Document:

Exhibit 10.27

 

WESCO AIRCRAFT HOLDINGS, INC.

 

INDEMNIFICATION AGREEMENT

 

This Indemnification Agreement (“Agreement”) is made as of                                 , 2011 by and between WESCO AIRCRAFT HOLDINGS, INC., a Delaware corporation (the “Company”), and                              (“Indemnitee”).

 

RECITALS

 

WHEREAS, highly competent persons have become more reluctant to serve publicly-held corporations as directors or in other capacities unless they are provided with adequate protection through insurance or adequate indemnification against inordinate risks of claims and actions against them arising out of their service to, and activities on behalf of, the corporation and the uncertainties relating to such insurance and to indemnification have increased the difficulty of attracting and retaining such persons;

 

WHEREAS, the Board of Directors of the Company (the “Board”) has determined that, (i) in order to attract and retain qualified individuals, the Company shall use its best efforts to maintain on an ongoing basis, at its sole expense, liability insurance to protect persons serving the Company and its subsidiaries from certain liabilities; (ii) although the furnishing of such insurance has been a customary and widespread practice among United States-based corporations and other business enterprises, the Company believes that, given current market conditions and trends, such insurance may be available to it in the future only at higher premiums and with more exclusions; (iii) at the same time, directors, officers and other persons in service to corporations or business enterprises are being increasingly subjected to expensive and time-consuming litigation relating to, among other things, matters that traditionally would have been brought only against the Company or business enterprise itself;

 

WHEREAS, the Bylaws of the Company require indemnification of the officers and directors of the Company, and, although Indemnitee may also be entitled to indemnification pursuant to applicable provisions of the General Corporation Law of the State of Delaware (“DGCL”), the Bylaws and the DGCL expressly provide that the indemnification provisions set forth therein are not exclusive, and thereby contemplate that contracts may be entered into between the Company and members of the Board, officers and other persons with respect to indemnification;

 

WHEREAS, the Board has determined that the increased difficulty in attracting and retaining such persons is detrimental to the best interests of the Company’s stockholders and that the Company should act to assure such persons that there will be increased certainty of such protection in the future;

 

WHEREAS, it is reasonable, prudent and necessary for the Company contractually to obligate itself to indemnify, and to advance expenses on behalf of, such persons to the fullest extent permitted by applicable law so that they will serve or continue to serve the Company free from undue concern that they will not be so indemnified;

 

 

WHEREAS, this Agreement is a supplement to and in furtherance of the Bylaws of the Company and any resolutions adopted pursuant thereto, and shall not be deemed a substitute therefor, nor to diminish or abrogate any rights of Indemnitee thereunder; and

 

WHEREAS, Indemnitee does not regard the protection available under the Company’s Bylaws and insurance as adequate in the present circumstances, and may not be willing to serve as an officer or director without adequate protection, and the Company desires Indemnitee to serve in such capacity and Indemnitee is willing to serve, continue to serve and to take on additional service for or on behalf of the Company on the condition that he be so indemnified;

 

NOW, THEREFORE, in consideration of the premises and the covenants contained herein, the Company and Indemnitee, intending to be legally bound, do hereby covenant and agree as follows:

 

1.                                       Services to the Company.  Indemnitee will serve or continue to serve as an officer, director or key employee of the Company for so long as Indemnitee is duly elected or appointed or until Indemnitee tenders his resignation.

 

2.                                       Definitions.  As used in this Agreement:

 

(a)                                  “Affiliate” of any specified Person (as defined below) shall mean any other Person controlling, controlled by or under common control with such specified Person.

 

(b)                                 “Agent” means any person who is or was a director, officer, or employee of the Company or a Subsidiary (as defined below) of the Company or other person authorized by the Company to act for the Company or any Enterprise (as defined below) relating thereto, including any such person serving in such capacity as a director, officer, employee, trustee, general partner, managing member, fiduciary, agent or other official of another corporation, partnership, limited liability company, joint venture, trust or other enterprise at the request of, for the convenience of, or to represent the interests of the Company or a subsidiary of the Company.

 

(c)                                  “Beneficial Owner” and “Beneficial Ownership” have the meanings set forth in Rule 13d-3 promulgated under the Exchange Act (as defined below) as in effect on the date hereof.

 

(d)                                 “Carlyle” means TC Group, L.L.C. and any other investment fund or related management company or general partner that is an Affiliate of TC Group, L.L.C.; provided, however, that the definition of Carlyle shall not include the Company or any of its subsidiaries.

 

(e)                                  “Change in Control” means the earliest to occur after the date of this Agreement of any of the following events:

 

1.                                       Acquisition of Stock by Third Party.  Any Person (as defined below) other than Carlyle or the Snyder Stockholders, is or becomes the Beneficial Owner, directly or indirectly, of securities of the Company representing fifteen percent (15%) or more of

 

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the combined voting power of the Company’s then outstanding securities entitled to vote generally in the election of directors, unless (i) the change in the relative Beneficial Ownership of the Company’s securities by any Person results solely from a reduction in the aggregate number of outstanding shares of securities entitled to vote generally in the election of directors, or (ii) such acquisition was approved in advance by the Continuing Directors (as defined below) and such acquisition would not constitute a Change in Control under part (3) of this definition;

 

2.                                       Change in Board of Directors.  Individuals who, as of the date hereof, constitute the Board, and any new director whose election by the Board or nomination for election by the Company’s stockholders was approved by a vote of at least two-thirds of the directors then still in office who were directors on the date hereof or whose election for nomination for election was previously so approved (collectively, the “Continuing Directors”), cease for any reason to constitute at least a majority of the members of the Board;

 

3.                                       Corporate Transactions.  The effective date of a reorganization, merger or consolidation of the Company (a “Business Combination”), in each case, unless, following such Business Combination:  (i) all or substantially all of the individuals and entities who were the Beneficial Owners of securities entitled to vote generally in the election of directors immediately prior to such Business Combination beneficially own, directly or indirectly, more than 51% of the combined voting power of the then outstanding securities of the Company entitled to vote generally in the election of directors resulting from such Business Combination (including, without limitation, a corporation which as a result of such transaction owns the Company or all or substantially all of the Company’s assets either directly or through one or more Subsidiaries) in substantially the same proportions as their ownership, immediately prior to such Business Combination, of the securities entitled to vote generally in the election of directors; (ii) no Person (excluding any corporation resulting from such Business Combination) is the Beneficial Owner, directly or indirectly, of 15% or more of the combined voting power of the then outstanding securities entitled to vote generally in the election of directors of such corporation except to the extent that such ownership existed prior to the Business Combination; and (iii) at least a majority of the Board of the corporation resulting from such Business Combination were Continuing Directors at the time of the execution of the initial agreement, or of the action of the Board, providing for such Business Combination;

 

4.                                       Liquidation.  The approval by the stockholders of the Company of a complete liquidation of the Company or an agreement or series of agreements for the sale or disposition by the Company of all or substantially all of the Company’s assets, other than factoring the Company’s current receivables or escrows due (or, if such approval is not required, the decision by the Board to proceed with such a liquidation, sale, or disposition in one transaction or a series of related transactions); or

 

5.                                       Other Events.  There occurs any other event of a nature that would be required to be reported in response to Item 6(e) of Schedule 14A of Regulation 14A (or a response to any similar item on any similar schedule or form) promulgated under the Exchange Act (as defined below), whether or not the Company is then subject to such reporting requirement.

 

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(f)                                    “Corporate Status” means the status of a Person (as defined below) who is or was an Agent of the Company or of any Enterprise (as defined below) which such Person is or was serving at the request of the Company.

 

(g)                                 “Delaware Court” shall mean the Court of Chancery of the State of Delaware.

 

(h)                                 “Disinterested Director” means a director of the Company who is not and was not a party to a Proceeding (as defined below) in respect of which indemnification is sought by Indemnitee.

 

(i)                                     “Enterprise” means any corporation, constituent corporation (including any constituent of a constituent) absorbed in a consolidation or merger to which the Company (or any of its wholly owned subsidiaries) is a party, Subsidiary (as defined below), limited liability company, partnership, joint venture, trust, employee benefit plan or other enterprise of which Indemnitee is or was serving at the request of the Company as an Agent.

 

(j)                                     “Exchange Act” means the Securities Exchange Act of 1934, as amended.

 

(k)                                  “Expenses” means (i) attorneys’ fees and costs, retainers, court costs, transcript costs, fees of testifying and non-testifying experts and consultants, witness fees, travel expenses, duplicating costs, printing and binding costs, telephone charges, postage, delivery service fees, and all other disbursements or expenses incurred in connection with (a) prosecuting, defending, preparing to prosecute or defend, investigating, being or preparing to be a witness in, or otherwise participating in, a Proceeding (as defined below), (b) any appeal resulting from any Proceeding (as defined below), including without limitation the premium, security for, and other costs relating to any cost bond, supersedeas bond, or other appeal bond or its equivalent; (c) preparing and forwarding statements to the Company to support advances of Expenses sought hereunder, (d) the interpretation, enforcement or defense of Indemnitee’s rights under this Agreement, by litigation or otherwise, (e) any federal, state, local or foreign taxes imposed on Indemnitee as a result of the actual or deemed receipt of any payments under this Agreement; provided, however, that Expenses excludes amounts paid in settlement by Indemnitee or the amount of judgments or Fines (as defined below) against Indemnitee.

 

(l)                                     “Fines” includes any excise tax assessed on Indemnitee with respect to any employee benefit plan; references to “serving at the request of the Company” shall include, but not be limited to, any service as an Agent of the Company which imposes duties on, or involves services by, such Agent with respect to an employee benefit plan, its participants or beneficiaries, including as a deemed fiduciary thereto; and if Indemnitee acted in good faith and in a manner Indemnitee reasonably believed to be in the best interests of the participants and beneficiaries of an employee benefit plan, Indemnitee shall be deemed to have acted in a manner “not opposed to the best interests of the Company” as referred to in this Agreement.

 

(m)                               “Independent Counsel” means a law firm or a member of a law firm that is experienced in matters of corporation law and neither presently is, nor in the past five years has been, retained to represent (i) the Company or Indemnitee in any matter material to either such party (other than with respect to matters concerning the Indemnitee under this Agreement, or of

 

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other indemnitees under similar indemnification agreements); or (ii) any other party to a Proceeding (as defined below) giving rise to a claim for indemnification hereunder.  Notwithstanding the foregoing, the term “Independent Counsel” shall not include any Person (as defined below) who, under the applicable standards of professional conduct then prevailing, would have a conflict of interest in representing either the Company or Indemnitee in an action to determine Indemnitee’s rights under this Agreement.

 

(n)                                 “Person” has the meaning set forth in Sections 13(d) and 14(d) of the Exchange Act as in effect on the date hereof; provided, however, that “Person” shall exclude:  (i) the Company; (ii) any Subsidiaries (as defined below) of the Company; (iii) any employee benefit plan or employment plan of the Company or of a Subsidiary (as defined below) of the Company or of any corporation owned, directly or indirectly, by the stockholders of the Company in substantially the same proportions as their ownership of stock of the Company; and (iv) any trustee or other fiduciary holding securities under an employee benefit plan or employment plan of the Company or of a Subsidiary (as defined below) of the Company or of a corporation owned directly or indirectly by the stockholders of the Company in substantially the same proportions as their ownership of stock of the Company.

 

(o)                                 “Potential Change in Control” means the occurrence of any of the following events: (i) the Company enters into any written or oral agreement, undertaking or arrangement, the consummation of which would result in the occurrence of a Change in Control; (ii) any Person or the Company publicly announces an intention to take or consider taking actions which if consummated would constitute a Change in Control; (iii) any Person who becomes the Beneficial Owner, directly or indirectly, of securities of the Company representing 5% or more of the combined voting power of the Company’s then outstanding securities entitled to vote generally in the election of directors increases his Beneficial Ownership of such securities by 5% or more over the percentage so owned by such Person on the date hereof; or (iv) the Board adopts a resolution to the effect that, for purposes of this Agreement, a Potential Change in Control has occurred.

 

(p)                                 “Proceeding” shall be broadly construed and shall include, without limitation, any threatened, pending or completed action, suit, arbitration, alternate dispute resolution mechanism (including, but without limitation, voluntary or court-ordered mediation), investigation (whether instituted by or on behalf of the Company or its Board or a governmental authority or other party), inquiry, administrative hearing or any other actual, threatened or completed proceeding, whether formal or informal or brought in the right of the Company or otherwise and whether of a civil (including intentional or unintentional tort claims), criminal, administrative or investigative nature, in which Indemnitee was, is or will be involved as a party or otherwise (including but without limitation as a witness) by reason of the fact that Indemnitee is or was a director or officer of the Company, by reason of any action (or failure to act) taken by him or of any action (or failure to act) on his part while acting as an Agent of the Company, or by reason of the fact that he is or was serving at the request of the Company as an Agent of any Enterprise, in each case whether or not serving in such capacity at the time any liability or expense is incurred for which indemnification, reimbursement, or advancement of expenses can be provided under this Agreement.  For purposes of determining whether Expenses were incurred in connection with a Proceeding as described in Section 2(k), the definition of

 

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Proceeding shall be met if Indemnitee in good faith believes that circumstances or events at will lead to a Proceeding as defined herein.

 

(q)                                 “Snyder Stockholders” means Randy Snyder, Susan Snyder and certain Affiliates of Randy Snyder and Susan Snyder; provided, however, that the definition of Snyder Stockholders shall not include the Company or any of its subsidiaries.

 

(r)                                    “Subsidiary,” with respect to any Person, means any corporation or other entity of which a majority of the voting power of the voting equity securities or equity interest is owned, directly or indirectly, by that Person.

 

3.                                       Indemnification in Third-Party Proceedings.  The Company shall indemnify and hold harmless Indemnitee in accordance with the provisions of this Section 3 if Indemnitee is, or is threatened to be made, a party to or a participant (as a witness or otherwise) in any Proceeding, other than a Proceeding by or in the right of the Company to procure a judgment in its favor. Pursuant to this Section 3, Indemnitee shall be indemnified against all Expenses, judgments, Fines, liabilities, penalties and amounts paid in settlement (including all interest, assessments and other charges paid or payable in connection with or in respect of such Expenses, judgments, Fines, liabilities, penalties and amounts paid in settlement) actually and reasonably incurred by Indemnitee or on his behalf in connection with such Proceeding or any claim, issue or matter therein, if Indemnitee acted in good faith, for a purpose which he reasonably believed to be in, or, in the case of service for any Enterprise, not opposed to, the best interests of the Company and, in criminal actions or Proceedings, in addition, had no reasonable cause to believe that his conduct was unlawful.

 

4.                                       Indemnification in Proceedings by or in the Right of the Company.  The Company shall indemnify and hold harmless Indemnitee in accordance with the provisions of this Section 4 if Indemnitee is, or is threatened to be made, a party to or a participant (as a witness or otherwise) in any Proceeding by or in the right of the Company or any Enterprise to procure a judgment in its favor. Pursuant to this Section 4, Indemnitee shall be indemnified against all Expenses actually and reasonably incurred by him or on his behalf in connection with such Proceeding or any claim, issue or matter therein, if Indemnitee acted, in good faith, for a purpose which he reasonably believed to be in, or, in the case of service for any Enterprise, not opposed to, the best interests of the Company. No indemnification for Expenses shall be made under this Section 4 in respect of any claim, issue or matter as to which Indemnitee shall have been adjudged to be liable to the Company, unless and only to the extent that the court in which the action was brought, or, if no action was brought, any court of competent jurisdiction, determines upon application that, in view of all the circumstances of the case, Indemnitee is fairly and reasonably entitled to indemnification for such Expenses as the court deems proper.

 

5.                                       Indemnification for Expenses of a Party Who is Wholly or Partly Successful. Notwithstanding any other provisions of this Agreement (and in furtherance of, and not as a limitation to, the indemnification provided thereunder), to the extent that Indemnitee is a party to (or a participant in) and is successful, on the merits or otherwise, in any Proceeding or in defense of any claim, issue or matter therein, in whole or in part, the Company shall indemnify and hold harmless Indemnitee against all Expenses actually and reasonably incurred by him in connection

 

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therewith. If Indemnitee is not wholly successful in such Proceeding but is successful, on the merits or otherwise, as to one or more but less than all claims, issues or matters in such Proceeding, the Company shall indemnify and hold harmless Indemnitee against all Expenses actually and reasonably incurred by him or on his behalf in connection with each successfully resolved claim, issue or matter. If the Indemnitee is not wholly successful in such Proceeding, the Company also shall indemnify and hold harmless Indemnitee against all Expenses actually and reasonably incurred in connection with a claim, issue or matter related to any claim, issue or matter on which the Indemnitee was successful. For purposes of this Section 5 and without limitation, the termination of any Proceeding or claim, issue or matter in such Proceeding by settlement (with or without court approval), entry of a plea of nolo contendere (or its equivalent) or by dismissal, with or without prejudice, shall be deemed to be a successful result as to such claim, issue or matter.

 

6.                                       Indemnification for Expenses of a Witness or for the Production of Documents Pursuant to Subpoena or Other Legal Compulsion.  Notwithstanding any other provision of this Agreement, to the extent that Indemnitee is, by reason of his Corporate Status, (i) a witness in any Proceeding to which Indemnitee is not a party, or (ii) compelled to produce documents or other evidence pursuant to subpoena or other legal compulsion, the Company shall indemnify and hold harmless the Indemnitee against all Expenses actually and reasonably incurred by him or on his behalf in connection therewith.

 

7.                                       Additional Indemnification.

 

(a)                                  Notwithstanding any limitation in Sections 3, 4 or 5 or in Section 145 of the DGCL or any other applicable statutory provision,  the Company shall indemnify and hold harmless Indemnitee to the fullest extent permitted by applicable law if Indemnitee is made, or is threatened to be made, a party to any Proceeding (including a Proceeding by or in the right of the Company to procure a judgment in its favor) against all Expenses, judgments, Fines, penalties and amounts paid in settlement (including all interest, assessments and other charges paid or payable in connection with or in respect of such Expenses, judgments, Fines, penalties and amounts paid in settlement) actually and reasonably incurred by Indemnitee in connection with the Proceeding.  No indemnification shall be made under this Section 7(a) on account of Indemnitee’s conduct which, through a final judicial adjudication, has been determined to constitute either a breach of Indemnitee’s duty of loyalty to the Company or its investors or is an act or omission not in good faith or which involves intentional misconduct or a knowing violation of the law.

 

(b)                                 For purposes of this Agreement, including without limitation Section 7(a) hereof, “to the fullest extent permitted by applicable law” includes, without limitation: (i) to the fullest extent authorized or permitted by the provisions of the DGCL as are in effect as of the date hereof, or any other applicable statutory provision, that authorize or contemplate indemnification by agreement, or the corresponding provision of any amendment to or replacement of the DGCL or other applicable statutory provision; and (ii) to the fullest extent authorized or permitted by any amendments to or replacements of the DGCL or other applicable statutory provision, adopted after the date of this Agreement that increase the extent to which the Company or any Enterprise may indemnify its Agents or other Persons holding similar fiduciary responsibilities.

 

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8.                                       Contribution in the Event of Joint Liability.

 

(a)                                  To the fullest extent permitted by applicable law, if the indemnification and hold harmless rights provided for in this Agreement are unavailable to Indemnitee in whole or in part for any reason whatsoever, the Company, in lieu of indemnifying and holding harmless Indemnitee, shall pay, in the first instance, the entire amount incurred by Indemnitee, whether for judgments, liabilities, Fines, penalties, amounts paid or to be paid in settlement and/or for Expenses, in connection with any Proceeding without requiring Indemnitee to contribute to such payment, and the Company hereby waives and relinquishes any right of contribution it may have at any time against Indemnitee.

 

(b)                                 The Company shall not, without the prior written consent of Indemnitee, which consent shall not be unreasonably withheld, conditioned or delayed, enter into any settlement of any Proceeding in which the Company is jointly liable with Indemnitee (or would be if joined in such Proceeding) unless such settlement: (i) provides for a full and final release of all claims asserted against Indemnitee; (ii) admits or implies no wrongdoing by or on behalf of Indemnitee; and (iii) potentially or actually imposes no cost, liability, exposure or burden on Indemnitee.

 

(c)                                  The Company hereby covenants and agrees to fully indemnify and hold harmless Indemnitee from any claims for contribution which may be brought by officers, directors or employees of the Company other than Indemnitee who may be jointly liable with Indemnitee.

