinancing
contemplated by the Offering Memorandum and (ii)
the Senior Secured Credit Facility (as
defined herein) granted in connection
with such refinancing; each as described in
the Preliminary Offering Memorandum
and the Offering Memorandum).
(f)
Due
Authorization. The Company and each of the Guarantors have full
right, power and authority to execute and
deliver this Agreement, the
Securities, the Indenture (including each
Guarantee set forth therein), the
Exchange Securities and the Registration
Rights Agreement (collectively, the
"Transaction Documents") and to perform
their respective obligations hereunder
and thereunder; and all action required to
be taken for the due and proper
authorization, execution and delivery of
each of the Transaction Documents and
the consummation of the transactions
contemplated thereby has been duly and
validly taken.
(g)
The Indenture.
The Indenture has been duly authorized by the Company
and each of the Guarantors and, when duly
executed and delivered in accordance
with its terms by each of the parties
thereto, will constitute a valid and
legally binding agreement of the Company
and each of the Guarantors enforceable
against the Company and each of the
Guarantors in accordance with its terms,
except as enforceability may be limited by
applicable bankruptcy, insolvency or
similar laws affecting the enforcement of
creditors' rights generally or by
equitable principles relating to
enforceability (collectively, the
"Enforceability Exceptions"); and 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 "Trust Indenture
Act"), and the rules and regulations
of the Commission applicable to an
indenture that is qualified thereunder.
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(h)
The Securities
and the Guarantees. The Securities have been duly
authorized by the Company and, when duly
executed, authenticated, issued and
delivered as provided in the Indenture and
paid for as provided herein, will be
duly and validly issued and outstanding and
will constitute valid and legally
binding obligations of the Company
enforceable against the Company in accordance
with their terms, subject to the
Enforceability Exceptions, and will be entitled
to the benefits of the Indenture; and the
Guarantees have been duly authorized
by each of the Guarantors and, when the
Securities have been duly executed,
authenticated, issued and delivered as
provided in the Indenture and paid for as
provided herein, will be valid and legally
binding obligations of each of the
Guarantors, enforceable against each of the
Guarantors in accordance with their
terms, subject to the Enforceability
Exceptions, and will be entitled to the
benefits of the Indenture.
(i)
The Exchange
Securities. On the Closing Date, the Exchange
Securities (including the related
guarantees) will have been duly authorized by
the Company and each of the Guarantors and,
when duly executed, authenticated,
issued and delivered as contemplated by the
Registration Rights Agreement, will
be duly and validly issued and outstanding
and will constitute valid and legally
binding obligations of the Company, as
issuer, and each of the Guarantors, as
guarantor, enforceable against the Company
and each of the Guarantors in
accordance with their terms, subject to the
Enforceability Exceptions, and will
be entitled to the benefits of the
Indenture.
(j)
Purchase and
Registration Rights Agreements. This Agreement has been
duly authorized, executed and delivered by
the Company and each of the
Guarantors; and the Registration Rights
Agreement has been duly authorized by
the Company and each of the Guarantors and,
when duly executed and delivered in
accordance with its terms by each of the
parties thereto, will constitute a
valid and legally binding agreement of the
Company and each of the Guarantors
enforceable against the Company and each of
the Guarantors in accordance with
its terms, subject to the Enforceability
Exceptions, and except that rights to
indemnity and contribution thereunder may
be limited by applicable law and
public policy.
(k)
Descriptions of
the Transaction Documents. Each Transaction Document
conforms in all material respects to the
description thereof contained in the
Preliminary Offering Memorandum and the
Offering Memorandum.
(l)
No Violation or
Default. Neither the Parent nor any of its
subsidiaries is (i) in violation of its
charter or by-laws or similar
organizational documents; (ii) in default,
and no event has occurred that, with
notice or lapse of time or both, would
constitute such a default, in the due
performance or observance of any term,
covenant or condition contained in any
indenture, mortgage, deed of trust, loan
agreement or other agreement or
instrument to which the Parent or any of
its subsidiaries is a party or by which
the Parent or any of its subsidiaries is
bound or to which any of the property
or assets of the Parent or any of its
subsidiaries is subject; or (iii) in
violation of any law or statute or any
judgment, order, rule or regulation of
any court or arbitrator or governmental or
regulatory authority, except, in the
case of clauses (ii) and (iii) above, for
any such default or violation that
would not, individually or in the
aggregate, have a Material Adverse Effect.
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(m)
No Conflicts.
The execution, delivery and performance by the Company
and each of the Guarantors of each of the
Transaction Documents to which each is
a party, the issuance and sale of the
Securities (including the Guarantees) and
compliance by the Company and each of the
Guarantors with the terms thereof and
the consummation of the transactions
contemplated by the Transaction Documents
will not (i) conflict with or result in a
breach or violation of any of the
terms or provisions of, or constitute a
default under, or result in the creation
or imposition of any lien, charge or
encumbrance upon any property or assets of
the Parent or any of its subsidiaries
pursuant to, any indenture, mortgage, deed
of trust, loan agreement or other agreement
or instrument to which the Parent or
any of its subsidiaries is a party or by
which the Parent or any of its
subsidiaries is bound or to which any of
the property or assets of the Parent or
any of its subsidiaries is subject, (ii)
result in any violation of the
provisions of the charter or by-laws or
similar organizational documents of the
Parent or any of its subsidiaries or (iii)
result in the violation of any law or
statute or any judgment, order, rule or
regulation of any court or arbitrator or
governmental or regulatory authority,
except, in the case of clauses (i) and
(iii) above, for any such conflict, breach
or violation that would not,
individually or in the aggregate, have a
Material Adverse Effect.
(n)
No Consents
Required. No consent, approval, authorization, order,
registration or qualification of or with
any court or arbitrator or governmental
or regulatory authority is required for the
execution, delivery and performance
by the Company and each of the Guarantors
of each of the Transaction Documents
to which each is a party, the issuance and
sale of the Securities (including the
Guarantees) and compliance by the Company
and each of the Guarantors with the
terms thereof and the consummation of the
transactions contemplated by the
Transaction Documents, except for such
consents, approvals, authorizations,
orders and registrations or qualifications
as may be required (i) under
applicable state securities laws in
connection with the purchase and resale of
the Securities by the Initial Purchasers
and (ii) with respect to the Exchange
Securities (including the related
guarantees) under the Securities Act and
applicable state securities laws as
contemplated by the Registration Rights
Agreement.
