EXHIBIT 10.1
ADVANSTAR COMMUNICATIONS INC.
$150,000,000
9 1/4% Senior Subordinated Notes due 2008
PURCHASE AGREEMENT
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April 27, 1998
CHASE SECURITIES INC.
XXXXXX BROTHERS INC.
c/o Chase Securities Inc.
000 Xxxx Xxxxxx, 0xx xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Ladies and Gentlemen:
Advanstar Communications Inc., a New York corporation (the "Company"),
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proposes to issue and sell $150,000,000 aggregate principal amount of its 9 1/4%
Senior Subordinated Notes due 2008 (the "Notes"), which Notes will be
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unconditionally guaranteed (the "Guarantees", and, together with the Notes, the
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"Securities"), on a senior subordinated basis, by (i) each subsidiary of the
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Company existing on the Closing Date (as defined in Section 4), including The
Men's Apparel Guild in California, Inc. ("MAGIC") and MAGIC Kids, Inc. ("MAGIC
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Kids"), and each subsidiary (other than foreign subsidiaries and Unrestricted
Subsidiaries) created or acquired after the Closing Date (collectively, the
"Subsidiary Guarantors") and (ii) AHI Holding Corp. ("AHI") and Advanstar
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Holdings, Inc. ("Holdings"). AHI, Holdings and each Subsidiary Guarantor party
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to this Agreement are referred to collectively as the "Current Guarantors". The
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Current Guarantors, MAGIC and MAGIC Kids are referred to collectively as the
"Guarantors". The Securities will be issued pursuant to an Indenture to be
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dated as of April 30, 1998 (the "Indenture") among the Company, each Guarantor
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and The Bank of New York, as trustee (the "Trustee"). The Company hereby
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confirms its agreement with Chase Securities Inc. ("CSI") and Xxxxxx Brothers
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Inc. (together with CSI, the "Initial Purchasers") concerning the purchase of
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the Securities from the Company by the several Initial Purchasers.
The Securities will be offered and sold to the Initial Purchasers
without being registered under the Securities Act of 1933, as amended (the
"Securities Act"), in reliance upon an exemption therefrom. The Company has
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prepared a preliminary offering memorandum dated April 9, 1998 (the "Preliminary
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Offering Memorandum") and will prepare an offering memorandum dated the date
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hereof (the "Offering Memorandum") setting forth information concerning the
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Company and the Securities. Copies of the Preliminary Offering Memorandum have
been, and copies of the Offering Memorandum will be, delivered by the Company to
the Initial Purchasers pursuant to the terms of this Agreement. Any references
herein to the Preliminary Offering Memorandum and the Offering Memorandum shall
be deemed to include all amendments and supplements thereto, unless otherwise
noted. The Company hereby confirms that it has authorized the use of the
Preliminary Offering Memorandum (until completion of the Final Memorandum) and
the Offering Memorandum in connection with the offering and resale of the
Securities by the Initial Purchasers in accordance with Section 3.
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Holders of the Securities (including the Initial Purchasers and their
direct and indirect transferees) will be entitled to the benefits of an Exchange
and Registration Rights Agreement, substantially in the form attached hereto as
Annex A (the "Registration Rights Agreement"), pursuant to which the Company and
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the Guarantors will agree to file with the Securities and Exchange Commission
(the "Commission") (i) a registration statement under the Securities Act (the
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"Exchange Offer Registration Statement") registering an issue of senior
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subordinated notes of the Company which are unconditionally guaranteed on a
senior subordinated basis by the Guarantors (the "Exchange Securities") and
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which are identical in all material respects to the Securities (except that the
Exchange Securities will not contain terms with respect to transfer
restrictions) and (ii) under certain circumstances, a shelf registration
statement pursuant to Rule 415 under the Securities Act (the "Shelf Registration
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Statement").
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On March 6, 1998, the Company entered into an Agreement and Plan of
Merger (the "Merger Agreement") with respect to the acquisition by the Company
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of all of the outstanding capital stock of MAGIC (the "MAGIC Acquisition").
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Upon consummation of the MAGIC Acquisition on the Closing Date, MAGIC will
become a wholly-owned subsidiary of the Company.
Capitalized terms used but not defined herein shall have the meanings
given to such terms in the Offering Memorandum.
I. Representations, Warranties and Agreements of the Company and the
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Current Guarantors. The Company and each Current Guarantor represent and
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warrant to, and agree with, the several Initial Purchasers on and as of the date
hereof and the Closing Date (provided, that references to subsidiaries of the
Company in this Article I shall not in any event be deemed to include MAGIC and
its subsidiaries) that:
(a) Each of the Preliminary Offering Memorandum and the Offering
Memorandum, as of its respective date, did not, and on the Closing Date the
Offering Memorandum will not, contain any untrue statement of a material
fact or omit to state a material fact required to be stated therein or
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading; provided that the
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Company and the Current Guarantors make no representation or warranty as to
information contained in or omitted from the Preliminary Offering
Memorandum or the Offering Memorandum in reliance upon and in conformity
with written information relating to the Initial Purchasers furnished to
the Company and the Current Guarantors by or on behalf of any Initial
Purchaser specifically for use therein (the "Initial Purchasers'
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Information").
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(b) Each of the Preliminary Offering Memorandum and the Offering
Memorandum, as of its respective date, contains all of the information
that, if requested by a prospective purchaser of the Securities, would be
required to be provided to such prospective purchaser pursuant to Rule
144A(d)(4) under the Securities Act.
(c) Assuming the accuracy of the representations and warranties of
the Initial Purchasers contained in Section 3 and their compliance with the
agreements set forth therein, it is not necessary, in connection with the
issuance and sale of the Securities to the Initial Purchasers and the
offer, resale and delivery of the Securities by the Initial Purchasers in
the manner contemplated by this Agreement and the Offering Memorandum, to
register the Securities under the Securities Act or to qualify the
Indenture under the Trust Indenture Act of 1939, as amended (the "Trust
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Indenture Act").
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(d) AHI, Holdings, the Company and each of its subsidiaries have been
duly incorporated and are validly existing as corporations in good standing
under the laws of their respective jurisdictions of incorporation, are duly
qualified to do business and are in good standing as foreign corporations
in each jurisdiction in which their respective ownership or lease of
property or the conduct of their respective businesses requires such
qualification, and have all power and authority necessary to own or hold
their respective properties and to conduct the businesses in which they are
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engaged, except where the failure to so qualify or have such power or
authority would not, singularly or in the aggregate, have a material
adverse effect on the condition (financial or otherwise), results of
operations, business or prospects of AHI, Holdings, the Company and its
subsidiaries taken as a whole (a "Material Adverse Effect").
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(e) The Company has an authorized capitalization as set forth in the
Offering Memorandum under the heading "Capitalization"; all of the
outstanding shares of capital stock of the Company have been duly and
validly authorized and issued and are fully paid and non-assessable; and
the capital stock of the Company conforms in all material respects to the
description thereof contained in the Offering Memorandum. All of the
outstanding shares of capital stock of each subsidiary of the Company have
been duly and validly authorized and issued, are fully paid and non-
assessable and are owned directly or indirectly by the Company, free and
clear of any lien, charge, encumbrance, security interest, restriction upon
voting or transfer or any other claim of any third party (other than liens
securing Senior Debt (as such term is defined in the Offering Memorandum)
or liens, encumbrances and minority interests permitted under Senior Debt).
All of the outstanding shares of capital stock of AHI and Holdings have
been duly and validly authorized and issued and are fully paid and non-
assessable.
(f) The Company and each Current Guarantor has full right, power and
authority to execute and deliver this Agreement, the Indenture, the
Registration Rights Agreement and the Securities (collectively, the
"Transaction Documents") and to perform their obligations hereunder and
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thereunder; and all corporate action required to be taken for the due and
proper authorization, execution and delivery of each of the Transaction
Documents and the consummation of the transactions contemplated thereby
have been duly and validly taken.
(g) This Agreement has been duly authorized, executed and delivered
by the Company and each Current Guarantor and constitutes a valid and
legally binding agreement of the Company and each Current Guarantor,
enforceable against the Company and each Current Guarantor in accordance
with its terms, except to the extent that such enforceability may be
limited by applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and other laws affecting creditors' rights
generally and by general equitable principles (whether considered in a
proceeding in equity or at law).
(h) The Registration Rights Agreement has been duly authorized by the
Company and each Current Guarantor and, when duly executed and delivered in
accordance with its terms by each of the parties thereto, will constitute a
valid and legally binding agreement of the Company and each Current
Guarantor, enforceable against the Company and each Current Guarantor in
accordance with its terms, except to the extent that such enforceability
may be limited by applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and other laws affecting creditors' rights
generally and by general equitable principles (whether considered in a
proceeding in equity or at law).
(i) The Indenture has been duly authorized by the Company and each
Current Guarantor and, when duly executed and delivered in accordance with
its terms by each of the parties thereto, will constitute a valid and
legally binding agreement of the Company and each Current Guarantor,
enforceable against the Company and each Current Guarantor in accordance
with its terms, except to the extent that such enforceability may be
limited by applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and other laws affecting creditors' rights
generally and by general equitable principles (whether considered in a
proceeding in equity or at law). On the Closing Date, the Indenture will
conform in all material respects to the requirements of the Trust Indenture
Act and the rules and regulations of the Commission applicable to an
indenture which is qualified thereunder.
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(j) The Notes have been duly authorized by the Company and, when duly
executed, authenticated, issued and delivered as provided in the Indenture
and paid for as provided herein, will be duly and validly issued and
outstanding and will constitute valid and legally binding obligations of
the Company, entitled to the benefits of the Indenture and enforceable
against the Company in accordance with their terms, except to the extent
that such enforceability may be limited by applicable bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium and other
laws affecting creditors' rights generally and by general equitable
principles (whether considered in a proceeding in equity or at law).
The Guarantees have been duly authorized by each Current
Guarantor and, when the Indenture is duly executed and delivered by the
Company, each Guarantor and the Trustee on the Closing Date, will
constitute valid and legally binding obligations of each Current Guarantor,
enforceable against each Current Guarantor in accordance with their terms
except to the extent that such enforceability may be limited by applicable
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium
and other laws affecting creditors' rights generally and by general
equitable principles (whether considered in a proceeding in equity or at
law).
(k) Each Transaction Document conforms in all material respects to
the description thereof contained in the Offering Memorandum.
(l) The execution, delivery and performance by the Company and each
Current Guarantor of each of the Transaction Documents, the issuance,
authentication, sale and delivery of the Securities and compliance by the
Company and each Current Guarantor with the terms thereof and the
consummation by the Company and each Current Guarantor of the transactions
contemplated by the Transaction Documents will not conflict with or result
in a breach or violation of any of the terms or provisions of, or
constitute a default under, or result in the creation or imposition of any
lien, charge or encumbrance upon any property or assets of AHI, Holdings,
the Company or any of its subsidiaries pursuant to, any indenture,
mortgage, deed of trust, loan agreement or other agreement or instrument to
which AHI, Holdings, the Company or any of its subsidiaries is a party or
by which AHI, Holdings, the Company or any of its subsidiaries is bound or
to which any of the property or assets of AHI, Holdings, the Company or any
of its subsidiaries is subject, except such as would not, individually or
in the aggregate, have a Material Adverse Effect, nor will such actions
result in any violation of (i) the provisions of the charter or by-laws of
AHI, Holdings, the Company or any of its subsidiaries or (ii) any statute
or any judgment, order, decree, rule or regulation of any court or
arbitrator or governmental agency or body having jurisdiction over AHI,
Holdings, the Company or any of its subsidiaries or any of their properties
or assets, except, with respect to this clause (ii), any such violations
which would not, individually or in the aggregate, have a Material Adverse
Effect; and no consent, approval, authorization or order of, or filing or
registration with, any such court or arbitrator or governmental agency or
body under any such statute, judgment, order, decree, rule or regulation is
required for the execution, delivery and performance by the Company and
each Current Guarantor of each of the Transaction Documents, the issuance,
authentication, sale and delivery of the Securities and compliance by the
Company and each Current Guarantor with the terms thereof and the
consummation of the transactions contemplated by the Transaction Documents,
except for such consents, approvals, authorizations, filings, registrations
or qualifications (i) which shall have been obtained or made prior to the
Closing Date, (ii) as may be required to be obtained or made under the
Securities Act and applicable state securities laws as provided in the
Registration Rights Agreement or (iii) which if not obtained would not,
individually or in the aggregate, have a Material Adverse Effect.
