Exhibit 1.1
ICON FITNESS CORPORATION
14% SERIES A SENIOR DISCOUNT
NOTES DUE 2006
PURCHASE AGREEMENT
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November 15, 1996
XXXXXXXXX, XXXXXX & XXXXXXXX
SECURITIES CORPORATION
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Ladies & Gentlemen:
Icon Fitness Corporation, a Delaware corporation (the "Company")
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agrees with you as follows:
1. Issuance of Securities. The Company proposes to issue and sell to
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Xxxxxxxxx, Xxxxxx & Xxxxxxxx Securities Corporation (the "Purchaser") an
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aggregate of $162,000,000 principal amount of 14% Series A Senior Discount Notes
due 2006 (the "Series A Notes" or the "Securities"). The Series A Notes are to
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be issued pursuant to an indenture (the "Note Indenture") to be dated as of
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November 15, 1996 between the Company and Fleet National Bank, as trustee (the
"Trustee").
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Capitalized terms used but not defined herein shall have the meanings
given to such terms in the Note Indenture.
The Series A Notes will be offered and sold to you pursuant to an
exemption from the registration requirements under the Securities Act of 1933,
as amended (the "Act"). The Company has prepared a preliminary offering
memorandum, dated November 12, 1996 (the "Preliminary Offering Memorandum"),
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and a final offering memorandum, dated November 15, 1996 (the "Offering
Memorandum"), relating to the Company and the Series A Notes.
Upon original issuance thereof, and until such time as the same is no
longer required under the applicable requirements of the Act, the Series A Notes
(and all securities issued in exchange therefor or in substitution thereof)
shall bear the following legend:
"THE SECURITY (OR ITS PREDECESSOR) EVIDENCED HEREBY WAS ORIGINALLY ISSUED
IN A TRANSACTION EXEMPT FROM REGISTRATION UNDER SECTION 5 OF THE UNITED
STATES SECURITIES ACT OF 1933 (THE "SECURITIES ACT"), AND THE SECURITY
EVIDENCED HEREBY MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE
ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM. EACH
PURCHASER OF THE SECURITY EVIDENCED HEREBY IS HEREBY NOTIFIED THAT THE
SELLER MAY BE RELYING ON THE EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF
THE SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER. THE HOLDER OF THE
SECURITY EVIDENCED XXXXXX AGREES FOR THE BENEFIT OF THE ISSUERS THAT (A)
SUCH SECURITY MAY BE RESOLD, PLEDGED OR OTHERWISE TRANSFERRED, ONLY (1)(a)
TO A PERSON
WHO THE SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER (AS
DEFINED IN RULE 144A UNDER THE SECURITIES ACT) IN A TRANSACTION MEETING THE
REQUIREMENTS OF RULE 144A, IN A TRANSACTION MEETING THE REQUIREMENTS OF
RULE 144, OR IN ACCORDANCE WITH ANOTHER EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT (AND BASED UPON AN OPINION OF COUNSEL IF
THE COMPANY SO REQUESTS), (b) TO THE COMPANY, (c) PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR (d) TO A FOREIGN PERSON
IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 904 UNDER THE SECURITIES
ACT, AND (2) IN EACH CASE, IN ACCORDANCE WITH ANY APPLICABLE SECURITIES
LAWS OF ANY STATE OF THE UNITED STATES OR ANY OTHER APPLICABLE JURISDICTION
AND (B) THE HOLDER WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY
ANY PURCHASER FROM IT OF THE SECURITY EVIDENCED HEREBY OF THE RESALE
RESTRICTIONS SET FORTH IN (A) ABOVE."
You have advised the Company that you will make offers (the "Exempt
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Resales") of the Series A Notes purchased hereunder on the terms set forth in
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the Offering Memorandum, as amended or supplemented, solely to persons whom you
reasonably believe to be "qualified institutional buyers," as defined in Rule
144A under the Act ("QIBs"), and to a limited number of institutional
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"Accredited Investors" referred to in Rule 501(a)(1), (2), (3) or (7) under the
Act (each, an "Accredited Investor"). The QIBs and the Accredited Investors are
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referred to herein as the "Eligible Purchasers." You will offer the Series A
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Notes to such QIBs and Accredited Investors initially at a price equal to
50.931% of the principal amount thereof. Such price may be changed at any time
without notice.
Holders (including subsequent transferees) of the Series A Notes will
have the registration rights set forth in the registration rights agreement
relating thereto (the "Registration Rights Agreement"), to be dated the Closing
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Date (as hereinafter defined), in substantially the form of Exhibit A hereto,
for so long as such Series A Notes constitute "Transfer Restricted Securities"
(as defined in the Registration Rights Agreement). Pursuant to the Registration
Rights Agreement, the Company will agree to file with the Securities and
Exchange Commission (the "Commission"), under the circumstances set forth
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therein, (i) a registration statement under the Act (the "Exchange Offer
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Registration Statement") relating to the 14% Series B Senior Discount Notes due
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2006 (the "Series B Notes") to be offered in exchange for the Series A Notes
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(the "Exchange Offer"), and (ii) a shelf registration statement pursuant to Rule
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415 under the Act (the "Shelf Registration Statement") relating to the resale by
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certain holders of the Series A Notes, and to use their best efforts to cause
such Registration Statements to be declared effective. This Purchase Agreement
(this "Agreement"), the Securities, the Note Indenture and the Registration
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Rights Agreement are hereinafter sometimes referred to collectively as the
"Operative Documents."
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2. Agreements to Sell and Purchase. On the basis of the
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representations and warranties contained in this Agreement, and subject to its
terms and conditions, the Company agrees to issue and sell to you, and Purchaser
agrees to purchase from the Company, $162,000,000 principal amount of the Series
A Notes. The purchase price for the the Series A Notes shall be $79,207,891.20
in the aggregate.
3. Delivery and Payment. Delivery to the Purchasers of and payment
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for the Series A Notes shall be made at 9:00 a.m., New York City time, on
November 20, 1996 (the "Closing Date") at the offices of Ropes & Gray, located
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in New York, NY, or such other time or place as you and the Company shall
designate.
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One or more of the Series A Notes in definitive form, registered in
the name of Cede & Co., as nominee of The Depository Trust Company ("DTC"),
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having an aggregate principal amount corresponding to the aggregate principal
amount of the Series A Notes sold pursuant to Exempt Resales to QIBs
(collectively, the "Master Note") and one or more Series A Notes in definitive
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form registered in such other names as you may request upon at least two
business days' notice to the Company (the "Definitive Securities"), having an
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aggregate principal amount corresponding to the aggregate principal amount of
the Series A Notes sold pursuant to Exempt Resales to Accredited Investors,
shall be delivered by the Company to you (or as you direct), against payment by
you of the purchase price therefor by wire transfer payable in immediately
available (same day) funds to the order of the Company or as the Company may
direct. The Master Note and Definitive Securities shall be made available to
you for inspection not later than 9:30 a.m. on the business day immediately
preceding the Closing Date.