 

9.                                       Exclusions.  Notwithstanding any provision in this Agreement, the Company shall not be obligated under this Agreement to make any indemnification in connection with any claim made against Indemnitee:

 

(a)                                  for which payment has actually been received by or on behalf of Indemnitee under any insurance policy or other indemnification provision other than as provided for pursuant to Section 17(g) herein;

 

(b)                                 for an accounting of profits made from the purchase and sale (or sale and purchase) by Indemnitee of securities of the Company within the meaning of Section 16(b) of the Exchange Act or similar provisions of state statutory law or common law; provided, however, that this Section 9(b) shall not negate Indemnitee’s right to the advancement of Expenses unless and to the extent that the Company reasonably determines that Indemnitee violated Section 16(b) of the Exchange Act or similar provisions of any federal, state or local laws and must disgorge profits in connection with such violation; provided further, however, that notwithstanding anything to the contrary stated or implied in this Section 9(b), indemnification pursuant to this Agreement relating to any Proceeding against Indemnitee for an accounting of profits made from the purchase or sale by Indemnitee of securities of the Company pursuant to the provisions of Section 16(b) of the Exchange Act or similar provisions of any federal, state or local laws shall not be prohibited if Indemnitee ultimately establishes in any a final, non-appealable judgment, by

 

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a court of competent jurisdiction, that no recovery of such profits from Indemnitee is permitted under Section 16(b) of the Exchange Act or similar provisions of any federal, state or local laws;

 

(c)                                  except as otherwise provided in Sections 14(e) and (f) hereof, prior to a Change in Control, in connection with any Proceeding (or any part of any Proceeding) initiated by Indemnitee, including any Proceeding (or any part of any Proceeding) initiated by Indemnitee against the Company or its directors, officers, employees or other indemnitees, unless (i) the Board authorized the Proceeding (or any part of any Proceeding) prior to its initiation; or (ii) the Company provides the indemnification, in its sole discretion, pursuant to the powers vested in the Company under applicable law; and/or

 

(d)                                 where the indemnification would be: (i) inconsistent with the law of the state of Delaware; (ii) inconsistent with a provision of the certificate of incorporation, a bylaw, a resolution of the board or of the shareholders, an agreement or other proper corporate action, in effect prior to and at the time of the accrual of the alleged cause of action asserted in the Proceeding in which the Expenses were incurred or other amounts were paid, which prohibits or otherwise limits indemnification; or (iii) if there has been a settlement that is approved by a court of competent jurisdiction and provides that the indemnification would be inconsistent with any condition with respect to indemnification expressly imposed by such court in approving the settlement.

 

10.                                 Advances of Expenses; Defense of Claim.

 

(a)                                  In the event Indemnitee is entitled to indemnification and/or advancement of Expenses with respect to any Proceeding, Indemnitee may, at Indemnitee’s option, (i) retain counsel selected by Indemnitee and approved by the Company (which approval shall not be unreasonably withheld, conditioned or delayed) to represent Indemnitee with respect to such Proceeding, at the sole expense of the Company, or (ii) have the Company assume the defense of Indemnitee in such Proceeding, in which case the Company shall assume the defense of such Proceeding with counsel selected by the Company and approved by Indemnitee (which approval shall not be unreasonably withheld, conditioned or delayed) within ten (10) days of the Company’s receipt of written notice of Indemnitee’s election to cause the Company to do so.  If the Company is required to assume the defense of any such Proceeding, it shall engage legal counsel for such defense, and the Company shall be solely responsible for all fees and expenses of such legal counsel and otherwise of such defense.  Such legal counsel may represent both Indemnitee and the Company (and/or any other party or parties entitled to be indemnified by the Company with respect to such matter) unless, in the reasonable opinion of legal counsel to Indemnitee, there is an actual or potential conflict of interest between Indemnitee and the Company (or any other such party or parties) or there are legal defenses available to Indemnitee that are not available to the Company (or any such other party or parties).  Notwithstanding either party’s assumption of responsibility for defense of a Proceeding, each party shall have the right to engage separate counsel at its own expense.  The party having responsibility for defense of a Proceeding shall provide the other party and its counsel with all copies of pleadings and non-privileged or otherwise protected material correspondence relating to the Proceeding.  Indemnitee and the Company shall reasonably cooperate in the defense of any Proceeding with respect to which indemnification is sought hereunder, regardless of whether the Company or

 

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Indemnitee assumes the defense thereof.  Indemnitee may not settle or compromise any Proceeding without the prior written consent of the Company, which consent shall not be unreasonably withheld, conditioned or delayed.  The Company may not, without the prior written consent of Indemnitee, which consent shall not be unreasonably withheld, conditioned or delayed, effect any settlement (in whole or in part) of any action, claim or Proceeding against Indemnitee; provided, however, that the Company shall be required to obtain Indemnitee’s prior written approval, which may be granted or withheld in Indemnitee’s sole, reasonable discretion, before entering into any settlement that (i) does not grant Indemnitee a complete and unqualified release of liability, (ii) would potentially or actually impose any cost, liability, exposure, penalty, burden or limitation on Indemnitee, or (iii) would admit any liability or misconduct, or imply any wrongdoing, by or on behalf of Indemnitee.  Moreover, without Indemnitee’s prior written consent, the Company shall not enter into any settlement of any action, claim or Proceeding in which the Company is or could be jointly liable with Indemnitee (or would be if joined in such Proceeding) unless such settlement provides for a full and final release of all claims asserted against Indemnitee; provided, however, that Indemnitee’s written consent shall not be required if the Company has determined that Indemnitee is not entitled to indemnification hereunder.  Notwithstanding the foregoing terms in this Section 10(a) or the terms of Section 8(b), the Company shall not, on its own behalf, settle any part of any action, claim or Proceeding to which Indemnitee is a party with respect to other parties (including the Company) without the written consent of Indemnitee if any portion of such settlement is to be funded from insurance proceeds pursuant to any insurance policy pursuant to which Indemnitee is an insured, additional insured, or otherwise an intended beneficiary with respect to Indemnitee’s status as an Agent; provided, however, that Indemnitee’s written consent shall not be required if the Company has determined that Indemnitee is not entitled to indemnification hereunder.

 

(b)                                 Notwithstanding any provision of this Agreement to the contrary, and to the fullest extent permitted by applicable law, within ten (10) days after the receipt by the Company of a written request for the advancement of Expenses by Indemnitee, the Company shall, in accordance with such request (but without duplication) (i) pay such Expenses on behalf of Indemnitee, (ii) advance to Indemnitee funds in an amount sufficient to pay such Expenses, or (iii) reimburse Indemnitee for such Expenses, whether such requests for advances are made prior to or after final disposition of any action, claim, Proceeding or other matter for which Indemnitee requests such advances unless, prior to the expiration of such ten-day period, the Company has delivered to Indemnitee a written determination that, in the reasonable and good faith opinion of the governing body of the Company, after consultation with outside legal counsel, such governing body has determined that there is no reasonable basis to believe that Indemnitee may be entitled to indemnification hereunder. Advances shall be unsecured and interest free. Advances shall be made without regard to Indemnitee’s ability to repay the Expenses and without regard to Indemnitee’s ultimate entitlement to indemnification under the other provisions of this Agreement. Advances shall include any and all reasonable Expenses incurred pursuing a Proceeding to enforce this right of advancement, including Expenses incurred preparing and forwarding statements to the Company to support the advances claimed. This Section 10(b) shall not apply to any claim made by Indemnitee for which indemnification is excluded pursuant to Section 9, except as expressly provided in Section 9.

 

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(c)                                  The Company will be entitled to participate in the Proceeding at its own expense.

 

(d)                                 The Company shall not seek, nor shall it agree to, consent to, support, or agree not to contest the entry of any “bar order” or other order, decree or stipulation, pursuant to 15 U.S.C. § 78u-4 (the Private Securities Litigation Reform Act), or any similar foreign, federal or state statute, regulation, rule or law, which would have the effect of prohibiting or limiting Indemnitee’s right to receive advancement of Expenses under this Agreement.

 

(e)                                  The right to advances under this Section 10 shall in all events continue until the final, non-appealable disposition of any action, claim, Proceeding or other matter for which Indemnitee is entitled to receive such advances hereunder.  The Company shall not initiate any proceeding seeking repayment of any advanced Expenses pursuant to the foregoing undertaking other than in a proceeding initiated in Delaware Court following a final, non-appealable judgment, by a court of competent jurisdiction, of the underlying and operative action, claim, Proceeding or other matter for which Indemnitee received such advanced Expenses.

 

(f)                                    Indemnitee shall qualify for advances upon the execution and delivery to the Company of this Agreement, which shall constitute an undertaking by Indemnitee to repay (without interest) the amounts advanced if and to the extent that it is ultimately determined by a court of competent jurisdiction in a final judgment, from which no appeals can be taken, that Indemnitee is not entitled to be indemnified by the Company, and no other form of undertaking shall be required from Indemnitee other than the execution of this Agreement.

 

11.                                 Procedure for Notification of Indemnified Matters and Application for Indemnification.

 

(a)                                  In the event Indemnitee believes that he or she is entitled to indemnification or advancement of Expenses hereunder, Indemnitee shall promptly deliver to the Company written notice of the action, claim, Proceeding or other matter with respect to which the Indemnitee believes he or she is or may be entitled to indemnification or advancement of Expenses hereunder. The failure of Indemnitee to so notify the Company shall not (i) prejudice the Indemnitee’s rights hereunder, or (ii) relieve the Company of any obligation which it may have to Indemnitee under this Agreement, or otherwise.

 

(b)                                 Indemnitee may deliver to the Company a written application to indemnify and hold harmless Indemnitee in accordance with this Agreement. Such application(s) may be delivered from time to time and at such time(s) as Indemnitee deems appropriate in his or her sole discretion. Following such a written application for indemnification by Indemnitee, the Indemnitee’s entitlement to indemnification shall be determined according to Section 12(a) of this Agreement.

 

12.                                 Procedure Upon Application for Indemnification.

 

(a)                                  A determination, if required by applicable law, with respect to Indemnitee’s entitlement to indemnification shall be made in the specific case by one of the

 

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following methods: (i) by the Board acting by a quorum consisting of directors who are not parties to such Proceeding upon a finding that Indemnitee has met the standard of conduct set forth in the Agreement and the DGCL; or (ii) if a quorum under subparagraph (a)(i) is not obtainable or, even if obtainable, a quorum of Disinterested Directors so directs: (a) by the Board upon the opinion in writing of Independent Counsel that indemnification is proper in the circumstances because the applicable standard of conduct set forth in this Agreement and the DGCL has been met by Indemnitee, or (b) by the shareholders upon a finding that Indemnitee has met the applicable standard of conduct set forth in such sections.

 

(b)                                 The Company promptly will advise Indemnitee in writing with respect to any determination that Indemnitee is or is not entitled to indemnification, including a description of any reason or basis for which indemnification has been denied. If it is so determined that Indemnitee is entitled to indemnification, payment to Indemnitee shall be made within ten (10) days after such determination. Indemnitee shall reasonably cooperate with the Person, Persons or entity making such determination with respect to Indemnitee’s entitlement to indemnification, including providing to such Person, Persons or entity upon reasonable advance request any documentation or information which is not privileged or otherwise protected from disclosure and which is reasonably available to Indemnitee and reasonably necessary to such determination. Any costs or Expenses (including attorneys’ fees and disbursements) incurred by Indemnitee in so cooperating with the Person, Persons or entity making such determination shall be borne by the Company (irrespective of the determination as to Indemnitee’s entitlement to indemnification) and the Company hereby indemnifies and agrees to hold Indemnitee harmless therefrom.

 

(c)                                  In the event the determination of entitlement to indemnification is to be made by Independent Counsel pursuant to Section 12(a) hereof, the Independent Counsel shall be selected as provided in this Section 12(c). The Independent Counsel shall be selected by Indemnitee (unless Indemnitee shall request that such selection be made by the Board), and Indemnitee shall give written notice to the Company advising it of the identity of the Independent Counsel so selected and certifying that the Independent Counsel so selected meets the requirements of “Independent Counsel” as defined in Section 2 of this Agreement. If the Independent Counsel is selected by the Board, the Company shall give written notice to Indemnitee advising him of the identity of the Independent Counsel so selected and certifying that the Independent Counsel so selected meets the requirements of “Independent Counsel” as defined in Section 2 of this Agreement. In either event, Indemnitee or the Company, as the case may be, may, within ten (10) days after such written notice of selection shall have been received, deliver to the Company or to Indemnitee, as the case may be, a written objection to such selection; provided, however, that such objection may be asserted only on the ground that the Independent Counsel so selected does not meet the requirements of “Independent Counsel” as defined in Section 2 of this Agreement, and the objection shall set forth with particularity the factual basis of such assertion.  Absent a proper and timely objection, the Person so selected shall act as Independent Counsel. If such written objection is so made and substantiated, the Independent Counsel so selected may not serve as Independent Counsel unless and until such objection is withdrawn or a court of competent jurisdiction has determined that such objection is without merit. If, within twenty (20) days after submission by Indemnitee of a written request for indemnification pursuant to Section 11(b) hereof, no Independent Counsel shall have been

 

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selected and not objected to, either the Company or Indemnitee may petition the Delaware Court for resolution of any objection which shall have been made by the Company or Indemnitee to the other’s selection of Independent Counsel and/or for the appointment as Independent Counsel of a Person selected by the Delaware Court, and the Person with respect to whom all objections are so resolved or the Person so appointed shall act as Independent Counsel under Section 12(a) hereof.  Upon the due commencement of any judicial Proceeding or arbitration pursuant to Section 14(a) of this Agreement, Independent Counsel shall be discharged and relieved of any further responsibility in such capacity (subject to the applicable standards of professional conduct then prevailing).

 

(d)                                 The Company agrees to pay the reasonable fees and Expenses of Independent Counsel and to fully indemnify and hold harmless such Independent Counsel against any and all Expenses, claims, liabilities and damages arising out of or relating to this Agreement or its engagement pursuant hereto.

 

13.                                 Presumptions and Effect of Certain Proceedings.

 

(a)                                  In making a determination with respect to entitlement to indemnification hereunder, the Person, Persons or entity making such determination (including, without limitation, any Independent Counsel) shall presume that Indemnitee is entitled to indemnification under this Agreement if Indemnitee has submitted a request for indemnification in accordance with Section 11(b) of this Agreement, and the Company shall have the burden of proof to overcome that presumption in connection with the making by any Person, Persons or entity of any determination contrary to that presumption.  Neither the failure of the Company (including by its directors or Independent Counsel) to have made a determination prior to the commencement of any action pursuant to this Agreement that indemnification is proper in the circumstances because Indemnitee has met the applicable standard of conduct, nor an actual determination by the Company (including by its directors or Independent Counsel) that Indemnitee has not met such applicable standard of conduct, shall be a defense to the action or create a presumption that Indemnitee has not met the applicable standard of conduct.

 

(b)                                 If the Person, Persons or entity empowered or selected under Section 12 of this Agreement to determine whether Indemnitee is entitled to indemnification shall not have made a determination within thirty (30) days after receipt by the Company of the request therefor, the requisite determination of entitlement to indemnification shall be deemed to have been made and Indemnitee shall be entitled to such indemnification, absent (i) a misstatement by Indemnitee of a material fact, or an omission of a material fact necessary to make Indemnitee’s statement not materially misleading, in connection with the request for indemnification, or (ii) a final judicial determination that any or all such indemnification is expressly prohibited under applicable law; provided, however, that such 30-day period may be extended for a reasonable time, not to exceed an additional fifteen (15) days, if the Person, Persons or entity making the determination with respect to entitlement to indemnification in good faith requires such additional time for the obtaining or evaluating of documentation and/or information relating thereto.

 

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(c)                                  The termination of any Proceeding or of any claim, issue or matter therein, by judgment, order, settlement (with or without court approval), conviction, or upon a plea of nolo  contendere or its equivalent, shall not (except as otherwise expressly provided in this Agreement) of itself adversely affect the right of Indemnitee to indemnification or create a presumption that Indemnitee did not act in good faith and in a manner which he reasonably believed to be in or not opposed to the best interests of the Company or any Enterprise or, with respect to any criminal Proceeding, that Indemnitee had reasonable cause to believe that his conduct was unlawful.

 

(d)                                 To the greatest extent permitted by law, settlement of any Proceeding without any finding of responsibility, wrongdoing or guilt on the part of the Indemnitee with respect to claims asserted in such Proceeding shall constitute a conclusive determination that Indemnitee is entitled to indemnification hereunder with respect to such Proceeding.

 

(e)                                  For purposes of any determination of good faith, Indemnitee shall be deemed to have acted in good faith if Indemnitee’s action is based on the records or books of account of the Company or any Enterprise, including financial statements, or on information supplied to Indemnitee by the officers of the Company or any Enterprise in the course of their duties, or on the advice of legal counsel for the Company or any Enterprise or on information or records given or reports made to the Company or any Enterprise by an independent certified public accountant or by an appraiser or other expert selected by the Company or any Enterprise.  The provisions of this Section 13(d) shall not be deemed to be exclusive or to limit in any way the other circumstances in which the Indemnitee may be deemed or found to have met the applicable standard of conduct set forth in this Agreement.

 

(f)                                    The knowledge and/or actions, or failure to act, of any other Agent of the Company or any Enterprise shall not be imputed to Indemnitee for purposes of determining the right to indemnification under this Agreement.

 

14.                                 Remedies of Indemnitee.

 

(a)                                  In the event that (i) a determination is made pursuant to Section 12 of this Agreement that Indemnitee is not entitled to indemnification under this Agreement, (ii) advancement of Expenses, to the fullest extent permitted by applicable law, is not timely made pursuant to Section 10 of this Agreement, (iii) no determination of entitlement to indemnification shall have been made pursuant to Section 12(a) of this Agreement within thirty (30) days after receipt by the Company of the request for indemnification, (iv) payment of indemnification is not made pursuant to Section 5, 6, 7 or the last sentence of Section 12(b) of this Agreement within ten (10) days after receipt by the Company of a written request therefor, (v) a contribution payment is not made in a timely manner pursuant to Section 8 of this Agreement, or (vi) payment of indemnification pursuant to Section 3 or 4 of this Agreement is not made within ten (10) days after a determination has been made that Indemnitee is entitled to indemnification, Indemnitee shall be entitled to an adjudication by the Delaware Court to such indemnification, contribution or advancement of Expenses.  Alternatively, Indemnitee, at his option, may seek an award in arbitration to be conducted by a single arbitrator pursuant to the Commercial Arbitration Rules of the American Arbitration Association. Except as set forth herein, the provisions of Delaware law

 

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(without regard to its conflict of laws rules) shall apply to any such arbitration. The Company shall not oppose Indemnitee’s right to seek any such adjudication or award in arbitration.

 

(b)                                 In the event that a determination shall have been made pursuant to Section 12(a) of this Agreement that Indemnitee is not entitled to indemnification, any judicial Proceeding or arbitration commenced pursuant to this Section 14 shall be conducted in all respects as a de  novo trial, or arbitration, on the merits and Indemnitee shall not be prejudiced by reason of that adverse determination. In any judicial Proceeding or arbitration commenced pursuant to this Section 14, Indemnitee shall be presumed to be entitled to indemnification under this Agreement and the Company shall have the burden of proving Indemnitee is not entitled to indemnification or advancement of Expenses, as the case may be, and the Company may not refer to or introduce into evidence any determination pursuant to Section 12(a) of this Agreement adverse to Indemnitee for any purpose. If Indemnitee commences a judicial Proceeding or arbitration pursuant to this Section 14, Indemnitee shall not be required to reimburse the Company for any advances pursuant to Section 10 until a final determination is made with respect to Indemnitee’s entitlement to indemnification (as to which all rights of appeal have been exhausted or lapsed).

 

(c)                                  If a determination shall have been made pursuant to Section 12(a) of this Agreement that Indemnitee is entitled to indemnification, the Company shall be bound by such determination in any judicial Proceeding or arbitration commenced pursuant to this Section 14, absent (i) a misstatement by Indemnitee of a material fact, or an omission of a material fact necessary to make Indemnitee’s statement not materially misleading, in connection with the request for indemnification; or (ii) a prohibition of such indemnification under applicable law.

 

(d)                                 The Company shall be precluded from asserting in any judicial Proceeding or arbitration commenced pursuant to this Section 14 that the procedures and presumptions of this Agreement are not valid, binding and enforceable and shall stipulate in any such court or before any such arbitrator that the Company is bound by all the provisions of this Agreement.