(m) Xxxxxx Xxxxxxxx LLP are independent certified public accountants
with respect to AHI, Holdings, the Company and its subsidiaries within the
meaning of Rule 101 of the Code of Professional Conduct of the American
Institute of Certified Public Accountants ("AICPA") and its interpretations
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and rulings thereunder. The historical financial statements (including the
related notes)
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contained in the Offering Memorandum comply in all material respects with
the requirements applicable to a registration statement on Form S-1 under
the Securities Act (except that certain supporting schedules are omitted);
such financial statements have been prepared in accordance with generally
accepted accounting principles consistently applied throughout the periods
covered thereby and fairly present the financial position of the entities
purported to be covered thereby at the respective dates indicated and the
results of their operations and their cash flows for the respective periods
indicated; and the financial information contained in the Offering
Memorandum under the headings "Summary--Summary Historical Consolidated
Financial and Other Data of Advanstar Communications Inc.",
"Capitalization", "Selected Historical Consolidated Financial and Other
Data of Advanstar Communications Inc.", "Management's Discussion and
Analysis of Financial Condition and Results of Operations--Advanstar" and
"Management--Executive Compensation" are derived from the accounting
records of the Company and its subsidiaries and fairly present the
information purported to be shown thereby. The pro forma financial
information contained in the Offering Memorandum has been prepared on a
basis consistent with the historical financial statements contained in the
Offering Memorandum (except for the pro forma adjustments specified
therein), includes all material adjustments to the historical financial
information required by Rule 11-02 of Regulation S-X under the Securities
Act and the Securities Exchange Act of 1934, as amended (the "Exchange
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Act"), to reflect the transactions described in the Offering Memorandum,
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gives effect to assumptions made on a reasonable basis and fairly presents
the historical and proposed transactions contemplated by the Offering
Memorandum and the Transaction Documents. The other historical financial
and statistical information and data included in the Offering Memorandum
are, in all material respects, fairly presented.
(n) There are no legal or governmental proceedings pending to which
AHI, Holdings, the Company or any of its subsidiaries is a party or of
which any property or assets of AHI, Holdings, the Company or any of its
subsidiaries is the subject which, singularly or in the aggregate, if
determined adversely to AHI, Holdings, the Company or any of its
subsidiaries, could reasonably be expected to have a Material Adverse
Effect; and to the best knowledge of the Company and each Current
Guarantor, no such proceedings are threatened or contemplated by
governmental authorities or threatened by others.
(o) No action has been taken and no statute, rule, regulation or
order has been enacted, adopted or issued by any United States governmental
agency or body which prevents the issuance of the Securities or suspends
the sale of the Securities in any jurisdiction; no injunction, restraining
order or order of any nature by any federal or state court of competent
jurisdiction has been issued with respect to AHI, Holdings, the Company or
any of its subsidiaries which would prevent or suspend the issuance or sale
of the Securities or the use of the Preliminary Offering Memorandum or the
Offering Memorandum in any jurisdiction; no action, suit or proceeding is
pending against or, to the best knowledge of the Company and each Current
Guarantor, threatened against or affecting AHI, Holdings, the Company or
any of its subsidiaries before any court or arbitrator or any governmental
agency, body or official, domestic or foreign, which could reasonably be
expected to interfere with or adversely affect the issuance of the
Securities or in any manner impair the validity or enforceability of any of
the Transaction Documents or any action taken or to be taken pursuant
thereto; and the Company has complied with any and all requests by any
securities authority in any jurisdiction for additional information to be
included in the Preliminary Offering Memorandum and the Offering
Memorandum.
(p) None of AHI, Holdings, the Company or any of its subsidiaries is
(i) in violation of its charter or by-laws, (ii) in default, and no event
has occurred which, with notice or lapse of time or both, would constitute
such a default, in the due performance or observance of any term, covenant
or condition contained in any indenture, mortgage, deed of trust, loan
agreement or other agreement or instrument to which it is a party or by
which it is bound or to which any of its property or assets is
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subject, in each case other than such as would not, individually or in the
aggregate, have a Material Adverse Effect, or (iii) in violation of any
law, ordinance, governmental rule, regulation or court decree to which it
or its property or assets may be subject, in each case other than such as
would not, individually or in the aggregate, have a Material Adverse
Effect.
(q) AHI, Holdings, the Company and each of its subsidiaries possess
all material licenses, certificates, authorizations and permits issued by,
and have made all declarations and filings with, the appropriate federal,
state or foreign regulatory agencies or bodies which are necessary or
desirable for the ownership of their respective properties or the conduct
of their respective businesses as described in the Offering Memorandum,
except where the failure to possess or make the same would not, singularly
or in the aggregate, have a Material Adverse Effect, and none of AHI,
Holdings, the Company or any of its subsidiaries has received notification
of any revocation or modification of any such license, certificate,
authorization or permit or has any reason to believe that any such license,
certificate, authorization or permit will not be renewed in the ordinary
course.
(r) AHI, Holdings, the Company and each of its subsidiaries have
filed all material federal, state, local and foreign income and franchise
tax returns required to be filed through the date hereof and have paid all
taxes due thereon, and no tax deficiency has been determined adversely to
AHI, Holdings, the Company or any of its subsidiaries which remains unpaid
and has had (nor does AHI, Holdings, the Company or any of its subsidiaries
have any knowledge of any tax deficiency which, if determined adversely to
AHI, Holdings, the Company or any of its subsidiaries, could reasonably be
expected to have) a Material Adverse Effect.
(s) None of AHI, Holdings, the Company or any of its subsidiaries is
(i) an "investment company" or a company "controlled by" an investment
company within the meaning of the Investment Company Act of 1940, as
amended (the "Investment Company Act"), and the rules and regulations of
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the Commission thereunder or (ii) a "holding company" or a "subsidiary
company" of a holding company or an "affiliate" thereof within the meaning
of the Public Utility Holding Company Act of 1935, as amended.
(t) AHI, Holdings, the Company and each of its subsidiaries maintain
a system of internal accounting controls sufficient to provide reasonable
assurance that (i) transactions are executed in accordance with
management's general or specific authorizations; (ii) transactions are
recorded as necessary to permit preparation of financial statements in
conformity with generally accepted accounting principles and to maintain
asset accountability; (iii) access to assets is permitted only in
accordance with management's general or specific authorization; and (iv)
the recorded accountability for assets is compared with the existing assets
at reasonable intervals and appropriate action is taken with respect to any
differences.
(u) AHI, Holdings, the Company and each of its subsidiaries have
insurance covering their respective properties, operations, personnel and
businesses, which insurance is in amounts and insures against such losses
and risks as are believed by AHI, Holdings the Company and its subsidiaries
to be adequate to protect AHI, Holdings, the Company and its subsidiaries
and their respective businesses. None of AHI, Holdings, the Company or any
of its subsidiaries has received notice from any insurer or agent of such
insurer that capital improvements or other expenditures are required or
necessary to be made in order to continue such insurance.
(v) AHI, Holdings, the Company and each of its subsidiaries own or
possess adequate rights to use all material patents, patent applications,
trademarks, service marks, trade names, trademark registrations, service
mark registrations, copyrights, licenses and know-how (including trade
secrets and other unpatented and/or unpatentable proprietary or
confidential information, systems or procedures) necessary for the conduct
of their respective businesses as described in the Offering
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Memorandum; and the conduct of their respective businesses as described in
the Offering Memorandum will not conflict with, and the Company and its
subsidiaries have not received any notice of any claim of conflict with,
any such rights of others, in each case other than such as would not,
individually or in the aggregate, have a Material Adverse Effect.
(w) AHI, Holdings, the Company and each of its subsidiaries have good
and marketable title in fee simple to, or have valid rights to lease or
otherwise use, all items of real and personal property which are material
to the business of AHI, Holdings, the Company and its subsidiaries, in each
case free and clear of all liens, encumbrances, claims and defects and
imperfections of title except such as (i) do not materially interfere with
the use made and proposed to be made of such property by AHI, Holdings, the
Company and its subsidiaries, (ii) could not reasonably be expected to
have a Material Adverse Effect or (iii) secure Senior Debt or are otherwise
permitted or incurred under the Senior Credit Agreement (as such term is
defined in the Offering Memorandum).
(x) No labor disturbance by or dispute with the employees of AHI,
Holdings, the Company or any of its subsidiaries exists or, to the best
knowledge of the Company and each Current Guarantor, is contemplated or
threatened, in each case which reasonably could be expected to have a
Material Adverse Effect.
(y) No "prohibited transaction" (as defined in Section 406 of the
Employee Retirement Income Security Act of 1974, as amended, including the
regulations and published interpretations thereunder ("ERISA"), or Section
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4975 of the Internal Revenue Code of 1986, as amended from time to time
(the "Code")) or "accumulated funding deficiency" (as defined in Section
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302 of ERISA) or any of the events set forth in Section 4043(b) of ERISA
(other than events with respect to which the 30-day notice requirement
under Section 4043 of ERISA has been waived) has occurred with respect to
any employee benefit plan (other than a multiemployer plan) of AHI,
Holdings, the Company or any of its subsidiaries which could reasonably be
expected to have a Material Adverse Effect; each such employee benefit plan
(other than a multiemployer plan) is in compliance in all material respects
with applicable law, including ERISA and the Code; AHI, Holdings, the
Company and each of its subsidiaries have not incurred and do not expect to
incur liability under Title IV of ERISA with respect to the termination of,
or withdrawal from, any pension plan for which AHI, Holdings, the Company
or any of its subsidiaries would have any liability; and each such pension
plan that is intended to be qualified under Section 401(a) of the Code is
so qualified in all material respects and nothing has occurred, whether by
action or by failure to act, which could reasonably be expected to cause
the loss of such qualification.
(z) There has been no storage, generation, transportation, handling,
treatment, disposal, discharge, emission or other release of any kind of
toxic or other wastes or other hazardous substances by, due to or caused by
AHI, Holdings, the Company or any of its subsidiaries (or, to the best
knowledge of the Company and each Current Guarantor, any other entity
(including any predecessor) for whose acts or omissions AHI, Holdings, the
Company or any of its subsidiaries is or could reasonably be expected to be
liable) upon any of the property now or previously owned or leased by AHI,
Holdings, the Company or any of its subsidiaries, or upon any other
property, in violation of any statute or any ordinance, rule, regulation,
order, judgment, decree or permit or which would, under any statute or any
ordinance, rule (including rule of common law), regulation, order,
judgment, decree or permit, give rise to any liability, except for any
violation or liability which could not reasonably be expected to have,
singularly or in the aggregate with all such violations and liabilities, a
Material Adverse Effect; and there has been no disposal, discharge,
emission or other release of any kind onto such property or into the
environment surrounding such property of any toxic or other wastes or other
hazardous substances with respect to which the Company or any Current
Guarantor has knowledge, except for any such disposal, discharge, emission
or other release of any kind which could not
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reasonably be expected to have, singularly or in the aggregate with all
such discharges and other releases, a Material Adverse Effect.
(aa) None of the Company or any Current Guarantor nor, to the best
knowledge of the Company and each Current Guarantor, any director, officer,
agent, employee or other person associated with or acting on behalf of the
Company or any Current Guarantor has (i) used any corporate funds for any
unlawful contribution, gift, entertainment or other unlawful expense
relating to political activity; (ii) made any direct or indirect unlawful
payment to any foreign or domestic government official or employee from
corporate funds; (iii) violated or is in violation of any provision of the
Foreign Corrupt Practices Act of 1977; or (iv) made any bribe, rebate,
payoff, influence payment, kickback or other unlawful payment.