4. Agreements of the Company. The Company agrees with you as
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follows:
(a) To advise you promptly and, if requested by the Purchaser,
confirm such advice in writing, (i) of the issuance by any state securities
commission of any stop order suspending the qualification or exemption from
qualification of any of the Series A Notes for offering or sale in any
jurisdiction, or the initiation of any proceeding for such purpose by any
state securities commission or other regulatory authority, and (ii) of the
happening of any event that makes any statement of a material fact made in
the Offering Memorandum untrue or that requires the making of any additions
to or changes in the Offering Memorandum in order to make the statements
therein, in the light of the circumstances under which they are made, not
misleading. The Company shall use its best efforts to prevent the issuance
of any stop order or order suspending the qualification or exemption of any
of the Series A Notes under any state securities or Blue Sky laws, and if
at any time any state securities commission or other regulatory authority
shall issue an order suspending the qualification or exemption of any of
the Series A Notes under any state securities or Blue Sky laws, the Company
shall use its best efforts to obtain the withdrawal or lifting of such
order at the earliest possible time.
(b) To furnish you, without charge, as many copies of the Preliminary
Offering Memorandum and the Offering Memorandum, and any amendments or
supplements thereto, as you may reasonably request. The Company consents
to the use of the Preliminary Offering Memorandum and the Offering
Memorandum, and any such amendments and supplements thereto, by you in
connection with Exempt Resales.
(c) Not to amend or supplement the Preliminary Offering Memorandum or
the Offering Memorandum prior to the Closing Date unless you shall
previously have been advised thereof and shall not have reasonably objected
thereto after being furnished a copy thereof. The Company shall promptly
prepare, upon your request, any amendment or supplement to the Preliminary
Offering Memorandum or the Offering Memorandum that may be necessary or
advisable in connection with Exempt Resales.
(d) If, after the date hereof and prior to consummation of any Exempt
Resales, any event shall occur as a result of which, in the judgment of the
Company or in the reasonable opinion of your counsel, it becomes necessary
to amend or supplement the Offering Memorandum in order to make the
statements therein, in the light of the circumstances when the Offering
Memorandum is delivered to an Eligible Purchaser which is a prospective
purchaser, not misleading, or if it is necessary to amend or supplement the
Offering Memorandum to comply with applicable law, forthwith to prepare an
appropriate amendment or supplement to the Offering Memorandum so that the
statements therein as so amended or supplemented will not, in the light of
the circumstances
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when it is so delivered, be misleading, or so that the Offering Memorandum
will comply with applicable law. The cost of preparing any such amendment
or supplement required more than six months after the Closing Date shall be
borne by you.
(e) To cooperate with you and your counsel in connection with the
qualification of the Series A Notes under the securities or Blue Sky laws
of such jurisdictions as you may request and to continue such qualification
in effect so long as required for the Exempt Resales; provided, however,
that the Company shall not be required in connection therewith to register
or qualify as a foreign corporation where it is not now so qualified or to
take any action that would subject it to the service of process in suits or
taxation, other than as to matters and transactions relating to the Exempt
Resales, in any jurisdiction where it is not now so subject.
(f) Whether or not the transactions contemplated by this Agreement
are consummated or this Agreement becomes effective or is terminated, to
pay all costs, expenses, fees and taxes incident to and in connection with:
(i) the preparation, printing, filing and distribution of the Preliminary
Offering Memorandum and the Offering Memorandum (including, without
limitation, financial statements and exhibits) and, except as provided in
Section 4(d), all amendments and supplements thereto, (ii) the preparation
(including, without limitation, word processing and duplication costs) and
delivery of this Agreement and the other Operative Documents and all
preliminary and final Blue Sky memoranda and all other agreements,
memoranda, correspondence and other documents prepared and delivered in
connection herewith and with the Exempt Resales, (iii) the issuance and
delivery by the Company of the Securities, (iv) 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 your counsel relating to such registration or
qualification), (v) furnishing such copies of the Preliminary Offering
Memorandum and the Offering Memorandum, and all amendments and supplements
thereto, as may be reasonably requested for use in connection with Exempt
Resales, (vi) the preparation of certificates for the Securities
(including, without limitation, printing and engraving thereof), (vii) the
fees, disbursements and expenses of the Company's counsel and accountants,
(viii) all expenses and listing fees in connection with the application for
quotation of the Series A Notes in the National Association of Securities
Dealers, Inc. ("NASD") Automated Quotation System - PORTAL ("PORTAL"),
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(ix) 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 and (x) the performance by the Company of its other
obligations under this Agreement and the other Operative Documents.
(g) To use the proceeds from the sale of the Series A Notes in the
manner described in the Offering Memorandum under the caption "Use of
Proceeds."
(h) Not to voluntarily claim, and to resist actively any attempts to
claim, the benefit of any usury laws against the holders of any Securities.
(i) [Intentionally Omitted]
(j) Not to sell, offer for sale or solicit offers to buy or otherwise
negotiate in respect of any security (as defined in the Act) that would be
integrated with the sale of the Series A Notes in a manner that would
require the registration under the Act of the sale to you or Eligible
Purchasers of the Series A Notes.
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(k) For so long as any of the Securities remain outstanding and
during any period in which the Company is not subject to Section 13 or
15(d) of the Securities Exchange Act of 1934, as amended (the "Exchange
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Act"), to make available to any QIB or beneficial owner of Series A Notes
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in connection with any sale thereof and any prospective purchaser of such
Series A Notes from such QIB or beneficial owner, the information required
by Rule 144A(d)(4) under the Act.
(l) To cause the Exchange Offer to be made in the appropriate form to
permit registration of the Series B Notes to be offered in exchange for the
Series A Notes and to comply with all applicable federal and state
securities laws in connection with the Exchange Offer.
(m) To comply with all of its agreements set forth in the
Registration Rights Agreement, and all agreements set forth in the
representation letter of the Company to DTC relating to the approval of the
Securities by DTC for "book-entry" transfer.
(n) To use its best efforts to effect the inclusion of the Series A
Notes in PORTAL.
(o) During a period of five years following the date of this
Agreement, to deliver to you promptly upon their becoming available, copies
of all current, regular and periodic reports filed by the Company with the
Commission or any securities exchange or with any governmental authority
succeeding to any of the Commission's functions.
5. Representations and Warranties. (a) The Company represents and
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warrants to you that:
(i) The Preliminary Offering Memorandum and the Offering
Memorandum have been prepared in connection with the Exempt Resales.
The Preliminary Offering Memorandum and the Offering Memorandum do
not, and any supplement or amendment to them will not, contain any
untrue statement of a material fact or omit to state any material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading, except that
the representations and warranties contained in this paragraph (i)
shall not apply to statements in or omissions from the Preliminary
Offering Memorandum and the Offering Memorandum (or any supplement or
amendment thereto) made in reliance upon and in conformity with
information relating to you furnished to the Company in writing by you
expressly for use therein. No stop order preventing the use of the
Preliminary Offering Memorandum or the Offering Memorandum, or any
amendment or supplement thereto, or any order asserting that any of
the transactions contemplated by this Agreement are subject to the
registration requirements of the Act, has been issued.
(ii) When the Series A Notes are issued and delivered pursuant
to this Agreement, none of the Series A Notes will be of the same
class (within the meaning of Rule 144A under the Act) as securities of
the Company that are listed on a national securities exchange
registered under Section 6 of the Exchange Act or that are quoted in a
United States automated interdealer quotation system.
