EXHIBIT 10.47
$106,000,000
BARNEY'S, INC.
AND
BARNEYS NEW YORK, INC.
106,000 UNITS CONSISTING OF
9.000% SENIOR SECURED NOTES DUE 2008 OF BARNEY'S, INC. AND
WARRANTS TO PURCHASE 361,672 SHARES OF COMMON STOCK OF
BARNEYS NEW YORK, INC.
PURCHASE AGREEMENT
------------------
March 26, 2003
XXXXXXXXX & COMPANY, INC.
000 Xxxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Ladies and Gentlemen:
Barney's, Inc., a New York corporation (the "Company"),
Barneys New York, Inc., a Delaware corporation and the sole shareholder of the
Company ("Holdings" and, together with the Company, the "Issuers"), and each of
the Subsidiary Guarantors (as hereinafter defined), hereby agree with you as
follows:
1. ISSUANCE OF UNITS. Subject to the terms and conditions
herein contained, the Issuers propose to issue and sell to Xxxxxxxxx & Company,
Inc. (the "Initial Purchaser") an aggregate of 106,000 Units (the "Units"), each
Unit consisting of $1,000 in principal amount at maturity of the Company's
9.000% Senior Secured Notes due 2008 (the "Notes") and one Warrant (a "Warrant")
to purchase 3.412 shares (such shares aggregating to 2.5% of the fully-diluted
common stock of Holdings as of the Closing Date (as hereinafter defined)
(assuming exercise of all such warrants)) of common stock of Holdings, par value
$0.01 per share (the "Common Stock"), subject to the terms and conditions set
forth herein. The Notes are to be issued pursuant to the provisions of an
indenture (the "Indenture"), to be dated as of the Closing Date, by and among
the Company, Holdings, the Subsidiary Guarantors (as hereinafter defined), and
Wilmington Trust Company, as trustee (the "Trustee"). The Warrants are to be
issued pursuant to the provisions of a warrant agreement (the "Warrant
Agreement"), to be dated as of the Closing Date, by and between Holdings and
Wilmington Trust Company, as warrant agent (in such capacity, the "Warrant
Agent"). As used herein, the term "Warrant Shares" shall mean, collectively, the
shares of Common Stock issuable upon exercise of the Warrants. As used herein,
the term "Securities" shall mean, collectively, the Units, the Notes, the
Warrants and the Warrant Shares. Capitalized terms used but not defined herein
shall have the meanings given to such terms in the Indenture or the Warrant
Agreement, as the case may be.
The Notes will be secured by second-priority liens on the
assets of the Company, Holdings and the Subsidiary Guarantors pursuant to the
Security Documents. As used herein, the term "Security Documents" means:
(a) the security agreement, to be dated as of the Closing Date (as
hereinafter defined), by and among the Company, Barneys America,
Inc., Barneys (CA) Lease Corp., Barneys (NY) Lease Corp., Xxxxx
All-American Sportswear Corp., BNY Licensing Corp., Barneys America
(Chicago) Lease Corp. (collectively, the "Borrowers") and Wilmington
Trust Company, as collateral agent (in such capacity, the "Collateral
Agent") (the "Borrowers' Security Agreement");
(b) the security agreement, to be dated as of the Closing Date, by and
between Holdings and the Collateral Agent ("Holdings' Security
Agreement");
(c) the pledge agreement, to be dated as of the Closing Date, by and
among the Borrowers and the Collateral Agent (the "Borrowers' Pledge
Agreement");
(d) the pledge agreement, to be dated as of the Closing Date, by and
among Holdings and the Collateral Agent ("Holdings' Pledge
Agreement");
(e) the intellectual property security agreement, to be dated as of the
Closing Date, by and among the Borrowers and the Collateral Agent
(the "Intellectual Property Security Agreement");
(f) the three blocked account agreements, to be dated as of the Closing
Date, by and among the Company, Holdings, the Collateral Agent and
the banks party thereto (the "Blocked Account Agreements"), to the
extent obtained; and
(g) the lockbox account agreement, to be dated as of the Closing Date, by
and among Citibank, N.A., the Company and the Collateral Agent (the
"Lockbox Account Agreement"), to the extent obtained.
The Units will be offered and sold to the Initial Purchaser pursuant
to an exemption from the registration requirements under the Securities Act of
1933, as amended (the "Act"). Upon original issuance thereof, and until such
time as the same is no longer required under the applicable requirements of the
Act, the Units shall bear the legends set forth in the final offering circular,
dated March 26, 2003 (the "Final Offering Circular"), relating to the offer and
the sale of the Units. The Company has prepared a preliminary offering circular,
dated March 3, 2003 (the "Preliminary Offering Circular"), relating to the offer
and the sale of the Notes, and the Issuers have prepared the Final Offering
Circular relating to the offer and sale of the Units (the "Offering"). "Offering
Circular" means, as of any date or time referred to in this Agreement, the most
recent offering circular (whether the Preliminary Offering Circular or the Final
Offering Circular, and any amendment or supplement to either such document),
including exhibits and schedules thereto.
In connection with the sale of the Units, the Company and the
Subsidiary Guarantors (as hereinafter defined) are concurrently entering into a
restatement of the credit facility among the Company, the Subsidiary Guarantors
and General Electric Capital Corporation, as Administrative Agent, on the
Closing Date (as defined in Section 3) which provides for a $70.0 million credit
facility pursuant to which the Company and the Subsidiary Guarantors may borrow
up to $66.0 million, with a $40.0 million sub-limit for the issuance of letters
of credit, subject to a borrowing base test (as amended, supplemented, modified,
extended or restated from time to time, the "Credit Facility").
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2. TERMS OF OFFERING. The Initial Purchaser has advised the
Issuers, and the Issuers understand, that the Initial Purchaser will make offers
to sell (the "Exempt Resales") some or all of the Units purchased by the Initial
Purchaser hereunder on the terms set forth in the Final Offering Circular, as
amended or supplemented, to persons (the "Subsequent Purchasers") whom the
Initial Purchaser (i) reasonably believes to be "qualified institutional buyers"
("QIBs") as defined in Rule 144A under the Act, (ii) reasonably believes (based
upon written representations made by such persons to the Initial Purchaser) to
be institutional "accredited investors" ("Accredited Investors") as defined in
Rule 501(a)(1), (2), (3) or (7) under the Act or (iii) reasonably believes to be
non-U.S. persons (as defined in Rule 902(k) of the Act) in reliance upon
Regulation S under the Act.
Pursuant to the Indenture, Holdings and each of the
entities listed on Schedule A attached hereto (each such entity, a "Subsidiary
Guarantor" and, together with Holdings, the "Guarantors"), jointly and
severally, shall fully and unconditionally guarantee, on a senior secured basis,
to each holder of the Notes and to the Trustee the payment and performance of
the Company's obligations under the Indenture and the Notes (each such
guarantee, a "Guarantee" and, collectively, the "Guarantees").
The Notes and the related Guarantees will be secured by a
second-priority lien on all of the Company's assets that secure its obligations
under the Credit Facility, and all of the assets of the Guarantors that secure
their obligations under the Credit Facility.
Holders of the Notes (including Subsequent Purchasers) will
have the registration rights set forth in the registration rights agreement (the
"Registration Rights Agreement"), to be dated as of the Closing Date (as defined
in Section 3). Pursuant to the Registration Rights Agreement, the Company,
Holdings and the Subsidiary Guarantors will agree, among other things, to file
with the Securities and Exchange Commission (the "SEC") (a) a registration
statement under the Act relating to senior secured notes (the "Exchange Notes")
(which shall be identical to the Notes and the related Guarantees except that
the Exchange Notes and the related Guarantees shall have been registered
pursuant to such registration statement and will not be subject to restrictions
on transfer or contain additional interest provisions) to be offered in exchange
for the Notes (such offer to exchange being referred to as the "Exchange Offer")
and/or (b) under certain circumstances, a shelf registration statement pursuant
to Rule 415 under the Act (the "Shelf Registration Statement") relating to the
resale by certain holders of the Notes. If required under the Registration
Rights Agreement, the Company will issue Exchange Notes to the Initial Purchaser
(the "Private Exchange Notes"). If the Company, Holdings or any of the
Subsidiary Guarantors fail to satisfy certain obligations under the Registration
Rights Agreement, the Company, Holdings and the Subsidiary Guarantors will be
required to pay Liquidated Damages (as defined in the Registration Rights
Agreement) to the holders of the Notes under certain circumstances.
Holders of the Warrants (including Subsequent Purchasers)
will have the registration rights described in the Offering Circular, which will
be set forth in the registration rights agreement (the "Equity Registration
Rights Agreement" and, together with the Registration Rights Agreement, the
"Registration Rights Agreements"), to be dated the Closing Date, for so long as
such Warrant Shares constitute Registrable Securities (as defined therein).
Pursuant to the Equity Registration Rights Agreement,
Holdings will file a registration statement upon exercise of a demand
registration right by the holders of the Registrable Securities, an "Equity
Registration Statement," covering the resale of the Warrant Shares by the holder
thereof and to use its reasonable best efforts to cause such Equity Registration
Statement to be declared effective, subject to certain exceptions, and to remain
effective for the period specified in the Equity Registration Rights Agreement.
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This purchase agreement (the "Agreement"), the Indenture,
the Registration Rights Agreements, the Notes, the Guarantees, the Security
Documents, the Warrant Agreement, the Warrants, the Warrant Shares, the Units,
the Exchange Notes and the Private Exchange Notes are referred to herein as the
"Documents."
3. PURCHASE, SALE AND DELIVERY. On the basis of the
representations, warranties, agreements and covenants herein contained and
subject to the terms and conditions herein set forth, the Issuers agree to issue
and sell to the Initial Purchaser, and the Initial Purchaser agrees to purchase
from the Issuers, 106,000 Units at a purchase price equal to $824.50 per Unit.
Such amount, when paid, will represent full satisfaction of Holdings'
obligations to the Initial Purchaser under Section 5(a) of the Letter Agreement
dated January 17, 2003, between Holdings and the Initial Purchaser, as amended
(the "Letter Agreement")). Delivery to the Initial Purchaser of and payment for
the Units shall be made at a closing (the "Closing") to be held at 9:00 a.m.,
New York time, on April 1, 2003 or such other date as the Issuers and the
Initial Purchaser shall mutually agree (the "Closing Date") at the New York
offices of Xxxxxx & Xxxxxxx LLP.
The Issuers shall deliver to the Initial Purchaser one or
more certificates representing the Units in definitive form, registered in such
names and denominations as the Initial Purchaser may request, against payment by
the Initial Purchaser of the purchase price therefor by immediately available
Federal funds bank wire transfer to such bank account or accounts as the Issuers
shall have heretofore designated to the Initial Purchaser. The certificates
representing the Units in definitive form shall be made available to the Initial
Purchaser for inspection at the New York offices of Xxxxxx & Xxxxxxx LLP (or
such other place as shall be reasonably acceptable to the Initial Purchaser) as
promptly as practicable prior to the Closing. Units to be represented by one or
more definitive global securities in book-entry form will be deposited on the
Closing Date, by or on behalf of the Issuers, with The Depository Trust Company
("DTC") or its designated custodian, and registered in the name of Cede & Co.