 

(e)                                  The Company shall indemnify and hold harmless Indemnitee to the fullest extent permitted by applicable law against all Expenses and, if requested by Indemnitee, shall (within ten (10) days after the Company’s receipt of such written request) advance to Indemnitee, to the fullest extent permitted by applicable law, such Expenses which are incurred by Indemnitee in connection with any judicial Proceeding or arbitration brought by Indemnitee (i) to enforce his rights under, or to recover damages for breach of, this Agreement or any other indemnification, advancement or contribution agreement or provision of the Company’s Bylaws now or hereafter in effect; or (ii) for recovery or advances under any insurance policy maintained by any Person for the benefit of Indemnitee, regardless of whether Indemnitee ultimately is determined to be entitled to such indemnification, advance, contribution or insurance recovery, as the case may be.

 

(f)                                    Interest shall be paid by the Company to Indemnitee at the legal rate under Delaware law for amounts which the Company indemnifies or is obliged to indemnify for the period commencing with the date on which Indemnitee requests indemnification, contribution,

 

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reimbursement or advancement of any Expenses and ending with the date on which such payment is made to Indemnitee by the Company.

 

15.                                 Establishment of Trust.  In the event of a Potential Change in Control, the Company shall, upon written request by Indemnitee, create a trust for the benefit of Indemnitee (the “Trust”) and from time to time upon written request of Indemnitee shall fund such Trust in an amount sufficient to satisfy any and all Expenses reasonably anticipated at the time of each such request to be incurred in connection with investigating, preparing for, participating in or defending any Proceedings, and any and all judgments, Fines, penalties and amounts paid in settlement (including all interest, assessments and other charges paid or payable in connection with or in respect of such judgments, Fines penalties and amounts paid in settlement) in connection with any and all Proceedings from time to time actually paid or claimed, reasonably anticipated or proposed to be paid.  The trustee of the Trust (the “Trustee”) shall be a bank or trust company or other individual or entity chosen by the Indemnitee and reasonably acceptable to the Company. Nothing in this Section 15 shall relieve the Company of any of its obligations under this Agreement. The amount or amounts to be deposited in the Trust pursuant to the foregoing funding obligation shall be determined by mutual agreement of the Indemnitee and the Company or, if the Company and the Indemnitee are unable to reach such an agreement, by Independent Counsel selected in accordance with Section 12(c) of this Agreement. The terms of the Trust shall provide that, except upon the consent of both the Indemnitee and the Company, upon a Change in Control:  (a) the Trust shall not be revoked, or the principal thereof invaded, without the written consent of the Indemnitee; (b) the Trustee shall advance, to the fullest extent permitted by applicable law, within two (2) business days of a request by the Indemnitee and upon the execution and delivery to the Company of an undertaking providing that the Indemnitee undertakes to repay the advance to the extent that it is ultimately determined that Indemnitee is not entitled to be indemnified by the Company, any and all Expenses to the Indemnitee; (c) the Trust shall continue to be funded by the Company in accordance with the funding obligations set forth above; (d) the Trustee shall promptly pay to the Indemnitee all amounts for which the Indemnitee shall be entitled to indemnification pursuant to this Agreement or otherwise; and (e) all unexpended funds in such Trust shall revert to the Company upon mutual agreement by the Indemnitee and the Company or, if the Indemnitee and the Company are unable to reach such an agreement, by Independent Counsel selected in accordance with Section 12(c) of this Agreement, that the Indemnitee has been fully indemnified under the terms of this Agreement.  The Trust shall be governed by Delaware law (without regard to its conflicts of laws rules) and the Trustee shall consent to the exclusive jurisdiction of the Delaware Court in accordance with Section 23 of this Agreement.

 

16.                                 Security.  Notwithstanding anything herein to the contrary, to the extent requested by the Indemnitee and approved by the Board, the Company may at any time and from time to time provide security to the Indemnitee for the Company’s obligations hereunder through an irrevocable bank line of credit, funded trust or other collateral. Any such security, once provided to the Indemnitee, may not be revoked or released without the prior written consent of the Indemnitee.

 

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17.                                 Non-Exclusivity; Priority of Payments; Survival of Rights; Insurance; Subrogation; Information Sharing.

 

(a)                                  The rights of indemnification and to receive advancement of Expenses as provided by this Agreement shall not be deemed exclusive of any other rights to which Indemnitee may at any time be entitled under applicable law, the Company’s Bylaws, any agreement, a vote of stockholders or a resolution of directors, or otherwise. No amendment, alteration or repeal of this Agreement or of any provision hereof shall limit or restrict any right of Indemnitee under this Agreement in respect of any action taken or omitted by such Indemnitee in his Corporate Status prior to such amendment, alteration or repeal. To the extent that a change in applicable law, whether by statute or judicial decision, permits greater indemnification or advancement of Expenses than would be afforded currently under the Company’s Bylaws or this Agreement, it is the intent of the parties hereto that Indemnitee shall enjoy by this Agreement the greater benefits so afforded by such change. No right or remedy herein conferred is intended to be exclusive of any other right or remedy, and every other right and remedy shall be cumulative and in addition to every other right and remedy given hereunder or now or hereafter existing at law or in equity or otherwise. The assertion or employment of any right or remedy hereunder, or otherwise, shall not prevent the concurrent assertion or employment of any other right or remedy.

 

(b)                                 The DGCL and the Company’s Bylaws permit the Company to purchase and maintain insurance or furnish similar protection or make other arrangements including, but not limited to, providing a trust fund, letter of credit, or surety bond (“Indemnification Arrangements”) on behalf of Indemnitee against any liability asserted against him or incurred by or on behalf of him or in such capacity as Agent of the Company, or arising out of his status as such, whether or not the Company would have the power to indemnify him against such liability under the provisions of this Agreement or under the DGCL, as it may then be in effect.  The purchase, establishment, and maintenance of any such Indemnification Arrangement shall not in any way limit or affect the rights and obligations of the Company or of the Indemnitee under this Agreement except as expressly provided herein, and the execution and delivery of this Agreement by the Company and the Indemnitee shall not in any way limit or affect the rights and obligations of the Company or the other party or parties thereto under any such Indemnification Arrangement.

 

(c)                                  To the extent that the Company maintains any insurance policy providing liability insurance for any Agents of the Company or any Enterprise which Agent serves at the request of the Company (such policy being referred to for purposes of this Section 17(d) as the “D&O Insurance”), Indemnitee shall be covered by such D&O Insurance policy in accordance with its terms.  In the event (i) that the Company determines to reduce materially or not to renew its directors’ and officers’ liability insurance, the Company will purchase six (6) year tail coverage D&O Insurance, on terms and conditions substantially similar to the existing D&O Insurance and through the Company’s insurance broker (“Comparable Coverage”), for the benefit of the directors, officers, employees or other Agents of the Company or any other Enterprise who had served in such capacity prior to the reduction, termination or expiration of the coverage; or (ii) of a Change in Control, the Company will either (A) purchase six (6) year tail coverage D&O Insurance with Comparable Coverage for the benefit of the directors, officers, employees or other Agents of the Company or any other Enterprise who had served in such capacity prior to the closing of the transaction or the occurrence of the event constituting the Change in Control, and/or (B) as applicable, cause the acquiring entity or person to purchase

 

17

 

such coverage and require the acquiring entity or person to deliver proof of the purchase of such coverage, in form and substance satisfactory to the Company, at or prior to the closing of the transaction or the occurrence of the event constituting the Change in Control; provided, however, that this clause (ii) shall not apply if, in connection with the Change in Control, there is no material reduction or non-renewal of the existing D&O Insurance coverage for the benefit of the directors, officers, employees or other Agents of the Company or any other Enterprise who served in such capacity prior to the closing of the transaction or the occurrence of the event constituting the Change in Control for the six (6) year period following the date of such closing or event.  Notwithstanding the foregoing, if the annual premium for any year of such tail coverage or other continuing D&O Insurance coverage would exceed 200% of the annual premium the Company paid for D&O Insurance in its last full fiscal year prior to the reduction, termination or expiration of the D&O Insurance or such Change in Control event, the Company (or the acquiror or successor, as the case may be) will be deemed to have satisfied its obligations under this Section 17(d) by purchasing as much D&O Insurance for such year as can be obtained for a premium equal to 200% such annual premium the Company paid for D&O Insurance in its last full fiscal year.

 

(d)                                 If, at the time the Company receives notice from any source of a Proceeding as to which Indemnitee is a party or a participant (as a witness or otherwise) and the Company has applicable (or potentially applicable) liability insurance in effect, the Company shall give prompt notice of such Proceeding to the insurers in accordance with the procedures set forth in the respective policies. The Company shall thereafter take all necessary or desirable action to cause such insurers to pay, on behalf of the Indemnitee, all amounts payable as a result of such Proceeding in accordance with the terms of such policies.  Notwithstanding the foregoing, the Company shall not be required to pay any amount hereunder if and to the extent that Indemnitee has actually received payment of such amount under any insurance policy, but the Company shall not be excused from any obligation hereunder due to the availability of any such insurance coverage, subject to the Company’s right to seek reimbursement of any amounts paid by the Company pursuant to any applicable insurance policy.  Nothing in this Agreement is intended or shall be construed to limit or reduce the rights of the Company, Carlyle, Indemnitee or any other individuals or entities pursuant to any insurance policy, or to limit or reduce the obligations of any insurer pursuant to any insurance policy or otherwise.  The foregoing notwithstanding, to the extent a claim for which indemnification or advancement of Expenses is available hereunder is covered by any insurance policy, (i) the issuer of such policy shall not be entitled to seek recovery from the Company or Carlyle, by subrogation or otherwise, solely by virtue of this Agreement, and (ii) nothing in this Agreement shall limit the Company’s or Carlyle’s right to pursue any claim for recovery or reimbursement of amounts paid under this Agreement under any insurance policy.  Indemnitee shall engage in reasonable, good faith efforts to cause the Company’s insurance to apply on a primary basis with respect to any other insurance that may be applicable to matters indemnified hereunder, including without limitation insurance procured for the benefit of the Indemnitee by Carlyle.

 

(e)                                  In the event of any payment under this Agreement, the Company shall be subrogated to the extent of such payment to all of the rights of recovery of Indemnitee, who shall execute all papers required and take all action necessary to secure such rights, including

 

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execution of such documents as are necessary to enable the Company to bring suit to enforce such rights.

 

(f)                                    The Company’s obligation to indemnify or advance Expenses hereunder to Indemnitee who is or was serving at the request of the Company as an Agent of any Enterprise shall be reduced by any amount Indemnitee has actually received as indemnification or advancement of Expenses from such Enterprise. Notwithstanding any other provision of this Agreement to the contrary, (i) Indemnitee shall have no obligation to reduce, offset, allocate, pursue or apportion any indemnification, hold harmless, exoneration, advancement, contribution or insurance coverage among multiple parties possessing such duties to Indemnitee prior to the Company’s satisfaction and performance of all its obligations under this Agreement, and (ii) the Company shall perform fully its obligations under this Agreement without regard to whether Indemnitee holds, may pursue or has pursued any indemnification, advancement, hold harmless, exoneration, contribution or insurance coverage rights against any Person or entity other than the Company.

 

(g)                                 The Company and Indemnitee hereby agree that any obligations of Carlyle to provide indemnification and advancement of Expenses with respect to actions, claims, Proceedings or other matters indemnified hereunder, including any such obligations arising from the terms of this Agreement, shall be (i) secondary to any indemnification or advancement obligations owed by the Company or any Enterprise and/or their respective subsidiaries, and (ii) reduced by any amount that the Indemnitee collects from the Company or any Enterprise and/or their respective subsidiaries as indemnification or advancement of Expenses.  Indemnitee shall engage in reasonable, good faith efforts to obtain indemnification and advancement of Expenses from the Company (or, if applicable, a subsidiary of the Company or an Enterprise and/or such Enterprise’s subsidiaries) prior to seeking indemnification and/or advancement of Expenses from Carlyle pursuant to this Agreement or otherwise.  Moreover, the Company and Indemnitee hereby agree to waive any right of subrogation or contribution against Carlyle or Carlyle’s insurers with respect to any payment made pursuant to this Agreement, including, but without limitation, any subrogation or contribution rights that otherwise would arise in favor of (i) Indemnitee, (ii) the Company or any Enterprise and/or their respective subsidiaries, or (iii) any insurer providing coverage to Indemnitee, the Company, or any Enterprise, and/or their respective subsidiaries.

 

18.                                 Duration of Agreement; Claims against Indemnitee.  All agreements and obligations of the Company contained herein shall continue during the period Indemnitee serves as an Agent of the Company or of any Enterprise which Indemnitee serves at the request of the Company and shall continue thereafter so long as Indemnitee shall be subject to any possible Proceeding (including any rights of appeal thereto and any Proceeding commenced by Indemnitee pursuant to Section 14 of this Agreement) by reason of his Corporate Status, whether or not he is acting in any such capacity at the time any liability or expense is incurred for which indemnification can be provided under this Agreement.  In addition to, and without limiting, the foregoing: (i) the rights and obligations set forth in this Agreement shall not be terminated without the prior written consent of the parties hereto, nor shall any change in Indemnitee’s Corporate Status (including but without limitation any termination of Indemnitee’s status as an officer, director, employee or Agent of, or attorney for, Company) affect the Indemnitee’s rights

 

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hereunder with respect to indemnified matters arising pursuant to the terms hereof; (ii) no amendment, alteration or repeal of this Agreement or of any provision hereof shall limit or restrict any right of Indemnitee under this Agreement in respect of any action taken or omitted by such Indemnitee in Indemnitee’s Corporate Status prior to such amendment, alteration or repeal; and (iii) this Agreement shall be effective as of the date set forth on the first page, and this Agreement shall apply to any indemnifiable actions, events or omissions occurring prior to such date if the Indemnitee was an Agent of the Company or of any Enterprise which Indemnitee served at the request of the Company at the time such actions, events or omissions occurred.

 

19.                                 Severability.  If any provision or provisions of this Agreement shall be held to be invalid, illegal or unenforceable for any reason whatsoever:  (a) the validity, legality and enforceability of the remaining provisions of this Agreement (including, without limitation, each portion of any Section, paragraph or sentence of this Agreement containing any such provision held to be invalid, illegal or unenforceable, that is not itself invalid, illegal or unenforceable) shall not in any way be affected or impaired thereby and shall remain enforceable to the fullest extent permitted by applicable law; (b) such provision or provisions shall be deemed reformed to the extent necessary to conform to applicable law and to give the maximum effect to the intent of the parties hereto; and (c) to the fullest extent possible, the provisions of this Agreement (including, without limitation, each portion of any Section, paragraph or sentence of this Agreement containing any such provision held to be invalid, illegal or unenforceable, that is not itself invalid, illegal or unenforceable) shall be construed so as to give effect to the intent manifested thereby.

 

20.                                 Enforcement and Binding Effect.

 

(a)                                  The Company expressly confirms and agrees that it has entered into this Agreement and assumed the obligations imposed on it hereby in order to induce Indemnitee to serve as a director, officer or key employee of the Company, and the Company acknowledges that Indemnitee is relying upon this Agreement in serving as a director, officer or key employee of the Company.

 

(b)                                 Without limiting any of the rights of Indemnitee under the Bylaws of the Company as they may be amended from time to time, this Agreement constitutes the entire agreement between the parties hereto with respect to the subject matter hereof and supersedes all prior agreements and understandings, oral, written and implied, between the parties hereto with respect to the subject matter hereof.

 

(c)                                  The indemnification and advancement of Expenses provided by or granted pursuant to this Agreement shall be binding upon and be enforceable by the parties hereto and their respective successors and assigns (including any direct or indirect successor by purchase, merger, consolidation or otherwise to all or substantially all of the business or assets of the Company), shall continue as to an Indemnitee who has ceased to be an Agent of the Company or of any Enterprise at the Company’s request, and shall inure to the benefit of Indemnitee and his or her spouse, assigns, heirs, devisees, executors and administrators and other legal representatives.

 

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(d)                                 The Company shall require and cause any successor (whether direct or indirect by purchase, merger, consolidation or otherwise) to all, substantially all or a substantial part, of the business and/or assets of the Company, by written agreement in form and substance satisfactory to Indemnitee, expressly to assume and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform if no such succession had taken place.

 

(e)                                  The Company and Indemnitee agree herein that a monetary remedy for breach of this Agreement, at some later date, may be inadequate, impracticable and difficult of proof, and further agree that such breach may cause Indemnitee irreparable harm. Accordingly, the parties hereto agree that Indemnitee may enforce this Agreement by seeking injunctive relief and/or specific performance hereof, without any necessity of showing actual damage or irreparable harm and that by seeking injunctive relief and/or specific performance Indemnitee shall not be precluded from seeking or obtaining any other relief to which he may be entitled. The Company and Indemnitee further agree that Indemnitee shall be entitled to such specific performance and injunctive relief, including temporary restraining orders, preliminary injunctions and permanent injunctions, without the necessity of posting bonds or other undertaking in connection therewith. The Company acknowledges that in the absence of a waiver, a bond or undertaking may be required of Indemnitee by the court in which the action was brought, and the Company hereby waives any such requirement of such a bond or undertaking.

 

21.                                 Modification and Waiver.  No supplement, modification or amendment of this Agreement shall be binding unless executed in writing by the parties hereto. No waiver of any of the provisions of this Agreement shall be deemed or shall constitute a waiver of any other provisions of this Agreement nor shall any waiver constitute a continuing waiver.

 

22.                                 Notices.  All notices, requests, demands and other communications under this Agreement shall be in writing and shall be deemed to have been duly given (i) if delivered by hand and receipted for by the party to whom said notice or other communication shall have been directed, or (ii) mailed by certified or registered mail with postage prepaid, on the third (3rd) business day after the date on which it is so mailed:

 

(a)          If to Indemnitee, at the address indicated on the signature page of this Agreement or such other address as Indemnitee shall provide in writing to the Company.

 

(b)                                 If to the Company, to:

 

Wesco Aircraft Holdings, Inc.
 27727 Avenue Scott

Valencia, CA 91355
 Attention:  General Counsel

 

or to any other address as may have been furnished to Indemnitee in writing by the Company.

 

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23.                                 Applicable Law and Consent to Jurisdiction.  This Agreement and the legal relations among the parties shall be governed by, and construed and enforced in accordance with, the laws of the State of Delaware, without regard to its conflict of laws rules. Except with respect to any arbitration commenced by Indemnitee pursuant to Section 14(a) of this Agreement, the Company and Indemnitee hereby irrevocably and unconditionally (a) agree that any action or Proceeding arising out of or in connection with this Agreement shall be brought only in the Delaware Court and not in any other state or federal court in the United States of America or any court in any other country; (b) consent to submit to the exclusive jurisdiction of the Delaware Court for purposes of any action or Proceeding arising out of or in connection with this Agreement; (c) appoint irrevocably, to the extent such party is not a resident of the State of Delaware, CT Corporation as its agent in the State of Delaware as such party’s agent for acceptance of legal process in connection with any such action or Proceeding against such party with the same legal force and validity as if served upon such party personally within the State of Delaware; (d) waive any objection to the laying of venue of any such action or Proceeding in the Delaware Court; and (e) waive, and agree not to plead or to make, any claim that any such action or Proceeding brought in the Delaware Court has been brought in an improper or inconvenient forum, or is subject (in whole or in part) to a jury trial.

 

24.                                 Identical Counterparts.  This Agreement may be executed in one or more counterparts, each of which shall for all purposes be deemed to be an original but all of which together shall constitute one and the same Agreement. Only one such counterpart signed (and delivered by facsimile or other electronic transmission) by the party against whom enforceability is sought needs to be produced to evidence the existence of this Agreement.

 

25.                                 Miscellaneous.  Use of the masculine pronoun shall be deemed to include usage of the feminine pronoun where appropriate. The headings of the paragraphs of this Agreement are inserted for convenience only and shall not be deemed to constitute part of this Agreement or to affect the construction thereof.

 

*                                         *                                         *

 

IN WITNESS WHEREOF, the parties have caused this Agreement to be signed as of the date first above written.

 

	
WESCO   AIRCRAFT HOLDINGS INC.
    	
 
    	
INDEMNITEE
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
By:
    	
 
    	
 
    	
 
    
	
 
    	
Name:
    	
 
    	
 
    	
Name:
    	
 
    
	
 
    	
Title:
    	
 
    	
 
    	
Address:
    	
 
    

 

22Exhibit 10.4

 

EXECUTION COPY

 

THE SHERIDAN GROUP, INC.

 

$150,000,000 12.5% Senior Secured Notes due 2014

 

PURCHASE AGREEMENT

 

April 8, 2011

 

JEFFERIES & COMPANY, INC.

