Exhibit 10.1
EXECUTION VERSION
$110,000,000
AMERICAN PACIFIC CORPORATION
(a Delaware corporation)
9% Senior Notes due 2015
PURCHASE AGREEMENT
January 30, 2007

 

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January 30, 2007
Wachovia Capital Markets, LLC
One Wachovia Center
301 South College Street
Charlotte, North Carolina 28288
Ladies and Gentlemen:
          American Pacific Corporation, a Delaware corporation (the “Company”),
proposes to issue and sell to Wachovia Capital Markets, LLC (the “Initial
Purchaser”) $110,000,000 aggregate principal amount of its 9% Senior Notes due
2015 (the “Notes”), which will be unconditionally guaranteed on a senior basis
as to principal, premium, if any, and interest (the “Guarantees”) by the
subsidiaries of the Company named in Schedule I hereto (each individually, a
“Guarantor” and collectively, the “Guarantors”). The Notes will be issued
pursuant to an Indenture (the “Indenture”) dated as of the Closing Date (as
defined in Section 2) among the Company, the Guarantors and Wells Fargo Bank,
National Association, as Trustee (the “Trustee”). This Agreement, the
Registration Rights Agreement, to be dated the Closing Date, between the Initial
Purchaser, the Company and the Guarantors (the “Registration Rights Agreement”)
and the Indenture are hereinafter collectively referred to as the “Transaction
Documents” and the execution and delivery of the Transaction Documents and the
Credit Facility (as defined below) and the transactions contemplated herein and
therein are hereinafter referred to as the “Transactions.”
          The Notes (and the related Guarantees) will be offered and sold
through the Initial Purchaser without being registered under the Securities Act
of 1933, as amended (the “Securities Act”), to qualified institutional buyers in
compliance with the exemption from registration provided by Rule 144A under the
Securities Act, and in offshore transactions in reliance on Regulation S under
the Securities Act (“Regulation S”). The Initial Purchaser has advised the
Company that it will offer and sell the Notes purchased by it hereunder in
accordance with Section 3 hereof as soon as it deems advisable.
          In connection with the sale of the Notes, the Company has prepared a
preliminary offering memorandum, dated January 19, 2007 (the “Preliminary
Memorandum”), the Offering Memorandum (as defined below) and a Final Offering
Memorandum (as defined below), dated the date hereof. The Final Memorandum, the
Preliminary Memorandum, and the Offering Memorandum are referred to herein as a
“Memorandum.” Each Memorandum sets forth certain information concerning the
Company, the Guarantors, the Notes, the Transaction Documents and the
Transactions. The Company hereby confirms that it has authorized the use of the
Preliminary Memorandum and the Offering Memorandum, and any amendment or
supplement thereto, in connection with the offer and sale of the Notes by the
Initial Purchaser. As used herein, the term “Memorandum” shall include, except
where specifically noted, in each case the documents incorporated by reference
therein. The terms “supplement,” “amendment” and “amend” as used herein with
respect to a Memorandum shall include all documents deemed to be incorporated by
reference in the Preliminary Memorandum, the Offering Memorandum or Final
Memorandum

 

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that are filed with the Securities and Exchange Commission (the “Commission”)
pursuant to the Securities Exchange Act of 1934, as amended (the “Exchange
Act”), prior to the Time of Sale (as defined below).
          Prior to the time when the sales of the Notes were first made (the
“Time of Sale”), the Company has prepared and delivered to the Initial Purchaser
a pricing supplement (the “Pricing Supplement”) dated January 30, 2007. The
Pricing Supplement together with the Preliminary Memorandum is referred to
herein as the “Offering Memorandum.”
          Promptly after the Time of Sale and in any event no later than the
second business day following the Time of Sale, the Company will prepare and
deliver to the Initial Purchaser a Final Offering Memorandum (the “Final
Memorandum”), which will consist of the Preliminary Offering Memorandum with
such changes therein as are required to reflect the information contained in the
Pricing Supplement, and from and after the time such Final Memorandum is
delivered to the Initial Purchaser, all references herein to the Offering
Memorandum shall be deemed to be a reference to both the Offering Memorandum and
the Final Memorandum.
          In connection with the consummation of the transactions described
herein, the Company will enter into an amended and restated $20.0 million senior
secured credit facility (the “Credit Facility”) among the Company, the
Guarantors, the lenders from time to time parties thereto, and Wachovia Bank,
National Association, as administrative agent.
          1. Representations and Warranties of the Company and the Guarantors.
The Company and the Guarantors jointly and severally represent and warrant to,
and agree with, the Initial Purchaser that:
     (a) The Preliminary Memorandum does not contain; the Offering Memorandum at
the Time of Sale and at the Closing Date; and the Final Memorandum, and any
amendment or supplement thereto does not and will not contain any untrue
statement of a material fact or omit to state any material fact necessary to
make the statements therein, in light of the circumstances under which they were
made, not misleading; provided, however, that the representations or warranties
set forth in this paragraph shall not apply to statements in or omissions from
any Memorandum made in reliance upon and in conformity with information
furnished in writing to the Company by the Initial Purchaser expressly for use
therein, as specified in Section 10. The statistical and industry data included
in each Memorandum are based on or derived from sources that the Company
believes to be reliable and accurate.
     (b) The Company has been duly organized and is validly existing as a
corporation in good standing under the laws of the State of Delaware. The
Company is duly qualified to do business as a foreign corporation and is in good
standing under the laws of each jurisdiction in which the conduct of its
business or its ownership or leasing of property requires such qualification,
except where the failure to so qualify or be in good standing would not have a
Material Adverse Effect. “Material Adverse Effect” shall mean a material adverse
change in or effect on or any development having a prospective material adverse
effect on (i) the business, operations, properties, assets, liabilities,
stockholders’ equity, earnings, condition (financial or otherwise), results of
operations or

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management of the Company and its subsidiaries, considered as one enterprise,
whether or not in the ordinary course of business, or (ii) the ability of the
Company and each Guarantor to perform its obligations under the Notes or the
Transaction Documents.
     (c) The Company and each Guarantor has full power (corporate and other) to
own or lease its properties and conduct its business as described in each
Memorandum; and the Company and each Guarantor has full power (corporate and
other) to enter into the Transaction Documents and to carry out all the terms
and provisions hereof and thereof to be carried out by it.
     (d) The capitalization of the Company is as set forth in the Offering
Memorandum under the heading “Capitalization.” All of the issued shares of
capital stock of the Company have been duly authorized and validly issued and
are fully paid and nonassessable; and none of the outstanding shares of capital
stock of the Company was issued in violation of the preemptive or other similar
rights of any security holder of the Company.
     (e) Each subsidiary of the Company has been duly incorporated, is validly
existing as a corporation in good standing under the laws of the jurisdiction of
its incorporation, has the corporate power and authority to own its property and
to conduct its business as described in the Offering Memorandum and is duly
qualified to transact business and is in good standing in each jurisdiction in
which the conduct of its business or its ownership or leasing of property
requires such qualification, except to the extent that the failure to be so
qualified or be in good standing would not have a Material Adverse Effect; all
of the issued capital stock of each subsidiary of the Company has been duly and
validly authorized and issued, is fully paid and non-assessable, and is owned
directly by the Company, free and clear of all liens, encumbrances, equities or
claims.
     (f) No subsidiary of the Company is prohibited, directly or indirectly,
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 property or assets to the Company or any other subsidiary of the
Company, except as provided by applicable laws or regulations, by the Indenture
or as disclosed in the Offering Memorandum.
     (g) Deloitte & Touche LLP, who has certified the consolidated historical
financial statements included in the Offering Memorandum and delivered its
report with respect to the audited consolidated historical financial statements
in the Offering Memorandum, is an independent public accountant with respect to
the Company within the meaning of the Securities Act and the applicable rules
and regulations thereunder.
     (h) The consolidated historical financial statements (including the notes
thereto) of the Company and its consolidated subsidiaries in the Offering
Memorandum fairly present the financial position, results of operations, cash
flows and changes in stockholders’ equity of the Company and its consolidated
subsidiaries as of the dates and for the periods specified therein; since the
date of the latest of such financial statements, there has been no change nor
any development or event involving a prospective change

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which, individually or in the aggregate, has had or could reasonably be expected
to have a Material Adverse Effect; such financial statements have been prepared
in accordance with generally accepted accounting principles consistently applied
throughout the periods involved (except as otherwise expressly disclosed in the
notes thereto) and comply as to form with the applicable accounting requirements
of Regulation S-X under the Securities Act; the information set forth under the
captions “Offering Memorandum Summary — Summary Consolidated Financial
Information” and “Selected Historical Consolidated Financial Information” in the
Offering Memorandum has been fairly extracted from the consolidated historical
financial statements of the Company and its consolidated subsidiaries, fairly
presents the information included therein and has been compiled on a basis
consistent with that of the audited consolidated historical financial statements
included in the Offering Memorandum; and the ratios of earnings to fixed charges
set forth in the Offering Memorandum under the caption “Selected Historical
Consolidated Financial Information” have been calculated in compliance with Item
503(d) of Regulation S-K under the Securities Act.
     (i) Subsequent to the respective dates as of which information is given in
the Offering Memorandum, (i) none of the Company and its subsidiaries have
incurred any material liability or obligation, direct or contingent, or entered
into any material transaction in each case not in the ordinary course of
business; (ii) the Company has not purchased any of its outstanding capital
stock, and has not declared, paid or otherwise made any dividend or distribution
of any kind on any class of its capital stock; and (iii) there has not been any
material change in the capital stock, short-term debt or long-term debt of the
Company and its subsidiaries, except as disclosed in the Offering Memorandum.
     (j) The Company and each of its subsidiaries maintains a system of internal
accounting controls sufficient to provide reasonable assurances that
(i) transactions are executed in accordance with management’s general or
specific authorizations; (ii) transactions are recorded as necessary to permit
preparation of consolidated historical 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.
     (k) The Company is subject to and in full compliance with the reporting
requirements of Section 13 or Section 15(d) of the Exchange Act. The documents
incorporated or deemed to be incorporated by reference in the Offering
Memorandum at the time they were filed with the Commission complied and will
comply in all material respects with the requirements of the Exchange Act and
the rules and regulations of the Commission promulgated thereunder and, when
read together with the other information in the Offering Memorandum, at the date
of the Offering Memorandum and as of the Closing Date, do not and will not
include an untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein, in
the light of the circumstances under which they were made, not misleading. The
Company has established and maintains disclosure controls and procedures (as
such term is