4. REPRESENTATIONS AND WARRANTIES OF THE COMPANY, HOLDINGS
AND THE SUBSIDIARY GUARANTORS. Each of the Company, Holdings and the Subsidiary
Guarantors, jointly and severally, represent and warrant to the Initial
Purchaser that, (i) as of the date hereof or with respect to paragraphs (f),
(g), (pp), (qq), (rr), (ss), (tt) and (uu) of this Section 4, as of 5:00 p.m. on
March 31, 2003 and (ii) as of the Closing Date:
(a) The Preliminary Offering Circular as of its date did not, and the Final
Offering Circular as of its date did not, and as of the Closing Date will
not, and each supplement or amendment thereto as of its date will not,
contain any untrue statement of a material fact or omit to state any
material fact (except, in the case of the Preliminary Offering Circular,
for pricing terms and other financial terms intentionally left blank)
necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading; provided,
however, that the Company, Holdings and the Subsidiary Guarantors make no
representation or warranty as to the information contained in the "Plan of
Distribution" section of the Offering Circular supplied by the Initial
Purchaser or its counsel in writing for specific inclusion in the Offering
Circular. No injunction or order has been issued that either (i) asserts
that any of the transactions contemplated by this Agreement or each of the
other Documents is subject to the registration requirements of the Act, or
(ii) could prevent or suspend the issuance or sale of the Units, Notes or
Warrants or the use of the Preliminary Offering Circular, the Final
Offering Circular or any amendment or supplement thereto, in any
jurisdiction. Each of the Preliminary Offering Circular and the Final
Offering Circular as of their respective dates contained, and the Final
Offering Circular, as amended or supplemented, as of the Closing Date will
contain, all the information specified in, and will meet the requirements
of, Rule 144A(d)(4) under the Act. Any transactions specified in Item 404
of Regulation S-K under the Act that would be required to be disclosed in
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the Final Offering Circular if the Final Offering Circular were a
prospectus included in a registration statement on Form S-1 filed under the
Act have been disclosed in the Final Offering Circular.
(b) Each corporation, partnership or other entity in which the Company,
directly or indirectly through any of its subsidiaries, owns fifty percent
(50%) or more of any class of securities or interests is listed on Schedule
B attached hereto (collectively, the "Subsidiaries").
(c) Each of the Company, Holdings, and the Subsidiaries (i) has been duly
organized, is validly existing and is in good standing under the laws of
its jurisdiction of organization, (ii) has all requisite power and
authority to carry on its business and to own, lease and operate its
properties and assets, and (iii) is duly qualified or licensed to do
business and is in good standing as a foreign corporation or limited
liability company, as the case may be, authorized to do business in each
jurisdiction in which the nature of such business or the ownership or
leasing of such properties requires such qualification, except where the
failure to be so qualified would not, individually or in the aggregate,
have a material adverse effect on (A) the properties, business, prospects,
operations, earnings, assets, liabilities or condition (financial or
otherwise) of the Company, Holdings and the Subsidiaries, taken as a whole,
(B) the ability of the Company, Holdings and the Subsidiary Guarantors to
perform their respective obligations under any Document or (C) the validity
of any of the Documents or the consummation of any of the transactions
contemplated therein (each, a "Material Adverse Effect").
(d) Provided that the exercise price of each Warrant shall equal or exceed
$0.01 per share at all times, all of the issued and outstanding shares of
capital stock of each of the Company and Holdings (i) have been, and the
Warrant Shares, when issued in accordance with the terms and conditions
contained in the Warrant Agreement will be, duly authorized and validly
issued, (ii) are, and the Warrant Shares, when issued in accordance with
the terms and conditions contained in the Warrant Agreement will be, fully
paid and nonassessable, and (iii) were not, and the Warrant Shares will not
be subject to, any preemptive or similar rights. As of the Closing Date,
the Warrant Shares will have been duly reserved for issuance by Holdings.
The information as of February 1, 2003 under the column "Actual" in the
table under the caption "Capitalization" in the Final Offering Circular
(including the footnotes thereto) sets forth, as of February 1, 2003, the
capitalization of Holdings. Except as disclosed in the Offering Circular,
as of the Closing Date, all of the outstanding shares of capital stock or
other equity interests of each of the Subsidiaries will be owned directly
or indirectly by the Company, free and clear of all liens, security
interests, mortgages, pledges, charges, equities, claims or restrictions on
transferability or encumbrances of any kind (collectively, "Liens"), other
than those imposed by the Act, the securities or "Blue Sky" laws of certain
domestic or foreign jurisdictions. Except as disclosed in the Final
Offering Circular or pursuant to stock option plans which are disclosed in
the Final Offering Circular, there are no outstanding (A) options, warrants
or other rights to purchase from Holdings or any of its subsidiaries, (B)
agreements, contracts, arrangements or other obligations of Holdings or any
of its subsidiaries to issue, or (C) other rights to convert any obligation
into or exchange any securities for, in the case of each of clauses (A)
through (C), shares of capital stock of, or other ownership or equity
interests in, Holdings or any of its subsidiaries.
(e) Except as disclosed in the Offering Circular, no holder of securities of
Holdings or any of its subsidiaries will be entitled to have such
securities registered under the registration statements required to be
filed by (i) the Company with respect to the Notes pursuant to the
Registration Rights Agreement or (ii) Holdings with respect to the Warrants
and the Warrant Shares pursuant to the Equity Registration Rights
Agreement.
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(f) The Company, Holdings and each of the Subsidiary Guarantors have all
requisite corporate power and authority to execute, deliver and perform
their obligations under the Documents to which they are a party and to
consummate the transactions contemplated thereby.
(g) This Agreement has been duly authorized, executed and delivered by the
Company, Holdings and the Subsidiary Guarantors. The Indenture has been
duly authorized by the Company, Holdings and the Subsidiary Guarantors and,
as of the Closing Date, will meet the requirements for qualification under
the Trust Indenture Act of 1939, as amended (the "TIA"). Assuming the due
authorization, execution and delivery thereof by each other party thereto,
the Indenture, when executed and delivered by the Company, Holdings and the
Subsidiary Guarantors, will constitute a legal, valid and binding
obligation of the Company, Holdings and the Subsidiary Guarantors,
enforceable against each of the Company, Holdings and the Subsidiary
Guarantors in accordance with its terms, except that (A) the enforcement
thereof may be subject to (i) bankruptcy, insolvency, reorganization,
receivership, moratorium, fraudulent conveyance or other similar laws now
or hereafter in effect relating to creditors' rights generally and (ii)
general principles of equity (whether applied by a court of law or equity)
and the discretion of the court before which any proceeding therefor may be
brought, (B) any rights to indemnity or contribution thereunder may be
limited by federal and state securities laws and public policy
considerations and (C) except to the extent that a waiver of rights under
any usury laws may be unenforceable.
(h) The Registration Rights Agreement and the Security Documents have each been
duly and validly authorized by the Company, Holdings and the Subsidiary
Guarantors to the extent a party thereto. The Registration Rights Agreement
and the Security Documents, when executed and delivered by the Company,
Holdings and the Subsidiary Guarantors to the extent a party thereto, will
each be validly executed and delivered and (assuming the due authorization,
execution and delivery by you, the Trustee and the other parties thereto,
as applicable) will each constitute legal, valid and binding obligations of
the Company, Holdings and the Subsidiary Guarantors to the extent a party
thereto in accordance with the terms thereof, enforceable against the
Company, Holdings and the Subsidiary Guarantors to the extent a party
thereto in accordance with their terms, except that (A) the enforcement
thereof may be subject to (i) bankruptcy, insolvency, reorganization,
receivership, moratorium, fraudulent conveyance or other similar laws now
or hereafter in effect relating to creditors' rights generally and (ii)
general principles of equity (whether applied by a court of law or equity)
and the discretion of the court before which any proceeding therefor may be
brought, (B) any rights to indemnity or contribution thereunder may be
limited by federal and state securities laws and public policy
considerations, and (C) certain remedial provisions of the Security
Documents are or may be unenforceable in whole or in part under the laws of
the State of New York, but the inclusion of such provisions does not affect
the validity of such agreements, and each of such agreements contains
adequate provisions for the practical realization of the rights and
benefits afforded thereby.
(i) The Notes, when issued, will be in the form contemplated by the Indenture.
The Notes, Exchange Notes and Private Exchange Notes have each been duly
authorized by the Company and, in the case of the Notes, when executed and
delivered by the Company, delivered to and paid for by the Initial
Purchaser and authenticated by the Trustee, in accordance with the terms of
this Agreement and the Indenture, the Notes will have been duly executed,
issued and delivered by the Company and will constitute legal, valid and
binding obligations of the Company, entitled to the benefit of the
Indenture and the Registration Rights Agreement, and enforceable against
the Company in accordance with their terms, except that the enforcement
thereof may be subject to (i) bankruptcy, insolvency, reorganization,
receivership, moratorium, fraudulent conveyance or other similar laws now
or hereafter in effect relating to creditors' rights generally, (ii)
general principles of equity (whether applied by a court of law or equity)
6
and the discretion of the court before which any proceeding therefor may be
brought, and (iii) except to the extent that a waiver of usury laws may be
unenforceable.
(j) The Guarantees have been duly authorized by each of the Guarantors and,
when executed by the Guarantors and when the Notes on which such Guarantees
have been endorsed have been duly executed by the Company and authenticated
by the Trustee in accordance with the Indenture and delivered to and paid
for by the Initial Purchaser in accordance with the terms of this
Agreement, will have been duly executed, issued and delivered and will
constitute legal, valid and binding obligations of each of the Guarantors,
entitled to the benefit of the Indenture, and enforceable against the
Guarantors in accordance with their terms, except that the enforcement
thereof may be subject to (i) bankruptcy, insolvency, reorganization,
receivership, moratorium, fraudulent conveyance or other similar laws now
or hereafter in effect relating to creditors' rights generally, (ii)
general principles of equity (whether applied by a court of law or equity)
and the discretion of the court before which any proceeding therefor may be
brought, and (iii) except to the extent that a waiver of usury laws may be
unenforceable.
(k) Neither Holdings, the Company nor any of the Subsidiaries is in violation
of its respective certificate of incorporation, by-laws or other
organizational documents (the "Charter Documents"). Neither Holdings, the
Company nor any of the Subsidiaries is, nor to the Company's knowledge does
any condition exist (with the passage of time or otherwise) that could
reasonably be expected to cause Holdings, the Company or any of the
Subsidiaries to be, (i) in violation of any statute, rule, regulation, law
or ordinance, or any judgment, decree or order applicable to the Company,
any of the Subsidiaries or any of their properties (collectively,
"Applicable Law") of any federal, state, local or other governmental
authority, governmental or regulatory agency or body, court, arbitrator or
self-regulatory organization, domestic or foreign (each, a "Governmental
Authority"), or (ii) in breach of or in 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 of them is a party
or by which any of them or their respective property is bound
(collectively, "Applicable Agreements") (except for the Credit Facility
with respect to which, as of the Closing Date, neither Holdings, the
Company, nor any of the Subsidiaries will be in breach of or in default
thereunder), other than such violations, breaches or defaults (x) disclosed
in the Final Offering Circular or (y) that would not, individually or in
the aggregate, have a Material Adverse Effect. To the knowledge of the
Company, all Applicable Agreements are in full force and effect and are the
legal, valid and binding obligations of the parties thereto with only such
exceptions as could not, individually or in the aggregate, have a Material
Adverse Effect.
