EXHIBIT 10.12
PCA LLC
PCA Finance Corp.
11.875% Senior Notes due 2009
unconditionally guaranteed as to the
payment of principal, premium,
if any, and interest by
the Guarantors listed on the signature pages hereof
----------
Purchase Agreement
June 20, 2002
Xxxxxxx, Xxxxx & Co.,
Banc of America Securities LLC
c/x Xxxxxxx, Xxxxx & Co.
00 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Ladies and Gentlemen:
PCA LLC, a Delaware limited liability company ("PCA"), and PCA Finance
Corp. ("PCA Finance" and, together with PCA, the "Companies") propose, subject
to the terms and conditions stated herein, to issue and sell to the Purchasers
named in Schedule I hereto (the "Purchasers") $165,000,000 aggregate principal
amount of 11.875% Senior Notes due 2009 of the Companies (the "Notes"). The
Notes will be entitled to the benefit of guarantees (the "Guarantees" and,
together with the Notes, the "Securities") by PCA International, Inc., a North
Carolina corporation ("Parent"), and the subsidiaries of PCA listed on the
signature pages hereof (the "Guarantors" and, together with the Companies, the
"Issuers").
1. The Issuers, jointly and severally, represent and warrant to, and
agree with, the Purchasers that:
(a) A preliminary offering circular, dated June 10, 2002 (the
"Preliminary Offering Circular"), and an offering circular, dated June
20, 2002 (the "Offering Circular"), have been prepared in connection
with the offering of the Securities. Any reference to the Preliminary
Offering Circular or the Offering Circular shall be deemed to refer to
and include any Additional Issuer Information (as defined in Section
5(f)) furnished by the Issuers prior to the completion of the
distribution of the Securities. The Preliminary Offering Circular and
the Offering Circular and any amendments or supplements thereto did not
and will not, as of their respective dates or as of the Time of
Delivery, contain 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; provided, however, that
this representation and warranty shall not apply to any statements or
omissions relating to a Purchaser made in reliance upon and in
conformity with information furnished in writing to the Companies by
such Purchaser through Xxxxxxx, Xxxxx & Co. expressly for use therein.
(b) Neither Parent nor any of its subsidiaries has sustained
since the date of the latest audited financial statements included in
the Offering Circular any loss or interference with its business from
fire, explosion, flood or other calamity, whether or not covered by
insurance, or from any labor dispute or court or governmental action,
order or decree, otherwise than as set forth or contemplated in the
Offering Circular; and, since the respective dates as of which
information is given in the Offering Circular, there has not been any
change in the capital stock or long-term debt of Parent or any of its
subsidiaries or any material adverse change, or any development
involving a prospective material adverse change, in or affecting the
general affairs, management, financial position, shareholders' equity
or results of operations of Parent and its subsidiaries, taken as a
whole, otherwise than as set forth or contemplated in the Offering
Circular.
(c) Parent and its subsidiaries have good and marketable title
in fee simple to all real property and good and marketable title to all
personal property owned by them, in each case free and clear of all
liens, encumbrances and defects except such as are described in the
Offering Circular or such as do not materially affect the value of such
property and do not interfere with the use made and proposed to be made
of such property by Parent and its subsidiaries; and any real property
and buildings held under lease by Parent and 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
and proposed to be made of such property and buildings by Parent and
its subsidiaries.
(d) Parent and each of its subsidiaries has been duly
incorporated or, in the case of subsidiaries that are not corporations,
duly formed, and is validly existing in good standing under the laws of
the jurisdiction of its incorporation or formation (to the extent the
concept of good standing is applicable in the relevant jurisdiction),
with corporate, limited liability company or limited partnership power
and authority to own its properties and conduct its business as
described in the Offering Circular, except for any failure to be in
good standing or have such power and authority that would not,
individually or in the aggregate, have a material adverse effect on the
financial position, shareholders' equity, business prospects or results
of operations of Parent and its subsidiaries, taken as a whole (a
"Material Adverse Effect"). Parent and each of its subsidiaries has
been duly qualified as a foreign corporation or partnership for the
transaction of business and is in good standing under the laws of each
other jurisdiction in which it owns or leases properties or conducts
any business so as to require such qualification, except to the extent
that the failure to be so qualified or to be in good standing would not
have a Material Adverse Effect.
(e) Each of Parent and PCA has an authorized capitalization as
set forth in the Offering Circular under the caption "Capitalization",
and all of the issued shares
2
of capital stock of Parent have been duly and validly authorized and
issued and are fully paid and non-assessable. All of the issued shares
of capital stock, partnership interests or limited liability company
interests of PCA and each of its subsidiaries have been duly and
validly authorized and issued, are fully paid and non-assessable
(except for partnership interests of general partners) and, except as
set forth in the Offering Circular and except for one share of each of
PCA of Mexico, S.A. de C.V. and American Studios de Mexico, S.A. de
C.V. which, in each case, is owned by third parties due to requirements
of Mexican law, are owned directly or indirectly by Parent (in the case
of PCA) or PCA (in the case of each of PCA's subsidiaries), free and
clear of all liens, encumbrances, equities or claims. Except as set
forth in the Offering Circular, the Companies have no direct or
indirect subsidiaries other than the Guarantors and dormant
subsidiaries that have no operations or assets, and the Companies do
not own, directly or indirectly, any equity or ownership interest in
any entity other than their respective subsidiaries.
(f) The Securities have been duly authorized by the Issuers
and, when duly executed and authenticated in accordance with the
provisions of the Indenture and delivered to and paid for by the
Purchasers in accordance with the terms of this Agreement, will
constitute valid and legally binding obligations of the Issuers
entitled to the benefits provided by the indenture to be dated as of
June 27, 2002 (the "Indenture") among the Issuers and The Bank of New
York, as trustee (the "Trustee"), under which they are to be issued and
enforceable against the Issuers in accordance with their terms, subject
to the effects of bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and other similar laws relating to or
affecting creditors' rights generally and to general principles of
equity (whether considered in a proceeding in equity or at law). The
Indenture has been duly authorized by the Issuers and, when executed
and delivered by the Issuers, the Indenture will constitute a valid and
legally binding obligation of the Issuers, enforceable against the
Issuers in accordance with its terms, subject to the effects of
bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and other similar laws relating to or affecting creditors'
rights generally and to general principles of equity (whether
considered in a proceeding in equity or at law). The Securities and the
Indenture will conform to the descriptions thereof in the Offering
Circular in all material respects.
