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Exhibit 1.2
STYLING TECHNOLOGY CORPORATION,
AS ISSUER OF THE NOTES
AND
XXXX LABORATORIES, INC.
J.D.S. MANUFACTURING CO., INC.
U.K. ABBA PRODUCTS, INC.
AS GUARANTORS
$100,000,000
10 7/8% SENIOR SUBORDINATED NOTES DUE 2008
PURCHASE AGREEMENT
DATED JUNE 18, 1998
NATIONSBANC XXXXXXXXXX SECURITIES LLC
FRIEDMAN, BILLINGS, XXXXXX & CO., INC.
IMPERIAL CAPITAL, LLC
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TABLE OF CONTENTS
PAGE(S)
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SECTION 1. REPRESENTATIONS AND WARRANTIES................................................................2
(a) No Registration Required.................................................................2
(b) No Integration of Offerings or General Solicitation......................................3
(c) Eligibility for Resale under Rule 144A...................................................3
(d) The Offering Memorandum..................................................................3
(e) Purchase Agreement.......................................................................3
(f) Registration Rights Agreement and DTC Agreement..........................................4
(g) Authorization of the Securities and the Exchange Securities..............................4
(h) Authorization of the Indenture...........................................................4
(i) Description of the Securities and the Indenture..........................................5
(j) No Material Adverse Change...............................................................5
(k) Independent Accountants..................................................................5
(l) Preparation of the Financial Statements..................................................5
(m) Incorporation and Good Standing of the Company and its Subsidiaries......................6
(n) Capitalization and Other Capital Stock Matters...........................................6
(o) Stock Exchange Listing...................................................................6
(p) Non-Contravention of Existing Instruments; No Further Authorizations or
Approvals Required ......................................................................7
(q) No Material Actions or Proceedings.......................................................7
(r) Intellectual Property Rights.............................................................8
(s) All Necessary Permits, etc...............................................................8
(t) Title to Properties......................................................................8
(u) Tax Law Compliance.......................................................................8
(v) Company Not an "Investment Company"......................................................8
(w) Insurance................................................................................9
(x) No Price Stabilization or Manipulation...................................................9
(y) No Default in Senior Indebtedness........................................................9
(z) Regulation S.............................................................................9
(aa) Reporting Issuers.......................................................................9
(bb) Company's Accounting System.............................................................9
(cc) Compliance with Environmental Laws......................................................9
(dd) Periodic Review of Costs of Environmental Compliance...................................10
(ee) ERISA Compliance.......................................................................10
(ff) Solvency...............................................................................11
(gg) Related Party Transactions.............................................................11
(hh) New Credit Facility....................................................................11
SECTION 2. PURCHASE, SALE AND DELIVERY OF THE SECURITIES................................................12
(a) The Securities..........................................................................12
(b) The Closing Date........................................................................12
(c) Delivery of the Securities..............................................................12
(d) Delivery of Offering Memorandum to the Initial Purchasers...............................12
(e) Initial Purchasers as Qualified Institutional Buyers....................................13
SECTION 3. ADDITIONAL COVENANTS.........................................................................13
(a) Initial Purchasers' Review of Proposed Amendments and Supplements.......................13
(b) Amendments and Supplements to the Offering Memorandum and Other Securities Act Matters..13
(c) Copies of the Offering Memorandum.......................................................14
(d) Blue Sky Compliance.....................................................................14
(e) Use of Proceeds.........................................................................14
(f) Ratings of the Securities...............................................................14
(g) The Depositary..........................................................................14
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TABLE OF CONTENTS
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(h) Additional Issuer Information...........................................................14
(i) Agreement Not To Offer or Sell Additional Securities....................................15
(j) Future Reports to the Initial Purchasers................................................15
(k) Registration Rights Agreement...........................................................15
(l) No Integration..........................................................................15
(m) Restriction on Repurchases..............................................................15
(n) Legended Securities.....................................................................16
(o) PORTAL..................................................................................16
(p) Form D..................................................................................16
(q) Due Diligence...........................................................................16
SECTION 4. PAYMENT OF EXPENSES..........................................................................16
SECTION 5. CONDITIONS OF THE OBLIGATIONS OF THE INITIAL PURCHASERS......................................17
(a) Accountants' Comfort Letter.............................................................17
(b) No Material Adverse Change or Ratings Agency Change.....................................17
(c) Opinions of Counsel for the Company.....................................................17
(d) Opinion of Counsel for the Initial Purchasers...........................................18
(e) Officers' Certificate...................................................................18
(f) Bring-down Comfort Letter...............................................................18
(g) PORTAL Listing..........................................................................19
(h) Registration Rights Agreement...........................................................19
(i) Additional Documents....................................................................19
SECTION 6. REIMBURSEMENT OF INITIAL PURCHASERS' EXPENSES................................................20
SECTION 7. OFFER, SALE AND RESALE PROCEDURES............................................................20
SECTION 8. INDEMNIFICATION..............................................................................22
(a) Indemnification of the Initial Purchasers...............................................22
(b) Indemnification of the Company and the Guarantors, its Directors and Officers...........22
(c) Notifications and Other Indemnification Procedures......................................23
(d) Settlements.............................................................................24
SECTION 9. CONTRIBUTION.................................................................................24
SECTION 10. TERMINATION OF THIS AGREEMENT...............................................................25
SECTION 11. REPRESENTATIONS AND INDEMNITIES TO SURVIVE DELIVERY.........................................26
SECTION 12. NOTICES.....................................................................................26
SECTION 13. SUCCESSORS..................................................................................27
SECTION 14. PARTIAL UNENFORCEABILITY....................................................................27
SECTION 15. GOVERNING LAW; CONSENT TO JURISDICTION......................................................28
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TABLE OF CONTENTS
CONTINUED
PAGE(S)
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(A) GOVERNING LAW PROVISIONS..........................................................28
SECTION 16. DEFAULT OF ONE OR MORE OF THE SEVERAL INITIAL PURCHASERS....................................28
SECTION 17. GENERAL PROVISIONS..........................................................................29
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PURCHASE AGREEMENT
June 18, 1998
NATIONSBANC XXXXXXXXXX SECURITIES LLC
FRIEDMAN, BILLINGS, XXXXXX & CO., INC.
IMPERIAL CAPITAL, LLC
As Initial Purchasers
c/o NATIONSBANC XXXXXXXXXX SECURITIES LLC
000 Xxxxxxxxxx Xxxxxx
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Ladies and Gentlemen:
Introduction. Styling Technology Corporation, a Delaware
corporation (the "Company"), proposes to issue and sell to the several Initial
Purchasers named on Schedule A (the "Initial Purchasers"), acting severally and
not jointly, the respective amounts set forth in such Schedule A of $100,000,000
aggregate principal amount of the Company's 10O% Senior Subordinated Notes due
2008 (the "Notes"). NationsBanc Xxxxxxxxxx Securities LLC, Friedman, Billings,
Xxxxxx & Co., Inc. and Imperial Capital, LLC have agreed to act as the several
Initial Purchasers in connection with the offering and sale of the Notes.
The Notes will be issued pursuant to an indenture dated as of
June 23, 1998 (the "Indenture") between the Company, the Guarantors (as defined
below) and State Street Bank and Trust Company of California, N.A., as trustee
(the "Trustee"). Notes issued in book-entry form will be issued in the name of
Cede & Co., as nominee of The Depository Trust Company (the "Depositary"),
pursuant to a DTC Agreement, to be dated as of the Closing Date (as defined in
Section 2) (the "DTC Agreement"), among the Company, the Trustee and the
Depositary.
The holders of the Notes will be entitled to the benefits of a
registration rights agreement to be dated as of the Closing Date (the
"Registration Rights Agreement") among the Company, the Guarantors and the
Initial Purchasers, pursuant to which the Company and the Guarantors will agree
to file, within 45 days of the Closing Date, a registration statement with the
Commission registering the Exchange Securities (as defined below) under the
Securities Act.
The payment of principal of, premium and Additional Interest
(as defined in the Indenture), if any, and interest on the Notes and the
Exchange Notes (as defined in the Registration Rights Agreement) will be
unconditionally guaranteed by (i) each of the Company's direct or indirect
domestic Restricted Subsidiaries (as defined in the Indenture) as of the date of
the Indenture and (ii) any other direct or indirect domestic Restricted
Subsidiary that executes an additional guarantee in accordance with the terms of
the Indenture, and their respective successors and assigns (collectively, the
"Guarantors"), pursuant to their guarantees
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(the "Guarantees"). The Notes and the Guarantees attached thereto are
collectively referred to herein as the "Securities"; and the Exchange Notes and
the Guarantees attached thereto are collectively referred to herein as the
"Exchange Securities."
The Company and the Guarantors understand that the Initial
Purchasers propose to make an offering of the Securities on the terms and in the
manner set forth herein and in the Offering Memorandum (as defined below) and
agree that the Initial Purchasers may resell, subject to the conditions set
forth herein, all or a portion of the Securities to purchasers (the "Subsequent
Purchasers") at any time after the date of this Agreement. The Securities are to
be offered and sold to or through the Initial Purchasers without being
registered with the Securities and Exchange Commission (the "Commission") under
the Securities Act of 1933 (the "Securities Act," which term, as used herein,
includes the rules and regulations of the Commission promulgated thereunder), in
reliance upon exemptions therefrom. The terms of the Securities and the
Indenture will require that investors that acquire Securities expressly agree
that Securities may only be resold or otherwise transferred, after the date
hereof, if such Securities are registered for sale under the Securities Act or
if an exemption from the registration requirements of the Securities Act is
available (including the exemptions afforded by Rule 144A ("Rule 144A") or
Regulation S ("Regulation S") thereunder).
The Company has prepared and delivered to each Initial
Purchaser copies of an Offering Memorandum "subject to completion" dated May 28,
1998 (the "Preliminary Offering Memorandum") and has prepared and will deliver
to each Initial Purchaser, on the date hereof or the next succeeding day, copies
of the Offering Memorandum dated June 18, 1998 describing the terms of the
Securities, each for use by such Initial Purchaser in connection with its
solicitation of offers to purchase the Securities. As used herein, the term
"Offering Memorandum" shall mean, with respect to any date or time referred to
in this Agreement, the Company's Offering Memorandum dated June 18, 1998
including amendments or supplements thereto and any exhibits thereto, in the
most recent form that has been prepared and delivered by the Company to the
Initial Purchasers in connection with their solicitation of offers to purchase
Securities. Further, any reference to the Preliminary Offering Memorandum or the
Offering Memorandum shall be deemed to refer to and include any Additional
Issuer Information (as defined in Section 3(h)) furnished by the Company prior
to the completion of the distribution of the Securities.
The Company and the Guarantors hereby confirm their agreements
with the Initial Purchasers as follows:
Section 1. Representations and Warranties. The Company and the
Guarantors hereby represent, warrant and covenant, jointly and severally, to
each Initial Purchaser as follows:
(a) No Registration Required. Subject to compliance by the
Initial Purchasers with the representations and warranties set forth in Section
2(e) hereof and with the procedures set forth in Section 7 hereof, it is not
necessary in connection with the offer, sale and delivery of the Securities to
the Initial Purchasers and to each Subsequent Purchaser in the manner
contemplated by this Agreement and the Offering Memorandum to register the
Securities under the Securities Act or, until such time as the Exchange
Securities are issued, pursuant to an effective registration statement, to
qualify the Indenture under the Trust
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Indenture Act of 0000 (xxx "Xxxxx Xxxxxxxxx Xxx," which term, as used herein,
includes the rules and regulations of the Commission promulgated thereunder).
(b) No Integration of Offerings or General Solicitation. The
Company has not, directly or indirectly, solicited any offer to buy or offered
to sell, and will not, directly or indirectly, solicit any offer to buy or offer
to sell, in the United States or to any United States citizen or resident, any
security which is or would be integrated with the sale of the Securities in a
manner that would require the Securities to be registered under the Securities
Act. None of the Company, its affiliates (as such term is defined in Rule 501(b)
under the Securities Act (each, an "Affiliate")), or any person acting on its or
any of their behalf (other than the Initial Purchasers, as to whom the Company
makes no representation or warranty) has engaged or will engage, in connection
with the offering of the Securities, in any form of general solicitation or
general advertising within the meaning of Rule 502(c) under the Securities Act.
With respect to those Securities sold in reliance upon Regulation S, (i) none of
the Company, its Affiliates or any person acting on its or their behalf (other
than the Initial Purchasers, as to whom the Company makes no representation or
warranty) has engaged or will engage in any directed selling efforts within the
meaning of Regulation S and (ii) each of the Company and its Affiliates and any
person acting on its or their behalf (other than the Initial Purchasers, as to
whom the Company makes no representation or warranty) has complied and will
comply with the offering restrictions set forth in Regulation S.
(c) Eligibility for Resale under Rule 144A. The Securities
are eligible for resale pursuant to Rule 144A and will not be, at the Closing
Date, of the same class as securities listed on a national securities exchange
registered under Section 6 of the Exchange Act or quoted in a U.S. automated
interdealer quotation system.