(bb) On and immediately after the Closing Date, the Company and
each Current Guarantor (after giving effect to the issuance of the
Securities and to the other transactions related thereto as described in
the Offering Memorandum) will be Solvent. As used in this paragraph, the
term "Solvent" with respect to any Person means, with respect to a
particular date, that on such date (i) the present fair market value (or
present fair saleable value) of the assets of such Person is not less than
the total amount required to pay the probable liabilities of such Person on
its total existing debts and liabilities (including contingent liabilities)
as they become absolute and matured, (ii) such Person is able to realize
upon its assets and pay its debts and other liabilities, contingent
obligations and commitments as they mature and become due in the normal
course of business, (iii) assuming the sale of the Securities as
contemplated by this Agreement and the Offering Memorandum, such Person is
not incurring debts or liabilities beyond its ability to pay as such debts
and liabilities mature and (iv) such Person is not engaged in any business
or transaction, and is not about to engage in any business or transaction,
for which its property would constitute unreasonably small capital after
giving due consideration to the prevailing practice in the industry in
which such Person is engaged. In computing the amount of such contingent
liabilities at any time, it is intended that such liabilities will be
computed at the amount that, in the light of all the facts and
circumstances existing at such time, represents the amount that can
reasonably be expected to become an actual or matured liability.
(cc) Except as described in the Offering Memorandum, there are no
outstanding material subscriptions, rights, warrants, calls or options to
acquire, or instruments convertible into or exchangeable for, or agreements
or understandings with respect to the sale or issuance of, any shares of
capital stock of or other equity or other ownership interest in AHI,
Holdings, the Company or any of its subsidiaries.
(dd) None of the proceeds of the sale of the Securities will be used,
directly or indirectly, for the purpose of purchasing or carrying any
"margin securities" as that term is defined in Regulations G and U of the
Board of Governors of the Federal Reserve System (the "Federal Reserve
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Board"), for the purpose of reducing or retiring any indebtedness which was
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originally incurred to purchase or carry any margin security or for any
other purpose which might cause any of the Securities to be considered a
"purpose credit" within the meanings of Regulation G, T, U or X of the
Federal Reserve Board.
(ee) None of AHI, Holdings, the Company or any of its subsidiaries is
a party to any contract, agreement or understanding with any person that
would give rise to a valid claim against the Company, any Current Guarantor
or the Initial Purchasers for a brokerage commission, finder's fee or like
payment in connection with the offering and sale of the Securities other
than this Agreement.
(ff) The Securities satisfy the eligibility requirements of Rule
144A(d)(3) under the Securities Act.
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(gg) None of the Company, any of its affiliates or any person acting
on its or their behalf has engaged or will engage in any directed selling
efforts (as such term is defined in Regulation S under the Securities Act
("Regulation S")), and all such persons have complied and will comply with
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the offering restrictions requirement of Regulation S to the extent
applicable.
(hh) Neither the Company nor any of its affiliates has, directly or
through any agent, sold, offered for sale, solicited offers to buy or
otherwise negotiated in respect of, any security (as such term is defined
in the Securities Act), which is or will be integrated with the sale of the
Securities in a manner that would require registration of the Securities
under the Securities Act.
(ii) None of the Company or any of its affiliates or any other person
acting on its or their behalf has engaged, 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.
(jj) There are no securities of the Company registered under the
Exchange Act or listed on a national securities exchange or quoted in a
U.S. automated inter-dealer quotation system.
(kk) The Company has not taken and will not take, directly or
indirectly, any action prohibited by Regulation M under the Exchange Act in
connection with the offering of the Securities.
(ll) No forward-looking statement (within the meaning of Section 27A
of the Securities Act and Section 21E of the Exchange Act) contained in the
Preliminary Offering Memorandum or the Offering Memorandum has been made or
reaffirmed without a reasonable basis or has been disclosed other than in
good faith.
(mm) None of AHI, Holdings, the Company or any of its subsidiaries
does business with the government of Cuba or with any person or affiliate
located in Cuba within the meaning of Florida Statutes Section 517.075.
(nn) Since the date as of which information is given in the Offering
Memorandum, except as otherwise stated therein, (i) there has been no
material adverse change or any development involving a prospective material
adverse change in the condition, financial or otherwise, or in the
earnings, business affairs, management or business prospects of the Company
or any Current Guarantor, whether or not arising in the ordinary course of
business, (ii) the Company and each Current Guarantor has not incurred any
material liability or obligation, direct or contingent, other than in the
ordinary course of business, (iii) the Company and each Current Guarantor
has not entered into any material transaction other than in the ordinary
course of business and (iv) there has not been any change in the capital
stock or long-term debt of the Company or any Current Guarantor, or any
dividend or distribution of any kind declared, paid or made by the Company
on any class of its capital stock.
2. Representations, Warranties and Agreements regarding MAGIC and
--------------------------------------------------------------
MAGIC Kids by the Company. The Company represents and warrants to, and agrees
-------------------------
with, the several Initial Purchasers on and as of the date hereof and the
Closing Date that:
(a) Each of the Preliminary Offering Memorandum and the Offering
Memorandum, as of its respective date, did not, and on the Closing Date the
Offering Memorandum will not, contain any untrue statement of a material
fact with respect to MAGIC or omit to state a material fact with respect to
MAGIC required to be stated therein or necessary in order to make the
statements with respect to MAGIC therein, in the light of the circumstances
under which they were made, not misleading; provided that neither the
--------
Company nor MAGIC makes any representation or warranty as to the Initial
Purchasers' Information.
10
(b) MAGIC and its subsidiaries have been duly incorporated and are
validly existing as corporations in good standing under the laws of their
jurisdictions of incorporation, are duly qualified to do business and are
in good standing as foreign corporations in each jurisdiction in which
their ownership or lease of property or the conduct of their businesses
require such qualification, and have all power and authority necessary to
own or hold their properties and to conduct the businesses in which they
are engaged, except where the failure to so qualify or have such power or
authority would not, singularly or in the aggregate, have a material
adverse effect on the condition (financial or otherwise), results of
operations, business or prospects of MAGIC and its subsidiaries taken as a
whole (a "MAGIC Material Adverse Effect").
-----------------------------
(c) All of the outstanding shares of capital stock of MAGIC and its
subsidiaries have been duly and validly authorized and issued and are fully
paid and non-assessable.
(d) MAGIC and MAGIC Kids have full right, power and authority to
execute and deliver the Indenture, the Registration Rights Agreement and
their respective Guarantees (the "MAGIC Guarantees") (collectively, the
----------------
"MAGIC Transaction Documents") and to perform their obligations hereunder
---------------------------
and thereunder; and all corporate action required to be taken for the due
and proper authorization, execution and delivery of each of the MAGIC
Transaction Documents and the consummation of the transactions contemplated
thereby have been duly and validly taken.
(e) The Registration Rights Agreement has been duly authorized by
MAGIC and MAGIC Kids and, when duly executed and delivered in accordance
with its terms by each of the parties thereto, will constitute a valid and
legally binding agreement of MAGIC and MAGIC Kids, enforceable against each
of them in accordance with its terms, except to the extent that such
enforceability may be limited by applicable bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and other laws affecting
creditors' rights generally and by general equitable principles (whether
considered in a proceeding in equity or at law).
(f) The Indenture has been duly authorized by MAGIC and MAGIC Kids
and, when duly executed and delivered in accordance with its terms by each
of the parties thereto, will constitute a valid and legally binding
agreement of MAGIC and MAGIC Kids, enforceable against each of them in
accordance with its terms, except to the extent that such enforceability
may be limited by applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and other laws affecting creditors' rights
generally and by general equitable principles (whether considered in a
proceeding in equity or at law).
(g) The MAGIC Guarantees have been duly authorized by MAGIC and MAGIC
Kids and, when the Indenture is duly executed and delivered by the Company,
each Guarantor and the Trustee on the Closing Date, will constitute a valid
and legally binding obligation of MAGIC and MAGIC Kids, enforceable against
each of them in accordance with its terms, except as (i) the enforceability
thereof may be limited by bankruptcy, insolvency or laws affecting
creditors' rights generally, and (ii) rights of acceleration, if
applicable, and the availability of remedies may be limited by equitable
principles of general applicability.
(h) The execution, delivery and performance by MAGIC and MAGIC Kids
of each of the MAGIC Transaction Documents, the issuance, authentication,
sale and delivery of the MAGIC Guarantees and compliance by MAGIC and MAGIC
Kids with the terms thereof and the consummation of the transactions
contemplated by the MAGIC Transaction Documents will not conflict with or
result in a breach or violation of any of the terms or provisions of, or
constitute a default under, or result in the creation or imposition of any
lien, charge or encumbrance upon any property or assets of MAGIC or any of
its subsidiaries pursuant to, any indenture, mortgage, deed of
11
trust, loan agreement or other agreement or instrument to which MAGIC or
its subsidiaries is a party or by which MAGIC or any of its subsidiaries is
bound or to which any of the property or assets of MAGIC or any of its
subsidiaries is subject, except such as would not, individually or in the
aggregate, have a MAGIC Material Adverse Effect, nor will such actions
result in any violation of (i) the provisions of the charter or by-laws of
MAGIC or any of its subsidiaries or (ii) any statute or any judgment,
order, decree, rule or regulation of any court or arbitrator or
governmental agency or body having jurisdiction over MAGIC or any of its
subsidiaries or any of their properties or assets, except, with respect to
this clause (ii), any such violations which would not, individually or in
the aggregate, have a MAGIC Material Adverse Effect; and no consent,
approval, authorization or order of, or filing or registration with, any
such court or arbitrator or governmental agency or body under any such
statute, judgment, order, decree, rule or regulation is required for the
execution, delivery and performance by MAGIC or MAGIC Kids of each of the
MAGIC Transaction Documents, the issuance, authentication, sale and
delivery of the MAGIC Guarantees and compliance by MAGIC and MAGIC Kids
with the terms thereof and the consummation of the transactions
contemplated by the MAGIC Transaction Documents, except for such consents,
approvals, authorizations, filings, registrations or qualifications (i)
which shall have been obtained or made prior to the Closing Date, (ii) as
may be required to be obtained or made under the Securities Act and
applicable state securities laws as provided in the Registration Rights
Agreement or (iii) which if not obtained would not, individually or in the
aggregate, have a MAGIC Material Adverse Effect.
(i) The historical financial statements (including the related notes)
of MAGIC contained in the Offering Memorandum comply in all material
respects with the requirements applicable to a registration statement on
Form S-1 under the Securities Act (except that certain supporting schedules
are omitted); such financial statements have been prepared in accordance
with generally accepted accounting principles consistently applied
throughout the periods covered thereby and fairly present the financial
position of the entities purported to be covered thereby at the respective
dates indicated and the results of their operations and their cash flows
for the respective periods indicated; and the financial information
contained in the Offering Memorandum under the heading "Management's
Discussion and Analysis of Financial Condition and Results of Operations--
MAGIC" are derived from the accounting records of MAGIC and its subsidiary
and fairly present the information purported to be shown thereby. The
other historical financial and statistical information and data included in
the Offering Memorandum, and pertaining to MAGIC are, in all material
respects, fairly presented.
(j) There are no legal or governmental proceedings pending to which
MAGIC or any of its subsidiaries is a party or of which any property or
assets of MAGIC or any of its subsidiaries is the subject which, singularly
or in the aggregate, if determined adversely to MAGIC or any of its
subsidiaries, could reasonably be expected to have a MAGIC Material Adverse
Effect; and to the best knowledge of the Company, no such proceedings are
threatened or contemplated by governmental authorities or threatened by
others.