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defined in Rules 13a-15 and 15d-14 under the Exchange Act); such disclosure
controls and procedures are designed to provide reasonable assurances that
material information relating to the Company and Subsidiaries is made known to
the chief executive officer and chief financial officer of the Company by others
within the Company or any subsidiary, and such disclosure controls and
procedures are reasonably effective to perform the functions for which they were
established subject to the limitations of any such control system; the Company’s
auditors and the audit committee of the board of directors of the Company have
been advised of: (A) any significant deficiencies in the design or operation of
internal controls which could adversely affect the Company’s ability to record,
process, summarize, and report financial data; and (B) any fraud, whether or not
material, that involves management or other employees who have a role in the
Company’s internal controls; and since the date of the most recent evaluation of
such disclosure controls and procedures, there have been no significant changes
in internal controls or in other factors that could significantly affect
internal controls, including any corrective actions with regard to significant
deficiencies and material weaknesses.
     (l) This Agreement has been duly authorized, executed and delivered by the
Company and each Guarantor.
     (m) The Indenture and the Registration Rights Agreement have been duly
authorized by the Company and each Guarantor and, on the Closing Date, will have
been duly executed and delivered by the Company and each Guarantor, and will
constitute the legal, valid and binding obligations of the Company and each
Guarantor, enforceable against the Company and each Guarantor in accordance with
their respective terms, except as the enforcement thereof may be limited by
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting
enforcement of creditors’ rights generally and except as enforcement thereof is
subject to general principles of equity; and the Indenture and the Registration
Rights Agreement will conform to the description thereof in the Offering
Memorandum and will be substantially in the form previously delivered to you.
     (n) The Indenture conforms in all material respects to the requirements of
the Trust Indenture Act of 1939, as amended (the “Trust Indenture Act”), and to
the rules and regulations of the commission applicable to an indenture that is
qualified thereunder.
     (o) The Notes have been duly authorized and, on the Closing Date, when
executed and authenticated in the manner provided for in the Indenture and
delivered to and paid for by the Initial Purchaser as provided in this
Agreement, will constitute the legal, valid and binding obligations of the
Company, enforceable against the Company in accordance with their terms, except
as the enforcement thereof may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting enforcement of creditors’
rights generally and except as enforcement thereof is subject to general
principles of equity, and will be entitled to the benefits of the Indenture and
the Registration Rights Agreement; the Guarantees have been duly authorized and,
on the Closing Date, upon the due issuance and delivery of the related Notes and
the due endorsement of the Guarantees thereon, will have been duly executed,
endorsed and delivered and will constitute valid and legally binding obligations
of each of the Guarantors, and will be entitled

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to the benefits of the Indenture; the Exchange Notes (as defined in the
Registration Rights Agreement) have been duly authorized and, when executed and
authenticated in the manner provided for in the Registration Rights Agreement
and the Indenture, will constitute the legal, valid and binding obligations of
the Company, enforceable against the Company in accordance with their terms,
except as the enforcement thereof may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting enforcement of creditors’
rights generally and except as enforcement thereof is subject to general
principles of equity, and will be entitled to the benefits of the Indenture and
the Registration Rights Agreement; and the Notes and the Exchange Notes will
conform to the descriptions thereof in the Offering Memorandum.
     (p) The execution, delivery and performance by the Company and each
Guarantor of this Agreement and the other Transaction Documents, the issuance
and sale of the Notes and the compliance by the Company and each Guarantor with
all of the provisions of the Notes, the Indenture, the Registration Rights
Agreement and this Agreement and the consummation of the transactions
contemplated hereby and thereby will not (i) conflict with, result in a breach
or violation of, the certificate of incorporation or by-laws of the Company or
any of its subsidiaries, (ii) conflict with, result in a breach or violation of,
or constitute a default under, any indenture, mortgage, deed of trust or loan
agreement, stockholders’ agreement or any other agreement or instrument to which
the Company or any of its subsidiaries is a party or by which the Company or any
of its subsidiaries is bound or any of their respective properties are subject,
or with or any statute, rule or regulation or any judgment, order or decree of
any governmental authority or court or any arbitrator applicable to the Company
or any of its subsidiaries, except, in the case of this clause (ii), for such
conflicts, breaches, violations or defaults which would not, individually or in
the aggregate, result in a Material Adverse Effect, or (iii) (assuming the
accuracy of the Initial Purchaser’s representations and warranties contained
herein) require the consent, approval, authorization, order, registration or
filing or qualification with, any governmental authority or court, or body or
arbitrator having jurisdiction over the Company or any of its subsidiaries,
except (x) such as may be required by the securities or Blue Sky laws of the
various states in connection with the offer or sale, or resale by the Initial
Purchaser, of the Notes and by Federal and state securities laws with respect to
the obligations of the Company and the Guarantors under the Registration Rights
Agreement or (y) where the failure to obtain such consents, approvals,
authorizations, orders, registrations, filings or qualifications could not
reasonably be expected to have a Material Adverse Effect.
     (q) No legal or governmental proceedings or investigations are pending or,
to the Company’s knowledge, threatened to which the Company or any of its
subsidiaries is a party or to which any of the properties of the Company or any
of its subsidiaries is subject, other than proceedings accurately described in
the Preliminary Memorandum and the Offering Memorandum and such proceedings or
investigations that would not, singly or in the aggregate, result in a Material
Adverse Effect.
     (r) There are no relationships, direct or indirect, between or among the
Company or any of its subsidiaries, on the one hand, and the respective
directors, officers or

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stockholders of the Company or any of its subsidiaries, on the other hand, that
would be required by Regulation S-K to be disclosed in an annual report on Form
10-K and there are no contracts or other documents that would be required by the
Securities Act to be disclosed in a prospectus were the Notes being issued and
sold in a public offering registered on Form S-1 under the Securities Act that
are not so disclosed in the Company’s public filings with the Commission.
     (s) The Company and its Affiliates (as defined in Rule 501(b) of
Regulation D under the Securities Act (“Regulation D”)) have not distributed
and, prior to the later of (i) the Closing Date and (ii) the completion of the
distribution of the Notes, will not distribute any offering material in
connection with the offering and sale of the Notes other than the Preliminary
Memorandum, the Offering Memorandum or any amendment or supplement thereto.
     (t) The Company and its subsidiaries have not sustained, since the date of
the latest audited consolidated historical financial statements included in the
Offering Memorandum (exclusive of any amendment or supplement thereto), any loss
or interference with its business or properties from fire, explosion, flood,
accident or other calamity, whether or not covered by insurance, or from any
labor dispute or court or governmental action, order or decree (whether domestic
or foreign) otherwise than as set forth in the Offering Memorandum (exclusive of
any amendment or supplement thereto) or as would not, individually or in the
aggregate, have a Material Adverse Effect; and, since such date, there has not
occurred any change or development having a Material Adverse Effect.
     (u) The statements set forth in the Offering Memorandum under the caption
“Description of Notes,” insofar as they purport to constitute a summary of the
terms of the Notes, and under the captions “Management,” “Certain Relationships
and Related Transactions,” “Description of Other Indebtedness,” “Material U.S.
Federal Tax Income Considerations,” “Exchange Offer; Registration Rights,”
insofar as they purport to summarize the provisions of the laws and documents
referred to therein, fairly and accurately summarize the subject matter thereof
in all material respects.
     (v) The Company and its subsidiaries have good and marketable title in fee
simple to all items of real property and good and marketable title to all
personal property owned by each of them, free and clear of any pledge, lien,
encumbrance, security interest or other defect or claim of any third party,
except as set forth in the Offering Memorandum or as would not, individually or
in the aggregate, have a Material Adverse Effect. Any property leased by the
Company and its subsidiaries is held under valid, subsisting and enforceable
leases, and there is no default under any such lease or any other event that
with notice or lapse of time or both would constitute a default thereunder.
     (w) No “prohibited transaction” (as defined in Section 406 of the Employee
Retirement Income Security Act of 1974, as amended, including the regulations
and published interpretations thereunder (“ERISA”), or Section 4975 of the
Internal Revenue Code of 1986, as amended from time to time (the “Code”)) or
“accumulated funding deficiency” (as defined in Section 302 of ERISA) or any of
the events set forth in Section

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4043(c) of ERISA (other than events with respect to which the 30-day notice
requirement under Section 4043 of ERISA has been waived) has occurred, exists or
is reasonably expected to occur with respect to any employee benefit plan (as
defined in Section 3(3) of ERISA) which the Company or any of its subsidiaries
maintains, contributes to or has any obligation to contribute to, or with
respect to which the Company or any of its subsidiaries has any liability,
direct or indirect, contingent or otherwise (a “Plan”) in each case as had or
could reasonably be expected to have a Material Adverse Effect; each Plan is in
compliance in all material respects with applicable law, including ERISA and the
Code; none of the Company or any of its subsidiaries has incurred or expects to
incur liability under Title IV of ERISA with respect to the termination of, or
withdrawal from, any Plan; and each Plan that is intended to be qualified under
Section 401(a) of the Code is so qualified in all material respects and nothing
has occurred, whether by action or failure to act, which could reasonably be
expected to cause the loss of such qualification.
     (x) Except as disclosed in each Memorandum, no labor dispute with the
employees of the Company or any of its subsidiaries exists, is imminent or is,
to the Company’s knowledge, threatened, and the senior officers of the Company
and its subsidiaries are not aware of any existing, imminent or threatened labor
disturbance by the employees of any of their respective principal suppliers,
manufacturers, customers or contractors, which, in either case, could reasonably
be expected to result in a Material Adverse Effect.
     (y) No proceedings for the merger, consolidation, liquidation or
dissolution of the Company or any Guarantor or the sale of all or a material
part of the assets of the Company and its subsidiaries or any material
acquisition by the Company or any Guarantor are pending or contemplated.
     (z) The Company and each of its subsidiaries owns or otherwise possesses
adequate rights to use all material patents, trademarks, service marks, trade
names and copyrights, all applications and registrations for each of the
foregoing, and all other material proprietary rights and confidential
information necessary to conduct their respective businesses as currently
conducted; none of the Company or any of its subsidiaries has received any
notice, or is otherwise aware, of any infringement of or conflict with the
rights of any third party with respect to any of the foregoing, except for any
infringement or conflict which would not individually or in the aggregate, have
a Material Adverse Effect.
     (aa) The Company and each of its subsidiaries is insured by insurers of
recognized financial responsibility against such losses and risks and in such
amounts and with such deductibles as are prudent in the business in which it is
engaged; and none of the Company or any of its subsidiaries has 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 from similar insurers
as may be necessary to continue their respective businesses at a cost that would
not have a Material Adverse Effect.
     (bb) Except as disclosed in the Offering Memorandum, the Company and each
of its subsidiaries has complied with all laws, ordinances, regulations and
orders applicable to the Company and its subsidiaries, and their respective
businesses, and none of the

