Exhibit 10.2
EXECUTION COPY
QUIKSILVER, INC.
$400,000,000
6 7/8% Senior Notes due 2015
Purchase Agreement
July 14, 2005
J.P. Morgan Securities Inc.
as Representative of the
several Initial Purchasers listed
in Schedule 1 hereto
c/o J.P. Morgan Securities Inc.
270 Park Avenue
New York, New York 10017
Ladies and Gentlemen:
Quiksilver, Inc., a Delaware corporation (the "Company"), proposes to issue
and sell to the several Initial Purchasers listed in Schedule 1 hereto (the
"Initial Purchasers"), for whom you are acting as representative (the
"Representative"), $400,000,000 principal amount of its 6 7/8% Senior Notes due
2015 (the "Securities"). The Securities will be issued pursuant to an Indenture
to be dated as of July 22, 2005 among the Company, the guarantors listed in
Schedule 2 hereto (the "Guarantors") and Wilmington Trust Company, a Delaware
banking corporation, as trustee (the "Trustee"), and will be guaranteed on an
unsecured senior basis by each of the Guarantors (the "Guarantees").
The Securities will be 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 prepared a preliminary
offering memorandum dated July 5, 2005 (the "Preliminary Offering Memorandum")
and will prepare an offering memorandum dated the date hereof (the "Offering
Memorandum") setting forth information concerning the 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. The Company hereby confirms
that it has authorized the use of the Preliminary Offering Memorandum and the
Offering Memorandum in connection with
the offering and resale of the Securities by the Initial Purchasers in the
manner contemplated by this Agreement. Capitalized terms used but not defined
herein shall have the meanings given to such terms in the Offering Memorandum.
References herein to the Preliminary Offering Memorandum and the Offering
Memorandum shall be deemed to refer to and include any document incorporated by
reference therein.
Holders of the Securities (including the Initial Purchasers and their
direct and indirect transferees) will be entitled to the benefits of a
Registration Rights Agreement, to be dated the Closing Date (as defined below)
and substantially in the form attached hereto as Exhibit A (the "Registration
Rights Agreement"), pursuant to which the Company and the Guarantors will agree
to file one or more registration statements with the Securities and Exchange
Commission (the "Commission") providing for the registration under the
Securities Act of the Securities or the Exchange Securities referred to (and as
defined) in the Registration Rights Agreement.
The Securities are being issued and sold in connection with the acquisition
by the Company of shares representing a minimum of 80% of the voting and
economic interests (the "Acquisition") of Skis Rossignol S.A. ("Rossignol" and,
together with the Company, the "Combined Company") pursuant to a Purchase
Agreement dated as of April 12, 2005 (the "Acquisition Agreement") and a tender
offer under French law (the "Tender Offer"). In connection with the Acquisition,
the Company entered into (i) an Amended and Restated Credit Agreement, dated as
of June 3, 2005, among the Company, Quiksilver Americas, Inc., as borrower, the
Lenders named therein and JPMorgan Chase Bank, N.A., as administrative agent
(the "Senior Credit Agreement"), providing for a senior secured asset-based
revolving credit facility (the "Senior Secured Facility") and (ii) a Credit
Agreement, dated as of April 12, 2005, among the Company, the Lenders named
therein and JPMorgan Chase Bank, N.A., as administrative agent (the "Interim
Agreement"), providing for a $350,000,000 interim facility (the "Interim
Facility"). The Securities are being issued and sold to repay a portion of the
amounts outstanding under the Senior Secured Facility and all of the amounts
outstanding under the Interim Facility and to finance the Acquisition as
described in the Offering Memorandum under the heading "Use of proceeds". For
purposes of this Agreement, the term "Rossignol Transactions" means,
collectively, the Acquisition, entering into the Acquisition Agreement, the
Senior Credit Agreement and the Interim Agreement, the offering of the
Securities and the other related transactions as described in the Offering
Memorandum under the heading "The Rossignol acquisition".
In the event that, prior to the Closing Date, the Company does not receive
official notice from the Autorite des Marches Financiers (the "AMF") and
Euronext Paris that a sufficient number of shares has been tendered in the
Tender Offer and are not withdrawable such that the Company will own shares
representing a minimum of 80% of the voting and economic interests of Rossignol
upon consummation of the Tender Offer, the Company will, on or prior to the
Closing Date, execute an escrow agreement, in the form and substance to be
agreed between the Company and the Initial Purchasers, which shall conform in
all material respects with the description thereof including in the Offering
Memorandum (the "Escrow Agreement"), and will direct the deposit in an escrow
account (the "Escrow Account") with Wilmington Trust Company, as escrow
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agent (the "Escrow Agent"), the net proceeds of the offering of the Securities,
together with an additional $18,638,888.90, such that the escrowed funds (the
"Escrowed Funds") are in an amount sufficient to redeem the Securities on
November 2, 2005 in cash at a redemption price equal to 100.0% of the principal
amount of the Securities plus accrued and unpaid interest thereon to such date.
The Escrow Agreement shall provide that the Escrowed Funds shall only be
released and paid out pursuant to the terms of the Escrow Agreement.
The Company hereby confirms its agreement with the several Initial
Purchasers concerning the purchase and resale of the Securities, as follows:
1. Purchase and Resale of the Securities. (a) The Company agrees to issue
and sell the Securities to the several Initial Purchasers as provided in this
Agreement, and each Initial Purchaser, on the basis of the representations,
warranties and agreements set forth herein and subject to the conditions set
forth herein, agrees, severally and not jointly, to purchase from the Company
the respective principal amount of Securities set forth opposite such Initial
Purchaser's name in Schedule 1 hereto at a price equal to 97.25% of the
principal amount thereof plus accrued interest, if any, from July 22, 2005 to
the Closing Date. The Company will not be obligated to deliver any of the
Securities except upon payment for all the Securities to be purchased as
provided herein.