520 Madison Avenue

New York, New York  10022

 

Ladies and Gentlemen:

 

The Sheridan Group, Inc., a Maryland corporation (the “Company”), and each of the entities listed on the signature page hereto as Guarantors (the “Guarantors”) hereby agrees with you as follows:

 

1.     Issuance of Securities.  The Company proposes to issue and sell to Jefferies & Company, Inc. (the “Initial Purchaser”), and the Initial Purchaser proposes to purchase, $150,000,000 aggregate principal amount of the Company’s 12.5% Senior Secured Notes due 2014, Series A (the “Series A Notes”).  The Series A Notes will be issued pursuant to an indenture (the “Indenture”), to be dated as of the Closing Date (as defined below), between the Company and The Bank of New York, as trustee (the “Trustee”).  The Series A Notes and the Series B Notes (as defined below), each with the Guarantee endorsed thereon, are collectively referred to herein as the “Notes.”  Capitalized terms used but not defined herein shall have the respective meanings set forth in the “Description of the Notes” section of the Final Offering Memorandum (as defined below).

 

Pursuant to the Indenture, each of the Guarantors and any future guarantors party to the Indenture, jointly and severally, will fully and unconditionally guarantee, on a senior secured basis, to each holder of Notes and the Trustee, the payment and performance of the Company’s obligations under the Indenture, the Notes and the Collateral Agreements (as defined below), including the payment of principal, interest, premium, if any, and Liquidated Damages, if any, on the Notes.

 

Pursuant to the terms of the Collateral Agreements, all of the obligations under the Indenture, the Notes and the Guarantees will be secured by security interests in, liens on or pledges of (the “Security Interests”) substantially all of the assets (other

 

 

than the Excluded Assets) of the Company and the Guarantors and any future Guarantors party to the Indenture, and a portion of the shares of capital stock of the subsidiaries of the Company (the “Collateral”), as set forth in the Final Offering Memorandum.

 

The Series A Notes will be offered and sold to the Initial Purchaser pursuant to an exemption from the registration requirements of the Securities Act of 1933, as amended, and the rules and regulations of the Securities and Exchange Commission (the “SEC”) thereunder (collectively, the “Securities Act”). The Company has prepared a preliminary offering memorandum, dated March 30, 2011 (the “Preliminary Offering Memorandum”), (ii) a pricing term sheet, dated the date hereof, attached hereto as Schedule I, which includes pricing terms and other information with respect to the Notes (the “Pricing Supplement”), and (iii) in the final offering memorandum, dated the date hereof  (the “Final Offering Memorandum”), in each case, relating to the offer and sale of the Series A Notes (the “Offering”).  All references in this Agreement to the Preliminary Offering Memorandum, the Time of Sale Document or the Final Offering Memorandum include, unless expressly stated otherwise, (i) all amendments or supplements thereto, (ii) all financial statements and schedules and other information contained therein (and references in this Agreement to such information being “contained,” “included” or “stated” (and other references of like import) in the Preliminary Offering Memorandum, the Time of Sale Document or the Final Offering Memorandum shall be deemed to mean all such information contained therein), (iii) any electronic Time of Sale Document or Final Offering Memorandum and (iv) any offering memorandum “wrapper” to be used in connection with offers to sell, solicitations of offers to buy or sales of the Notes in non-U.S. jurisdictions.  The Preliminary Offering Memorandum and the Pricing Supplement are collectively referred to herein as the “Time of Sale Document.”

 

Upon original issuance thereof, and until such time as the same is no longer required under the Indenture or the applicable requirements of the Securities Act, the Series A Notes shall bear the legend set forth in the Final Offering Memorandum.

 

2.     Agreements to Sell and Purchase.   On the basis of the representations, warranties, agreements and covenants contained herein, and subject to the terms and conditions hereof, the Company shall issue and sell to the Initial Purchaser, and the Initial Purchaser agrees to purchase from the Company, $150,000,000 aggregate principal amount of Series A Notes.  The purchase price for the Series A Notes shall be 91.0% of the principal amount thereof.

 

3.     Terms of Offering.   The Initial Purchaser has advised the Company, and the Company understands, that the Initial Purchaser will make offers to sell (the “Exempt Resales”) the Series A Notes purchased by the Initial Purchaser hereunder on the terms set forth in the Time of Sale Document and the Final Offering Memorandum

 

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solely to persons whom the Initial Purchaser reasonably believes to be “qualified institutional buyers,” as defined in Rule 144A under the Securities Act (“QIBs”) or (b) non-U.S. persons purchasing Series A Notes in transactions that occur outside the United States in accordance with Regulation S under the Securities Act (“Regulation S Purchasers” and, collectively with QIBs, “Eligible Purchasers”).

 

Holders (including subsequent transferees) of the Series A Notes will have the registration rights set forth in the registration rights agreement (the “Registration Rights Agreement”), to be executed on and dated as of the Closing Date.  Pursuant to the Registration Rights Agreement, the Company and the Guarantors, will agree, among other things, (a) to file with the Securities and Exchange Commission (the “Commission”) under the circumstances set forth therein (i) a registration statement under the Securities Act (the “Exchange Offer Registration Statement”) relating to, among other things, the 12.5% Senior Secured Notes due 2014, Series B (the “Series B Notes”), identical in all material respects to the Series A Notes, including with respect to the Guarantees thereof (except that the Series B Notes shall have been registered pursuant to such registration statement and shall not contain provisions for Liquidated Damages), to be offered in exchange for the Series A Notes (such offer to exchange being referred to as the “Registered  Exchange Offer”), and (ii) under certain circumstances, a shelf registration statement pursuant to Rule 415 under the Securities Act (the “Shelf Registration Statement” and, together with the Exchange Offer Registration Statement, the “Registration Statements”) relating to the resale by certain holders of the Series A Notes, and (b) to cause such Registration Statements to be declared effective, as applicable.

 

The Company and the Guarantors will enter into certain security and pledge agreements, mortgages, deeds of trust and certain other documents (collectively, the “Collateral Agreements”), on the Closing Date (or with respect to such mortgages and deeds of trust, within 60 days of the Closing Date) that will provide for the grant of the Security Interests in the Collateral to the Trustee, as collateral agent for the Trustee and the holders of the Notes (in such capacity, the “Collateral Agent”).  The Security Interests will secure the payment and performance when due of all of the respective obligations of the Company and the Guarantors under the Indenture, the Notes and the Guarantees.

 

On the Closing Date, the Company will either amend its existing working capital facility or enter into a new senior secured working capital facility (in either case, the “New Credit Facility”).  In connection with entering into the New Credit Facility, the Trustee, the lender under the New Credit Facility, the Company and the Guarantors will enter into an Intercreditor Agreement, to be dated as of the Closing Date, in a form reasonably satisfactory to the Initial Purchaser, which form shall be attached as an exhibit to the Indenture (the “Intercreditor Agreement”).

 

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This Agreement, the Indenture, the Registration Rights Agreement, the Notes, the Guarantees, the Collateral Agreements, the New Credit Facility and the Intercreditor Agreement, collectively are referred to herein as the “Transaction Documents.”  The transactions contemplated by the Transaction Documents, including, without limitation, the Offering and the application of the proceeds therefrom as described in the Time of Sale Document and the Final Offering Memorandum, the issuance and sale of the Notes in accordance with this Agreement, the creation, grant, recording and perfection of the Security Interests, and borrowings under the New Credit Facility (if any), collectively are referred to herein as the “Transactions.”

 

4.     Delivery and Payment.  Delivery to the Initial Purchaser of and payment for the Series A Notes shall be made at a Closing (the “Closing”) to be held at 10:00 a.m., New York City time, on April 15, 2011, (such time and date, the “Closing Date”) at the offices of White & Case LLP, 1155 Avenue of the Americas, New York, New York 10036.  The Closing Date and the location of delivery of and the form of payment for the Series A Notes may be varied by agreement between the Initial Purchaser and the Company.

 

The Company shall deliver to the Initial Purchaser one or more certificates representing the Series A Notes (the “Global Securities”), each in definitive form, registered in the name of Cede & Co., as nominee of The Depository Trust Company (“DTC”), or such other names as the Initial Purchaser may request upon at least one Business Day’s notice to the Company, in such denominations as the Initial Purchaser may request against payment by the Initial Purchaser of the purchase price therefore by immediately available Federal funds bank wire transfer to such bank account as the Company shall designate to the Initial Purchaser at least two Business Days prior to the Closing.  “Business Day” means any day other than a Saturday, a Sunday or a day on which banking institutions in The City of New York or at a place of payment are authorized by law, regulation or executive order to remain closed.

 

The Global Securities in definitive form shall be made available to the Initial Purchaser for inspection at the offices of White & Case LLP, 1155 Avenue of the Americas, New York, New York 10036 (or such other place as shall be acceptable to the Initial Purchaser) not later than the close of business, New York City time, one Business Day immediately preceding the Closing Date.  Series A Notes to be represented by one or more Global Securities in book-entry form will be deposited on the Closing Date, by or on behalf of the Company, with DTC or its designated custodian, and registered in the name of Cede & Co.

 

5.     Agreements of the Company and the Guarantors.  Each of the Company and the Guarantors, jointly and severally, hereby agrees:

 

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(a)   Certain Events.  To (i) advise the Initial Purchaser promptly after obtaining knowledge (and, if requested by the Initial Purchaser, confirm such advice in writing) of (A) the issuance by any U.S. or non-U.S. federal or state securities commission of any stop order suspending the qualification or exemption from qualification of any of the Series A Notes for offer or sale in any jurisdiction, or the initiation of any proceeding for such purpose by any U.S. or non-U.S. federal or state securities commission or other regulatory authority, or (B) the happening of any event that makes any statement of a material fact made in the Time of Sale Document, any Company Additional Written Communication (as defined below) or the Final Offering Memorandum, untrue or that requires the making of any additions to or changes in the Time of Sale Document, any Company Additional Written Communication, or the Final Offering Memorandum, to make the statements therein, in the light of the circumstances under which they were made, not misleading, (ii) use its commercially reasonable efforts to prevent the issuance of any stop order or order suspending the qualification or exemption from qualification of any of the Notes under any securities or “Blue Sky” laws of U.S. state or non-U.S. jurisdictions and (iii) if, at any time, any U.S. or non-U.S. federal or state securities commission or other regulatory authority shall issue an order suspending the qualification or exemption from qualification of any of the Notes under any such laws, use its commercially reasonable efforts to obtain the withdrawal or lifting of such order at the earliest possible time.

 

(b)   Offering Documents.  To (i) furnish the Initial Purchaser and those persons identified by the Initial Purchaser to the Company, without charge, as many copies of the Time of Sale Document and the Final Offering Memorandum, and any amendments or supplements thereto, as the Initial Purchaser may reasonably request, and (ii) promptly prepare, upon the Initial Purchaser’s request, any amendment or supplement to the Time of Sale Document or the Final Offering Memorandum that the Initial Purchaser, upon the advice of legal counsel, determines may be necessary in connection with Exempt Resales (and each of the Company and the Guarantors hereby consents to the use of the Time of Sale Document and the Final Offering Memorandum, and any amendments and supplements thereto, by the Initial Purchaser in connection with Exempt Resales).

 

(c)   Notice of Amendment or Supplement.  Except as set forth in Section 5(d), not to amend or supplement the Time of Sale Document or the Final Offering Memorandum prior to the Closing Date, or at any time prior to the completion of the resale by the Initial Purchaser of all of the Series A Notes, unless the Initial Purchaser shall previously have been advised thereof and shall not have objected thereto within two Business Days after being furnished a copy thereof.  Before making, preparing, using, authorizing, approving or referring to

 

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any marketing materials (including any roadshow or investor presentation materials) or other written communications that constitute an offer to sell or a solicitation of an offer to buy the Notes (each such communication by the Company or its agents or representatives, a “Company Additional Written Communication”), the Company will furnish to the Initial Purchaser and counsel for the Initial Purchaser a copy of such written communication for review and will not make, prepare, use, authorize, approve or refer to any such written communication to which the Initial Purchaser reasonably objects.  The Company and the Guarantors consent to the use by the Initial Purchaser of a Company Additional Written Communication that contains (A) information describing the preliminary terms of the Series A Notes or their offering or (B) information that describes the final terms of the Series A Notes or their offering and that is included in or is subsequently included in the Final Offering Memorandum, including by means of the Pricing Supplement

 

(d)   Preparation of Amendments and Supplements.  At any time prior to the completion of the resale by the Initial Purchaser of all of the Series A Notes, (i) if any event shall occur as a result of which, in the reasonable judgment of the Company or the Initial Purchaser, it becomes necessary or advisable to amend or supplement the Time of Sale Document or the Final Offering Memorandum to correct any untrue statement of a material fact or omission to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, or if it is necessary to amend or supplement the Time of Sale Document or the Final Offering Memorandum to comply with any Applicable Law, to prepare, at the expense of the Company, an appropriate amendment or supplement to the Time of Sale Document and the Final Offering Memorandum (in form and substance reasonably satisfactory to the Initial Purchaser) so that (A) as so amended or supplemented, the Time of Sale Document and the Final Offering Memorandum will not include an untrue statement of material fact or omit to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, and (B) the Time of Sale Document and the Final Offering Memorandum will comply with Applicable Law and (ii) if in the reasonable judgment of the Company it becomes necessary or advisable to amend or supplement the Time of Sale Document or the Final Offering Memorandum so that the Time of Sale Document and the Final Offering Memorandum will contain all of the information specified in, and meet the requirements of, Rule 144A(d)(4) under the Securities Act, to prepare an appropriate amendment or supplement to the Time of Sale Document or the Final Offering Memorandum (in form and substance reasonably satisfactory to the Initial Purchaser) so that the Time of Sale Document or the Final Offering Memorandum, as so amended or supplemented, will contain the information specified in, and meet the requirements of, such Rule.

 

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(e)   Qualification of Securities.  To cooperate with the Initial Purchaser and the Initial Purchaser’s counsel in connection with the qualification of the Notes under the securities or blue sky laws of such jurisdictions as the Initial Purchaser may request and continue such qualification in effect so long as reasonably required for Exempt Resales; provided, that none of the Company or any of the Guarantors shall be required in connection therewith (i) to file any general consent to service of process or take any action that would subject it to service of process in suits other than those arising out of the offer and sale of the Notes in any jurisdiction in which it is not otherwise so subject, (ii) to register or qualify as a foreign corporation or as a dealer in securities in any jurisdiction where it is not now so qualified or (iii) to subject itself to general taxation in respect of doing business in any jurisdiction in which it is not otherwise so subject.

 

(f)    Costs and Expenses.  Whether or not any of the Transactions are consummated or this Agreement is terminated, to pay (i) all costs, expenses, fees and taxes (other than federal, state or local taxes of the Initial Purchaser) incident to and in connection with: (A) the preparation, printing and distribution of the Time of Sale Document and the Final Offering Memorandum and any and all amendments and supplements thereto (including, without limitation, financial statements and exhibits), and all other agreements, memoranda, correspondence and other documents prepared and delivered in connection herewith (including the furnishing of copies of the foregoing to the Initial Purchaser and such other persons as the Initial Purchaser may reasonably request), (B) the printing, processing and distribution (including, without limitation, word processing and duplication costs) and delivery of each of the Transaction Documents, (C) the preparation, issuance and delivery of the Notes, and (D) the qualification of the Notes for offer and sale under the securities or blue sky laws of the several states (including, without limitation, filing fees and reasonable fees and disbursements of the Initial Purchaser’s counsel relating to such registration or qualification and the preparation of memoranda related thereto); (ii) all fees and expenses of the counsel and accountants of the Company and the Guarantors; (iii) all fees and expenses in connection with approval of the Notes by DTC for “book-entry” transfer; (iv) all fees charged by rating agencies in connection with the rating of the Notes; (v) the fees and expenses of the Trustee and the Collateral Agent; (vi) all costs and expenses of the Registered Exchange Offer, the Exchange Offer Registration Statement and any Shelf Registration Statement, as provided in the Registration Rights Agreement; (vii) all costs and expenses in connection with the creation and perfection of the security interest to be created and perfected pursuant to the Collateral Agreements (including without limitation, filing and recording fees, search fees, taxes and costs of title policies); (viii) all other fees, disbursements and out-of-pocket expenses incurred by the Initial Purchaser in connection with its services to be rendered hereunder including, without

 

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limitation, the fees and disbursements of White & Case LLP, counsel to the Initial Purchaser, travel and lodging expenses, chartering of airplanes, roadshow or investor presentation expenses, word processing charges, the costs of printing or producing any investor presentation materials, messenger and duplicating service expenses, facsimile expenses and other customary expenditures and (ix) all other costs and expenses incident and necessary to the performance of the obligations of the Company and the Guarantors under the Transaction Documents for which provision is not otherwise made in this section.

 

(g)   Use of Proceeds.  To use the proceeds from the Offering in all material respects as described in the Time of Sale Document and the Final Offering Memorandum under the caption “Use of Proceeds.”

 

(h)   Security Interests.  To do and perform in all material respects all things required to be done and performed under the Collateral Agreements prior to, on and after the Closing Date, including, without limitation, all things necessary or reasonably advisable to obtain, record and effect (as applicable) on or prior to the Closing Date (i) all Permits (as defined below) necessary for the granting, perfection and enforcement of the Security Interests and for the foreclosure by the Collateral Agent thereon following an Event of Default (as defined in the Indenture), (ii) all termination statements, mortgage releases and other documents necessary to terminate any Liens (as defined in the Indenture) on the Collateral (other than Liens created by the Indenture, Liens created by the Collateral Agreements and Permitted Liens (as defined in the Indenture)), and (iii) subject to the terms of the Intercreditor Agreement, any Permitted Liens and clause 5(q) below, a valid and perfected and enforceable, first priority Security Interest in each of the assets and shares of capital stock which are to constitute the Collateral.

 

(i)    Integration.  Not to, and to ensure that none of its affiliates (as defined in Rule 501(b) under the Securities Act, but excluding Jefferies & Company, Inc. and its affiliates, as to which no covenant is made) will, sell, offer for sale or solicit offers to buy or otherwise negotiate in respect of any “security” (as defined in the Securities Act) that would be integrated with the sale of the Series A Notes in a manner that would require the registration under the Securities Act of the sale to the Initial Purchaser or of the offers or sales of Series A Notes pursuant to Exempt Resales.

 

(j)    Rule 144A Information.  For so long as any of the Series A Notes remain outstanding and are “restricted securities” within the meaning of Rule 144(a)(3) under the Securities Act, during any period in which the Company is not subject to Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), to make available, upon request, to

 

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any holder of the Notes in connection with any sale thereof and any prospective Eligible Purchaser of such Notes from such holder, the information required by Rule 144A(d)(4) under the Securities Act.

 

(k)   DTC.  To use reasonable best efforts to obtain the approval of DTC for “book-entry” transfer of the Notes, and to comply in all material respects with the representation letter to DTC relating to the approval of the Notes by DTC for “book entry” transfer.

 

(l)    Reports.  For so long as any of the Notes are outstanding, or until the second anniversary of the Closing Date, whichever is earlier, to furnish to the Initial Purchaser copies of all reports and other communications (financial or otherwise) furnished by the Company to the Trustee or to the holders of Notes and, as soon as available, copies of any reports or financial statements not available on EDGAR furnished to or filed by the Company with the Commission or any national securities exchange on which any class of securities of the Company may be listed.

 

(m)  No Selling Efforts or General Solicitation.  Except in connection with the Registered Exchange Offer or the filing of the Shelf Registration Statement, not to, and not to authorize or permit any person acting on its behalf to, (i) distribute any offering material in connection with the offer and sale of the Series A Notes other than the Time of Sale Document and the Final Offering Memorandum and any amendments and supplements to the Preliminary Offering Memorandum or the Final Offering Memorandum prepared in compliance with this Agreement, (ii) solicit any offer to buy or offer to sell the Series A Notes by means of any form of general solicitation or general advertising (including, without limitation, as such terms are used in Regulation D under the Securities Act) or in any manner involving a public offering within the meaning of Section 4(2) of the Securities Act, or (iii) engage in any directed selling efforts within the meaning of Regulation S, and all such persons will comply with the offering restrictions requirement of Regulation S.

 

(n)   Performance of Agreements.  To comply with all of its agreements set forth in the Transaction Documents, and to do and perform in all material respects all things required or necessary to be done and performed under this Agreement by it prior to the Closing Date and to satisfy in all material respects all conditions precedent to the Initial Purchaser’s obligations under this Agreement to purchase the Notes.

 

(o)   Stabilization or Manipulation.  Not to take, directly or indirectly, any action designed to or that might be reasonably expected to cause or result in stabilization or manipulation of the price of the Notes or any other

 

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reference security, whether to facilitate the sale or resale of the Notes or otherwise.