(d) The Offering Memorandum. The Offering Memorandum does not,
and at the Closing Date will not, include an untrue statement of a material fact
or omit to state a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading; provided that this representation, warranty and agreement shall not
apply to statements in or omissions from the Offering Memorandum made in
reliance upon and in conformity with information furnished to the Company in
writing by any Initial Purchaser through NationsBanc Xxxxxxxxxx Securities LLC
expressly for use in the Offering Memorandum. Each of the Preliminary Offering
Memorandum and the Offering Memorandum, as of its date, contains all the
information specified in, and meeting the requirements of, Rule 144A(d)(4). The
Company has not distributed and will not distribute, prior to the later of the
Closing Date and the completion of the Initial Purchasers' distribution of the
Securities, any offering material in connection with the offering and sale of
the Securities other than the Preliminary Offering Memorandum or the Offering
Memorandum.
(e) Purchase Agreement. This Agreement has been duly
authorized, executed and delivered by, and is a valid and binding agreement of,
the Company and the Guarantors, enforceable in accordance with its terms, except
as rights to indemnification hereunder may be limited by applicable law and
except as the enforcement hereof may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws relating to or affecting the
rights and remedies of creditors or by general equitable principles.
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(f) Registration Rights Agreement and DTC Agreement. At the
Closing Date, each of the Registration Rights Agreement and the DTC Agreement
will be duly authorized, executed and delivered by, and will be a valid and
binding agreement of, the Company and, as applicable, each of the Guarantors,
enforceable in accordance with its terms, except as the enforcement thereof may
be limited by bankruptcy, insolvency, reorganization, moratorium or other
similar laws relating to or affecting the rights and remedies of creditors or by
general equitable principles.
(g) Authorization of the Securities and the Exchange
Securities.
(i) The Notes to be purchased by the Initial
Purchasers from the Company are in the form contemplated by the Indenture, have
been duly authorized for issuance and sale pursuant to this Agreement and the
Indenture and, at the Closing Date, will have been duly executed by the Company
and, when authenticated in the manner provided for in the Indenture and
delivered against payment of the purchase price therefor, will constitute valid
and binding agreements of the Company, enforceable in accordance with their
terms, except as the enforcement thereof may be limited by bankruptcy,
insolvency, reorganization, moratorium or other similar laws relating to or
affecting the rights and remedies of creditors or by general equitable
principles and will be entitled to the benefits of the Indenture.
(ii) The Exchange Notes have been duly and validly
authorized for issuance by the Company, and when issued and authenticated in
accordance with the terms of the Indenture, the Registration Rights Agreement
and the Exchange Offer, will constitute valid and binding obligations of the
Company, enforceable against the Company in accordance with their terms, except
as the enforcement thereof may be limited by bankruptcy, insolvency,
reorganization, moratorium, or similar laws relating to or affecting enforcement
of the rights and remedies of creditors or by general principles of equity and
will be entitled to the benefits of the Indenture.
(iii) The Guarantees of the Notes and the Exchange
Notes are in the respective forms contemplated by the Indenture, have been duly
authorized for issuance and sale pursuant to this Agreement and the Indenture
and, at the Closing Date, will have been duly executed by each of the Guarantors
and, when authenticated in the manner provided for in the Indenture and
delivered against payment of the purchase price for the Notes, will constitute
valid and binding agreements of the Guarantors, enforceable in accordance with
their terms, except as the enforcement thereof may be limited by bankruptcy,
insolvency, reorganization, moratorium or other similar laws relating to or
affecting the rights and remedies of creditors or by general equitable
principles and will be entitled to the benefits of the Indenture.
(h) Authorization of the Indenture. The Indenture has been
duly authorized by the Company and the Guarantors and, at the Closing Date, will
have been duly executed and delivered by the Company and the Guarantors and will
constitute a valid and binding agreement of the Company and the Guarantors,
enforceable against the Company and the Guarantors in accordance with its terms,
except as the enforcement thereof may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws relating to or affecting the
rights and remedies of creditors or by general equitable principles.
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(i) Description of the Securities and the Indenture. The
Securities and the Indenture will conform in all material respects to the
respective statements relating thereto contained in the Offering Memorandum and
will be in substantially the respective forms previously delivered to the
Initial Purchasers.
(j) No Material Adverse Change. Except as otherwise disclosed
in the Offering Memorandum, subsequent to the respective dates as of which
information is given in the Offering Memorandum: (i) there has been no material
adverse change, or any development that could reasonably be expected to result
in a material adverse change in the condition, financial or otherwise, or in the
earnings, business, operations or prospects, whether or not arising from
transactions in the ordinary course of business, of the Company and its
subsidiaries, considered as one entity (any such change is called a "Material
Adverse Change"); (ii) the Company and its subsidiaries, considered as one
entity, have not incurred any material liability or obligation, indirect, direct
or contingent, not in the ordinary course of business nor entered into any
material transaction or agreement not in the ordinary course of business; and
(iii) there has been no dividend or distribution of any kind declared, paid or
made by the Company or, except for dividends paid to the Company or other
subsidiaries, any of its subsidiaries on any class of capital stock or
repurchase or redemption by the Company or any of its subsidiaries of any class
of capital stock.
(k) Independent Accountants. Xxxxxx Xxxxxxxx LLP, which has
expressed its opinion with respect to the financial statements (which term as
used in this Agreement includes the related notes thereto) filed with the
Commission included in the Offering Memorandum are independent public or
certified public accountants within the meaning of Regulation S-X under the
Securities Act and the Exchange Act.
(l) Preparation of the Financial Statements. The financial
statements, together with the related schedules and notes, included in the
Offering Memorandum present fairly the consolidated financial position of the
Company and its subsidiaries as of and at the dates indicated and the results of
their operations and cash flows for the periods specified. Such financial
statements have been prepared in conformity with generally accepted accounting
principles as applied in the United States on a consistent basis throughout the
periods involved, except as may be expressly stated in the related notes
thereto. The financial data set forth in the Offering Memorandum under the
captions "Summary -- Summary Consolidated Financial Data," "Consolidated
Financial Data" and "Capitalization" fairly present the information set forth
therein on a basis consistent with that of the audited financial statements
contained in the Offering Memorandum. The pro forma consolidated financial
statements of the Company and its subsidiaries and the related notes thereto
included under the caption "Summary -- Summary Pro Forma Consolidated Financial
Data," "Unaudited Pro Forma Consolidated Financial Data" and elsewhere in the
Offering Memorandum present fairly the information contained therein, have been
prepared in accordance with the Commission's rules and guidelines with respect
to pro forma financial statements and have been properly presented on the bases
described therein, and the assumptions used in the preparation thereof are
reasonable and the adjustments used therein are appropriate to give effect to
the transactions and circumstances referred to therein. The Company's ratios of
earnings to fixed charges set forth in the Offering Memorandum under the
captions "Summary -- Summary Unaudited Pro Forma Consolidated Financial Data,"
"Selected Consolidated Financial Data" and
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"Unaudited Pro Forma Consolidated Financial Data" have been calculated in
compliance with Item 503(d) of Regulation S-K under the Securities Act.
(m) Incorporation and Good Standing of the Company and its
Subsidiaries. Each of the Company and its subsidiaries has been duly
incorporated and is validly existing as a corporation in good standing under the
laws of the jurisdiction of its incorporation and has corporate power and
authority to own, lease and operate its properties and to conduct its business
as described in the Offering Memorandum and, company and, as applicable, the
Guarantors, to enter into and perform its obligations under each of this
Agreement, the Registration Rights Agreement, the DTC Agreement, the Securities,
the Exchange Securities and the Indenture. Each of the Company and each
subsidiary is duly qualified as a foreign corporation to transact business and
is in good standing in the State of Arizona (in the case of the Company) and
each other jurisdiction in which such qualification is required, whether by
reason of the ownership or leasing of property or the conduct of business,
except for such jurisdictions (other than, in the case of the Company, the State
of Arizona) where the failure to so qualify or to be in good standing would not,
individually or in the aggregate, result in a Material Adverse Change. All of
the issued and outstanding capital stock of each subsidiary has been duly
authorized and validly issued, is fully paid and nonassessable and is owned by
the Company, directly or through subsidiaries, free and clear of any security
interest, mortgage, pledge, lien, encumbrance or claim. The Company does not own
or control, directly or indirectly, any corporation, association or other entity
other than the subsidiaries listed in Exhibit 22 to the Company's Annual Report
on Form 10-K for the fiscal year ended December 31, 1997.
(n) Capitalization and Other Capital Stock Matters. At March
31, 1998, on a consolidated basis, after giving pro forma effect to the issuance
and sale of the Securities pursuant hereto, the Company would have had an
authorized and outstanding capitalization as set forth in the Offering
Memorandum under the caption "Capitalization" (other than for subsequent
issuances of capital stock, if any, pursuant to employee benefit plans described
in the Offering Memorandum or upon exercise of outstanding options described in
the Offering Memorandum). All of the outstanding shares of Common Stock have
been duly authorized and validly issued, are fully paid and nonassessable and
have been issued in compliance with federal and state securities laws. None of
the outstanding shares of Common Stock were issued in violation of any
preemptive rights, rights of first refusal or other similar rights to subscribe
for or purchase securities of the Company. There are no authorized or
outstanding options, warrants, preemptive rights, rights of first refusal or
other rights to purchase, or equity or debt securities convertible into or
exchangeable or exercisable for, any capital stock of the Company or any of its
subsidiaries other than those accurately described in the Offering Memorandum
(o) Stock Exchange Listing. The Common Stock is registered
pursuant to Section 12(g) of the Exchange Act and is listed on the Nasdaq
National Market, and the Company has taken no action designed to, or likely to
have the effect of, terminating the registration of the Common Stock under the
Exchange Act or delisting the Common Stock from the Nasdaq National Market, nor
has the Company received any notification that the Commission or the National
Association of Securities Dealers, Inc. (the "NASD") is contemplating
terminating such registration or listing.
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(p) Non-Contravention of Existing Instruments; No Further
Authorizations or Approvals Required. Neither the Company nor any of its
subsidiaries is in violation of its charter or by-laws or is in default (or,
with the giving of notice or lapse of time, would be in default) ("Default")
under any indenture, mortgage, loan or credit agreement, note, contract,
franchise, lease or other instrument to which the Company or any of its
subsidiaries is a party or by which it or any of them may be bound (including,
without limitation, the Credit Agreement, dated December 10, 1997, by and among
the Company and Credit Agricole Indosuez, New York Branch, as Agent for the
other Lenders party thereto) (the "Existing Credit Facility"), or to which any
of the property or assets of the Company or any of its subsidiaries is subject
(each, an "Existing Instrument"), except for such Defaults as would not,
individually or in the aggregate, result in a Material Adverse Change. The
Company's and, as applicable, each Guarantor's execution, delivery and
performance of this Agreement, the Registration Rights Agreement, the DTC
Agreement and the Indenture, and the issuance and delivery of the Securities or
the Exchange Securities, and consummation of the transactions contemplated
hereby and thereby and by the Offering Memorandum (i) have been duly authorized
by all necessary corporate action and will not result in any violation of the
provisions of the charter or by-laws of the Company or any subsidiary, (ii) will
not conflict with or constitute a breach of, or Default or a Debt Repayment
Triggering Event (as defined below) under, or result in the creation or
imposition of any lien, charge or encumbrance upon any property or assets of the
Company or any of its subsidiaries pursuant to, or require the consent of any
other party to, any Existing Instrument, except for such conflicts, breaches,
Defaults, liens, charges or encumbrances as would not, individually or in the
aggregate, result in a Material Adverse Change and (iii) will not result in any
violation of any law, administrative regulation or administrative or court
decree applicable to the Company or any subsidiary. No consent, approval,
authorization or other order of, or registration or filing with, any court or
other governmental or regulatory authority or agency, is required for the
Company's or, as applicable, any Guarantor's execution, delivery and performance
of this Agreement, the Registration Rights Agreement, the DTC Agreement or the
Indenture, or the issuance and delivery of the Securities or the Exchange
Securities, or consummation of the transactions contemplated hereby and thereby
and by the Offering Memorandum, except such as have been obtained or made by the
Company and are in full force and effect under the Securities Act, applicable
state securities or blue sky laws. As used herein, a "Debt Repayment Triggering
Event" means any event or condition which gives, or with the giving of notice or
lapse of time would give, the holder of any note, debenture or other evidence of
indebtedness (or any person acting on such holder's behalf) the right to require
the repurchase, redemption or repayment of all or a portion of such indebtedness
by the Company or any of its subsidiaries.