(l) Neither the execution, delivery or performance of the Documents nor the
consummation of any of the transactions contemplated therein will conflict
with, violate, constitute a breach of or a default (with the passage of
time or otherwise) under, require the consent of any person (other than
consents already obtained) or result in the imposition of a Lien on any
assets of Holdings, the Company or any of the Subsidiaries (except
Permitted Liens) under or pursuant to, (i) the Charter Documents, (ii) any
Applicable Agreement, other than such conflicts, violations, breaches,
defaults, consents, Liens or accelerations that would not, individually or
in the aggregate, have a Material Adverse Effect (except for the Credit
Facility with respect to which, as of the Closing Date, neither the
execution, delivery or performance of the Documents nor the consummation of
any of the transactions contemplated therein will conflict with, violate,
constitute a breach of or a default (with the passage of time or otherwise)
under, require the consent of any person (other than consents already
obtained) or result in the imposition of a Lien on any assets of Holdings,
the Company or any of the Subsidiaries (except Permitted Liens)), or (iii)
any Applicable Law. After consummation of the Offering and the transactions
7
contemplated in the Documents, no Default or Event of Default will exist
under the Indenture.
(m) When executed and delivered, the Documents will conform in all material
respects to the descriptions thereof in the Final Offering Circular, and
the Security Documents will create valid and enforceable security interests
in favor of the Collateral Agent in all Collateral which security interests
will secure the repayment of the Notes and the other obligations purported
to be secured thereby. As of the Closing Date, the Note Liens will be
subject in terms of priority only to the Priority Liens and Permitted Liens
that are prior to the Note Liens by operation of law.
(n) No filing with, consent, approval, authorization or order of, any
Governmental Authority is required for the consummation of the transactions
contemplated by this Agreement, the Indenture, the Security Documents, the
Warrant Agreement and the Registration Rights Agreements, except (i) as
have been obtained or will have been obtained on or before the Closing
Date, (ii) as may be necessary to perfect security interests granted
pursuant to the Security Documents and (iii) as may be required under the
Act or state securities laws or "Blue Sky" laws.
(o) Except as disclosed in the Final Offering Circular, there is no action,
claim, suit, demand, hearing, notice of violation or deficiency, or
proceeding, domestic or foreign (collectively, "Proceedings"), pending or,
to the knowledge of the Company, threatened, that either (i) seeks to
restrain, enjoin, prevent the consummation of, or otherwise challenge any
of the Documents or any of the transactions contemplated therein, or (ii)
would, individually or in the aggregate, have a Material Adverse Effect.
Except as disclosed in the Final Offering Circular, neither the Company nor
any of the Guarantors is subject to any judgment, order or decree of which
the Company has knowledge that would, individually or in the aggregate,
have a Material Adverse Effect.
(p) Each of Holdings, the Company and the Subsidiaries possesses all licenses,
permits, certificates, consents, orders, approvals and other authorizations
from, and has made all declarations and filings with, all Governmental
Authorities, presently required or necessary to own or lease, as the case
may be, and to operate their respective properties and to carry on their
respective businesses as now or proposed to be conducted as set forth in
the Final Offering Circular ("Permits"), except (i) as disclosed in the
Final Offering Circular, or (ii) where the failure to obtain such Permits
would not, individually or in the aggregate, have a Material Adverse
Effect. None of Holdings, the Company or the Subsidiaries has received
actual notice of any proceeding relating to revocation or modification of
any such Permit, except (i) as disclosed in the Final Offering Circular, or
(ii) where such revocation or modification could not, individually or in
the aggregate, have a Material Adverse Effect.
(q) Each of Holdings, the Company and the Subsidiaries will have good and
marketable title to all real property owned by it, good title to all
personal property owned by it and good and marketable title to all
leasehold estates in real and personal property being leased by it and, as
of the Closing Date, will be free and clear of all Liens, except Permitted
Liens.
(r) Each of Holdings, the Company and the Subsidiaries maintains reasonable
adequate insurance covering its properties, operations, personnel and
business as is customary in the businesses in it is engaged. To the
knowledge of the Company, all policies of insurance insuring Holdings, the
Company and any of the Subsidiaries and their respective businesses,
assets, employees, officers and directors are in full force and effect.
Each of Holdings, the Company and the Subsidiaries is in compliance with
the terms of such policies and instruments in all material respects, and,
except as disclosed in the Final Offering Circular, there are no claims by
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Holdings, the Company or any of the Subsidiaries under any such policy or
instrument as to which any insurance company is denying liability or
defending under a reservation of rights clause, which claims, individually
or in the aggregate would have a Material Adverse Effect.
(s) All material Tax returns required to be filed by Holdings, the Company and
each of the Subsidiaries have been filed or extensions thereof have been
requested, and all such returns are true, complete and correct in all
material respects. All material Taxes that are due from Holdings, the
Company and the Subsidiaries have been paid other than those (i) currently
payable without penalty or interest or (ii) being contested in good faith
and by appropriate proceedings and for which adequate reserves have been
established in accordance with generally accepted accounting principles of
the United States, consistently applied ("GAAP"). To the knowledge of the
Company after due inquiry, there are no proposed Tax assessments against
Holdings, the Company or any of the Subsidiaries that could, individually
or in the aggregate, have a Material Adverse Effect. To the knowledge of
the Company, the accruals and reserves on the books and records of
Holdings, the Company and the Subsidiaries in respect of any material Tax
liability for any Taxable period not finally determined are adequate to
meet any assessments of Tax for any such period. For purposes of this
Agreement, the term "Tax" and "Taxes" shall mean all Federal, state, local
and foreign taxes, and other assessments of a similar nature (whether
imposed directly or through withholding), including any interest, additions
to tax, or penalties applicable thereto.
(t) Each of Holdings, the Company and the Subsidiaries owns, or is validly
licensed under, or has the right to use, 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") necessary for the conduct of
its businesses and, as of the Closing Date, will be free and clear of all
Liens (except Permitted Liens), except where the failure to own, license or
have the right to use such Intellectual Property would not have a Material
Adverse Effect. To the Company's knowledge, no claims or notices of any
potential claim have been asserted by any person challenging the use of any
such Intellectual Property by Holdings, the Company or any of the
Subsidiaries or questioning the validity or effectiveness of the
Intellectual Property or any license or agreement related thereto, and, to
the Company's knowledge, there are no facts which would form a valid basis
for any such claim, other than any claims that would not, individually or
in the aggregate, have a Material Adverse Effect. To the Company's
knowledge, the use of such Intellectual Property by Holdings, the Company
or any of the Subsidiaries will not infringe on the Intellectual Property
rights of any other person.
(u) The Company 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 authorization, (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 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.
(v) The audited consolidated financial statements and related notes of Holdings
contained in the Final Offering Circular (collectively, the "Financial
Statements") will present fairly in all material respects the financial
position, results of operations and cash flows of Holdings and its
consolidated subsidiaries, as of the respective dates and for the
respective periods to which they apply and, except as disclosed in the
Final Offering Circular, have been prepared in accordance with GAAP and
comply as to form with the requirements of Regulation S-X of the Act.
Except as set forth in the Final Offering Circular, the selected
consolidated historical financial data included in the Final Offering
9
Circular has been prepared on a basis consistent with that of the Financial
Statements and present fairly, in all material respects, the financial
position and results of operations of Holdings and its consolidated
subsidiaries as of the respective dates and for the respective periods
indicated. All other financial, statistical, and market and
industry-related data included in the Final Offering Circular are based on
or derived from sources that the Company believes to be reliable and
accurate.
(w) The pro forma financial data set forth in the Final Offering Circular
include assumptions that provide a reasonable basis for presenting the
significant effects directly attributable to the transactions and events
described therein, the related pro forma adjustments give appropriate
effect to those assumptions, and the pro forma adjustments reflect, in all
material respects, the proper application of those adjustments to the
financial data in the pro forma financial data included in the Final
Offering Circular.
(x) Subsequent to the respective dates as of which information is given in the
Offering Circular, except as disclosed in the Offering Circular, (i)
neither Holdings, the Company nor any of the Subsidiaries has incurred any
liabilities, direct or contingent, that are material, individually or in
the aggregate, to the Company, or has entered into any material
transactions not in the ordinary course of business, (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 Holdings, the Company or any Subsidiary (other than any increases in
short-term indebtedness of Holdings, the Company or any Subsidiary in the
ordinary course of business relating to the working capital needs of
Holdings, the Company or any such Subsidiary), or any payment of or
declaration to pay any dividends or any other distribution with respect to
Holdings, the Company or any of the Subsidiaries, and (iii) there has not
been any material adverse change in the properties, business, prospects,
operations, earnings, assets, liabilities or condition (financial or
otherwise) of Holdings, the Company and the Subsidiaries in the aggregate
(each of clauses (i), (ii) and (iii), a "Material Adverse Change").
(y) No "nationally recognized statistical rating organization" (as such term is
defined for purposes of Rule 436(g)(2) under the Act) (i) has imposed (or
has informed the Company that it is considering imposing) any condition
(financial or otherwise) on the Company retaining any rating assigned to
the Company or to any securities of the Company, or (ii) has indicated to
the Company 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
change in the outlook for any rating of Holdings, the Company or any of the
Subsidiaries or any securities of Holdings, the Company or any of the
Subsidiaries.
(z) All indebtedness represented by the Notes and the Guarantees is being
incurred for proper purposes and in good faith. On the Closing Date, the
Company and each of the Guarantors (i) will be solvent, (ii) will have
sufficient capital for carrying on its business and (iii) will be able to
pay its debts as they mature.
(aa) None of Holdings, the Company or the Subsidiaries has and, to each of its
knowledge after due inquiry, no one acting on its 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 any security of either of
the Issuers to facilitate the sale or resale of the Units, (ii) sold, bid
for, purchased, or paid anyone any compensation for soliciting purchases
of, the Units, or (iii) paid or agreed to pay to any person any
compensation for soliciting another to purchase any other securities of the
Issuers (other than pursuant to this Agreement or pursuant to the Letter
Agreement.
10
(bb) Assuming (i) the representations of the Initial Purchaser contained in this
Agreement are true, correct and complete, (ii) compliance by the Initial
Purchaser with its covenants set forth in this Agreement and (iii) the
accuracy of and compliance with the representations and warranties made in
accordance with this Agreement and the Offering Circular by purchasers to
whom the Initial Purchaser initially resells the Units, it is not necessary
in connection with the offer, sale and delivery of the Units to the Initial
Purchaser pursuant to this Agreement or the offer and resale of the Units
by the Initial Purchaser, in the manner contemplated by this Agreement and
described in the Offering Circular, to register the Securities under the
Act or to qualify the Indenture under the TIA.