(g) The Exchange and Registration Rights Agreement, dated the
date hereof, among the Issuers and the Purchasers (the "Exchange and
Registration Rights Agreement") has been duly authorized, executed and
delivered by each of the Issuers and constitutes a valid and legally
binding obligation of each of the Issuers, enforceable in accordance
with its terms, subject to the effects of bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and other similar
laws relating to or affecting creditors' rights generally and to
general principles of equity (whether considered in a proceeding in
equity or at law) and except as rights of indemnification and
contribution may be limited under applicable law.
(h) None of the transactions contemplated by this Agreement
(including, without limitation, the use of the proceeds from the sale
of the Securities) will violate or result in a violation of Section 7
of the United States Securities Exchange Act of 1934, as amended (the
"Exchange Act"), or any regulation promulgated thereunder,
3
including, without limitation, Regulations T, U and X of the Board of
Governors of the Federal Reserve System.
(i) Prior to the date hereof, neither Parent nor any of its
affiliates has taken any action which is designed to or which has
constituted or which might have been expected to cause or result in
stabilization or manipulation of the price of any security of any
Issuer in connection with the offering of the Securities.
(j) The issue and sale of the Securities and the compliance by
the Issuers with all of the provisions of the Securities, the
Indenture, the Exchange and Registration Rights Agreement and this
Agreement and the consummation of the transactions herein and therein
contemplated will not (i) conflict with or result in a breach or
violation of any of the terms or provisions of, or constitute a default
under, any indenture, mortgage, deed of trust, loan agreement or other
agreement or instrument to which Parent or any of its subsidiaries is a
party or by which Parent or any of its subsidiaries is bound or to
which any of the property or assets of Parent or any of its
subsidiaries is subject, (ii) violate any provision of the certificate
of incorporation or by-laws or similar governing document of Parent or
any of its subsidiaries or (iii) violate any statute or any order, rule
or regulation of any court or governmental agency or body having
jurisdiction over Parent or any of its subsidiaries or any of their
properties, except in the case of clause (i) or (iii) for any such
conflict, breach, violation or default which would not have a Material
Adverse Effect or adversely affect the ability of the Issuers to
consummate the transactions contemplated hereby. No consent, approval,
authorization, order, registration or qualification of or with any such
court or governmental agency or body is required for the issue and sale
of the Securities or the consummation by the Issuers of the
transactions contemplated by this Agreement, the Exchange and
Registration Rights Agreement or the Indenture, except (x) in the case
of performance of the Exchange and Registration Rights Agreement, for
the filing of a registration statement by the Issuers with the
Securities and Exchange Commission (the "Commission") pursuant to the
United States Securities Act of 1933, as amended (the "Act"), (y) such
consents, approvals, authorizations, registrations or qualifications as
may be required under state securities or Blue Sky laws in connection
with the purchase and distribution of the Securities by the Purchasers
and (z) such consents, approvals, authorizations, orders, registrations
and qualifications that will have been obtained at or prior to the Time
of Delivery.
(k) Neither Parent nor any of its subsidiaries is (i) in
violation of its certificate of incorporation or by-laws or, in the
case of subsidiaries that are not corporations, other similar governing
documents or (ii) in default in the performance or observance of any
obligation, 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, in the case of this clause (ii), for any such violation
or default which would not have a Material Adverse Effect or adversely
affect the ability of the Issuers to consummate the transactions
contemplated hereby.
(l) The statements set forth in the Offering Circular under
the caption "Description of Notes," insofar as they purport to
constitute a summary of the terms
4
of the Securities and the Exchange and Registration Rights Agreement,
and under the captions "Description of Certain Indebtedness," "Business
-- Governmental Regulations," "Business -- Licenses, Trademarks and
Patents," "Management -- Employment and Severance Arrangements,"
"Management -- Management Stock Option Plan," "Certain Relationships
and Related Party Transactions," "Certain U.S. Federal Income Tax
Considerations" and "Underwriting," insofar as they purport to describe
the provisions of the laws, documents and legal matters referred to
therein, are accurate, complete and fair.
(m) Other than as set forth in the Offering Circular, there
are no legal or governmental proceedings pending to which Parent or any
of its subsidiaries is a party or of which any property of Parent or
any of its subsidiaries is the subject, other than proceedings that
could not reasonably be expected, individually or in the aggregate, to
have a Material Adverse Effect. Other than as set forth in the Offering
Circular, to the best of the Issuers' knowledge, no such proceedings
are threatened or contemplated by governmental authorities or
threatened by others.
(n) When the Securities are issued and delivered pursuant to
this Agreement, the Securities will not be of the same class (within
the meaning of Rule 144A under the Act) as securities of the Issuers
which are listed on a national securities exchange registered under
Section 6 of the Exchange Act or quoted in a U.S. automated
inter-dealer quotation system.
(o) Neither Parent nor any of its subsidiaries is, nor after
giving effect to the offering and sale of the Securities and the
application of the proceeds thereof as described in Offering Circular
will be, an "investment company", as such term is defined in the United
States Investment Company Act of 1940, as amended (the "Investment
Company Act").
(p) Neither the Companies nor any person acting on their
behalf has offered or sold the Securities by means of any general
solicitation or general advertising within the meaning of Rule 502(c)
under the Act or, with respect to Securities sold outside the United
States to non-U.S. persons (as defined in Rule 902 under the Act), by
means of any directed selling efforts within the meaning of Rule 902
under the Act, and the Companies, any affiliate of the Companies and
any person acting on their behalf have complied with and will implement
the "offering restrictions" within the meaning of such Rule 902;
provided, however, that no representation or warranty is made as to any
actions taken by or on behalf of the Purchasers.