(q) No Material Actions or Proceedings. There are no legal or
governmental actions, suits or proceedings pending or, to the best of the
Company's or any Guarantor's knowledge, threatened (i) against or affecting the
Company or any of its subsidiaries, (ii) which has as the subject thereof any
officer or director of, or property owned or leased by, the Company or any of
its subsidiaries or (iii) relating to environmental or discrimination matters,
where in any such case (A) there is a reasonable possibility that such action,
suit or proceeding might be determined adversely to the Company or such
subsidiary and (B) any such action, suit or proceeding, if so determined
adversely, would reasonably be expected to result in a Material Adverse Change
or adversely affect the consummation of the transactions contemplated by this
Agreement. No material labor dispute with the employees of the Company or any of
its subsidiaries or with the employees of any principal supplier of the
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Company, exists or, to the best of the Company's or any Guarantor's knowledge,
is threatened or imminent.
(r) Intellectual Property Rights. The Company and its
subsidiaries own or possess sufficient trademarks, trade names, patent rights,
copyrights, licenses, approvals, trade secrets and other similar rights
(collectively, "Intellectual Property Rights") reasonably necessary to conduct
their businesses as now conducted; and the expected expiration of any of such
Intellectual Property Rights would not result in a Material Adverse Change.
Neither the Company nor any of its subsidiaries has received any notice of
infringement or conflict with asserted Intellectual Property Rights of others,
which infringement or conflict, if the subject of an unfavorable decision, would
result in a Material Adverse Change.
(s) All Necessary Permits, etc. The Company and each
subsidiary possess such valid and current certificates, authorizations or
permits issued by the appropriate state, federal or foreign regulatory agencies
or bodies necessary to conduct their respective businesses, and neither the
Company nor any subsidiary has received any notice of proceedings relating to
the revocation or modification of, or non-compliance with, any such certificate,
authorization or permit which, singly or in the aggregate, if the subject of an
unfavorable decision, ruling or finding, could result in a Material Adverse
Change.
(t) Title to Properties. The Company and each of its
subsidiaries has good and marketable title to all the properties and assets
reflected as owned in the financial statements referred to in Section 1(k) above
(or elsewhere in the Offering Memorandum), in each case free and clear of any
security interests, mortgages, liens, encumbrances, equities, claims and other
defects, except such as do not materially and adversely affect the value of such
property and do not materially interfere with the use made or proposed to be
made of such property by the Company or such subsidiary. The real property,
improvements, equipment and personal property held under lease by the Company or
any subsidiary are held under valid and enforceable leases, with such exceptions
as are not material and do not materially interfere with the use made or
proposed to be made of such real property, improvements, equipment or personal
property by the Company or such subsidiary.
(u) Tax Law Compliance. The Company and its subsidiaries have
filed all necessary federal, state and foreign income and franchise tax returns
and have paid all taxes required to be paid by any of them and, if due and
payable, any related or similar assessment, fine or penalty levied against any
of them. The Company has made adequate charges, accruals and reserves in the
applicable financial statements referred to in Section 1(k) above in respect of
all federal, state and foreign income and franchise taxes for all periods as to
which the tax liability of the Company or any of its subsidiaries has not been
finally determined.
(v) Company and Guarantors Not "Investment Companies." The
Company and the Guarantors have been advised of the rules and requirements under
the Investment Company Act of 1940, as amended (the "Investment Company Act").
Neither the Company nor any Guarantor is, nor after receipt of payment for the
Securities will be, an "investment company" within the meaning of Investment
Company Act and the Company and each Guarantor will conduct its business in a
manner so that it will not become subject to the Investment Company Act.
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(w) Insurance. Each of the Company and its subsidiaries are
insured by recognized, financially sound institutions with policies in such
amounts and with such deductibles and covering such risks as are generally
deemed adequate and customary for their businesses including, but not limited
to, policies covering real and personal property owned or leased by the Company
and its subsidiaries against theft, damage, destruction, acts of vandalism and
earthquakes. The Company has no reason to believe that it or any subsidiary will
not be able (i) to renew its existing insurance coverage as and when such
policies expire or (ii) to obtain comparable coverage from similar institutions
as may be necessary or appropriate to conduct its business as now conducted and
at a cost that would not result in a Material Adverse Change. Neither of the
Company nor any subsidiary has been denied any insurance coverage which it has
sought or for which it has applied.
(x) No Price Stabilization or Manipulation. Neither the
Company nor any Guarantor has taken or will take, directly or indirectly, any
action designed to or that might be reasonably expected to cause or result in
stabilization or manipulation of the price of any security of the Company or any
Guarantor to facilitate the sale or resale of the Securities.
(y) No Default in Senior Indebtedness. No event of default
exists under any contract, indenture, mortgage, loan agreement, note, lease or
other agreement or instrument constituting Senior Debt (as defined in the
Indenture).
(z) Regulation S. The Company and its affiliates, the
Guarantors and their respective affiliates, and all persons acting on their
behalf (other than the Initial Purchasers, as to whom the Company and the
Guarantors make no representation) have complied with and will comply with the
offering restrictions and requirements of Regulation S in connection with the
offering of the Securities outside the United States and, in connection
therewith, the Offering Memorandum will contain the disclosure required by Rule
902(h).
(aa) Reporting Issuers. Each of the Company and the
Guarantors is a "reporting issuer," as defined in Rule 902 under the Securities
Act.
(bb) Company's Accounting System. The Company maintains a
system of accounting controls sufficient to provide reasonable assurances that
(i) transactions are executed in accordance with management's general or
specific authorization; (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with generally accepted
accounting principles as applied in the United States and to maintain
accountability for assets; (iii) access to assets is permitted only in
accordance with management's general or specific authorization; and (iv) the
recorded accountability for assets is compared with existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences.
(cc) Compliance with Environmental Laws. Except as would not,
individually or in the aggregate, result in a Material Adverse Change (i)
neither the Company nor any of its subsidiaries is in violation of any federal,
state, local or foreign law or regulation relating to pollution or protection of
human health or the environment (including, without limitation, ambient air,
surface water, groundwater, land surface or subsurface strata) or wildlife,
including without limitation, laws and regulations relating to emissions,
discharges, releases or threatened releases of chemicals, pollutants,
contaminants, wastes, toxic substances,
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hazardous substances, petroleum and petroleum products (collectively, "Materials
of Environmental Concern"), or otherwise relating to the manufacture,
processing, distribution, use, treatment, storage, disposal, transport or
handling of Materials of Environment Concern (collectively, "Environmental
Laws"), which violation includes, but is not limited to, noncompliance with any
permits or other governmental authorizations required for the operation of the
business of the Company or its subsidiaries under applicable Environmental Laws,
or noncompliance with the terms and conditions thereof, nor has the Company or
any of its subsidiaries received any written communication, whether from a
governmental authority, citizens group, employee or otherwise, that alleges that
the Company or any of its subsidiaries is in violation of any Environmental Law;
(ii) there is no claim, action or cause of action filed with a court or
governmental authority, no investigation with respect to which the Company has
received written notice, and no written notice by any person or entity alleging
potential liability for investigatory costs, cleanup costs, governmental
responses costs, natural resources damages, property damages, personal injuries,
attorneys' fees or penalties arising out of, based on or resulting from the
presence, or release into the environment, of any Material of Environmental
Concern at any location owned, leased or operated by the Company or any of its
subsidiaries, now or in the past (collectively, "Environmental Claims"), pending
or, to the best of the Company's knowledge, threatened against the Company or
any of its subsidiaries or any person or entity whose liability for any
Environmental Claim the Company or any of its subsidiaries has retained or
assumed either contractually or by operation of law; and (iii) to the best of
the Company's knowledge, there are no past or present actions, activities,
circumstances, conditions, events or incidents, including, without limitation,
the release, emission, discharge, presence or disposal of any Material of
Environmental Concern, that reasonably could result in a violation of any
Environmental Law or form the basis of a potential Environmental Claim against
the Company or any of its subsidiaries or against any person or entity whose
liability for any Environmental Claim the Company or any of its subsidiaries has
retained or assumed either contractually or by operation of law.
(dd) Periodic Review of Costs of Environmental Compliance. In
the ordinary course of its business, the Company conducts a periodic review of
the effect of Environmental Laws on the business, operations and properties of
the Company and its subsidiaries, in the course of which it identifies and
evaluates associated costs and liabilities (including, without limitation, any
capital or operating expenditures required for clean-up, closure of properties
or compliance with Environmental Laws or any permit, license or approval, any
related constraints on operating activities and any potential liabilities to
third parties). On the basis of such review and the amount of its established
reserves, the Company has reasonably concluded that such associated costs and
liabilities would not, individually or in the aggregate, result in a Material
Adverse Change.
(ee) ERISA Compliance. The Company and its subsidiaries and
any "employee benefit plan" (as defined under the Employee Retirement Income
Security Act of 1974, as amended, and the regulations and published
interpretations thereunder (collectively, "ERISA")) established or maintained by
the Company, its subsidiaries or their "ERISA Affiliates" (as defined below) are
in compliance in all material respects with ERISA. "ERISA Affiliate" means, with
respect to the Company or a subsidiary, any member of any group of organizations
described in Sections 414(b), (c), (m) or (o) of the Internal Revenue Code of
1986, as amended, and the regulations and published interpretations thereunder
(the "Code") of which the Company or such subsidiary is a member. No "reportable
event" (as defined
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under ERISA) has occurred or is reasonably expected to occur with respect to any
"employee benefit plan" established or maintained by the Company, its
subsidiaries or any of their ERISA Affiliates. No "employee benefit plan"
established or maintained by the Company, its subsidiaries or any of their ERISA
Affiliates, if such "employee benefit plan" were terminated, would have any
"amount of unfunded benefit liabilities" (as defined under ERISA). Neither the
Company, its subsidiaries nor any of their ERISA Affiliates has incurred or
reasonably expects to incur any liability under (i) Title IV of ERISA with
respect to termination of, or withdrawal from, any "employee benefit plan" or
(ii) Sections 412, 4971, 4975 or 4980B of the Code. Each "employee benefit plan"
established or maintained by the Company, its subsidiaries or any of their ERISA
Affiliates that is intended to be qualified under Section 401(a) of the Code is
so qualified and nothing has occurred, whether by action or failure to act,
which would cause the loss of such qualification.
(ff) Solvency. The Company and each Guarantor is, and
immediately after the Closing Date will be, Solvent. As used herein, the term
"Solvent" means, with respect to the Company or a Guarantor on a particular
date, that on such date (i) the fair market value of the assets of the Company
or such Guarantor is greater than the total amount of liabilities (including
contingent liabilities) of the Company or such Guarantor, (ii) the present fair
salable value of the assets of the Company or such Guarantor is greater than the
amount that will be required to pay the probable liabilities of the Company or
such Guarantor on its debts as they become absolute and matured, (iii) the
Company or such Guarantor is able to realize upon its assets and pay its debts
and other liabilities, including contingent obligations, as they mature and (iv)
the Company or such Guarantor does not have unreasonably small capital.
(gg) Related Party Transactions. There are no business
relationships or related-party transactions involving the Company or any
subsidiary or any other person that would be required to be described in the
Offering Memorandum were it to be filed as a part of a Registration Statement on
Form S-1 under the Securities Act, which have not been described as would have
been so required.
(hh) New Credit Facility. The New Credit Facility (as defined
in the Offering Memorandum) has been duly and validly authorized by the Company
and each of the Guarantors.
(ii) The European Touch Acquisitions. Each of (a) the Stock
Purchase Agreement dated as of June 17, 1998 between the Company and the
stockholders of European Touch Co., Incorporated, (b) the Stock Purchase
Agreement dated as of June 17, 1998 between the Company and the stockholders of
European Touch, Ltd. II, (c) the Stock Purchase Agreement dated as of June 17,
1998 between the Company and the stockholders of Beauty Products Inc. and (d)
the Stock Purchase Agreement dated as of June 17, 1998 between the Company and
the stockholders of Cosmetics International Inc. (collectively, the "European
Touch Acquisition Agreements") with respect to the Company's acquisition of each
of such companies (the "European Touch Companies") has been duly authorized,
executed and delivered by, and is a valid and binding agreement of, each of the
Company and the stockholders of the European Touch Companies, and is enforceable
against each party thereto in accordance with its terms, except as the
enforcement thereof may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws relating to or affecting the rights and
remedies of creditors or by general equitable principles. The Company's
acquisitions of the
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European Touch Companies pursuant to the European Touch Acquisition Agreements
are collectively referred to as the "European Touch Acquisitions."
Any certificate signed by an officer of the Company or a
Guarantor and delivered to the Initial Purchasers or to counsel for the Initial
Purchasers shall be deemed to be a representation and warranty by the Company or
such Guarantor, as the case may be, to each Initial Purchaser as to the matters
set forth therein.
Section 2. Purchase, Sale and Delivery of the Securities.