(b) The Company understands that the Initial Purchasers intend to offer the
Securities for resale on the terms set forth in the Offering Memorandum. Each
Initial Purchaser, severally and not jointly, represents, warrants and agrees
that:
(i) it is a qualified institutional buyer within the meaning of Rule
144A under the Securities Act (a "QIB") and an accredited investor within
the meaning of Rule 501(a) 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 not solicited offers for, or offered or sold, and will
not solicit offers for, or offer or sell, the Securities as part of their
initial offering except:
(A) within the United States to persons whom it reasonably
believes to be QIBs in transactions pursuant to Rule 144A under the
Securities Act ("Rule 144A") and in connection with each such sale, it
has taken or will take reasonable steps to ensure that the purchaser
of the Securities is aware that such sale is being made in reliance on
Rule 144A; or
(B) in accordance with the restrictions set forth in Annex A
hereto.
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(c) 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(f) and 5(h), counsel for the Company and counsel for the Initial
Purchasers, respectively, may rely (including, for purposes of the Company's
representations and warranties in Section 3 hereof) upon the accuracy of the
representations and warranties of the Initial Purchasers, and compliance by the
Initial Purchasers with their agreements, contained in paragraph (b) above
(including Annex A hereto), and each Initial Purchaser hereby consents to such
reliance.
(d) The Company acknowledges and agrees that the Initial Purchasers may
offer and sell Securities to or through any affiliate of an Initial Purchaser
and that any such affiliate may offer and sell Securities purchased by it to or
through any Initial Purchaser.
(e) The Company acknowledges and agrees that the Initial Purchasers are
acting solely in the capacity of an arm's length contractual counterparty to the
Company with respect to the offering of the Securities contemplated hereby
(including in connection with determining the terms of the offering) and not as
a financial advisor or a fiduciary to, or an agent of, the Company or any other
person. Additionally, no Initial Purchaser is advising the Company or any other
person as to any legal, tax, investment, accounting or regulatory matters in any
jurisdiction. The Company shall consult with its own advisors concerning such
matters and shall be responsible for making their own independent investigation
and appraisal of the transactions contemplated hereby, and the Initial
Purchasers shall have no responsibility or liability to the Company with respect
thereto. Any review by the Initial Purchasers of the Company, the transactions
contemplated hereby or other matters relating to such transactions will be
performed solely for the benefit of the Initial Purchasers and shall not be on
behalf of the Company.
2. Payment and Delivery. (a) Payment for and delivery of the Securities
will be made at the offices of Simpson Thacher & Bartlett LLP, 425 Lexington
Avenue, New York, NY at 9:00 A.M., New York City time on July 22, 2005, or at
such other time or place on the same or such other date, not later than the
fifth business day thereafter, as the Representative and the Company may agree
upon in writing. The time and date of such payment and delivery is referred to
herein as the "Closing Date".
(b) In the event that, prior to the Closing Date, the Company does not
receive official notice from the AMF and Euronext Paris that a sufficient number
of shares has been tendered in the Tender Offer and are not withdrawable such
that the Company will own shares representing a minimum of 80% of the voting and
economic interests of Rossignol upon consummation of the Tender Offer, delivery
of the Securities by the Company shall be made to the Initial Purchasers against
payment of the purchase price by the Initial Purchasers, subject to the deposit
of such funds in the Escrow Account, together with an additional $18,638,888.90
provided by the Company, such that the Escrowed Funds are in an amount
sufficient to redeem the Securities on November 2, 2005 in cash at a redemption
price equal to 100.0% of the principal amount of the Securities plus accrued and
unpaid interest to such date; and payment for the Securities
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by the Initial Purchasers shall be made against delivery to the Initial
Purchasers of the Securities as set forth below and effected by wire transfer of
immediately available funds to the Escrow Account. In the event that the
Acquisition is consummated on or prior to the Closing Date, payment for the
Securities shall be made by wire transfer in immediately available funds to the
account(s) specified by the Company to the Representative against delivery to
the nominee of The Depository Trust Company, for the account of the Initial
Purchasers, of one or more global notes representing the Securities
(collectively, the "Global Notes"), with any transfer taxes payable in
connection with the sale of the Securities duly paid by the Company. The Global
Notes will be made available for inspection by the Representative not later than
1:00 P.M., New York City time, in each case, on the business day prior to the
Closing Date.
3. Representations and Warranties of the Company and the Guarantors. The
Company and the Guarantors jointly and severally represent and warrant to each
Initial Purchaser that:
(a) Offering Memorandum. The Preliminary Offering Memorandum, as of its
date, did not, and the Offering Memorandum, in the form first used by the
Initial Purchasers to confirm sales of the Securities and as of the Closing
Date, will not, contain any untrue statement of a material fact or omit to state
a material fact necessary in order to make the statements therein, in the light
of the circumstances under which they were made, not misleading; provided that
the Company and the Guarantors make no representation or warranty with respect
to any statements or omissions made in reliance upon and in conformity with
information relating to any Initial Purchaser furnished to the Company in
writing by such Initial Purchaser through the Representative expressly for use
in the Preliminary Offering Memorandum and the Offering Memorandum.
(b) Incorporated Documents. The documents incorporated by reference in the
Preliminary Offering Memorandum and the Offering Memorandum, when filed with the
Commission, conformed or will conform, as the case may be, in all material
respects to the requirements of the Exchange Act and the rules and regulations
of the Commission thereunder, and did not and 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.
(c) Financial Statements.
(i) The financial statements and the related notes thereto of the
Company and its subsidiaries included or incorporated by reference in the
Preliminary Offering Memorandum and the Offering Memorandum (A) comply as
to form in all material respects of the accounting requirements of the
Securities Act and Exchange Act, as applicable, and the rules and
regulations thereunder; (B) have been prepared in accordance with U.S.
generally accepted accounting principles ("U.S. GAAP") consistently applied
(provided that, the unaudited financial statements do not include all of
the information and notes required in accordance
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with U.S. GAAP and are subject to normal year-end adjustments); (C) are
true, accurate and complete in all material respects; (D) present fairly in
all material respects the financial position of the Company and its
subsidiaries as of the dates indicated and the results of their operations
and the changes in their cash flows for the periods specified; and (E)
disclose all material liabilities (contingent and otherwise) of the Company
and its subsidiaries. The other financial information relating to the
Company and its subsidiaries included or incorporated by reference in the
Preliminary Offering Memorandum and the Offering Memorandum has been
derived from the accounting records of the Company and its subsidiaries and
presents fairly in all material respects the information shown thereby.