(k) No injunction, restraining order or order of any nature by any
federal or state court of competent jurisdiction has been issued with
respect to MAGIC or any of its subsidiaries which would prevent or suspend
the issuance or sale of the Securities or the use of the Preliminary
Offering Memorandum or the Offering Memorandum in any jurisdiction; no
action, suit or proceeding is pending against or, to the best knowledge of
the Company, threatened against or affecting MAGIC or any of its
subsidiaries before any court or arbitrator or any governmental agency,
body or official, domestic or foreign, which could reasonably be expected
to interfere with or adversely affect the issuance of the Securities or in
any manner impair the validity or enforceability of any of the MAGIC
Transaction Documents or any action taken or to be taken pursuant thereto;
and MAGIC has complied with any and all requests by any securities
authority in any jurisdiction for additional information to be included in
the Preliminary Offering Memorandum and the Offering Memorandum.
12
(l) Neither MAGIC nor any of its subsidiaries is (i) in violation of
its charter or by-laws, (ii) in default, and no event has occurred which,
with notice or lapse of time or both, would constitute such a default, in
the due performance or observance of any term, covenant or condition
contained in any indenture, mortgage, deed of trust, loan agreement or
other material agreement or instrument to which it is a party or by which
it is bound or to which any of its property or assets is subject, except
such as would not, individually or in the aggregate, have a MAGIC Material
Adverse Effect, or (iii) in violation of any law, ordinance, governmental
rule, regulation or court decree to which it or its property or assets may
be subject, except such as would not, individually or in the aggregate,
have a MAGIC Material Adverse Effect.
(m) MAGIC and its subsidiaries possess all material licenses,
certificates, authorizations and permits issued by, and have made all
declarations and filings with, the appropriate federal, state or foreign
regulatory agencies or bodies which are necessary or desirable for the
ownership of their properties or the conduct of their businesses as
described in the Offering Memorandum, except where the failure to possess
or make the same would not, singularly or in the aggregate, have a MAGIC
Material Adverse Effect, and neither MAGIC nor any of its subsidiaries have
received notification of any revocation or modification of any such
license, certificate, authorization or permit or has any reason to believe
that any such license, certificate, authorization or permit will not be
renewed in the ordinary course.
(n) MAGIC and its subsidiaries have filed all material federal,
state, local and foreign income and franchise tax returns required to be
filed through the date hereof and have paid all taxes due thereon, and no
tax deficiency has been determined adversely to MAGIC or any of its
subsidiaries which remains unpaid and has had (nor does the Company, MAGIC
or any of its subsidiaries have any knowledge of any tax deficiency which,
if determined adversely to MAGIC or any of its subsidiaries, could
reasonably be expected to have) a MAGIC Material Adverse Effect.
(o) Neither MAGIC nor any of its subsidiaries is (i) an "investment
company" or a company "controlled by" an investment company within the
meaning of the Investment Company Act of 1940, as amended (the "Investment
----------
Company Act"), and the rules and regulations of the Commission thereunder
-----------
or (ii) a "holding company" or a "subsidiary company" of a holding company
or an "affiliate" thereof within the meaning of the Public Utility Holding
Company Act of 1935, as amended.
(p) MAGIC and its subsidiaries each maintain a system of internal
accounting controls sufficient to provide reasonable assurance that (i)
transactions are executed in accordance with management's general or
specific authorizations; (ii) transactions are recorded as necessary to
permit preparation of financial statements in conformity with generally
accepted accounting principles and to maintain asset accountability; (iii)
access to assets is permitted only in accordance with management's general
or specific authorization; and (iv) the recorded accountability for assets
is compared with the existing assets at reasonable intervals and
appropriate action is taken with respect to any differences.
(q) MAGIC and its subsidiaries each have insurance covering its
properties, operations, personnel and businesses, which insurance is in
amounts and insures against such losses and risks as are believed by the
Company to be adequate to protect MAGIC and its subsidiaries and their
respective businesses. Neither MAGIC nor its subsidiaries have received
notice from any insurer or agent of such insurer that capital improvements
or other expenditures are required or necessary to be made in order to
continue such insurance.
(r) MAGIC and its subsidiaries each own or possess adequate rights to
use all material patents, patent applications, trademarks, service marks,
trade names, trademark registrations, service mark registrations,
copyrights, licenses and know-how (including trade secrets and other
unpatented
13
and/or unpatentable proprietary or confidential information, systems or
procedures) necessary for the conduct of their respective businesses as
described in the Offering Memorandum; and the conduct of their respective
businesses as described in the Offering Memorandum will not conflict with,
and MAGIC and its subsidiaries have not received any notice of any claim of
conflict with, any such rights of others, except such as would not,
individually or in the aggregate, have a MAGIC Material Adverse Effect.
(s) MAGIC and its subsidiaries each have good and marketable title in
fee simple to, or have valid rights to lease or otherwise use, all items of
real and personal property which are material to the business of MAGIC and
its subsidiaries, in each case free and clear of all liens, encumbrances,
claims and defects and imperfections of title except such as (i) do not
materially interfere with the use made and proposed to be made of such
property by MAGIC and its subsidiaries, (ii) could not reasonably be
expected to have a MAGIC Material Adverse Effect or (iii) are permitted
under the Senior Credit Agreement.
(t) No labor disturbance by or dispute with the employees of MAGIC or
its subsidiaries exists or, to the best knowledge of the Company, is
contemplated or threatened, in each case which could reasonably be expected
to have a MAGIC Material Adverse Effect.
(u) No "prohibited transaction" (as defined in Section 406 of the
Employee Retirement Income Security Act of 1974, as amended, including the
regulations and published interpretations thereunder ("ERISA"), or Section
-----
4975 of the Internal Revenue Code of 1986, as amended from time to time
(the "Code")) or "accumulated funding deficiency" (as defined in Section
----
302 of ERISA) or any of the events set forth in Section 4043(b) of ERISA
(other than events with respect to which the 30-day notice requirement
under Section 4043 of ERISA has been waived) has occurred with respect to
any employee benefit plan (other than a multiemployer plan) of MAGIC or any
of its subsidiaries which could reasonably be expected to have a MAGIC
Material Adverse Effect; each such employee benefit plan (other than a
multiemployer plan) is in compliance in all material respects with
applicable law, including ERISA and the Code; MAGIC and its subsidiaries
have not incurred and do not expect to incur liability under Title IV of
ERISA with respect to the termination of, or withdrawal from, any pension
plan for which MAGIC or its subsidiary would have any liability; and each
such pension plan that is intended to be qualified under Section 401(a) of
the Code is so qualified in all material respects and nothing has occurred,
whether by action or by failure to act, which could reasonably be expected
to cause the loss of such qualification.
(v) There has been no storage, generation, transportation, handling,
treatment, disposal, discharge, emission or other release of any kind of
toxic or other wastes or other hazardous substances by, due to or caused by
MAGIC or any of its subsidiaries (or, to the best knowledge of the Company,
any other entity (including any predecessor) for whose acts or omissions
MAGIC or any of its subsidiaries is or could reasonably be expected to be
liable) upon any of the property now or previously owned or leased by MAGIC
or any of its subsidiaries, or upon any other property, in violation of any
statute or any ordinance, rule, regulation, order, judgment, decree or
permit or which would, under any statute or any ordinance, rule (including
rule of common law), regulation, order, judgment, decree or permit, give
rise to any liability, except for any violation or liability which could
not reasonably be expected to have, singularly or in the aggregate with all
such violations and liabilities, a MAGIC Material Adverse Effect; and there
has been no disposal, discharge, emission or other release of any kind onto
such property or into the environment surrounding such property of any
toxic or other wastes or other hazardous substances with respect to which
the Company has knowledge, except for any such disposal, discharge,
emission or other release of any kind which could not reasonably be
expected to have, singularly or in the aggregate with all such discharges
and other releases, a MAGIC Material Adverse Effect.
14
(w) Neither MAGIC nor MAGIC Kids nor, to the best knowledge of the
Company, any director, officer, agent, employee or other person associated
with or acting on behalf of MAGIC has (i) used any corporate funds for any
unlawful contribution, gift, entertainment or other unlawful expense
relating to political activity; (ii) made any direct or indirect unlawful
payment to any foreign or domestic government official or employee from
corporate funds; (iii) violated or is in violation of any provision of the
Foreign Corrupt Practices Act of 1977; or (iv) made any bribe, rebate,
payoff, influence payment, kickback or other unlawful payment.
(x) There are no outstanding subscriptions, rights, warrants, calls
or options to acquire, or instruments convertible into or exchangeable for,
or agreements or understandings with respect to the sale or issuance of,
any shares of capital stock of or other equity or other ownership interest
in MAGIC, other than the Merger Agreement.
(aa) Neither MAGIC nor any of its subsidiaries is a party to any
contract, agreement or understanding with any person that would give rise
to a valid claim against the Company, MAGIC or the Initial Purchasers for a
brokerage commission, finder's fee or like payment in connection with the
offering and sale of the Securities.
(bb) None of MAGIC, any of its affiliates or any person acting on its
or their behalf has engaged or will engage in any directed selling efforts
(as such term is defined in Regulation S), and all such persons have
complied and will comply with the offering restrictions requirement of
Regulation S to the extent applicable.
(cc) Neither MAGIC nor any of its affiliates has, directly or through
any agent, sold, offered for sale, solicited offers to buy or otherwise
negotiated in respect of, any security (as such term is defined in the
Securities Act), which is or will be integrated with the sale of the
Securities in a manner that would require registration of the Securities
under the Securities Act.
(dd) None of MAGIC or any of its affiliates or any other person
acting on its or their behalf has engaged, 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.
(ee) There are no securities of MAGIC or MAGIC Kids registered under
the Exchange Act, or listed on a national securities exchange or quoted in
a U.S. automated inter-dealer quotation system.
(ff) Each of MAGIC and MAGIC Kids has not taken and will not take,
directly or indirectly, any action prohibited by Regulation M under the
Exchange Act in connection with the offering of the Securities.
(gg) No forward-looking statement (within the meaning of Section 27A
of the Securities Act and Section 21E of the Exchange Act) contained in the
Preliminary Offering Memorandum or the Offering Memorandum with respect to
MAGIC or MAGIC Kids has been made or reaffirmed without a reasonable basis
or has been disclosed other than in good faith.
(hh) Neither MAGIC nor any of its subsidiaries do business with the
government of Cuba or with any person or affiliate located in Cuba within
the meaning of Florida Statutes Section 517.075.
(ii) Since the date as of which information is given in the Offering
Memorandum, except as otherwise stated therein, (i) there has been no
material adverse change or any development involving a prospective material
adverse change in the condition, financial or otherwise, or in the
earnings, business affairs, management or business prospects of MAGIC,
whether or not arising in the ordinary
15
course of business, (ii) MAGIC has not incurred any material liability or
obligation, direct or contingent, other than in the ordinary course of
business, (iii) MAGIC has not entered into any material transaction other
than in the ordinary course of business and (iv) there has not been any
change in the capital stock or long-term debt of MAGIC, or any dividend or
distribution of any kind declared, paid or made by MAGIC on any class of
its capital stock.
3. Purchase and Resale of the Securities. (a) On the basis of the
-------------------------------------
representations, warranties and agreements contained herein, and subject to the
terms and conditions set forth herein, the Company agrees to issue and sell to
each of the Initial Purchasers, severally and not jointly, and each of the
Initial Purchasers, severally and not jointly, agrees to purchase from the
Company, the principal amount of Securities set forth opposite the name of such
Initial Purchaser on Schedule 1 hereto at a purchase price equal to 97.00% of
the principal amount thereof. The Company shall not be obligated to deliver any
of the Securities except upon payment for all of the Securities to be purchased
as provided herein.