(a) The Securities. The Company and the Guarantors agree to
issue and sell to the several Initial Purchasers, severally and not jointly, all
of the Securities upon the terms herein set forth. On the basis of the
representations, warranties and agreements herein contained, and upon the terms
but subject to the conditions herein set forth, the Initial Purchasers agree,
severally and not jointly, to purchase from the Company and the Guarantors the
aggregate principal amount of Securities set forth opposite their names on
Schedule A, at a discounted purchase price of 97.0% (which amount equals a Price
to Investors of 100% less the Initial Purchasers' Discount of 3.0%) of the
principal amount thereof payable on the Closing Date.
(b) The Closing Date. Delivery of certificates for the
Securities in definitive form to be purchased by the Initial Purchasers and
payment therefor shall be made at the offices of NationsBanc Xxxxxxxxxx
Securities LLC, 000 Xxxxxxxxxx Xxxxxx, Xxx Xxxxxxxxx, Xxxxxxxxxx (or such other
place as may be agreed to by the Company and the Initial Purchasers) at 7:00
a.m. (San Francisco time) on June 23, 1998, or such other time and date not
later than 10:30 a.m. (San Francisco time) on June 30, 1998 as the Initial
Purchasers shall designate by notice to the Company (the time and date of such
closing are called the "Closing Date"). Delivery of other closing documents
shall be made at the offices of Xxxxxx & Xxxxxxx, San Francisco, California, on
the Closing Date.
(c) Delivery of the Securities. The Company shall deliver, or
cause to be delivered, to NationsBanc Xxxxxxxxxx Securities LLC for the accounts
of the several Initial Purchasers certificates for the Securities at the Closing
Date against the irrevocable release of a wire transfer of immediately available
funds for the amount of the purchase price therefor. The certificates for the
Securities shall be in such denominations ($1,000 or integral multiples thereof)
and registered in the name of Cede & Co., as nominee of the Depository, pursuant
to the DTC Agreement and shall be made available for inspection on the business
day preceding the Closing Date at a location in New York City as the Initial
Purchasers may designate; provided that certificated Securities originally
purchased by or transferred to institutional "accredited investors" (as defined
in Rule 501(a)(1), (2), (3) or (7) under the Securities Act) who are not also
"qualified institutional buyers" (as defined in Rule 144A under the Securities
Act) will be issued in minimum denominations of $250,000. Time shall be of the
essence, and delivery at the time and place specified in this Agreement is a
further condition to the obligations of the Initial Purchasers.
(d) Delivery of Offering Memorandum to the Initial Purchasers.
Not later than 12:00 p.m. on the second business day following the date of
this Agreement, the Company
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shall deliver or cause to be delivered copies of the Offering Memorandum in such
quantities and at such places as the Initial Purchasers shall reasonably
request.
(e) Initial Purchasers as Qualified Institutional Buyers.
Each Initial Purchaser severally and not jointly represents and warrants to, and
agrees with, the Company that it is a "qualified institutional buyer" within the
meaning of Rule 144A (a "Qualified Institutional Buyer") and an "accredited
investor" within the meaning of Rule 501(a) under the Securities Act (an
"Accredited Investor").
Section 3. Additional Covenants. The Company and the Guarantors
further covenant and agree with each Initial Purchaser as follows:
(a) Initial Purchasers' Review of Proposed Amendments and
Supplements. Prior to amending or supplementing the Offering Memorandum, the
Company shall furnish to the Initial Purchasers for review a copy of each such
proposed amendment or supplement, and the Company shall not file any such
proposed amendment or supplement to which the Initial Purchasers reasonably
object.
(b) Amendments and Supplements to the Offering Memorandum and
Other Securities Act Matters. If, prior to the completion of the placement of
the Securities by the Initial Purchasers with the Subsequent Purchasers (as
evidenced by a notice in writing from the Initial Purchasers to the Company),
any event shall occur or condition exist as a result of which it is 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 a purchaser, not misleading, or if in the opinion of the Initial
Purchasers or counsel for the Initial Purchasers it is otherwise necessary to
amend or supplement the Offering Memorandum to comply with law, the Company
agrees to prepare promptly (subject to Section 3(a) hereof) and furnish at its
own expense to the Initial Purchasers, amendments or supplements to the Offering
Memorandum so that the statements in the Offering Memorandum as so amended or
supplemented will not, in the light of the circumstances when the Offering
Memorandum is delivered to a purchaser, be misleading or so that the Offering
Memorandum, as amended or supplemented, will comply with law.
Following the consummation of the Exchange Offer or the
effectiveness of an applicable shelf registration statement and for so long as
the Securities are outstanding if, in the reasonable judgment of the Initial
Purchasers, the Initial Purchasers or any of their affiliates (as such term is
defined in the rules and regulations under the Securities Act) are required to
deliver a prospectus in connection with sales of, or market-making activities
with respect to, such securities, (A) to periodically amend the applicable
registration statement so that the information contained therein complies with
the requirements of Section 10(a) of the Securities Act, (B) to amend the
applicable registration statement or supplement the related prospectus or the
documents incorporated therein when necessary to reflect any material changes in
the information provided therein so that the registration statement and the
prospectus 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 existing as of the date the prospectus is so
delivered, not misleading and (C) to provide the Initial Purchasers with copies
of each amendment or supplement filed and such other documents as the Initial
Purchasers may reasonably request.
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The Company hereby expressly acknowledges that the
indemnification and contribution provisions of Sections 8 and 9 hereof are
specifically applicable and relate to each offering memorandum, registration
statement, prospectus, amendment or supplement referred to in this Section 3(b).
(c) Copies of the Offering Memorandum. The Company agrees to
furnish the Initial Purchasers, without charge, as many copies of the Offering
Memorandum and any amendments and supplements thereto as they shall have
reasonably requested.
(d) Blue Sky Compliance. The Company shall cooperate with the
Initial Purchasers and counsel for the Initial Purchasers to qualify or register
the Securities for sale under (or obtain exemptions from the application of) the
Blue Sky or state securities laws of those jurisdictions designated by the
Initial Purchasers, shall comply with such laws and shall continue such
qualifications, registrations and exemptions in effect so long as required for
the distribution of the Securities. The Company shall not be required to qualify
as a foreign corporation or to take any action that would subject it to general
service of process in any such jurisdiction where it is not presently qualified
or where it would be subject to taxation as a foreign corporation. The Company
will advise the Initial Purchasers promptly of the suspension of the
qualification or registration of (or any such exemption relating to) the
Securities for offering, sale or trading in any jurisdiction or any initiation
or threat of any proceeding for any such purpose, and in the event of the
issuance of any order suspending such qualification, registration or exemption,
the Company shall use its best efforts to obtain the withdrawal thereof at the
earliest possible moment.
(e) Use of Proceeds. The Company shall apply the net proceeds
from the sale of the Securities sold by it in the manner described under the
caption "Use of Proceeds" in the Offering Memorandum.
(f) Ratings of the Securities. The Company and the Guarantors
shall take all reasonable action necessary to enable Standard & Poor's Ratings
Group, a division of McGraw Hill, Inc. ("S&P"), and Xxxxx'x Investors Service,
Inc. ("Moody's") to provide their respective credit ratings of the Securities.
(g) The Depositary. The Company and the Guarantors will
cooperate with the Initial Purchasers and use its best efforts to permit the
Securities to be eligible for clearance and settlement through the facilities of
the Depositary.
(h) Additional Issuer Information. Prior to the completion of
the placement of the Securities by the Initial Purchasers with the Subsequent
Purchasers (as evidenced by a notice in writing from the Initial Purchasers to
the Company), the Company shall file, on a timely basis, with the Commission and
the Nasdaq National Market all reports and documents required to be filed under
Section 13 or 15(d) of the Exchange Act. Additionally, at any time when the
Company is not subject to Section 13 or 15(d) of the Exchange Act, for the
benefit of holders and beneficial owners from time to time of Securities, the
Company shall furnish at its expense, upon request, to holders and beneficial
owners of Securities and prospective purchasers of Securities, information
("Additional Issuer Information") satisfying the requirements of subsection
(d)(4) of Rule 144A.
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(i) Agreement Not To Offer or Sell Additional Securities.
During the period of 180 days following the date of the Offering Memorandum, the
Company will not, without the prior written consent of NationsBanc Xxxxxxxxxx
Securities LLC (which consent may be withheld at the sole discretion of
NationsBanc Xxxxxxxxxx Securities LLC), directly or indirectly, sell, offer,
contract or grant any option to sell, pledge, transfer or establish an open "put
equivalent position" within the meaning of Rule 16a-1(h) under the Exchange Act,
or otherwise dispose of or transfer, or announce the offering of, or file any
registration statement under the Securities Act in respect of, any debt
securities of the Company or securities exchangeable for or convertible into
debt securities of the Company (other than as contemplated by this Agreement and
to register the Exchange Securities).
(j) Future Reports to the Initial Purchasers. During the
period of five years following the date hereof, the Company will furnish to
NationsBanc Xxxxxxxxxx Securities LLC at 000 Xxxxxxxxxx Xxxxxx, Xxx Xxxxxxxxx,
XX 00000, Attention: Xxxxx Xxxxxx; and Friedman, Billings, Xxxxxx & Co., Inc.,
Potomac Tower, 0000 00xx Xxxxxx Xxxxx, 00xx Xxxxx, Xxxxxxxxx, XX 00000,
Attention: Xxx Xxxxxxxxxx; and Imperial Capital, LLC, 000 Xxxxx Xxxxx Xx., Xxxxx
000, Xxxxxxx Xxxxx, XX 00000, Attention: Xxxxx Xxxxx, (i) as soon as practicable
after the end of each fiscal year, copies of the Annual Report of the Company
containing the balance sheet of the Company as of the close of such fiscal year
and statements of income, stockholders' equity and cash flows for the year then
ended and the opinion thereon of the Company's independent public or certified
public accountants; (ii) as soon as practicable after the filing thereof, copies
of each proxy statement, Annual Report on Form 10-K, Quarterly Report on Form
10-Q, Current Report on Form 8-K or other report filed by the Company with the
Commission, the NASD or any securities exchange; and (iii) as soon as available,
copies of any report or communication of the Company mailed generally to holders
of its capital stock or debt securities (including the holders of the
Securities).
(k) Registration Rights Agreement. The Company and each
Guarantor shall comply with all provisions and obligations of, and shall cause
the Exchange Offer (as defined in the Registration Rights Agreement) to be made
in the appropriate form as contemplated by, the Registration Rights Agreement,
and shall comply with all applicable federal and state securities laws in
connection with the Exchange Offer.
(l) No Integration. The Company agrees that it will not and
will cause its Affiliates not to make any offer or sale of securities of the
Company of any class if, as a result of the doctrine of "integration" referred
to in Rule 502 under the Securities Act, such offer or sale would render invalid
(for the purpose of (i) the sale of the Securities by the Company and the
Guarantors to the Initial Purchasers, (ii) the resale of the Securities by the
Initial Purchasers to Subsequent Purchasers or (iii) the resale of the
Securities by such Subsequent Purchasers to others) the exemption from the
registration requirements of the Securities Act provided by Section 4(2) thereof
or by Rule 144A or by Regulation S thereunder or otherwise.
(m) Restriction on Repurchases. Until the expiration of two
years after the original issuance of the Securities, the Company will not, and
will cause its Affiliates not to, purchase or agree to purchase or otherwise
acquire any Securities which are "restricted securities" (as such term is
defined under Rule 144(a)(3) under the Securities Act), whether as beneficial
owner or otherwise (except as agent acting as a securities broker on behalf of
and for the account of customers in the ordinary course of business in
unsolicited broker's
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transactions) unless, immediately upon any such purchase, the Company or any
Affiliate shall submit such Securities to the Trustee for cancellation.
(n) Legended Securities. Each certificate for a Note will
bear the legend contained in "Transfer Restrictions" in the Offering Memorandum
for the time period and upon the other terms stated in the Offering Memorandum.
(o) PORTAL. The Company will use its best efforts to cause
such Notes to be eligible for the National Association of Securities Dealers,
Inc. PORTAL market (the "PORTAL market").
(p) Form D. The Company will file with the Commission, not
later than 15 days after the Closing Date, five copies of a notice on Form D
under the Securities Act (one of which will be manually signed by a person duly
authorized by the Company); will otherwise comply with the requirements of Rule
503 under the Securities Act; and will furnish promptly to the Initial
Purchasers evidence of each such required timely filing (including a copy
thereof).
(q) Due Diligence. In connection with the original
distribution of the Securities, the Company and each of the Guarantors agree
that, prior to any offer or resale of the Securities by the Initial Purchasers,
the Initial Purchasers and counsel for the Initial Purchasers shall have the
right to make reasonable inquiries into the business of the Company and its
subsidiaries. The Company and each of the Guarantors also agree to provide
answers to each prospective Subsequent Purchaser of Securities who so requests
concerning the Company and its subsidiaries (to the extent that such information
is available or can be acquired and made available to prospective Subsequent
Purchasers without unreasonable effort or expense and to the extent the
provision thereof is not prohibited by applicable law) and the terms and
conditions of the offering of the Securities, as provided in the Offering
Memorandum.