(ii) To the Company's knowledge, the financial statements and the
related notes thereto of Rossignol and its subsidiaries included in the
Preliminary Offering Memorandum and the Offering Memorandum (A) comply in
all material respects with the applicable requirements of the Securities
Act and the Exchange Act, as applicable, and the rules and regulations
thereunder; (B) have been prepared in accordance with French generally
accepted accounting principles ("French GAAP") applied on a consistent
basis throughout the periods covered thereby; (C) have been reconciled from
French GAAP to U.S. GAAP in accordance with U.S. GAAP; (D) are true,
accurate and complete in all material respects; (E) present fairly in all
material respects the financial position of Rossignol and its subsidiaries
as of the dates indicated and the results of their operations and changes
in their cash flows for the periods specified; and (F) disclose all
material liabilities (contingent and otherwise) of Rossignol and its
subsidiaries. The other financial information relating to Rossignol and its
subsidiaries included in the Preliminary Offering Memorandum and the
Offering Memorandum has been derived from the accounting records of
Rossignol and its subsidiaries and presents fairly in all material respects
the information shown thereby.
(iii) The pro forma financial information and the related notes
thereto included or incorporated by reference in the Preliminary Offering
Memorandum and the Offering Memorandum have been prepared in accordance
with the Commission's rules and guidance with respect to pro forma
financial information, and the assumptions underlying such pro forma
financial information are reasonable and are set forth in the Preliminary
Offering Memorandum and the Offering Memorandum.
(d) No Material Adverse Change. Since the date of the most recent financial
statements of the Company or Rossignol, as applicable, included or incorporated
by reference in the Preliminary Offering Memorandum and the Offering Memorandum,
(i) there has not been any material change in the capital stock or long-term
debt of the Company or any of its subsidiaries or, to the Company's knowledge,
Rossignol or any of its subsidiaries, or any dividend or distribution of any
kind declared, set aside for payment, paid or made by the Company or, to the
Company's knowledge, Rossignol on any class of capital stock, or any material
adverse change in or affecting the business,
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properties, management, financial position, results of operations or prospects
of the Company and its subsidiaries taken as a whole or, to the Company's
knowledge, Rossignol and its subsidiaries taken as a whole; (ii) neither the
Company or any of its subsidiaries nor, to the Company's knowledge, Rossignol or
any of its subsidiaries has entered into any transaction (other than the
Acquisition) or agreement that is material to the Combined Company and its
subsidiaries taken as a whole or incurred any liability or obligation, direct or
contingent, that is material to the Combined Company and its subsidiaries taken
as a whole; and (iii) neither the Company or any of its subsidiaries nor, to the
Company's knowledge, Rossignol or any of its subsidiaries has sustained any
material loss or interference with its business from fire, explosion, flood or
other calamity, whether or not covered by insurance, or from any labor
disturbance or dispute or any action, order or decree of any court or arbitrator
or governmental or regulatory authority, except in each case as otherwise
disclosed in the Preliminary Offering Memorandum and the Offering Memorandum.
(e) Organization and Good Standing. Each of the Company and its
subsidiaries and, to the Company's knowledge, Rossignol and its subsidiaries
have been duly organized and are validly existing and in good standing under the
laws of their respective jurisdictions of organization, are duly qualified to
conduct business and are in good standing 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
(corporate, partnership, limited liability company and otherwise) necessary to
own or hold their respective properties and to conduct the businesses in which
they are engaged and to conduct the businesses as currently proposed to be
conducted following the consummation of the Acquisition as described in the
Offering Memorandum, except where the failure to be so qualified or have such
power or authority would not, individually or in the aggregate, have a material
adverse effect on the business, properties, management, financial position,
results of operations or prospects of the Company and its subsidiaries taken as
a whole or on the performance by the Company and the Guarantors of their
obligations under the Securities and the Guarantees (a "Material Adverse
Effect"). After consummation of the Acquisition, the Company will not own or
control, directly or indirectly, any corporation, association or other entity
other than the subsidiaries listed in Schedule 3 to this Agreement.
(f) Capitalization. The Company has a capitalization as set forth in the
Preliminary Offering Memorandum and the Offering Memorandum under the heading
"Capitalization"; and all the outstanding shares of capital stock or other
equity interests of each subsidiary of the Company have been duly and validly
authorized and issued, are fully paid and non-assessable (except, in the case of
any foreign subsidiary, for directors' qualifying shares and except as otherwise
described in the Offering Memorandum) and are owned directly or indirectly by
the Company, free and clear of any lien, charge, encumbrance, security interest,
restriction on voting or transfer or any other claim of any third party, other
than liens, charges, encumbrances, security interests and restrictions under the
Senior Secured Facility and the Interim Facility.
(g) Due Authorization.
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(i) The Company and each of the Guarantors have full right, power and
authority to execute and deliver this Agreement, the Securities, the
Indenture (including each Guarantee set forth therein), the Exchange
Securities, the Escrow Agreement and the Registration Rights Agreement
(collectively, the "Transaction Documents") and to perform their respective
obligations hereunder and thereunder; and all 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 has been duly and validly taken.
(ii) At the time of entering into each of the agreements in connection
with the Rossignol Transactions, including without limitation, the
Acquisition Agreement, the Senior Credit Agreement and the Interim
Agreement (collectively, the "Rossignol Transaction Documents"), the
Company had full right, power and authority to execute and deliver each
such agreement or instrument; the Company has full right, power and
authority to perform its respective obligations under each Rossignol
Transaction Document; and all action required to be taken for the due and
proper authorization, execution and delivery of each of the Rossignol
Transaction Documents and the consummation of the Rossignol Transactions
has been duly and validly taken.