(cc) The Units, Notes and Warrants are eligible for resale pursuant to Rule
144A(d)(3) under the Act, and no other securities of the Issuers of the
same class (within the meaning of Rule 144A under the Act) as the Units,
Notes and Warrants are listed on a national securities exchange registered
under Section 6 of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), or quoted in a U.S. automated inter-dealer quotation
system. No securities of the Issuers of the same class as the Units, Notes
and Warrants have been offered, issued or sold by the Issuers or any of
their Affiliates within the six-month period immediately prior to the date
hereof.
(dd) Neither the Issuers nor any of their Affiliates or other person acting on
behalf of the Issuers has offered or sold the Units by means of any general
solicitation or general advertising within the meaning of Rule 502(c) under
the Act or, with respect to Units sold outside the United States to
non-U.S. persons, by means of any directed selling efforts within the
meaning of Rule 902 under the Act, and the Issuers, any Affiliate of the
Issuers and any person acting on behalf of the Issuers have complied with
and will implement the "offering restrictions" within the meaning of such
Rule 902; provided that no representation is made in this subsection with
respect to the actions of the Initial Purchaser, any of its Affiliates or
any other person on behalf of the Initial Purchaser or any of its
Affiliates.
(ee) Each of Holdings, the Company and the Subsidiaries has fulfilled its
obligations, if any, under the minimum funding standards of Xxxxxxx 000 xx
xxx Xxxxxx Xxxxxx Employee Retirement Income Security Act of 1974, as
amended ("ERISA") with respect to each "pension plan" (as defined in
Section 3(2) of ERISA), subject to Section 302 of ERISA which Holdings, the
Company or the Subsidiaries sponsors or maintains, or with respect to which
it has (or within the last three years had) any obligation to make
contributions, and each such plan is in compliance in all material respects
with the presently applicable provisions of ERISA and the Internal Revenue
Code of 1986, as amended, or the rules, regulations and published
interpretations promulgated thereunder, except where the failure to fulfill
such obligations would not have a Material Adverse Effect. None of
Holdings, the Company or the Subsidiaries has incurred any unpaid liability
to the Pension Benefit Guaranty Corporation (other than for the payment of
premiums in the ordinary course) or to any such plan under Title IV of
ERISA.
(ff) No labor problem, union organizing activity or dispute with any employees
of the Company, Holdings, the Subsidiary Guarantors or any of their
subsidiaries exists or to the Company's best knowledge is threatened or
imminent that could have a Material Adverse Effect.
(gg) None of the transactions contemplated in the Documents 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.
11
(hh) Neither Issuer is an open-end investment company, unit investment trust or
face-amount certificate company that is or is required to be registered
under Section 8 of the United States Investment Company Act of 1940 (the
"Investment Company Act"); and neither Issuer is, nor after giving effect
to the offering and sale of the Units and the application of the proceeds
thereof as described in the Final Offering Circular will be, an "investment
company" as defined in the Investment Company Act.
(ii) The Issuers have not engaged any broker, finder, commission agent or other
similar person (other than the Initial Purchaser) in connection with the
Offering or any of the transactions contemplated in the Documents, and the
Issuers are not under any obligation to pay any broker's fee or commission
in connection with such transactions (other than commissions or fees to the
Initial Purchaser).
(jj) Each of Holdings, the Company and the Subsidiaries (i) is in compliance
with any and all applicable foreign, federal, state and local laws and
regulations relating to the protection of the environment or hazardous or
toxic substances or wastes, pollutants or contaminants ("Environmental
Laws"), (ii) has received and is in compliance with all permits, licenses
or other approvals required of it under applicable Environmental Laws to
conduct its business and (iii) has not received actual notice of any actual
or potential liability for the investigation or remediation of any disposal
or release of hazardous or toxic substances or wastes, pollutants or
contaminants, except (A) as disclosed in the Final Offering Circular or (B)
where such non-compliance with Environmental Laws, failure to receive
required permits, licenses or other approvals, or liability would not,
individually or in the aggregate, have a Material Adverse Effect. Except as
disclosed in the Final Offering Circular, neither Holdings, the Company nor
any of the Subsidiaries has been named as a "potentially responsible party"
under the Comprehensive Environmental Response, Compensation, and Liability
Act of 1980, as amended.
In the ordinary course of its business, the Company periodically reviews
the effect of Environmental Laws on the business, operations and properties
of Holdings, the Company and the Subsidiaries, in the course of which it
identifies and evaluates associated costs and liabilities (including,
without limitation, any capital or operating expenditures required for
clean-up, 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). On the basis of
such review, the Company has reasonably concluded that such associated
costs would not have a Material Adverse Effect.
(kk) As of the Closing Date, there will be no encumbrances or restrictions on
the ability of Holdings or any Subsidiary (x) to pay dividends or make
other distributions on such parties' capital stock or to make loans or
advances or pay any indebtedness to, or investments in, Holdings, the
Company or any Subsidiary, or (y) to transfer any of its property or assets
to Holdings, the Company or any Subsidiary, except pursuant to the Credit
Facility or as described in the Final Offering Circular.
(ll) As of the Closing Date the Borrowers and Holdings will own the Collateral
free and clear of all Liens except for Permitted Liens.
(mm) As of the Closing Date, the representations and warranties contained in the
Security Documents will be true and correct in all material respects.
(nn) As of the Closing Date, the Note Liens will have been duly perfected as to
all Collateral, except with respect to any deposit or security accounts
which are perfected in accordance with the terms of the Security Documents.
12
(oo) Each certificate signed by any officer of Holdings, the Company, or any
Subsidiary and delivered to the Initial Purchaser shall be deemed a
representation and warranty by Holdings, the Company or any such Subsidiary
(and not individually by such officer) to the Initial Purchaser with
respect to the matters covered thereby.
(pp) The Warrants, when issued on the Closing Date, will provide for the right
to purchase 2.5% of the fully-diluted common stock of Holdings as of the
Closing Date, determined in accordance with GAAP (assuming exercise of all
such warrants).
(qq) The Warrants, when issued, will be in the form contemplated by the Warrant
Agreement. The Warrants have been duly authorized by Holdings and when
executed and delivered by Holdings, delivered to and paid for by the
Initial Purchaser and authenticated by the Warrant Agent, in accordance
with the terms of this Agreement and the Warrant Agreement, the Warrants
will have been duly executed, issued and delivered by Holdings and will
constitute legal, valid and binding obligations of Holdings, entitled to
the benefit of the Warrant Agreement and the Equity Registration Rights
Agreement, and enforceable against Holdings in accordance with their terms,
except that the enforcement thereof may be subject to (i) bankruptcy,
insolvency, reorganization, receivership, moratorium, fraudulent conveyance
or other similar laws now or hereafter in effect relating to creditors'
rights generally and (ii) general principles of equity (whether applied by
a court of law or equity) and the discretion of the court before which any
proceeding therefor may be brought.
(rr) The Warrant Shares have been duly and validly authorized for issuance by
Holdings, and when issued pursuant to the terms of the Warrants and the
Warrant Agreement, will be fully paid and non-assessable and will not be
subject to any preemptive or similar rights assuming that at the time of
the issuance of any Warrant Share upon the exercise of any Warrant, the
exercise price of such Warrant shall equal or exceed $0.01 per share.
(ss) The Equity Registration Rights Agreement has been duly and validly
authorized by Holdings. The Equity Registration Rights Agreement, when
executed and delivered by Holdings, will be validly executed and delivered
and (assuming due authorization, execution and delivery by you and the
other parties thereto) will constitute the legal, valid and binding
obligation of Holdings in accordance with the terms thereof, enforceable
against Holdings in accordance with its terms, except that (A) the
enforcement thereof may be subject to (i) bankruptcy, insolvency,
reorganization, receivership, moratorium, fraudulent conveyance or other
similar laws now or hereafter in effect relating to creditors' rights
generally and (ii) general principles of equity (whether applied by a court
of law or equity) and the discretion of the court before which any
proceeding therefor may be brought and (B) any rights to indemnity or
contribution thereunder may be limited by federal and state securities laws
and public policy considerations.
(tt) The Warrant Agreement has been duly and validly authorized by Holdings. The
Warrant Agreement, when executed and delivered by Holdings will be validly
executed and delivered and (assuming due authorization, execution and
delivery by the Warrant Agent and the other parties thereto) will
constitute the legal, valid and binding obligation of Holdings in
accordance with the terms thereof, enforceable against Holdings in
accordance with its terms, except that the enforcement thereof may be
subject to (i) bankruptcy, insolvency, reorganization, receivership,
moratorium, fraudulent conveyance or other similar laws now or hereafter in
effect relating to creditors' rights generally and (ii) general principles
of equity (whether applied by a court of law or equity) and the discretion
of the court before which any proceeding therefor may be brought.
(uu) Each of the Issuers has duly authorized the issuance of the Notes and the
Warrants as a Unit.
13
5. COVENANTS OF THE COMPANY, HOLDINGS AND THE SUBSIDIARY
GUARANTORS. The Company, Holdings and the Subsidiary Guarantors, jointly and
severally, hereby agree:
(a) 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 state securities commission of any stop
order suspending the qualification or exemption from qualification of the
Securities for offer or sale in any jurisdiction, or the initiation of any
proceeding for such purpose by any 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 Final Offering Circular untrue or
that requires the making of any additions to or changes in the Final
Offering Circular in order 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
the Securities under any state securities or Blue Sky laws, and (iii) if at
any time any state securities commission or other regulatory authority
shall issue an order suspending the qualification or exemption from
qualification of the Securities under any such laws, use its commercially
reasonable efforts to obtain the withdrawal or lifting of such order at the
earliest possible time.
(b) To (i) furnish the Initial Purchaser, without charge, with as many copies
of the Final Offering Circular, and any amendments or supplements thereto,
as the Initial Purchaser may reasonably request, and (ii) promptly prepare,
upon the Initial Purchaser's reasonable request, any amendment or
supplement to the Final Offering Circular that the Initial Purchaser, upon
advice of legal counsel, determines may be necessary in connection with
Exempt Resales (and the Company hereby consents to the use of (a) the
Preliminary Offering Circular by the Initial Purchaser prior to the date of
the Final Offering Circular and (b) the Final Offering Circular, and any
amendments and supplements thereto, by the Initial Purchaser in connection
with Exempt Resales).
(c) Not to amend or supplement the Final Offering Circular prior to the Closing
Date unless the Initial Purchaser shall previously have been advised
thereof and shall have provided a written consent thereto, which consent
shall not be unreasonably withheld.
(d) So long as the Initial Purchaser shall hold any of the Units, (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 Final Offering Circular in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading, or to comply with Applicable Law, the Company will,
at the expense of the Company, prepare and provide the Initial Purchaser
with an appropriate amendment or supplement to the Final Offering Circular
(in form and substance reasonably satisfactory to the Initial Purchaser) so
that, as so amended or supplemented, the Final Offering Circular will not
include an untrue statement of a material fact or omit to state a material
fact necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading, and 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 Final Offering
Circular so that the Final Offering Circular will contain all of the
information specified in, and meet the requirements of, Rule 144A(d)(4) of
the Act, to prepare an appropriate amendment or supplement to the Final
Offering Circular (in form and substance reasonably satisfactory to the
Initial Purchaser) so that the Final Offering Circular, as so amended or
supplemented, will contain the information specified in, and meet the
requirements of, such Rule.