NationsBanc Xxxxxxxxxx Securities LLC, on behalf of the
several Initial Purchasers, may, in its sole discretion, waive in writing the
performance by the Company or the Guarantors of any one or more of the foregoing
covenants or extend the time for their performance.
Section 4. Payment of Expenses. The Company agrees to pay all costs,
fees and expenses incurred in connection with the performance of its obligations
hereunder and in connection with the transactions contemplated hereby, including
without limitation (i) all expenses incident to the issuance and delivery of the
Securities (including all printing and engraving costs), (ii) all necessary
issue, transfer and other stamp taxes in connection with the issuance and sale
of the Securities to the Initial Purchasers, (iii) all fees and expenses of the
Company's and the Guarantors' counsel, independent public or certified public
accountants and other advisors, (iv) all costs and expenses incurred in
connection with the preparation, printing, filing, shipping and distribution of
each Preliminary Offering Memorandum and the Offering Memorandum (including
financial statements and exhibits), and all amendments and supplements thereto,
this Agreement, the Registration Rights Agreement, the Indenture, the DTC
Agreement, and the Notes and the Guarantees, (v) all filing fees, attorneys'
fees and expenses incurred by the Company or the Initial Purchasers in
connection with qualifying or registering (or obtaining exemptions from the
qualification or registration of) all or any part of the Securities for offer
and sale under the Blue Sky laws and, if requested by the Initial
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Purchasers, preparing and printing a "Blue Sky Survey" or memorandum, and any
supplements thereto, advising the Initial Purchasers of such qualifications,
registrations and exemptions, (vi) the fees and expenses of the Trustee,
including the fees and disbursements of counsel for the Trustee in connection
with the Indenture, the Securities and the Exchange Securities, (vii) any fees
payable in connection with the rating of the Securities or the Exchange
Securities with the ratings agencies and the listing of the Securities with the
PORTAL market, (viii) any filing fees incident to, and any reasonable fees and
disbursements of counsel to the Initial Purchasers in connection with the review
by the National Association of Securities Dealers, Inc., if any, of the terms of
the sale of the Securities or the Exchange Securities, (ix) all fees and
expenses (including reasonable fees and expenses of counsel) of the Company and
the Guarantors in connection with approval of the Securities by DTC for
"book-entry" transfer, and (x) the performance by the Company and the Guarantors
of their respective other obligations under this Agreement. Except as provided
in this Section 4, Section 6, Section 8 and Section 9 hereof, the Initial
Purchasers shall pay their own expenses, including the fees and disbursements of
their counsel.
Section 5. Conditions of the Obligations of the Initial Purchasers. The
obligations of the several Initial Purchasers to purchase and pay for the
Securities as provided herein on the Closing Date shall be subject to the
accuracy of the representations and warranties on the part of the Company and
the Guarantors set forth in Section 1 hereof as of the date hereof and as of the
Closing Date as though then made and to the timely performance by the Company
and the Guarantors of their respective covenants and other obligations
hereunder, and to each of the following additional conditions:
(a) Accountants' Comfort Letter. On the date hereof, the
Initial Purchasers shall have received from Xxxxxx Xxxxxxxx LLP, independent
public or certified public accountants for the Company, a letter dated the date
hereof addressed to the Initial Purchasers, in form and substance satisfactory
to the Initial Purchasers, containing statements and information of the type
ordinarily included in accountants "comfort letters" to Initial Purchasers,
delivered according to Statement of Auditing Standards Nos. 72 and 76 (or any
successor bulletins), with respect to the audited and unaudited financial
statements and certain financial information contained in the Registration
Statement and the Offering Memorandum.
(b) No Material Adverse Change or Ratings Agency Change. For
the period from and after the date of this Agreement and prior to the Closing
Date:
(i) in the judgment of the Initial Purchasers there
shall not have occurred any Material Adverse Change; and
(ii) there shall not have occurred any downgrading,
nor shall any notice have been given of any intended or
potential downgrading or of any review for a possible change
that does not indicate the direction of the possible change,
in the rating accorded any securities of the Company or any of
its subsidiaries by any "nationally recognized statistical
rating organization" as such term is defined for purposes of
Rule 436(g)(2) under the Securities Act.
(c) Opinion of Counsel for the Company and the Guarantors. On
the Closing Date, the Initial Purchasers shall have received the favorable
opinion of X'Xxxxxx,
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Cavanagh, Anderson, Xxxxxxxxxxxxx & Xxxxxxxx, counsel for the Company and the
Guarantors, dated as of such Closing Date, the form of which is attached as
Exhibit A hereto.
(d) Opinion of Counsel for the Initial Purchasers. On the
Closing Date, the Initial Purchasers shall have received the favorable opinion
of Xxxxxx & Xxxxxxx, counsel for the Initial Purchasers, dated as of such
Closing Date, with respect to such matters as may be reasonably requested by the
Initial Purchasers.
(e) Officers' Certificates. On the Closing Date, the Initial
Purchasers shall have received a written certificate or certificates executed by
the President and the Secretary of the Company and the President and the
Secretary of each Guarantor, dated as of the Closing Date, to the effect set
forth in subsection (b)(ii) of this Section 5, and further to the effect that:
(i) for the period from and after the date of this
Agreement and prior to the Closing Date there has not occurred
any Material Adverse Change;
(ii) the representations, warranties and covenants of
the Company or such Guarantor, as the case may be, set forth
in Section 1 of this Agreement are true and correct with the
same force and effect as though expressly made on and as of
the Closing Date;
(iii) each of European Touch Acquisition Agreements
with respect to the Company's acquisition of each of the
European Touch Companies has been duly authorized, executed
and delivered by, and is a valid and binding agreement of,
each of the Company and the stockholders of the European Touch
Companies, and is enforceable against each party thereto in
accordance with its terms, except as the enforcement thereof
may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws relating to or affecting the
rights and remedies of creditors or by general equitable
principles;
(iv) the Company and each Guarantor, as the case may
be, has complied with all the agreements and satisfied all the
conditions on its part to be performed or satisfied under this
Agreement and under each of the European Touch Acquisition
Agreements at or prior to the Closing Date; and
(v) each of the stockholders of the European Touch
Companies has complied with all the agreements and satisfied
all the conditions on its part to be performed or satisfied
under its respective Acquisition Agreement at or prior to the
Closing Date.
(f) Bring-down Comfort Letter. On the Closing Date the Initial
Purchasers shall have received from Xxxxxx Xxxxxxxx LLP, independent public or
certified public accountants for the Company, a letter dated such date, in form
and substance satisfactory to the Initial Purchasers, to the effect that they
reaffirm the statements made in the letter furnished by them pursuant to
subsection (a) of this Section 5, except that the specified date referred to
therein for the carrying out of procedures shall be no more than three business
days prior to the Closing Date.
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(g) PORTAL Listing. At the Closing Date, the Notes shall have
been designated for trading on the PORTAL market.
(h) Registration Rights Agreement. The Company and the
Guarantors shall have entered into the Registration Rights Agreement and the
Initial Purchasers shall have received executed counterparts thereof.
(i) Availability of Documents Relating to the European Touch
Acquisitions. Prior to the time of this Agreement, the Company shall have
furnished, or caused to be furnished, for review by the Initial Purchasers and
counsel for the Initial Purchasers copies of the European Touch Acquisition
Agreements (including all final and completed schedules and exhibits thereto),
and such further information, certificates and documents as any of them may
reasonably request. At the Closing Date, none of the European Touch Acquisition
Agreements shall have been amended, in any material respect, from the agreements
as originally executed.
(j) European Touch Acquisitions. At the Closing Date, each of
the European Touch Acquisition Agreements shall have been duly authorized,
executed and delivered by each of the Company and each of the stockholders of
the European Touch Companies. At the Closing Date, each of the Company and the
stockholders of the European Touch Companies shall have complied with all the
agreements and satisfied all the conditions on its part to be performed or
satisfied under its respective European Touch Acquisition Agreement at or prior
to the Closing Date. Each of the European Touch Acquisitions shall have been
consummated by the Company, in accordance with the terms and conditions of the
respective European Touch Acquisition Agreement, without any material
contingencies or liabilities of or owing by the Company except as disclosed in
the Offering Memorandum.
(k) European Touch Companies as Guarantors of the Notes. At
the Closing Date, each of the European Touch Companies shall have become,
jointly and severally, Guarantors of the Notes.
(l) Termination of Existing Credit Facility. The financial
institutions party to the Existing Credit Facility will have prepared and, if
applicable, executed all such instruments and agreements as are necessary to
release, terminate and discharge all mortgages, pledges, security interests and
other liens and encumbrances on any property or assets of the Company or any of
its subsidiaries created or arising pursuant to or in connection with the
Existing Credit Facility and, on the Closing Date, such instruments and
agreements shall be delivered to the Company and the Company shall , as promptly
as practicable thereafter, take such actions (including filings or recordings in
governmental offices) as are necessary to effect the release, termination and
discharge of all such mortgages, pledges, security interests, liens and
encumbrances.
(m) Additional Documents. On or before the Closing Date, the
Initial Purchasers and counsel for the Initial Purchasers shall have received
such information, documents and opinions as they may reasonably require for the
purposes of enabling them to pass upon the issuance and sale of the Securities
as contemplated herein, or in order to evidence the accuracy of any of the
representations and warranties, or the satisfaction of any of the conditions or
agreements, herein contained.
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If any condition specified in this Section 5 is not satisfied
when and as required to be satisfied, this Agreement may be terminated by the
Initial Purchasers by notice to the Company at any time on or prior to the
Closing Date, which termination shall be without liability on the part of any
party to any other party, except that Section 4, Section 6, Section 8 and
Section 9 shall at all times be effective and shall survive such termination.
Section 6. Reimbursement of Initial Purchasers' Expenses. If this
Agreement is terminated by the Initial Purchasers pursuant to Section 5 or
Section 6, or if the sale to the Initial Purchasers of the Securities on the
Closing Date is not consummated because of any refusal, inability or failure on
the part of the Company or the Guarantors to perform any agreement herein or to
comply with any provision hereof, the Company agrees to reimburse the Initial
Purchasers (or such Initial Purchasers as have terminated this Agreement with
respect to themselves), severally, upon demand for all out-of-pocket expenses
that shall have been reasonably incurred by the Initial Purchasers in connection
with the proposed purchase and the offering and sale of the Securities,
including but not limited to fees and disbursements of counsel, printing
expenses, travel expenses, postage, facsimile and telephone charges.
Section 7. Offer, Sale and Resale Procedures. Each of the Initial
Purchasers, on the one hand, and the Company and each of the Guarantors, on the
other hand, hereby establish and agree to observe the following procedures in
connection with the offer and sale of the Securities:
(i) Offers and Sales only to Institutional Accredited
Investors or Qualified Institutional Buyers. Offers and sales of the Securities
will be made only by the Initial Purchasers or Affiliates thereof qualified to
do so in the jurisdictions in which such offers or sales are made. Each such
offer or sale shall only be made (A) to persons whom the offeror or seller
reasonably believes to be qualified institutional buyers (as defined in Rule
144A under the Securities Act), or (B) to a limited number of other
institutional accredited investors (as such term is defined in Rule 501(a)(1),
(2), (3) or (7) of Regulation D) that the offeror or seller reasonably believes
to be and, with respect to sales and deliveries, that are Accredited Investors
("Institutional Accredited Investors"), or (C) non-U.S. persons outside the
United States to whom the offeror or seller reasonably believes offers and sales
of the Securities may be made in reliance upon Regulation S under the Securities
Act, upon the terms and conditions set forth in Annex I hereto, which Annex I is
hereby expressly made a part hereof.
(ii) No General Solicitation. The Securities will be offered
by approaching prospective Subsequent Purchasers on an individual basis. No
general solicitation or general advertising (within the meaning of Rule 502(c)
under the Securities Act) will be used in the United States in connection with
the offering of the Securities.
(iii) Purchases by Non-Bank Fiduciaries. In the case of a
non-bank Subsequent Purchaser of a Note acting as a fiduciary for one or more
third parties, in connection with an offer and sale to such purchaser pursuant
to clause (i) above, each third party shall, in the judgment of the applicable
Initial Purchaser, be an Institutional Accredited Investor or a Qualified
Institutional Buyer or a non-U.S. person outside the United States.