(o)
Legal
Proceedings. Except as described in the Preliminary Offering
Memorandum and the Offering Memorandum,
there are no legal, governmental or
regulatory investigations, actions, suits
or proceedings pending to which the
Parent or any of its subsidiaries is a
party or to which any property of the
Parent or any of its subsidiaries is the
subject that, individually or in the
aggregate, if determined adversely to the
Parent or any of its subsidiaries,
could reasonably be expected to have a
Material Adverse Effect; and no such
investigations, actions, suits or
proceedings, to the best knowledge of the
Company and each of the Guarantors,
contemplated by any governmental or
regulatory authority or threatened by
others.
(p)
Independent
Accountants. Ernst & Young LLP, who have certified
certain financial statements of the Parent
and its subsidiaries, are independent
public accountants with respect to the
Parent and its subsidiaries within the
meaning of Rule 101 of the Code of
Professional Conduct of the American
Institute of Certified Public Accountants
and its interpretations and rulings
thereunder.
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(q)
Title to Real
and Personal Property. The Parent and its subsidiaries
have good and marketable title in fee
simple to, or have valid leases or rights
to lease or otherwise use, all items of
real and personal property that are
material to the respective businesses of
the Parent and its subsidiaries, in
each case free and clear of all liens,
encumbrances, claims and defects and
imperfections of title except those that
(i) do not materially interfere with
the use made and proposed to be made of
such property by the Parent and its
subsidiaries or (ii) could not reasonably
be expected, individually or in the
aggregate, to have a Material Adverse
Effect.
(r)
Title to
Intellectual Property. The Parent and its subsidiaries own
or possess adequate rights to use all
material patents, patent applications,
trademarks, service marks, trade names,
trademark registrations, service mark
registrations, copyrights, licenses and
know-how (including trade secrets and
other unpatented and/or unpatentable
proprietary or confidential information,
systems or procedures) necessary for the
conduct of their respective businesses;
and the conduct of their respective
businesses will not conflict in any material
respect with any such rights of others, and
the Parent and its subsidiaries have
not received any notice of any claim of
infringement of or conflict with any
such rights of others, except, in each
case, where the failure to own or possess
such rights or any such conflict or
infringement will not, individually or in
the aggregate, result in a Material Adverse
Effect.
(s)
Investment
Company Act. Neither the Parent nor any of its
subsidiaries is, and after giving effect to
the offering and sale of the
Securities and the application of the
proceeds thereof as described in the
Offering Memorandum none of them will be,
an "investment company" or an entity
"controlled" by an "investment company"
within the meaning of the Investment
Company Act of 1940, as amended, and the
rules and regulations of the Commission
thereunder (collectively, "Investment
Company Act").
(t)
Taxes. The
Parent and its subsidiaries have paid all federal, state,
local and foreign taxes and filed all tax
returns required to be paid or filed
through the date hereof; and except as
otherwise disclosed in the Preliminary
Offering Memorandum and the Offering
Memorandum or for taxes the failure of
which to pay or file could not,
individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect,
there is no tax deficiency that has
been, or could reasonably be expected to
be, asserted against the Parent or any
of its subsidiaries or any of their
respective properties or assets that has had
or could reasonably be expected to have a
Material Adverse Effect.
(u)
Licenses and
Permits. The Parent and its subsidiaries possess all
licenses, certificates, permits and other
authorizations issued by, and have
made all declarations and filings with, the
appropriate federal, state, local or
foreign governmental or regulatory
authorities that are necessary for the
ownership or lease of their respective
properties or the conduct of their
respective businesses as described in the
Preliminary Offering Memorandum and
the Offering Memorandum, except where the
failure to possess or make the same
would not, individually or in the
aggregate, have a Material Adverse Effect; and
except as described in the Preliminary
Offering Memorandum and the Offering
Memorandum, neither the Parent nor any of
its subsidiaries has received notice
of any
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revocation or modification of any such
license, certificate, permit or
authorization or has any reason to believe
that any such license, certificate,
permit or authorization will not be renewed
in the ordinary course.
(v)
No Labor
Disputes. No labor strike, slowdown, work stoppage, lockout
or other labor disturbance by or collective
dispute with employees of the Parent
or any of its subsidiaries exists or, to
the best knowledge of the Company and
each of the Guarantors, is contemplated or
threatened that, individually or in
the aggregate, could reasonably be expected
to give rise to a Material Adverse
Effect. Except as otherwise disclosed in
the Preliminary Offering Memorandum and
the Offering Memorandum, no action,
complaint, charge, inquiry, proceeding or
investigation by or on behalf of any
employee, prospective employee, former
employee, labor organization or other
representative of the Company's employees
is pending or, to the best knowledge of the
Company and each of the Guarantors,
contemplated or threatened that,
individually or in the aggregate, could
reasonably be expected to give rise to a
Material Adverse Effect. The Parent and
its subsidiaries are not a party to, or
otherwise bound by, any consent decree
with, or citation by, any government agency
relating to employees or employment
practices.
(w)
Compliance With
Environmental Laws. The Parent and its subsidiaries
(i) are in compliance with all, and have
not violated any, applicable federal,
state, local and foreign laws, rules,
regulations, decisions, orders or other
legally enforceable requirements relating
to the protection of human health and
safety, the environment or hazardous or
toxic substances or wastes, pollutants
or contaminants (collectively,
"Environmental Laws"); (ii) have received and are
in compliance with all, and have not
violated any, permits, licenses or other
approvals required of them under applicable
Environmental Laws to conduct their
respective businesses; and (iii) have not
received notice of any actual or
potential liability (including, without
limitation, such liability of a third
party which could reasonably be expected to
adversely affect the Parent or any
of its subsidiaries) for the investigation
or remediation of any disposal or
release of hazardous or toxic substances or
wastes, pollutants or contaminants,
or any actual or alleged violation of any
Environmental Laws, and there is no
basis for any such liability, except in any
such case for any failure to comply
with or violation of Environmental Laws, or
failure to receive or comply with
such required permits, licenses or
approvals, or liability, as would not,
individually or in the aggregate, have a
Material Adverse Effect.