(q) Within the preceding six months, neither the Companies nor
any other person acting on behalf of the Companies has offered or sold
to any person any Securities, or any securities of the same or a
similar class as the Securities, other than
Securities offered or sold to the Purchasers hereunder. The Companies
will take reasonable precautions designed to ensure that any offer or
sale, direct or indirect, in the United States or to any U.S. person
(as defined in Rule 902 under the Act) of any Securities or any
substantially similar security issued by the Companies, within six
months subsequent to the date on which the distribution of the
Securities has been completed (as notified to the Companies by Xxxxxxx,
Sachs & Co.), is made under
5
restrictions and other circumstances reasonably designed not to affect
the status of the offer and sale of the Securities in the United States
and to U.S. persons contemplated by this Agreement as transactions
exempt from the registration provisions of the Act.
(r) Neither the Companies nor any of their affiliates does
business with the government of Cuba or with any person or affiliate
located in Cuba within the meaning of Section 517.075, Florida
Statutes.
(s) The financial statements included in the Offering Circular
present fairly, in all material respects, the financial position of
Parent and PCA and its consolidated subsidiaries as of the dates shown
and their results of operations, changes in shareholders' equity and
cash flows for the periods shown, and such financial statements have
been prepared in conformity with the generally accepted accounting
principles in the United States applied on a consistent basis. The
information set forth under the captions "Offering Circular Summary--
Summary Consolidated Financial and Operating Data" and "Selected
Historical Consolidated Financial and Operating Data" included in the
Offering Circular fairly presents, in all material respects, the
information set forth therein on a basis consistent with that of the
audited financial statements of Parent. The ratios of earnings to fixed
charges set forth in the Offering Circular under the captions "Offering
Circular Summary-Summary Consolidated Financial and Operating Data" and
"Selected Historical Consolidated Financial and Operating Data" have
been calculated in compliance with item 503(d) of Regulation S-K.
(t) Each of Deloitte & Touche LLP and KPMG LLP, who have
certified certain financial statements of Parent and its subsidiaries,
are independent public accountants as required by the Act and the rules
and regulations of the Commission thereunder.
(u) Parent and its subsidiaries possess all licenses, permits,
certificates, consents, orders, approvals and other authorizations
from, and have made all declarations and filings with, all federal,
state, local and other governmental authorities, and all courts and
other tribunals, 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 Offering Circular ("Permits"), except where the
failure to obtain such Permits (by possession, declaration or filing)
would not, individually or in the aggregate, have a Material Adverse
Effect.
(v) Except as described in the Offering Circular or as would
not, individually or in the aggregate, have a Material Adverse Effect,
(A) Parent and each of its subsidiaries is in compliance with and not
subject to any known liability under applicable Environmental Laws (as
defined below), (B) Parent and each of its subsidiaries has made all
filings and provided all notices required under any applicable
Environmental Law, and has, and is in compliance with, all Permits
required under any applicable Environmental Laws and each of them is in
full force and effect, (C) there is no civil, criminal or
administrative action, suit, demand, claim, hearing, notice of
violation or, to the best knowledge of the Issuers, investigation,
proceeding, notice or demand
6
letter or request for information pending or, to the best knowledge of
the Issuers, threatened against Parent or any of its subsidiaries under
any Environmental Law, (D) no lien, charge, encumbrance or restriction
has been recorded under any Environmental Law with respect to any
assets, facility or property owned, operated, leased or controlled by
Parent or any of its subsidiaries, (E) none of Parent or any of its
subsidiaries has received notice that it has been identified as a
potentially responsible party under the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended
("CERCLA"), or any comparable state law and (F) except as disclosed in
or contemplated by the Offering Circular, no property or facility of
Parent or any of its subsidiaries is (i) listed or, to the best
knowledge of the Issuers, proposed for listing on the National
Priorities List under CERCLA or (ii) listed in the Comprehensive
Environmental Response, Compensation and Liability Information System
List promulgated pursuant to CERCLA, or on any comparable list
maintained by any state or local governmental authority.
For purposes of this Agreement, "Environmental Laws" means the
common law and all applicable federal, provincial, state and local laws
or regulations, codes, orders, decrees, judgments or injunctions
issued, promulgated, approved or entered thereunder, relating to
pollution or protection of public or employee health and safety or the
environment, including, without limitation, laws relating to (i)
emissions, discharges, releases or threatened releases of hazardous
materials into the environment (including, without limitation, ambient
air, surface water, groundwater, land surface or subsurface strata),
(ii) the manufacture, processing, distribution, use, generation,
treatment, storage, disposal, transport or handling of hazardous
materials, and (iii) underground and aboveground storage tanks and
related piping, and emissions, discharges, releases or threatened
releases therefrom.
(w) There is no strike or material labor dispute, slowdown or
work stoppage with the employees of Parent or any of its subsidiaries
which is pending or, to the best knowledge of the Companies,
threatened.
(x) Each of Parent and its subsidiaries carries insurance
(including self-insurance, if any) in such amounts and covering such
risks as in its reasonable determination is adequate for the conduct of
its business and the value of its properties.
(y) Except as described in the Offering Circular, neither
Parent nor any of its subsidiaries has incurred any liability for any
prohibited transaction or accum lated funding deficiency or any
complete or partial withdrawal liability with respect to any pension,
profit sharing or other plan which is subject to the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), to which
Parent or any of its subsidiaries makes or ever has made a contribution
and in which any employee of Parent or any such subsidiary is or has
ever been a participant, which would, individually or in the aggregate,
have a Material Adverse Effect. With respect to such plans, each of
Parent and its subsidiaries is in compliance in all respects with all
applicable provisions of ERISA, except where the failure to so comply
would not, individually or in the aggregate, have a Material Adverse
Effect.
7
(z) Assuming that the representations and warranties of the
Purchasers contained in Section 3 and Annex I are true and correct and
that each Purchaser complies with its agreements contained in Section 3
and Annex I, it is not necessary in connection with the offer, sale and
delivery of the Securities to the Purchasers or the reoffer and resale
by the Purchasers in the manner contemplated by this Agreement and the
Offering Circular to register the Securities under the Act or to
qualify the Indenture in respect of the Securities under the United
States Trust Indenture Act of 1939, as amended (the "Trust Indenture
Act").