 

(p)   Sale of Restricted Securities.  During the one year period after the Closing Date (or such shorter period as may be provided for in Rule 144 under the Securities Act, as the same may be in effect from time to time), to not, and to not permit any current or future subsidiaries of either the Company or any other Affiliates controlled by the Company to, resell any of the Series A Notes which constitute “restricted securities” under Rule 144 that have been reacquired by the Company, any current or future subsidiaries or any other Affiliates controlled by the Company, except pursuant to an effective registration statement under the Securities Act.

 

(q)   Post-Closing Deliverables.  Within 60 days from the Closing Date, (i) to deliver (A) mortgages and deeds of trust (which include fixture filings and assignments of rent, assignments of leases and security agreements, as applicable) in form and substance substantially similar to the Original Indenture Mortgages, to be recorded in all jurisdictions necessary to perfect the Liens created by the Collateral Agreements, covering the Premises, which mortgages and deeds of trust (which include fixture filings and assignments of rent, assignments of leases and security agreements, as applicable) shall be so recorded on or about 60 days from the Closing Date; (B) an irrevocable and unconditional written agreement from a title insurance company, reasonably acceptable to the Initial Purchaser, to issue A.L.T.A. extended coverage lender’s policies of title insurance (each, a “Title Policy”), each in an amount equal to 100% of the fair market value of the Premises to be covered by the related mortgage, as estimated by the Company in good faith, and on forms and with endorsements required by the Initial Purchaser, insuring the validity, first priority and enforceability of the Liens created by the mortgages on the Premises (and expressly including coverage for mechanic’s and materialmen’s liens), subject only to those title matters and exceptions approved by the Initial Purchaser; (C) the most recent existing survey of each Premise, together with either (i) an updated survey certification in favor of the Collateral Agent from the applicable surveyor stating that, based on a visual inspection of the applicable property and the knowledge of the surveyor, there has been no change in the facts depicted in the survey, or (ii) an affidavit from the Company or the applicable Subsidiary Guarantor stating that there has been no material changes to the applicable property, in each case sufficient for the title insurer to remove the standard survey exception from the applicable Title Policy and issue the endorsements required pursuant to the provisions of clause (H) above and (ii) to cause to be delivered to the Initial Purchasers a favorable opinion from relevant local counsel (in form and substance reasonably satisfactory to the Initial Purchaser and counsel to the Initial Purchaser), relating to each mortgage

 

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or deed of trust.  Neither the Collateral Agent nor the Trustee shall have any responsibility nor obligation to cause any of the post-closing deliverables described in this Section 5(q) to be delivered nor any liability in the event any such post-closing deliverables are not so delivered.

 

6.     Representations and Warranties of the Company and the Guarantors.  Each of the Company and the Guarantors, jointly and severally, represents and warrants to the Initial Purchaser that:

 

(a)   Offering Documents.  (i) The Time of Sale Document, as of the Applicable Time, did not include any untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, (ii) the Final Offering Memorandum, as of the date thereof, did not and, at the Closing Date, will not include any untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading and (iii) each Company Additional Written Communication, when taken together with the Time of Sale Document at the time such Company Additional Written Communication was made, did not, and, at the Closing Date, will not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading.  No statement of material fact included in the Final Offering Memorandum has been omitted from the Time of Sale Document, and no statement of material fact included in the Time of Sale Document has been omitted from the Final Offering Memorandum.  The foregoing representation and warranty made in this Section 6(a) shall not apply to any statements or omissions made in reliance on and in conformity with information relating to the Initial Purchaser furnished in writing to the Company by the Initial Purchaser specifically for inclusion in the Time of Sale Document or the Final Offering Memorandum.  The parties hereto acknowledge that for purposes of this Agreement (including this Section 6(a) and Section 8) the only information furnished in writing to the Company by the Initial Purchaser specifically for inclusion in the Time of Sale Document or the Final Offering Memorandum is the information set forth (i) on the cover page of the Final Offering Memorandum with respect to the price of the Notes, (ii) in the first sentence of the fifth paragraph under the caption “Plan of Distribution,” (iii) in the fifth and sixth sentences of the sixth paragraph under the caption “Plan of Distribution,” (iv) in the first and last sentences of the seventh paragraph under the caption “Plan of Distribution” and (v) the sixth and seventh sentences of the last risk factor on page 24 of the Time of Sale Document and the Final Offering Memorandum  (such information described in the immediately preceding clauses (i) through (v) of this Section 6(a), the “Furnished Information”).

 

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Each of the Time of Sale Document and the Final Offering Memorandum, as of their respective dates contained, and the Final Offering Memorandum, as of the Closing Date and as amended or supplemented, will contain, all of the information specified in, and meet the requirements of, Rule 144A(d)(4) under the Securities Act.

 

“Applicable Time” means 10:50 a.m., New York time, on the date hereof or such other time as may be agreed upon in writing by the Company and the Initial Purchaser.

 

(b)   Limitation on Offering Materials.  The Company has not prepared, made, used, authorized, approved or distributed and will not, and will not cause or allow its agents or representatives to, prepare, make, use, authorize, approve or distribute any written communication that constitutes an offer to sell or a solicitation of an offer to buy the Notes, or otherwise is prepared to market the Notes, other than (i) the Time of Sale Document, (ii) the Final Offering Memorandum and (iii) any Company Additional Written Communication used in accordance with Section 5(c) hereof.

 

(c)   144A Eligibility.  No securities of the same class (within the meaning of Rule 144A) as the Series A Notes are listed on a national securities exchange registered under Section 6 of the Exchange Act or quoted in a United States automated inter-dealer quotation system.  Upon issuance, the Series A Notes will be eligible for resale pursuant to Rule 144A under the Securities Act.

 

(d)   Due Organization; Good Standing.  Each of the Company and the Guarantors (i) has been duly incorporated, is validly existing and is in good standing under the laws of its jurisdiction of incorporation, (ii) has all requisite corporate power and corporate authority to conduct and carry on its business and to own, lease, use and operate its properties and assets as described in the Time of Sale Document and the Final Offering Memorandum, and (iii) is duly qualified or licensed to do business and is in good standing as a foreign corporation, authorized to do business in each jurisdiction in which the nature of its business or the ownership, leasing, use or operation of its properties and assets requires such qualification or licensing, except where such failure to be so qualified or licensed or in good standing as a foreign corporation would not, singly or in the aggregate, have a material adverse effect on (A) the properties, business, operations, earnings, assets, liabilities or condition (financial or otherwise) of the Company and the Guarantors, taken as a whole, (B) the ability of the Company or any of the Guarantors to perform in all material respects its obligations under any of the Transaction Documents, or (C) the validity or enforceability of any of the Transaction Documents or the consummation of any of the Transactions (each, a “Material Adverse Effect”).

 

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(e)   Capitalization.  All of the outstanding shares of capital stock of the Company have been duly authorized, are validly issued, fully paid and nonassessable, and are not subject to, any preemptive or similar rights.  The table under the caption “Capitalization” in the Time of Sale Document and the Final Offering Memorandum (including the footnotes thereto) sets forth, as of its date, the actual capitalization of the Company.  The column titled “As Adjusted” in the table under the caption “Capitalization” in the Offering Memorandum (including the footnote thereto) sets forth, as of its date, the capitalization of the Company, after giving effect to the Transactions.  Immediately following the Closing, except as set forth in such table, neither the Company nor any of the Guarantors will have any liabilities, absolute, accrued, contingent or otherwise other than:  (i) liabilities that are reflected in the Company Financial Statements (as defined below), (ii) loans made under the New Credit Facility, (iii) liabilities incurred subsequent to December 31, 2010, in the ordinary course of business, consistent with past practice, and (iv) other liabilities that would not, singly or in the aggregate, have a Material Adverse Effect.

 

(f)    Subsidiaries.  The Company does not have a direct or indirect equity or voting interest in any other entity except the Guarantors and Capital City Press, Inc.  Attached as Schedule II is a list of the Guarantors and their jurisdictions of incorporation.  All of the issued and outstanding shares of capital stock or other equity interests of the Guarantors have been duly authorized, are validly issued, fully paid and nonassessable, and are not subject to, any preemptive or similar rights and are owned by the Company free and clear of all Liens, except for (v) Liens created by the Indenture, (w) Liens created by the Collateral Agreements, (x) Liens securing Indebtedness incurred under the New Credit Facility, (y) Liens that will be terminated on the Closing Date and (z) Permitted Liens that do not, singly or in the aggregate, materially detract from the value of such shares or equity interests and would not, singly or in the aggregate, have a Material Adverse Effect.  Except as disclosed in the Time of Sale Document and the Final Offering Memorandum, there are no outstanding (i) securities convertible into, or exchangeable for, any capital stock of the Company or any of the Guarantors, (ii) options, warrants or other rights to purchase or subscribe for any capital stock of, or any securities convertible into or exchangeable for any capital stock of, the Company or any of the Guarantors or (iii) contracts, commitments, agreements, understandings, arrangements, undertakings, rights, calls or claims of any kind relating to the issuance of any capital stock of the Company or any of the Guarantors, any such convertible or exchangeable securities or any such options, warrants or rights.  Except as set forth in this Section 6(f), upon consummation of the Transactions, none of the Company or any Guarantors will directly or indirectly own any capital stock of or other equity interest in any person.

 

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(g)   No Other Registration Rights.  No holder of securities of the Company or any of the Guarantors will be entitled to have such securities registered under the Registration Statements required to be filed by the Company and the Guarantors with respect to the Series A Notes pursuant to the Registration Rights Agreement.

 

(h)   Power and Authority.  Each of the Company and the Guarantors has all requisite corporate power and corporate authority to execute and deliver, and to perform its obligations under, the Transaction Documents to which it is a party and to consummate the Transactions.

 

(i)    Authorization of this Agreement.  This Agreement and the Transactions contemplated hereby (including, without limitation, the Offering and the issuance and sale of the Notes in accordance with this Agreement) have been duly authorized by each of the Company and the Guarantors, and this Agreement has been validly executed and delivered by, and is the legal, valid and binding obligation of, each of the Company and the Guarantors, enforceable against each of the Company and the Guarantors in accordance with its terms, except that (i) such enforceability may be limited by bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and other similar laws relating to or affecting creditor’s rights generally, and by general equitable principles (whether considered in a proceeding in equity or at law) and (ii) any rights to indemnification and contribution may be limited by federal and state securities laws and principles of public policy.

 

(j)    Authorization of Indenture.  The Indenture and the Transactions contemplated thereby have been duly authorized by each of the Company and the Guarantors.  On the Closing Date, when the Series A Notes are delivered and paid for by the Initial Purchaser and authenticated by the Trustee pursuant to this Agreement and the Indenture, the Indenture will have been validly executed and delivered by, and (assuming the due authorization, execution and delivery thereof by the Trustee) will be the legal, valid and binding obligation of, each of the Company and the Guarantors, enforceable against each of the Company and the Guarantors in accordance with its terms, except that (i) such enforceability may be limited by bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and other similar laws relating to or affecting creditor’s rights generally, and by general equitable principles (whether considered in a proceeding in equity or at law) and (ii) any rights to indemnification and contribution may be limited by federal and state securities laws and principles of public policy.  On the Closing Date, the Indenture will conform to the requirements for qualification under the Trust Indenture Act of 1939, as amended (the “TIA”), applicable to an indenture that is required to be qualified under the TIA.

 

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(k)   Authorization of Registration Rights Agreement.  The Registration Rights Agreement and the Transactions contemplated thereby have been duly authorized by each of the Company and the Guarantors and, on the Closing Date, the Registration Rights Agreement will have been validly executed and delivered by, and (assuming the due authorization, execution and delivery thereof by the Initial Purchaser) will be the legal, valid and binding obligation of the Company and the Guarantors, enforceable against the Company and the Guarantors in accordance with its terms, except that (i) such enforceability may be limited by bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and other similar laws relating to or affecting creditor’s rights generally, and by general equitable principles (whether considered in a proceeding in equity or at law) and (ii) any rights to indemnification and contribution may be limited by federal and state securities laws and principles of public policy.  The Registration Rights Agreement, when executed and delivered, will conform in all material respects to the description thereof in the Time of Sale Document and the Final Offering Memorandum.

 

(l)    Authorization of Series A Notes.  The Series A Notes have been duly authorized by the Company for issuance and sale to the Initial Purchaser pursuant to this Agreement and, on the Closing Date, when the Series A Notes are delivered to and paid for by the Initial Purchaser and authenticated by the Trustee pursuant to this Agreement and the Indenture, will have been validly executed, issued and delivered by the Company in accordance with the terms of this Agreement and the Indenture and will be legal, valid and binding obligations of the Company entitled to the benefits of the Indenture and enforceable against the Company in accordance with their terms, except that such enforceability may be limited by bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and other similar laws relating to or affecting creditor’s rights generally, and by general equitable principles (whether considered in a proceeding in equity or at law).  The Series A Notes, when issued, authenticated and delivered, will conform in all material respects to the description thereof in the Time of Sale Document and the Final Offering Memorandum.

 

(m)  Authorization of Series B Notes.  The Series B Notes have been duly authorized by the Company and, when issued in the Registered Exchange Offer, will have been validly executed, authenticated, issued and delivered in accordance with the terms of the Indenture, the Registration Rights Agreement and the Registered Exchange Offer and will be legal, valid and binding obligations of the Company, entitled to the benefits of the Indenture and enforceable against the Company in accordance with their terms, except that such enforceability may be limited by bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and other similar laws relating to or

 

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affecting creditor’s rights generally, and by general equitable principles (whether considered in a proceeding in equity or at law).  The Series B Notes, when issued, authenticated and delivered, will conform in all material respects to the description thereof in the Time of Sale Document and the Final Offering Memorandum.

 

(n)   Authorization of Guarantees of Series A Notes.  The Guarantee to be endorsed on the Series A Notes by each Guarantor has been duly authorized by each such Guarantor and, when issued and executed by the Guarantors, will have been validly executed and delivered by each such Guarantor in accordance with the terms of the Indenture.  The Guarantee of each Guarantor endorsed on the Series A Notes will be the legal, valid and binding obligation of each such Guarantor, enforceable against each such Guarantor in accordance with its terms, except that such enforceability may be limited by bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and other similar laws relating to or affecting creditor’s rights generally, and by general equitable principles (whether considered in a proceeding in equity or at law).  The Guarantees of the Series A Notes, when executed and delivered, will conform in all material respects to the description thereof in the Time of Sale Document and the Final Offering Memorandum.

 

(o)   Authorization of Guarantees of Series B Notes.  The Guarantee to be endorsed on the Series B Notes by each Guarantor has been duly authorized by each such Guarantor and, when the Series B Notes are issued in the Registered Exchange Offer, will have been validly executed and delivered by each such Guarantor in accordance with the terms of the Indenture, the Registration Rights Agreement and the Registered Exchange Offer.  When the Series B Notes have been issued, executed and authenticated in accordance with the terms of the Registered Exchange Offer and the Indenture, the Guarantee of each Guarantor endorsed on the Series B Notes will be the legal, valid and binding obligation of each such Guarantor, enforceable against each such Guarantor in accordance with its terms, except that such enforceability may be limited by bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and other similar laws relating to or affecting creditor’s rights generally, and by general equitable principles (whether considered in a proceeding in equity or at law).  The Guarantees of the Series B Notes, when executed and delivered, will conform in all material respects to the description thereof in the Time of Sale Document and the Final Offering Memorandum.

 

(p)   Authorization of Collateral Agreements.  Each of the Collateral Agreements and the Transactions contemplated thereby (including, without limitation, the creation, grant, recording and perfection of the Security Interests, the execution and filing of financing statements and the payment of

 

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any fees and taxes in connection therewith) have been duly authorized by each of the Company and the Guarantors party thereto and, on the Closing Date, each of the Collateral Agreements will have been validly executed and delivered by, and (assuming the due authorization, execution and delivery thereof by the other parties thereto) will be the legal, valid and binding obligation of, the Company and the Guarantors party thereto, enforceable against the Company and the Guarantors party thereto in accordance with its terms, except that (i) such enforceability may be limited by bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and other similar laws relating to or affecting creditor’s rights generally, and by general equitable principles (whether considered in a proceeding in equity or at law) and (ii) any rights to indemnification and contribution may be limited by federal and state securities laws and principles of public policy.

 

(q)   No Violation.  None of the Company or the Guarantors is in violation of its certificate of incorporation or by-laws (collectively, the “Charter Documents”).  None of the Company or the Guarantors is (i) in violation of any federal, state, local or foreign statute, law or ordinance, or any judgment, decree, rule, regulation or order (collectively, “Applicable Law”), of any government, governmental or regulatory agency or body, court, arbitrator or self-regulatory organization, domestic or foreign (each, a “Governmental Authority”), other than violations that would not, singly or in the aggregate, have a Material Adverse Effect, or (ii) in breach of or default under any bond, debenture, note or other evidence of indebtedness, indenture, mortgage, deed of trust, lease or any other agreement or instrument to which any such person is a party or by which any of them or any of their respective property is bound (collectively, “Applicable Agreements”), other than as disclosed in the Time of Sale Document and the Final Offering Memorandum and other than breaches or defaults that would not, singly or in the aggregate, have a Material Adverse Effect.  Except as disclosed in the Time of Sale Document and the Final Offering Memorandum, there exists no condition that, with the passage of time or otherwise, would (x) constitute a violation of (A) the Charter Documents or (B) Applicable Laws or (y) constitute a breach of or default under any Applicable Agreement or (z) result in the imposition of any penalty or the acceleration of any indebtedness, other than, in the case of the immediately preceding clauses (x)(B), (y) and (z), such violations, breaches, penalties or defaults that would not, singly or in the aggregate, have a Material Adverse Effect.

 

(r)    No Conflict.  Except as disclosed in the Time of Sale Document and the Final Offering Memorandum, none of the execution, delivery or performance of any of the Transaction Documents, nor the compliance with the terms and provisions thereof, nor the consummation of any of the

 

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Transactions shall conflict with, violate, constitute a breach of or a default (with the passage of time or otherwise) under, result in the imposition of a Lien on any assets or capital stock of the Company or any of the Guarantors (except (w) Liens created by the Indenture, (x) Liens created by the Collateral Agreements, (y) Liens securing Indebtedness incurred under the New Credit Facility and (z) Permitted Liens that do not, singly or in the aggregate, materially detract from the value of or materially impair the use of such assets or capital stock and would not, singly or in the aggregate, have a Material Adverse Effect), or result in an acceleration of indebtedness under or pursuant to, (i) the Charter Documents, (ii) any Applicable Agreement or (iii) (assuming the accuracy of the representations and warranties of the Initial Purchaser in Section 7 of this Agreement) any Applicable Law, other than, in the case of the immediately preceding clauses (ii) and (iii), such violations, breaches, defaults impositions or accelerations that would not, singly or in the aggregate, have a Material Adverse Effect.  After giving effect to the Transactions, no Default or Event of Default (each, as defined in the Indenture) will exist.

 

(s)   Permits.  Except as disclosed in the Time of Sale Document and the Final Offering Memorandum and assuming the accuracy of the representations and warranties of the Initial Purchaser in Section 7 of this Agreement, no permit, certificate, authorization, approval, consent, license or order of, or filing, registration, declaration or qualification with, any Governmental Authority or any other person (collectively, “Permits”) is required in connection with, or as a condition to, the execution, delivery or performance of any of the Transaction Documents, the compliance with the terms and provisions thereof or the consummation of any of the Transactions, other than (i) such Permits as have been made or obtained on or prior to the Closing Date, which Permits are in full force and effect on the Closing Date, (ii) as may be required for Exempt Resales under the securities or blue sky laws of the various jurisdictions in which the Notes are being offered by the Initial Purchaser, (iii) the order of the Commission declaring the Exchange Offer Registration Statement or the Shelf Registration Statement, as the case may be, effective, (iv) the recording and filing of the mortgages, applicable financing statements, applicable control agreements and filings with the United States Patent and Trademark Office and (v) such Permits, the failure of which to make or obtain would not, singly or in the aggregate, have a Material Adverse Effect.