(iii) The Company and each of its subsidiaries has been duly
incorporated, is validly existing as a corporation in good standing
under the laws of its respective jurisdiction of incorporation, has
all requisite corporate power and authority to carry on its business
as it is currently being conducted and as described in the Offering
Memorandum
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and is duly qualified and in good standing as a foreign corporation
authorized to do business in each other jurisdiction in which the
nature of its business or its ownership or leasing of property
requires such qualification, except where the failure to be so
qualified would not have a material adverse effect on the current or
future consolidated financial position, stockholders' equity (deficit)
or results of operation of the Company and its subsidiaries taken as
one enterprise (a "Material Adverse Effect").
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(iv) Each "significant subsidiary" of the Company, as defined
in Rule 1-01 of Regulation S-X of the Act, is listed on Schedule I
hereto. The Company directly owns all of the issued and outstanding
capital stock and other securities evidencing equity ownership of IHF
Holdings, Inc. and owns, directly or indirectly through other
subsidiaries, 100% of the outstanding capital stock or other
securities evidencing equity ownership of each such significant
subsidiary, free and clear of any security interest, claim, lien,
limitation on voting rights or encumbrance (other than as described in
the Offering Memorandum), except for directors' qualifying shares and
shares of preferred stock of IHF Holdings, Inc. ("Holdings Preferred
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Stock") which would have an aggregate liquidation preference of
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approximately $45.4 million at November 30, 1996 and options to
purchase shares of Holdings Preferred Stock which would have an
aggregate liquidation preference of approximately $5.1 million at
November 30, 1996, which shares of Holdings Preferred Stock and
options will be acquired by the Company with a portion of the proceeds
of the sale of the Series A Notes; and all of such securities have
been duly authorized, validly issued, are fully paid and nonassessable
and were not issued in violation of any preemptive or similar rights.
Except as described in the preceding sentence, there are no
outstanding subscriptions, rights, warrants, calls, commitments of
sale or options to acquire, or instruments convertible into or
exchangeable for, any such shares of capital stock or other equity
interest of such subsidiaries. There are no outstanding advances to
IHF Holdings, Inc. made by the Company, and IHF Holdings, Inc. does
not have any indebtedness owing to the Company.
(v) The Company has all requisite corporate power and
authority to execute, deliver and perform its obligations under this
Agreement, the Note Indenture, the Registration Rights Agreement and
the other Operative Documents to which it is a party and to consummate
the transactions contemplated hereby and thereby, including, without
limitation, the corporate power and authority to issue, sell and
deliver the Series A Notes as provided herein and therein.
(vi) This Agreement has been duly and validly authorized,
executed and delivered by the Company and is the legally valid and
binding agreement of the Company, enforceable against it in accordance
with its terms.
(vii) The Note Indenture has been duly and validly authorized
by the Company and, when duly executed and delivered by the Company,
will be the legally valid and binding obligation of the Company,
enforceable against it in accordance with its terms. The Note
Indenture, when executed and delivered, will conform to the
description thereof in the Offering Memorandum.
(viii) The Series A Notes have been duly and validly
authorized for issuance and sale to you by the Company pursuant to
this Agreement and, when issued and authenticated in accordance with
the terms of the Note Indenture and delivered against payment therefor
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in accordance with the terms hereof, will be the legally valid and
binding obligations of the Company, enforceable against the Company in
accordance with their terms and entitled to the benefits of the Note
Indenture. The Series A Notes, when issued, authenticated and
delivered, will conform to the description thereof in the Offering
Memorandum.
(ix) The Series B Notes have been duly and validly authorized
for issuance by the Company, and when issued and authenticated in
accordance with the terms of the Note Indenture, the Registration
Rights Agreement and the Exchange Offer, will be the legally valid and
binding obligations of the Company, enforceable against the Company in
accordance with their terms and entitled to the benefits of the Note
Indenture.
(x) The Registration Rights Agreement has been duly and validly
authorized by the Company and, when duly executed and delivered by the
Company, will be the legally valid and binding obligation of the
Company, enforceable against it in accordance with its terms. The
Registration Rights Agreement, when executed and delivered, will
conform to the description thereof in the Offering Memorandum.
(xi) Neither the Company nor any of its subsidiaries is in
violation of its respective charter or bylaws or is in default in the
performance of any bond, debenture, note, indenture, mortgage, deed of
trust or other agreement or instrument to which it is a party or by
which it is bound or to which any of its properties is subject, or is
in violation of any law, statute, rule, regulation, judgment or court
decree applicable to the Company, any of its subsidiaries or their
assets or properties, except for such violations or defaults that
would not individually or in the aggregate have a Material Adverse
Effect. There exists no condition that, with notice, the passage of
time or otherwise, would constitute such a default under any such
document or instrument.
(xii) The execution, delivery and performance by the Company of
this Agreement and the other Operative Documents to which it is a
party, the issuance and sale of the Series A Notes, and the
consummation of the transactions contemplated hereby and thereby will
not violate, conflict with or constitute a breach of any of the terms
or provisions of, or a default under (or an event that with notice or
the lapse of time, or both, would constitute a default), or require
consent under, or result in the imposition of a lien or encumbrance on
any properties of the Company or any of its subsidiaries, or an
acceleration of indebtedness pursuant to, (i) the charter or bylaws of
the Company or any of its subsidiaries, (ii) any bond, debenture,
note, indenture, mortgage, deed of trust or other agreement or
instrument to which the Company or any of its subsidiaries is a party
or by which any of them or their property is or may be bound, (iii)
any statute, rule or regulation applicable to the Company, any of its
subsidiaries or any of their assets or properties, or (iv) any
judgment, order or decree of any court or governmental agency or
authority having jurisdiction over the Company, any of its
subsidiaries or their assets or properties, except for such conflicts,
breaches, violations or defaults that would not have a Material
Adverse Effect, and other than under the Credit Agreement (as defined
in the Note Indenture), with respect to which the Company agrees to
obtain all necessary consents or waivers prior to the Closing Date. No
consent, approval, authorization or order of, or filing, registration,
qualification, license or permit of or with, any court or governmental
agency, body or administrative agency is required for the execution,
delivery and performance of this Agreement and the other Operative
Documents and the consummation of the transactions contemplated hereby
and thereby, except such as have been obtained and made (or, in the
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case of the Registration Rights Agreement, will be obtained and made)
under the Act, the Trust Indenture Act of 1939, as amended (the "Trust
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Indenture Act") and state securities or Blue Sky laws and regulations
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or such as may be required by the NASD. No consents or waivers from
any other person are required for the execution, delivery and
performance of this Agreement and the other Operative Documents and
the consummation of the transactions contemplated hereby and thereby,
other than such consents and waivers as have been obtained (or, in the
case of the Registration Rights Agreement, will be obtained).