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(iv) Restrictions on Transfer. Upon original issuance by the
Company, and until such time as the same is no longer required under the
applicable requirements of the Securities Act, the Securities (and all
securities issued in exchange therefor or in substitution thereof, other than
the Exchange Securities) shall bear the following legend:
"THE SECURITY (OR ITS PREDECESSOR) EVIDENCED HEREBY HAS NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), AND THE SECURITY EVIDENCED HEREBY MAY NOT BE
OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT OR IN ACCORDANCE WITH AN APPLICABLE
EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT
(SUBJECT TO THE DELIVERY OF SUCH EVIDENCE, IF ANY, REQUIRED UNDER THE
INDENTURE PURSUANT TO WHICH THIS NOTE IS ISSUED) AND IN ACCORDANCE WITH
ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR ANY
OTHER JURISDICTION. 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 OR ANOTHER EXEMPTION UNDER THE SECURITIES ACT. THE HOLDER OF
THE SECURITY EVIDENCED HEREBY AGREES FOR THE BENEFIT OF THE COMPANY
THAT (A) SUCH SECURITY MAY BE RESOLD, PLEDGED OR OTHERWISE TRANSFERRED
ONLY (1) (a) TO A PERSON THAT 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,
(b) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144 UNDER THE
SECURITIES ACT, (c) OUTSIDE THE UNITED STATES TO A FOREIGN PERSON IN A
TRANSACTION MEETING THE REQUIREMENTS OF RULE 904 UNDER THE SECURITIES
ACT OR (d) 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), (2) TO THE COMPANY OR (3) PURSUANT
TO AN EFFECTIVE REGISTRATION STATEMENT AND, 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 OF THE SECURITY
EVIDENCED HEREBY OF THE RESALE RESTRICTIONS SET FORTH IN (A) ABOVE."
Following the sale of the Securities by the Initial Purchasers
to Subsequent Purchasers pursuant to the terms hereof, the Initial Purchasers
shall not be liable or responsible to the Company or any Guarantor for any
losses, damages or liabilities suffered or incurred by the Company or any
Guarantor, including any losses, damages or liabilities under the Securities
Act, arising from or relating to any resale or transfer of any Security.
(v) Delivery of Offering Memorandum. Each Initial Purchaser
will deliver to each purchaser of the Securities from such Initial Purchaser, in
connection with its
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original distribution of the Securities, a copy of the Offering Memorandum, as
amended and supplemented at the date of such delivery.
SECTION 8. INDEMNIFICATION.
(a) Indemnification of the Initial Purchasers. The Company and
each of the Guarantors, jointly and severally, agree to indemnify and hold
harmless each Initial Purchaser, its officers and employees, and each person, if
any, who controls any Initial Purchaser within the meaning of the Securities Act
and the Exchange Act against any loss, claim, damage, liability or expense, as
incurred, to which such Initial Purchaser or such controlling person may become
subject, under the Securities Act, the Exchange Act or other federal or state
statutory law or regulation, or at common law or otherwise (including in
settlement of any litigation, if such settlement is effected with the written
consent of the Company), insofar as such loss, claim, damage, liability or
expense (or actions in respect thereof as contemplated below) arises out of or
is based (i) upon 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 the omission or alleged omission
therefrom of a material fact necessary in order to make the statements therein,
in the light of the circumstances under which they were made, not misleading; or
(ii) in whole or in part upon any inaccuracy in the representations and
warranties of the Company or any of the Guarantors contained herein; and to
reimburse each Initial Purchaser and each such controlling person for any and
all expenses (including the fees and disbursements of counsel chosen by
NationsBanc Xxxxxxxxxx Securities LLC) as such expenses are reasonably incurred
by such Initial Purchaser or such controlling person in connection with
investigating, defending, settling, compromising or paying any such loss, claim,
damage, liability, expense or action; provided, however, that the foregoing
indemnity agreement shall not apply to any loss, claim, damage, liability or
expense to the extent, but only to the extent, arising out of or based upon any
untrue statement or alleged untrue statement or omission or alleged omission
made in reliance upon and in conformity with written information furnished to
the Company or the Guarantors by the Initial Purchasers expressly for use in any
Preliminary Offering Memorandum or the Offering Memorandum (or any amendment or
supplement thereto). The indemnity agreement set forth in this Section 8(a)
shall be in addition to any liabilities that the Company and the Guarantors may
otherwise have.
(b) Indemnification of the Company, the Guarantors and their
Respective Directors and Officers. Each Initial Purchaser agrees, severally and
not jointly, to indemnify and hold harmless the Company and the Guarantors and
each of their respective directors and each person, if any, who controls the
Company and the Guarantors within the meaning of the Securities Act or the
Exchange Act, against any loss, claim, damage, liability or expense, as
incurred, to which the Company or any Guarantor or any such director, or
controlling person may become subject, under the Securities Act, the Exchange
Act, or other federal or state statutory law or regulation, or at common law or
otherwise (including in settlement of any litigation, if such settlement is
effected with the written consent of such Initial Purchaser), insofar as such
loss, claim, damage, liability or expense (or actions in respect thereof as
contemplated below) arises out of or is based upon any untrue or alleged untrue
statement of a material fact contained in any Preliminary Offering Memorandum or
the Offering Memorandum (or any amendment or supplement thereto), or arises out
of or is based upon the omission or alleged omission to state therein a material
fact required to be stated therein or
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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 was made in any Preliminary Offering
Memorandum or the Offering Memorandum (or any amendment or supplement thereto),
in reliance upon and in conformity with written information furnished to the
Company and the Guarantors by the Initial Purchasers expressly for use therein;
and to reimburse the Company and the Guarantors, or any such director or
controlling person for any legal and other expenses reasonably incurred by the
Company and the Guarantors, or any such director or controlling person in
connection with investigating, defending, settling, compromising or paying any
such loss, claim, damage, liability, expense or action. The Company and the
Guarantors hereby acknowledge that the only information that the Initial
Purchasers have furnished to the Company or any Guarantor expressly for use in
any Preliminary Offering Memorandum or the Offering Memorandum (or any amendment
or supplement thereto) are the statements set forth (A) as the last paragraph on
page iii of the Offering Memorandum concerning stabilization by the Initial
Purchasers and (B) in the third and sixth paragraphs under the caption "Plan of
Distribution" in the Offering Memorandum; and the Initial Purchasers confirm
that such statements are correct. The indemnity agreement set forth in this
Section 8(b) shall be in addition to any liabilities that each Initial Purchaser
may otherwise have.
(c) Notifications and Other Indemnification Procedures.
Promptly after receipt by an indemnified party under this Section 8 of notice of
the commencement of any action, such indemnified party will, if a claim in
respect thereof is to be made against an indemnifying party under this Section
8, notify the indemnifying party in writing of the commencement thereof, but the
omission so to notify the indemnifying party will not relieve it from any
liability which it may have to any indemnified party for contribution or
otherwise than under the indemnity agreement contained in this Section 8 or to
the extent it is not prejudiced as a proximate result of such failure. In case
any such action is brought against any indemnified party and such indemnified
party seeks or intends to seek indemnity from an indemnifying party, the
indemnifying party will be entitled to participate in and, to the extent that it
shall elect, jointly with all other indemnifying parties similarly notified, by
written notice delivered to the indemnified party promptly after receiving the
aforesaid notice from such indemnified party, to assume the defense thereof with
counsel reasonably satisfactory to such indemnified party; provided, however, if
the defendants in any such action include both the indemnified party and the
indemnifying party and the indemnified party shall have reasonably concluded
that a conflict may arise between the positions of the indemnifying party and
the indemnified party in conducting the defense of any such action or that there
may be legal defenses available to it and/or other indemnified parties which are
different from or additional to those available to the indemnifying party, the
indemnified party or parties shall have the right to select separate counsel to
assume such legal defenses and to otherwise participate in the defense of such
action on behalf of such indemnified party or parties. Upon receipt of notice
from the indemnifying party to such indemnified party of such indemnifying
party's election so to assume the defense of such action and approval by the
indemnified party of counsel, the indemnifying party will not be liable to such
indemnified party under this Section 8 for any legal or other expenses
subsequently incurred by such indemnified party in connection with the defense
thereof unless (i) the indemnified party shall have employed separate counsel in
accordance with the proviso to the next preceding sentence (it being understood,
however, that the indemnifying party shall not be liable for the expenses of
more than one separate counsel (together with local counsel), approved by the
indemnifying party
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(NationsBanc Xxxxxxxxxx Securities LLC in the case of Section 8(b) and Section
9), representing the indemnified parties who are parties to such action) or (ii)
the indemnifying party shall not have employed counsel satisfactory to the
indemnified party to represent the indemnified party within a reasonable time
after notice of commencement of the action, in each of which cases the fees and
expenses of counsel shall be at the expense of the indemnifying party.
(d) Settlements. The indemnifying party under this Section 8
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 against any loss, claim, damage, liability or expense by
reason of such settlement or judgment. Notwithstanding the foregoing sentence,
if at any time an indemnified party shall have requested an indemnifying party
to reimburse the indemnified party for fees and expenses of counsel as
contemplated by Section 8(c) hereof, the indemnifying party agrees that it shall
be liable for any settlement of any proceeding effected without its written
consent if (i) such settlement is entered into more than 30 days after receipt
by such indemnifying party of the aforesaid request and (ii) such indemnifying
party shall not have reimbursed the indemnified party in accordance with such
request prior to the date of such settlement. No indemnifying party shall,
without the prior written consent of the indemnified party, effect any
settlement, compromise or consent to the entry of judgment in any pending or
threatened action, suit or proceeding in respect of which any indemnified party
is or could have been a party and indemnity was or could have been sought
hereunder by such indemnified party, unless such settlement, compromise or
consent includes an unconditional release of such indemnified party from all
liability on claims that are the subject matter of such action, suit or
proceeding.
Section 9. Contribution. If the indemnification provided for in Section
8 is for any reason held to be unavailable to or otherwise insufficient to hold
harmless an indemnified party in respect of any losses, claims, damages,
liabilities or expenses referred to therein, then each indemnifying party shall
contribute to the aggregate amount paid or payable by such indemnified party, as
incurred, as a result of any losses, claims, damages, liabilities or expenses
referred to therein (i) in such proportion as is appropriate to reflect the
relative benefits received by the Company and the Guarantors, on the one hand,
and the Initial Purchasers, on the other hand, from the offering of the
Securities pursuant to this Agreement 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 Company and the Guarantors, on the one
hand, and the Initial Purchasers, on the other hand, in connection with the
statements or omissions or inaccuracies in the representations and warranties
herein which resulted in such losses, claims, damages, liabilities or expenses,
as well as any other relevant equitable considerations. The relative benefits
received by the Company and the Guarantors, on the one hand, and the Initial
Purchasers, on the other hand, in connection with the offering of the Securities
pursuant to this Agreement shall be deemed to be in the same respective
proportions as the total net proceeds from the offering of the Securities
pursuant to this Agreement (before deducting expenses) received by the Company
and the Guarantors, and the total discount received by the Initial Purchasers
bear to the aggregate initial offering price of the Securities. The relative
fault of the Company and the Guarantors, on the one hand, and the Initial
Purchasers, on the other hand, shall be determined by reference to, among other
things, whether any such untrue or alleged
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untrue statement of a material fact or omission or alleged omission to state a
material fact or any such inaccurate or alleged inaccurate representation or
warranty relates to information supplied by the Company or any Guarantor, on the
one hand, or the Initial Purchasers, on the other hand, and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission.
The amount paid or payable by a party as a result of the
losses, claims, damages, liabilities and expenses referred to above shall be
deemed to include, subject to the limitations set forth in Section 8(c), any
legal or other fees or expenses reasonably incurred by such party in connection
with investigating or defending any action or claim. The provisions set forth in
Section 8(c) with respect to notice of commencement of any action shall apply if
a claim for contribution is to be made under this Section 9; provided, however,
that no additional notice shall be required with respect to any action for which
notice has been given under Section 8(c) for purposes of indemnification.
The Company, the Guarantors and the Initial Purchasers agree
that it would not be just and equitable if contribution pursuant to this Section
9 were determined by pro rata allocation (even if the Initial 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 in this
Section 9.
Notwithstanding the provisions of this Section 9, no Initial
Purchaser shall be required to contribute any amount in excess of the discount
received by such Initial Purchaser in connection with the Securities distributed
by it. No person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the Securities Act) shall be entitled to contribution from any
person who was not guilty of such fraudulent misrepresentation. The Initial
Purchasers' obligations to contribute pursuant to this Section 9 are several,
and not joint, in proportion to their respective commitments as set forth
opposite their names in Schedule A. For purposes of this Section 9, each officer
and employee of an Initial Purchaser and each person, if any, who controls an
Initial Purchaser within the meaning of the Securities Act and the Exchange Act
shall have the same rights to contribution as such Initial Purchaser, and each
director of the Company or any Guarantor, each officer of the Company or any
Guarantor who signed the Registration Statement, and each person, if any, who
controls the Company or any Guarantor within the meaning of the Securities Act
and the Exchange Act shall have the same rights to contribution as the Company.