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Company or any of its subsidiaries has received any notice to the contrary; and
each of the Company and its subsidiaries possesses all certificates,
authorizations, permits, licenses, approvals, orders and franchises
(collectively, “Licenses”) necessary to conduct their respective businesses in
the manner and to the full extent now operated or proposed to be operated as
described in the Offering Memorandum, in each case issued by the appropriate
federal, state, local or foreign governmental or regulatory authorities
(collectively, the “Agencies”), except where the failure to so comply or to
possess such Licenses would not have a Material Adverse Effect. The Licenses are
in full force and effect and no proceeding has been instituted or, to the
Company’s knowledge, is threatened or contemplated which in any manner affects
or calls into question the validity or effectiveness thereof, except where such
invalidity or ineffectiveness thereof would not, individually or in the
aggregate, have a Material Adverse Effect.
     (cc) The operation of the business of the Company and its subsidiaries in
the manner and to the full extent now operated or proposed to be operated as
described in the Offering Memorandum is in accordance with the Licenses and all
orders, rules and regulations of the Agencies, and no event has occurred which
permits (nor has an event occurred which with notice or lapse of time or both
would permit) the revocation or termination of any necessary Licenses or which
might result in any other impairment of the rights of the Company therein or
thereunder, and the Company and each of its subsidiaries is in compliance with
all statutes, orders, rules and regulations of the Agencies relating to or
affecting its operations in each case except as would not, individually or in
the aggregate, have a Material Adverse Effect.
     (dd) There is and has been no failure on the part of the Company or any of
the Company’s directors or officers, in their capacities as such, to comply in
all material respects with any provision of the Sarbanes Oxley Act of 2002 and
the rules and regulations promulgated in connection therewith (the “Sarbanes
Oxley Act”) that are currently applicable to the Company, including Section 402
related to loans and Sections 302 and 906 related to certifications.
     (ee) (i) The Company and each of its subsidiaries is and has been in
compliance with all applicable laws, statutes, ordinances, rules, regulations,
orders, judgments, decisions, decrees, standards, and requirements relating to:
human health and safety; pollution; management, disposal or release of any
chemical substance, product or waste; and protection, cleanup, remediation or
corrective action relating to the environment or natural resources
(“Environmental Law”);
     (ii) The Company and each of its subsidiaries has obtained and is in
compliance with the conditions of all permits, authorizations, licenses,
approvals and variances necessary under any Environmental Law for the continued
conduct in the manner now conducted of their respective businesses
(“Environmental Permits”);
     (iii) There are no past or present conditions or circumstances, including
but not limited to pending changes in any Environmental Law or Environmental
Permits, that are likely to interfere with the conduct of the business of the

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Company and its subsidiaries in the manner now conducted or which would
interfere with compliance with any Environmental Law or Environmental Permits;
and
     (iv) There are no past or present conditions or circumstances at, or
arising out of, their respective businesses, assets and properties of the
Company and each of its subsidiaries or any business, assets or properties
formerly leased, operated or owned by the Company or any of its subsidiaries,
including but not limited to on-site or off-site disposal or release of any
chemical substance, product or waste, which may give rise to: (i) liabilities or
obligations for any cleanup, remediation or corrective action under any
Environmental Law; (ii) claims arising under any Environmental Law for personal
injury, property damage, or damage to natural resources; (iii) liabilities or
obligations incurred by the Company or its subsidiaries to comply with any
Environmental Law; or (iv) fines or penalties arising under any Environmental
Law;
except in each case for any noncompliance or conditions or circumstances that,
singly or in the aggregate, would not result in a Material Adverse Effect or as
disclosed in the Offering Memorandum.
     (ff) Neither the Company nor any Guarantor is in violation of its
certificate of incorporation or its bylaws, and no default or breach exists, and
no event has occurred that, with notice or lapse of time or both, would
constitute a default in the due performance and observation of any term,
covenant or condition of any indenture, mortgage, deed of trust, lease, loan
agreement, stockholders’ agreement or any other agreement or instrument to which
the Company or any of its subsidiaries is a party or by which the Company or any
of its subsidiaries is bound or to which any of their respective properties are
subject, in each case except as would not, individually or in the aggregate
result in a Material Adverse Effect.
     (gg) The Company and each of its subsidiaries has filed all foreign,
federal, state and local tax returns that are required to be filed or has
requested extensions thereof and has paid all taxes required to be paid by it
and any other assessment, fine or penalty levied against it, to the extent that
any of the foregoing is due and payable, except for any such assessment, fine or
penalty that is currently being contested in good faith and for which the
Company and its subsidiaries retains adequate reserves and except where the
failure to file such tax returns or pay such taxes or other assessments, fines
or penalties would not, individually or in the aggregate, have a Material
Adverse Effect.
     (hh) Except as disclosed in the Offering Memorandum, there are no
contracts, agreements or understandings between the Company or any of its
subsidiaries and any person granting such person the right to require the
Company or any of its subsidiaries to file a registration statement under the
Securities Act or to require the Company to include any securities held by any
person in any registration statement filed by the Company under the Securities
Act.
     (ii) Neither the Company nor any Guarantor is, nor after giving effect to
the offering and sale of the Notes and the application of the proceeds thereof
as described in

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the Offering Memorandum will be, an “investment company,” or a company
“controlled” by an “investment company,” within the meaning of the Investment
Company Act of 1940, as amended (the “Investment Company Act”).
     (jj) Within the preceding six months, none of the Company or any of its
Affiliates has, directly or through any agent, made offers or sales of any
security of the Company, or solicited offers to buy or otherwise negotiated in
respect of any securities of the Company of the same or a similar class as the
Notes, other than the Notes offered or sold to the Initial Purchaser hereunder.
     (kk) None of the Company or any of its Affiliates has, directly or through
any person acting on its or their behalf (other than the Initial Purchaser, as
to which no statement is made), offered, solicited offers to buy or sold the
Notes by any form of general solicitation or general advertising (within the
meaning of Regulation D) or in any manner involving a public offering within the
meaning of Section 4(2) of the Securities Act.
     (ll) None of the Company, any of its Affiliates, nor any person acting on
its or their behalf (other than the Initial Purchaser, as to which no statement
is made), has engaged in any directed selling efforts with respect to the Notes,
and each of them has complied with the offering restrictions requirement of
Regulation S under the Securities Act (“Regulation S”). Terms used in this
paragraph have the meanings given to them by Regulation S.
     (mm) None of the Company or any of its Affiliates has taken, directly or
indirectly, any action designed to cause or result in, or which has constituted
or which might reasonably be expected to cause or result in, stabilization or
manipulation of the price of any security of the Company to facilitate the sale
or resale of the Notes; nor has the Company or any of its Affiliates paid or
agreed to pay to any person any compensation for soliciting another to purchase
any securities of the Company (except as contemplated by this Agreement).
     (nn) The Notes satisfy the eligibility requirements of Rule 144A(d)(3)
under the Securities Act.
     (oo) Assuming the accuracy of the representations and warranties of the
Initial Purchaser in Section 3 hereof and compliance by the Initial Purchaser
with the procedures set forth in Section 3 hereof, it is not necessary in
connection with the offer, sale and delivery of the Notes to the Initial
Purchaser in the manner contemplated by this Agreement and disclosed in each
Memorandum to register the Notes or the related Guarantees under the Securities
Act or to qualify the Indenture under the Trust Indenture Act.
     (pp) None of the Transactions (including, without limitation, the use of
proceeds from the sale of the Notes) will violate or result in a violation of
Section 7 of the Exchange Act or any regulation promulgated thereunder,
including, without limitation, Regulations T, U and X of the Board of Governors
of the Federal Reserve System.

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     (qq) There are, and during the last 12 months there have been, no material
disputes between the Company and any of its ten largest suppliers (as measured
by dollar volume of goods purchased by the Company) (“Material Suppliers”) or
ten largest customers (as measured by dollar volume of goods sold by the
Company) (“Material Customers”). The Company’s relations with its Material
Suppliers and Material Customers are, to the Company’s knowledge, good, and the
Company has received no notice, and is not otherwise aware, of any anticipated
material dispute with any of its Material Suppliers and Material Customers, or
that (i) any Material Supplier intends to cease or materially reduce its supply
to the Company or (ii) any Material Customer intends to cease or materially
reduce its purchases from the Company.
     (rr) Except as disclosed in the Offering Memorandum, there are no
agreements, arrangements or understandings that will require the payment of any
commissions, fees or other remuneration to any investment banker, broker,
finder, consultant or intermediary in connection with the transactions
contemplated by this Agreement.
     (ss) The Company does not intend to treat any of the transactions
contemplated by the Transaction Documents as being a “reportable transaction”
(within the meaning of Treasury Regulation Section 1.6011-4). In the event the
Company determines to take any action inconsistent with such intention, it will
promptly notify the Initial Purchaser thereof. If the Company so notifies the
Initial Purchaser, the Company acknowledges that the Initial Purchaser may treat
its purchase and resale of Notes as part of a transaction that is subject to
Treasury Regulation Section 301.6112-1, and the Initial Purchaser will maintain
the lists and other records required by such Treasury Regulation.
     (tt) The Company has been advised by the NASD’s PORTAL Market that the
Notes have been designated PORTAL-eligible securities in accordance with the
rules and regulations of the NASD.
     (uu) There are no stamp or other issuance or transfer taxes or duties or
other similar fees or charges required to be paid in connection with the
execution and delivery of this Agreement or the issuance or sale by the Company
of the Notes.
     (vv) None of the Company, its subsidiaries or, to the knowledge of the
Company, any director, officer, agent, employee or Affiliate of the Company or
any of its subsidiaries is aware of or has taken any action, directly or
indirectly, that would result in a material violation by such Persons of Foreign
Corrupt Practices Act of 1977, as amended, and the rules and regulations
thereunder (the “FCPA”), including, without limitation, making use of the mails
or any means or instrumentality of interstate commerce corruptly in furtherance
of an offer, payment, promise to pay or authorization of the payment of any
money, or other property, gift, promise to give, or authorization of the giving
of anything of value to any “foreign official” (as such term is defined in the
FCPA) or any foreign political party or official thereof or any candidate for
foreign political office, in contravention of the FCPA; and the Company, its
subsidiaries and, to the knowledge of the Company, its Affiliates have conducted
their businesses in compliance with the FCPA and have instituted and maintain
policies and procedures designed to ensure, and which are reasonably expected to
continue to ensure, continued compliance therewith.