(h) The Indenture. The Indenture has been duly authorized by the Company
and each of the Guarantors 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 of the Guarantors enforceable
against the Company and each of the Guarantors in accordance with its terms,
except as enforceability may be limited by applicable bankruptcy, insolvency or
similar laws affecting the enforcement of creditors' rights generally or by
equitable principles relating to enforceability (collectively, the
"Enforceability Exceptions"); and on the Closing Date, the Indenture will
conform in all material respects to the requirements of the Trust Indenture Act
of 1939, as amended (the "Trust Indenture Act"), and the rules and regulations
of the Commission applicable to an indenture that is qualified thereunder.
(i) The Securities and the Guarantees. The Securities 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 enforceable against the Company in accordance
with their terms, subject to the Enforceability Exceptions, and will be entitled
to the benefits of the Indenture; and the Guarantees have been duly authorized
by each of the Guarantors and, when the Securities have been duly executed,
authenticated, issued and delivered as provided in the Indenture and paid for as
provided herein, will be valid and legally binding obligations of each of the
Guarantors, enforceable against each of the Guarantors in accordance with their
terms, subject to the Enforceability Exceptions, and will be entitled to the
benefits of the Indenture.
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(j) The Exchange Securities. On the Closing Date, the Exchange Securities
(including the related guarantees) will have been duly authorized by the Company
and each of the Guarantors and, when duly executed, authenticated, issued and
delivered as contemplated by the Registration Rights Agreement, will be duly and
validly issued and outstanding and will constitute valid and legally binding
obligations of the Company, as issuer, and each of the Guarantors, as
guarantors, enforceable against the Company and each of the Guarantors in
accordance with their terms, subject to the Enforceability Exceptions, and will
be entitled to the benefits of the Indenture.
(k) Purchase and Registration Rights Agreements. This Agreement has been
duly authorized, executed and delivered by the Company and each of the
Guarantors; and the Registration Rights Agreement has been duly authorized by
the Company and each of the Guarantors 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 of the Guarantors
enforceable against the Company and each of the Guarantors in accordance with
its terms, subject to the Enforceability Exceptions, and except that rights to
indemnity and contribution thereunder may be limited by applicable law and
public policy.
(l) Acquisition Agreement. The Acquisition Agreement has been duly
authorized, executed and delivered by the Company and, to the Company's
knowledge, Rossignol, and the transactions contemplated thereby have been duly
authorized by the Company and, to the Company's knowledge, Rossignol; the
Acquisition Agreement constitutes a legally valid and binding agreement of the
Company and, to the Company's knowledge, Rossignol, enforceable against the
Company and, to the Company's knowledge, Rossignol in accordance with its terms,
subject to the Enforceability Exceptions.
(m) Escrow Agreement. The Escrow Agreement and the transactions
contemplated thereby have been duly authorized by the Company and, when duly
executed and delivered by the Company, and when duly executed and delivered by
the Escrow Agent, the Escrow Agreement will constitute a valid and legally
binding agreement of the Company, enforceable against the Company in accordance
with its terms, subject to the Enforceability Exceptions.
(n) Other Rossignol Transaction Documents. Each of the Rossignol
Transaction Documents not referred to in the preceding clause (l) has been duly
authorized, executed and delivered by the Company and, to the Company's
knowledge, Rossignol, if a signatory thereto, and constitutes a valid and
legally binding obligation of the Company, enforceable against the Company in
accordance with its terms, subject to the Enforceability Exceptions.
(o) Descriptions of the Transaction Documents and the Rossignol Transaction
Documents. Each Transaction Document and each Rossignol Transaction Document
conforms in all material respects to the description thereof contained in the
Preliminary Offering Memorandum and the Offering Memorandum.
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(p) No Violation or Default. Neither the Company or any of its subsidiaries
nor, to the Company's knowledge, Rossignol or any of its subsidiaries is (i) in
violation of its charter or by-laws or similar organizational documents; (ii) in
default, and no event has occurred that, 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 the Company or any of
its subsidiaries or Rossignol or any of its subsidiaries, as applicable, is a
party or by which the Company or any of its subsidiaries or Rossignol or any of
its subsidiaries, as applicable, is bound or to which any of the property or
assets of the Company or any of its subsidiaries or Rossignol or any of its
subsidiaries, as applicable, is subject; or (iii) in violation of any law or
statute or any judgment, order, rule or regulation of any court or arbitrator or
governmental or regulatory authority, except, in the case of clauses (ii) and
(iii) above, for any such default or violation that would not, individually or
in the aggregate, have a Material Adverse Effect.
(q) No Conflicts. The execution, delivery and performance by the Company
and each of the Guarantors of each of the Transaction Documents to which each is
a party; the execution, delivery and performance by the Company and Rossignol,
if a signatory thereto, of each of the Rossignol Transaction Documents; the
issuance and sale of the Securities (including the Guarantees) and compliance by
the Company and each of the Guarantors with the terms thereof; the consummation
of the transactions contemplated by the Transaction Documents; and the
consummation of the Rossignol Transactions will not (i) conflict with or result
in a breach or violation of any of the terms or provisions of, or constitute a
default under, or result in the creation or imposition of any lien, charge or
encumbrance (other than pursuant to the Senior Credit Agreement, the Interim
Agreement and the Escrow Agreement) upon any property or assets, whether
currently owned or hereafter acquired, of the Company or any of its subsidiaries
or, to the Company's knowledge, Rossignol or any of its subsidiaries pursuant
to, any indenture, mortgage, deed of trust, loan agreement, pledge, security
interest or other agreement or instrument to which the Company or any of its
subsidiaries or, to the Company's knowledge, Rossignol or any of its
subsidiaries is a party or by which the Company or any of its subsidiaries or,
to the Company's knowledge, Rossignol or any of its subsidiaries is bound or to
which any of the property or assets, whether currently owned or hereafter
acquired, of the Company or any of its subsidiaries or, to the Company's
knowledge, Rossignol or any of its subsidiaries is subject, (ii) result in any
violation of the provisions of the charter or by-laws or similar organizational
documents of the Company or any of its subsidiaries or, to the Company's
knowledge, Rossignol or any of its subsidiaries or (iii) result in the violation
or contravention of any law or statute, treaty or any judgment, order, rule or
regulation, determination, policy statement or interpretation of any court or
arbitrator or governmental or regulatory authority applicable to the Company or
any of its subsidiaries or, to the Company's knowledge, applicable to Rossignol
or any of its subsidiaries, except, in the case of clauses (i) and (iii) above,
for any such conflict, breach, violation, default or contravention that would
not, individually or in the aggregate, have a Material Adverse Effect. The
execution, delivery and performance by the Company and Rossignol, as applicable,
of each of the Rossignol Transaction Documents and the consummation of the
Rossignol Transactions, will not result in any material breach or violation of,
or constitute a material default or change of
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control under, or cause the acceleration of, any existing indebtedness of the
Company or, to the Company's knowledge, Rossignol.