(x)
Compliance With
ERISA. Each employee benefit plan, within the
meaning of Section 3(3) of the Employee
Retirement Income Security Act of 1974,
as amended ("ERISA"), that is maintained,
administered or contributed to by the
Parent or any of its affiliates for
employees or former employees of the Parent
and its affiliates has been maintained in
all material respects in compliance
with its terms and the requirements of any
applicable statutes, orders, rules
and regulations, including but not limited
to ERISA and the Internal Revenue
Code of 1986, as amended (the "Code"); no
material prohibited transaction,
within the meaning of Section 406 of ERISA
or Section 4975 of the Code, has
occurred with respect to any such plan
excluding transactions effected pursuant
to a statutory or administrative exemption;
and for each such plan that is
subject to the funding rules of Section 412
of the Code or Section 302 of ERISA,
no "accumulated funding deficiency" as
defined in Section 412 of the Code has
been
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incurred, whether or not waived, and the
fair market value of the assets of each
such plan (excluding for these purposes
accrued but unpaid contributions)
exceeds the present value of all benefits
accrued under such plan determined
using reasonable actuarial assumptions.
(y)
Accounting
Controls. The Parent and its subsidiaries maintain
systems of internal accounting controls
sufficient to provide reasonable
assurance that (i) transactions are
executed in accordance with management's
general or specific authorizations; (ii)
transactions are recorded as necessary
to permit preparation of financial
statements in conformity with generally
accepted accounting principles and to
maintain asset accountability; (iii)
access to assets is permitted only in
accordance with management's general or
specific authorization; and (iv) the
recorded accountability for assets is
compared with the existing assets at
reasonable intervals and appropriate action
is taken with respect to any
differences.
(z)
Insurance. The
Parent and its subsidiaries have insurance covering
their respective properties, operations,
personnel and businesses, including
business interruption insurance, which
insurance is in amounts and insures
against such losses and risks as are
adequate to protect the Parent and its
subsidiaries and their respective
businesses; and neither the Parent nor any of
its subsidiaries has (i) received notice
from any insurer or agent of such
insurer that capital improvements or other
expenditures are required or
necessary to be made in order to continue
such insurance or (ii) any reason to
believe that it will not be able to renew
its existing insurance coverage as and
when such coverage expires or to obtain
similar coverage at reasonable cost from
similar insurers as may be necessary to
continue its business.
(aa)
No Unlawful Payments.
Neither the Parent nor any of its subsidiaries
nor, to the best knowledge of the Company
and each of the Guarantors, any
director, officer, agent, employee or other
person associated with or acting on
behalf of the Parent or any of its
subsidiaries has (i) used any corporate funds
for any unlawful contribution, gift,
entertainment or other unlawful expense
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
Foreign Corrupt Practices Act of 1977; or
(iv) made any bribe, rebate, payoff,
influence payment, kickback or other
unlawful payment.
(bb)
Solvency. On and
immediately after the Closing Date, each of the
Parent and the Company (after giving effect
to the issuance of the Securities
and the other transactions related thereto
as described in the Offering
Memorandum) will be Solvent. As used in
this paragraph, the term "Solvent"
means, with respect to a particular date,
that on such date (i) the present fair
market value (or present fair saleable
value) of the assets of each of the
Parent and the Company is not less than the
total amount required to pay the
liabilities of the Parent and the Company
on its respective total existing debts
and liabilities (including contingent
liabilities) as they become absolute and
matured; (ii) each of the Parent and the
Company is able to realize upon its
assets and pay its respective debts and
other liabilities, contingent
obligations and commitments as they mature
and become due in the normal course
of business; (iii) assuming
consummation
10
<PAGE>
of the issuance of the Securities as
contemplated by this Agreement and the
Offering Memorandum, each of the Parent and
the Company is not incurring debts
or liabilities beyond its respective
ability to pay as such debts and
liabilities mature; (iv) each of the Parent
and the Company is not engaged in
any business or transaction, and does not
propose to engage in any business or
transaction, for which its respective
property would constitute unreasonably
small capital after giving due
consideration to the prevailing practice in the
industry in which the Company is engaged;
and (v) neither the Parent nor the
Company is a defendant in any civil action
that could result in a judgment that
the Parent or the Company is or would
become unable to satisfy.
(cc)
No Restrictions on
Subsidiaries. No subsidiary of the Company is
currently prohibited, directly or
indirectly, under any agreement or other
instrument to which it is a party or is
subject, from paying any dividends to
the Company, from making any other
distribution on such subsidiary's capital
stock, from repaying to the Company any
loans or advances to such subsidiary
from the Company or from transferring any
of such subsidiary's properties or
assets to the Company or any other
subsidiary of the Company.
(dd)
No Broker's Fees.
Neither the Parent nor any of its subsidiaries is
a party to any contract, agreement or
understanding with any person (other than
this Agreement) that would give rise to a
valid claim against any of them or any
Initial Purchaser for a brokerage
commission, finder's fee or like payment in
connection with the offering and sale of
the Securities.
(ee)
Rule 144A Eligibility.
On the Closing Date, the Securities will not
be of the same class as securities listed
on a national securities exchange
registered under Section 6 of the Exchange
Act or quoted in an automated
inter-dealer quotation system; and each of
the Preliminary Offering Memorandum
and the Offering Memorandum, as of its
respective date, contains or will contain
all the information that, if requested by a
prospective purchaser of the
Securities, would be required to be
provided to such prospective purchaser
pursuant to Rule 144A(d)(4) under the
Securities Act.
(ff)
No Integration.
Neither the Company nor any of its affiliates (as
defined in Rule 501(b) of Regulation D)
has, directly or through any agent,
sold, offered for sale, solicited offers to
buy or otherwise negotiated in
respect of, any security (as defined in the
Securities Act), that is or will be
integrated with the sale of the Securities
in a manner that would require
registration of the Securities under the
Securities Act.
(gg)
No General
Solicitation or Directed Selling Efforts. None of the
Company or any of its affiliates or any
other person acting on its or their
behalf (other than the Initial Purchasers,
their agents and affiliates, as to
which no representation is made) has (i)
solicited offers for, or offered or
sold, the Securities by means of any form
of general solicitation or general
advertising within the meaning of Rule
502(c) of Regulation D or in any manner
involving a public offering within the
meaning of Section 4(2) of the Securities
Act or (ii) engaged in any directed selling
efforts within the meaning of
Regulation S under the Securities Act
("Regulation S"), and all such persons
have complied with the offering
restrictions requirement of Regulation S.
11
<PAGE>
(hh)
Securities Law
Exemptions. Assuming the accuracy of the
representations and warranties of the
Initial Purchasers contained in Section
1(b) (including Annex A hereto) and their
compliance with their agreements set
forth therein, it is not necessary, in
connection with the issuance and sale of
the Securities to the Initial Purchasers
and the offer, resale and delivery of
the Securities by the Initial Purchasers in
the manner contemplated by this
Agreement and the Offering Memorandum, to
register the Securities under the
Securities Act or to qualify the Indenture
under the Trust Indenture Act.