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     (ww) The operations of the Company and its subsidiaries are and have been
conducted at all times in compliance in all material respects with applicable
financial recordkeeping and reporting requirements of the Currency and Foreign
Transactions Reporting Act of 1970, as amended, the money laundering statutes of
all jurisdictions, the U.S. PATRIOT Act, the rules and regulations thereunder,
and any related or similar rules, regulations or guidelines, issued,
administered or enforced by any governmental agency (collectively, the “Money
Laundering Laws”) and no action, suit or proceeding by or before any court or
governmental agency, authority or body or any arbitrator involving the Company
or any of its subsidiaries with respect to the Money Laundering Laws is pending
or, to the knowledge of the Company, threatened.
     (xx) None of the Company, any of its subsidiaries or, to the knowledge of
the Company, any director, officer, agent, employee or Affiliate of the Company
or any of its subsidiaries is currently subject to any U.S. sanctions
administered by the Office of Foreign Assets Control of the U.S. Department of
the Treasury (“OFAC”); and the Company will not directly or indirectly use the
proceeds of the Offering, or lend, contribute or otherwise make available such
proceeds to any subsidiary, joint venture partner or other person or entity, for
the purpose of financing the activities of any person currently subject to any
U.S. sanctions administered by OFAC.
Each certificate signed by any officer of the Company or the Guarantors and
delivered to the Initial Purchaser or its counsel pursuant to this Agreement
shall be deemed to be a representation and warranty by the Company or the
Guarantors, as the case may be, to the Initial Purchaser as to the matters
covered thereby.
          2. Purchase, Sale and Delivery of the Notes. On the basis of the
representations, warranties, agreements and covenants herein contained and
subject to the terms and conditions herein set forth, the Company agrees to
issue and sell $110,000,000 aggregate principal amount of Notes, and the Initial
Purchaser agree to purchase from the Company the principal amount of Notes at a
purchase price equal to 97.25% of the principal amount thereof (the “Purchase
Price”). One or more certificates in definitive form or global form, as
instructed by the Initial Purchaser for the Notes that the Initial Purchaser has
agreed to purchase hereunder, and in such denomination or denominations and
registered in such name or names as the Initial Purchaser requests upon notice
to the Company not later than one full business day prior to the Closing Date
(as defined below), shall be delivered by or on behalf of the Company to the
Initial Purchaser for the account of the Initial Purchaser, with any transfer
taxes payable in connection with the transfer of the Notes to the Initial
Purchaser duly paid, against payment by or on behalf of the Initial Purchaser of
the Purchase Price therefor by wire transfer in Federal or other funds
immediately available to the account of the Company. Such delivery of and
payment for the Notes shall be made at the offices of Cahill Gordon & Reindel
llp (“Counsel for the Initial Purchaser”), 80 Pine Street, New York, New York
10005 at 10:00 A.M., New York City time, on February 6,2007, or at such other
place, time or date as the Initial Purchaser and the Company may agree upon,
such time and date of delivery against payment being herein referred to as the
“Closing Date.” The Company will make such certificate or certificates for the
Notes available for examination by the Initial Purchaser at the New York, New
York offices of Counsel for the

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Initial Purchaser not later than 10:00 A.M., New York City time on the business
day prior to the Closing Date.
          3. Offering of the Notes and the Initial Purchaser’s Representations
and Warranties. The Initial Purchaser represents and warrants to and agrees with
the Company that:
     (a) It is a qualified institutional buyer as defined in Rule 144A under the
Securities Act (a “QIB”).
     (b) It has solicited, and will solicit, offers for such Notes only from,
and has offered, and will offer, such Notes only to, persons that it reasonably
believes to be (A) in the case of offers inside the United States, QIBs (B) in
the case of offers outside the United States, to persons other than U.S. persons
(“foreign purchasers,” which term shall include dealers or other professional
fiduciaries in the United States acting on a discretionary basis for foreign
beneficial owners (other than an estate or trust)) in reliance upon Regulation S
under the Securities Act that, in each case, in purchasing such Notes are deemed
to have represented and agreed as provided in the Offering Memorandum under the
caption “Notice to Investors.”
     (c) It has not offered or sold, and will not offer or sell, the Notes using
any form of general solicitation or general advertising (within the meaning of
Regulation D) or in any manner involving a public offering within the meaning of
Section 4(2) under the Securities Act.
     (d) With respect to offers and sales outside the United States:
     (i) at or prior to the confirmation of any sale of any Notes sold in
reliance on Regulation S, it will have sent to each distributor, dealer or other
person receiving a selling concession, fee or other remuneration that purchases
Notes from it during the distribution compliance period (as defined in
Regulation S) a confirmation or notice substantially to the following effect:
     “The Notes covered hereby have not been registered under the U.S.
Securities Act of 1933, as amended (the “Securities Act”), and may not be
offered or sold within the United States or to, or for the account or benefit
of, U.S. persons, (i) as part of their distribution at any time; or
(ii) otherwise until 40 days after the later of the commencement of the offering
of the Notes and February 6, 2007, except in either case in accordance with
Regulation S or Rule 144A under the Securities Act. Terms used above have the
meanings given to them by Regulation S.”; and
     (ii) the Initial Purchaser has offered the Notes and will offer and sell
the Notes (A) as part of its distribution at any time and (B) otherwise until
40 days after the later of the commencement of the offering and the Closing
Date, only in accordance with Rule 903 of Regulation S or as otherwise permitted
in Section 3(b); accordingly, the Initial Purchaser has not engaged nor will
engage in any directed selling efforts (within the meaning of Regulation S) with
respect to the

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Notes, and the Initial Purchaser has complied and will comply with the offering
restrictions requirements of Regulation S.
          Terms used in this Section 3(d) have the meanings given to them by
Regulation S.
          4. Covenants of the Company. The Company covenants and agrees with the
Initial Purchaser that:
     (a) The Company will prepare the Offering Memorandum in the form approved
by the Initial Purchaser and will not amend or supplement the Offering
Memorandum or the Final Memorandum including by filing documents under the
Exchange Act which are incorporated by reference therein without first
furnishing to the Initial Purchaser a copy of such proposed amendment or
supplement or filing and will not use or file any amendment or supplement to
which the Initial Purchaser may reasonably object.
     (b) The Company will furnish to the Initial Purchaser and to Counsel for
the Initial Purchaser concurrently with the Time of Sale and during the period
referred to in paragraph (c) below, without charge, as many copies of the
Offering Memorandum and any amendments and supplements thereto as they may
reasonably request.
     (c) At any time prior to the completion of the distribution of the Notes by
the Initial Purchaser, if any event occurs or condition exists 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 to make the statements therein, in light of the circumstances under
which they were made, not misleading, or if it should be necessary to amend or
supplement the Offering Memorandum, to comply with applicable law, the Company
will promptly (i) notify the Initial Purchaser of the same; (ii) subject to the
requirements of paragraph (a) of this Section 4, prepare and provide to the
Initial Purchaser, at its own expense, an amendment or supplement to the
Offering Memorandum, so that the statements in the Offering Memorandum as so
amended or supplemented will not, in the light of the circumstances when the
Offering Memorandum, is delivered to a purchaser, be misleading or so that the
Offering Memorandum, as amended or supplemented, will comply with applicable
law; and (iii) supply any supplemented or amended Offering Memorandum, to the
Initial Purchaser and Counsel for the Initial Purchaser, without charge, in such
quantities as may be reasonably requested.
     (d) The Company will (i) qualify the Notes and the Guarantees for sale by
the Initial Purchaser under the laws of such jurisdictions as the Initial
Purchaser may designate and (ii) maintain such qualifications for so long as
required for the sale of the Notes by the Initial Purchaser. The Company will
promptly advise the Initial Purchaser of the receipt by the Company of any
notification with respect to the suspension of the qualification of the Notes
for sale in any jurisdiction or the initiation or threatening of any proceeding
for such purpose.
     (e) At any time prior to the completion of the distribution of the Notes by
the Initial Purchaser, the Company will deliver to the Initial Purchaser such
additional information concerning the business and financial condition of the
Company as the Initial

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Purchaser may from time to time request and whenever it or any of its
subsidiaries publishes or makes available to the public (by filing with any
regulatory authority or securities exchange or by publishing a press release or
otherwise) any information that would reasonably be expected to be material in
the context of the issuance of the Notes under this Agreement, shall promptly
notify the Initial Purchaser as to the nature of such information or event. The
Company will likewise notify the Initial Purchaser of (i) any decrease in the
rating of the Notes or any other debt securities of the Company by any
nationally recognized statistical rating organization (as defined in
Rule 436(g)(2) under the Securities Act) or (ii) any notice or public
announcement given of any intended or potential decrease in any such rating or
that any such securities rating agency has under surveillance or review, with
possible negative implications, its rating of the Notes, promptly after the
Company becomes aware of any such decrease, notice or public announcement. The
Company will also, for a period of five years from the Closing Date, deliver to
the Initial Purchaser, as soon as available and without request, copies of any
reports and financial statements furnished to or filed with the Commission to
the extent such reports and financial statements are not publicly available on
the Commission’s Electronic Data Gathering and Retrieval System.
     (f) The Company will not, and will not permit any of its Affiliates to,
resell any of the Notes that have been acquired by any of them, other than
pursuant to an effective registration statement under the Securities Act or in
accordance with Rule 144 under the Securities Act.
     (g) Except as contemplated in the Registration Rights Agreement, none of
the Company or any of its Affiliates, nor any person acting on its or their
behalf (other than the Initial Purchaser or any of its Affiliates, as to which
no statement is made) will, directly or indirectly, make offers or sales of any
security, or solicit offers to buy any security, under circumstances that would
require the registration of the Notes under the Securities Act.
     (h) None of the Company or any of its Affiliates, nor any person acting on
its or their behalf (other than the Initial Purchaser or any of its Affiliates,
as to which no statement is made), will solicit any offer to buy or offer to
sell the Notes by means of any form of general solicitation or general
advertising (within the meaning of Regulation D) or in any manner involving a
public offering within the meaning of Section 4(2) of the Securities Act.
     (i) None of the Company or any of its Affiliates, nor any person acting on
its or their behalf (other than the Initial Purchaser or any of its Affiliates,
as to which no statement is made), will engage in any directed selling efforts
(within the meaning of Regulation S) with respect to the Notes, and each of them
will comply with the offering restrictions requirements of Regulation S.
     (j) None of the Company or any of its Affiliates, nor any person acting on
its or their behalf (other than the Initial Purchaser or any of its Affiliates,
as to which no statement is made), will sell, offer for sale or solicit offers
to buy or otherwise negotiate in respect of any securities of the same or a
similar class as the Notes, other than the