(r) No Consents Required. No consent, approval, authorization, order,
registration or qualification of or with any court or arbitrator or governmental
or regulatory authority is required for (i) the execution, delivery and
performance by the Company and each of the Guarantors of each of the Transaction
Documents to which each is a party; (ii) the execution, delivery and performance
by the Company and Rossignol, as applicable, of each of the Rossignol
Transaction Documents; (iii) the issuance and sale of the Securities (including
the Guarantees) and compliance by the Company and each of the Guarantors with
the terms thereof; (iv) the consummation of the transactions contemplated by the
Transaction Documents; and (v) the consummation of the Rossignol Transactions,
except for such consents, approvals, authorizations, orders and registrations or
qualifications as may be required (x) under applicable state securities laws in
connection with the purchase and resale of the Securities by the Initial
Purchasers and (y) with respect to the Exchange Securities (including the
related guarantees) under the Securities Act and applicable state securities
laws as contemplated by the Registration Rights Agreement.
(s) Legal Proceedings. Except as disclosed in the Preliminary Offering
Memorandum and the Offering Memorandum, there are no legal, governmental or
regulatory investigations, actions, suits or proceedings pending to which the
Company or any of its subsidiaries or, to the Company's knowledge, Rossignol or
any of its subsidiaries is a party or to which any property of the Company or
any of its subsidiaries or, to the Company's knowledge, Rossignol or any of its
subsidiaries is the subject that, individually or in the aggregate, if
determined adversely to the Company, Rossignol or any of their respective
subsidiaries, could reasonably be expected to have a (i) Material Adverse Effect
or (ii) a Material Adverse Effect on the performance of the Transaction
Documents or the Rossignol Transaction Documents or the consummation of any of
the transactions contemplated hereby and thereby; and no threats of such
investigations, actions, suits or proceedings have been made to the Company or
any of its subsidiaries or, to the Company's knowledge, Rossignol or any of its
subsidiaries, or, to the knowledge of the Company and each of the Guarantors, no
such investigations, actions, suits or proceedings are contemplated by any
governmental or regulatory authority or threatened by others.
(t) Independent Accountants.
(i) Deloitte & Touche LLP, who have certified certain financial
statements of the Company and its subsidiaries, are independent registered
public accountants with respect to the Company and its subsidiaries within
the meaning of the Securities Act and the applicable published rules and
regulations thereunder and the Public Company Accounting Oversight Board
("PCAOB").
(ii) KPMG S.A., who have certified certain financial statements of
Rossignol and its subsidiaries, are independent registered public
accountants with respect to (x) Rossignol and its subsidiaries within the
meaning of all applicable accounting standards and (y) the Company and its
subsidiaries within
11
the meaning of the Securities Act and the applicable published rules and
regulations thereunder and the PCAOB.
(u) Title to Real and Personal Property. Each of the Company and its
subsidiaries and, to the Company's knowledge, Rossignol and its subsidiaries has
good and marketable title in fee simple to, or has valid rights to lease or
otherwise use, all items of real and personal property that are material to the
respective businesses of the Company and its subsidiaries and Rossignol and its
subsidiaries, in each case free and clear of all liens, encumbrances, claims and
defects and imperfections of title except those that (i) do not materially
interfere with the use made and proposed to be made, as described in the
Offering Memorandum, of such property by the Company, Rossignol or their
respective subsidiaries, as applicable, (ii) could not reasonably be expected,
individually or in the aggregate, to have a Material Adverse Effect or (iii) are
disclosed in the Offering Memorandum.
(v) Title to Intellectual Property. Each of the Company and its
subsidiaries or, to the Company's knowledge, Rossignol and its subsidiaries (i)
own, possess or are licensed to use 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), including (x) all extensions,
renewals, reissues, divisions, continuations and continuations-in-part of any of
the foregoing and (y) all rights to sue for past, present and future
infringements of any of the foregoing, necessary for the conduct of their
respective businesses as currently conducted in all material respects, and the
conduct of their respective businesses does not and will not conflict with or
infringe on, in any material respect, any such rights of others; and (ii) except
for claims that would not have a Material Adverse Effect, have not received any
notice of any claim of infringement of or conflict with any such rights of
others, and no claim has been asserted and is pending by others challenging or
questioning the use of any such rights of the Company and its subsidiaries or,
to the knowledge of the Company, Rossignol and its subsidiaries, as the case may
be, or the validity or effectiveness of any such rights, nor do the Company and
its subsidiaries or, to the knowledge of the Company, Rossignol and its
subsidiaries, know of any valid basis for any such claim.
(w) Investment Company Act. Neither the Company nor any of its subsidiaries
is, and after giving effect to the offering and sale of the Securities and the
application of the proceeds thereof as described in the Offering Memorandum none
of them will be, an "investment company" or an entity "controlled" by an
"investment company" within the meaning of the Investment Company Act of 1940,
as amended, and the rules and regulations of the Commission thereunder
(collectively, "Investment Company Act").