(aa) The representations and warranties in the purchase
agreement(s) relating to the senior subordinated discount notes of
Parent being issued at the Time of Delivery (the "Parent Senior
Subordinated Notes") and the senior subordinated notes of PCA being
issued at the Time of Delivery (the "Opco Senior Subordinated Notes")
and in the new credit facility being entered into at the Time of
Delivery (the "New Credit Facility") are true and correct.
2. Subject to the terms and conditions herein set forth, the
Companies agree to issue and sell to each of the Purchasers, and each of the
Purchasers agrees, severally and not jointly, to purchase from the Companies, at
a purchase price of 95.218% of the principal amount thereof, plus accrued
interest, if any, from June 27, 2002 to the Time of Delivery (as defined below),
the principal amount of Securities set forth opposite the name of such Purchaser
in Schedule I hereto.
3. Upon the authorization by you of the release of the
Securities, the several Purchasers propose to offer the Securities for resale
upon the terms and conditions set forth in this Agreement and the Offering
Circular and each Purchaser hereby represents and warrants to, and agrees with,
the Companies that:
(a) It has solicited offers from and offered the Securities
only to, and will solicit offers from or offer, sell and deliver the
Securities only to: (i) persons who it reasonably believes are
"qualified institutional buyers" ("QIBs") within the meaning of Rule
144A under the Act in transactions meeting the requirements of Rule
144A or (ii) upon the terms and conditions set forth in Annex I to this
Agreement.
(b) It is an institutional "accredited investor" within the
meaning of Rule 501(a)(1), (2), (3) or (7) under the Act.
(c) It has not solicited offers or offered the Securities by,
and will not solicit offers or offer or sell the Securities by, any
form of general solicitation or general advertising, including but not
limited to the methods described in Rule 502(c) under the Act.
4. (a) The Securities to be purchased by each Purchaser
hereunder, in definitive form, and in such authorized denominations and
registered in such names as Xxxxxxx, Xxxxx & Co. may request upon at least
forty-eight hours' prior notice to the Companies, shall be delivered by or on
behalf of the Companies to Xxxxxxx, Xxxxx & Co., through the facilities of The
Depository Trust Company ("DTC"), for the account of such Purchaser, against
payment by or on behalf of such Purchaser of the purchase price therefor by
8
wire transfer, payable to the order of the Companies in Federal (same day)
funds. The Companies will cause the certificates representing the Securities to
be made available for checking and packaging at least twenty-four hours prior to
the Time of Delivery at the office of DTC or its designated custodian (the
"Designated Office"). The Securities to be purchased by each Purchaser hereunder
will be represented by one or more definitive global Securities in book-entry
form which will be deposited by or on behalf of the Companies with DTC or its
designated custodian. The Companies will deliver the Securities to Xxxxxxx,
Xxxxx & Co. by causing DTC to credit the Securities to the account of Xxxxxxx,
Xxxxx & Co. at DTC. The time and date of such delivery and payment shall be
10:00 a.m., New York City time, on June 27, 2002 or such other time and date as
Xxxxxxx, Xxxxx & Co. and the Companies may agree upon in writing. Such time and
date are herein called the "Time of Delivery".
(b) The documents to be delivered at the Time of Delivery by
or on behalf of the parties hereto pursuant to Section 7 hereof, including the
cross-receipt for the Securities and any additional documents requested by the
Purchasers pursuant to Section 7(h) hereof, will be delivered at such time and
date at the offices of Xxxxxx Xxxxxx & Xxxxxxx, 00 Xxxx Xxxxxx, Xxx Xxxx, Xxx
Xxxx (the "Closing Location"), and the Securities will be delivered at the
Designated Office, all at the Time of Delivery. A meeting will be held at the
Closing Location at 12:00 p.m., New York City time, on the New York Business Day
next preceding the Time of Delivery, at which meeting the final drafts of the
documents to be delivered pursuant to the preceding sentence will be available
for review by the parties hereto. For the purposes of this Section 4, "New York
Business Day" shall mean each Monday, Tuesday, Wednesday, Thursday and Friday
which is not a day on which banking institutions in New York are generally
authorized or obligated by law or executive order to close.
5. The Issuers, jointly and severally, agree with each of the
Purchasers:
(a) To prepare the Offering Circular in a form approved by
you; to make no amendment or any supplement to the Offering Circular
which shall be disapproved by you promptly after reasonable notice by
the Companies of their proposed amendment or supplement; and to furnish
you with copies thereof.
(b) Promptly from time to time to take such action as you may
reasonably request to qualify the Securities for offering and sale
under the securities laws of such jurisdictions as you may reasonably
request and to comply with such laws so as to permit the continuance of
sales and dealings therein in such jurisdictions for as long as may be
necessary to complete the distribution of the Securities; provided,
however, that in connection therewith no Issuer shall be required to
qualify as a foreign corporation or a dealer in securities or to file a
general consent to service of process in any jurisdiction or subject
itself to taxation in any such jurisdiction if it is not so subject.
(c) To furnish each of the Purchasers with two copies of the
Offering Circular and each amendment or supplement thereto signed by an
authorized officer of the Companies with the independent accountants'
report(s) in the Offering Circular, and any amendment or supplement
containing amendments to the financial statements covered by such
report(s), signed by the accountants, and additional con-
9
formed copies thereof in such quantities as you may from time to time
reasonably request, and if, at any time prior to the expiration of nine
months after the date of the Offering Circular, any event shall have
occurred as a result of which the Offering Circular as then amended or
supplemented would include an 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 when such Offering Circular is delivered, not misleading, or,
if for any other reason it shall be necessary or legally advisable in
the opinion of counsel during such same period to amend or supplement
the Offering Circular, to notify you and upon your request to prepare
and furnish without charge to each Purchaser and to any dealer in
securities as many copies as you may from time to time reasonably
request of an amended Offering Circular or a supplement to the Offering
Circular which will correct such statement or omission or effect such
compliance.
(d) During the period beginning from the date hereof and
continuing until the date six months after the Time of Delivery, not to
offer, sell, contract to sell or otherwise dispose of, except as
provided hereunder, any securities of any Issuer that are substantially
similar to the Securities.