14
(e) So long as any of the Securities are "restricted securities" within the
meaning of Rule 144(a)(3) under the Act, to, during any period in which
Holdings is not subject to and in compliance with Section 13 or 15(d) of
the Exchange Act or is not exempt from such reporting requirements pursuant
to and in compliance with Rule 12g3-2(b) under the Exchange Act, provide to
each holder of such restricted securities and to each prospective purchaser
(as designated by such holder) of such restricted securities, upon the
request of such holder or prospective purchaser, any information required
to be provided by Rule 144A(d)(4) under the Act.
(f) To cooperate with the Initial Purchaser and the Initial Purchaser's counsel
in connection with the qualification of the Securities 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 neither the Company, Holdings nor any
Subsidiary Guarantor shall be obligated to file any general consent to
service of process or qualify to do business as a foreign corporation in
any jurisdiction in which it is not required to be qualified.
(g) Whether or not any of the Offering or the transactions contemplated under
the Documents are consummated or this Agreement is terminated, to pay (i)
all costs, expenses, fees and taxes incident to and in connection with: (A)
the preparation, printing and distribution of the Preliminary Offering
Circular and the Final Offering Circular 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, (B) the printing, processing
and distribution (including, without limitation, word processing and
duplication costs) and delivery of, each of the Documents, (C) the
preparation, issuance and delivery of the Securities, (D) the qualification
of the Securities for offer and sale under the securities or Blue Sky laws
of the several states (including, without limitation, the reasonable fees
and disbursements of the Initial Purchaser's counsel relating to such
qualification) and (E) furnishing such copies of the Preliminary Offering
Circular and the Final Offering Circular, and all amendments and
supplements thereto, as may reasonably be requested for use by the Initial
Purchaser, (ii) all fees and expenses of the counsel, accountants and any
other experts or advisors retained by the Company, (iii) all expenses and
listing fees in connection with qualifying the Units, Notes and Warrants
for trading on the Private Offerings, Resales and Trading Automated
Linkages ("PORTAL") market, (iv) all fees and expenses (including fees and
expenses of counsel) of the Company in connection with approval of the
Securities by DTC for "book-entry" transfer, (v) all fees charged by rating
agencies in connection with the rating of the Notes, (vi) all fees and
expenses (including reasonable fees and expenses of counsel) of the
Trustee, the Warrant Agent and the Collateral Agent and (vii) all
reasonable fees, disbursements and out-of-pocket expenses incurred by
Initial Purchaser in connection with its services rendered and to be
rendered in connection with the Offering including, without limitation, the
fees, expenses, disbursements and charges (including fees for processing
and distributing the Documents) of Xxxxxx & Xxxxxxx LLP, counsel to the
Initial Purchaser, travel and lodging expenses, word processing charges,
messenger and duplicating services, facsimile expenses and other customary
expenditures; provided, however, that the Company shall not be responsible
for the fees, disbursements and out-of-pocket expenses incurred by the
Initial Purchaser, including the fees and disbursements of Xxxxxx & Xxxxxxx
LLP, pursuant to (vii) above in excess of $375,000 without the express
written consent of the Company; provided, however, that any payment by the
Company, Holdings or any of the Subsidiary Guarantors pursuant to this
clause (vii) will be a credit against the obligations of Holdings set forth
in Section 5(b) of the Letter Agreement. If the sale of the Units provided
for herein is not consummated because any condition to the obligations of
the Initial Purchaser set forth in Section 7 hereof is not satisfied,
because this Agreement is terminated pursuant to Section 9 hereof or
15
because of any failure, refusal or inability on the part of the Company,
Holdings or the Subsidiary Guarantors to perform all obligations and
satisfy all conditions on its part to be performed or satisfied hereunder
(other than in each such case solely by reason of a default by the Initial
Purchaser on its obligations hereunder after all conditions hereunder have
been satisfied in accordance herewith), the Company agrees to promptly
reimburse the Initial Purchaser in cash upon demand for all fees,
disbursements and out-of-pocket expenses (including fees, expenses,
disbursements and charges of Xxxxxx & Xxxxxxx LLP, counsel for the Initial
Purchaser to be paid in cash) that shall have been incurred by the Initial
Purchaser in connection with the proposed Offering; provided, however, that
the Company shall not be responsible for the fees, disbursements and
out-of-pocket expenses incurred by the Initial Purchaser in excess of
$375,000 without the express written consent of the Company; provided
further, however, that any such reimbursement will be a credit against the
obligations of Holdings set forth in Section 5(b) of the Letter Agreement.
(h) To use the proceeds of the Offering in the manner described in the Final
Offering Circular under the caption "Use of Proceeds."
(i) To do and perform all things required to be done and performed in all
material respects under the Documents prior to and after the Closing Date.
(j) Not to, and to ensure that no affiliate (as defined in Rule 501(b) of the
Act) of the Company will, sell, offer for sale or solicit offers to buy or
otherwise negotiate in respect of any "security" (as defined in the Act)
that could be integrated with the sale of the Units in a manner that could
require the registration under the Act of the sale to the Initial Purchaser
or to the Subsequent Purchasers of the Units.
(k) To comply with the representation letter of the Company to DTC relating to
the approval of the Units by DTC for "book entry" transfer.
(l) To use their commercially reasonable efforts to effect the inclusion of the
Units, Notes and Warrants in PORTAL.
(m) For so long as any of the Securities remain outstanding, the Company will
furnish to the Initial Purchaser copies of all reports and other
communications (financial or otherwise) furnished by the Company to the
Trustees or to the holders of the Securities and, as soon as available,
copies of any reports or financial statements furnished to or filed by
Holdings with the SEC or any national securities exchange on which any
class of securities of Holdings may be listed; provided, however, that any
such report or financial statements filed on XXXXX need not be furnished.
(n) Except in connection with the Exchange Offer, the filing of the Shelf
Registration Statement or the filing of the Equity 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 Securities other than the Preliminary Offering Circular and the
Final Offering Circular and any amendments and supplements to the Final
Offering Circular prepared in compliance with this Agreement, or (ii)
solicit any offer to buy or offer to sell the Securities by means of any
form of general solicitation or general advertising (including, without
limitation, as such terms are used in Regulation D under the Act) or in any
manner involving a public offering within the meaning of Section 4(2) of
the Act.
(o) During the two year period after the Closing Date (or such shorter period
as may be provided for in Rule 144(k) under the Act, as the same may be in
effect from time to time), not to, and not to permit any current or future
Subsidiaries of the Company or any other affiliates (as defined in Rule
144A under the Act) controlled by the Company to, resell any of the
16
Securities which constitute "restricted securities" under Rule 144 that
have been reacquired by the Company, any current or future Subsidiaries of
the Company or any other affiliates (as defined in Rule 144A under the Act)
controlled by the Company, except pursuant to an effective registration
statement under the Act.
(p) To pay all stamp, documentary and transfer taxes and other duties, if any,
which may be imposed by the United States or any political subdivision
thereof or taxing authority thereof or therein with respect to the issuance
of the Units or the sale thereof to the Initial Purchaser.
6. REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF THE
INITIAL PURCHASER. The Initial Purchaser represents and warrants to the Company,
Holdings and the Subsidiary Guarantors and agrees that:
(a) It is a QIB as defined in Rule 144A under the Act and it will offer the
Units for resale only upon the terms and conditions set forth in this
Agreement and in the Final Offering Circular.
(b) It is not acquiring the Units with a view to any distribution thereof that
would violate the Act or the securities laws of any state of the United
States or any other applicable jurisdiction. In connection with the Exempt
Resales, it will solicit offers to buy the Units only from, and will offer
and sell the Units only to, persons reasonably believed by the Initial
Purchaser to be (A) QIBs, (B) Accredited Investors or (C) non-U.S. persons
referred to in Regulation S under the Act; provided, however, that in
purchasing such Units, such persons are deemed to have represented and
agreed as provided under the caption "Notice to Investors" contained in the
Final Offering Circular.
(c) No form of general solicitation or general advertising in violation of the
Act has been or will be used nor will any offers in any manner involving a
public offering within the meaning of Section 4(2) of the Act or, with
respect to Units to be sold in reliance on Regulation S, by means of any
directed selling efforts, be made by such Initial Purchaser or any of its
representatives in connection with the offer and sale of any of the Units.
(d) The Initial Purchaser will deliver to each Subsequent Purchaser of the
Units, in connection with its original distribution of the Units, a copy of
the Final Offering Circular, as amended and supplemented at the date of
such delivery.
(e) (i) It has not offered or sold and, before the expiration of the period of
six months from the closing date for the Units, will not offer or sell any
Units to persons in the United Kingdom, except to those persons whose
ordinary activities involve them in acquiring, holding, managing or
disposing of investments (as principal or agent) for the purposes of their
businesses or otherwise in circumstances which have not resulted and will
not result in an offer to the public in the United Kingdom within the
meaning of the Public Offers of Securities Regulations 1995, (ii) it has
only communicated or caused to be communicated and will only communicate or
cause to be communicated any invitation or inducement to engage in
investment activity (within the meaning of Section 21 of the Financial
Services and Markets Xxx 0000 (the "FSMA")) ---- received by it in
connection with the issue or sale of any Units in circumstances in which
Section 21(1) of the FSMA does not apply to the Company, and (iii) it has
complied and will comply with all applicable provisions of the FSMA, with
respect to anything done by it in relation to the Units in, from or
otherwise involving the United Kingdom.
17
(f) It will not engage in hedging transactions with regard to the Warrants and
the Warrant Shares prior to one year after the later of the commencement of
this offering and the closing of this offering.
7. CONDITIONS. The obligation of the Initial Purchaser to
purchase the Units under this Agreement are subject to the satisfaction or
waiver of each of the following conditions:
(a) All the representations and warranties of the Company, Holdings and the
Subsidiary Guarantors contained in this Agreement and in each of the
Documents shall be true and correct as of the date hereof and at the
Closing Date. On or prior to the Closing Date, the Company, Holdings, and
the Subsidiary Guarantors and each other party to the Documents (other than
the Initial Purchaser) shall have performed or complied with all of the
agreements and satisfied all conditions on their respective parts to be
performed, complied with or satisfied pursuant to the Documents (other than
conditions to be satisfied by the Company, Holdings, the Subsidiary
Guarantors or such other parties, which the failure to so satisfy could
not, individually or in the aggregate, have a Material Adverse Effect).
(b) No injunction, restraining order or order of any nature by a Governmental
Authority shall have been issued as of the Closing Date that could prevent
or materially interfere with the consummation of the Offering or any of the
transactions contemplated under the Documents; and no stop order suspending
the qualification or exemption from qualification of any of the Securities
in any jurisdiction shall have been issued and no Proceeding for that
purpose shall have been commenced or, to the knowledge of the Company after
due inquiry, be pending or threatened as of the Closing Date.