 

(t)    No Proceedings.  Except as disclosed in the Time of Sale Document and the Final Offering Memorandum, there is no action, claim, suit, hearing, notice of violation or deficiency, or proceeding (including, without limitation, any investigation or partial proceeding, such as a deposition), domestic or foreign (collectively, “Proceedings”), pending or, to the knowledge of the Company, threatened (i) with respect to any of the Company or any of the

 

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Guarantors in connection with, or that seeks to restrain, enjoin, prevent the consummation of, or otherwise challenge, any of the Transaction Documents or any of the Transactions, or (ii) that would, singly or in the aggregate, have a Material Adverse Effect.  None of the Company or any of the Guarantors is subject to any judgment, order, decree, rule or regulation of any Governmental Authority that would, singly or in the aggregate, have a Material Adverse Effect.  No injunction or order has been issued and no Proceeding is pending or, to the knowledge of the Company, threatened that (i) asserts that the offer, sale and delivery of the Series A Notes to the Initial Purchaser pursuant to this Agreement or the initial resale of the Series A Notes by the Initial Purchaser in the manner contemplated by this Agreement is subject to the registration requirements of the Securities Act, or (ii) would prevent or suspend the issuance or sale of the Notes, including the Exempt Resales, or the use of the Time of Sale Document and the Final Offering Memorandum, or any amendment or supplement thereto, in any jurisdiction.

 

(u)   Title to Assets.  Each of the Company and the Guarantors (i) have good and marketable title, free and clear of all Liens (other than (w) Liens created by the Indenture, (x) Liens created by the Collateral Agreements, (y) Liens securing Indebtedness incurred under the New Credit Facility, and (z) Permitted Liens that would not, singly or in the aggregate, have a Material Adverse Effect), to all property and assets owned by it, including those described in the Time of Sale Document and the Final Offering Memorandum as being owned by it, and (ii) hold a valid leasehold interest, which leasehold interest is in full force and effect, with respect to each lease of real and personal property leased by it, other than exceptions that would not, singly or in the aggregate, have a Material Adverse Effect.

 

(v)   Sufficiency and Condition of Assets.  The assets of the Company and the Guarantors include all of the assets and properties necessary to the conduct of the businesses as currently conducted by them, and such assets are in working condition, except where the failure of such assets to be in working condition would not, singly or in the aggregate, have a Material Adverse Effect.  Without limiting the foregoing, each of the real properties of the Company and the Guarantors (including, without limitation, all buildings, structures, improvements and fixtures located thereon, thereunder, thereover or therein, and all appurtenances thereto and other aspects thereof):  (i) is in good working condition and repair and, to the knowledge of the Company, is structurally sound and free of defects, with no alterations or repairs being required thereto under applicable law or insurance company requirements; and (ii) is otherwise suitable, sufficient and adequate for its current use, operation and occupancy, except, in each such case, for such failures to meet such

 

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standards as would not, singly or in the aggregate, have a Material Adverse Effect.

 

(w)  Insurance.  Each of the Company and the Guarantors maintains reasonably adequate insurance covering its properties, operations, personnel and businesses against losses and risks in accordance with customary industry practice.  To the knowledge of the Company, all such insurance is outstanding and duly in force.

 

(x)    Real Property. No condemnation, eminent domain, or similar proceeding exists, is pending or, to the knowledge of the Company, is threatened, with respect to or that could affect any real property owned by the Company or any of the Guarantors or that, to the knowledge of the Company, could affect any real property leased by the Company or any of the Guarantors, except, in each case, for such proceedings as would not, singly or in the aggregate, have a Material Adverse Effect.  Other than the Specified Property, no real property owned by the Company or any of the Guarantors is subject to any sales contract, option, right of first refusal or similar agreement or arrangement with any third party. There is no real property currently under contract or subject to an option in favor of the Company or any of the Guarantors, except for real property which the failure of the Company or any of the Guarantors to acquire, would not, singly or in the aggregate, have a Material Adverse Effect.

 

(y)   Security Interests.  (i)  Upon execution and delivery of the Collateral Agreements by all parties thereto and the issuance of the Notes, the Collateral Agreements will create, in favor of the Collateral Agent, for the benefit of the holders of the Notes, a legal, valid and enforceable Lien on, and security interest in, all of the right, title and interest of the Company and the Guarantors in the Collateral (except as may be limited by bankruptcy laws other than Section 544(a) of the Bankruptcy Code).  Upon (A) the execution and delivery of the relevant Collateral Agreements by all parties thereto, (B) in the case of Collateral in which a security interest may be perfected by filing a Uniform Commercial Code financing statement, the filing of such financing statement with the appropriate filing office, (C) in the case of Collateral in which a security interest may not be perfected by filing a Uniform Commercial Code financing statement or in which a security interest may only be perfected by the Collateral Agent obtaining “control” (as defined in the Uniform Commercial Code) or possession of such Collateral, the obtaining by the Collateral Agent of “control” or the delivery to and possession by the Collateral Agent of such Collateral and (D) in the case of Collateral in which a Lien or security interest may be perfected by recording a mortgage, the recording and filing of such mortgage with the appropriate governmental office of record, the

 

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Security Interests in such Collateral will be valid and perfected, and such Collateral will be subject in the case of priority only to Permitted Liens (subject to the Intercreditor Agreement).  (ii) As of the Closing Date, there will be no currently authorized financing statement, security agreement, chattel mortgage, real estate mortgage or other document filed or recorded with any filing records, registry, or other public office, that purports to cover, affect or give notice of any present or possible future Lien on any assets or property of the Company or any Guarantor, except for (A) Liens created by the Indenture, (B) Liens created by the Collateral Agreements, (C) Liens securing Indebtedness incurred under the New Credit Facility, and (D) Permitted Liens.  (iii) All information certified by an officer of the Company in the Perfection Certificate to be dated as of the Closing Date and to be delivered by such officer on behalf of the Company will be true and correct in all material respects as of the Closing Date (except for information stated to be certified as of a date other than the Closing Date, which information will be true and correct in all material respects as of such other date). (iv) As of the Closing Date (or such other date to the extent expressly stated in the Collateral Agreements), the representations and warranties of each of the Company and the Guarantors in the Collateral Agreements are true and correct (if such representations and warranties are not already qualified with respect to materiality) in all material respects.

 

(z)    Taxes.  All material tax returns required to be filed (taking into account all applicable extensions) by the Company or any of the Guarantors in any jurisdiction (including foreign jurisdictions) have been filed and, when filed, all such returns were accurate in all material respects, and all material taxes, assessments, fees and other charges (including, without limitation, withholding taxes, penalties and interest) due or claimed to be due from the Company or any of the Guarantors have been paid, other than those being contested in good faith by appropriate proceedings, or those that are currently payable without penalty or interest and, in each case, for which an adequate reserve or accrual has been established on the books and records of the Company or the Guarantors, as applicable, in accordance with generally accepted accounting principles of the United States, consistently applied (“GAAP”).  There are no actual or, to the knowledge of the Company, proposed tax assessments for any taxable period against the Company or any of the Guarantors that would, singly or in the aggregate, have a Material Adverse Effect.  To the knowledge of the Company, the charges, accruals and reserves on the books and records of the Company and the Guarantors, as applicable, in respect of any tax liability for any tax periods not finally determined are adequate to meet any material assessments of tax.

 

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(aa)         Intellectual Property.  The Company and the Guarantors own, possess or are licensed under, or have the right to use or can acquire on reasonable terms, all patents, patent rights, licenses, inventions, copyrights, know-how (including trade secrets and other unpatented and/or unpatentable proprietary or confidential information, systems or procedures), trademarks, service marks and trade names (collectively, “Intellectual Property”) currently used in the conduct of their businesses, free and clear of all Liens, other than (w) Liens created by the Indenture, (x) Liens created by the Collateral Agreements, (y) Liens securing Indebtedness incurred under the New Credit Facility, and (z) Permitted Liens that would not, singly or in the aggregate, have a Material Adverse Effect.  No written claims have been received by the Company or any Guarantor alleging that the use of any such Intellectual Property by the Company or any of the Guarantors in their businesses infringes the intellectual property rights of any third party, or questioning the validity or effectiveness of any license or agreement related thereto (other than any claims that, if successful, would not, individually or the aggregate, have a Material Adverse Effect), and, to the knowledge of the Company, there is no valid basis for any such claim.  To the knowledge of the Company, the use of such Intellectual Property by the Company and the Guarantors does not infringe on the Intellectual Property rights of any other person.

 

(bb)         Accounting Controls.  Each of the Company and the Guarantors maintains a system of internal accounting controls sufficient to provide reasonable assurance that (i) material transactions are executed in accordance with management’s general or specific authorizations, (ii) material transactions are recorded as necessary to permit preparation of financial statements in conformity with GAAP 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 material differences.

 

(cc)         Financial Statements.  The audited consolidated financial statements and related notes and supporting schedules of the Company and the Guarantors contained in the Time of Sale Document and the Final Offering Memorandum (the “Financial Statements”) present fairly, in all material respects, the financial position, results of operations and cash flows of the Company and its consolidated subsidiaries, as of the respective dates and for the respective periods to which they apply and have been prepared in accordance with GAAP applied on a consistent basis throughout the periods involved (except as noted therein) and the requirements of Regulation S-X. The financial data set forth under the captions “Summary Historical Consolidated Financial Data” and “Selected Historical Consolidated Financial Data” in the Time of Sale

 

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Document and the Final Offering Memorandum has been prepared on a basis consistent with that of the Financial Statements and present fairly the financial position and results of operations of the Company and its consolidated subsidiaries as of the respective dates and for the respective periods indicated.

 

All other financial, statistical and market and industry data and forward-looking statements (within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act) contained in the Time of Sale Document and the Final Offering Memorandum are fairly and accurately presented in all material respects, are based on or derived from sources that the Company believes to be reliable and accurate in all material respects and are presented on a reasonable basis.  No other financial statements or supporting schedules are required to be included in the Time of Sale Document or the Final Offering Memorandum.

 

(dd)         Independent Accountants.  PricewaterhouseCoopers, LLP, who have certified and expressed their opinion with respect to the financial statements including the related notes thereto and supporting schedules contained in the Time of Sale Document and the Final Offering Memorandum, are (i) an independent registered public accounting firm with respect to the Company and the Guarantors within the applicable rules and regulations adopted by the SEC and as required by the Securities Act, (ii) in compliance with the applicable requirements relating to the qualification of accountants Regulation S-X and (iii) a registered public accounting firm as defined by the Public Company Accounting Oversight Board (United States) whose registration has not been suspended or revoked and who has not requested such registration to be withdrawn.

 

(ee)         No Material Adverse Change.  Subsequent to the respective dates as of which information is contained in the Time of Sale Document and the Final Offering Memorandum, except as disclosed in the Time of Sale Document and the Final Offering Memorandum, (i) the Company and the Guarantors have not incurred any liabilities, direct or contingent, that are material, singly or in the aggregate, to them, taken as a whole, and have not entered into any transactions not in the ordinary course of business, that are material, singly or in the aggregate, to them, taken as a whole, (ii) there has not been any material decrease in the capital stock, or any material increase in long-term indebtedness or any material increase in short-term indebtedness of the Company or the Guarantors, or any payment of or declaration to pay any dividends or any other distribution with respect to the Company or the Guarantors, and (iii) there has not been any material adverse change in the properties, business, operations, earnings, assets, liabilities or condition (financial or otherwise) of the Company and the Guarantors taken as a whole

 

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(each of clauses (i), (ii) and (iii), a “Material Adverse Change”).  To the knowledge of the Company, there is no event that has occurred which could reasonably be expected, singly or in the aggregate, to have a Material Adverse Effect or a Material Adverse Change, except such events as have been disclosed in the Time of Sale Document and the Final Offering Memorandum.

 

(ff)           Ratings.  No “nationally recognized statistical rating organization” as such term is defined for purposes of Rule 436(g)(2) under the Securities Act (i) has imposed (or has informed the Company or any Guarantor that it is considering imposing) any condition (financial or otherwise) on the Company’s or any Guarantor’s retaining any rating assigned to any securities of the Company or any Guarantor, or (ii) has indicated to the Company or any Guarantor that it is considering (A) the downgrading, suspension, or withdrawal of, or any review for a possible change that does not indicate the direction of the possible change in, any rating so assigned, or (B) any adverse change in the outlook for any rating of any securities of the Company or any Guarantor.

 

(gg)         Solvency.  The Company and each Guarantor is incurring its respective indebtedness under the Series A Notes and the Guarantees in good faith and for the purposes set forth in the Time of Sale Document and the Final Offering Memorandum under the caption “Use of Proceeds.”  On the Closing Date, immediately before and immediately after giving effect to the Transactions, the Company and the Guarantors (on a consolidated basis) will be Solvent.  As used herein, “Solvent” means, for any person on a particular date, that on such date (i) the present fair salable value of the assets of such person, considered as a whole and as a going concern, will exceed the amount required to pay its liability on its debts; (ii) the present fair salable value of the assets of such person, considered as a whole and as a going concern, will exceed the amount required to pay its probable liability on its existing debts as they become absolute and matured; (iii) the assets of such person will not constitute unreasonably small capital with which to conduct its present businesses after giving due consideration to the prevailing practice in the industry in which it is engaged; and (iv) such person does not intend to incur or believe that it would incur debts beyond its ability to pay as those debts become due.  For purposes of this paragraph, “debts” includes contingent and unliquidated debts.  In computing the amount of contingent liabilities at any time, such liabilities will be computed at the amount that, in light of all of the facts and circumstances existing at the time, represents the amount that can reasonably be expected to become an actual or matured liability after reasonably taking into account the probability that the contingency will occur.  None of the Company or any of the Guarantors is contemplating the filing of a petition by it under any bankruptcy or insolvency laws or the liquidating of all or a substantial portion of its

 

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property, and, to the knowledge of the Company, no person is contemplating the filing of any such petition.

 

(hh)         No Solicitation.  None of the Company, the Guarantors or any of their affiliates or anyone acting on their behalf has (i) taken, directly or indirectly, any action designed to cause or to result in, or that has constituted or which might reasonably be expected to constitute, the stabilization or manipulation of the price of the Notes or to facilitate the sale or resale of any of the Notes, (ii) sold, bid for, purchased, or paid anyone any compensation for soliciting purchases of, any of the Notes, or (iii) except as disclosed in the Time of Sale Document and the Final Offering Memorandum, paid or agreed to pay to any person any compensation for soliciting another to purchase any other securities of the Company or the Guarantors.

 

(ii)           No Registration.  Without limiting any provision herein, no registration under the Securities Act and no qualification of the Indenture under the TIA is required for the offer or sale of the Series A Notes to the Initial Purchaser as contemplated hereby or for the Exempt Resales, assuming (i) that the purchasers in the Exempt Resales are Eligible Purchasers and (ii) the accuracy of the Initial Purchaser’s representations contained in Section 7.  No form of general solicitation or general advertising (within the meaning of Regulation D under the Securities Act) was used by the Company, the Guarantors or any of their respective affiliates or any of their respective representatives in connection with the offer and sale of any of the Series A Notes or in connection with Exempt Resales; provided, that no representation is made in this subsection with respect to the actions of the Initial Purchaser.  No securities of the Company of the same class as the Series A Notes have been offered, issued or sold by the Company or any of its Affiliates within the six-month period immediately prior to the date hereof; and the Company does not have any intention of making, and will not make, an offer or sale of such securities of the Company of the same class as the Series A Notes, for a period of six months after the date of this Agreement, except for the offering of the Series B Notes as contemplated by this Agreement or the Registration Rights Agreement.  As used in this paragraph, the terms “offer” and “sale” have the meanings specified in Section 2(a)(3) of the Securities Act.

 

(jj)           ERISA.  With respect to any employee benefit plans maintained or contributed to by the Company, the Company, and the employee benefit plans, are in compliance in all material respects with all presently applicable provisions of the Employee Retirement Income Security Act of 1974, as amended, (“ERISA”), the Code and the applicable regulations published under ERISA and the Code.  No condition exists or event or transaction has occurred or, to the knowledge of the Company, is reasonably likely to occur in

 

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connection with any employee benefit plan that could result in the Company or any of the Guarantors or any such ERISA Affiliate incurring any liability, fine or penalty that could, singly or in the aggregate, have a Material Adverse Effect.  None of the Company or any of the Guarantors or any such ERISA Affiliate maintains any employee pension benefit plan that is subject to Title IV of ERISA.

 

The terms “employee benefit plan,” “employee pension benefit plan,” and “party in interest” shall have the meanings assigned to such terms in Section 3 of ERISA.  The term “ERISA Affiliate” shall mean any trade or business, whether or not incorporated, that together with the Company would be deemed a “single employer” within the meaning of Section 4001(b) of ERISA, and the term “disqualified person” shall have the meaning assigned to such term in section 4975 of the Internal Revenue Code of 1986, as amended, or the rules, regulations and published interpretations promulgated thereunder (collectively the “Code”).

 

(kk)         Investment Company Act and Other Federal Regulations.  Neither the Company nor any of the Guarantors has taken, and none of them will take, any action that may cause this Agreement or the issuance of the Series A Notes to, and none of the Transactions will, violate or result in a violation of Section 7 of the Exchange Act (including, without limitation, Regulation T (12 C.F.R. Part 220), Regulation U (12 C.F.R. Part 221) or Regulation X (12 C.F.R. Part 224) of the Board of Governors of the Federal Reserve System).  Neither the Company nor any of the Guarantors is, or upon the consummation of the Offering and sale of the Series A Notes and the application of the net proceeds thereof as described in the Time of Sale Document and the Final Offering Memorandum will be, an “investment company” as defined in the Investment Company Act of 1940, as amended.

 

(ll)           No Brokers.  Neither the Company nor any of the Guarantors has dealt with any broker, finder, commission agent or other person (other than the Initial Purchaser) in connection with the Transactions, and neither the Company nor any of the Guarantors is under any obligation to pay any broker’s fee or commission in connection with the Transactions (other than commissions and fees to the Initial Purchaser).

 

(mm)       No Labor Disputes.  Except as would not have, singly or in the aggregate, a Material Adverse Effect, neither the Company nor any of the Guarantors is engaged in any unfair labor practice.  Except as would not have, singly or in the aggregate, a Material Adverse Effect, (i) no unfair labor practice complaint or other proceeding is pending or, to the knowledge of the Company, threatened against the Company or any of the Guarantors before the National

 

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Labor Relations Board or any state, local or foreign labor relations board or any industrial tribunal, and no grievance or arbitration proceeding arising out of or under any collective bargaining agreement is so pending or, to the knowledge of the Company, threatened; (ii) no strike, labor dispute, slowdown or stoppage is pending or, to the knowledge of the Company, threatened against the Company or any of the Guarantors; and (iii) except as disclosed in the Time of Sale Document and the Final Offering Memorandum, no union representation question exists with respect to the employees of the Company or any of the Guarantors, and, to the knowledge of the Company, no union organizing activities are taking place.

 

(nn)         Employment Laws.  Except as disclosed in the Time of Sale Document and the Final Offering Memorandum, to the knowledge of the Company, there is no violation of any federal, state or local law relating to employment and employment practices, discrimination in the hiring, promotion or pay of employees, nor any applicable wage or hour laws by the Company or any of the Guarantors that would, singly or in the aggregate, have a Material Adverse Effect.

 

(oo)         WARN Act.  To the knowledge of the Company, (i) there is no threatened or pending liability against the Company or any of the Guarantors pursuant to the Worker Adjustment and Retraining Notification Act of 1988 (the “WARN Act”) or any applicable state or local law concerning a plant closing or mass layoff; and (ii) there has been no violation of the WARN Act or any similar law within the last four years that would, singly or in the aggregate, have a Material Adverse Effect.

 

(pp)         Environmental Laws.  Except as disclosed in the Time of Sale Document and the Final Offering Memorandum or as otherwise would not, singly or in the aggregate, have a Material Adverse Effect or otherwise require disclosure in the Time of Sale Document and the Final Offering Memorandum, (i) neither the Company nor any of the Guarantors has been or is in violation of any federal, state or local laws and regulations relating to pollution or protection of human health or the environment, including, without limitation, laws and regulations relating to emissions, discharges, releases or threatened releases of toxic or hazardous substances, materials or wastes, or petroleum and petroleum products (“Materials of Environmental Concern”), or otherwise relating to the protection of human health and safety, or the use, treatment, storage, disposal, transport or handling of Materials of Environmental Concern (collectively, “Environmental Laws”), which violation includes, but is not limited to, noncompliance with, or lack of, any permits or other environmental authorizations; (ii) to the knowledge of the Company, there are no circumstances, either past, present or that are reasonably foreseeable, that may lead to any such

 

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violation in the future; (iii) none of the Company or any of the Guarantors has received any written or, to the knowledge of the Company, oral communication, whether from a Governmental Authority or otherwise, alleging any such violation; (iv) there is no pending or, to the knowledge of the Company, threatened claim, action, investigation, notice (written or, to the knowledge of the Company, oral) or other Proceeding by any person or entity alleging potential liability of the Company or any of the Guarantors (or, to the knowledge of the Company against any person or entity for whose acts or omissions the Company or any of the Guarantors is or may reasonably be expected to be liable, either contractually or by operation of law) for investigatory, cleanup, or other response costs, or natural resources or property damages, or personal injuries, attorney’s fees or penalties relating to (A) the presence, or release into the environment, of any Materials of Environmental Concern at any location, or (B) circumstances forming the basis of any violation or potential violation, of any Environmental Law (collectively, “Environmental Claims”); and (v) to the knowledge of the Company, there are no past or present actions, activities, circumstances, conditions, events or incidents that could reasonably be expected to form the basis of any Environmental Claim.