(e) Not to be or become, at any time prior to the expiration
of three years after the Time of Delivery, an open-end investment
company, unit investment trust, closed-end investment company or
face-amount certificate company that is or is required to be registered
under Section 8 of the Investment Company Act.
(f) At any time when the Companies are not subject to Section
13 or 15(d) of the Exchange Act, for the benefit of holders from time
to time of Securities, to furnish at its expense, upon request, to
holders of Securities and prospective purchasers of Securities
information (the "Additional Issuer Information") satisfying the
requirements of subsection (d)(4)(i) of Rule 144A under the Act.
(g) To use its best efforts to cause the Securities to be
eligible for the PORTAL trading system of the National Association of
Securities Dealers, Inc.
(h) During a period of five years from the date of the
Offering Circular, to deliver to you (i) as soon as they are available,
copies of any reports and financial statements furnished to or filed
with the Commission or any securities exchange on which the Securities
or any class of securities of either of the Companies is listed; and
(ii) such additional information furnished by the Companies to the
Trustee or to the holders of the Securities pursuant to the Indenture
or the Trust Indenture Act.
(i) The Companies will not, and will not permit any of their
"affiliates" (as defined in Rule 144 under the Act) to, resell any of
the Securities which constitute "restricted securities" under Rule 144
that have been reacquired by any of them.
(j) To use the net proceeds received from the sale of the
Securities pursuant to this Agreement in the manner specified in the
Offering Circular under the caption "Use of Proceeds."
10
(k) To continue to use all commercially reasonable
efforts to cause all assets (including contracts) of Parent to
be transferred or assigned to PCA as soon as practicable.
6. The Issuers, jointly and severally, covenant and agree with
the several Purchasers to pay or cause to be paid the following: (i)
the fees, disbursements and expenses of the Issuers' counsel and
accountants in connection with the issue of the Securities and all
other expenses in connection with the preparation, printing and filing
of the Preliminary Offering Circular and the Offering Circular and any
amendments and supplements thereto and the mailing and delivering of
copies thereof to the Purchasers and dealers; (ii) all expenses in
connection with the qualification of the Securities for offering and
sale under state securities laws as provided in Section 5(b) hereof,
including the reasonable fees and disbursements of counsel for the
Purchasers in connection with such qualification and in connection with
the Blue Sky and legal investment surveys; (iii) any fees charged by
securities rating services for rating the Securities; (iv) the cost of
preparing the Securities; (v) the fees and expenses of the Trustee and
any agent of the Trustee and the fees and disbursements of counsel for
the Trustee in connection with the Indenture and the Securities; (vi)
any cost incurred in connection with the designation of the Securities
for trading in PORTAL; (vii) the reasonable cost of printing or
producing this Agreement, the Indenture, the Blue Sky and Legal
Investment Memoranda, closing documents (including any compilations
thereof) and any other documents in connection with the offering
purchase, sale and delivery of the Securities; and (viii) all other
costs and expenses incident to the performance of their obligations
hereunder which are not otherwise specifically provided for in this
Section. It is understood, however, that, except as provided in this
Section, and Sections 8 and 11 hereof, the Purchasers will pay all of
their own costs and expenses, including the fees of their counsel,
transfer taxes on resale of any of the Securities by them, and any
advertising expenses connected with any offers they may make.
7. The obligations of the Purchasers hereunder shall be
subject, in their discretion, to the condition that all representations
and warranties and other statements of the Issuers herein are, at and
as of the Time of Delivery, true and correct, the condition that the
Issuers shall have performed all of their obligations hereunder
theretofore to be performed, and the following additional conditions:
(a) Xxxxxx Xxxxxx & Xxxxxxx, counsel for the
Purchasers, shall have furnished to you its opinion or
opinions, dated the Time of Delivery, with respect to such
matters as you may reasonably request, and such counsel shall
have received such papers and information as they may
reasonably request to enable them to pass upon such matters.
(b) At the Time of Delivery:
(i) Xxxx, Xxxxx, Xxxxxxx, Xxxxxxx &
Xxxxxxxx, counsel for the Issuers, shall have furnished to you
its written opinion, dated the Time of Delivery, in the form
attached hereto as Xxxxx XXX-A;
11
(ii) Xxxxxxxx, Xxxxxxxx & Xxxxxx, P.A.,
special North Carolina counsel for the Issuers, shall have
furnished to you its written opinion, dated the Time of
Delivery, in the form attached hereto as Xxxxx XXX-B;
(iii) X. Xxxxxx Xxxx, legal counsel of the
Issuers, shall have furnished to you his written opinion,
dated the Time of Delivery, in the form attached hereto as
Xxxxx XXX-C;
(iv) Xxxxxxxx & Xxxxxx LLP, special Texas
counsel for the Issuers, shall have furnished to you its
written opinion, dated the Time of Delivery, in the form
attached hereto as Annex III-D; and
(v) The Purchasers shall have received a copy of each legal
opinion delivered in connection with the issuance of the Parent Senior
Subordinated Notes, the Opco Senior Subordinated Notes and the New
Credit Facility, and letters entitling the Purchasers to rely on each
such opinion as if such opinion were addressed to the Purchasers.
(c) On the date of the Offering Circular prior to the
execution of this Agreement, and also at the Time of Delivery, Deloitte
& Touche LLP shall have furnished to you letters, dated the respective
dates of delivery thereof, substantially in the form attached hereto as
Annex II, and otherwise satisfactory in form and substance to you. On
the date of the Offering Circular prior to the execution of this
Agreement, KPMG LLP shall have furnished to you a letter, dated the
date of delivery thereof, to the effect of the statements set forth in
paragraphs (i) and (ii) of Annex II and otherwise satisfactory in form
and substance to you.