(ii)
No Stabilization.
Neither the Company nor any of the Guarantors has
taken, directly or indirectly, any action
designed to or that could reasonably
be expected to cause or result in any
stabilization or manipulation of the price
of the Securities.
(jj)
Margin Rules. Neither
the issuance, sale and delivery of the
Securities nor the application of the
proceeds thereof by the Company as
described in the Offering Memorandum will
violate Regulation T, U or X of the
Board of Governors of the Federal Reserve
System or any other regulation of such
Board of Governors.
(kk)
Forward-Looking
Statements. No forward-looking statement (within the
meaning of Section 27A of the Securities
Act and Section 21E of the Exchange
Act) contained in the Preliminary Offering
Memorandum and the Offering
Memorandum has been made or reaffirmed
without a reasonable basis or has been
disclosed other than in good faith.
(ll)
Statistical and Market
Data. Nothing has come to the attention of
the Company that has caused the Company to
believe that the statistical and
market-related data included in the
Preliminary Offering Memorandum and the
Offering Memorandum is not based on or
derived from sources that are reliable
and accurate in all material respects.
4. Further
Agreements of the Company and the Guarantors. The
Company and each of the Guarantors jointly
and severally covenant and agree with
each Initial Purchaser that:
(a) Delivery of
Copies. The Company will deliver to the Initial
Purchasers as many copies of the
Preliminary Offering Memorandum and the
Offering Memorandum (including all
amendments and supplements thereto) as the
Representative may reasonably request.
(b) Amendments
or Supplements. Before making or distributing any
amendment or supplement to the Preliminary
Offering Memorandum or the Offering
Memorandum, the Company will furnish to the
Representative and counsel for the
Initial Purchasers a copy of the proposed
amendment or supplement for review,
and will not distribute any such proposed
amendment or supplement to which the
Representative reasonably objects.
(c) Notice to
the Representative. The Company will advise the
Representative promptly, and confirm such
advice in writing, (i) of the issuance
by any
12
<PAGE>
governmental or regulatory authority of any
order preventing or suspending the
use of the Preliminary Offering Memorandum
or the Offering Memorandum or the
initiation or threatening of any proceeding
for that purpose; (ii) of the
occurrence of any event at any time prior
to the completion of the initial
offering of the Securities as a result of
which the Offering Memorandum as then
amended or supplemented would 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 existing
when the Offering Memorandum is
delivered to a purchaser, not misleading;
and (iii) of the receipt by the
Company of any notice with respect to any
suspension of the qualification of the
Securities for offer and sale in any
jurisdiction or the initiation or
threatening of any proceeding for such
purpose; and the Company will use its
reasonable best efforts to prevent the
issuance of any such order preventing or
suspending the use of the Preliminary
Offering Memorandum or the Offering
Memorandum or suspending any such
qualification of the Securities and, if any
such order is issued, will obtain as soon
as possible the withdrawal thereof.
(d) Ongoing
Compliance of the Offering Memorandum. If at any time
prior to the completion of the initial
offering of the Securities (i) any event
shall occur or condition shall exist as a
result of which the Offering
Memorandum as then amended or supplemented
would include any untrue statement of
a material fact or omit to state any
material fact necessary in order to make
the statements therein, in the light of the
circumstances existing when the
Offering Memorandum is delivered to a
purchaser, not misleading or (ii) it is
necessary to amend or supplement the
Offering Memorandum to comply with law, the
Company will promptly notify the Initial
Purchasers thereof and forthwith
prepare and, subject to paragraph (b)
above, furnish to the Initial Purchasers
such amendments or supplements to the
Offering Memorandum as may be necessary so
that the statements in the Offering
Memorandum as so amended or supplemented
will not, in the light of the circumstances
existing when the Offering
Memorandum is delivered to a purchaser, be
misleading or so that the Offering
Memorandum will comply with law.
(e) Blue Sky
Compliance. The Company will qualify the Securities
for offer and sale under the securities or
Blue Sky laws of such jurisdictions
as the Representative shall reasonably
request and will continue such
qualifications in effect so long as
required for the offering and resale of the
Securities; provided that neither the
Company nor any of the Guarantors shall be
required to (i) qualify as a foreign
corporation or other entity or as a dealer
in securities in any such jurisdiction
where it would not otherwise be required
to so qualify, (ii) file any general
consent to service of process in any such
jurisdiction or (iii) subject itself to
taxation in any such jurisdiction if it
is not otherwise so subject.
(f) Clear
Market. During the period from the date hereof through
and including the date that is 180 days
after the date hereof, the Company and
each of the Guarantors will not, without
the prior written consent of the
Representative, offer, sell, contract to
sell or otherwise dispose of any debt
securities issued or guaranteed by the
Company or any of the Guarantors and
having a tenor of more than one year,
provided that this clause (f) shall not
prevent the Company from making any
borrowings under
13
<PAGE>
the Senior Secured Credit Agreement (or a
similar senior secured credit facility
refinancing the Senior Secured Credit
Agreement), or enter into any
sale/leaseback transactions or equipment
financing transactions in the ordinary
course of business, consistent with past
practice.
(g) Use of
Proceeds. The Company will apply the net proceeds from
the sale of the Securities as described in
the Offering Memorandum under the
heading "Use of Proceeds".
(h) Supplying
Information. While the Securities remain outstanding
and are "restricted securities" within the
meaning of Rule 144(a)(3) under the
Securities Act, the Company and each of the
Guarantors will, during any period
in which the Company is not subject to and
in compliance with Section 13 or
15(d) of the Exchange Act, furnish to
holders of the Securities and prospective
purchasers of the Securities designated by
such holders, upon the request of
such holders or such prospective
purchasers, the information required to be
delivered pursuant to Rule 144A(d)(4) under
the Securities Act.
(i) PORTAL and
DTC. The Company will assist the Initial Purchasers
in arranging for the Securities to be
designated Private Offerings, Resales and
Trading through Automated Linkages
("PORTAL") Market securities in accordance
with the rules and regulations adopted by
the National Association of Securities
Dealers, Inc. ("NASD") relating to trading
in the PORTAL Market and for the
Securities to be eligible for clearance and
settlement through The Depository
Trust Company ("DTC").