 

In the ordinary course of business, each of the Company and the Guarantors, as appropriate, (i) conducts a periodic review of compliance with Environmental Laws applicable to its business, operations and properties and assesses and evaluates potential liabilities (including, without limitation, for capital or operating expenditures required for cleanup, closure of properties or compliance with Environmental Laws or any permit, license or approval, any related constraints on operating activities, and any potential liabilities to third parties under Environmental Laws); and (ii) has conducted environmental investigations of, and has reviewed reasonably available information regarding, its business, properties and operations, and of other properties within the vicinity of its business, properties and operations, as appropriate for the circumstances of each such property and operation; on the basis of such reviews, investigations and inquiries, it has reasonably concluded that any costs and liabilities associated with such matters would not have, singularly or in the aggregate, a Material Adverse Effect or otherwise require disclosure in the Time of Sale Document and the Final Offering Memorandum.

 

(qq)         Directed Selling Efforts.  None of the Company, or the Guarantors nor any of their respective affiliates or any person acting on its or their behalf (other than the Initial Purchaser, as to whom the Company and the Guarantors make no representation) has engaged or will engage in any directed selling efforts within the meaning of Regulation S under the Securities Act (“Regulation S”) with respect to the Series A Notes or the Guarantees.

 

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(rr)           No Plan or Scheme.  The sale of the Series A Notes pursuant to Regulation S is not part of a plan or scheme to evade the registration provisions of the Securities Act.

 

(ss)         Regulation S Offering Restrictions.  The Company, the Guarantors and their respective affiliates and all persons acting on their behalf (other than the Initial Purchaser, as to whom the Company and the Guarantors make no representation) have complied with and will comply with the offering restrictions requirements of Regulation S in connection with the offering of the Series A Notes outside the United States.

 

(tt)           Representations and Warranties.  Each certificate signed by any officer of the Company or any of the Guarantors and delivered to the Initial Purchaser or counsel for the Initial Purchaser pursuant to this Agreement shall be deemed to be a representation and warranty by the Company and the Guarantors (and not individually by such officer) to the Initial Purchaser as to the matters covered thereby.

 

(uu)         Foreign Corrupt Practices Act.  None of the Company or any Guarantor or any director, officer, employee or, to the knowledge of the Company or any Guarantor, any agent or other person acting on behalf of the Company or any Guarantor has, in the course of its actions for, or on behalf of, the Company or any Guarantor (i) used any corporate funds for any unlawful contribution, gift, entertainment or other unlawful expenses relating to political activity; (ii) made any direct or indirect unlawful payment to any domestic government official, “foreign official” (as defined in the U.S. Foreign Corrupt Practices Act of 1977, as amended, and the rules and regulations thereunder (collectively, the “FCPA”) or employee from corporate funds; (iii) violated or is in violation of any provision of the FCPA or any applicable non-U.S. anti-bribery statute or regulation; or (iv) made any unlawful bribe, rebate, payoff, influence payment, kickback or other unlawful payment to any domestic government official, such foreign official or employee.

 

(vv)         Money Laundering.  The operations of the Company and the  Guarantors are and have been conducted at all times in compliance 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 applicable jurisdictions, 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

 

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Company or the  Guarantors with respect to the Money Laundering Laws is pending or, to the Company’s knowledge, threatened.

 

(ww)       OFAC.  Neither the Company nor the  Guarantors nor, to the Company’s knowledge, any director, officer, agent, employee or Affiliate of the Company or any of the  Guarantors or other person acting on their behalf is currently subject to any U.S. sanctions administered by the Office of Foreign Assets Control of the U.S. Treasury Department (“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.

 

7.     Representations and Warranties of the Initial Purchaser.  The Initial Purchaser represents and warrants to the Company and the Guarantors that:

 

(a)           QIB.  It is a QIB with such knowledge and experience in financial and business matters as is necessary in order to evaluate the merits and risks of an investment in the Series A Notes.

 

(b)           Eligible Purchasers.  It (i) is not acquiring the Series A Notes with a view to any distribution thereof that would violate the Securities Act or the securities laws of any state of the United States or any other applicable jurisdiction, and (ii) will be soliciting offers for the Series A Notes only from, and will be offering and selling the Series A Notes only to (A) persons in the United States whom it reasonably believes to be QIBs in reliance on the exemption from the registration requirements of the Securities Act provided by Rule 144A under the Securities Act or (B) Regulation S Purchasers in Offshore Transactions in reliance upon Regulation S under the Securities Act.

 

(c)           No General Solicitation.  No form of general solicitation or general advertising within the meaning of Section 502(c) of the Act nor any offers involving a public offering within the meaning of Section 4(2) of the Act have been or will be used by the Initial Purchaser or any of its representatives in connection with the offer and sale of any of the Series A Notes.

 

(d)           Representations of Eligible Purchasers.  In connection with the Exempt Resales, it will solicit offers to buy the Series A Notes only from, and will offer and sell the Series A Notes only to, persons whom it reasonably believes to be Eligible Purchasers in accordance with this Agreement and on the terms contemplated by the Time of Sale Document and the Final Offering Memorandum.

 

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(e)           Power and Authority.  It has all requisite power and authority to enter into, deliver and perform its obligations under this Agreement and the Registration Rights Agreement and each of this Agreement and the Registration Rights Agreement has been duly and validly authorized by it.

 

(f)            Directed Selling Efforts.  The Initial Purchaser and its affiliates or any person acting on its or their behalf have not engaged and will not engage in any directed selling efforts within the meaning of Regulation S with respect to the Series A Notes or the Guarantees.

 

(g)           Offshore Transactions.  The Series A Notes offered and sold by the Initial Purchaser pursuant hereto in reliance on Regulation S have been and will be offered and sold only in Offshore Transactions.

 

(h)           No Plan or Scheme.  The sale of the Series A Notes offered and sold by the Initial Purchaser pursuant hereto in reliance on Regulation S is not part of a plan or scheme to evade the registration provisions of the Securities Act.

 

(i)            Regulation S Offering Restrictions.  The Initial Purchaser agrees that it has not offered or sold and will not offer or sell the Series A Notes in the United States or to, or for the benefit or account of, a U.S. Person (other than a distributor), in each case, as defined in Rule 902 under the Securities Act (i) as part of its distribution at any time and (ii) otherwise until 40 days after the later of the commencement of the offering of the Series A Notes pursuant hereto and the Closing Date, other than in accordance with Regulation S of the Securities Act or another exemption from the registration requirements of the Securities Act.  The Initial Purchaser agrees that, during such 40-day restricted period, it will not cause any advertisement with respect to the Series A Notes (including any “tombstone” advertisement) to be published in any newspaper or periodical or posted in any public place and will not issue any circular relating to the Series A Notes, except such advertisements as permitted by and include the statements required by Regulation S.

 

(j)            Notice Required.  The Initial Purchaser agrees that, at or prior to confirmation of a sale of Series A Notes by it to any distributor, dealer or person receiving a selling concession, fee or other remuneration during the 40-day restricted period referred to in Rule 903(b)(3) under the Securities Act, it will send to such distributor, dealer or person receiving a selling concession, fee or other remuneration a confirmation or notice to substantially the following effect:

 

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“The Series A 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 and sold within the United States or to, or for the account or benefit of, U.S. persons (i) as part of your distribution at any time or (ii) otherwise until 40 days after the later of the commencement of the Offering and the Closing Date, except in either case in accordance with Regulation S under the Securities Act (or Rule 144A under the Securities Act or to institutional “accredited investors,” as defined in Rule 501(a)(1), (2), (3) or (7) under the Securities Act) in transactions that are exempt from the registration requirements of the Securities Act), and in connection with any subsequent sale by you of the Series A Notes covered hereby in reliance on Regulation S during the period referred to above to any distributor, dealer or person receiving a selling concession, fee or other remuneration, you must deliver a notice to substantially the foregoing effect.  Terms used above have the meanings assigned to them in Regulation S.”

 

(k)   Regulation S Security.  The Initial Purchaser agrees that the Series A Notes offered and sold in reliance on Regulation S will be represented upon issuance by a global security that may not be exchanged for definitive securities until the expiration of the 40-day restricted period referred to in Rule 903(b)(3) of the Securities Act and only upon certification of beneficial ownership of such Series A Notes by non-U.S. persons or U.S. persons who purchased such Series A Notes in transactions that were exempt from the registration requirements of the Securities Act.

 

8.     Indemnification.

 

(a)   Indemnification of Initial Purchaser.  The Company and each of the Guarantors shall, jointly and severally, indemnify and hold harmless the Initial Purchaser 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 (any of such persons being hereinafter referred to as a “controlling person”), and the respective officers, directors, partners and employees of the Initial Purchaser and any such controlling person (collectively, the “Purchaser Indemnified Parties”), to the fullest extent lawful, from and against any and all losses, claims, damages and liabilities, and will reimburse promptly upon demand the Purchaser Indemnified Parties for all costs and expenses (including, without limitation, reasonable attorneys’ fees and other costs and expenses reasonably incurred in connection with investigating, preparing, pursuing or

 

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defending against any of the foregoing) (such losses, claims, damages, liabilities, costs and expenses, collectively, “Losses”) directly or indirectly caused by, based upon or arising out of (i) any untrue statement or alleged untrue statement of a material fact contained in the Time of Sale Document, any Company Additional Written Communication or the Final Offering Memorandum (or any amendment or supplement thereto) or (ii) any omission or alleged omission to state therein 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; provided, that neither the Company nor any Guarantor shall be liable under the indemnity provided in this Section 8(a) to any Purchaser Indemnified Party for any Losses that are based on an untrue statement or omission or alleged untrue statement or omission made in reliance on and in conformity with the Furnished Information.

 

(b)   Actions Against Parties; Notification.  If any Proceeding shall be brought or asserted against any person entitled to indemnification hereunder (an “Indemnified Party”), such Indemnified Party shall give prompt written notice to the party or parties from which such indemnification is sought (the “Indemnifying Parties” and each, an “Indemnifying Party”); provided, that the failure to so notify the Indemnifying Parties shall not relieve any of the Indemnifying Parties from any obligation or liability under Section 8(a) or 8(c) except to the extent (but only to the extent) that it shall be finally determined by a court of competent jurisdiction (which determination is not subject to appeal) that such Indemnifying Party has been prejudiced materially by such failure.

 

The Indemnifying Parties shall have the right, exercisable by giving written notice to an Indemnified Party, within 20 Business Days after receipt of written notice from such Indemnified Party of such Proceeding, to assume, at their expense, the defense of any such Proceeding; provided, that an Indemnified Party shall have the right to employ separate counsel in any such Proceeding and to participate in the defense thereof, but the fees and expenses of such counsel shall be at the expense of such Indemnified Party or parties unless: (i) the Indemnifying Parties have agreed to pay such fees and expenses; (ii) the Indemnifying Parties shall have failed promptly to assume the defense of such Proceeding or shall have failed to employ counsel reasonably satisfactory to such Indemnified Party; or (iii) the named parties to any such Proceeding (including any impleaded parties) include both such Indemnified Party and one or more Indemnifying Parties, and such Indemnified Party shall have been advised by counsel that there may be one or more defenses available to such Indemnified Party that are in addition to, or in conflict with, those defenses available to the Indemnifying Party (in which case, if such Indemnified Party notifies the Indemnifying Parties in writing that it elects to employ separate counsel at the expense of the Indemnifying Parties, the Indemnifying Parties

 

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shall not have the right to direct the defense thereof on behalf of the Indemnified Party or Parties and the reasonable fees and expenses of such counsel shall be at the expense of the Indemnifying Parties; it being understood, however, that, the Indemnifying Parties shall not, in connection with any one such Proceeding or separate but substantially similar or related Proceedings in the same jurisdiction, arising out of the same general allegations or circumstances, be liable for the fees and expenses of more than one separate firm of attorneys (together with appropriate local counsel) at any time for such Indemnified Party).

 

No Indemnifying Party shall be liable for any settlement of any such Proceeding effected without its written consent, which consent shall not be unreasonably withheld.  No Indemnifying Party shall, without the prior written consent of the Indemnified Party, consent to entry of any judgment in or enter into any settlement of any pending or threatened Proceeding in respect of which indemnification or contribution may be sought hereunder (whether or not any Indemnified Party is a party thereto) unless such judgment or settlement includes, as an unconditional term thereof, the giving by the claimant or plaintiff to each Indemnified Party of a release, in form and substance reasonably satisfactory to the Indemnified Party, from all Losses that may arise from such Proceeding or the subject matter thereof (whether or not any Indemnified Party is a party thereto).

 

(c)   Indemnification of the Company and the Guarantors.  The Initial Purchaser agrees to indemnify and hold harmless and reimburse the Company, the Guarantors and each of their controlling persons and the respective members, managers, officers, directors, partners and employees of the Company and the Guarantors and any such controlling person to the same extent as the foregoing indemnity from the Company and the Guarantors to each of the Purchaser Indemnified Parties stated in Section 8(a), but only with respect to Losses that are caused by, based upon or arising out of an untrue statement or omission or alleged untrue statement or omission made in reliance on and in conformity with the Furnished Information.

 

(d)   Contribution.  If the indemnification provided for in this Section 8 is unavailable to an Indemnified Party or is insufficient to hold such Indemnified Party harmless for any Losses in respect of which this Section 8 would otherwise apply by its terms (other than by reason of exceptions provided in this Section 8), then each indemnifying party, in lieu of indemnifying such Indemnified Party, shall contribute to the amount paid or payable by such Indemnified Party as a result of such Losses (i) in such proportion as is appropriate to reflect the relative benefits received by the Company and the Guarantors, on the one hand, and the Initial Purchaser, on the other hand, from the Offering or (ii) if the allocation provided by clause (i) above is not permitted

 

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by applicable law, in such proportion as is appropriate to reflect not only the relative benefits referred to in clause (i) above but also the relative fault of the Company and the Guarantors, on the one hand, and the Initial Purchaser, on the other hand, in connection with the actions, statements or omissions that resulted in such Losses, as well as any other relevant equitable considerations.  The relative benefits received by the Company and the Guarantors, on the one hand, and the Initial Purchaser, on the other hand, shall be deemed to be in the same proportion as the total net proceeds from the Offering (before deducting expenses) received by the Company, on the one hand, and the total discounts and commissions received by the Initial Purchaser, on the other hand, bear to the total price of the Series A Notes in Exempt Resales as set forth on the cover page of the Final Offering Memorandum.  The relative fault of the Company and the Guarantors, on the one hand, and the Initial Purchaser, on the other hand, shall be determined by reference to, among other things, whether any untrue or alleged untrue statement of a material fact or omission or alleged omission to state a material fact relates to information supplied by the Company or any Guarantor, on the one hand, or the Initial Purchaser, on the other hand, and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission.  The amount paid by an Indemnified Party as a result of any Losses shall be deemed to include all costs (including, without limitation, reasonable attorneys’ fees) and expenses incurred by such party in connection with any Proceeding, to the extent such party would have been indemnified or reimbursed for such fees or expenses if the indemnification provided for in this Section 8 was available to such party.

 

Each party hereto agrees that it would not be just and equitable if contribution pursuant to this Section 8(d) were determined by pro rata allocation or by any other method of allocation that does not take account of the equitable considerations referred to in the immediately preceding paragraph. Notwithstanding the provisions of this Section 8(d), the Initial Purchaser shall not be required to contribute, in the aggregate, any amount in excess of (i) the aggregate gross proceeds received by the Initial Purchaser from the sale of the Series A Notes over (ii) the sum of (A) the aggregate price at which the Initial Purchaser purchased the Series A Notes from the Company and (B) the amount of any Losses that the Purchaser Indemnified Parties otherwise have been required to pay by reason of such untrue or alleged untrue statement of such omission or alleged omission.  No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation.

 

(e)   Nonexclusive Remedy. The indemnity and contribution agreements contained in this Section 8 are in addition to any liability that any of

 

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the Indemnifying Parties may otherwise have to the Indemnified Parties, and do not limit in any way rights or remedies which may otherwise be available at law or in equity.

 

9.     Conditions.

 

(a)   Conditions to Obligations of Initial Purchaser.  The obligations of the Initial Purchaser to purchase the Series A Notes under this Agreement are subject to the satisfaction or waiver of each of the following conditions:

 

(i)            Representations and Warranties of the Company and the Guarantors.  All the representations and warranties of each of the Company and the Guarantors in this Agreement shall be true and correct in all material respects (other than representations and warranties with a “material adverse effect” qualifier or other materiality qualifier, which shall be true and correct as written) at and as of the Closing Date after giving effect to the Transactions with the same force and effect as if made on and as of such date.  On or prior to the Closing Date, each of the Company and the Guarantors shall have performed or complied in all material respects with all of the agreements and satisfied in all material respects all conditions on their respective parts required to be performed, complied with or satisfied by it as of or prior to the Closing Date pursuant to this Agreement.

 

(ii)           No Injunction.  No injunction, restraining order or order of any nature by a Governmental Authority shall have been issued as of the Closing Date that would prevent or materially interfere with the issuance and sale of the Series A Notes or the consummation of any of the Transactions; and no stop order suspending the qualification or exemption from qualification of any of the Series A Notes in any jurisdiction shall have been issued, and no Proceeding for that purpose shall have been commenced or be pending or, to the knowledge of the Company, contemplated as of the Closing Date.

 

(iii)          No Proceedings.  No action shall have been taken and no Applicable Law shall have been enacted, adopted or issued that would, as of the Closing Date, prevent the consummation of any of the Transactions.  Except as disclosed in the Time of Sale Document and the Final Offering Memorandum, no Proceeding shall be pending or, to the knowledge of the Company, threatened other than Proceedings that (A) if adversely determined would not, singly or in the aggregate, adversely affect the issuance or marketability of the Series A Notes, and (B) would not, singly or in the aggregate, have a Material Adverse Effect.

 

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(iv)          No Material Adverse Change.  Subsequent to the respective dates as of which information is given in the Time of Sale Document (exclusive of any amendment or supplement thereto), there shall not have been any Material Adverse Change.

 

(v)           Maintenance of Rating.  As of the Closing Date, (i) there shall not have occurred any downgrading, suspension or withdrawal of, nor shall any notice have been given of any potential or intended downgrading, suspension or withdrawal of, or of any review (or of any potential or intended review) for a possible change that does not indicate the direction of the possible change in, any rating of any securities of the Company or the Guarantors (including, without limitation, the placing of any of the foregoing ratings on credit watch with negative or developing implications or under review with an uncertain direction) by any “nationally recognized statistical rating organization” as such term is defined for purposes of Rule 436(g)(2) under the Securities Act, (ii) there shall not have occurred any adverse change, nor shall any notice have been given of any potential or intended adverse change, in the outlook for any rating of any securities of the Company or the Guarantors by any such rating organization and (iii) no such rating organization shall have given notice that it has assigned (or is considering assigning) a lower rating to the Notes than that on which the Notes were marketed.

 

(vi)          Officers’, Secretary’s and Solvency Certificates.  The Initial Purchaser shall have received on the Closing Date (A) certificates dated the Closing Date, signed by (1) the Chief Executive Officer, and (2) the principal financial or accounting officer of each of the Company and the Guarantors, on behalf of such entity, confirming the matters set forth in paragraphs  (i), (ii), (iii), (iv), (v), and (xi) of this Section 9(a), (B) a certificate, dated the Closing Date, signed by the Secretary of each of the Company and the Guarantors certifying such matters as the Initial Purchaser may reasonably request, and (C) a certificate of solvency, dated the Closing Date, signed by the principal financial or accounting officer of the Company and the Guarantors certifying such matters as the Initial Purchaser may reasonably request.

 

(vii)         Opinions of Counsel.  The Initial Purchaser shall have received, a favorable opinion (in form and substance reasonably satisfactory to the Initial Purchaser and counsel to the Initial Purchaser), dated the Closing Date, of each of the following: (A) Dechert LLP, special counsel to the Company and the Guarantors; (B) Devine, Millimet & Branch, PA, local New Hampshire counsel to Dartmouth Printing Company and Dartmouth Journal Services, Inc.; and (C) White & Case LLP, special counsel to the Initial Purchaser.