(xiii) Other than as set forth in the Offering Memorandum, there
is (i) no action, suit or proceeding before or by any court,
arbitrator or governmental agency, body or official, domestic or
foreign, now pending or, to the best of the Company's knowledge,
threatened or contemplated to which the Company or any of its
subsidiaries is or may be a party or to which the business or property
of the Company or any of its subsidiaries is or may be subject, (ii)
no statute, rule, regulation or order that has been enacted, adopted
or issued by any governmental agency or that has been proposed by any
governmental body, (iii) no injunction, restraining order or order of
any nature by a federal or state court or foreign court of competent
jurisdiction to which the Company or any of its subsidiaries is or may
be subject issued that, in the case of clauses (i), (ii) and (iii)
above, (x) could reasonably be expected to be determined adversely to
the Company or any of its subsidiaries, and singly or in the
aggregate, would, if so determined, have a Material Adverse Effect,
(y) would interfere with or adversely affect the issuance of the
Series A Notes or (z) in any manner draw into question the validity of
this Agreement, the Note Indenture, the Registration Rights Agreement
or any other Operative Document.
(xiv) Other than as set forth in the Offering Memorandum, no
action has been taken and no statute, rule or regulation or order has
been enacted, adopted or issued by any governmental agency that
prevents the issuance of the Securities; no injunction, restraining
order or order of any nature by a federal or state court of competent
jurisdiction has been issued that prevents the issuance of the Series
A Notes or suspends the sale of the Series A Notes in any jurisdiction
referred to in Section 4(e) hereof; and no action, suit or proceeding
is pending against or affecting or, to the best knowledge of the
Company and any of its subsidiaries, threatened against, the Company
or any of its subsidiaries before any court or arbitrator or any
governmental body, agency or official which, if adversely determined,
would prohibit, interfere with or adversely affect the issuance or
marketability of the Series A Notes or in any manner draw into
question the validity of any Operative Document; and every request of
any securities authority or agency of any jurisdiction for additional
information has been complied with in all material respects.
(xv) The Company and its subsidiaries have obtained all
permits, consents and authorizations required to be obtained by them
under laws or regulations relating to the protection of the
environment or concerning the handling, storage, disposal or discharge
of toxic materials (collectively, "Environmental Laws") except where
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the failure to do so would not individually or in the aggregate
reasonably be expected to have a Material Adverse Effect, and any such
permits, consents and authorizations remain in full force and effect.
The Company and its subsidiaries are in compliance with the
Environmental Laws in all respects except where the failure to be in
such compliance would not individually or in the aggregate reasonably
be expected to have a Material Adverse Effect, and there is no pending
or, to the Company's or its subsidiaries' knowledge, threatened,
action or
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proceeding against the Company or its subsidiaries alleging violations
of the Environmental Laws.
(xvi) Each of the Company and its subsidiaries has good and
marketable title to all of the properties and assets owned by them as
reflected in the Company's financial statements as described in the
Offering Memorandum as owned by it, free and clear of all liens,
charges, encumbrances and restrictions, except such as are described
in the Offering Memorandum or are not material and do not interfere
with the use made or proposed to be made of such property by the
Company and its subsidiaries. Any real property and buildings held
under lease by the Company or any of its subsidiaries are held by them
under valid, subsisting and enforceable leases with such exceptions as
are not material and do not interfere with the use made or proposed to
be made of such property and buildings by the Company and its
subsidiaries.
(xvii) Each of the Company and its subsidiaries owns or
possesses adequate licenses or rights to use patents, 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, the "Intellectual Property") necessary to conduct the
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business now or proposed to be conducted by them as described in the
Offering Memorandum, and neither the Company nor any of its
subsidiaries has received any notice of infringement of or conflict
with asserted rights of others with respect to any of the foregoing
which could reasonably be expected to have a Material Adverse Effect.
The use of the Intellectual Property in connection with the business
and operations of the Company and its subsidiaries does not, to the
knowledge of the Company or its subsidiaries, infringe on the rights
of any person, which infringement or conflict could result in a
Material Adverse Effect.
(xviii) Neither the Company nor any of its subsidiaries is (i) an
"investment company" or a company "controlled" by an "investment
company" within the meaning of the Investment Company Act of 1940, as
amended (the "Investment Company Act"), or (ii) a "holding company" or
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a "subsidiary company" or an "Affiliate" of a holding company within
the meaning of the Public Utility Holding Company Act of 1935, as
amended, or analogous foreign laws or regulations.
(xix) There are no holders of securities of the Company who, by
reason of the execution by the Company of this Agreement or any other
Operative Document to which it is a party or the consummation of the
transactions contemplated hereby and thereby, have the right to
request or demand that the Company register under the Act or analogous
foreign laws and regulations securities held by them.
(xx) The authorized, issued and outstanding capital stock of
the Company has been duly and validly authorized and issued, is fully
paid and nonassessable and was not issued in violation of or subject
to any preemptive or similar rights. The Company and its subsidiaries
had at August 31, 1996, on a pro forma basis giving effect only to the
incorporation of the Company, an authorized and outstanding
capitalization as set forth in the Offering Memorandum.
(xxi) Neither the Company nor any of its subsidiaries has (i)
taken, directly or indirectly, any action designed to, or that might
reasonably be expected to, cause or result
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in stabilization or manipulation of the price of any security of the
Company or any of its subsidiaries to facilitate the sale or resale of
the Series A Notes or (ii) since the date of the Preliminary Offering
Memorandum (A) sold, bid for, purchased or paid any person any
compensation for soliciting purchases of, the Series A Notes or (B)
paid or agreed to pay to any person any compensation for soliciting
another to purchase any other securities of the Company or any of its
subsidiaries, other than as contemplated by this Agreement.
(xxii) No registration under the Act of the Series A Notes is
required for the sale of the Series A Notes to the Purchaser as
contemplated hereby or for the Exempt Resales assuming (i) that the
purchasers who buy the Series A Notes in the Exempt Resales are either
QIBs or Accredited Investors (up to a maximum of 35 such Accredited
Investors) and (ii) the accuracy of the Purchasers' representations
regarding the absence of general solicitation in connection with the
sale of Series A Notes to the Purchaser and the Exempt Resales
contained herein. No form of general solicitation or general
advertising was used by the Company or any of its representatives in
connection with the offer and sale of any of the Series A Notes or in
connection with Exempt Resales, including, but not limited to,
articles, notices or other communications published in any newspaper,
magazine, or similar medium or broadcast over television or radio, or
any seminar or meeting whose attendees have been invited by any
general solicitation or general advertising. No securities of the same
class as the Series A Notes have been issued and sold by the Company
within the six-month period immediately prior to the date hereof.
(xxiii) Set forth on Schedule II hereto is a list of each
employee pension or benefit plan with respect to which the Company or
any corporation considered an affiliate of the Company within the
meaning of Section 407(d)(7) of ERISA (an "Affiliate") is a party in
---------
interest or disqualified person. The execution and delivery of this
Agreement, the other Operative Documents and the sale of the Series A
Notes to be purchased by the Eligible Purchasers will not involve any
prohibited transaction within the meaning of Section 406 of ERISA or
Section 4975 of the Internal Revenue Code of 1986. The representation
made by the Company in the preceding sentence is made in reliance upon
and subject to the accuracy of, and compliance with, the
representations and covenants made or deemed made by the Eligible
Purchasers as set forth in the Offering Memorandum under the Section
entitled "Notice to Investors."
(xxiv) Each of the Preliminary Offering Memorandum and the
Offering Memorandum, as of its date, and each amendment or supplement
thereto, as of its date, contains all the information specified in,
and meets the requirements of, Rule 144A(d)(4) under the Act.