(b) The Initial Purchasers have advised the Company that they propose
to offer the Securities for resale upon the terms and subject to the conditions
set forth herein and in the Offering Memorandum. Each Initial Purchaser,
severally and not jointly, represents, warrants and agrees that (i) it is
purchasing the Securities pursuant to a private sale exempt from registration
under the Securities Act, (ii) it has not solicited offers for, or offered or
sold, and will not solicit offers for, or offer or sell, the Securities by means
of any form of general solicitation or general advertising within the meaning of
Rule 502(c) of Regulation D under the Securities Act ("Regulation D") or in any
------------
manner involving a public offering within the meaning of Section 4(2) of the
Securities Act and (iii) it has solicited and will solicit offers for the
Securities only from, and has offered or sold and will offer, sell or deliver
the Securities, as part of their initial offering, only (A) within the United
States to persons whom it reasonably believes to be qualified institutional
buyers ("Qualified Institutional Buyers"), as defined in Rule 144A under the
------------------------------
Securities Act ("Rule 144A"), or if any such person is buying for one or more
---------
institutional accounts for which such person is acting as fiduciary or agent,
only when such person has represented to it that each such account is a
Qualified Institutional Buyer to whom notice has been given that such sale or
delivery is being made in reliance on Rule 144A and in each case, in
transactions in accordance with Rule 144A and (B) outside the United States to
persons other than U.S. persons in reliance on and compliance with Regulation S
under the Securities Act ("Regulation S").
------------
(c) In connection with the offer and sale of Securities in reliance
on Regulation S, each Initial Purchaser, severally and not jointly, represents,
warrants and agrees that:
(i) The Securities have not been registered under the
Securities Act and may not be offered or sold within the United States or
to, or for the account or benefit of, U.S. persons except pursuant to an
exemption from, or in transactions not subject to, the registration
requirements of the Securities Act.
(ii) Such Initial Purchaser has offered and sold the
Securities, and will offer and sell the Securities, (A) as part of their
distribution at any time and (B) otherwise until 40 days after the later of
the commencement of the offering of the Securities and the Closing Date,
only in accordance with Regulation S or Rule 144A or any other available
exemption from registration under the Securities Act.
(iii) None of such Initial Purchaser or any of its affiliates
or any other person acting on its or their behalf has engaged or will
engage in any directed selling efforts with respect to the Securities, and
all such persons have complied and will comply with the offering
restrictions requirement of Regulation S.
(iv) at or prior to the confirmation of sale of any
Securities sold in reliance on Regulation S, it will have sent to each
distributor, dealer or other person receiving a selling
16
concession, fee or other remuneration that purchase Securities from it
during the restricted period 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 or sold within the
United States or to, or for the account or benefit of, U.S.
persons (i) as part of their distribution at any time or
(ii) otherwise until 40 days after the later of the
commencement of the offering of the Securities and the date
of original issuance of the Securities, except in accordance
with Regulation S or Rule 144A or any other available
exemption from registration under the Securities Act. Terms
used above have the meanings given to them by Regulation S."
(v) it has not and will not enter into any contractual
arrangement with any distributor with respect to the distribution of the
Securities, except with its affiliates or with the prior written consent of
the Company.
Terms used in this Section 3(c) have the meanings given to them by Regulation S.
(d) Each Initial Purchaser, severally and not jointly, represents,
warrants and agrees that (i) it has not offered or sold and prior to the date
six months after the Closing Date will not offer or sell any Securities to
persons in the United Kingdom except to persons whose ordinary activities
involve them in acquiring, holding, managing or disposing of investments (as
principal or agent) for the purposes of their businesses or otherwise in
circumstances which have not resulted and will not result in an offer to the
public in the United Kingdom within the meaning of the Public Offers of
Securities Regulations 1995; (ii) it has complied and will comply with all
applicable provisions of the Financial Services Act 1986 and the Public Offers
of Securities Regulations 1995 with respect to anything done by it in relation
to the Securities in, from or otherwise involving the United Kingdom; and (iii)
it has only issued or passed on and will only issue or pass on in the United
Kingdom any document received by it in connection with the issue of the
Securities to a person who is of a kind described in Article 11(3) of the
Financial Services Act 1986 (Investment Advertisements) (Exemptions) Order 1996
or is a person to whom such document may otherwise lawfully be issued or passed
on.
(e) Each Initial Purchaser, severally and not jointly, agrees that,
prior to or simultaneously with the confirmation of sale by such Initial
Purchaser to any purchaser of any of the Securities purchased by such Initial
Purchaser from the Company pursuant hereto, such Initial Purchaser shall furnish
to that purchaser a copy of the Offering Memorandum (and any amendment or
supplement thereto that the Company shall have furnished to such Initial
Purchaser prior to the date of such confirmation of sale). In addition to the
foregoing, each Initial Purchaser acknowledges and agrees that the Company and,
for purposes of the opinions to be delivered to the Initial Purchasers pursuant
to Sections 5(d) and (e), counsel for the Company and for the Initial
Purchasers, respectively, may rely upon the accuracy of the representations and
warranties of the Initial Purchasers and their compliance with their agreements
contained in this Section 2, and each Initial Purchaser hereby consents to such
reliance.
(f) The Company acknowledges and agrees that the Initial Purchasers
may sell Securities to any affiliate of an Initial Purchaser and that any such
affiliate may sell Securities purchased by it to an Initial Purchaser.
(g) No initial purchaser will offer or sell Securities in any
jurisdiction where their offer or sale pursuant to and in the manner
contemplated by the Offering Memorandum would be unlawful or would, to the
knowledge of the Initial Purchasers, reasonably be expected to require any
registration or qualification of such offer or sale by the Company.
17
4. Delivery of and Payment for the Securities. (a) Delivery of and
------------------------------------------
payment for the Securities shall be made at the offices of Xxxxxxx Xxxxxxx &
Xxxxxxxx, New York, New York, or at such other place as shall be agreed upon by
the Initial Purchasers and the Company, at 10:00 A.M., New York City time, on
April 30, 1998, or at such other time or date, not later than seven full
business days thereafter, as shall be agreed upon by the Initial Purchasers and
the Company (such date and time of payment and delivery being referred to herein
as the "Closing Date").
------------
(b) On the Closing Date, payment of the purchase price for the
Securities shall be made to the Company by wire or book-entry transfer of same-
day funds to such account or accounts as the Company shall specify prior to the
Closing Date or by such other means as the parties hereto shall agree prior to
the Closing Date against delivery to the Initial Purchasers of the certificates
evidencing the Securities. Time shall be of the essence, and delivery at the
time and place specified pursuant to this Agreement is a further condition of
the obligations of the Initial Purchasers hereunder. Upon delivery, the
Securities shall be in global form, registered in such names and in such
denominations as CSI on behalf of the Initial Purchasers shall have requested in
writing not less than two full business days prior to the Closing Date. The
Company agrees to make one or more global certificates evidencing the Securities
available for inspection by CSI on behalf of the Initial Purchasers in New York,
New York at least 24 hours prior to the Closing Date.
5. Further Agreements of the Company and the Current Guarantors. The
------------------------------------------------------------
Company and the Current Guarantors agree with each of the several Initial
Purchasers:
(a) to advise the Initial Purchasers promptly and, if requested,
confirm such advice in writing, of the happening of any event which makes
any statement of a material fact made in the Offering Memorandum untrue or
which requires the making of any additions to or changes in the Offering
Memorandum (as amended or supplemented from time to time) in order to make
the statements therein, in the light of the circumstances under which they
were made, not misleading; to advise the Initial Purchasers promptly of any
order preventing or suspending the use of the Preliminary Offering
Memorandum or the Offering Memorandum, of any suspension of the
qualification of the Securities for offering or sale in any jurisdiction
and of the initiation or threatening of any proceeding for any such
purpose; and to use its best efforts to prevent the issuance of any such
order preventing or suspending the use of the Preliminary Offering
Memorandum or the Offering Memorandum or suspending any such qualification
and, if any such suspension is issued, to obtain the lifting thereof at the
earliest possible time;
(b) to furnish promptly to each of the Initial Purchasers and counsel
for the Initial Purchasers, without charge, as many copies of the
Preliminary Offering Memorandum and the Offering Memorandum (and any
amendments or supplements thereto) as may be reasonably requested;
(c) prior to making any amendment or supplement to the Offering
Memorandum, to furnish a copy thereof to each of the Initial Purchasers and
counsel for the Initial Purchasers and not to effect any such amendment or
supplement to which the Initial Purchasers shall reasonably object by
notice to the Company after a reasonable period to review;
(d) if, at any time prior to completion of the resale of the
Securities by the Initial Purchasers, any event shall occur or condition
exist as a result of which it is necessary, in the opinion of counsel for
the Initial Purchasers or counsel for the Company, to amend or supplement
the Offering Memorandum in order that the Offering Memorandum 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 existing at the time it is delivered to a purchaser, not
misleading, or if it is necessary to amend or supplement the Offering
Memorandum to comply with applicable law, to
18
promptly prepare such amendment or supplement as may be necessary to
correct such untrue statement or omission or so that the Offering
Memorandum, as so amended or supplemented, will comply with applicable law;
(e) for so long as the Securities are outstanding and are "restricted
securities" within the meaning of Rule 144(a)(3) under the Securities Act,
to furnish to holders of the Securities and prospective purchasers of the
Securities designated by such holders, upon request of such holders or such
prospective purchasers, the information required to be delivered pursuant
to Rule 144A(d)(4) under the Securities Act, unless the Company is then
subject to and in compliance with Section 13 or 15(d) of the Exchange Act;
(f) for so long as the Securities are outstanding, to furnish to the
Initial Purchasers copies of any annual reports, quarterly reports and
current reports filed by the Company with the Commission on Forms 10-K, 10-
Q and 8-K, or such other similar forms as may be designated by the
Commission, and such other documents, reports and information as shall be
furnished by the Company to the Trustee or to the holders of the Securities
pursuant to the Indenture or the Exchange Act or any rule or regulation of
the Commission thereunder;
(g) to promptly take from time to time such actions as the Initial
Purchasers may reasonably request to qualify the Securities for offering
and sale under the securities or Blue Sky laws of such United States
jurisdictions as the Initial Purchasers may designate and to continue such
qualifications in effect for so long as required for the resale of the
Securities; and to arrange for the determination of the eligibility for
investment of the Securities under the laws of such jurisdictions as the
Initial Purchasers may reasonably request; provided that the Company and
--------
its subsidiaries shall not be obligated to qualify as foreign corporations
in any jurisdiction in which they are not so qualified or to file a general
consent to service of process in any jurisdiction;
(h) to assist the Initial Purchasers in arranging for the Securities
to be designated Private Offerings, Resales and Trading through Automated
Linkages ("PORTAL") Market securities in accordance with the rules and
------
regulations adopted by the National Association of Securities Dealers, Inc.