(d) (i) Neither Parent nor any of its subsidiaries shall have
sustained since the date of the latest audited financial statements
included in the Offering Circular any loss or interference with its
business from fire, explosion, flood or other calamity, whether or not
covered by insurance, or from any labor dispute or court or
governmental action, order or decree, otherwise than as set forth or
contemplated in the Offering Circular, and (ii) since the respective
dates as of which information is given in the Offering Circular there
shall not have been any change in the capital stock or long-term debt
of Parent or any of its subsidiaries or any change, or any development
involving a prospective change, in or affecting the general affairs,
management, financial position, shareholders' equity or results of
operations of Parent and its subsidiaries, otherwise than as set forth
or contemplated in the Offering Circular, the effect of which, in any
such case described in clause (i) or (ii), is in the judgment of
Xxxxxxx, Xxxxx & Co. so material and adverse as to make it
impracticable or inadvisable to proceed with the offering or the
delivery of the Securities on the terms and in the manner contemplated
in this Agreement and in the Offering Circular.
(e) On or after the date hereof (i) no downgrading shall have
occurred in the rating accorded any debt or preferred stock of Parent
or any of its subsidiaries by any "nationally recognized statistical
rating organization", as that term is defined by the Commission for
purposes of Rule 436(g)(2) under the Act, and (ii) no such organization
shall have publicly announced that it has under surveillance or review,
with
12
possible negative implications, its rating of any debt or preferred
stock of Parent or any of its subsidiaries.
(f) On or after the date hereof there shall not have occurred
any of the following: (i) a suspension or material limitation in
trading in securities generally on the New York Stock Exchange, Nasdaq
or in the over-the-counter market; (ii) a general moratorium on
commercial banking activities declared by either Federal or New York
State authorities or a material disruption in commercial banking or
securities settlement or clearance service in the United States; (iii)
the outbreak or escalation of hostilities involving the United States
or the declaration by the United States of a national emergency or war
or (iv) the occurrence of any other calamity or crisis or any change in
financial, political or economic conditions in the United States or
elsewhere, if the effect of any such event specified in clause (iii) or
(iv) in the judgment of Xxxxxxx, Xxxxx & Co. makes it impracticable or
inadvisable to proceed with the sale or the delivery of the Securities
on the terms and in the manner contemplated in this Agreement and in
the Offering Circular.
(g) The Securities have been designated for trading on PORTAL.
(h) The Companies shall have furnished or caused to be
furnished to you at the Time of Delivery a certificate of the Chief
Executive Officer and the Chief Financial Officer of the Companies
satisfactory to you as to the accuracy of the representations and
warranties of the Issuers herein at and as of such Time of Delivery, as
to the performance by the Issuers of all of their obligations hereunder
to be performed at or prior to such Time of Delivery, as to the matters
set forth in subsections (d) and (e) of this Section and as to such
other matters as you may reasonably request.
(i) Since the date hereof, the Companies shall not have made
any amendment or supplement to the Offering Circular other than any
such amendment or supplement which has been provided to the Purchasers
and to which the Purchasers have not objected.
(j) As of the Time of Delivery, Parent shall have repaid all
loans outstanding under and terminated all commitments pursuant to the
Bridge Loan Agreement dated as of August 25, 1998 among Parent, as
borrower, the guarantors listed on the signature pages thereto, the
lenders named therein and NationsBridge, L.L.C., as administrative
agent, as amended.
(k) As of the Time of Delivery, Parent shall have repaid all
loans outstanding under and terminated all commitments pursuant to the
Credit Agreement dated as of August 25, 1998 among Parent, as borrower,
the guarantors party thereto, the lenders party thereto and
NationsBank, N.A., as agent, as amended.
(l) As of the Time of Delivery, PCA shall have entered into
the New Credit Facility, on the terms set forth in the Offering
Circular and have satisfied all conditions precedent to borrowing
thereunder.
13
(m) As of the Time of Delivery, the Purchasers shall have
received the Exchange and Registration Rights Agreement executed by the
Issuers and such agreement shall be in full force and effect at all
times from and after the Time of Delivery.
(n) As of the Time of Delivery, Parent and the Issuers shall
have consummated the transactions described in the Offering Circular
under the caption "Offering Circular Summary-The Transactions" on the
terms set forth therein.
(o) As of the Time of Delivery, all conditions precedent
relating to the issuance and sale of the Parent Senior Subordinated
Notes and the Opco Senior Subordinated Notes shall be satisfied and the
consummation thereof shall have occurred prior to, or shall occur
substantially simultaneous with, the issuance of the Notes.
8. (a) The Issuers, jointly and severally, will indemnify and
hold harmless each Purchaser against any losses, claims, damages or liabilities,
joint or several, to which such Purchaser may become subject, under the Act or
otherwise, insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon an untrue statement or alleged
untrue statement of a material fact contained in any Preliminary Offering
Circular or the Offering Circular, or any amendment or supplement thereto, or
arise out of or are based upon the omission or alleged omission to state therein
a material fact necessary to make the statements therein not misleading, and
will reimburse each Purchaser for any legal or other expenses reasonably
incurred by such Purchaser in connection with investigating or defending any
such action or claim as such expenses are incurred; provided, however, that the
Issuers shall not be liable to any Purchaser in any such case to the extent that
any such loss, claim, damage or liability arises out of or is based upon an
untrue statement or alleged untrue statement or omission or alleged omission
related to such Purchaser and made in any Preliminary Offering Circular or the
Offering Circular or any such amendment or supplement in reliance upon and in
conformity with written information furnished to the Companies by such Purchaser
through Xxxxxxx, Xxxxx & Co. expressly for use therein.
(b) Each Purchaser will indemnify and hold harmless each
Issuer against any losses, claims, damages or liabilities to which such Issuer
may become subject, under the Act or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or are based
upon an untrue statement or alleged untrue statement of a material fact
contained in any Preliminary Offering Circular or the Offering Circular, or any
amendment or supplement thereto, or arise out of or are based upon the omission
or alleged omission to state therein a material fact or necessary to make the
statements therein 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 related to such Purchaser and was made in any Preliminary
Offering Circular or the Offering Circular or any such amendment or supplement
in reliance upon and in conformity with written information furnished to the
Companies by such Purchaser through Xxxxxxx, Xxxxx & Co. expressly for use
therein; and will reimburse each Issuer for any legal or other expenses
reasonably incurred by such Issuer in connection with investigating or defending
any such action or claim as such expenses are incurred.