 

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(viii)        Accountants’ Comfort Letters.  The Initial Purchaser shall have received from PricewaterhouseCoopers LLP, independent auditors with respect to the Company, (A) a customary initial comfort letter delivered according to Statement of Auditing Standards No. 72 (or any successor bulletin), dated the date hereof, in form and substance reasonably satisfactory to the Initial Purchaser and its counsel, with respect to the financial statements and certain financial information contained in the Time of Sale Document and the Final Offering Memorandum, and (B) a customary “bring-down” comfort letter, dated the Closing Date, in form and substance reasonably satisfactory to the Initial Purchaser and its counsel, which includes, among other things, a reaffirmation of the statements made in its initial letter furnished pursuant to clause (A) with respect to such financial statements and financial information contained in the Time of Sale Document and the Final Offering Memorandum.

 

(ix)           Execution and Delivery of Documents.  The Transaction Documents shall have been executed and delivered by all parties thereto and the Initial Purchaser shall have received an executed copy of each Transaction Document.

 

(x)            Additional Transaction Documents.  The Initial Purchaser or its counsel shall have received copies of all opinions, certificates and other documents required to be delivered under or in connection with the Transactions on or prior to the Closing Date.

 

(xi)           Consummation of Transactions.  Each of the Transactions to be consummated on or prior to the Closing Date shall have been consummated on terms that conform in all material respects to the description thereof in the Time of Sale Document and the Final Offering Memorandum.  The terms of each Transaction Document shall conform in all material respects to the description thereof in the Time of Sale Document and the Final Offering Memorandum to the extent described therein.

 

(xii)          Collateral Agreements.  Subject to clause 5(q) hereof, the Company and the Guarantors shall have furnished to the Initial Purchaser the Collateral Agreements duly executed, and if appropriate, notarized, by the respective parties thereto, together with:

 

(A)          proper financing statements, each in the form to be filed on the Closing Date under the Uniform Commercial Code of all jurisdictions that may be deemed necessary or, in the reasonable opinion of the Collateral Agent, desirable to perfect the Liens created by the Collateral Agreements, covering the Collateral and naming the Collateral

 

38

 

Agent as secured party, which financing statements shall be so filed on the Closing Date;

 

(B)           proper instruments to be filed in the U.S. Patent and Trademark Office that may be deemed necessary or, in the reasonable opinion of the Collateral Agent, desirable to perfect the liens granted on patents, if any, and trademarks, which liens have been created by the Collateral Agreements;

 

(C)           contemplated requests for information and Lien search results, listing all effective financing statements filed as of a recent date in the jurisdictions referred to in Section 9(a)(xii)(A) that name any of the Company or the Guarantors as debtor, together with copies of such financing statements (none of which shall cover the Collateral described in the Collateral Agreements, other than financing statements which cover Permitted Liens);

 

(D)          copies of duly executed UCC-3 termination statements, mortgage releases, intellectual property releases and other collateral releases and terminations, each in form and substance reasonably satisfactory to the Initial Purchaser evidencing the release of each item of Collateral and the termination of all Liens thereon (other than Liens created by the Indenture and the Collateral Agreements or Permitted Liens), and each such release and termination shall be in full force and effect;

 

(E)           if requested by the Collateral Agent, bailee letters and landlord waivers, in form and substance reasonably satisfactory to the Initial Purchaser, executed by bailees and landlords, the Company or the Guarantors, as appropriate, for delivery to each of the persons specified in the Collateral Agreements as holding Collateral;

 

(F)           the stock certificates pledged to the Collateral Agent pursuant to the Collateral Agreements; and

 

(G)           any other documents required to be delivered to the Collateral Agent pursuant to the Collateral Agreements and reasonable evidence that all other actions necessary or, in the reasonable opinion of the Collateral Agent, desirable to perfect and protect the Liens created by the Collateral Agreements have been taken.

 

(xiii)         Liens.  The Initial Purchaser and its counsel shall be satisfied that (a) the Lien granted to the Collateral Agent, for the benefit of the holders of the Notes in the Collateral is of the priority described in the Final

 

39

 

Offering Memorandum and (b) no Lien exists on any of the Collateral, other than the Lien created in favor of the Collateral Agent, for the benefit of the holders of the Notes pursuant to a Collateral Agreement in each case subject to the Permitted Liens.

 

(xiv)        Additional Documents.  Counsel to the Initial Purchaser shall have been furnished with such documents as they may reasonably require for the purpose of enabling them to review or pass upon the matters referred to in this Section 9 and to evidence the accuracy, completeness and satisfaction of the representations, warranties and conditions contained in this Agreement.

 

(b)           Conditions to the Company’s and the Guarantors’ Obligations.  The obligations of the Company to sell, and the obligations of the Guarantors to guarantee, the Series A Notes under this Agreement are subject to the satisfaction or waiver of each of the following conditions:

 

(i)            Payment.  The Initial Purchaser shall have delivered payment to the Company for the Series A Notes pursuant to Sections 2 and 4 of this Agreement and shall have complied with all other obligations and agreements required to be complied with by the Initial Purchaser hereunder on or prior to the Closing Date.

 

(ii)           Representations and Warranties.  All of the representations and warranties of the Initial Purchaser in this Agreement shall be true and correct in all material respects at and as of the Closing Date, with the same force and effect as if made on and as of such date.

 

(iii)          No Injunctions.  No injunction, restraining order or order of any nature by a Governmental Authority shall have been issued as of the Closing Date that would prevent or interfere with the issuance and sale of the Series A Notes; and no stop order suspending the qualification or exemption from qualification of any of the Series A Notes in any jurisdiction shall have been issued and no Proceeding for that purpose shall have been commenced or be pending or contemplated as of the Closing Date.

 

10.  Termination.  This Agreement shall become effective upon the execution and delivery of this Agreement by the parties hereto.  The Initial Purchaser may terminate this Agreement at any time prior to the Closing Date by written notice to the Company if any of the following has occurred:

 

(a)   Material Adverse Effect.  Subsequent to the respective dates as of which information is given in the Time of Sale Document (exclusive of any amendment or supplement thereto), any Material Adverse Effect or any

 

40

 

Material Adverse Change that could, in the Initial Purchaser’s reasonable judgment, (i) make it impracticable or inadvisable to proceed with the Offering or delivery of the Series A Notes, including the Exempt Resales, on the terms and in the manner contemplated in the Time of Sale Document and the Final Offering Memorandum or (ii) materially impair the investment quality of the Notes.

 

(b)   Failure to Satisfy Conditions.  The failure of the Company or any of the Guarantors to satisfy the conditions contained in Section 9(a) on or prior to the Closing Date.

 

(c)   Outbreak of Hostilities.  Any attack on or incidences of terrorism involving the United States, any outbreak or escalation of hostilities directly or indirectly involving the United States, any military action or commencement or declaration of war by or directly or indirectly involving the United States, any declaration of a national emergency, any other calamity, emergency or crisis directly or indirectly involving the United States, any material adverse change in economic conditions in or the financial markets of the United States or elsewhere or any change or development involving a prospective change in national or international political, financial or economic conditions, in each case the effect of which could be reasonably expected to make it, in the Initial Purchaser’s judgment, impracticable or inadvisable to market or proceed with the offering or delivery of the Series A Notes on the terms and in the manner contemplated in the Time of Sale Document and the Final Offering Memorandum or to enforce contracts for the sale of any of the Series A Notes.

 

(d)   Suspension of Trading.  The suspension or limitation of trading generally in securities on the New York Stock Exchange, the American Stock Exchange or the Nasdaq National Market or any setting of limitations on prices for securities on any such exchange or on the Nasdaq National Market.

 

(e)   Enactment of Adverse Law.  The enactment, publication, decree or other promulgation after the date hereof of any Applicable Law that in the Initial Purchaser’s opinion, after receiving advice of legal counsel, materially and adversely affects, or could be reasonably expected to materially and adversely affect, the properties, business, operations, earnings, assets, liabilities or condition (financial or otherwise) of the Company and the Guarantors, taken as a whole.

 

(f)    Downgrade of Securities.  On or after the date hereof, (i) there shall not have occurred any downgrading, suspension or withdrawal of, nor shall any notice have been given of any potential or intended downgrading,

 

41

 

suspension or withdrawal of, or of any review (or of any potential or intended review) for a possible change that does not indicate the direction of the possible change in, any rating of the Company or any of the Guarantors or any securities of the Company or any of the Guarantors (including, without limitation, the placing of any of the foregoing ratings on credit watch with negative or developing implications or under review with an uncertain direction) by any “nationally recognized statistical rating organization” as such term is defined for purposes of Rule 436(g)(2) under the Securities Act, (ii) there shall not have occurred any adverse change, nor shall any notice have been given of any potential or intended adverse change, in the outlook for any rating of the Company or the Guarantors or any securities of the Company or the Guarantors (by any such rating organization and (iii) no such rating organization shall have given notice that it has assigned (or is considering assigning) a lower rating to the Notes than that on which the Notes were marketed.

 

(g)   Banking Moratorium.  The declaration of a banking moratorium by any Governmental Authority or the taking of any action by any Governmental Authority after the date hereof in respect of its monetary or fiscal affairs that in the Initial Purchaser’s opinion could reasonably be expected to have, singly or in the aggregate, a Material Adverse Effect.

 

The respective indemnities, contribution and expense reimbursement provisions and agreements, and representations, warranties and other statements of the Company and the Guarantors and the Initial Purchaser set forth in or made pursuant to this Agreement shall remain operative and in full force and effect, and will survive, regardless of (i) any investigation, or statement as to the results thereof, made by or on behalf of the Initial Purchaser or any of the Company or the Guarantors, or any of their respective officers, directors, members or managers or any of their respective controlling persons, (ii) acceptance of the Notes, and payment for them hereunder, and (iii) any termination of this Agreement (including, without limitation, any termination pursuant to this Section 10).  Without limiting the foregoing, notwithstanding any termination of this Agreement, the Company and the Guarantors shall be and shall remain jointly and severally liable (x) for all expenses that they have agreed to pay pursuant to Section 5(f), and (y) pursuant to Section 8 and (ii) the Initial Purchaser shall be and shall remain liable for its obligations pursuant to Section 8.

 

11.  No Fiduciary Relationship

 

The Company and the Guarantors hereby acknowledge that the Initial Purchaser is acting solely as initial purchaser in connection with the purchase and sale of the Notes. The Company and the Guarantors further acknowledge that the Initial Purchaser is acting pursuant to a contractual relationship created solely by this Agreement entered into on an arm’s length basis, and in no event do the parties intend

 

42

 

that the Initial Purchaser act or be responsible as a fiduciary to either the Company, the Guarantors or their respective management, stockholders or creditors or any other person in connection with any activity that the Initial Purchaser may undertake or have undertaken in furtherance of the purchase and sale of the Notes, either before or after the date hereof.  The Initial Purchaser hereby expressly disclaims any fiduciary or similar obligations to either the Company or the Guarantors, either in connection with the transactions contemplated by this Agreement or any matters leading up to such transactions, and the Company and the Guarantors hereby confirm their understanding and agreement to that effect. The Company, the Guarantors and the Initial Purchaser agree that they are each responsible for making their own independent judgments with respect to any such transactions and that any opinions or views expressed by the Initial Purchaser to the Company and the Guarantors regarding such transactions, including, but not limited to, any opinions or views with respect to the price or market for the Notes, do not constitute advice or recommendations to the Company and the Guarantors. The Company and the Guarantors hereby waive and release, to the fullest permitted by law, any claims that either of the Company or the Guarantors may have against the Initial Purchaser with respect to any breach or alleged breach of any fiduciary or similar duty to the Company or the Guarantors in connection with the transactions contemplated by this Agreement or any matters leading up to such transactions.

 

12.  Miscellaneous.

 

(a)   Notices.  Notices given pursuant to any provision of this Agreement shall be addressed as follows:  (i) if to any of the Company and the Guarantors, to 11311 McCormick Road, S260, Hunt Valley, Maryland 21031, Attention: President, with a copy to Dechert LLP, 2929 Arch Street, Philadelphia, Pennsylvania 19104, Attention: Eric S. Siegel, Esq. and (ii) if to the Initial Purchaser, to  Jefferies & Company, Inc., 520 Madison Avenue, New York, NY 10022, with a copy to White & Case LLP, 1155 Avenue of the Americas, New York, NY 10036, Attention:  Jin K. Kim, Esq. (provided, that any notice pursuant to Section 8 hereof will be mailed, delivered, telegraphed or sent by facsimile and confirmed to the party to be notified and its counsel), or in any case to such other address as the person to be notified may have requested in writing.

 

(b)   Successors and Assigns.  This Agreement has been and is made solely for the benefit of and shall be binding upon each of the Company and the Guarantors, the Initial Purchaser and, to the extent provided in Section 8, the controlling persons, officers, directors, partners, employees, representatives and agents referred to in Section 8, and their respective heirs, executors, administrators, successors and assigns, all as and to the extent provided in this Agreement, and no other person shall acquire or have any right under or by virtue of this Agreement.  The term “successors and assigns” shall not include a

 

43

 

purchaser of any of the Series A Notes from the Initial Purchaser merely because of such purchase.  Notwithstanding the foregoing, it is expressly understood and agreed that each purchaser who purchases Series A Notes from the Initial Purchaser is intended to be a beneficiary of the Company’s and the Guarantors’ covenants contained in the Registration Rights Agreement to the same extent as if the Series A Notes were sold and those covenants were made directly to such purchaser by each of the Company and the Guarantors, and each such purchaser shall have the right to take action against each of the Company and the Guarantors to enforce, and obtain damages for any breach of, those covenants.

 

(c)   Governing Law; Jurisdiction; Waiver of Jury Trial; Venue.  This Agreement shall be governed by, and construed in accordance with, the laws of the State of New York.  Each of the Company and the Guarantors hereby expressly and irrevocably (i) submits to the non-exclusive jurisdiction of the federal and state courts sitting in the Borough of Manhattan in the City of New York in any suit or proceeding arising out of or relating to this Agreement or the Transactions, and (ii) waives (a) its right to a trial by jury in any legal action or proceeding relating to this Agreement, the Transactions or any course of conduct, course of dealing, statements (whether verbal or written) or actions of the Initial Purchaser and for any counterclaim related to any of the foregoing and (b) any obligation which it may have or hereafter may have to the laying of venue of any such litigation brought in any such court referred to above and any claim that any such litigation has been brought in an inconvenient forum.

 

(d)   Entire Agreement; Counterparts.  This Agreement constitutes the entire agreement of the parties to this Agreement and supersedes all prior written or oral and all contemporaneous oral agreements, understandings and negotiations with respect to the subject matter hereof.  This Agreement may be executed in two or more counterparts, each one of which shall be an original, with the same effect as if the signatures thereto and hereto were upon the same instrument.

 

(e)   Headings.  The headings in this Agreement are for convenience of reference only and shall not limit or otherwise affect the meaning hereof.  When a reference is made in this Agreement to a Section, paragraph, subparagraph, Schedule or Exhibit, such reference shall mean a Section, paragraph, subparagraph, Schedule or Exhibit to this Agreement unless otherwise indicated.

 

(f)    Interpretation.  The words “include,” “includes,” and “including” when used in this Agreement shall be deemed in each case to be followed by the words “without limitation.”  The phrases “the date of this

 

44

 

Agreement,” “the date hereof,” and terms of similar import shall be deemed to refer to April 8, 2011.   The words “hereof,” “herein,” “herewith,”  “hereby” and “hereunder” and words of similar import shall, unless otherwise stated, be construed to refer to this Agreement as a whole and not to any particular provision of this Agreement.  The phrase “to the knowledge of the Company” means (i) the actual knowledge of John A. Saxton and Robert M. Jakobe and (ii) the knowledge John A. Saxton and Robert M. Jakobe could reasonably be expected to have after such inquiry of the Presidents of each of the Company’s Subsidiaries as is reasonable under the circumstances.  Unless the context otherwise requires, defined terms shall include the singular and plural and the conjunctive and disjunctive forms of the terms defined.

 

(g)   Severability.  If any term, provision, covenant or restriction of this Agreement is held by a court of competent jurisdiction to be invalid, illegal, void or unenforceable, the remainder of the terms, provisions, covenants and restrictions set forth herein shall remain in full force and effect and shall in no way be affected, impaired or invalidated, and the parties hereto shall use their reasonable best efforts to find and employ an alternative means to achieve the same or substantially the same result as that contemplated by such term, provision, covenant or restriction. It is hereby stipulated and declared to be the intention of the parties that they would have executed the remaining terms, provisions, covenants and restrictions without including any of such that may be hereafter declared invalid, illegal, void or unenforceable.

 

(h)   Amendment.  This Agreement may be amended, modified or supplemented, and waivers or consents to departures from the provisions hereof may be given, provided that the same are in writing and signed by each of the signatories hereto.

 

[signature pages follow]

 

45

 

Please confirm that the foregoing correctly sets forth the agreement between the Company and the Guarantors, on the one hand, and the Initial Purchaser, on the other hand.

 

 

	
 
    	
 
    	
Very   truly yours,
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
Company
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
THE   SHERIDAN GROUP, INC.
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:
    	
/s/   Robert M. Jakobe
    
	
 
    	
 
    	
 
    	
Name:
    	
Robert   M. Jakobe
    
	
 
    	
 
    	
 
    	
Title:
    	
Executive   Vice President & Chief Financial Officer
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
Guarantors
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
DARTMOUTH PRINTING COMPANY
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:
    	
/s/   Robert M. Jakobe
    
	
 
    	
 
    	
 
    	
Name:
    	
Robert M. Jakobe
    
	
 
    	
 
    	
 
    	
Title:
    	
Secretary
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
DARTMOUTH JOURNAL SERVICES, INC.
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:
    	
/s/   Robert M. Jakobe
    
	
 
    	
 
    	
 
    	
Name:
    	
Robert M. Jakobe
    
	
 
    	
 
    	
 
    	
Title:
    	
Secretary
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
SHERIDAN BOOKS, INC.
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:
    	
/s/   Robert M. Jakobe
    
	
 
    	
 
    	
 
    	
Name:
    	
Robert M. Jakobe
    
	
 
    	
 
    	
 
    	
Title:
    	
Secretary
    

 

 

	
 
    	
 
    	
THE DINGLEY PRESS, INC.
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:
    	
/s/   Robert M. Jakobe
    
	
 
    	
 
    	
 
    	
Name:
    	
Robert M. Jakobe
    
	
 
    	
 
    	
 
    	
Title:
    	
Secretary
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
THE SHERIDAN GROUP HOLDING COMPANY
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:
    	
/s/   Robert M. Jakobe
    
	
 
    	
 
    	
 
    	
Name:
    	
Robert M. Jakobe
    
	
 
    	
 
    	
 
    	
Title:
    	
President
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
THE SHERIDAN PRESS, INC.
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:
    	
/s/   Robert M. Jakobe
    
	
 
    	
 
    	
 
    	
Name:
    	
Robert M. Jakobe
    
	
 
    	
 
    	
 
    	
Title:
    	
Secretary
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
UNITED   LITHO, INC.
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:
    	
/s/   Robert M. Jakobe
    
	
 
    	
 
    	
 
    	
Name:
    	
Robert M. Jakobe
    
	
 
    	
 
    	
 
    	
Title:
    	
Secretary
    

 

 

	
ACCEPTED   AND AGREED TO:
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
JEFFERIES &   COMPANY, INC.
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
By:
    	
/s/   Kevin Lockhart
    	
 
    	
 
    
	
 
    	
Name:
    	
Kevin   Lockhart
    	
 
    	
 
    
	
 
    	
Title:
    	
Managing   Director
    	
 
    	
 
    

 

 

Schedule I

 

Pricing Supplement

 

 

Schedule II

 

Guarantors

 

	
Name
    	
 
    	
State of Incorporation
    
	
Dartmouth   Printing Company
    	
 
    	
New Hampshire
    
	
Dartmouth   Journal Services, Inc.
    	
 
    	
New Hampshire
    
	
Sheridan   Books, Inc.
    	
 
    	
Delaware
    
	
The   Dingley Press, Inc.
    	
 
    	
Delaware
    
	
The   Sheridan Group Holding Company
    	
 
    	
Delaware
    
	
The   Sheridan Press, Inc.
    	
 
    	
Maryland
    
	
United   Litho, Inc.
    	
 
    	
Maryland

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