("NASD") relating to trading in the PORTAL Market and for the Securities to
----
be eligible for clearance and settlement through The Depository Trust
Company ("DTC");
---
(i) not to, and to cause its affiliates not to, sell, offer for sale
or solicit offers to buy or otherwise negotiate in respect of any security
(as such term is defined in the Securities Act) which could be integrated
with the sale of the Securities in a manner which would require
registration of the Securities under the Securities Act;
(j) except following the effectiveness of the Exchange Offer
Registration Statement or the Shelf Registration Statement, as the case may
be, not to, and to cause its affiliates not to, and not to authorize or
knowingly permit any person acting on their behalf to, solicit any offer to
buy or offer to sell the Securities by means of any form of general
solicitation or general advertising within the meaning of Regulation D or
in any manner involving a public offering within the meaning of Section
4(2) of the Securities Act; and not to offer, sell, contract to sell or
otherwise dispose of, directly or indirectly, any securities under
circumstances where such offer, sale, contract or disposition would cause
the exemption afforded by Section 4(2) of the Securities Act to cease to be
applicable to the offering and sale of the Securities as contemplated by
this Agreement and the Offering Memorandum;
(k) for a period of 90 days from the date of the Offering Memorandum,
not to offer for sale, sell, contract to sell or otherwise dispose of,
directly or indirectly, or file a registration statement for, or announce
any offer, sale, contract for sale of or other disposition of any debt
securities issued or
19
guaranteed by the Company or any of its subsidiaries (other than the
Securities or the Exchange Securities) without the prior written consent of
the Initial Purchasers;
(l) during the period from the Closing Date until two years after the
Closing Date, without the prior written consent of the Initial Purchasers,
not to, and not permit any of its affiliates (as defined in Rule 144 under
the Securities Act) to, resell any of the Securities that have been
reacquired by them, except for Securities purchased by the Company or any
of its affiliates and resold in a transaction registered under the
Securities Act;
(m) not to, for so long as the Securities are outstanding, be or
become, or be or become owned by, an open-end investment company, unit
investment trust or face-amount certificate company that is or is required
to be registered under Section 8 of the Investment Company Act, and to not
be or become, or be or become owned by, a closed-end investment company
required to be registered, but not registered thereunder;
(n) in connection with the offering of the Securities, until CSI on
behalf of the Initial Purchasers shall have notified the Company of the
completion of the resale of the Securities, not to, and to cause its
affiliated purchasers (as defined in Regulation M under the Exchange Act)
not to, either alone or with one or more other persons, bid for or
purchase, for any account in which it or any of its affiliated purchasers
has a beneficial interest, any Securities, or attempt to induce any person
to purchase any Securities; and not to, and to cause its affiliated
purchasers not to, make bids or purchase for the purpose of creating
actual, or apparent, active trading in or of raising the price of the
Securities;
(o) in connection with the offering of the Securities, to make its
officers, employees, independent accountants and legal counsel reasonably
available upon request by the Initial Purchasers;
(p) to furnish to each of the Initial Purchasers on the date hereof a
copy of the independent accountants' report included in the Offering
Memorandum signed by the accountants rendering such report;
(q) to do and perform all things required to be done and performed by
it under this Agreement that are within its control prior to or after the
Closing Date, and to use its best efforts to satisfy all conditions
precedent on its part to the delivery of the Securities;
(r) to not take any action prior to the execution and delivery of the
Indenture which, if taken after such execution and delivery, would have
violated any of the covenants contained in the Indenture;
(s) to not take any action prior to the Closing Date which would
require the Offering Memorandum to be amended or supplemented pursuant to
Section 5(d);
(t) prior to the Closing Date, not to issue any press release or
other communication directly or indirectly or hold any press conference
with respect to the Company or any Guarantor, its condition, financial or
otherwise, or earnings, business affairs or business prospects (except for
routine oral marketing communications in the ordinary course of business
and consistent with the past practices of the Company and the Guarantors
and of which the Initial Purchasers are notified), without the prior
written consent of the Initial Purchasers, unless in the judgment of the
Company and its counsel, and after notification to the Initial Purchasers,
such press release or communication is required by law; and
20
(u) to apply the net proceeds from the sale of the Securities as set
forth in the Offering Memorandum under the heading "Use of Proceeds".
6. Conditions of Initial Purchasers' Obligations. The respective
---------------------------------------------
obligations of the several Initial Purchasers hereunder are subject to the
accuracy, on and as of the date hereof and the Closing Date, of the
representations and warranties of the Company and the Current Guarantors
contained herein, to the accuracy of the statements of the Company and the
Current Guarantors and their respective officers made in any certificates
delivered pursuant hereto, to the performance by the Company and the Current
Guarantors of its obligations hereunder, and to each of the following additional
terms and conditions:
(a) The Offering Memorandum (and any amendments or supplements
thereto) shall have been printed and copies distributed to the Initial
Purchasers as promptly as practicable on or following the date of this
Agreement or at such other date and time as to which the Initial Purchasers
may agree; and no stop order suspending the sale of the Securities in any
United States jurisdiction shall have been issued and no proceeding for
that purpose shall have been commenced or shall be pending or threatened.
(b) None of the Initial Purchasers shall have discovered and
disclosed to the Company on or prior to the Closing Date that the Offering
Memorandum or any amendment or supplement thereto contains an untrue
statement of a fact which, in the opinion of counsel for the Initial
Purchasers, is material or omits to state any fact which, in the opinion of
such counsel, is material and is required to be stated therein or is
necessary to make the statements therein not misleading.
(c) All corporate proceedings and other legal matters incident to the
authorization, form and validity of each of the Transaction Documents and
the Offering Memorandum, and all other legal matters relating to the
Transaction Documents and the transactions contemplated thereby, shall be
satisfactory in all material respects to the Initial Purchasers, and the
Company shall have furnished to the Initial Purchasers all documents and
information that they or their counsel may reasonably request to enable
them to pass upon such matters.
(d) Xxxxx, Xxxxxxx & Xxxxxxxxx, LLP, Xxxxxx Xxxxxx White & XxXxxxxxx,
Xxxxx & Xxxx, P.C. and Xxxxxx, Xxxxxxx & Xxxxxxx L.L.P., as counsel to the
Company and the Guarantors, shall have furnished to the Initial Purchasers
their written opinion, as counsel to the Company, addressed to the Initial
Purchasers and dated the Closing Date, in form and substance reasonably
satisfactory to the Initial Purchasers, substantially to the effect set
forth in Annexes B-1, B-2, B-3 and B-4 hereto.
(e) The Initial Purchasers shall have received from Xxxxxxx Xxxxxxx &
Xxxxxxxx, counsel for the Initial Purchasers, such opinion or opinions,
dated the Closing Date, with respect to such matters as the Initial
Purchasers may reasonably require, and the Company and each Guarantor shall
have furnished to such counsel such documents and information as they
request for the purpose of enabling them to pass upon such matters.
(f) The Company shall have furnished to the Initial Purchasers
letters (the "Initial Letters") of Xxxxxx Xxxxxxxx LLP and Coopers &
---------------
Xxxxxxx LLP, addressed to the Initial Purchasers and dated the date hereof,
in form and substance satisfactory to the Initial Purchasers.
(g) The Company shall have furnished to the Initial Purchasers a
letter (the "Bring-Down Letter") of Xxxxxx Xxxxxxxx LLP, addressed to the
-----------------
Initial Purchasers and dated the Closing Date (i) confirming that they are
independent public accountants with respect to the Company and its
subsidiaries within the meaning of Rule 101 of the Code of Professional
Conduct of the AICPA and its interpretations and rulings thereunder, (ii)
stating, as of the date of the Bring-Down Letter (or, with respect to
matters involving changes or developments since the respective dates as of
which specified
21
financial information is given in the Offering Memorandum, as of a date not
more than three business days prior to the date of the Bring-Down Letter),
that the conclusions and findings of such accountants with respect to the
financial information and other matters covered by the Initial Letter are
accurate and (iii) confirming in all material respects the conclusions and
findings set forth in the Initial Letter.
(h) The Company shall have furnished to the Initial Purchasers a
certificate, dated the Closing Date, of its chief executive officer and its
chief financial officer stating that (A) such officers have carefully
examined the Offering Memorandum, (B) in their opinion, the Offering
Memorandum, as of its date, did not include any untrue statement of a
material fact and did not omit to state a material fact required to be
stated therein or necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading, and
since the date of the Offering Memorandum, no event has occurred which
should have been set forth in a supplement or amendment to the Offering
Memorandum so that the Offering Memorandum (as so amended or supplemented)
would not include any untrue statement of a material fact and would not
omit to state a material fact required to be stated therein or necessary in
order to make the statements therein, in the light of the circumstances
under which they were made, not misleading and (C) as of the Closing Date,
the representations and warranties of the Company and each Guarantor in
this Agreement are true and correct, the Company and each Guarantor has
complied with all agreements and satisfied all conditions on its part to be
performed or satisfied hereunder on or prior to the Closing Date, and
subsequent to the date of the most recent financial statements contained in
the Offering Memorandum, there has been no material adverse change in the
financial position or results of operation of the Company or any of its
subsidiaries, or any change, or any development including a prospective
change, in or affecting the condition (financial or otherwise), results of
operations, business or prospects of the Company, its subsidiaries and the
Guarantors taken as a whole, except as set forth in the Offering
Memorandum.
(i) The Initial Purchasers shall have received a counterpart of the
Registration Rights Agreement which shall have been executed and delivered
by a duly authorized officer of the Company and each Guarantor.
(j) The Indenture shall have been duly executed and delivered by the
Company, each Guarantor and the Trustee, and the Securities shall have been
duly executed and delivered by the Company and each Guarantor and duly
authenticated by the Trustee.
(k) On or prior to the Closing Date, (i) the Company shall have
delivered to the Initial Purchasers a true copy of the amended Senior
Credit Agreement which shall have been executed and delivered by the
Company and the banks party thereto, (ii) all conditions to the
transactions contemplated by the Merger Agreement shall have been satisfied
or waived such that the transactions contemplated by the Merger Agreement
will be consummated contemporaneously with the closing of the sale of the
Securities and (iii) the HFCP Equity Investment (as such term is defined in
the Offering Memorandum) shall have been effected.
(l) The Securities shall have been approved by the NASD for trading
in the PORTAL Market.
(m) If any event shall have occurred that requires the Company under
Section 5(d) to prepare an amendment or supplement to the Offering
Memorandum, such amendment or supplement shall have been prepared, the
Initial Purchasers shall have been given a reasonable opportunity to
comment thereon, and copies thereof shall have been delivered to the
Initial Purchasers reasonably in advance of the Closing Date.
22
(n) There shall not have occurred any invalidation of Rule 144A under
the Securities Act by any court or any withdrawal or proposed withdrawal of
any rule or regulation under the Securities Act or the Exchange Act by the
Commission or any amendment or proposed amendment thereof by the Commission
which in the reasonable judgment of the Initial Purchasers would materially
impair the ability of the Initial Purchasers to purchase, hold or effect
resales of the Securities as contemplated hereby.
(o) Subsequent to the execution and delivery of this Agreement or, if
earlier, the dates as of which information is given in the Offering
Memorandum (exclusive of any amendment or supplement thereto), there shall
not have been any change in the capital stock or long-term debt or any
change, or any development involving a prospective change, in or affecting
the condition (financial or otherwise), results of operations, business or
prospects of AHI, Holdings, MAGIC, MAGIC Kids, the Company and its
subsidiaries taken as a whole, the effect of which, in any such case
described above, is, in the reasonable judgment of the Initial Purchasers,
so material and adverse as to make it impracticable or inadvisable to
proceed with the sale or delivery of the Securities on the terms and in the
manner contemplated by this Agreement and the Offering Memorandum
(exclusive of any amendment or supplement thereto).
(p) No action shall have been taken and no statute, rule, regulation
or order shall have been enacted, adopted or issued by any United States
governmental agency or body which would, as of the Closing Date, prevent
the issuance or sale of the Securities; and no injunction, restraining
order or order of any other nature by any federal or state court of
competent jurisdiction shall have been issued as of the Closing Date which
would prevent the issuance or sale of the Securities.
(q) Subsequent to the execution and delivery of this Agreement (i) no
downgrading shall have occurred in the rating accorded the Securities or
any of the Company's other debt securities or preferred stock by any
"nationally recognized statistical rating organization", as such term is
defined by the Commission for purposes of Rule 436(g)(2) of the rules and
regulations of the Commission under the Securities Act and (ii) no such
organization shall have publicly announced that it has under surveillance
or review (other than an announcement with positive implications of a
possible upgrading), its rating of the Securities or any of the Company's
other debt securities or preferred stock.
(r) Subsequent to the execution and delivery of this Agreement there
shall not have occurred any of the following: (i) trading in securities
generally on the New York Stock Exchange, the American Stock Exchange or
the over-the-counter market shall have been suspended or limited, or
minimum prices shall have been established on any such exchange or market
by the Commission, by any such exchange or by any other regulatory body or
governmental authority having jurisdiction, or trading in any securities of
the Company on any exchange or in the over-the-counter market shall have
been suspended or (ii) any moratorium on commercial banking activities
shall have been declared by federal or New York state authorities or (iii)
an outbreak or escalation of hostilities or a declaration by the United
States of a national emergency or war or (iv) a material adverse change in
general economic, political or financial conditions (or the effect of
international conditions on the financial markets in the United States
shall be such) the effect of which, in the case of this clause (iv), is, in
the judgment of the Initial Purchasers, so material and adverse as to make
it impracticable or inadvisable to proceed with the sale or the delivery of
the Securities on the terms and in the manner contemplated by this
Agreement and in the Offering Memorandum (exclusive of any amendment or
supplement thereto).