(xxv) Subsequent to the respective dates as of which
information is given in the Offering Memorandum and up to the Closing
Date, except as set forth in the Offering Memorandum, neither the
Company nor any of its subsidiaries has incurred any liabilities or
obligations, direct or contingent, which are material to the Company
and its subsidiaries taken as a whole, nor entered into any
transaction not in the ordinary course of business, there has not
been, singly or in the aggregate, any material adverse change, or any
development which may reasonably be expected to involve a material
adverse change, in the properties, business, results of operations,
condition (financial or otherwise), affairs or prospects of the
Company and its subsidiaries, taken as a whole (a "Material Adverse
----------------
10
Change") and there have not been dividends or distributions of any
------
kind declared, paid or made by Company or any of its subsidiaries on
any class of its capital stock.
(xxvi) Neither the Company, nor any agent thereof acting on the
behalf of any of them has taken, and none of them will take, any
action that might cause this Agreement or the issuance or sale of the
Series A Notes to violate Regulation G (12 C.F.R. Part 207),
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 or analogous foreign laws and regulations.
(xxvii) The accountants who have certified or shall certify the
financial statements and supporting schedules included or to be
included as part of the Offering Memorandum are independent
accountants as required by the Act and the rules and regulations of
the Commission thereunder. The consolidated historical financial
statements of the Company and its subsidiaries and Healthrider, Inc.
and its subsidiaries, respectively, fairly present the consolidated
financial condition and results of operations of the Company and its
subsidiaries and Healthrider, Inc. and its subsidiaries, respectively,
at the respective dates and for the respective periods indicated, in
accordance with generally accepted accounting principles consistently
applied throughout such periods, except as stated therein. Subject to
the qualifications stated in the Offering Memorandum, the pro forma
financial statements have been prepared on a basis consistent with
such historical statements, except for the pro forma adjustments
specified therein, and give effect to assumptions made on a reasonable
basis and present fairly the historical and proposed transactions
contemplated by this Agreement and the other Operative Documents.
Subject to the qualifications stated in the Offering Memorandum, other
financial and statistical information and data included in the
Offering Memorandum, historical and pro forma, are accurately
presented and prepared on a basis consistent with such financial
statements and the books and records of the Company and its
subsidiaries and Healthrider, Inc. and its subsidiaries.
(xxviii) The present fair saleable value of the assets of the
Company exceeds the amount that will be required to be paid on or in
respect of the existing debts and other liabilities (including
contingent liabilities) of each such person as they become absolute
and matured. The assets of the Company do not constitute unreasonably
small capital to carry out its business as conducted or as proposed to
be conducted. The Company does not intend to, nor does it believe that
it will, incur debts beyond its ability to pay such debts as they
mature. Upon the issuance of the Series A Notes, the present fair
saleable value of the assets of the Company will exceed the amount
that will be required to be paid on or in respect of the existing
debts and other liabilities (including contingent liabilities) of such
person as they become absolute and matured. The assets of the Company,
upon the issuance of the Series A Notes, will not constitute
unreasonably small capital to carry out its business as now conducted,
including the capital needs of the Company, taking into account the
projected capital requirements and capital availability of the
Company.
(xxix) There are no contracts, agreements or understandings
between the Company or any of its subsidiaries and any person that
would give rise to a valid claim against the Company, its subsidiaries
or the Purchaser for a brokerage commission, finder's fee or like
payment in connection with the issuance, purchase and sale of the
Series A Notes.
11
(xxx) The provisions of the Note Indenture are sufficient to
create a valid and enforceable security interest in favor of the
Trustee, for the benefit of the holders of the Series A Notes and the
Series B Notes, in all of the Company's right, title and interest in
the Collateral (as defined in the Note Indenture) that is of the type
in which a security interest can be created under Article 9 of the
Uniform Commercial Code, as in effect in all applicable jurisdictions
(the "Applicable UCC"), to the extent the Applicable UCC is applicable
to the creation of such security interests. The delivery of the
Collateral in which a security interest may be perfected by possession
pursuant to the Applicable UCC to (and provided the same remains in
the possession of) the Trustee will cause the Trustee to have a
perfected security interest in such Collateral.
(xxxi) When the Note Indenture is executed and delivered and
the Collateral is delivered in connection therewith, the Trustee will
have an enforceable and perfected security interest for the benefit of
the Trustee and the holders of the Series A Notes and the Series B
Notes, in the collateral consisting of "certificated securities" (as
defined in Section 8-102 of the Applicable UCC) in which a security
interest can be created under Article 8 (the "Pledged Securities"), to
the extent the Applicable UCC is applicable to the creation and
perfection of such security interests as a result of the delivery
thereof to (and retention of possession thereof by) the Trustee.
Assuming the Trustee takes the actions described in this paragraph,
and takes the Collateral in good faith and without notice of any
adverse claim as defined in Section 8-302(2) of the Applicable UCC,
the Trustee will acquire an enforceable and perfected security
interest in the Pledged Securities free of adverse claims for the
benefit of the Trustee and the holders of the Series A Notes and
Series B Notes.
The Company acknowledges that the Purchaser and, for purposes of the
opinions to be delivered to the Purchaser pursuant to Section 7 hereof, counsel
to the Company and counsel to the Purchaser will rely upon the accuracy and
truth of the foregoing representations and hereby consent to such reliance.
(b) The Purchaser represents and warrants to the Company and agrees
that:
(i) Such Purchaser is a QIB, with such knowledge and
experience in financial and business matters as are necessary in order
to evaluate the merits and risks of an investment in the Series A
Notes.
(ii) Such Purchaser (A) is not acquiring the Series A Notes
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 and (B) will be reoffering and reselling the
Series A Notes only to QIBs in reliance on the exemption from the
registration requirements of the Act provided by Rule 144A and to
Accredited Investors in a private placement exempt from the
registration requirements of the Act.
(iii) No form of general solicitation or general advertising has
been or will be used by such Purchaser or any of its representatives
in connection with the offer and sale of any of the Series A Notes,
including, but not limited to, articles, notices or other
communications published in any newspaper, magazine, or similar medium
or broadcast over television or radio, or any seminar or meeting whose
attendees have been invited by any general solicitation or general
advertising.
12
(iv) Such Purchaser agrees that, in connection with the Exempt
Resales, it will solicit offers to buy the Series A Notes only from,
and will offer to sell the Series A Notes only to, QIBs and a total of
no more than 35 Accredited Investors. Such Purchaser further agrees
(A) that it will offer to sell the Series A Notes only to, and will
solicit offers to buy the Series A Notes only from (1) QIBs who in
purchasing such Series A Notes will be deemed to have represented and
agreed that they are purchasing the Series A Notes for their own
accounts or accounts with respect to which they exercise sole
investment discretion and that they or such accounts are QIBs and (2)
Accredited Investors who make the representations contained in, and
execute and return to the Purchaser, a certificate in the form of
Annex A attached to the Offering Memorandum and (B) that, in the case
-------
of such QIBs and Accredited Investors, acknowledges and agrees that
such Series A Notes will not have been registered under the Act and
may be resold, pledged or otherwise transferred only (x)(I) to a
person who the seller reasonably believes is a QIB in a transaction
meeting the requirements of Rule 144A, (II) in a transaction meeting
the requirements of Rule 144, (III) to a foreign person in a
transaction meeting the requirements of Rule 904 under the Act or (IV)
in accordance with another exemption from the registration
requirements of the Act (and based upon an opinion of counsel if the
Company so requests), (y) to the Company, (z) pursuant to an effective
registration statement under the Act and, in each case, in accordance
with any applicable securities laws of any state of the United States
or any other applicable jurisdiction and (C) that the holder will, and
each subsequent holder is required to, notify any purchaser from it of
the security evidenced thereby of the resale restrictions set forth in
(B) above.