(x) Taxes. Each of the Company and its subsidiaries and, to the Company's
knowledge, Rossignol and its subsidiaries has paid all material federal, state,
local and foreign taxes and filed all material tax returns required to be paid
or filed through the date hereof; and except as otherwise disclosed in the
Preliminary Offering
12
Memorandum and the Offering Memorandum, there is no material tax deficiency that
has been, or could reasonably be expected to be, asserted against the Company or
any of its subsidiaries or any of their respective properties or assets or, to
the Company's knowledge, Rossignol or any of its subsidiaries or any of their
respective properties or assets.
(y) Licenses and Permits. The Company and its subsidiaries and, to the
Company's knowledge, Rossignol and its subsidiaries possess all licenses,
certificates, permits and other authorizations issued by, and have made all
declarations and filings with, the appropriate federal, state, local or foreign
governmental or regulatory authorities that are necessary for the ownership or
lease of their respective properties or the conduct of their respective
businesses as described in the Preliminary Offering Memorandum and the Offering
Memorandum, except where the failure to possess or make the same would not,
individually or in the aggregate, have a Material Adverse Effect; and except as
described in the Preliminary Offering Memorandum and the Offering Memorandum,
neither the Company or any of its subsidiaries nor, to the Company's knowledge,
Rossignol or any of its subsidiaries has received notice of any revocation or
modification of any such license, certificate, permit or authorization or has
any reason to believe that any such license, certificate, permit or
authorization will not be renewed in the ordinary course.
(z) No Labor Disputes. No labor disturbance by or dispute with employees of
the Company or any of its subsidiaries or, to the Company's knowledge, Rossignol
or any of its subsidiaries exists or, to the knowledge of the Company and each
of the Guarantors, is contemplated or threatened.
(aa) Compliance With Environmental Laws. The Company and its subsidiaries
(i) are and have been in compliance with any and all applicable federal, state,
local and foreign laws, rules, regulations, decisions and orders relating to the
protection of human health and safety, the environment or hazardous or toxic
substances or wastes, pollutants or contaminants (collectively, "Environmental
Laws"); (ii) have received and are in compliance with all permits, licenses or
other approvals required of them under applicable Environmental Laws to conduct
their respective businesses; and (iii) have not received notice of, and are not
aware of any reasonable basis for, any actual or potential liability or
obligations concerning the presence, investigation, remediation, disposal or
release of, or exposure to, hazardous or toxic substances or wastes, pollutants
or contaminants, except in any such case for any such failure to comply with, or
failure to receive required permits, licenses or approvals, or liability or
obligations, as would not, individually or in the aggregate, have a Material
Adverse Effect.
(bb) Compliance With ERISA. Each employee benefit plan, within the meaning
of Section 3(3) of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), that is maintained, administered or contributed to (or
required to be contributed to) by the Company or any of its affiliates for
employees or former employees of the Company or its affiliates has been
maintained in compliance with its terms and the requirements of any applicable
statutes, orders, rules and regulations, in all material respects, including but
not limited to ERISA and the Internal Revenue Code of 1986, as amended (the
"Code"); no event set forth in Section 4043(c) of ERISA has
13
occurred during the five-year period prior to the date on which this
representation is made with respect to any such plan and no termination of any
such plan has occurred, and no lien in favor of the Pension Benefit Guaranty
Corporation or a plan has arisen, during such five-year period; no prohibited
transaction, within the meaning of Section 406 of ERISA or Section 4975 of the
Code, has occurred with respect to any such plan excluding transactions effected
pursuant to a statutory or administrative exemption; for each such plan that is
subject to the funding rules of Section 412 of the Code or Section 302 of ERISA,
no "accumulated funding deficiency" as defined in Section 412 of the Code has
been incurred, whether or not waived, and the fair market value of the assets of
each such plan (based on those assumption used to fund such plans) exceeds the
present value of all benefits accrued under such plan. Neither the Company nor
any of its affiliates maintains, contributes to or is required to contribute to
any "multiemployer plan", as such term is defined in Section 4001(a)(3) of
ERISA.
(cc) Accounting Controls. Each of the Company and its subsidiaries and, to
the Company's knowledge, Rossignol and its subsidiaries maintain systems of
internal accounting controls sufficient to provide reasonable assurance that (i)
transactions are executed in accordance with their respective 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 their respective
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.
(dd) Sarbanes-Oxley. The Company is in compliance with applicable
provisions of the Sarbanes-Oxley Act of 2002 (the "Sarbanes-Oxley Act") that are
effective and is actively taking steps to ensure that it will be in compliance
with other applicable provisions of the Sarbanes-Oxley Act upon the
effectiveness of such provisions.
(ee) Disclosure Controls and Procedures. The Company has established and
maintains "disclosure controls and procedures" (as defined in Rules 13a-15(e)
and 15d-15(e) of the Exchange Act); the Company's "disclosure controls and
procedures" (i) are reasonably designed to ensure that all information (both
financial and non-financial) required to be disclosed by the Company in the
reports that it files or submits under the Exchange Act is recorded, processed,
summarized and reported within the time periods specified in the rules and
regulations of the Exchange Act; (ii) that all such information is accumulated
and communicated to the Company's management as appropriate to allow timely
decisions regarding required disclosure and to make the certifications of the
chief executive officer and chief financial officer of the Company required
under the Exchange Act with respect to such reports; (iii) have been evaluated
for effectiveness as of the date of the filing of its most recent annual or
quarterly report filed with the Commission; and (iv) are effective in all
material respects to perform the functions for which they were established.
(ff) No Material Weaknesses.
14
(i) Since the date of the filing of the Company's Annual Report on
Form 10-K for the year ended October 31, 2004, the Company's auditors and
the audit committee of the board of directors of the Company have not been
advised of (A) any significant deficiencies or material weaknesses in the
design or operation of internal controls which could adversely affect the
Company's ability to record, process, summarize and report financial data;
or (B) any fraud, whether or not material, that involves management or
other employees who have a significant role in the Company's internal
controls.