Section 10. Termination of this Agreement. Prior to the Closing Date,
this Agreement maybe terminated by the Initial Purchasers by notice given to the
Company if at any time (i) trading or quotation in any of the Company's
securities shall have been suspended or limited by the Commission or by the
Nasdaq Stock Market, or trading in securities generally on either the Nasdaq
Stock Market or the New York Stock Exchange shall have been suspended or
limited, or minimum or maximum prices shall have been generally established on
any of such stock exchanges by the Commission or the NASD; (ii) a general
banking moratorium shall have been declared by any of federal, New York or
Arizona authorities; (iii) there shall have occurred any outbreak or escalation
of national or international hostilities or any crisis or calamity, or any
change in the United States or international financial markets, or any
substantial change or development involving a prospective substantial change in
United States' or international political, financial or economic conditions, as
in the judgment of the Initial
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Purchasers is material and adverse and makes it impracticable to market the
Securities in the manner and on the terms described in the Offering Memorandum
or to enforce contracts for the sale of securities; (iv) in the judgment of the
Initial Purchasers there shall have occurred any Material Adverse Change; or (v)
the Company shall have sustained a loss by strike, fire, flood, earthquake,
accident or other calamity of such character as in the judgment of the Initial
Purchasers may interfere materially with the conduct of the business and
operations of the Company regardless of whether or not such loss shall have been
insured. Any termination pursuant to this Section 10 shall be without liability
on the part of (a) the Company or any Guarantor to any Initial Purchaser, except
that the Company shall be obligated to reimburse the expenses of the Initial
Purchasers pursuant to Sections 4 and 6 hereof, (b) any Initial Purchaser to the
Company or any Guarantor, or (c) of any party hereto to any other party except
that the provisions of Section 8 and Section 9 shall at all times be effective
and shall survive such termination.
Section 11. Representations and Indemnities to Survive Delivery. The
respective indemnities, agreements, representations, warranties and other
statements of the Company, the Guarantors, their respective officers and of the
several Initial Purchasers set forth in or made pursuant to this Agreement will
remain in full force and effect, regardless of any investigation made by or on
behalf of any Initial Purchaser or the Company and the Guarantors or any of its
or their partners, officers or directors or any controlling person, as the case
may be, and will survive delivery of and payment for the Securities sold
hereunder and any termination of this Agreement.
Section 12. Notices. All communications hereunder shall be in writing
and shall be mailed, hand delivered or telecopied and confirmed to the parties
hereto as follows:
If to the Initial Purchasers:
NationsBanc Xxxxxxxxxx Securities LLC
000 Xxxxxxxxxx Xxxxxx
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Facsimile: 000-000-0000
Attention: Xxxxx X. Xxxxxx
with a copy to:
NationsBanc Xxxxxxxxxx Securities LLC
000 Xxxxxxxxxx Xxxxxx
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxxx X. Xxxxxx, Esq.
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with a copy (which shall not constitute notice) to:
Xxxxxx & Xxxxxxx
000 Xxxxxxxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxxxxx X. Xxxxxx, Esq.
If to the Company or the Guarantors:
0000 Xxxx Xxxxxxxxx Xx., Xxx 000
Xxxxxxx, XX 00000
Facsimile: (000) 000-0000
Attention: Xxxxxxx Xxxx, Chief Financial Officer
with a copy (which shall not constitute notice) to:
X'Xxxxxx Xxxxxxxx
0 Xxxx Xxxxxxxxx Xxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxxxx X. Xxxx, Esq.
Any party hereto may change the address for receipt of communications by giving
written notice to the others.
Section 13. Successors. This Agreement will inure to the benefit of and
be binding upon the parties hereto, including any substitute Initial Purchasers
pursuant to Section 16 hereof, and to the benefit of the employees, officers and
directors and controlling persons referred to in Section 8 and Section 9, and in
each case their respective successors, and no other person will have any right
or obligation hereunder. The term "successors" shall not include any purchaser
of the Securities as such from any of the Initial Purchasers merely by reason of
such purchase.
Section 14. Partial Unenforceability. The invalidity or
unenforceability of any Section, paragraph or provision of this Agreement shall
not affect the validity or enforceability of any other Section, paragraph or
provision hereof. If any Section, paragraph or provision of this Agreement is
for any reason determined to be invalid or unenforceable, there shall be deemed
to be made such minor changes (and only such minor changes) as are necessary to
make it valid and enforceable.
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Section 15. Governing Law; Consent to Jurisdiction.
(a) Governing Law Provisions. THIS AGREEMENT SHALL BE GOVERNED
BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK
APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED IN SUCH STATE.
(b) Consent to Jurisdiction. Any legal suit, action or
proceeding arising out of or based upon this Agreement or the transactions
contemplated hereby ("Related Proceedings") may be instituted in the federal
courts of the United States of America located in the City and County of San
Francisco or the courts of the State of California in each case located in the
City and County of San Francisco (collectively, the "Specified Courts"), and
each party irrevocably submits to the exclusive jurisdiction (except for
proceedings instituted in regard to the enforcement of a judgment of any such
court (a "Related Judgment"), as to which such jurisdiction is non-exclusive) of
such courts in any such suit, action or proceeding. Service of any process,
summons, notice or document by mail to such party's address set forth above
shall be effective service of process for any suit, action or other proceeding
brought in any such court. The parties irrevocably and unconditionally waive any
objection to the laying of venue of any suit, action or other proceeding in the
Specified Courts and irrevocably and unconditionally waive and agree not to
plead or claim in any such court that any such suit, action or other proceeding
brought in any such court has been brought in an inconvenient forum. Each party
not located in the United States irrevocably appoints CT Corporation System,
which currently maintains a San Francisco office at 00 Xxxxxxxxx Xxxxxx, Xxx
Xxxxxxxxx, Xxxxxxxxxx 00000, Xxxxxx Xxxxxx of America, as its agent to receive
service of process or other legal summons for purposes of any such suit, action
or proceeding that may be instituted in any state or federal court in the City
and County of San Francisco.
SECTION 16. DEFAULT OF ONE OR MORE OF THE SEVERAL INITIAL PURCHASERS.
If any one or more of the several Initial Purchasers shall fail or refuse to
purchase Securities that it or they have agreed to purchase hereunder on the
Closing Date, and the aggregate number of Securities which such defaulting
Initial Purchaser or Initial Purchasers agreed but failed or refused to purchase
does not exceed 10% of the aggregate number of the Securities to be purchased on
such date, the other Initial Purchasers shall be obligated, severally, in the
proportions that the number of Securities set forth opposite their respective
names on Schedule A bears to the aggregate number of Securities set forth
opposite the names of all such non-defaulting Initial Purchasers, or in such
other proportions as may be specified by the Initial Purchasers with the consent
of the non-defaulting Initial Purchasers, to purchase the Securities which such
defaulting Initial Purchaser or Initial Purchasers agreed but failed or refused
to purchase on such date. If any one or more of the Initial Purchasers shall
fail or refuse to purchase Securities and the aggregate number of Securities
with respect to which such default occurs exceeds 10% of the aggregate number of
Securities to be purchased on the Closing Date, and arrangements satisfactory to
the Initial Purchasers and the Company for the purchase of such Securities are
not made within 48 hours after such default, this Agreement shall terminate
without liability of any party to any other party except that the provisions of
Section 4, Section 6, Section 8 and Section 9 shall at all times be effective
and shall survive such termination. In any such case either the Initial
Purchasers or the Company shall have the right to postpone the Closing Date, as
the case may be, but in no event for longer than seven days in
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33
order that the required changes, if any, to the Offering Memorandum or any other
documents or arrangements may be effected.
As used in this Agreement, the term "Initial Purchaser" shall
be deemed to include any person substituted for a defaulting Initial Purchaser
under this Section 10. Any action taken under this Section 16 shall not relieve
any defaulting Initial Purchaser from liability in respect of any default of
such Initial Purchaser under this Agreement.
Section 17. General Provisions. This Agreement constitutes the entire
agreement of the parties to this Agreement and supersedes all prior written or
oral and all contemporaneous oral agreements, understandings and negotiations
with respect to the subject matter hereof. This Agreement may be executed in two
or more counterparts, each one of which shall be an original, with the same
effect as if the signatures thereto and hereto were upon the same instrument.
This Agreement may not be amended or modified unless in writing by all of the
parties hereto, and no condition herein (express or implied) may be waived
unless waived in writing by each party whom the condition is meant to benefit.
The Table of Contents and the section headings herein are for the convenience of
the parties only and shall not affect the construction or interpretation of this
Agreement.
Each of the parties hereto acknowledges that it is a
sophisticated business person who was adequately represented by counsel during
negotiations regarding the provisions hereof, including, without limitation, the
indemnification provisions of Section 8 and the contribution provisions of
Section 9, and is fully informed regarding said provisions. Each of the parties
hereto further acknowledges that the provisions of Sections 8 and 9 hereto
fairly allocate the risks in light of the ability of the parties to investigate
the Company, its affairs and its business in order to assure that adequate
disclosure has been made in the Registration Statement, any Preliminary Offering
Memorandum and the Offering Memorandum (and any amendments and supplements
thereto), as required by the Securities Act and the Exchange Act.
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If the foregoing is in accordance with your understanding of
our agreement, kindly sign and return to the Company the enclosed copies hereof,
whereupon this instrument, along with all counterparts hereof, shall become a
binding agreement in accordance with its terms.
Very truly yours,
STYLING TECHNOLOGY CORPORATION
By: /s/ Xxx X. Xxxxxxx
---------------------------
Xxx X. Xxxxxxx
President
By: /s/ Xxxxxxx X. Xxxx
---------------------------
Xxxxxxx X. Xxxx
Secretary
XXXX LABORATORIES, INC.
By: /s/ Xxx X. Xxxxxxx
---------------------------
Xxx X. Xxxxxxx
President
By: /s/ Xxxxxxx X. Xxxx
---------------------------
Xxxxxxx X. Xxxx
Secretary
J.D.S. MANUFACTURING CO., INC.
By: /s/ Xxx X. Xxxxxxx
---------------------------
Xxx X. Xxxxxxx
President
By: /s/ Xxxxxxx X. Xxxx
---------------------------
Xxxxxxx X. Xxxx
Secretary
35
ABBA PRODUCTS, INC.
By: /s/ Xxx X. Xxxxxxx
---------------------------
Xxx X. Xxxxxxx
President
By: /s/ Xxxxxxx X. Xxxx
---------------------------
Xxxxxxx X. Xxxx
Secretary
36
The foregoing Purchase Agreement is hereby confirmed and
accepted by the Initial Purchasers in San Francisco, California as of the date
first above written.
NATIONSBANC XXXXXXXXXX SECURITIES LLC
FRIEDMAN, BILLINGS, XXXXXX & CO., INC.
IMPERIAL CAPITAL, LLC
As the several Initial Purchasers
By NATIONSBANC XXXXXXXXXX SECURITIES LLC
/s/ illegible
By: -------------------------------------
37
SCHEDULE A
Aggregate
Principal Amount
of Securities to be
Initial Purchasers Purchased
------------------ ---------
NationsBanc Xxxxxxxxxx Securities LLC $ 65,000,000
Friedman, Billings, Xxxxxx & Co., Inc. 25,000,000
Imperial Capital, LLC ................ 10,000,000
Total ................................ $100,000,000
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EXHIBIT A
Opinions of counsel for the Company to be delivered pursuant
to Section 5(c) of the Purchase Agreement.
References to the Offering Memorandum in this Exhibit A
include any supplements thereto at the Closing Date.
References below to Guarantors shall mean the "Guarantors"
that executed the Purchase Agreement, together with each of the European Touch
Companies that will execute and deliver the Indenture to become Guarantors
simultaneous with the Closing.
(i) The Company has been duly incorporated and is validly existing as a
corporation in good standing under the laws of the State of Delaware.
(ii) The Company has corporate power and authority to own, lease and
operate its properties and to conduct its business as described in the Offering
Memorandum and to enter into and perform its obligations, under the Purchase
Agreement, the Registration Rights Agreement, the Indenture, the Securities, the
Exchange Securities and the DTC Agreement.
(iii) The Company is duly qualified as a foreign corporation to
transact business and is in good standing in the State of Arizona and in each
other jurisdiction in which such qualification is required, whether by reason of
the ownership or leasing of property or the conduct of business, except for such
jurisdictions (other than the State of Arizona) where the failure to so qualify
or to be in good standing would not, individually or in the aggregate, result in
a Material Adverse Change.
(iv) Each of the Guarantors and each other significant subsidiary of
the Company (as defined in Rule 405 under the Securities Act) has been duly
incorporated and is validly existing as a corporation in good standing under the
laws of the jurisdiction of its incorporation; has corporate power and authority
to own, lease and operate its properties and to conduct its business as
described in the Offering Memorandum; to the best knowledge of such counsel, is
duly qualified as a foreign corporation to transact business and is in good
standing in each jurisdiction in which such qualification is required, whether
by reason of the ownership or leasing of property or the conduct of business,
except for such jurisdictions where the failure to so qualify or to be in good
standing would not, individually or in the aggregate, result in a Material
Adverse Change; and, in the case of the Guarantors, has corporate power and
authority to enter into and perform its obligations under the Purchase
Agreement, the Registration Rights Agreement, the Indenture, the Securities, the
Exchange Securities and the DTC Agreement, as applicable.