(j) No Resales
by the Company. Until the issuance of the Exchange
Securities, the Company will not, and will
not permit any of its affiliates (as
defined in Rule 144 under the Securities
Act) to, resell any of the Securities
that have been acquired by any of them,
except for Securities purchased by the
Company or any of its affiliates and resold
in a transaction registered under
the Securities Act.
(k) No
Integration. Neither the Company nor any of its affiliates
(as defined in Rule 501(b) of Regulation D)
will, directly or through any agent,
sell, offer for sale, solicit offers to buy
or otherwise negotiate in respect
of, any security (as defined in the
Securities Act), that is or will be
integrated with the sale of the Securities
in a manner that would require
registration of the Securities under the
Securities Act.
(l) No General
Solicitation or Directed Selling Efforts. None of
the Company or any of its affiliates or any
other person acting on its or their
behalf (other than the Initial Purchasers,
as to which no covenant is given)
will (i) solicit offers for, or offer or
sell, the Securities by means of any
form of general solicitation or general
advertising within the meaning of Rule
502(c) of Regulation D or in any manner
involving a public offering within the
meaning of Section 4(2) of the Securities
Act or (ii) engage in any directed
selling efforts within the meaning of
Regulation S, and all such persons will
comply with the offering restrictions
requirement of Regulation S.
14
<PAGE>
(m) No
Stabilization. Neither the Company nor any of the
Guarantors will take, directly or
indirectly, any action designed to or that
could reasonably be expected to cause or
result in any stabilization or
manipulation of the price of the
Securities.
5.
Conditions of Initial Purchasers' Obligations. The obligation
of each Initial Purchaser to purchase
Securities on the Closing Date as provided
herein is subject to the performance by the
Company and each of the Guarantors
of their respective covenants and other
obligations hereunder and to the
following additional conditions:
(a)
Representations and Warranties. The representations and
warranties of the Company and the
Guarantors contained herein shall be true and
correct on the date hereof and on and as of
the Closing Date; and the statements
of the Company, the Guarantors and their
respective officers made in any
certificates delivered pursuant to this
Agreement shall be true and correct on
and as of the Closing Date.
(b) No
Downgrade. Subsequent to the execution and delivery of this
Agreement, (i) no downgrading shall have
occurred in the rating accorded the
Securities or any other debt securities or
preferred stock issued or guaranteed
by the Company or any of the Guarantors by
any "nationally recognized
statistical rating organization", as such
term is defined by the Commission for
purposes of Rule 436(g)(2) under the
Securities Act; and (ii) no such
organization shall have publicly announced
that it has under surveillance or
review, or has changed its outlook with
respect to, its rating of the Securities
or of any other debt securities or
preferred stock issued or guaranteed by the
Company or any of the Guarantors (other
than an announcement with positive
implications of a possible upgrading).
(c) No Material
Adverse Change. Subsequent to the execution and
delivery of this Agreement, no event or
condition of a type described in Section
3(c) hereof shall have occurred or shall
exist, which event or condition is not
described in the Offering Memorandum
(excluding any amendment or supplement
thereto) and the effect of which in the
reasonable judgment of the
Representative makes it impracticable or
inadvisable to proceed with the
offering, sale or delivery of the
Securities on the terms and in the manner
contemplated by this Agreement and the
Offering Memorandum.
(d) Officer's
Certificate. The Representative shall have received
on and as of the Closing Date a certificate
of an executive officer of the
Company and of each Guarantor who has
specific knowledge of the Company's or
such Guarantor's financial matters and is
satisfactory to the Representative (i)
confirming that such officer has carefully
reviewed the Offering Memorandum and,
to the best knowledge of such officer, the
representation set forth in Section
3(a) hereof is true and correct, (ii)
confirming that the other representations
and warranties of the Company and the
Guarantors in this Agreement are true and
correct and that the Company and the
Guarantors have complied with all
agreements and satisfied all conditions on
their part to be performed or
satisfied hereunder at or prior to the
Closing Date and (iii) to the effect set
forth in paragraphs (b) and (c) above.
15
<PAGE>
(e) Comfort
Letters. On the date of this Agreement and on the
Closing Date, Ernst & Young LLP shall
have furnished to the Representative, at
the request of the Company, letters, dated
the respective dates of delivery
thereof and addressed to the Initial
Purchasers, in form and substance
reasonably satisfactory to the
Representative, containing statements and
information of the type customarily
included in accountants' "comfort letters"
to underwriters with respect to the
financial statements and certain financial
information contained in the Preliminary
Offering Memorandum and the Offering
Memorandum; provided that the letter
delivered on the Closing Date shall use a
"cut-off" date no more than three business
days prior to the Closing Date.
(f) Opinion of Counsel for the Company
and the Guarantors.
Sachnoff & Weaver, Ltd., counsel for
the Company, shall have furnished to the
Representative, at the request of the
Company, their written opinion, dated the
Closing Date and addressed to the Initial
Purchasers, in form and substance
reasonably satisfactory to the
Representative, to the effect set forth in Annex
B hereto.
(g) Opinion of
Colorado Counsel for the Company and the
Guarantors. Gorsuch Kirgis LLP, Colorado
counsel for the Company and the
Guarantors, shall have furnished to the
Representative, at the request of the
Company, their written opinion, dated the
Closing Date and addressed to the
Initial Purchasers, in form and substance
reasonably satisfactory to the
Representative, to the effect set forth in
Annex C hereto.
(h) Opinion of
New York Counsel for the Company and the
Guarantors. Willkie Farr & Gallagher
LLP, New York counsel for the Company and
the Guarantors, shall have furnished to the
Representative, at the request of
the Company, their written opinion, dated
the Closing Date and addressed to the
Initial Purchasers, in form and substance
reasonably satisfactory to the
Representative, to the effect set forth in
Annex D.
(i) Opinion of
Counsel for VI New Mexico. Myers, Oliver & Price,
P.C., counsel for VI New Mexico, shall have
furnished to the Representative, at
the request of the Company, their written
opinion, dated the Closing Date and
addressed to the Initial Purchasers, in
form and substance reasonably
satisfactory to the Representative, to the
effect set forth in Annex E hereto.
(j) Opinion of
Counsel for the Initial Purchasers. The
Representative shall have received on and
as of the Closing Date an opinion of
Simpson Thacher & Bartlett LLP, counsel
for the Initial Purchasers, with respect
to such matters as the Representative may
reasonably request, and such counsel
shall have received such documents and
information as they may reasonably
request to enable them to pass upon such
matters.