(c) No action shall have been taken and no Applicable Law shall have been
enacted, adopted or issued that could, as of the Closing Date, reasonably
be expected to prevent the consummation of the Offering or any of the
transactions contemplated under the Documents. No Proceeding shall be
pending or, to the knowledge of the Company after due inquiry, threatened
other than Proceedings that (A) are disclosed in the Final Offering
Circular, (B) if adversely determined could not, individually or in the
aggregate, adversely affect the issuance or marketability of the Units, or
(C) could not, individually or in the aggregate, have a Material Adverse
Effect.
(d) Since the date hereof, there shall not have been any Material Adverse
Change.
(e) The Units, Notes and Warrants shall have been designated PORTAL securities
in accordance with the rules and regulations adopted by the National
Association of Securities Dealers, Inc. relating to trading in the PORTAL
market.
(f) 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, 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 securities of the Company (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 Act, (ii) there shall not have occurred any change, nor shall any
notice have been given of any potential or intended change, in the outlook
for any rating of the Company or any securities of the Company by any such
rating organization and (iii) no such rating organization shall have given
18
notice that it has assigned (or is considering assigning) a lower rating to
the Notes than that on which the Notes were marketed.
(g) The proceeds of the Offering will be used in the manner described in the
funds flow memorandum delivered by the Company prior to the Closing Date,
with such terms and in such form as is reasonably acceptable to the Initial
Purchaser.
(h) The Initial Purchaser shall have received on the Closing Date:
(i) certificates dated the Closing Date, signed by (1) the Chief Executive
Officer and (2) the principal financial or accounting officer(s) of
the Company, Holdings and the Subsidiary Guarantors, on behalf of the
Company, Holdings and the Subsidiary Guarantors, respectively, to the
effect that (a) the representations and warranties set forth in
Section 4 hereof are true and correct in all material respects with
the same force and effect as though expressly made at and as of the
Closing Date, (b) the Company, Holdings and the Subsidiary Guarantors
have complied with all agreements and satisfied all conditions in all
material respects on its part to be performed or satisfied hereunder
at or prior to the Closing Date, (c) at the Closing Date, since the
date hereof or since the date of the most recent financial statements
in the Final Offering Circular (exclusive of any amendment or
supplement thereto after the date thereof), except as disclosed in the
Final Offering Circular, no event or events have occurred, no
information has become known nor does any condition exist that,
individually or in the aggregate, would have a Material Adverse
Effect, (d) since the date of the most recent financial statements in
the Final Offering Circular (exclusive of any amendment or supplement
thereto after the date thereof), other than as described in the Final
Offering Circular or contemplated hereby, neither Holdings, the
Company nor any Subsidiary has incurred any liabilities or
obligations, direct or contingent, not in the ordinary course of
business, that are material to Holdings, the Company and the
Subsidiaries, taken as a whole, or entered into any transactions not
in the ordinary course of business that are material to the business,
condition (financial or otherwise) or results of operations or
prospects of Holdings, the Company and the Subsidiaries, taken as a
whole, and there has not been any change in the capital stock or
long-term indebtedness of Holdings, the Company or any Subsidiary that
is material to the business, condition (financial or otherwise) or
results of operations or prospects of Holdings, the Company and the
Subsidiaries, taken as a whole, and (e) the sale of the Units has not
been enjoined (temporarily or permanently);
(ii) certificates dated the Closing Date, executed by the Secretary of each
of the Company, Holdings and each Subsidiary Guarantor, certifying
such matters as the Initial Purchaser may reasonably request;
(iii) the opinions of Weil, Gotshal & Xxxxxx LLP, counsel to the Issuers
and the Guarantors, dated the Closing Date, in the forms of Exhibit A
and Exhibit B attached hereto and containing customary assumptions and
qualifications reasonably satisfactory to the Initial Purchaser;
(iv) the letter from Weil, Gotshal & Xxxxxx LLP, counsel to the Issuers,
dated the Closing Date, in the form of Exhibit C attached hereto;
(v) the opinion of Xxxx X. Xxxxxxxxx, General Counsel of the Issuers,
dated the Closing Date, in the form of Exhibit D attached hereto;
(vi) an opinion, dated the Closing Date, of Xxxxxx & Xxxxxxx LLP, counsel
to the Initial Purchaser, in form satisfactory to the Initial
Purchaser covering such matters as are customarily covered in such
opinions.
19
(i) The Initial Purchaser shall have received from Ernst & Young LLP,
independent auditors, with respect to the Company, (A) a customary comfort
letter, dated the date of the Final Offering Circular, in form and
substance reasonably satisfactory to the Initial Purchaser, with respect to
the financial statements and certain financial information contained in the
Final Offering Circular and (B) a customary comfort letter, dated the
Closing Date, in form and substance reasonably satisfactory to the Initial
Purchaser, to the effect that Ernst & Young LLP reaffirm the statements
made in its letter furnished pursuant to clause (A).
(j) Each of the Documents (except the Blocked Account Agreements and the
Lockbox Account Agreement) shall have been executed and delivered by all
parties thereto, and the Initial Purchaser shall have received a fully
executed original of each Document (except the Blocked Account Agreements
and the Lockbox Account Agreement), except that the failure by the Initial
Purchaser to execute and deliver the Registration Rights Agreement shall
not constitute a basis upon which the Initial Purchaser may terminate this
Agreement pursuant to Section 9(b) hereof if all of the other conditions to
the obligations of the Initial Purchaser to purchase the Units under this
Agreement have been satisfied.
(k) The Initial Purchaser shall have received copies of all opinions,
certificates, letters and other documents delivered under or in connection
with the Offering or any transaction contemplated in the Documents that are
required to be delivered at or prior to the Closing Date.
(l) None of the parties to any of the Documents (other than the Initial
Purchaser) shall be in breach or default in any material respect under
their respective obligations thereunder.
(m) On or prior to the Closing Date, the Company and the Subsidiary Guarantors
shall have entered into a restatement of the Credit Facility, in form and
substance reasonably satisfactory to the Initial Purchaser, providing for,
among other items, a reduction in the revolving credit commitment
thereunder and permitting a second-priority lien on the assets secured by
the Credit Facility, and the Credit Facility, as restated, shall be in full
force and effect as of such date.
(n) The Collateral Agent shall have received on the Closing Date:
(i) appropriately completed copies, which have been duly authorized for
filing by the appropriate Person, of Uniform Commercial Code financing
statements naming the Company and each Subsidiary Guarantor as a
debtor and the Collateral Agent as the secured party, or other similar
instruments or documents to be filed under the UCC of all
jurisdictions as may be necessary or, in the reasonable opinion of the
Collateral Agent and its counsel, desirable to perfect the security
interests of the Collateral Agent pursuant to the Indenture;
(ii) appropriately completed copies, which have been duly authorized for
filing by the appropriate Person, of Uniform Commercial Code Form
UCC-3 termination statements, if any, necessary to release all Liens
(other than Priority Liens) of any Person in any collateral described
in the Indenture previously granted by any Person;
(iii) certified copies of Uniform Commercial Code Requests for Information
or Copies (Form UCC-11), or a similar search report certified by a
party acceptable to the Collateral Agent, dated a date reasonably near
to the Closing Date, listing all effective financing statements which
name the Company or any Subsidiary Guarantor (under its present name
and any previous names) as the debtor, together with copies of such
20
financing statements (none of which shall cover any collateral
described in the Indenture, other than such financing statements that
evidence Priority Liens);
(iv) such other approvals, opinions, or documents as the Collateral Agent
may reasonably request in form and substance reasonably satisfactory
to the Collateral Agent; and
(v) the Collateral Agent and its counsel shall be satisfied that (i) the
Lien granted to the Collateral Agent, for the benefit of the Secured
Parties in the collateral described above is of the priority described
in the Final Offering Circular; and (ii) no Lien exists on any of the
collateral described above other than the Lien created in favor of the
Collateral Agent, for the benefit of the Secured Parties, pursuant to
the Indenture, in each case subject to Permitted Liens.
(o) All Uniform Commercial Code financing statements or other similar financing
statements and Uniform Commercial Code Form UCC-3 termination statements
required pursuant to clause (n)(i) and (ii) above (collectively, the
"Filing Statements") shall have been delivered to CT Corporation System or
another similar filing service company acceptable to the Collateral Agent
(the "Filing Agent"). The Filing Agent shall have acknowledged in a writing
reasonably satisfactory to the Collateral Agent and its counsel (i) the
Filing Agent's receipt of all Filing Statements, (ii) that the Filing
Statements have either been submitted for filing in the appropriate filing
offices or will be submitted for filing in the appropriate offices within
ten days following the Closing Date and (iii) that the Filing Agent will
notify the Collateral Agent and its counsel of the results of such
submissions within 30 days following the Closing Date.
(p) The Administrative Agent shall have executed and delivered to the
Collateral Agent the acknowledgements attached to the Borrowers' Pledge
Agreement and Holdings' Pledge Agreement relating to the Pledged Stock.
(q) By 5:00 p.m. on Monday, March 31, 2003, the respective Boards of Directors
of the Company, Holdings and the Subsidiary Guarantors shall have approved
and authorized by all necessary corporate action (1) the execution and
delivery of the Documents, (2) all actions to be performed or satisfied
under the Documents, (3) the consummation of the transactions contemplated
by the Documents, (4) the pricing terms of the Notes, Warrants and Units,
and (5) all other actions necessary in connection with the transactions
contemplated by the Documents and the offering of the Notes, Warrants and
Units, and shall have provided you with notice of the same.
(r) By 5:00 p.m. on Monday, March 31, 2003, the representations and warranties
of the Company, Holdings and the Subsidiary Guarantors set forth in
Sections 4(f), (g), (pp), (qq), (rr), (ss), (tt) and (uu) hereof shall be
true and correct.