(s) The Initial Purchasers shall have received on the Closing Date an
Officer's Certificate from Xxxxxx Xxxxxx, President and Chief Executive
Officer of MAGIC, addressed to the Initial Purchasers and dated the Closing
Date, in form of Annex C hereto.
23
All opinions, letters, evidence and certificates mentioned above or
elsewhere in this Agreement shall be deemed to be in compliance with the
provisions hereof only if they are in form and substance reasonably satisfactory
to counsel for the Initial Purchasers.
7. Termination. The obligations of the Initial Purchasers hereunder
-----------
may be terminated by the Initial Purchasers, in their absolute discretion, by
notice given to and received by the Company prior to delivery of and payment for
the Securities if, prior to that time, any of the events described in Section
6(m), (n), (o), (p) or (q) shall have occurred and be continuing.
8. Defaulting Initial Purchasers. (a) If, on the Closing Date, any
-----------------------------
Initial Purchaser defaults in the performance of its obligations under this
Agreement, the non-defaulting Initial Purchasers may make arrangements for the
purchase of the Securities which such defaulting Initial Purchaser agreed but
failed to purchase by other persons satisfactory to the Company and the non-
defaulting Initial Purchasers, but if no such arrangements are made within 36
hours after such default, this Agreement shall terminate without liability on
the part of the non-defaulting Initial Purchasers, the Company or the
Guarantors, except that the Company will continue to be liable for the payment
of expenses to the extent set forth in Sections 9 and 13 and except that the
provisions of Sections 9 and 10 shall not terminate and shall remain in effect.
As used in this Agreement, the term "Initial Purchasers" includes, for all
purposes of this Agreement unless the context otherwise requires, any party not
listed in Schedule 1 hereto that, pursuant to this Section 8, purchases
Securities which a defaulting Initial Purchaser agreed but failed to purchase.
(b) Nothing contained herein shall relieve a defaulting Initial
Purchaser of any liability it may have to the Company or the Current Guarantors
or any non-defaulting Initial Purchaser for damages caused by its default. If
other persons are obligated or agree to purchase the Securities of a defaulting
Initial Purchaser, either the non-defaulting Initial Purchasers or the Company
may postpone the Closing Date for up to seven full business days in order to
effect any changes that in the opinion of counsel for the Company or counsel for
the Initial Purchasers may be necessary in the Offering Memorandum or in any
other document or arrangement, and the Company agrees to promptly prepare any
amendment or supplement to the Offering Memorandum that effects any such
changes.
9. Reimbursement of Initial Purchasers' Expenses. If (a) this
---------------------------------------------
Agreement shall have been terminated pursuant to Section 7 or 8, (b) the Company
shall fail to tender the Securities for delivery to the Initial Purchasers for
any reason permitted under this Agreement or (c) the Initial Purchasers shall
decline to purchase the Securities for any reason permitted under this
Agreement, the Company shall reimburse the Initial Purchasers for such out-of-
pocket expenses (including reasonable fees and disbursements of counsel) as
shall have been reasonably incurred by the Initial Purchasers in connection with
this Agreement and the proposed purchase and resale of the Securities. If this
Agreement is terminated pursuant to Section 8 by reason of the default of one or
more of the Initial Purchasers, the Company shall not be obligated to reimburse
any defaulting Initial Purchaser on account of such expenses.
10. Indemnification. (a) The Company and the Current Guarantors,
---------------
jointly and severally, shall indemnify and hold harmless each Initial Purchaser,
its affiliates, their respective officers, directors, employees, representatives
and agents, and each person, if any, who controls any Initial Purchaser within
the meaning of the Securities Act or the Exchange Act (collectively referred to
for purposes of this Section 10(a) and Section 11 as an Initial Purchaser), from
and against any loss, claim, damage or liability, joint or several, or any
action in respect thereof (including, without limitation, any loss, claim,
damage, liability or action relating to purchases and sales of the Securities),
to which that Initial Purchaser may become subject, whether commenced or
threatened, under the Securities Act, the Exchange Act, any other federal or
state statutory law or regulation, at common law or otherwise, insofar as such
loss, claim, damage, liability or action arises out of, or is based upon, (i)
any untrue statement or alleged untrue statement of a material fact contained in
the Preliminary Offering Memorandum or the Offering Memorandum or in any
amendment or supplement thereto
24
or in any information provided by the Company or any Guarantor pursuant to
Section 5(e) or (ii) the omission or alleged omission to state therein a
material fact required to be stated therein or necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading, and shall reimburse each Initial Purchaser promptly upon
demand for any legal or other expenses reasonably incurred by that Initial
Purchaser in connection with investigating or defending or preparing to defend
against or appearing as a third party witness in connection with any such loss,
claim, damage, liability or action as such expenses are incurred; provided,
--------
however, that the Company and the Guarantors shall not be liable in any such
-------
case to the extent that any such loss, claim, damage, liability or action arises
out of, or is based upon, an untrue statement or alleged untrue statement in or
omission or alleged omission from any of such documents in reliance upon and in
conformity with any Initial Purchasers' Information; and provided, further, that
-------- -------
with respect to any such untrue statement in or omission from the Preliminary
Offering Memorandum, the indemnity agreement contained in this Section 10(a)
shall not inure to the benefit of any such Initial Purchaser to the extent that
the sale to the person asserting any such loss, claim, damage, liability or
action was an initial resale by such Initial Purchaser and any such loss, claim,
damage, liability or action of or with respect to such Initial Purchaser results
from the fact that both (A) to the extent required by applicable law, a copy of
the Offering Memorandum was not sent or given to such person at or prior to the
written confirmation of the sale of such Securities to such person and (B) the
untrue statement in or omission from the Preliminary Offering Memorandum was
corrected in the Offering Memorandum unless, in either case, such failure to
deliver the Offering Memorandum was a result of non-compliance by the Company or
any Current Guarantor with Section 5(b).
(b) Each Initial Purchaser, severally and not jointly, shall
indemnify and hold harmless the Company, its affiliates (including the
Guarantors), their respective officers, directors, employees, representatives
and agents, and each person, if any, who controls the Company within the meaning
of the Securities Act or the Exchange Act (collectively referred to for purposes
of this Section 10(b) and Section 11 as the Company), from and against any loss,
claim, damage or liability, joint or several, or any action in respect thereof,
to which the Company or a Guarantor may become subject, whether commenced or
threatened, under the Securities Act, the Exchange Act, any other federal or
state statutory law or regulation, at common law or otherwise, insofar as such
loss, claim, damage, liability or action arises out of, or is based upon, (i)
any untrue statement or alleged untrue statement of a material fact contained in
the Preliminary Offering Memorandum or the Offering Memorandum or in any
amendment or supplement thereto or (ii) the omission or alleged omission to
state therein a material fact required to be stated therein or necessary in
order to make the statements therein, in the light of the circumstances under
which they were made, not misleading, but in each case only to the extent that
the untrue statement or alleged untrue statement or omission or alleged omission
was made in reliance upon and in conformity with any Initial Purchasers'
Information, and shall reimburse the Company and the Current Guarantors for any
legal or other expenses reasonably incurred by the Company or the Current
Guarantors in connection with investigating or defending or preparing to defend
against or appearing as a third party witness in connection with any such loss,
claim, damage, liability or action as such expenses are incurred.
(c) Promptly after receipt by an indemnified party under this Section
10 of notice of any claim or the commencement of any action, the indemnified
party shall, if a claim in respect thereof is to be made against the
indemnifying party pursuant to Section 10(a) or 10(b), notify the indemnifying
party in writing of the claim or the commencement of that action; provided,
--------
however, that the failure to notify the indemnifying party shall not relieve it
-------
from any liability which it may have under this Section 10 except to the extent
that it has been materially prejudiced (such as through the forfeiture of
substantive rights or defenses) by such failure; and, provided, further, that
-------- -------
the failure to notify the indemnifying party shall not relieve it from any
liability which it may have to an indemnified party otherwise than under this
Section 10. If any such claim or action shall be brought against an indemnified
party, and it shall notify the indemnifying party thereof, the indemnifying
party shall be entitled to participate therein and, to the extent that it
wishes, jointly with any other similarly notified indemnifying party, to assume
the defense thereof with counsel reasonably satisfactory to the indemnified
party. After notice from the indemnifying party to the indemnified party of its
25
election to assume the defense of such claim or action, the indemnifying party
shall not be liable to the indemnified party under this Section 10 for any legal
or other expenses subsequently incurred by the indemnified party in connection
with the defense thereof other than reasonable costs of investigation; provided,
--------
however, that an indemnified party shall have the right to employ its own
-------
counsel in any such action, but the fees, expenses and other charges of such
counsel for the indemnified party will be at the expense of such indemnified
party unless (1) the employment of counsel by the indemnified party has been
authorized in writing by the indemnifying party, (2) the indemnified party has
reasonably concluded (based upon advice of counsel to the indemnified party)
that there may be legal defenses available to it or other indemnified parties
that are different from or in addition to those available to the indemnifying
party, (3) a conflict or potential conflict exists (based upon advice of counsel
to the indemnified party) between the indemnified party and the indemnifying
party (in which case the indemnifying party will not have the right to direct
the defense of such action on behalf of the indemnified party) or (4) the
indemnifying party has not in fact employed counsel reasonably satisfactory to
the indemnified party to assume the defense of such action within a reasonable
time after receiving notice of the commencement of the action, in each of which
cases the reasonable fees, disbursements and other charges of counsel will be at
the expense of the indemnifying party or parties. It is understood that the
indemnifying party or parties shall not, in connection with any proceeding or
related proceedings in the same jurisdiction, be liable for the reasonable fees,
disbursements and other charges of more than one separate firm of attorneys (in
addition to any local counsel) at any one time for all such indemnified party or
parties. Each indemnified party, as a condition of the indemnity agreements
contained in Sections 10(a) and 10(b), shall use all reasonable efforts to
cooperate with the indemnifying party in the defense of any such action or
claim. No indemnifying party shall be liable for any settlement of any such
action effected without its written consent (which consent shall not be
unreasonably withheld), but if settled with its written consent or if there be a
final judgment for the plaintiff in any such action, the indemnifying party
agrees to indemnify and hold harmless any indemnified party from and against any
loss or liability by reason of such settlement or judgment. No indemnifying
party shall, without the prior written consent of the indemnified party (which
consent shall not be unreasonably withheld), effect any settlement of any
pending or threatened proceeding in respect of which any indemnified party is or
could have been a party and indemnity could have been sought hereunder by such
indemnified party unless such settlement includes an unconditional release of
such indemnified party from all liability on claims that are the subject matter
of such proceeding.
The obligations of the Company, the Current Guarantors and the Initial
Purchasers in this Section 10 and in Section 11 are in addition to any other
liability that the Company, the Current Guarantors or the Initial Purchasers, as
the case may be, may otherwise have, including in respect of any breaches of
representations, warranties and agreements made herein by any such party.