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Notes offered or sold to the Initial Purchaser hereunder in a manner which would
require the registration under the Securities Act of the Notes.
     (k) So long as any of the Notes are “restricted securities” within the
meaning of Rule 144(a)(3) under the Securities Act, at any time that the Company
is not then subject to Section 13 or 15(d) of the Exchange Act, the Company will
provide at its expense to each holder of the Notes and to each prospective
purchaser (as designated by such holder) of the Notes, upon the request of such
holder or prospective purchaser, any information required to be provided by
Rule 144A(d)(4) under the Securities Act. (This covenant is intended to be for
the benefit of the holders, and the prospective purchasers designated by such
holders from time to time, of the Notes.)
     (l) The Company will apply the net proceeds from the sale of the Notes as
set forth under “Use of Proceeds” in the Offering Memorandum.
     (m) Until completion of the distribution, neither the Company nor any of
its Affiliates will take, directly or indirectly, any action designed to cause
or result in, or which has constituted or which might reasonably be expected to
cause or result in, stabilization or manipulation of the price of any security
of the Company to facilitate the sale or resale of the Notes.
     (n) For so long as any Notes are outstanding, the Company and its
subsidiaries will conduct its operations in a manner that will not subject the
Company or any subsidiary to registration as an investment company under the
Investment Company Act.
     (o) Each Note will bear a legend substantially to the following effect (and
consistent with the Registration Rights Agreement and the Indenture) until such
legend shall no longer be necessary or advisable because the Notes are no longer
subject to the restrictions on transfer described therein:
     THIS NOTE HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS
AMENDED (THE “SECURITIES ACT”), AND ACCORDINGLY, MAY NOT BE OFFERED, SOLD,
PLEDGED OR OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER, OR AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF, THE
SECURITIES ACT, IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE
OF THE UNITED STATES OR ANY OTHER JURISDICTION AND IN ACCORDANCE WITH THE
TRANSFER RESTRICTIONS CONTAINED IN THE INDENTURE UNDER WHICH THIS NOTE WAS
ISSUED.
     (p) The Company will not, directly or indirectly, offer, sell, contract to
sell or otherwise dispose of any debt securities of the Company or warrants to
purchase debt securities of the Company substantially similar to the Notes
(other than the Notes offered pursuant to this Agreement) for a period of
90 days after the date hereof, without the prior written consent of Wachovia
Capital Markets, LLC.

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     (q) The Company will, promptly after it has notified the Initial Purchaser
of any intention by the Company to treat the Transactions as being a “reportable
transaction” (within the meaning of Treasury Regulation Section 1.6011-4),
deliver a duly completed copy of IRS Form 8886 or any successor form to the
Initial Purchaser.
     (r) The Company acknowledges and agrees that the Initial Purchaser is
acting solely in the capacity of an arm’s length contractual counterparty to the
Company with respect to the offering of the Notes and the Guarantees
contemplated hereby (including in connection with determining the terms of the
offering) and not as a financial advisor or a fiduciary to, or an agent of, the
Company or any other person. Additionally, the Initial Purchaser is not advising
the Company or any other person as to any legal, tax, investment, accounting or
regulatory matters in any jurisdiction. The Company shall consult with its own
advisors concerning such matters and shall be responsible for making its own
independent investigation and appraisal of the transactions contemplated hereby,
and the Initial Purchaser shall have no responsibility or liability to the
Company with respect thereto. Any review by the Initial Purchaser of the
Company, the transactions contemplated hereby or other matters relating to such
transactions will be performed solely for the benefit of the Initial Purchaser
and shall not be on behalf of the Company.
          4A. Other Agreements. In relation to each Member State of the European
Economic Area that has implemented the Prospectus Directive (each, a “Relevant
Member State”), the Initial Purchaser represents and agrees that with effect
from and including the date on which the Prospectus Directive is implemented in
that Relevant Member State (the “Relevant Implementation Date”) it has not made
and will not make an offer of Notes to the public in that Relevant Member State
prior to the publication of a prospectus in relation to the Notes that has been
approved by the competent authority in that Relevant Member State or, where
appropriate, approved in another Relevant Member State and notified to the
competent authority in that Relevant Member State, all in accordance with the
Prospectus Directive, except that it may, with effect from and including the
Relevant Implementation Date, make an offer of Notes to the public in that
Relevant Member State at any time:

  •   to legal entities which are authorized or regulated to operate in the
financial markets or, if not so authorized or regulated, whose corporate purpose
is solely to invest in securities;     •   to any legal entity which has two or
more of (1) an average of at least 250 employees during the last financial year,
(2) a total balance sheet of more than €43,000,000 and (3) an annual net
turnover of more than €50,000,000, as shown in its last annual or consolidated
accounts; or     •   in any other circumstances which do not require the
publication by us of a prospectus pursuant to Article 3 of the Prospectus
Directive.

     The Initial Purchaser represents and agrees that:

  •   it has only communicated or caused to be communicated and will only
communicate or cause to be communicated an invitation or inducement to engage in
investment

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      activity (within the meaning of Section 21 of the Financial Services and
Markets Act 2000 (the “FSMA”) received by it in connection with the issue or
sale of the Notes in circumstances in which either Section 21(1) of the FSMA
does not apply or where the exemptions in Section 21(1) of the FMSA do apply to
us; and           •   it has complied and will comply with all applicable
provisions of the FSMA and all applicable regulations made thereunder with
respect to anything done by it in relation to the notes in, from or otherwise
involving the United Kingdom.

          5. Expenses.
          (a) Whether or not the transactions contemplated in this Agreement are
consummated or this Agreement is terminated, the Company and the Guarantors will
pay or cause to be paid all expenses incident to the performance of its
obligations under this Agreement, including: (i) the fees, disbursements and
expenses of the Company’s counsel and the Company’s accountants in connection
with the issuance and sale of the Notes and all other fees or expenses in
connection with the preparation of each Memorandum and all amendments and
supplements thereto, including all printing costs associated therewith, and the
delivering of copies thereof to the Initial Purchaser, in the quantities herein
above specified, (ii) all costs and expenses related to the transfer and
delivery of the Notes to the Initial Purchaser, including any transfer or other
taxes payable thereon, (iii) the cost of producing any Blue Sky or legal
investment memorandum in connection with the offer and sale of the Notes under
state securities laws and all expenses in connection with the qualification of
the Notes for offer and sale under state securities laws as provided in Section
4(d) hereof, including filing fees and the reasonable fees and disbursements of
Counsel for the Initial Purchaser in connection with such qualification and in
connection with the Blue Sky or legal investment memorandum, (iv) any fees
charged by rating agencies for the rating of the Notes, (v) all document
production charges and expenses of counsel to the Initial Purchaser (but not
including their fees for professional services) in connection with the
preparation of this Agreement, (vi) the fees and expenses, if any, incurred in
connection with the admission of the Notes for trading in PORTAL or any
appropriate market system, (vii) the costs and charges of the Trustee and any
transfer agent, registrar or depositary, (viii) the cost of the preparation,
issuance and delivery of the Notes, (ix) all costs and expenses relating to
investor presentations, including any “road show” presentations undertaken in
connection with the marketing of the offering of the Notes, including, without
limitation, expenses associated with the production of road show slides and
graphics, fees and expenses of any consultants engaged in connection with the
road show presentations, travel and lodging expenses of the Initial Purchaser
and officers of the Company and any such consultants, and the cost of any
aircraft chartered in connection with the road show, and (x) all other costs and
expenses incident to the performance of the obligations of the Company hereunder
for which provision is not otherwise made in this Section. It is understood,
however, that except as provided in Section 5(b) of this Agreement and Section 5
of the engagement letter dated December 21, 2006, between Wachovia Capital
Markets, LLC and the Company (which shall remain in full force and effect
notwithstanding the execution of this Agreement), the Initial Purchaser will pay
all of its costs and expenses, including fees and disbursements of its counsel,
transfer taxes payable on resale of any of the Notes by them and any advertising
expenses connected with any offers they may make.

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          (b) If the sale of the Notes provided for herein is not consummated
because any condition to the obligations of the Initial Purchaser set forth in
Section 6 hereof is not satisfied, because this Agreement is terminated pursuant
to Section 9 hereof or because of any failure, refusal or inability on the part
of the Company to perform all obligations and satisfy all conditions on its part
to be performed or satisfied hereunder other than by reason of a default by the
Initial Purchaser, the Company will reimburse the Initial Purchaser upon demand
for all reasonable out-of-pocket expenses (including counsel fees and
disbursements) that shall have been incurred by them in connection with the
proposed purchase and sale of the Notes; provided, however, that the obligations
of the Company under this Section 5(b) shall be in addition to, and not in place
of, the provisions for expense reimbursement set forth in the Engagement Letter.
          6. Conditions to the Initial Purchaser’s Obligations. The obligations
of the Initial Purchaser to purchase and pay for the Notes shall be subject to
the accuracy of the representations and warranties of the Company in Section 1
hereof, in each case as of the date hereof and as of the Closing Date, as if
made on and as of the Closing Date, to the accuracy of the statements of the
Company’s officers made pursuant to the provisions hereof, to the performance by
the Company of its covenants and agreements hereunder and to the following
additional conditions:
     (a) The Initial Purchaser shall have received an opinion, dated the Closing
Date, of Morrison & Foerster LLP, counsel for the Company, and Santoro, Driggs,
Walch, Kearney, Johnson & Thompson, Nevada counsel to the Company, in form and
substance satisfactory to the Initial Purchaser, to the effect set forth in
Exhibit A-1 and A-2 hereto.
     (b) The Initial Purchaser shall have received an opinion, dated the Closing
Date, of Cahill Gordon & Reindel llp, Counsel for the Initial Purchaser, with
respect to the issuance and sale of the Notes and such other related matters as
the Initial Purchaser may reasonably require, and the Company shall have
furnished to such counsel such documents as it may reasonably request for the
purpose of enabling it to pass upon such matters.
     (c) The Initial Purchaser shall have received on each of the date hereof
and the Closing Date a letter, dated the date hereof or the Closing Date, as the
case may be, in form and substance satisfactory to the Initial Purchaser and
Counsel for the Initial Purchaser, from Deloitte & Touche LLP, independent
public accountants, containing statements and information of the type ordinarily
included in accountants’ “comfort letters” to underwriters with respect to the
consolidated historical financial statements and certain financial information
contained in the Offering Memorandum; provided that the letter shall use a
“cut-off date” within three business days of the date of such letter and that
their procedures, shall extend to financial information in the Final Memorandum
not contained in the Preliminary Memorandum. References to the Offering
Memorandum in this paragraph (c) with respect to either letter referred to above
shall include any amendment or supplement thereto at the date of such letter.
     (d) (i) None of the Company nor any of its subsidiaries, shall have
sustained, since the date of the latest audited consolidated historical
financial statements included in