(k) No Legal
Impediment to Issuance. No action shall have been
taken and no statute, rule, regulation or
order shall have been enacted, adopted
or issued by any federal, state or foreign
governmental or regulatory authority
that would, as of the Closing Date, prevent
the issuance or sale of the
Securities or the issuance of the
Guarantees; and no injunction or order of any
federal, state or foreign court shall
have
16
<PAGE>
been issued that would, as of the Closing
Date, prevent the issuance or sale of
the Securities or the issuance of the
Guarantees.
(l) Good
Standing. The Representative shall have received on and
as of the Closing Date satisfactory
evidence of the good standing of the Company
and the Guarantors in their respective
jurisdictions of organization and their
good standing in such other jurisdictions
as the Representative may reasonably
request, in each case in writing or any
standard form of telecommunication, from
the appropriate governmental authorities of
such jurisdictions.
(m) Registration
Rights Agreement. The Initial Purchasers shall
have received a counterpart of the
Registration Rights Agreement that shall have
been executed and delivered by a duly
authorized officer of the Company and each
of the Guarantors.
(n) PORTAL and
DTC. The Securities shall have been approved by the
NASD for trading in the PORTAL Market and
shall be eligible for clearance and
settlement through DTC.
(o) Senior
Secured Credit Agreement. The Company shall have
entered into the Credit Agreement, dated as
of the Closing Date, by and among
the Parent, the Company, the lenders party
thereto and Wells Fargo Foothill,
Inc., as Arranger and Administrative Agent,
as amended from time to time after
the Closing Date (the "Senior Secured
Credit Agreement"), which shall have the
terms and conditions described in the
Offering Memorandum in all material
respects, and such agreement shall be in
full force and effect, and the closing
conditions to the initial borrowings
thereunder shall have been satisfied such
that simultaneously with the payment for
the Securities all borrowings
(including letters of credit) requested by
the Company to be made on the Closing
Date under the Senior Secured Credit
Facility shall have been received, which
amounts, along with proceeds from the sale
by the Company of the Securities,
shall be sufficient to effect the
refinancing contemplated in the Offering
Memorandum under the heading "The
refinancing," and the Parent and its
subsidiaries shall have taken all actions
as may be required to effect the
repayment of their existing indebtedness,
as contemplated in the Offering
Memorandum. The Company shall have provided
to the Representative and counsel to
the initial purchasers the reasonable
opportunity to review, as may be
requested, copies of the Senior Secured
Credit Agreement and related documents.
(p) Additional
Documents. On or prior to the Closing Date, the
Company and the Guarantors shall have
furnished to the Representative such
further certificates and documents as the
Representative may reasonably request.
All opinions, letters, certificates and evidence mentioned above
or
elsewhere in this Agreement shall be deemed
to be in compliance with the
provisions hereof only if they are in form
and substance reasonably satisfactory
to counsel for the Initial Purchasers.
17
<PAGE>
6. Indemnification and Contribution.
(a)
Indemnification of the Initial Purchasers. The Company and
each of the Guarantors jointly and
severally agree to indemnify and hold
harmless each Initial Purchaser, its
affiliates, directors and officers and each
person, if any, who controls such Initial
Purchaser within the meaning of
Section 15 of the Securities Act or Section
20 of the Exchange Act, from and
against any and all losses, claims, damages
and liabilities (including, without
limitation, legal fees and other expenses
incurred in connection with any suit,
action or proceeding or any claim asserted,
as such fees and expenses are
incurred), joint or several, that arise out
of, or are based upon, any untrue
statement or alleged untrue statement of a
material fact contained in the
Preliminary Offering Memorandum or the
Offering Memorandum (or any amendment or
supplement thereto) or any omission or
alleged omission to state therein a
material fact necessary in order to make
the statements therein, in the light of
the circumstances under which they were
made, not misleading, except insofar as
such losses, claims, damages or liabilities
arise out of, or are based upon, any
untrue statement or omission or alleged
untrue statement or omission made in
reliance upon and in conformity with any
information relating to any Initial
Purchaser furnished to the Company in
writing by such Initial Purchaser through
the Representative expressly for use
therein; provided, that with respect to any
such untrue statement in or omission from
the Preliminary Offering Memorandum,
the indemnity agreement contained in this
paragraph (a) shall not inure to the
benefit of any Initial Purchaser to the
extent that the sale to the person
asserting any such loss, claim, damage or
liability was an initial resale by
such Initial Purchaser and any such loss,
claim, damage or liability of or with
respect to such Initial Purchaser results
from the fact that both (i) a copy of
the Offering Memorandum was not sent or
given to such person at or prior to the
written confirmation of the sale of such
Securities to such person and (ii) the
untrue statement in or omission from such
Preliminary Offering Memorandum was
corrected in the Offering Memorandum
unless, in either case, such failure to
deliver the Offering Memorandum was a
result of non-compliance by the Company
with the provisions of Section 4
hereof.
(b)
Indemnification of the Company. Each Initial Purchaser agrees,
severally and not jointly, to indemnify and
hold harmless the Company, each of
the Guarantors, each of their respective
officers and directors and each person,
if any, who controls the Company or any of
the Guarantors within the meaning of
Section 15 of the Securities Act or Section
20 of the Exchange Act to the same
extent as the indemnity set forth in
paragraph (a) above, but only with respect
to any losses, claims, damages or
liabilities that arise out of, or are based
upon, any untrue statement or omission or
alleged untrue statement or omission
made in reliance upon and in conformity
with any information relating to such
Initial Purchaser furnished to the Company
in writing by such Initial Purchaser
through the Representative expressly for
use in the Preliminary Offering
Memorandum and the Offering Memorandum (or
any amendment or supplement thereto),
it being understood and agreed that the
only such information consists of the
following: the statements concerning the
Initial Purchasers contained in the
third paragraph, the fifth and sixth
sentences of the eighth paragraph and the
tenth paragraph, in each case under the
heading of "Plan of distribution."