11. Contribution. If the indemnification provided for in Section 10
------------
is unavailable or insufficient to hold harmless an indemnified party under
Section 10(a) or 10(b), then each indemnifying party shall, in lieu of
indemnifying such indemnified party, contribute to the amount paid or payable by
such indemnified party as a result of such loss, claim, damage or liability, or
action in respect thereof, (i) in such proportion as shall be appropriate to
reflect the relative benefits received by the Company and the Current Guarantors
on the one hand and the Initial Purchasers on the other from the offering of the
Securities 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 Current Guarantors on the one hand and the Initial
Purchasers on the other with respect to the statements or omissions that
resulted in such loss, claim, damage or liability, or action in respect thereof,
as well as any other relevant equitable considerations. The relative benefits
received by the Company and the Current Guarantors on the one hand and the
Initial Purchasers on the other with respect to such offering shall be deemed to
be in the same proportion as the total net proceeds from the offering of the
Securities purchased under this Agreement (before deducting expenses) received
by or on behalf of the Company and the Current Guarantors, on the one hand, and
the total discounts and commissions received by the Initial Purchasers with
respect to the Securities purchased under this Agreement, on the other, bear to
the total gross proceeds from the sale of the Securities under this Agreement,
in each case as set forth in the table on the cover page of the
26
Offering Memorandum. The relative fault shall be determined by reference to,
among other things, whether the untrue or alleged untrue statement of a material
fact or the omission or alleged omission to state a material fact relates to the
Company or any Current Guarantor or information supplied by the Company or any
Current Guarantors on the one hand or to any Initial Purchasers' Information on
the other, the intent of the parties and their relative knowledge, access to
information and opportunity to correct or prevent such untrue statement or
omission. The Company and the Current Guarantors and the Initial Purchasers
agree that it would not be just and equitable if contributions pursuant to this
Section 11 were to be 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 that does not take into account the equitable considerations
referred to herein. The amount paid or payable by an indemnified party as a
result of the loss, claim, damage or liability, or action in respect thereof,
referred to above in this Section 11 shall be deemed to include, for purposes of
this Section 11, any legal or other expenses reasonably incurred by such
indemnified party in connection with investigating or defending or preparing to
defend any such action or claim. Notwithstanding the provisions of this Section
11, no Initial Purchaser shall be required to contribute any amount in excess of
the amount by which the total discounts and commissions received by such Initial
Purchaser with respect to the Securities purchased by it under this Agreement
exceeds the amount of any damages which such Initial Purchaser has otherwise
paid or become liable to pay by reason of any untrue or alleged untrue statement
or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. The Initial Purchasers' obligations to contribute
as provided in this Section 11 are several in proportion to their respective
purchase obligations and not joint.
12. Persons Entitled to Benefit of Agreement. This Agreement shall
----------------------------------------
inure to the benefit of and be binding upon the Initial Purchasers, the Company
and the Current Guarantors and their respective successors. This Agreement and
the terms and provisions hereof are for the sole benefit of only those persons,
except as provided in Sections 10 and 11 with respect to affiliates, officers,
directors, employees, representatives, agents and controlling persons of the
Company, the Current Guarantors and the Initial Purchasers. Nothing in this
Agreement is intended or shall be construed to give any person, other than the
persons referred to in this Section 12, any legal or equitable right, remedy or
claim under or in respect of this Agreement or any provision contained herein.
13. Expenses. The Company agrees with the Initial Purchasers to pay
--------
(a) the costs incident to the authorization, issuance, sale, preparation and
delivery of the Securities and any taxes payable in that connection; (b) the
costs incident to the preparation, printing and distribution of the Preliminary
Offering Memorandum, the Offering Memorandum and any amendments or supplements
thereto; (c) the costs of reproducing and distributing each of the Transaction
Documents; (d) the costs incident to the preparation, printing and delivery of
the certificates evidencing the Securities, including stamp duties and transfer
taxes, if any, payable upon issuance of the Securities; (e) the fees and
expenses of the Company's counsel and independent accountants; (f) the fees and
expenses of qualifying the Securities under the securities laws of the several
jurisdictions as provided in Section 5(h) and of preparing, printing and
distributing Blue Sky Memoranda (including related fees and expenses of counsel
for the Initial Purchasers); (g) any fees charged by rating agencies for rating
the Securities; (h) the fees and expenses of the Trustee and any paying agent
(including related fees and expenses of any counsel to such parties); (i) all
expenses and application fees incurred in connection with the application for
the inclusion of the Securities on the PORTAL Market and the approval of the
Securities for book-entry transfer by DTC; and (j) all other costs and expenses
incident to the performance of the obligations of the Company and the Guarantors
under this Agreement which are not otherwise specifically provided for in this
Section 13; provided, however, that except as provided in this Section 13 and
-------- -------
Section 9, the Initial Purchasers shall pay their own costs and expenses.
14. Survival. The respective indemnities, rights of contribution,
--------
representations, warranties and agreements of the Company, the Current
Guarantors and the Initial Purchasers contained in this Agreement or made by or
on behalf of the Company, the Current Guarantors or the Initial Purchasers
pursuant
27
to this Agreement or any certificate delivered pursuant hereto shall survive the
delivery of and payment for the Securities and shall remain in full force and
effect, regardless of any termination or cancellation of this Agreement or any
investigation made by or on behalf of any of them or any of their respective
affiliates, officers, directors, employees, representatives, agents or
controlling persons.
15. Notices, etc. All statements, requests, notices and agreements
-------------
hereunder shall be in writing, and:
(a) if to the Initial Purchasers, shall be delivered or sent by mail
or telecopy transmission to Chase Securities Inc., 000 Xxxx Xxxxxx, Xxx
Xxxx, Xxx Xxxx 00000, Attention: Legal Dept., 40th Floor (telecopier no.:
(000) 000-0000); or
(b) if to the Company or the Current Guarantors, shall be delivered
or sent by mail or telecopy transmission to the address of the Company set
forth in the Offering Memorandum, Attention: Chief Financial Officer
(telecopier no.: 440-826-2833);
provided that any notice to an Initial Purchaser pursuant to Section 10(c) shall
--------
also be delivered or sent by mail to such Initial Purchaser at its address set
forth on the signature page hereof. Any such statements, requests, notices or
agreements shall take effect at the time of receipt thereof. The Company and
the Current Guarantors shall be entitled to act and rely upon any request,
consent, notice or agreement given or made on behalf of the Initial Purchasers
by CSI.
16. Definition of Terms. For purposes of this Agreement, (a) the
-------------------
term "business day" means any day on which the New York Stock Exchange, Inc. is
open for trading, (b) the term "subsidiary" has the meaning set forth in Rule
405 under the Securities Act and (c) except where otherwise expressly provided,
the term "affiliate" has the meaning set forth in Rule 405 under the Securities
Act.
17. Initial Purchasers' Information. The parties hereto acknowledge
-------------------------------
and agree that, for all purposes of this Agreement, the Initial Purchasers'
Information consists solely of the following information in the Preliminary
Offering Memorandum and the Offering Memorandum: (i) the last paragraph on the
front cover page concerning the terms of the offering by the Initial Purchasers;
(ii) the legend on the inside front cover page concerning over-allotment and
trading activities by the Initial Purchasers; and (iii) the statements
concerning the Initial Purchasers contained in the first sentence of the third
paragraph, the fifth paragraph, the seventh paragraph, the twelfth paragraph and
the thirteenth paragraph under the heading "Plan of Distribution".
18. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
-------------
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
19. Counterparts. This Agreement may be executed in one or more
------------
counterparts (which may include counterparts delivered by telecopier) and, if
executed in more than one counterpart, the executed counterparts shall each be
deemed to be an original, but all such counterparts shall together constitute
one and the same instrument.
20. Amendments. No amendment or waiver of any provision of this
----------
Agreement, nor any consent or approval to any departure therefrom, shall in any
event be effective unless the same shall be in writing and signed by the parties
hereto.
21. Headings. The headings herein are inserted for convenience of
--------
reference only and are not intended to be part of, or to affect the meaning or
interpretation of, this Agreement.
28
If the foregoing is in accordance with your understanding of our
agreement, kindly sign and return to us a counterpart hereof, whereupon this
instrument will become a binding agreement among the Company, the Guarantors and
the several Initial Purchasers in accordance with its terms.
Very truly yours,
ADVANSTAR COMMUNICATIONS INC.
By /s/ Xxxxxx X. Xxxxxxx
_____________________________
Name: Xxxxxx X. Xxxxxxx
Title: Chairman &
Chief Executive Officer
AHI HOLDING CORP.
By /s/ Xxxxxx X. Xxxxxxx
_____________________________
Name: Xxxxxx X. Xxxxxxx
Title: Chairman &
Chief Executive Officer
ADVANSTAR HOLDINGS, INC.
By /s/ Xxxxxx X. Xxxxxxx
_____________________________
Name: Xxxxxx X. Xxxxxxx
Title: Chairman &
Chief Executive Officer
ART EXPOSITIONS INTERNATIONAL INC.
By /s/ Xxxxxx X. Xxxxxxx
_____________________________
Name: Xxxxxx X. Xxxxxxx
Title: Chairman &
Chief Executive Officer
EXPOCON MANAGEMENT ASSOCIATES, INC.
By /s/ Xxxxxx X. Xxxxxxx
_____________________________
Name: Xxxxxx X. Xxxxxxx
Title: Chairman &
Chief Executive Officer
ON DEMAND MARKETING, INC.
By /s/ Xxxxxx X. Xxxxxxx
_____________________________
Name: Xxxxxx X. Xxxxxxx
Title: Chairman &
Chief Executive Officer
29
TECHNOLOGY EVENTS COMPANY, LLC
By /s/ Xxxxxx X. Xxxxxxx
______________________________
Name: Xxxxxx X. Xxxxxxx
Title: Chairman & Chief Executive Officer
Accepted:
CHASE SECURITIES INC.
By____________________________
Authorized Signatory
Address for notices pursuant to Section 10(c):
000 Xxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Legal Department
XXXXXX BROTHERS INC.
By____________________________
Authorized Signatory
Address for notices pursuant to Section 10(c):
3 World Financial Center
New York, NY 10285
Attention: Legal Department
SCHEDULE 1
Principal
Amount
Initial Purchasers of Securities
------------------ -------------
Chase Securities Inc. $ 75,000,000
Xxxxxx Brothers Inc. $ 75,000,000
------------
Total $150,000,000
ANNEX A
Form of Exchange and Registration Rights Agreement
A-1
ANNEX B-1
Form of Opinion of Xxxxx, Xxxxxxx & Xxxxxxxxx, LLP
B-1
ANNEX B-2
Form of Opinion of Xxxxxx Xxxxxx Xxxxx & XxXxxxxxx
B-2
ANNEX B-3
Form of Opinion of Xxxxx & Xxxx, P.C.
B-3
ANNEX B-4
Form of Opinion of Xxxxxx, Xxxxxxx & Xxxxxxx L.L.P.
B-4
ANNEX C
The undersigned, Xxxxxx Xxxxxx, in his capacity as President of
the Men's Apparel Guild in California, Inc., a California corporation ("MAGIC"),
a wholly-owned subsidiary of Advanstar Communications Inc., a New York
corporation ("Advanstar"), does hereby certify in the name of and on behalf of
MAGIC, pursuant to Section 6(s) of the Purchase Agreement, dated April 27, 1998
(the "Purchase Agreement"), among Advanstar, certain of the Guarantors, Chase
Securities Inc. and Xxxxxx Brothers Inc., relating to the Company's $150,000,000
in aggregate principal amount of 9 1/4% Senior Subordinated Notes due 2008, as
follows (capitalized terms used herein without definition have the meanings
assigned to them in the Purchase Agreement):
(i) I have reviewed the Offering Memorandum;
(ii) in my opinion, the Offering Memorandum, as of the date hereof, does
not include any untrue statement of a material fact regarding MAGIC and does not
omit to state a material fact regarding MAGIC required to be stated therein or
necessary in order to make the statements therein regarding MAGIC, in the light
of the circumstances under which they were made, not misleading; and
(iii) as of the date hereof, there has been no material adverse change in
the financial position or results of operation of MAGIC or any of its
subsidiaries, or any material adverse development including a prospectively
material adverse change, in or affecting the condition (financial or otherwise),
results of operations, business or prospects of MAGIC and its subsidiaries taken
as a whole, except as set forth in the Offering Memorandum.
C-1
IN WITNESS WHEREOF, the I have executed this Officer's Certificate and
caused it to be delivered as of this 30th day of April, 1998.
_____________________
Name: Xxxxxx Xxxxxx
Title: President
C-2