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the Offering Memorandum (exclusive of any amendment or supplement thereto), any
loss or interference with their respective businesses or properties from fire,
explosion, flood, accident or other calamity, whether or not covered by
insurance, or from any labor dispute or court or governmental action, order or
decree (whether domestic or foreign) otherwise than as set forth in the Offering
Memorandum (exclusive of any amendment or supplement thereto); and (ii) since
the respective dates as of which information is given in each Memorandum, there
shall not have been any change in the capital stock or long-term debt of the
Company and its subsidiaries, or any change in or effect on or any development
having a prospective change in or effect on the business, operations,
properties, assets, liabilities, stockholders’ equity, earnings, condition
(financial or otherwise), results of operations or management of the Company and
its subsidiaries, whether or not in the ordinary course of business, otherwise
than as set forth in each such Memorandum (exclusive of any amendment or
supplement thereto), the effect of which, in any such case described in clause
(i) or (ii), is, in the sole judgment of the Initial Purchaser, so material and
adverse as to make it impracticable or inadvisable to market the Notes on the
terms and in the manner described in the Offering Memorandum (exclusive of any
amendment or supplement thereto).
     (e) None of the information set forth in the sections of the Offering
Memorandum entitled “Use of Proceeds,” “Certain Relationships and Related
Transactions” and “Offering Memorandum Summary—Recent Developments” shall have
changed, nor shall there have been any change in the information with respect to
the directors and officers of the Company from what is set forth in the section
of the Offering Memorandum entitled “Management,” if the effect of any such
change, individually or in the aggregate, in the sole judgment of the Initial
Purchaser makes it impracticable or inadvisable to proceed with the offering or
the delivery of the Notes on the terms and in the manner described in the
Offering Memorandum, exclusive of any amendment or supplement thereto.
     (f) The Initial Purchaser shall have received a certificate, dated the
Closing Date and in form and substance satisfactory to the Initial Purchaser, of
the Chief Executive Officer and the Chief Financial Officer of the Company as to
the accuracy of the representations and warranties of the Company in this
Agreement at and as of the Closing Date; that the Company has performed all
covenants and agreements and satisfied all conditions on its part to be
performed or satisfied at or prior to the Closing Date; and as to the matters
set forth in Sections 6(d) and (e).
     (g) The Notes shall have received initial ratings by Standard & Poor’s and
Moody’s, and, subsequent to the date hereof, there shall not have been any
decrease in the rating of the Notes or any of the Company’s other securities by
any “nationally recognized statistical rating agency,” as that term is defined
by the Commission for purposes of Rule 436(g)(2) under the Securities Act, and
no such organization shall have publicly announced that it has under
surveillance or review its ratings of the Securities or any of the Company’s
other securities or any notice or public announcement given of any intended or
potential decrease in any such rating or that any such securities rating agency

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has under surveillance or review, with possible negative implications, its
rating of the Notes.
     (h) The Notes shall have been designated for trading on PORTAL.
     (i) The Notes shall be eligible for clearance and settlement through the
Depository Trust Company.
     (j) On or before the Closing Date, the Initial Purchaser and Counsel for
the Initial Purchaser shall have received such further certificates, documents
or other information as they may have reasonably requested from the Company.
     (k) The Company and the Guarantors shall have executed and delivered the
documentation with respect to the Credit Facility and the Initial Purchaser
shall have received copies thereof.
          7. Indemnification and Contribution.
          (a) The Company and each Guarantor, jointly and severally, agrees to
indemnify and hold harmless the Initial Purchaser, its affiliates, directors and
officers and each person, if any, who controls (within the meaning of Section 15
of the Securities Act or Section 20 of the Exchange Act) the Initial Purchaser
against any losses, claims, damages or liabilities, joint or several, to which
the Initial Purchaser or such other person may become subject, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) arise out
of or are based upon (i) any untrue statement or alleged untrue statement of any
material fact contained in the Preliminary Memorandum, the Offering Memorandum
or any amendment or supplement thereto; or (ii) the omission or alleged omission
to state in the Preliminary Memorandum, the Offering Memorandum or any amendment
or supplement thereto a material fact necessary to make the statements therein,
in the light of the circumstances in which they were made, not misleading, and
will reimburse, as incurred, the Initial Purchaser and each such other person
for any legal or other expenses reasonably incurred by the Initial Purchaser or
such other person in connection with investigating, defending against or
appearing as a third-party witness in connection with any such loss, claim,
damage, liability or action; provided, however, that the Company and the
Guarantors will not be liable in any such case to the extent that any such loss,
claim, damage or liability arises out of or is based upon any untrue statement
or alleged untrue statement or omission or alleged omission made in any
Preliminary Memorandum, the Offering Memorandum or any amendment or supplement
thereto, in reliance upon and in conformity with written information furnished
to the Company by the Initial Purchaser specifically for use therein as set
forth in Section 10 hereof.
          (b) The Initial Purchaser will indemnify and hold harmless the Company
and the Guarantors and their respective affiliates, directors, officers, and
each person, if any, who controls (within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act) any of the Company or the
Guarantors against any losses, claims, damages or liabilities joint or several
to which the Company, the Guarantors, any such affiliates, directors or officers
or such controlling person may become subject, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or are based
upon (i) any untrue statement or

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alleged untrue statement of any material fact contained in the Preliminary
Memorandum or any amendment or supplement thereto, or (ii) the omission or
alleged omission to state in the Preliminary Memorandum, or the Offering
Memorandum or any amendment or supplement thereto a material fact necessary to
make the statements therein, in the light of the circumstances under which they
were made, not misleading, in each case to the extent, but only to the extent,
that such untrue statement or alleged untrue statement or omission or alleged
omission was made in reliance upon and in conformity with written information
furnished to the Company by the Initial Purchaser specifically for use therein
as set forth in Section 10 hereof and, subject to the limitation set forth
immediately preceding this clause, will reimburse as incurred, any legal or
other expenses reasonably incurred by the Company or the Guarantors or any such
affiliates, directors or officers or such controlling person in connection with
investigating, defending against or appearing as a third-party witness in
connection with, any such loss, claim, damage, liability or action in respect
thereof.
          (c) Promptly after receipt by any person to whom indemnity may be
available under this Section 7 (the “indemnified party”) of notice of the
commencement of any action, such indemnified party will, if a claim in respect
thereof is to be made against any person from whom indemnity may be sought under
this Section 7 (the “indemnifying party”), notify such indemnifying party of the
commencement thereof; but the failure so to notify such indemnifying party will
not relieve such indemnifying party from any liability which it may have under
this Section 7 to the extent it is not materially prejudiced as a proximate
result of the failure or any other liability which it may have to such
indemnified party otherwise than under this Section 7. In case any such action
is brought against any indemnified party, and such indemnified party notifies
the relevant indemnifying party of the commencement thereof, such indemnifying
party will be entitled to participate therein and, to the extent that it may
wish, to assume the defense thereof, jointly with any other indemnifying party
similarly notified, with counsel satisfactory to such indemnified party;
provided, however, that if the named parties in any such action (including
impleaded parties) include both the indemnified party and the indemnifying party
and the indemnified party shall have concluded, based on advice of outside
counsel, that there may be one or more legal defenses available to it and/or
other indemnified parties which are different from or additional to those
available to the indemnifying party or that representation of both parties by
the same counsel would be inappropriate due to actual or potential differing
interests between them, the indemnifying party shall not have the right to
direct the defense of such action on behalf of such indemnified party or parties
and such indemnified party or parties shall have the right to select separate
counsel to defend such action on behalf of such indemnified party or parties.
After notice from an indemnifying party to an indemnified party of its election
so to assume the defense thereof and approval by such indemnified party of
counsel appointed to defend such action, such indemnifying party will not be
liable to such indemnified party under this Section 7 for any legal or other
expenses, other than reasonable costs of investigation, subsequently incurred by
such indemnified party in connection with the defense thereof, unless (i) such
indemnified party shall have employed separate counsel in accordance with the
proviso to the immediately preceding sentence or (ii) such indemnifying party
does not promptly retain counsel satisfactory to such indemnified party or
(iii) such indemnifying party has authorized the employment of counsel for such
indemnified party at the expense of the indemnifying party. After such notice
from an indemnifying party to an indemnified party, such indemnifying party will
not be liable for the costs and expenses of any settlement of such action
effected by such

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indemnified party without the written consent of such indemnifying party.
Notwithstanding the foregoing sentence, if at any time an indemnified party
shall have requested an indemnifying party to reimburse the indemnified party
for fees and expenses of counsel as contemplated by (i), (ii) or (iii) of the
third sentence of this paragraph, the indemnifying party agrees that it shall be
liable for any settlement of any proceeding effected without its written consent
if (x) such settlement is entered into more than 30 days after receipt by such
indemnifying party of the aforesaid request and (y) such indemnifying party
shall not have reimbursed the indemnified party in accordance with such request
prior to the date of such settlement. An indemnifying party will not, without
the prior written consent of the indemnified party, settle or compromise or
consent to the entry of any judgment in any pending or threatened claim, action,
suit or proceeding in respect of which indemnification may be sought hereunder
(whether or not the indemnified party or any other person that may be entitled
to indemnification hereunder is a party to such claim, action, suit or
proceeding) unless such settlement, compromise or consent includes an
unconditional release of the indemnified party and such other persons from all
liability arising out of such claim, action, suit or proceeding.
          (d) (i) In circumstances in which the indemnity agreement provided for
in the preceding paragraphs of this Section 7 is unavailable or insufficient,
for any reason, to hold harmless an indemnified party in respect of any losses,
claims, damages or liabilities (including, without limitation, any legal or
other expenses incurred in connection with defending or investigating any action
or claim) (or actions in respect thereof) (“Losses”), the Company and the
Guarantors, on the one hand, and the Initial Purchaser, on the other, in order
to provide for just and equitable contribution, agree to contribute to the
amount paid or payable by such indemnified party as a result of such Losses to
which the Company and the Guarantors, on the one hand, and the Initial
Purchaser, on the other, may be subject, 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 Purchaser, on the other, from the offering of the
Notes or (ii) if the allocation provided by the foregoing clause (i) is
unavailable for any reason, not only such relative benefits but also the
relative fault of the Company and the Guarantors, on the one hand, and the
Initial Purchaser, on the other, in connection with the statements or omissions
or alleged statements or omissions that resulted in such Losses. The relative
benefits received by the Company and the Guarantors, on the one hand, and the
Initial Purchaser, on the other, shall be deemed to be in the same proportion as
the total proceeds from the offering (before deducting expenses) received by the
Company bear to the total discounts and commissions received by the Initial
Purchaser from the Company in connection with the purchase of the Notes
hereunder as set forth in the Final Memorandum. The relative fault of the
parties 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, the Guarantors or the Initial Purchaser, the parties’ intent, relative
knowledge, access to information and opportunity to correct or prevent such
statement or omission, and any other equitable considerations appropriate in the
circumstances. The Company, the Guarantors and the Initial Purchaser agree that
it would not be just and equitable if contribution were determined by pro rata
allocation or by any other method of allocation that does not take into account
the equitable considerations referred to above. Notwithstanding any other
provision of this paragraph (d), the Initial Purchaser shall not be obligated to
make contributions hereunder that in the aggregate exceed the total underwriting
discounts and commissions received by the Initial Purchaser from the