14
(c) Promptly after receipt by an indemnified party under
subsection (a) or (b) above of notice of the commencement of any action, such
indemnified party shall, if a claim in respect thereof is to be made against the
indemnifying party under such subsection, notify the indemnifying party in
writing of the commencement thereof; but the omission so to notify the
indemnifying party shall not relieve it from any liability which it may have to
any indemnified party otherwise than under such subsection. In case any such
action shall be brought against any indemnified party and it shall notify the
indemnifying party of the commencement thereof, the indemnifying party shall be
entitled to participate therein and, to the extent that it shall wish, jointly
with any other indemnifying party similarly notified, to assume the defense
thereof, with counsel satisfactory to such indemnified party (who shall not,
except with the consent of the indemnified party, be counsel to the indemnifying
party), and, after notice from the indemnifying party to such indemnified party
of its election so to assume the defense thereof, the indemnifying party shall
not be liable to such indemnified party under such subsection for any legal
expenses of other counsel or any other expenses, in each case subsequently
incurred by such indemnified party, in connection with the defense thereof other
than reasonable costs of investigation. It is understood that the indemnifying
party shall not, in respect of the legal expenses of any indemnified party in
connection with any proceeding or related proceedings in the same jurisdiction,
be liable for the reasonable fees and expenses of more than one separate firm
(in addition to any local counsel) for all such indemnified parties and that all
such reasonable fees and expenses shall be reimbursed as they are incurred upon
presentation of a statement or statements thereof in reasonable detail and
subject to an undertaking to return such amounts if it is determined that such
party is not entitled to indemnification under this Agreement in respect of such
matter. In the event that the indemnifying party does not elect to assume the
defense in such proceeding or proceedings, such firm shall be designated in
writing by Xxxxxxx Xxxxx & Co., in the case of parties indemnified pursuant to
Section 8(a), and by the Issuers, in the case of parties indemnified pursuant to
Section 8(b). The indemnifying party shall not be liable for any settlement of
any proceeding effected without its written consent, but if settled with such
consent or if there be a final judgment for the plaintiff, the indemnifying
party agrees to indemnify the indemnified party from and against any loss or
liability covered by Section 8(a) or 8(b), as applicable, by reason of such
settlement or judgment. No indemnifying party shall, without the written consent
of the indemnified party, effect the settlement or compromise of, or consent to
the entry of any judgment with respect to, any pending or threatened action or
claim in respect of which indemnification or contribution may be sought
hereunder (whether or not the indemnified party is an actual or potential party
to such action or claim) unless such settlement, compromise or judgment (i)
includes an unconditional release of the indemnified party from all liability
arising out of such action or claim and (ii) does not include a statement as to,
or an admission of, fault, culpability or a failure to act, by or on behalf of
any indemnified party.
(d) If the indemnification provided for in this Section 8 is
unavailable to or insufficient to hold harmless an indemnified party under
subsection (a) or (b) above in respect of any losses, claims, damages or
liabilities (or actions in respect thereof) referred to therein, then each
indemnifying party shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, claims, damages or liabilities (or
actions in respect thereof) in such proportion as is appropriate to reflect the
relative benefits received by the Issuers on the one hand and the Purchasers on
the other from the offering of the Securities. If, however, the allocation
provided by the immediately preceding sentence is not per-
15
mitted by applicable law or if the indemnified party failed to give the notice
required under subsection (c) above, then each indemnifying party shall
contribute to such amount paid or payable by such indemnified party in such
proportion as is appropriate to reflect not only such relative benefits but also
the relative fault of the Issuers on the one hand and the Purchasers on the
other in connection with the statements or omissions which resulted in such
losses, claims, damages or liabilities (or actions in respect thereof), as well
as any other relevant equitable considerations. The relative benefits received
by the Issuers on the one hand and the Purchasers on the other shall be deemed
to be in the same proportion as the total net proceeds from the offering (before
deducting expenses) received by the Issuers bear to the total underwriting
discounts and commissions received by the Purchasers, in each case as set forth
in the Offering Circular. The relative fault shall be determined by reference
to, among other things, whether the untrue or alleged untrue statement of a
material fact or the omission or alleged omission to state a material fact
relates to information supplied by the Issuers on the one hand or the Purchasers
on the other and the parties' relative intent, knowledge, access to information
and opportunity to correct or prevent such statement or omission. The Issuers
and the Purchasers agree that it would not be just and equitable if contribution
pursuant to this subsection (d) were determined by pro rata allocation (even if
the Purchasers were treated as one entity for such purpose) or by any other
method of allocation which does not take account of the equitable considerations
referred to above in this subsection (d). The amount paid or payable by an
indemnified party as a result of the losses, claims, damages or liabilities (or
actions in respect thereof) referred to above in this subsection (d) shall be
deemed to include 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 subsection (d), no Purchaser
shall be required to contribute any amount in excess of the amount by which the
total price at which the Securities purchased by it and distributed to investors
were offered to investors exceeds the amount of any damages which such Purchaser
has otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission. The Purchasers' obligations in this
subsection (d) to contribute are several in proportion to their respective
purchase obligations and not joint.
(e) The obligations of the Issuers under this Section 8 shall
be in addition to any liability which the Issuers may otherwise have and shall
extend, upon the same terms and conditions, to each person, if any, who controls
any Purchaser within the meaning of the Act; and the obligations of the
Purchasers under this Section 8 shall be in addition to any liability which the
respective Purchasers may otherwise have and shall extend, upon the same terms
and conditions, to each officer and director of the Issuers and to each person,
if any, who controls the Issuers within the meaning of the Act.
9. (a) If any Purchaser shall default in its obligation to
purchase the Securities which it has agreed to purchase hereunder, you may in
your discretion arrange for you or another party or other parties to purchase
such Securities on the terms contained herein. If within thirty-six hours after
such default by any Purchaser you do not arrange for the purchase of such
Securities, then the Companies shall be entitled to a further period of
thirty-six hours within which to procure another party or other parties
satisfactory to you to purchase such Securities on such terms. In the event
that, within the respective prescribed periods, you notify the Companies that
you have so arranged for the purchase of such Securities, or the Companies
notify you that they have so arranged for the purchase of such Se-
16
curities, you or the Companies shall have the right to postpone the
Time of Delivery for a period of not more than seven days, in order to
effect whatever changes may thereby be made necessary in the Offering
Circular, or in any other documents or arrangements, and the Companies
agree to prepare promptly any amendments to the Offering Circular which
in your opinion may thereby be made necessary. The term "Purchaser" as
used in this Agreement shall include any person substituted under this
Section with like effect as if such person had originally been a party
to this Agreement with respect to such Securities.