(ii) Based on the Company's evaluation of Rossignol's internal
controls and procedures, the Company is not aware of (A) any significant
deficiencies or material weaknesses in the design or operation of internal
controls which could adversely affect Rossignol's ability to record,
process, summarize and report financial data; or (B) any fraud, whether or
not material, that involves management or other employees who have a
significant role in Rossignol's internal controls.
(gg) Insurance. The Company and its subsidiaries and, to the Company's
knowledge, Rossignol and its subsidiaries have insurance covering their
respective properties, operations, personnel and businesses, including business
interruption insurance, which insurance is in amounts and insures against such
losses and risks as are adequate to protect the Company and its subsidiaries and
their respective businesses and Rossignol and its subsidiaries and their
respective businesses, as applicable; and neither the Company or any of its
subsidiaries nor, to the Company's knowledge, Rossignol or any of its
subsidiaries has (i) 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 or (ii) any reason to believe that it
will not be able to renew its existing insurance coverage as and when such
coverage expires or to obtain similar coverage at reasonable cost from similar
insurers as may be necessary to continue its business.
(hh) No Unlawful Payments. Neither the Company or any of its subsidiaries
nor, to the Company's knowledge, Rossignol or any of its subsidiaries nor, to
the knowledge of the Company and each of the Guarantors, any director, officer,
agent, employee or other person associated with or acting on behalf of the
Company, Rossignol or any of their respective subsidiaries 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.
(ii) Solvency. On and immediately after the Closing Date, the Company
(after giving effect to the issuance of the Securities, the Acquisition and the
other transactions related thereto as described in the Offering Memorandum) will
be Solvent. As used in this paragraph, the term "Solvent" 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 the
15
Company is not less than the total amount required to pay the liabilities of the
Company on its total existing debts and liabilities (including contingent
liabilities) as they become absolute and matured; (ii) the Company 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 consummation of the issuance of the Securities as
contemplated by this Agreement and the Offering Memorandum, the Company is not
incurring debts or liabilities beyond its ability to pay as such debts and
liabilities mature; (iv) the Company is not engaged in any business or
transaction, and does not propose 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 the Company is
engaged; and (v) the Company is not a defendant in any civil action that would
result in a judgment that the Company is or would become unable to satisfy.
(jj) No Restrictions on Subsidiaries. Except for restrictions under the
Senior Secured Facility, the Interim Facility and the Leasehold Improvement Loan
made by Union Bank of California, N.A., in each case as disclosed in the
Offering Memorandum, no subsidiary of the Company or, to the Company's
knowledge, Rossignol is currently prohibited, directly or indirectly, under any
agreement or other instrument to which it is a party or is subject, from paying
any dividends to the Company or Rossignol, as applicable, from making any other
distribution on such subsidiary's capital stock, from repaying to the Company or
Rossignol, as applicable, any loans or advances to such subsidiary from the
Company or Rossignol, as applicable, or from transferring any of such
subsidiary's properties or assets to the Company or Rossignol, as applicable, or
any other subsidiary of the Company or Rossignol, as applicable.
(kk) No Broker's Fees. Neither the Company or any of its subsidiaries nor
Rossignol or any of its subsidiaries is a party to any contract, agreement or
understanding with any person (other than this Agreement) that would give rise
to a valid claim against any of them or any Initial Purchaser for a brokerage
commission, finder's fee or like payment in connection with the offering and
sale of the Securities.
(ll) Rule 144A Eligibility. On the Closing Date, the Securities will not be
of the same class as securities listed on a national securities exchange
registered under Section 6 of the Exchange Act or quoted in an automated
inter-dealer quotation system; and each of the Preliminary Offering Memorandum
and the Offering Memorandum, as of its respective date, contains or will contain
all 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.
(mm) No Integration. Neither the Company nor any of its affiliates (as
defined in Rule 501(b) of Regulation D) has, directly or through any agent,
sold, offered for sale, solicited offers to buy or otherwise negotiated in
respect of, any security (as defined in the Securities Act), that 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.
16
(nn) No General Solicitation or Directed Selling Efforts. None of the
Company or any of its affiliates or any other person acting on its or their
behalf (other than the Initial Purchasers, as to which no representation is
made) has (i) solicited offers for, or offered or sold, the Securities by means
of any form of general solicitation or general advertising within the meaning of
Rule 502(c) of Regulation D or in any manner involving a public offering within
the meaning of Section 4(2) of the Securities Act or (ii) engaged in any
directed selling efforts within the meaning of Regulation S under the Securities
Act ("Regulation S"), and all such persons have complied with the offering
restrictions requirement of Regulation S.
(oo) Securities Law Exemptions. Assuming the accuracy of the
representations and warranties of the Initial Purchasers contained in Section
1(b) (including Annex A hereto) and their compliance with their 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.
(pp) No Stabilization. Neither the Company nor, to the Company's knowledge,
Rossignol nor any of the Guarantors has taken, directly or indirectly, any
action designed to or that could reasonably be expected to cause or result in
any stabilization or manipulation of the price of the Securities.
(qq) Margin Rules. Neither the issuance, sale and delivery of the
Securities nor the application of the proceeds thereof by the Company as
described in the Offering Memorandum will violate Regulation T, U or X of the
Board of Governors of the Federal Reserve System or any other regulation of such
Board of Governors.
(rr) Forward-Looking Statements. 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 and the Offering
Memorandum has been made or reaffirmed without a reasonable basis or has been
disclosed other than in good faith.
(ss) Statistical and Market Data. Nothing has come to the attention of the
Company that has caused the Company to believe that the statistical and
market-related data included or incorporated by reference in the Preliminary
Offering Memorandum and the Offering Memorandum is not based on or derived from
sources that are reliable and accurate in all material respects.