8. INDEMNIFICATION AND CONTRIBUTION.
(a) Each of the Company, Holdings and the Subsidiary Guarantors, jointly and
severally, agree to indemnify and hold harmless the Initial Purchaser, each
of its affiliates (including any person who controls the Initial Purchaser
within the meaning of Section 15 of the Act or Section 20 of the Exchange
Act) and their respective officers, directors, partners, shareholders,
counsel, employees and agents (the Initial Purchaser and each such other
person being referred to as an "Indemnified Person"), to the fullest extent
lawful, from and against any losses, claims, damages, liabilities and
reasonable expenses (or actions in respect thereof), as incurred, related
to or arising out of or in connection with:
21
(i) actions taken or omitted to be taken by the Company, Holdings, their
respective affiliates, employees or agents;
(ii) actions taken or omitted to be taken by any Indemnified Person
(including acts or omissions constituting ordinary negligence)
pursuant to the terms of, or in connection with services rendered
pursuant to, the Offering or any Indemnified Person's role in
connection therewith; provided, however, that the Company, Holdings
and the Subsidiary Guarantors shall not be responsible for any losses,
claims, damages, liabilities or expenses of any Indemnified Person to
the extent, and only to the extent, that it is finally judicially
determined that they are due primarily to such Indemnified Person's
willful misconduct or gross negligence;
(iii) any untrue statement or alleged untrue statement of a material fact
contained in any Offering Circular, or in any amendment or supplement
thereto; and/or
(iv) the omission or alleged omission to state in any Offering Circular or
any amendment or supplement thereto, a material fact required to be
stated therein, or necessary to make the statements therein in light
of the circumstances under which they were made, not misleading,
and, subject to the provisions hereof, will reimburse the Indemnified
Persons for all reasonable expenses (including, without limitation,
reasonable fees and expenses of counsel) as they are incurred in
connection with investigating, preparing, defending or settling any
such action or claim, whether or not in connection with litigation in
which any Indemnified Person is a named party. If any of the
Indemnified Persons' personnel appears as witnesses, are deposed or
are otherwise involved in the defense of any action against an
Indemnified Person, the Company, Holdings, the Subsidiary Guarantors
or their respective officers or directors, the Company, Holdings and
the Subsidiary Guarantors will pay the Initial Purchaser (i) with
respect to each day that one of the Indemnified Persons' professional
personnel appears as a witness or is deposed and/or (ii) with respect
to each day that one of the Indemnified Persons' professional
personnel is involved in the preparation therefor, (a) a fee of
$2,000 per day for each such person with respect to each appearance
as a witness or for a deposition and (b) at a rate of $200 per hour
with respect to each hour of preparation for any such appearance, and
Company, Holdings and the Subsidiary Guarantors will reimburse the
Initial Purchaser for all reasonable expenses incurred by the Initial
Purchaser by reason of any of the Indemnified Persons being involved
in any such action; provided, however, the Company, Holdings and the
Subsidiary Guarantors shall not be liable for indemnification
hereunder with regard to (a) information contained in the "Plan of
Distribution" section of the Offering Circular supplied by the
Initial Purchaser or its counsel in writing for specific inclusion in
the Offering Circular or (b) any negligent act or omission or willful
misconduct by the Initial Purchaser or any other Indemnified Person
which is the primary cause of, and results in, the unavailability to
the Company (or any of its affiliates) or to the Offering of the
exemption from the registration requirements of the Securities Act
provided by Section 4(2) thereof or Rule 144A thereunder. This
indemnity will be in addition to any liability that the Company,
Holdings and the Subsidiary Guarantors may otherwise have to the
Indemnified Persons, and as to the Preliminary Offering Circular,
shall not inure to the benefit of the Initial Purchaser (or any
person controlling such Initial Purchaser) on account of any loss,
claim, damage or liability arising from the sale of Securities to any
person by the Initial Purchaser if the Initial Purchaser failed to
send or give a copy of the Final Offering Circular (as the same may
be supplemented or amended) to such person at or prior to the written
confirmation of the sale of the Units to such person, and the untrue
statement or alleged untrue statement or omission or alleged omission
of a material fact in such Preliminary Offering Circular was
22
corrected in the Final Offering Circular, unless such failure
resulted from noncompliance by the Company, Holdings and the
Subsidiary Guarantors with Section 5(b).
(b) The Initial Purchaser agrees to indemnify and hold harmless each of the
Company, Holdings, the Subsidiary Guarantors and their respective
directors, officers and each person, if any, who controls the Company,
Holdings or any Subsidiary Guarantor within the meaning of Section 15 of
the Act or Section 20 of the Exchange Act against any losses, claims,
damages or liabilities (or actions in respect thereof) to which the
Company, Holdings, the Subsidiary Guarantors or any such director, officer
or controlling person may become subject, as incurred, related to or
arising out of or in connection with (i) any untrue statement or alleged
untrue statement of any material fact contained in any Offering Circular or
any amendment or supplement thereto or (ii) the omission or the alleged
omission to state therein a material fact required to be stated in any
Offering Circular or any amendment or supplement thereto or necessary to
make the statements therein, in light of the circumstances under which they
were made, not misleading, in each case to the extent (but only to the
extent) that such untrue statement or alleged untrue statement or omission
or alleged omission was made in reliance upon and in conformity with
written information concerning the Initial Purchaser contained in the "Plan
of Distribution" section of the Offering Circular, furnished to the Company
or its agents by the Initial Purchaser or its counsel specifically for use
therein; and, subject to the limitation set forth immediately preceding
this clause, will reimburse, as incurred, any reasonable legal or other
expenses incurred by the Company, Holdings, the Subsidiary Guarantors or
any such director, officer or controlling person in connection with any
such loss, claim, damage, liability or action in respect thereof. This
indemnity agreement will be in addition to any liability that the Initial
Purchaser may otherwise have to the Company, Holdings and the Subsidiary
Guarantors.
(c) As promptly as reasonably practical after receipt by an indemnified party
under this Section 8 of notice of the commencement of any action for which
such indemnified party is entitled to indemnification under this Section 8,
such indemnified party will, if a claim in respect thereof is to be made
against the indemnifying party under this Section 8, notify the
indemnifying party of the commencement thereof in writing; but the omission
to so notify the indemnifying party (i) will not relieve such indemnifying
party from any liability under paragraph (a) or (b) above unless and only
to the extent it is materially prejudiced as a result thereof and (ii) will
not, in any event, relieve the indemnifying party from any obligations to
any indemnified party other than the indemnification obligation provided in
paragraphs (a) and (b) above. In case any such action is brought against
any indemnified party, and it notifies the indemnifying party of the
commencement thereof, the indemnifying party will be entitled to
participate therein and, to the extent that it may determine, jointly with
any other indemnifying party similarly notified, to assume the defense
thereof, with counsel reasonably satisfactory to such indemnified party;
provided, however, that if (i) the use of counsel chosen by the
indemnifying party to represent the indemnified party would present such
counsel with a conflict of interest, (ii) the defendants in any such action
include both the indemnified party and the indemnifying party, and the
indemnified party shall have been advised by counsel that there may be one
or more legal defenses available to it and/or other indemnified party that
are different from or additional to those available to the indemnifying
party, or (iii) the indemnifying party shall not have employed counsel
reasonably satisfactory to the indemnified party to represent the
indemnified party within a reasonable time after receipt by the
indemnifying party of notice of the institution of such action, then, in
each such case, the indemnifying party shall not have the right to direct
the defense of such action on behalf of such indemnified party or parties
and such indemnified party or parties shall have the right to select
separate counsel to defend such action on behalf of such indemnified party
or parties at the expense of the indemnifying party. After notice from the
indemnifying party to such indemnified party of its election so to assume
23
the defense thereof and approval by such indemnified party of counsel
appointed to defend such action, which approval shall not be unreasonably
withheld, the indemnifying party will not be liable to such indemnified
party under this Section 8 for any legal or other expenses, other than
reasonable costs of investigation, subsequently incurred by such
indemnified party in connection with the defense thereof, unless (i) the
indemnified party shall have employed separate counsel in accordance with
the proviso to the immediately preceding sentence (it being understood,
however, that in connection with such action the indemnifying party shall
not be liable for the expenses of more than one separate counsel (in
addition to local counsel) in any one action or separate but substantially
similar actions in the same jurisdiction arising out of the same general
allegations or circumstances, designated by the Initial Purchaser in the
case of paragraph (a) of this Section 8 or the Company, Holdings and the
Subsidiary Guarantors in the case of paragraph (b) of this Section 8,
representing the indemnified party under such paragraph (a) or paragraph
(b), as the case may be, who are parties to such action or actions) or (ii)
the indemnifying party has authorized in writing the employment of counsel
for the indemnified party at the expense of the indemnifying party. After
such notice from the indemnifying party to such indemnified party, the
indemnifying party will not be liable for the costs and expenses of any
settlement of such action effected by such indemnified party without the
prior written consent of the indemnifying party (which consent shall not be
unreasonably withheld).
(d) No indemnifying party shall settle or compromise or consent to the entry of
any judgment in or otherwise seek to terminate any pending or threatened
action, claim, suit or proceeding in which any indemnified party is or
could have been a party and as to which indemnification or contribution
could have been sought by such indemnified party hereunder (whether or not
such indemnified party is a party thereto), unless such indemnified party
has given its prior written consent, or the settlement, compromise, consent
or termination includes an express unconditional release (which shall not
be unreasonably withheld or delayed) of such indemnified party, reasonably
satisfactory in form and in substance to such indemnified party, from all
losses, claims, damages or liabilities arising out of such action, claim,
suit or proceeding.
(e) If for any reason (other than the willful misconduct or gross negligence of
an indemnified party or as otherwise provided above), the indemnity
provided for in the preceding paragraphs of this Section 8 is unavailable
to an indemnified party or insufficient to hold an indemnified party
harmless, then each indemnifying party, to the fullest extent permitted by
law, shall contribute to the amount paid or payable by such indemnified
party as a result of such claims, liabilities, losses, damages or expenses
in such proportion as is appropriate to reflect the relative benefits
received by the indemnifying party or parties, on the one hand, and the
indemnified party or parties, on the other, from the Offering or, if
allocation on that basis is not permitted under applicable law, in such
proportion as is appropriate to reflect not only the relative benefits
received by the indemnifying party or parties, on the one hand, and
indemnified party or parties, on the other, but also the relative fault of
the indemnifying party or parties, on the one hand, and the indemnified
party or parties, as well as any relevant equitable considerations.
Notwithstanding the provisions hereof, the aggregate contribution of all
Indemnified Persons to all claims, liabilities, losses, damages and
expenses shall not exceed the amount of the total discounts and commissions
received by the Initial Purchaser under this Agreement less the aggregate
amount of any damages that such Initial Purchaser has otherwise been
required to pay by reason of the untrue or alleged untrue statements or the
omissions or alleged omissions to state a material fact. It is hereby
further agreed that the relative benefits received by the Company, Holdings
and the Subsidiary Guarantors on the one hand and the Initial Purchaser on
the other with respect to the Offering shall be deemed to be in the same
proportion as (i) the total proceeds from the Offering (before deducting
expenses) received by the Company and Holdings bears to (ii) the total
24
discounts and commissions received by the Initial Purchaser in the Offering
under this Agreement. The relative fault of the Company, Holdings and the
Subsidiary Guarantors on the one hand and the Initial Purchaser on the
other with respect to the Offering shall be determined by reference to,
among other things, whether any untrue or alleged untrue statement of a
material fact or the omission or alleged omission to state a material fact
relates to information supplied by the Company, Holdings or the Subsidiary
Guarantors or by the Initial Purchaser and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission or alleged statement or omission and any other
equitable consideration appropriate to the circumstances.
(f) The Company, Holdings, the Subsidiary Guarantors and the Initial Purchaser
agree that it would not be equitable if the amount of such contribution
determined pursuant to the immediately preceding paragraph (e) were
determined by pro rata or per capita allocation or by any other method of
allocation that does not take into account the equitable considerations
referred to in the first sentence of the immediately preceding paragraph
(e). Notwithstanding the foregoing, no person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Act) shall be
entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. For purposes of the immediately preceding
paragraph (e), each person, if any, who controls the Initial Purchaser
within the meaning of Section 15 of the Act or Section 20 of the Exchange
Act shall have the same rights to contribution as the Initial Purchaser,
and each director of any of the Company, Holdings or the Subsidiary
Guarantors, each officer of any of the Company, Holdings or the Subsidiary
Guarantors and each person, if any, who controls any of the Company,
Holdings or any of the Subsidiary Guarantors within the meaning of Section
15 of the Act or Section 20 of the Exchange Act, shall have the same rights
to contribution as the Company, Holdings and the Subsidiary Guarantors.