(v) Such Purchaser also understands that the Company and, for
purposes of the opinions to be delivered to you pursuant to Section 7
hereof, counsel to the Company and counsel to the Purchaser will rely
upon the accuracy and truth of the foregoing representations and
hereby consents to such reliance.
6. Indemnification.
---------------
(a) The Company agrees to indemnify and hold harmless (i) the
Purchaser and (ii) each person, if any, who controls (within the meaning of
Section 15 of the Act or Section 20 of the Exchange Act) the Purchaser (any of
the persons referred to in this clause (ii) being hereinafter referred to as a
"controlling person"), and (iii) the respective officers, directors, partners,
employees, representatives and agents of the Purchaser or any controlling person
(any person referred to in clause (i), (ii) or (iii) may hereinafter be referred
to as an "Indemnified Person") to the fullest extent lawful, from and against
------------------
any and all losses, claims, damages, liabilities, judgments, actions and
expenses (including without limitation and as incurred, reimbursement of all
reasonable costs of investigating, preparing, pursuing or defending any claim or
action, or any investigation or proceeding by any governmental agency or body,
commenced or threatened, including the reasonable fees and expenses of counsel
to any Indemnified Person) directly or indirectly caused by, related to, based
upon, arising out of or in connection with any untrue statement or alleged
untrue statement of a material fact contained in the Preliminary Offering
Memorandum or the Offering Memorandum (or any amendment or supplement thereto),
or any omission or alleged omission to state therein a material fact required to
be stated therein or necessary to make the statements therein not misleading,
except insofar as such losses, claims, damages, liabilities or expenses are
caused by an untrue statement or omission or alleged untrue statement or
omission that is made in reliance upon and in conformity with information
relating to such Purchaser furnished in writing to the Company by such Purchaser
expressly for use therein; provided that the foregoing indemnity agreement with
respect to the Preliminary Offering Memorandum shall not inure to the benefit of
the Purchaser from whom the person
13
asserting any such losses, claims, damages or liabilities purchased Series A
Notes, or any person controlling such Purchaser, if a copy of the Offering
Memorandum (as then amended or supplemented if the Company shall have furnished
any amendments or supplements thereto) was not sent or given by or on behalf of
the Purchaser to such person, at or prior to the written confirmation of the
sale of the Series A Notes to such person, and if the Offering Memorandum (as so
amended or supplemented) would have cured the defect giving rise to such loss,
claim, damage, liability or expense. The Company shall notify you promptly of
the institution, threat or assertion of any claim, proceeding (including any
governmental investigation) or litigation in connection with the matters
addressed by this Agreement which involves the Company or an Indemnified Person.
(b) Promptly after receipt by an Indemnified Person under paragraph
(a) above of notice of the commencement of any action or proceeding (including
any governmental investigation or inquiry), such Indemnified Person shall, if a
claim in respect thereof is to be made against the Company under such paragraph,
promptly notify the Company in writing of the commencement thereof; but the
omission so to notify the Company shall not relieve it from any liability that
it may have to such Indemnified Person except to the extent that the omission to
give such notice actually and materially prejudices the rights of the Company.
In case any such action shall be brought against any Indemnified Person, and it
shall notify the Company of the commencement thereof, the Company shall be
entitled to participate in, and, to the extent that it shall wish, to assume the
defense thereof, with counsel satisfactory to the Indemnified Person, and after
notice from the Company to such Indemnified Person of its election so to assume
the defense thereof, the Company shall not be liable to such Indemnified Person
under such paragraph for any legal or other expenses subsequently incurred by
such Indemnified Person in connection with the defense thereof (other than
reasonable costs of investigation) unless (a) the Company has agreed to pay such
fees and expenses or (b) the named parties to any such action or proceeding
(including any impleaded parties) include both the Indemnified Person and the
Company, and the Indemnified Person shall have been advised in writing by
counsel that there may be one or more legal defenses available to such
Indemnified Person which are different from or additional to those available to
the Company (in which case, if such Indemnified Person notifies the Company in
writing that it elects to employ separate counsel at the expense of the Company,
the Company shall not have the right to assume the defense of such action or
proceeding on behalf of such Indemnified Person, it being understood, however,
that the Company shall not, in connection with any one such action or proceeding
or separate but substantially similar or related actions or proceeding in the
same jurisdiction arising out of the same general allegations or circumstances,
be liable for the reasonable fees and expenses of more than one separate firm of
attorneys (in addition to any local counsel) at any time for such Indemnified
Person and any other Indemnified Person, which firm (and local counsel if any)
shall be designated in writing by such Indemnified Person). The Company shall
not be liable for any settlement of any such action or proceeding effected
without its prior written consent, which consent will not be unreasonably
withheld, but if settled with its written consent, or if there be a final
judgment for the plaintiff in any such action or proceeding, the Company agrees
to indemnify and hold harmless such Indemnified Person from and against any loss
or liability by reason of such settlement or judgment. The Company shall not,
without the prior written consent of an Indemnified Person, settle or compromise
or consent to the entry of judgement in or otherwise seek to terminate any
pending or threatened action, claim, litigation or proceeding in respect of
which indemnification or contribution may be sought hereunder (whether or not
any Indemnified Person is a party thereto), unless such settlement, compromise,
consent or termination includes an unconditional release of such Indemnified
Person from all liability arising out of such action, claim, litigation or
proceeding.
(c) The Purchaser agrees to indemnify and hold harmless the Company,
and its directors, officers and any person controlling (within the meaning of
Section 15 of the Act or Section 20 of the Exchange Act) the Company and the
respective officers, directors, partners, employees, representatives
14
and agents of each such person, to the same extent as the foregoing indemnity
from the Company to each of the Indemnified Persons, but only with respect to
claims and actions based on information relating to such Purchaser furnished in
writing by such Purchaser to the Company expressly for use in the Offering
Memorandum.
The statements in the Offering Memorandum in "Plan of Distribution"
and in "Notice to Investors" constitute the only information heretofore
furnished to the Company in writing by the Purchaser expressly for use in the
Preliminary Offering Memorandum or the Offering Memorandum, or any amendment or
supplement thereto.