18
<PAGE>
(c) Notice and
Procedures. If any suit, action, proceeding
(including any governmental or regulatory
investigation), claim or demand shall
be brought or asserted against any person
in respect of which indemnification
may be sought pursuant to either paragraph
(a) or (b) above, such person (the
"Indemnified Person") shall promptly notify
the person against whom such
indemnification may be sought (the
"Indemnifying Person") in writing; provided
that the failure to notify the Indemnifying
Person shall not relieve it from any
liability that it may have under this
Section 6 except to the extent that it has
been materially prejudiced (through the
forfeiture of substantive rights or
defenses) by such failure; and provided,
further, that the failure to notify the
Indemnifying Person shall not relieve it
from any liability that it may have to
an Indemnified Person otherwise than under
this Section 6. If any such
proceeding shall be brought or asserted
against an Indemnified Person and it
shall have notified the Indemnifying Person
thereof, the Indemnifying Person
shall retain counsel reasonably
satisfactory to the Indemnified Person to
represent the Indemnified Person and any
others entitled to indemnification
pursuant to this Section 6 that the
Indemnifying Person may designate in such
proceeding and shall pay the fees and
expenses of such counsel related to such
proceeding, as incurred. In any such
proceeding, any Indemnified Person shall
have the right to retain its own counsel,
but the fees and expenses of such
counsel shall be at the expense of such
Indemnified Person unless (i) the
Indemnifying Person and the Indemnified
Person shall have mutually agreed to the
contrary; (ii) the Indemnifying Person has
failed within a reasonable time to
retain counsel reasonably satisfactory to
the Indemnified Person; (iii) the
Indemnified Person shall have reasonably
concluded upon advice of counsel that
there may be legal defenses available to it
that are different from or in
addition to those available to the
Indemnifying Person; or (iv) the named
parties in any such proceeding (including
any impleaded parties) include both
the Indemnifying Person and the Indemnified
Person and representation of both
parties by the same counsel would be
inappropriate due to actual or potential
differing interests between them. It is
understood and agreed that the
Indemnifying Person shall not, in
connection with any proceeding or related
proceeding in the same jurisdiction, be
liable for the fees and expenses of more
than one separate firm (in addition to any
local counsel) for all Indemnified
Persons, and that all such fees and
expenses shall be reimbursed as they are
incurred. Any such separate firm for any
Initial Purchaser, its affiliates,
directors and officers and any control
persons of such Initial Purchaser shall
be designated in writing by J.P. Morgan
Securities Inc. and any such separate
firm for the Company, the Guarantors and
any control persons of the Company and
the Guarantors shall be designated in
writing by the Company. The Indemnifying
Person shall not be liable for any
settlement of any proceeding effected without
its prior written consent, but if settled
with such consent or if there be a
final judgment for the plaintiff, the
Indemnifying Person agrees to indemnify
each Indemnified Person from and against
any loss or liability by reason of such
settlement or judgment. Notwithstanding the
foregoing sentence, if at any time
an Indemnified Person shall have requested
that an Indemnifying Person reimburse
the Indemnified Person for fees and
expenses of counsel as contemplated by this
paragraph, the Indemnifying Person shall be
liable for any settlement of any
proceeding effected without its written
consent if (i) such settlement is
entered into more than 45 days after
receipt by the Indemnifying Person of such
request and (ii) the Indemnifying Person
shall not have reimbursed the
Indemnified
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Person in accordance with such request
prior to the date of such settlement. No
Indemnifying Person shall, without the
written consent of the Indemnified
Person, effect any settlement of any
pending or threatened proceeding in respect
of which any Indemnified Person is or could
have been a party and
indemnification could have been sought
hereunder by such Indemnified Person,
unless such settlement (x) includes an
unconditional release of such Indemnified
Person, in form and substance reasonably
satisfactory to such Indemnified
Person, from all liability on claims that
are the subject matter of such
proceeding and (y) does not include any
statement as to or any admission of
fault, culpability or a failure to act by
or on behalf of any Indemnified
Person.
(d)
Contribution. If the indemnification provided for in
paragraphs (a) and (b) above is unavailable
to an Indemnified Person or
insufficient in respect of any losses,
claims, damages or liabilities referred
to therein, then each Indemnifying Person
under such paragraph, in lieu of
indemnifying such Indemnified Person
thereunder, shall contribute to the amount
paid or payable by such Indemnified Person
as a result of such losses, claims,
damages or liabilities (i) in such
proportion as is appropriate to reflect the
relative benefits received by the Company
and the Guarantors on the one hand and
the Initial Purchasers on the other from
the offering of the Securities or (ii)
if the allocation provided by clause (i) is
not permitted by applicable law, in
such proportion as is appropriate to
reflect not only the relative benefits
referred to in clause (i) but also the
relative fault of the Company and the
Guarantors on the one hand and the Initial
Purchasers on the other in connection
with the statements or omissions that
resulted in such losses, claims, damages
or liabilities, as well as any other
relevant equitable considerations. The
relative benefits received by the Company
and the Guarantors on the one hand and
the Initial Purchasers on the other shall
be deemed to be in the same respective
proportions as the net proceeds (before
deducting expenses) received by the
Company from the sale of the Securities and
the total discounts and commissions
received by the Initial Purchasers in
connection therewith, as provided in this
Agreement, bear to the aggregate offering
price of the Securities. The relative
fault of the Company and the Guarantors on
the one hand and the Initial
Purchasers on the other shall be determined
by reference to, among other things,
whether the untrue or alleged untrue
statement of a material fact or the
omission or alleged omission to state a
material fact relates to information
supplied by the Company or any Guarantor or
by the Initial Purchasers and the
parties' relative intent, knowledge, access
to information and opportunity to
correct or prevent such statement or
omission.
(e) Limitation
on Liability. The Company, the Guarantors and the
Initial Purchasers agree that it would not
be just and equitable if contribution
pursuant to this Section 6 were determined
by pro rata allocation (even if the
Initial Purchasers were treated as one
entity for such purpose) or by any other
method of allocation that does not take
account of the equitable considerations
referred to in paragraph (d) above. The
amount paid or payable by an Indemnified
Person as a result of the losses, claims,
damages and liabilities referred to in
paragraph (d) above shall be deemed to
include, subject to the limitations set
forth above, any legal or other expenses
incurred by such Indemnified Person in
connection with any such action or claim.
Notwithstanding the provisions of this
Section 6, in no event shall an Initial
Purchaser be required to
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<PAGE>
contribute any amount in excess of the
amount by which the total discounts and
commissions received by such Initial
Purchaser with respect to the offering of
the Securities exceeds the amount of any
damages that such Initial Purchaser has
otherwise been required to pay by reason of
such untrue or alleged untrue
statement or omission or alleged omission.