(v) All of the issued and outstanding capital stock of the Guarantors
and each such significant subsidiary has been duly authorized and validly
issued, is fully paid and non-assessable and is owned by the Company, directly
or through subsidiaries, free and clear of any security interest, mortgage,
pledge, lien, encumbrance or, to the best knowledge of such counsel, any pending
or threatened claim.
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(vi) The authorized, issued and outstanding capital stock of the
Company conforms in all material respects to the descriptions thereof in the
Offering Memorandum. All of the outstanding shares of Common Stock have been
duly authorized and validly issued, are fully paid and nonassessable and, to the
best of such counsel's knowledge, have been issued in compliance with the
registration and qualification requirements of federal and state securities
laws.
(vii) No stockholder of the Company or any other person has any
preemptive right, right of first refusal or other similar right to subscribe for
or purchase securities of the Company arising (i) by operation of the charter or
by-laws of the Company or the General Corporation Law of the State of Delaware
or (ii) to the best knowledge of such counsel, otherwise.
(viii) The Purchase Agreement has been duly authorized, executed and
delivered by each of the Company and the Guarantors (other than the European
Touch Companies).
(ix) Each of the Registration Rights Agreement and the DTC Agreement
(A) has been duly authorized, executed and delivered by, and (B) is a valid and
binding agreement of, the Company and the Guarantors, enforceable in accordance
with its terms, except as the enforcement thereof may be limited by bankruptcy,
insolvency, reorganization, moratorium or other similar laws relating to or
affecting the rights and remedies of creditors or by general equitable
principles.
(x) The Indenture (A) has been duly authorized, executed and delivered
by each of the Company and the Guarantors and (B) (assuming the due
authorization, execution and delivery thereof by the Trustee) constitutes a
valid and binding agreement of the Company and the Guarantors, enforceable
against each of them in accordance with its terms, except as the enforcement
thereof may be limited by bankruptcy, insolvency, reorganization, moratorium or
other similar laws relating to or affecting the rights and remedies of creditors
or by general principles of equity.
(xi) The Notes (A) are in the form contemplated by the Indenture and
have been duly authorized by the Company for issuance and sale pursuant to this
Agreement and the Indenture, and (B) when executed by the Company and
authenticated by the Trustee in the manner provided in the Indenture (assuming
the due authorization, execution and delivery of the Indenture by the Trustee)
and delivered against payment of the purchase price therefor, will constitute
valid and binding obligations of the Company, enforceable against the Company in
accordance with their terms, except as the enforcement thereof may be limited by
bankruptcy, insolvency, reorganization, moratorium, or similar laws relating to
or affecting enforcement of the rights and remedies of creditors or by general
principles of equity and will be entitled to the benefits of the Indenture.
(xii) The Exchange Notes (A) have been duly and validly authorized for
issuance by the Company, and (B) (assuming no change in applicable laws prior to
the issuance date of the Exchange Notes) when issued and authenticated in
accordance with the terms of the Indenture, the Registration Rights Agreement
and the Exchange Offer, will constitute valid and binding obligations of the
Company, enforceable against the Company in accordance with their terms, except
as the enforcement thereof may be limited by bankruptcy, insolvency,
reorganization,
A-3
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moratorium, or similar laws relating to or affecting enforcement of the rights
and remedies of creditors or by general principles of equity and will be
entitled to the benefits of the Indenture.
(xiii) The Guarantees of the Notes and the Exchange Notes (A) are in
the respective forms contemplated by the Indenture and, have been duly
authorized for issuance and sale pursuant to this Agreement and the Indenture
and have been duly executed by each of the Guarantors, and (B) when
authenticated in the manner provided for in the Indenture and delivered against
payment of the purchase price for the Notes, will constitute valid and binding
agreements of the Guarantors, enforceable in accordance with their terms, except
as the enforcement thereof may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws relating to or affecting the
rights and remedies of creditors or by general equitable principles and will be
entitled to the benefits of the Indenture.
(xiv) The Securities and the Indenture conform in all material respects
to the descriptions thereof contained in the Offering Memorandum.
(xv) The statements in the Offering Memorandum under the captions "Risk
Factors -- Subordination," " -- Regulation," " -- Restrictive Debt Covenants"
and " -- Fraudulent Conveyances," "Description of the Notes," "Business --
Intellectual Property," "Certain United States Federal Tax Considerations for
Non-United States Holders" and "Notice to Investors," insofar as such statements
constitute matters of law, summaries of legal matters, the Company's charter or
by-law provisions, documents or legal proceedings, or legal conclusions, have
been reviewed by such counsel and fairly present and summarize, in all material
respects, the matters referred to therein.
(xvi) To the best knowledge of such counsel, except as is disclosed in
the Offering Memorandum, there are no legal or governmental proceedings that are
pending or threatened against the Company or any of its subsidiaries that would
be required by Item 103 of Regulation S-K to be disclosed in a Registration
Statement on Form S-1.
(xvii) To the best knowledge of such counsel, except as is disclosed in
the Offering Memorandum, there are no transactions or relationships that would
be required by Item 404 of Regulation S-K to be disclosed in a Registration
Statement on Form S-1.
(xviii) No consent, approval, authorization or other order of, or
registration or filing with, any court or other governmental authority or
agency, is required for the Company's or the Guarantors' execution, delivery and
performance of the Purchase Agreement, the Registration Rights Agreement, the
DTC Agreement, the Indenture, the Securities, the Exchange Securities or the
Guarantees, as applicable, or consummation of the transactions contemplated
thereby and by the Offering Memorandum, except as required under applicable
state securities or blue sky laws.
(xix) The execution and delivery of the Purchase Agreement, the
Registration Rights Agreement, the DTC Agreement, the Securities, the Exchange
Securities and the Indenture by the Company and the Guarantors, as applicable,
and the performance by the Company and the Guarantors, of their respective
obligations thereunder (other than performance by the Company and the Guarantors
of their respective obligations under the indemnification section of the
Purchase Agreement, as to which no opinion need be rendered) (i) have been duly
A-4
41
authorized by all necessary corporate action on the part of the Company and the
Guarantors; (ii) will not result in any violation of the provisions of the
charter or by-laws of the Company or any subsidiary; (iii) will not constitute a
breach of, or Default or a Debt Repayment Triggering Event under, or result in
the creation or imposition of any lien, charge or encumbrance upon any property
or assets of the Company or any of its subsidiaries pursuant to, (A) the Credit
Agreement, dated December 10, 1997, by and among the Company and Credit Agricole
Indosuez, New York Branch, as Agent, and the other Lenders party thereto or (B)
to the best knowledge of such counsel, any other material Existing Instrument;
or (iv) to the best knowledge of such counsel, will not result in any violation
of any law, administrative regulation or administrative or court decree
applicable to the Company or any subsidiary.
(xx) The Company is not, and after receipt of payment for the
Securities will not be, an "investment company" within the meaning of Investment
Company Act.
(xxi) To the best knowledge of such counsel, neither the Company nor
any subsidiary is in violation of its charter or by-laws or any law,
administrative regulation or administrative or court decree applicable to the
Company or any subsidiary or is in Default in the performance or observance of
any obligation, agreement, covenant or condition contained in any material
Existing Instrument, except in each such case for such violations or Defaults as
would not, individually or in the aggregate, result in a Material Adverse
Change.
(xxii) No registration of the Notes or the Guarantees under the
Securities Act, and no qualification of an indenture under the Trust Indenture
Act with respect thereto, is required for in connection with the purchase of the
Initial Securities by the Initial Purchasers or the initial resale of the
Initial Securities by the Initial Purchasers to Qualified Institutional Buyers
or Institutional Accredited Investors in the manner contemplated by this
Agreement and the Offering Memorandum other than any registration or
qualification that may be required in connection with the Exchange Offer
contemplated by the Offering Memorandum or in connection with the Registration
Rights Agreement. Such counsel need express no opinion, however, as to when or
under what circumstances any Initial Notes initially sold by the Initial
Purchasers may be reoffered or resold.
(xxiii) Each of the Preliminary Offering Memorandum and the Offering
Memorandum, as of its date, and each amendment or supplement thereto, as of its
date (except for the financial statements included therein, as to which no
opinion need be expressed), contained all of the information required under Rule
144A(d)(A) of the Securities Act.
(xxiv) Upon repayment of amounts outstanding under the Existing Credit
Facility, the Company will be entitled to obtain the release, termination and
discharge of the mortgages, pledges, security interests and other liens referred
to in paragraph 5(l) of this Agreement.
(xxv) The New Credit Facility has been duly and validly authorized by
the Company and each of the Guarantors (including, without limitation, the
European Touch Companies).
(xxvi) Each of the European Touch Acquisition Agreements has been duly
authorized, executed and delivered by, and is a valid and binding agreement of,
each of the Company and the stockholders of the European Touch Companies, and is
enforceable against each party thereto in accordance with its terms, except as
the enforcement thereof may be limited by
A-5
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bankruptcy, insolvency, reorganization, moratorium or other similar laws
relating to or affecting the rights and remedies of creditors or by general
equitable principles.
In addition, such counsel shall state that they have
participated in conferences with officers and other representatives of the
Company, representatives of the independent public or certified public
accountants for the Company and with representatives of the Initial Purchasers
at which the contents of the Offering Memorandum, and any supplements or
amendments thereto, and related matters were discussed and, although such
counsel is not passing upon and does not assume any responsibility for the
accuracy, completeness or fairness of the statements contained in the Offering
Memorandum (other than as specified above), and any supplements or amendments
thereto, on the basis of the foregoing, nothing has come to their attention
which would lead them to believe that either the Offering Memorandum, as of its
date or at the Closing Date, contained or contains an untrue statement of a
material fact or omitted or omits 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 (it being understood that such counsel need express no
belief as to the financial statements or other financial data derived therefrom,
included in the Offering Memorandum or any amendments or supplements thereto).
In rendering such opinion, such counsel may rely (A) as to
matters involving the application of laws the States of California, Wisconsin
and Texas and of any other jurisdiction other than the General Corporation Law
of the State of Delaware, the laws of the State of Arizona or the federal law of
the United States, to the extent they deem proper and specified in such opinion,
upon the opinion (which shall be dated the Closing Date shall be satisfactory in
form and substance to the Initial Purchasers, shall expressly state that the
Initial Purchasers may rely on such opinion as if it were addressed to them and
shall be furnished to the Initial Purchasers) of other counsel of good standing
whom they believe to be reliable and who are satisfactory to counsel for the
Initial Purchasers; provided, however, that such counsel shall further state
that they believe that they and the Initial Purchasers are justified in relying
upon such opinion of other counsel, and (B) as to matters of fact, to the extent
they deem proper, on certificates of responsible officers of the Company and
public officials.
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ANNEX I
Resale Pursuant to Regulation S or Rule 144A. Each Initial
Purchaser understands that:
(a) Such Initial Purchaser agrees that it has not offered or
sold and will not offer or sell the Securities in the United States or
to, or for the benefit or account of, a U.S. Person (other than a
distributor), in each case, as defined in Rule 902 under the Securities
Act (i) as part of its distribution at any time and (ii) otherwise
until 40 days after the later of the date the Notes were first offered
to persons other than "distributors" (as defined in Regulation S) in
reliance upon Regulation S and the Closing Date, other than in
accordance with Regulation S of the Securities Act or another exemption
from the registration requirements of the Securities Act. Such Initial
Purchaser agrees that, during such 40-day restricted period, it will
not cause any advertisement with respect to the Securities (including
any "tombstone" advertisement) to be published in any newspaper or
periodical or posted in any public place and will not issue any
circular relating to the Securities, except such advertisements as are
permitted by and include the statements required by Regulation S.
(b) Such Initial Purchaser agrees that, at or prior to
confirmation of a sale of Securities by it to any distributor, dealer
or person receiving a selling concession, fee or other remuneration
during the 40-day restricted period referred to in Rule 903(c)(2) under
the Securities Act, it will send to such distributor, dealer or person
receiving a selling concession, fee or other remuneration a
confirmation or notice to substantially the following effect:
"The Securities covered hereby have not been registered under
the U.S. Securities Act of 1933, as amended (the "Securities
Act"), and may not be offered and sold within the United
States or to, or for the account or benefit of, U.S. persons
(i) as part of your distribution at any time or (ii) otherwise
until 40 days after the later of the date the Notes were first
offered to persons other than "distributors" (as defined in
Regulation S) in reliance upon Regulation S and the Closing
Date, except in either case in accordance with Regulation S
and under the Securities Act (or Rule 144A or to Accredited
Institutions in transactions that are exempt from the
registration requirements of the Securities Act), and in
connection with any subsequent sale by you of the Notes
covered hereby in reliance on Regulation S during the period
referred to above to any distributor, dealer or person
receiving a selling concession, fee or other remuneration, you
must deliver a notice to substantially the foregoing effect.
Terms used above have the meanings assigned to them in
Regulation S."
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