(d) If the indemnification provided for in this Section 6 is
unavailable to an indemnified party in respect of any losses, claims, damages,
liabilities or expenses referred to herein, then each indemnifying party, in
lieu of indemnifying such indemnified party, shall contribute to the amount paid
or payable by such indemnified party as a result of such losses, claims,
damages, liabilities and expenses (i) in such proportion as is appropriate to
reflect the relative benefits received by the indemnifying party on the one hand
and the indemnified party on the other hand from the offering of the Series A
Notes or (ii) if the allocation provided by clause (i) above is not permitted by
applicable law, in such proportion as is appropriate to reflect not only the
relative benefits referred to in clause (i) above but also the relative fault of
the indemnifying party and the indemnified party, as well as any other relevant
equitable considerations. The relative benefits received by the Company, on the
one hand, and the Purchaser, on the other hand, shall be deemed to be in the
same proportion as the total proceeds from the offering of the Series A Notes
(net of commissions but before deducting expenses) received by the Company and
the total commissions received by the Purchaser bear to the total price of the
Series A Notes paid in the Exempt Resales, in each case as set forth in the
table on the cover page of the Offering Memorandum. The relative fault of the
Company, on the one hand, and the Purchaser, on the other hand, shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to state
a material fact related to information supplied by the Company, on the one hand,
and the Purchaser, on the other hand, and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission. The indemnity set forth herein shall be in addition to
any liability or obligation the Company may otherwise have to any Indemnified
Person.
The Company, and the Purchaser agree that it would not be just and
equitable if contribution pursuant to this Section 6(d) were determined by pro
rata allocation or by any other method of allocation which does not take account
of the equitable considerations referred to in the immediately preceding
paragraph. The amount paid or payable by an indemnified party as a result of the
losses, claims, damages, liabilities or expenses referred to in the immediately
preceding paragraph shall be deemed to include, subject to the limitations set
forth above, any legal or other expenses reasonably incurred by such indemnified
party in connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this Section 6, neither the Purchaser nor any
related Indemnified Persons shall be required to contribute, in the aggregate,
any amount in excess of the amount by which the total discounts and commissions
received by the Purchaser with respect to the Series A Notes, exceeds the amount
of any damages which the Purchaser has otherwise been required to pay by reason
of such untrue or alleged untrue statement or omission or alleged omission. No
person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation.
(e) The Company hereby designates the Corporation Service Company as
their authorized agent upon whom process may be served in any action, suit or
proceeding that may be instituted in any state or federal court in the State of
New York by the Purchaser or any person controlling the
15
Purchaser asserting a claim for indemnification or contribution under or
pursuant to this Section 7, and the Company will accept the jurisdiction of such
court in such action, and waive, to the fullest extent permitted by applicable
law, any defense based upon lack of personal jurisdiction or venue. A copy of
any such process shall be sent or given to the Company at the address for
notices specified in Section 10 hereof.
7. Conditions of Purchaser's Obligations. The obligations of the
-------------------------------------
Purchaser under this Agreement are subject to the satisfaction of each of the
following conditions:
(a) All of the representations and warranties of the Company
contained in this Agreement shall be true and correct on the date hereof
and on the Closing Date with the same force and effect as if made on and as
of the date hereof and the Closing Date, respectively. The Company shall
have performed or complied with all of the agreements herein contained and
required to be performed or complied with by it at or prior to the Closing
Date.
(b) The Offering Memorandum shall have been printed and copies
distributed to the Purchaser not later than 5:00 p.m., New York City time,
on the date of this Agreement or at such later date and time as to which
you may agree, and no stop order suspending the qualification or exemption
from qualification of any of the Series A Notes in any jurisdiction
referred to in Section 4(e) shall have been issued and no proceeding for
that purpose shall have been commenced or shall be pending or threatened.
(c) No action shall have been taken and no statute, rule, regulation
or order shall have been enacted, adopted or issued by any governmental
agency which would, as of the Closing Date, prevent the issuance of any of
the Series A Notes; no action, suit or proceeding shall be pending against
or affecting or, to the knowledge of the Company, threatened against, the
Company or any of its subsidiaries before any court or arbitrator or any
governmental body, agency or official that, if adversely determined, would
prohibit, interfere with or adversely affect the issuance of the Series A
Notes or would have a Material Adverse Effect, or in any manner draw into
question the validity of this Agreement, the Note Indenture, the Series A
Notes or the Registration Rights Agreement; and no stop order preventing
the use of the Offering Memorandum, or any amendment or supplement thereto,
or any order asserting that any of the transactions contemplated by this
Agreement are subject to the registration requirements of the Act shall
have been issued.
(d) Since the dates as of which information is given in the Offering
Memorandum, (i) there shall not have been any material change, or any
development that is reasonably likely to result in a material change, in
the capital stock or the long-term debt, or material increase in the short-
term debt, of the Company and its subsidiaries considered as a whole from
that set forth in the Offering Memorandum, (ii) no dividend or distribution
of any kind shall have been declared, paid or made by the Company or any of
its subsidiaries on any class of its capital stock, and (iii) neither the
Company nor any of its subsidiaries shall have incurred any liabilities or
obligations, direct or contingent, that are material, individually or in
the aggregate, to the Company and its subsidiaries, taken as a whole, and
that are required to be disclosed on a balance sheet in accordance with
generally accepted accounting principles and are not disclosed on the
latest balance sheet included in the Offering Memorandum. Since the date
hereof and since the dates as of which information is given in the Offering
Memorandum, there shall not have been any Material Adverse Change.
(e) You shall have received certificates, dated the Closing Date,
signed by (i) the President or any Vice President and (ii) a principal
financial or accounting officer of the Company
16
confirming, as of the Closing Date, the matters set forth in paragraphs
(a), (b), (c) and (d) of this Section 7.
(f) You shall have received on the Closing Date an opinion
(satisfactory to you and your counsel), dated the Closing Date, of Ropes &
Gray, counsel for the Company, in the form of Exhibit A hereto. You shall
also have received an opinion (reasonably satisfactory to you and your
counsel), dated the Closing Date, of Xxxxxx, XxxXxxxxx, Xxxxxxx & Xxxxxxx
with respect to all matters involving New York law.
(g) You shall have received an opinion (satisfactory to you and your
counsel), dated the Closing Date, of Xxxx Xxxxxxxx, Esq., General Counsel
for the Company, to the effect that:
(i) To the best of such General Counsel's knowledge, the
Company and its subsidiaries own or possess adequate licenses or other
rights to use all trademarks, service marks and trade names necessary
to conduct the business now or proposed to be conducted by them as
described in the Offering Memorandum and the Company and its
subsidiaries have not received any notice of infringement of or
conflict with (and know of no such infringement of or conflict with)
asserted rights of others with respect to any trademarks, service
marks or trade names which could reasonably be expected to result in
any material adverse effect upon the Company and its subsidiaries
taken as one enterprise;
(ii) To the best of such General Counsel's knowledge, the
Company and its subsidiaries have obtained all permits, consents and
authorizations required to be obtained by them under the Environmental
Laws except where the failure to do so would not individually or in
the aggregate have a material adverse effect on the current or future
consolidated financial position, stockholders' equity (deficit) or
results of operations of the Company and its subsidiaries taken as one
enterprise, and any such permits, consents and authorizations remain
in full force and effect. To the best of such General Counsel's
knowledge, the Company and its subsidiaries are in compliance with the
Environmental Laws in all respects except where the failure to be in
compliance would not individually or in the aggregate have a material
adverse effect on the current or future consolidated financial
position, stockholders' equity (deficit) or results of operations of
the Company and its subsidiaries taken as one enterprise, and there is
no pending or, to the Company's or its subsidiaries' knowledge,
threatened, action or proceeding against the Company and its
subsidiaries alleging violations of the Environmental Laws; and
(iii) To the best of such General Counsel's knowledge,
neither the Company nor ICON Health & Fitness, Inc. is in default in
the performance or observance of any obligation, agreement, covenant
or condition contained in any indenture, mortgage, deed of trust, loan
agreement, lease or other agreement or instrument to which it is a
party or by which it or any of its properties may be bound except for
such violations or defaults that would not individually or in the
aggregate have a material adverse effect on the current or future
consolidated financial position, stockholders' equity (deficit) or
results of operation of the Company and its subsidiaries taken as one
enterprise.