No person guilty of fraudulent
misrepresentation (within the meaning of
Section 11(f) of the Securities Act)
shall be entitled to contribution from any
person who was not guilty of such
fraudulent misrepresentation. The Initial
Purchasers' obligations to contribute
pursuant to this Section 6 are several in
proportion to their respective
purchase obligations hereunder and not
joint.
(f)
Non-Exclusive Remedies. The remedies provided for in this
Section 6 are not exclusive and shall not
limit any rights or remedies that may
otherwise be available to any Indemnified
Person at law or in equity.
7.
Termination. This Agreement may be terminated in the absolute
discretion of the Representative, by notice
to the Company, if after the
execution and delivery of this Agreement
and on or prior to the Closing Date (i)
trading generally shall have been suspended
or materially limited on the New
York Stock Exchange or the over-the-counter
market; (ii) trading of any
securities issued or guaranteed by the
Company or any of the Guarantors shall
have been suspended on any exchange or in
any over-the-counter market; (iii) a
general moratorium on commercial banking
activities shall have been declared by
federal or New York State authorities; or
(iv) there shall have occurred any
outbreak or escalation of hostilities or
any change in financial markets or any
calamity or crisis, either within or
outside the United States, that, in the
reasonable judgment of the Representative,
is material and adverse and makes it
impracticable or inadvisable to proceed
with the offering, sale or delivery of
the Securities on the terms and in the
manner contemplated by this Agreement and
the Offering Memorandum.
8.
Defaulting Initial Purchaser. (a) If, on the Closing Date, any
Initial Purchaser defaults on its
obligation to purchase the Securities that it
has agreed to purchase hereunder, the
non-defaulting Initial Purchasers may in
their discretion arrange for the purchase
of such Securities by other persons
satisfactory to the Company on the terms
contained in this Agreement. If, within
36 hours after any such default by any
Initial Purchaser, the non-defaulting
Initial Purchasers do not arrange for the
purchase of such Securities, then the
Company shall be entitled to a further
period of 36 hours within which to
procure other persons satisfactory to the
non-defaulting Initial Purchasers to
purchase such Securities on such terms. If
other persons become obligated or
agree to purchase the Securities of a
defaulting Initial Purchaser, either the
non-defaulting Initial Purchasers or the
Company may postpone the Closing Date
for up to five full business days in order
to effect any changes that in the
opinion of counsel for the Company or
counsel for the Initial Purchasers may be
necessary in the Offering Memorandum or in
any other document or arrangement,
and the Company agrees to promptly prepare
any amendment or supplement to the
Offering Memorandum that effects any such
changes. As used in this Agreement,
the term "Initial Purchaser" includes, for
all purposes of this Agreement unless
the context otherwise requires, any
21
<PAGE>
person not listed in Schedule 1 hereto
that, pursuant to this Section 8,
purchases Securities that a defaulting
Initial Purchaser agreed but failed to
purchase.
(b) If, after
giving effect to any arrangements for the purchase
of the Securities of a defaulting Initial
Purchaser or Initial Purchasers by the
non-defaulting Initial Purchasers and the
Company as provided in paragraph (a)
above, the aggregate principal amount of
such Securities that remains
unpurchased does not exceed one-eleventh of
the aggregate principal amount of
all the Securities, then the Company shall
have the right to require each
non-defaulting Initial Purchaser to
purchase the principal amount of Securities
that such Initial Purchaser agreed to
purchase hereunder plus such Initial
Purchaser's pro rata share (based on the
principal amount of Securities that
such Initial Purchaser agreed to purchase
hereunder) of the Securities of such
defaulting Initial Purchaser or Initial
Purchasers for which such arrangements
have not been made.
(c) If, after
giving effect to any arrangements for the purchase
of the Securities of a defaulting Initial
Purchaser or Initial Purchasers by the
non-defaulting Initial Purchasers and the
Company as provided in paragraph (a)
above, the aggregate principal amount of
such Securities that remains
unpurchased exceeds one-eleventh of the
aggregate principal amount of all the
Securities, or if the Company shall not
exercise the right described in
paragraph (b) above, then this Agreement
shall terminate without liability on
the part of the non-defaulting Initial
Purchasers. Any termination of this
Agreement pursuant to this Section 8 shall
be without liability on the part of
the Company or the Guarantors, except that
the Company and each of the
Guarantors will continue to be liable for
the payment of expenses as set forth
in Section 9 hereof and except that the
provisions of Section 6 hereof shall not
terminate and shall remain in effect.
(d) Nothing
contained herein shall relieve a defaulting Initial
Purchaser of any liability it may have to
the Company, the Guarantors or any
non-defaulting Initial Purchaser for
damages caused by its default.
9. Payment
of Expenses. (a) Whether or not the transactions
contemplated by this Agreement are
consummated or this Agreement is terminated,
the Company and each of the Guarantors
jointly and severally agree to pay or
cause to be paid all of the following costs
and expenses incident to the
performance of their respective obligations
hereunder: (i) the costs incident to
the authorization, issuance, sale,
preparation and delivery of the Securities
and any taxes payable in that connection;
(ii) the costs incident to the
preparation and printing of the Preliminary
Offering Memorandum and the Offering
Memorandum (including any amendment or
supplement thereto) and the distribution
thereof; (iii) the costs of reproducing and
distributing each of the Transaction
Documents; (iv) the fees and expenses of
the Company's and the Guarantors'
counsel and independent accountants; (v)
the fees and expenses incurred in
connection with the registration or
qualification and determination of
eligibility for investment of the
Securities under the laws of such states and
other foreign jurisdictions as the
Representative may designate and the
preparation, printing and distribution of a
Blue Sky Memorandum (including the
related fees and expenses of counsel for
the Initial
22
<PAGE>
Purchasers); (vi) any fees charged by
rating agencies for rating the Securities;
(vii) the fees and expenses of the Trustee
and any paying agent (including
related fees and expenses of any counsel to
such parties); (viii) all expenses
and application fees incurred in connection
with the application for the
inclusion of the Securities on the PORTAL
Market and the approval of the
Securities for book-entry transfer by DTC;
and (ix) all expenses incurred by the
Company in connection with any "road show"
presentation to potential investors,
provided that the Initial Purchasers will
pay 50% of the aircraft expenses
incurred in connection with such road
show.
(b) If (i) this
Agreement is terminated pursuant to Section 7,
(ii) the Company for any reason fails to
tender the Securities for delivery to
the Initial Purchasers or (iii) the Initial
Purchasers decline to purchase the
Securities for any reason permitted
under