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Company in connection with the purchase of the Notes hereunder, and no person
guilty of fraudulent misrepresentation (within the meaning of Section 10(f) of
the Securities Act) shall be entitled to contribution from any person who was
not guilty of such fraudulent misrepresentation. For purposes of this paragraph
(d), each person, if any, who controls the Initial Purchaser within the meaning
of Section 15 of the Securities Act or Section 20 of the Exchange Act and each
other person listed in Section 7(a) hereof shall have the same rights to
contribution as the Initial Purchaser, and each affiliate, director or officer
of the Company or any Guarantor and each person, if any, who controls the
Company within the meaning of Section 15 of the Securities Act or Section 20 of
the Exchange Act, shall have the same rights to contribution as the Company and
the Guarantors.
          (e) The obligations of the Company and the Guarantors under this
Section 7 shall be in addition to any obligations or liabilities which the
Company and the Guarantors may otherwise have and the obligations of the Initial
Purchaser under this Section 7 shall be in addition to any obligations or
liabilities which the Initial Purchaser may otherwise have.
          8. Survival. The respective representations, warranties, agreements,
covenants, indemnities and other statements of the Company, the Guarantors,
their respective officers, and the Initial Purchaser set forth in this Agreement
or made by or on behalf of them, respectively, pursuant to this Agreement shall
remain in full force and effect, regardless of (i) any investigation made by or
on behalf of the Company, the Guarantors, their respective officers or directors
or any controlling person referred to in Section 7 hereof or the Initial
Purchaser and (ii) delivery of and payment for the Notes. The respective
agreements, covenants, indemnities and other statements set forth in Sections 5
and 7 hereof shall remain in full force and effect, regardless of any
termination or cancellation of this Agreement.
          9. Termination.
          (a) The Initial Purchaser may terminate this Agreement with respect to
the Notes by notice to the Company at any time on or prior to the Closing Date
in the event that the Company shall have failed, refused or been unable to
perform in any material respect all obligations and satisfy in any material
respect all conditions on its part to be performed or satisfied hereunder at or
prior thereto or if, at or prior to the Closing Date (i) trading in securities
generally on the New York Stock Exchange, the NASDAQ National Market or in the
over-the-counter market, or trading in any securities of the Company on any
exchange or in the over-the-counter market, shall have been suspended or minimum
or maximum prices shall have been established on any such exchange or market;
(ii) there has been a material disruption in commercial banking or securities
settlement, payment or clearance services in the United States; (iii) a banking
moratorium shall have been declared by New York, North Carolina or United States
authorities or (iv) there shall have been (A) an outbreak or escalation of
hostilities between the United States and any foreign power, (B) an outbreak or
escalation of any other insurrection or armed conflict involving the United
States, (C) the occurrence of any other calamity or crisis involving the United
States or (D) any change in general economic, political or financial conditions
which has an effect on the U.S. financial markets or the international financial
markets that, in the case of any event described in this clause (iv), in the
sole judgment of the Initial Purchaser, makes it impracticable or inadvisable to
proceed with the offer, sale and delivery of the Notes as disclosed in

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the Preliminary Memorandum or the Offering Memorandum, exclusive of any
amendment or supplement thereto.
          (b) Termination of this Agreement pursuant to this Section 9 shall be
without liability of any party to any other party except as provided in
Sections 5 and 7 hereof.
          10. Information Supplied by Initial Purchaser. The statements set
forth in the second sentence of the second paragraph, the second and fourth
sentences of the third paragraph, the second and third sentences of the sixth
paragraph and the seventh paragraph under the heading “Plan of Distribution” in
the Preliminary Memorandum, the Offering Memorandum, to the extent such
statements relate to the Initial Purchaser, constitute the only information
furnished by the Initial Purchaser to the Company for the purposes of Sections
1(a) and 7 hereof.
          11. Notices. All communications hereunder shall be in writing and, if
sent to any of the Initial Purchaser, shall be delivered or sent by mail, telex
or facsimile transmission and confirmed in writing to Wachovia Capital Markets,
LLC, One Wachovia Center, 301 South College Street, Charlotte, North Carolina
28288-0604, Attention: Jay Braden, with a copy to Cahill Gordon & Reindel LLP,
80 Pine Street, New York, New York 10011, Attention: James J. Clark, Esq. and if
sent to the Company or any Guarantor, shall be delivered or sent by mail, telex
or facsimile transmission and confirmed in writing to the Company at American
Pacific Corporation, 3770 Howard Hughes Parkway, Suite 300, Las Vegas, NV 89109,
Attention: Chief Financial Officer, with a copy to Morrison & Foerster LLP, 425
Market Street, San Francisco, CA 90013, Attention: Zane Gresham, Esq.
          12. Successors. This Agreement shall inure to the benefit of and shall
be binding upon the Initial Purchaser, the Company and the Guarantors and their
respective successors and legal representatives, and nothing expressed or
mentioned in this Agreement is intended or shall be construed to give any other
person any legal or equitable right, remedy or claim under or in respect of this
Agreement, or any provisions herein contained, this Agreement and all conditions
and provisions hereof being intended to be and being for the sole and exclusive
benefit of the Initial Purchaser, the Company and the Guarantors and their
respective successors and legal representatives, and for the benefit of no other
person, except that (i) the indemnities of the Company contained in Section 7 of
this Agreement shall also be for the benefit of any person or persons who
control the Initial Purchaser within the meaning of Section 15 of the Securities
Act or Section 20 of the Exchange Act and (ii) the indemnities of the Initial
Purchaser contained in Section 7 of this Agreement shall also be for the benefit
of the affiliates, directors and officers of the Company and the Guarantors, and
any person or persons who control the Company or the Guarantors within the
meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act.
No purchaser of Notes from the Initial Purchaser shall be deemed a successor to
the Initial Purchaser because of such purchase.
          13. Applicable Law. This Agreement shall be governed by the laws of
the State of New York.

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          14. Consent to Jurisdiction and Service of Process; Waiver of Jury
Trial.
          (a) All judicial proceedings arising out of or relating to this
Agreement may be brought in any state or federal court of competent jurisdiction
in the State of New York, which jurisdiction is exclusive, and the Company and
the Guarantors hereby consent to the jurisdiction of such courts.
          (b) Each party agrees that any service of process or other legal
summons in connection with any Proceeding may be served on it by mailing a copy
thereof by registered mail, or a form of mail substantially equivalent thereto,
postage prepaid, addressed to the served party at its address as provided for in
Section 12 hereof. Nothing in this Section shall affect the right of the parties
to serve process in any other manner permitted by law.
          (c) Each of the Company and the Guarantors hereby waives all right to
trial by jury in any proceeding (whether based upon contract, tort or otherwise)
in any way arising out of or relating to this Agreement. Each of the Company and
the Guarantors agrees that a final judgment in any such proceeding brought in
any such court shall be conclusive and binding upon it and may be enforced in
any other courts in the jurisdiction of which it is or may be subject, by suit
upon such judgment.
          15. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
[The remainder of this page is intentionally left blank.]

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          If the foregoing correctly sets forth our understanding, please
indicate your acceptance thereof in the space provided below for that purpose,
whereupon this letter shall constitute an agreement binding the Company, the
Guarantors and the Initial Purchaser.

            Very truly yours,

AMERICAN PACIFIC CORPORATION
      By:   /s/ John R. Gibson         Name:   John R. Gibson        Title:  
President and Chief Executive Officer     

            THE GUARANTORS

AMERICAN PACIFIC CORPORATION
(NEVADA)
      By:   /s/ John R. Gibson         Name:   John R. Gibson        Title:  
President     

            AMERICAN AZIDE CORPORATION
      By:   /s/ John R. Gibson         Name:   John R. Gibson        Title:  
President     

            AMPAC FARMS, INC.
      By:   /s/ John R. Gibson         Name:   John R. Gibson        Title:  
President     

            AMPAC-ISP CORP.
      By:   /s/ John R. Gibson         Name:   John R. Gibson        Title:  
President   

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            ENERGETIC ADDITIVES INC., LLC
      By:   /s/ Dana Kelley         Name:   Dana Kelley        Title:   Manager 
   

            AMPAC FINE CHEMICALS LLC
      By:   /s/ Aslam Malik         Name:   Aslam Malik        Title:  
President   

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Accepted as of the date hereof.