(g) No Indemnified Person shall have any liability to the Company, Holdings or
the Subsidiary Guarantors or any officer, director, employee or affiliate
thereof in connection with the services rendered in relation to the
Offering except for any liability for claims, liabilities, losses or
damages finally judicially determined to have resulted primarily as a
result of such Indemnified Person's willful misconduct or gross negligence.
(h) The indemnity, contribution and expense reimbursement obligations set forth
herein (i) shall be in addition to any liability the Company, Holdings or
the Subsidiary Guarantors may have to any Indemnified Person at common law
or otherwise, (ii) shall remain operative and in full force and effect
regardless of any investigation made by or on behalf of the Initial
Purchaser or any other Indemnified Person and (iii) shall be binding on any
successor or assign of the Company, Holdings or the Subsidiary Guarantors
and successors or assigns to the Company's, Holdings' and the Subsidiary
Guarantors' business and assets.
(i) If the Company, Holdings or the Subsidiary Guarantors enter into any
agreement or arrangement with respect to, or effects, any proposed sale,
exchange, dividend or other distribution or liquidation of all or a
significant portion of its assets in one or a series of transactions or any
significant recapitalization or reclassification of its outstanding
securities, the Company, Holdings or the Subsidiary Guarantors shall
provide for the assumption of their obligations under this Agreement by
another party reasonably satisfactory to the Initial Purchaser.
9. TERMINATION. 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:
25
(a) since the date hereof, any Material Adverse Effect or development involving
or reasonably expected to result in a prospective Material Adverse Effect
that, in the Initial Purchaser's reasonable judgment, makes it
impracticable or inadvisable to proceed with the offering or delivery of
the Units on the terms and in the manner contemplated in the Final Offering
Circular;
(b) the failure of the Company, Holdings or the Subsidiary Guarantors to
satisfy the conditions contained in Section 7(a) hereof on or prior to the
Closing Date;
(c) any outbreak or escalation of hostilities or other national or
international calamity or crisis, including acts of terrorism, or material
adverse change or disruption in economic conditions in, or in the financial
markets of, the United States (it being understood that any such change or
disruption shall be relative to such conditions and markets as in effect on
the date hereof), if the effect of such outbreak, escalation, calamity,
crisis, act or material adverse change in the economic conditions in, or in
the financial markets of, the United States could be reasonably expected to
make it, in the Initial Purchaser's sole judgment, impracticable or
inadvisable to market or proceed with the offering or delivery of the Units
on the terms and in the manner contemplated in the Final Offering Circular
or to enforce contracts for the sale of any of the Units;
(d) trading in Holdings' common stock shall have been suspended by the SEC or
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 NASDAQ National Market;
(e) the enactment, publication, decree or other promulgation after the date
hereof of any Applicable Law that in the Initial Purchaser's counsel's
reasonable opinion materially and adversely affects, or could be reasonably
expected to materially and adversely affect, the properties, business,
prospects, operations, earnings, assets, liabilities or condition
(financial or otherwise) of the Company and the Subsidiaries, taken as a
whole; or
(f) the declaration of a banking moratorium by any federal or New York state
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 a material adverse effect on the financial markets in the
United States or elsewhere.
10. SURVIVAL OF REPRESENTATIONS AND INDEMNITIES. The
representations and warranties, covenants, agreements, indemnities and
contribution and expense reimbursement provisions and other agreements,
representations and warranties of the Issuers, the other Guarantors and the
Initial Purchaser set forth in 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, the Issuers or the other Guarantors, and (ii) acceptance of the
Units, and payment for them hereunder.
11. DEFAULT BY THE INITIAL PURCHASER. If the Initial
Purchaser shall breach its obligation to purchase the Units that it has agreed
to purchase hereunder on the Closing Date and arrangements satisfactory to the
Company for the purchase of such Units are not made within 36 hours after such
default, this Agreement shall terminate with respect to the Initial Purchaser
without liability on the part of the Company, and nothing herein shall relieve
the Initial Purchaser from liability for such default.
26
12. INFORMATION SUPPLIED BY THE INITIAL PURCHASER. The
statements set forth in the first and second sentences of the fourth paragraph,
the fifth and sixth sentences of the sixth paragraph, the first and second
sentences of the seventh paragraph, the first and second sentences of the ninth
paragraph and the eleventh paragraph under the heading "Plan of Distribution" in
the Offering Circular (to the extent such statements relate to the Initial
Purchaser) constitute the only information furnished by the Initial Purchaser or
its counsel to the Company, Holdings or the Subsidiary Guarantors for the
purposes of Sections 4(a) and 8 hereof.
13. MISCELLANEOUS.
(a) Notices given pursuant to any provision of this Agreement shall be
addressed as follows: (i) if to the Issuers, to: 000 Xxxxx Xxxxxx, Xxx
Xxxx, Xxx Xxxx 00000, Attention: Xxxx Xxxxxxxxx, Esq., with a copy to: Xxxx
Xxxxxxx & Xxxxxx LLP, 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000,
Attention: Xxxxx X. Xxxxx, Esq., and (ii) if to the Initial Purchaser, to:
Xxxxxxxxx & Company, Inc., 00000 Xxxxx Xxxxxx Xxxxxxxxx, Xxx Xxxxxxx, XX,
00000, 00xx Xxxxx, Xxx Xxxx, Xxx Xxxx, 00000, Attention: Xxxxx X. Xxxxxx,
Esq., with a copy to: Xxxxxx & Xxxxxxx LLP, 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx
Xxxx 00000, Attention: Xxxxxx Xxxxx, Esq., (or in any case to such other
address as the person to be notified may have requested in writing).
(b) This Agreement has been and is made solely for the benefit of and shall be
binding upon the Company, Holdings, the Subsidiary Guarantors, the Initial
Purchaser and, to the extent provided in Section 8 hereof, the controlling
persons and their respective agents, employees, officers, directors,
partners, counsel, and shareholders 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 purchaser of any of the Units
from the Initial Purchaser merely because of such purchase.
(c) THE VALIDITY AND INTERPRETATION OF THIS AGREEMENT, AND THE TERMS AND
CONDITIONS SET FORTH HEREIN SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS
MADE AND TO BE PERFORMED WHOLLY THEREIN, WITHOUT REGARD TO PRINCIPLES OF
CONFLICTS OF LAW.
(d) This Agreement may be signed in various counterparts which together shall
constitute one and the same instrument.
(e) The headings in this Agreement are for convenience of reference only and
shall not limit or otherwise affect the meaning hereof.
(f) 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 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.
27
(g) 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 all of the signatories hereto.
28
Please confirm that the foregoing correctly sets forth the
agreement among the Company, Holdings or the Subsidiary Guarantors and the
Initial Purchaser.
Very truly yours,
BARNEY'S, INC.
By: /s/ XXXXXX X. XXXXXXX
-------------------------------------------------
Name: Xxxxxx X. Xxxxxxx
Title: Executive Vice President and Chief
Financial Officer
BARNEYS NEW YORK, INC.
By: /s/ XXXXXX X. XXXXXXX
-------------------------------------------------
Name: Xxxxxx X. Xxxxxxx
Title: Executive Vice President and Chief
Financial Officer
BARNEYS AMERICA, INC.
By: /s/ XXXXXX X. XXXXXXX
-------------------------------------------------
Name: Xxxxxx X. Xxxxxxx
Title: Executive Vice President and Chief
Financial Officer
BARNEYS (CA) LEASE CORP.
By: /s/ XXXXXX X. XXXXXXX
-------------------------------------------------
Name: Xxxxxx X. Xxxxxxx
Title: Executive Vice President and Chief
Financial Officer
BARNEYS (NY) LEASE CORP.
By: /s/ XXXXXX X. XXXXXXX
------------------------------------------------
Name: Xxxxxx X. Xxxxxxx
Title: Executive Vice President and Chief
Financial Officer
XXXXX ALL-AMERICAN SPORTSWEAR CORP.
By: /s/ XXXXXX X. XXXXXXX
-------------------------------------------------
Name: Xxxxxx X. Xxxxxxx
Title: Executive Vice President and Chief
Financial Officer
BNY LICENSING CORP.
By: /s/ XXXXXX X. XXXXXXX
-------------------------------------------------
Name: Xxxxxx X. Xxxxxxx
Title: Executive Vice President and Chief
Financial Officer
BARNEYS AMERICA (CHICAGO) LEASE CORP.
By: /s/ XXXXXX X. XXXXXXX
-------------------------------------------------
Name: Xxxxxx X. Xxxxxxx
Title: Executive Vice President and Chief
Financial Officer
Accepted and Agreed to:
XXXXXXXXX & COMPANY, INC.
By: /s/ XXXX XXXXXXXX
-----------------------------
Name: Xxxx Xxxxxxxx
Title: Managing Director
SCHEDULE A
----------
SUBSIDIARY GUARANTORS
---------------------
---------------------------------------------------------------------- -------------------------------------------------------------
Company Name State of Incorporation
------------ ----------------------
---------------------------------------------------------------------- -------------------------------------------------------------
BARNEYS AMERICA, INC Delaware
---------------------------------------------------------------------- -------------------------------------------------------------
BARNEYS (CA) LEASE CORP. Delaware
---------------------------------------------------------------------- -------------------------------------------------------------
BARNEYS (NY) LEASE CORP. Delaware
---------------------------------------------------------------------- -------------------------------------------------------------
XXXXX ALL-AMERICAN SPORTSWEAR CORP. New York
---------------------------------------------------------------------- -------------------------------------------------------------
BNY LICENSING CORP. Delaware
---------------------------------------------------------------------- -------------------------------------------------------------
BARNEYS AMERICA (CHICAGO) LEASE CORP. Delaware
---------------------------------------------------------------------- -------------------------------------------------------------
SCHEDULE B
----------
MAJORITY-INTEREST HELD SUBSIDIARIES
-----------------------------------
---------------------------------------------------------------------- -------------------------------------------------------------
Company Name State of Incorporation
------------ ----------------------
---------------------------------------------------------------------- -------------------------------------------------------------
BARNEYS AMERICA, INC Delaware
---------------------------------------------------------------------- -------------------------------------------------------------
BARNEYS (CA) LEASE CORP. Delaware
---------------------------------------------------------------------- -------------------------------------------------------------
BARNEYS (NY) LEASE CORP. Delaware
---------------------------------------------------------------------- -------------------------------------------------------------
XXXXX ALL-AMERICAN SPORTSWEAR CORP. New York
---------------------------------------------------------------------- -------------------------------------------------------------
BNY LICENSING CORP. Delaware
---------------------------------------------------------------------- -------------------------------------------------------------
BARNEYS AMERICA (CHICAGO) LEASE CORP. Delaware
---------------------------------------------------------------------- -------------------------------------------------------------
BARNEYS ASIA CO. LLC Delaware
---------------------------------------------------------------------- -------------------------------------------------------------