(h) You shall have received an opinion, dated the Closing Date, of
Xxxx, Xxxxxxx, Xxxxxxx, Xxxx & Handler, LLP, your counsel, in form and
substance reasonably satisfactory to you, covering such matters as are
customarily covered in such opinions.
17
(i) At the time this Agreement is executed and delivered by the
Company and on the Closing Date, you shall have received letters,
substantially in the form previously approved by you, from Price Waterhouse
LLP, Deloitte & Touche LLP and Xxxxxx Xxxxxxxx LLP, independent public
accountants, with respect to the financial statements and certain financial
information contained in the Offering Memorandum.
(j) Xxxx, Xxxxxxx, Xxxxxxx, Xxxx & Handler, LLP, shall have been
furnished with such documents and opinions, in addition to those set forth
above, as they may reasonably require for the purpose of enabling them to
review or pass upon the matters referred to in this Section 7 and in order
to evidence the accuracy, completeness or satisfaction in all material
respects of any of the representations, warranties or conditions herein
contained.
(k) Prior to the Closing Date, the Company shall have furnished to
you such further information, certificates and documents as you may
reasonably request.
(l) The Company shall have entered into the Note Indenture and you
shall have received counterparts, conformed as executed, thereof.
(m) The Company shall have entered into the Registration Rights
Agreement and you shall have received counterparts, conformed as executed,
thereof.
(n) The Purchaser shall have received a solvency opinion, dated the
Closing Date, of American Appraisal Associates, in form satisfactory to the
Purchaser and such opinion shall be accompanied by a letter addressed to
the Purchaser entitling it to rely on such opinion.
(o) The Company shall have obtained a consent under the Credit
Agreement (as defined in the Note Indenture) in form and substance
reasonably satisfactory to the Purchaser and the Company.
All opinions, certificates, letters and other documents required by
this Section 7 to be delivered by the Company will be in compliance with the
provisions hereof only if they are reasonably satisfactory in form and substance
to you. The Company will furnish the Purchaser with such conformed copies of
such opinions, certificates, letters and other documents as they shall
reasonably request.
8. [Intentionally Omitted]
9. Effective Date of Agreement and Termination. This Agreement shall
-------------------------------------------
become effective upon the execution hereof.
This Agreement may be terminated at any time on or prior to the
Closing Date by you by notice to the Company if any of the following has
occurred: (i) subsequent to the date information is provided in the Offering
Memorandum, any Material Adverse Change which, in your judgment, materially
impairs the investment quality of any of the Series A Notes, (ii) any outbreak
or escalation of hostilities or other national or international calamity or
crisis or material adverse change in the financial markets of the United States
or elsewhere, or any other substantial national or international calamity or
emergency if the effect of such outbreak, escalation, calamity, crisis, material
adverse change or emergency would, in your judgment, make it impracticable or
inadvisable to market any of the Series A Notes or to enforce contracts for the
sale of any of the Series A Notes, (iii) any suspension or limitation of trading
generally in securities on the New York Stock Exchange or in the over-the-
counter markets or any setting of minimum prices for
18
trading on such exchange or markets, (iv) any declaration of a general banking
moratorium by either federal or New York authorities, (v) the taking of any
action by any federal, state or local government or agency in respect of its
monetary or fiscal affairs that in your judgment has a material adverse effect
on the financial markets in the United States, and would, in your judgment, make
it impracticable or inadvisable to market any of the Series A Notes or to
enforce contracts for the sale of any of the Series A Notes, (vi) the enactment,
publication, decree, or other promulgation of any federal or state statute,
regulation, rule or order of any court or other governmental authority which, in
your judgment, would have a Material Adverse Effect, or (vii) any securities of
the Company or any of its subsidiaries shall have been downgraded or placed on
any "watch list" for possible downgrading by any nationally recognized
statistical rating organization.
The indemnities and contribution provisions and the other agreements,
representations and warranties of the Company, its officers and directors and of
the Purchaser set forth in or made pursuant to this Agreement shall remain
operative and in full force and effect, and will survive delivery of and payment
for the Series A Notes, regardless of (i) any investigation, or statement as to
the results thereof, made by or on behalf of either of the Purchaser or by or on
behalf of the Company, the officers or directors of the Company or controlling
person of the Company, (ii) acceptance of the Series A Notes and payment for
them hereunder and (iii) termination of this Agreement.
If this Agreement shall be terminated by the Purchasers pursuant to
clauses (i) or (vii) of the second paragraph of this Section 9 or because of the
failure or refusal on the part of the Company to comply with the terms or to
fulfill any of the conditions of this Agreement, the Company agrees to reimburse
you for all out-of-pocket expenses (including the fees and disbursements of
counsel) incurred by you. Notwithstanding any termination of this Agreement, the
Company shall be liable for all expenses which it has agreed to pay pursuant to
Section 4(f) hereof.
Except as otherwise provided, this Agreement has been and is made
solely for the benefit of and shall be binding upon the Company, the Purchaser,
any Indemnified Person referred to herein and their respective 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
terms "successors and assigns" shall not include a purchaser of any of the
Series A Notes from any Purchaser merely because of such purchase.
10. Miscellaneous. Notices given pursuant to any provision of this
-------------
Agreement shall be addressed as follows: (a) if to the Company, 0000 Xxxxx 0000
Xxxx, Xxxxx, Xxxx 00000-8206, Attention: President, with a copy to Ropes & Gray,
One International Place, Boston, Massachusetts 02110, Attention: Winthrop Minot,
Esq., and (b) if to the Purchaser, 000 Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000,
Attention: Xx. Xxxx Xxxxxxx, with a copy to Xxxx, Xxxxxxx, Xxxxxxx, Xxxx &
Xxxxxxx, LLP, Attention: Xxxxxxx Xxxxxxx, Esq., or in any case to such other
address as the person to be notified may have requested in writing.
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This Agreement shall be governed and construed in accordance with the
internal laws of the State of New York. This Agreement may be signed in various
counterparts which together shall constitute one and the same instrument.
Please confirm that the foregoing correctly sets forth the Agreement
among the Company and the Purchaser.
Very truly yours,
ICON FITNESS CORPORATION
By: /s/ X. Xxxx Xxxx
-------------------------------------
Name: X. Xxxx Xxxx
Title: Treasurer
Accepted and agreed to as of
the date first above written:
XXXXXXXXX, XXXXXX & XXXXXXXX
SECURITIES CORPORATION
By: /s/ Xxxx X. Xxxxxxx
-------------------------------
Name: Xxxx X. Xxxxxxx
Title: Vice President
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