          WACHOVIA CAPITAL MARKETS, LLC    
 
       
By:
  /s/ Scott Joyce
 
Name: Scott Joyce
Title: Vice President    

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SCHEDULE I
GUARANTORS

      Guarantor   Jurisdiction of Formation
 
   
American Pacific Corporation
  Nevada
American Azide Corporation
  Nevada
Ampac Farms, Inc.
  Nevada
Ampac-ISP Corp., LLC
  Delaware
Energetic Additives Inc., LLC
  Nevada
Ampac Fine Chemicals LLC
  California

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EXHIBIT A-1
FORM OF OPINION OF
MORRISON & FOERSTER LLP
          Based upon and subject to the limitations and qualifications set forth
herein, we are of the opinion that:
     (1) The Company and each Designated Guarantor is duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
organization and has full corporate or limited liability company, as applicable,
power and authority to own or lease its property and conduct its business as
described in the Offering Memorandum and the Final Memorandum. The Company and
each Designated Guarantor is duly qualified to transact business and in good
standing in each jurisdiction in which the conduct of its business requires such
qualification, except for any such jurisdiction where the failure to be so
qualified or in good standing would not have a Material Adverse Effect.
     (2) The Company and each Designated Guarantor has the corporate power and
authority to execute and deliver, and to perform and observe the provisions of,
the Documents.
     (3) To our knowledge and except as set forth in the Offering Memorandum and
the Final Memorandum, there are no legal or governmental proceedings pending or
threatened to which the Company or any Guarantor is a party or which any
property or assets of the Company or any Guarantor is subject which would
reasonably be expected to have a Material Adverse Effect.
     (4) The Purchase Agreement has been duly authorized, executed and delivered
by the Company and each Designated Guarantor.
     (5) Each of the Indenture and the Registration Rights Agreement has been
duly authorized, executed and delivered by the Company and each Designated
Guarantor, and constitutes a legal, valid and binding agreement of the Company
and each Guarantor, enforceable against the Company and each Guarantor in
accordance with its terms.
     (6) The Guarantees have been duly authorized and, when executed and
authenticated in accordance with the Indenture and delivered to and paid for by
the Initial Purchaser in accordance with the terms of the Purchase Agreement,
the Guarantees endorsed thereon will be legal, valid and binding obligations of
the Guarantors, enforceable against the Guarantors in accordance with their
terms.
     (7) The Notes have been duly authorized and when executed and authenticated
in accordance with the provisions of the Indenture, and delivered to and paid
for by the Initial Purchaser in accordance with the terms of the Purchase
Agreement and the Indenture, will constitute the legal, valid and binding
obligations of the Company, entitled

 

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to the benefits of the Indenture and the Registration Rights Agreement and
enforceable against the Company in accordance with their terms.
     (8) The Exchange Notes have been duly authorized, and when executed and
authenticated in accordance with the provisions of the Indenture and
Registration Rights Agreement and delivered to the noteholders in exchange for
the Notes in accordance with the terms of the Registration Rights Agreement,
will be valid and binding obligations of the Company, enforceable in accordance
with their terms, and will be entitled to the benefits of the Indenture and the
Registration Rights Agreement.
     (9) The statements set forth in the Offering Memorandum and the Final
Memorandum under the heading “Description of Notes,” insofar as they purport to
constitute a summary of the terms of the Notes (including the Guarantees) and
the Indenture, and under the heading “Exchange Offer; Registration Rights,”
“Description of Other Indebtedness, “Notice to Investors” and “Material U.S.
Federal Income Tax Considerations,” insofar as they purport to describe the
provisions of the laws and documents referred to therein, are accurate, complete
and fair.
     (10) Assuming (a) the accuracy of, and compliance with, the
representations, warranties and covenants of the Company in the Purchase
Agreement (other than Section 1(oo) thereof), (b) the accuracy of, and
compliance with, the representations, warranties and covenants of the Initial
Purchaser in the Purchase Agreement, (c) the accuracy of the representations and
warranties of each of the purchasers to whom the Initial Purchaser initially
resells the Notes as specified in the Offering Memorandum, (d) the compliance by
the Initial Purchaser with the offering and transfer procedures and restrictions
described in the Offering Memorandum, and (e) the receipt by the purchasers to
whom the Initial Purchaser initially resells the Notes of a copy of the Offering
Memorandum prior to such sale, it is not necessary in connection with the offer,
sale and delivery of the Notes in the manner contemplated by the Purchase
Agreement and the Offering Memorandum to register the Notes under the Securities
Act or to qualify the Indenture under the Trust Indenture Act (it being
understood that no opinion is being given for any subsequent resale of the
Notes).
     (11) The execution, delivery and performance by the Company and each
Designated Guarantor of the Documents, the Notes and the Guarantees, as
applicable, the compliance by the Company and each Guarantor with the provisions
thereof and the consummation of the transactions contemplated therein does not
and will not (a) result in a breach, of violation of, or constitute a default
under, the charter and bylaws or operating agreement of the Company and each
Designated Guarantor, as applicable, or the terms of any Material Contract to
which the Company or any Guarantor is a party or bound or (b) result in the
violation of any statute or any order, rule or regulation of any court or
governmental agency or body having jurisdiction over the Company or any of the
Designated Guarantors known by us to be customarily applicable to transactions
of the nature contemplated by the Documents.
     (12) No consent, approval, authorization or order of, or filing or
registration with, any U.S. federal or state court or governmental agency or
body having jurisdiction

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over the Company or any of the Guarantors or any of their respective properties
or assets is required for the execution, delivery and performance of the
Purchase Agreement, the Indenture, the Registration Rights Agreement, the Notes
and the Guarantees by the Company and each Guarantor and the consummation of the
transactions contemplated thereby and therein, except (a) with respect to the
transactions contemplated by the Registration Rights Agreement such consents,
approvals, authorizations, orders, filings or registrations as may be required
under the Act and the qualification of the Indenture under the Trust Indenture
Act, (b) such consents, approvals, authorizations, orders, filings or
registrations as may be required under applicable state securities laws in
connection with the purchase and distribution of the Notes by the Initial
Purchaser, subject to paragraph 10 above and (c) for such consents, approvals,
authorizations, orders, filings or registrations as have been obtained or made.
     (13) To our knowledge, neither the Company nor any of the Guarantors are in
violation of their respective charters, bylaws or operating agreements.
     (14) Neither the Company nor any of the Guarantors is, or after giving
effect to the offering and sale of the Notes and the application of the net
proceeds thereof as set forth in the Offering Memorandum will be, an “investment
company” or a company “controlled” by an “investment company” as such terms are
defined in the Investment Company Act of 1940, as amended.
     (15) The documents incorporated or deemed to be incorporated by reference
in the Offering Memorandum at the time they were filed with the Commission
complied as to form in all material respects with the requirements of the
Exchange Act and the rules and regulations of the Commission promulgated
thereunder.
          In our capacity as counsel to the Company, we have examined the
Offering Memorandum and the Final Memorandum. In addition, we have participated
in conferences with your representatives, representatives of the Company and
representatives of the accountants of the Company concerning the Offering
Memorandum and the Final Memorandum, and have considered the matters required to
be stated therein and the statements contained therein, although we have not
independently verified the accuracy, completeness or fairness of such
statements, except for such statements pertaining to our opinion set forth above
in paragraph (9). Based upon and subject to the foregoing, nothing has come to
our attention that leads us to believe that the Offering Memorandum, as of the
Time of Sale and as of the date hereof, and the Final Memorandum, as of its date
and as of the date hereof, contained or contains an untrue statement of a
material fact or omitted or omits to state any material fact necessary in order
to make the statements therein, in the light of the circumstances under which
they were made, not misleading (it being understood that we have not been
requested to and do not make any comment or express any belief in this paragraph
with respect to the financial statements (including the footnotes thereto),
financial statement schedules and other financial and accounting information
contained in the Offering Memorandum and the Final Memorandum).

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EXHIBIT A-2
FORM OF OPINION OF
SANTORO, DRIGGS, WALCH, KEARNEY,
JOHNSON & THOMPSON
          Based upon the foregoing, and upon our examination of such questions
of law and statutes of the State of Nevada as we have considered necessary or
appropriate, and subject to the assumptions, qualifications, limitations and
exceptions set forth herein, we are of the opinion that:
     1. The Nevada Subsidiaries are duly organized, validly existing and in good
standing under the laws of the State of Nevada and have full corporate power and
authority to own or lease their property and conduct their business as described
in the Offering Memorandum and the Final Memorandum. The Nevada Subsidiaries are
duly qualified to transact business and in good standing in each jurisdiction in
which the conduct of their business requires such qualification, except for any
such jurisdiction where the failure to be so qualified or in good standing would
not have a Material Adverse Effect.
     2. The Nevada Subsidiaries have the corporate power and authority to
execute and deliver, and to perform and observe the provisions of, the
Documents.
     3. The Purchase Agreement has been duly authorized, executed and delivered
by the Nevada Subsidiaries.
     4. Each of the Indenture and the Registration Rights Agreement has been
duly authorized, executed and delivered by the Nevada Subsidiaries and is
enforceable against the Nevada Subsidiaries in accordance with its terms.
     5. The Guarantees have been duly authorized, and when executed and
authenticated in accordance with the Indenture and delivered to and paid for by
the Initial Purchaser in accordance with the terms of the Purchase Agreement,
the Guarantees endorsed thereon will be legal, valid and binding obligations of
the Nevada Subsidiaries, enforceable against the Nevada Subsidiaries in
accordance with their terms.
     6. The execution, delivery and performance by the Nevada Subsidiaries of
the Documents and the Guarantees, as applicable, the compliance by the Nevada
Subsidiaries with the provisions thereof and the consummation of the
transactions contemplated therein does not and will not (a) result in a breach
of violation of, or constitute a default under, the articles of incorporation or
organization and bylaws or operating agreement of the Nevada Subsidiaries, as
applicable, or (b) result in the violation of any statute or any order, rule or
regulation of any court or governmental agency or body having jurisdiction over
the Nevada Subsidiaries known by us to be customarily applicable to transactions
of the nature contemplated by the Documents

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     7. No consent, approval, authorization or order of, or filing or
registration with, any U.S. federal or state or foreign court or governmental
agency or body having jurisdiction over the Nevada Subsidiaries or any of their
respective properties or assets is required for the execution, delivery and
performance of the Purchase Agreement, the Indenture, the Registration Rights
Agreement and the Guarantees by the Nevada Subsidiaries and the consummation of
the transactions contemplated thereby and therein, except (a) as may be required
by the Act, the Trust Indenture Act of 1939 or such consents, approvals,
authorizations, orders, filings or registrations as may be required under
applicable state securities laws in connection with the purchase and
distribution of the Notes and (b) for such consents, approvals, authorizations,
orders, filings or registrations as have been obtained or made.
     8. To our knowledge, the Nevada Subsidiaries are not in violation of their
respective articles of incorporation or organization, bylaws or operating
agreements.
     9. The Exchange Guarantees have been duly authorized, and when executed and
authenticated in accordance with the provisions of the Indenture and
Registration Rights Agreement, and delivered in exchange for the Guarantees in
accordance with the terms of the Registration Rights Agreement and the Exchange
Offer, will be valid and binding obligations of the Nevada Subsidiaries,
enforceable in accordance with their terms.

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