(b) If, after giving effect to any arrangements for the
purchase of the Securities of a defaulting Purchaser or Purchasers by
you and the Companies as provided in subsection (a) above, the
aggregate principal amount of such Securities which remains unpurchased
does not exceed one-eleventh of the aggregate principal amount of all
the Securities, then the Companies shall have the right to require each
non-defaulting Purchaser to purchase the principal amount of Securities
which such Purchaser agreed to purchase hereunder and, in addition, to
require each non-defaulting Purchaser to purchase its pro rata share
(based on the principal amount of Securities which such Purchaser
agreed to purchase hereunder) of the Securities of such defaulting
Purchaser or Purchasers for which such arrangements have not been made;
but nothing herein shall relieve a defaulting Purchaser from liability
for its default.
(c) If, after giving effect to any arrangements for the
purchase of the Securities of a defaulting Purchaser or Purchasers by
you and the Companies as provided in subsection (a) above, the
aggregate principal amount of Securities which remains unpurchased
exceeds one-eleventh of the aggregate principal amount of all the
Securities, or if the Companies shall not exercise the right described
in subsection (b) above to require non-defaulting Purchasers to
purchase Securities of a defaulting Purchaser or Purchasers, then this
Agreement shall thereupon terminate, without liability on the part of
any non-defaulting Purchaser or the Companies, except for the expenses
to be borne by the Companies and the Purchasers as provided in Section
6 hereof and the indemnity and contribution agreements in Section 8
hereof; but nothing herein shall relieve a defaulting Purchaser from
liability for its default.
10. The respective indemnities, agreements, representations,
warranties and other statements of the Issuers and the several
Purchasers, as set forth in this Agreement or made by or on behalf of
them, respectively, pursuant to this Agreement, shall remain in full
force and effect, regardless of any investigation (or any statement as
to the results thereof) made by or on behalf of any Purchaser or any
controlling person of any Purchaser, or any Issuer, or any officer or
director or controlling person of any Issuer, and shall survive
delivery of and payment for the Securities.
11. If for any reason, the Securities are not delivered by or
on behalf of the Issuers as provided herein, the Issuers, jointly and
severally, agree to reimburse the Purchasers for all out-of-pocket
expenses, including fees and disbursements of counsel, reasonably
incurred by the Purchasers in making preparations for the purchase,
sale and delivery of the Securities, but the Issuers shall then be
under no further liability to any Purchaser except as provided in
Sections 6 and 8 hereof.
17
12. All statements, requests, notices and agreements hereunder
shall be in writing, and if to the Purchasers shall be delivered or
sent by mail, telex or facsimile transmission to you, Xxxxxxx, Xxxxx &
Co., at 00 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention:
Registration Department, with a copy to Xxxxxxx X. Xxxxxxxx, Esq.,
Xxxxxx Xxxxxx & Xxxxxxx, 00 Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000; and
if to the Issuers shall be delivered or sent by mail, telex or
facsimile transmission to the address of the Companies set forth in the
Offering Circular, Attention: Secretary, with a copy to Xxxxxxx X.
Xxxxxxxx, Esq., Xxxx, Xxxxx, Xxxxxxx, Xxxxxxx & Xxxxxxxx, 0000 Xxxxxx
xx xxx Xxxxxxxx, Xxx Xxxx, Xxx Xxxx, 00000. Any such statements,
requests, notices or agreements shall take effect upon receipt thereof.
13. This Agreement shall be binding upon, and inure solely to
the benefit of, the Purchasers, the Issuers and, to the extent provided
in Sections 8 and 10 hereof, the officers and directors of the Issuers
and each person who controls any Issuer or any Purchaser, and their
respective heirs, executors, administrators, successors and assigns,
and no other person shall acquire or have any right under or by virtue
of this Agreement. No purchaser of any of the Securities from any
Purchaser shall be deemed a successor or assign by reason merely of
such purchase.
14. Time shall be of the essence of this Agreement.
15. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York.
16. This Agreement may be executed by any one or more of the
parties hereto in any number of counterparts, each of which shall be
deemed to be an original, but all such respective counterparts shall
together constitute one and the same instrument.
18
If the foregoing is in accordance with your understanding,
please sign and return to us eight counterparts hereof, and upon the acceptance
hereof by you this letter and such acceptance hereof shall constitute a binding
agreement between each of the Purchasers and each of the Issuers.
Very truly yours,
PCA LLC
PCA Finance Corp.
By: /s/ Xxxxx X. Xxxx
--------------------------------------------
Name: Xxxxx X. Xxxx
Title: President and CEO
Guarantors:
PCA International, Inc.
American Studios, Inc.
PCA National LLC
PCA Photo Corporation of Canada, Inc.
Photo Corporation of America
By: /s/ Xxxxx X. Xxxx
-----------------------------------------------
Name: Xxxxx X. Xxxx
Title: President and CEO
PCA National of Texas LP
By: PCA National LLC,
its general partner
By: /s/ Xxxxx X. Xxxx
-------------------------------------------
Name: Xxxxx X. Xxxx
Title: President and CEO
S-1
Accepted as of the date hereof:
Xxxxxxx, Xxxxx & Co.
Banc of America Securities LLC
By: XXXXXXX, XXXXX & Co.
/s/ Xxxxxxx, Xxxxx & Co.
------------------------------------
(Xxxxxxx, Xxxxx & Co.)
S-2
SCHEDULE I
Principal
Amount of
Securities
to be
Purchaser Purchased
--------- ---------
Xxxxxxx, Xxxxx & Co. $107,250,000
Banc of America Securities LLC $57,750,000
-------------------
Total $165,000,000
====================