(tt) Disclosure. The statements in the Offering Memorandum under the
headings "Description of the other indebtedness," "Description of notes,"
"Exchange offer and registration rights agreement" and "Certain United States
federal income tax considerations" fairly summarize the matters therein
described.
17
(uu) No Registration Rights. There are no contracts, agreements or
understandings between the Company, on the one hand, and any person, on the
other hand, granting such person the right to require the Company, as the case
may be, to file a registration statement under the Securities Act with respect
to any securities of the Company owned or to be owned by such person or to
require the Company to include such securities in any securities being
registered pursuant to any other registration statement filed by the Company
under the Securities Act.
4. Further Agreements of the Company and the Guarantors. The Company and
each of the Guarantors jointly and severally covenant and agree with each
Initial Purchaser that:
(a) Delivery of Copies. The Company will deliver to the Initial Purchasers
as many copies of the Preliminary Offering Memorandum and the Offering
Memorandum (including all amendments and supplements thereto) as the
Representative may reasonably request.
(b) Offering Memorandum, Amendments or Supplements. Before finalizing the
Offering Memorandum or making or distributing any amendment or supplement to the
Preliminary Offering Memorandum or the Offering Memorandum or filing with the
Commission any document that will be incorporated by reference therein, the
Company will furnish to the Representative and counsel for the Initial
Purchasers a copy of the proposed Offering Memorandum, amendment or supplement
or document to be incorporated by reference therein for review, and will not
distribute any such proposed Offering Memorandum, amendment or supplement or
file any such document with the Commission to which the Representative may
reasonably object, except for documents filed under the Exchange Act as required
by applicable law.
(c) Notice to the Representative. The Company will advise the
Representative promptly, and confirm such advice in writing, (i) of the issuance
by any governmental or regulatory authority of any order preventing or
suspending the use of the Preliminary Offering Memorandum or the Offering
Memorandum or the initiation or threatening of any proceeding for that purpose;
(ii) of the occurrence of any event at any time prior to the completion of the
initial offering of the Securities as a result of which the Offering Memorandum
as then amended or supplemented would include any 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 when the Offering Memorandum
is delivered to a purchaser, not misleading; and (iii) of the receipt by the
Company of any notice with respect to any suspension of the qualification of the
Securities for offer and sale in any jurisdiction or the initiation or
threatening of any proceeding for such purpose; and the Company will use its
reasonable 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 of the Securities and, if any
such order is issued, will obtain as soon as possible the withdrawal thereof.
18
(d) Ongoing Compliance of the Offering Memorandum. If at any time prior to
the completion of the initial offering of the Securities (i) any event shall
occur or condition shall exist as a result of which the Offering Memorandum as
then amended or supplemented would include any untrue statement of a material
fact or omit to state any material fact necessary in order to make the
statements therein, in the light of the circumstances existing when the Offering
Memorandum is delivered to a purchaser, not misleading or (ii) it is necessary
to amend or supplement the Offering Memorandum to comply with law, the Company
will immediately notify the Initial Purchasers thereof and forthwith prepare
and, subject to paragraph (b) above, furnish to the Initial Purchasers such
amendments or supplements to the Offering Memorandum (or any document to be
filed with the Commission and incorporated by reference therein) as may be
necessary so that the statements in the Offering Memorandum as so amended or
supplemented (or including such document to be incorporated by reference
therein) will not, in the light of the circumstances existing when the Offering
Memorandum is delivered to a purchaser, be misleading or so that the Offering
Memorandum will comply with law.
(e) Blue Sky Compliance. The Company will qualify the Securities for offer
and sale under the securities or Blue Sky laws of such jurisdictions as the
Representative shall reasonably request and will continue such qualifications in
effect so long as required for the offering and resale of the Securities;
provided that neither the Company nor any of the Guarantors shall be required to
(i) qualify as a foreign corporation or other entity or as a dealer in
securities in any such jurisdiction where it would not otherwise be required to
so qualify, (ii) file any general consent to service of process in any such
jurisdiction or (iii) subject itself to taxation in any such jurisdiction if it
is not otherwise so subject.
(f) Clear Market. During the period from the date hereof through and
including the date that is ninety (90) days after the date hereof, the Company
and each of the Guarantors will not, without the prior written consent of the
Representative, offer, sell, contract to sell or otherwise dispose of any debt
securities issued or guaranteed by the Company or any of the Guarantors and
having a tenor of more than one year.
(g) Use of Proceeds. The Company will apply the net proceeds from the sale
of the Securities as described in the Offering Memorandum under the heading "Use
of Proceeds".
(h) Supplying Information. While the Securities remain outstanding and are
"restricted securities" within the meaning of Rule 144(a)(3) under the
Securities Act, the Company and each of the Guarantors will, during any period
in which the Company is not subject to and in compliance with Section 13 or
15(d) of the Exchange Act, furnish to holders of the Securities and prospective
purchasers of the Securities designated by such holders, upon the request of
such holders or such prospective purchasers, the information required to be
delivered pursuant to Rule 144A(d)(4) under the Securities Act.
(i) PORTAL and DTC. The Company will 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
19
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").
(j) No Resales by the Company. Until the issuance of the Exchange
Securities, the Company will not, and will not permit any of its affiliates (as
defined in Rule 144 under the Securities Act) to, resell any of the Securities
that have been acquired by any of them, except for Securities purchased by the
Company or any of its affiliates and resold in a transaction registered under
the Securities Act.
(k) No Integration. Neither the Company nor any of its affiliates (as
defined in Rule 501(b) of Regulation D) will, directly or through any agent,
sell, offer for sale, solicit offers to buy or otherwise negotiate in respect
of, any security (as defined in the Securities Act), that 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.
(l) No General Solicitation or Directed Selling Efforts. None of the
Company or any of its affiliates or any other person acting on its or their
behalf (other than the Initial Purchasers, as to which no covenant is given)
will (i) 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 or in any manner involving a public offering within the
meaning of Section 4(2) of the Securities Act or (ii) engage in any directed
selling efforts within the meaning of Regulation S, and all such persons will
comply with the offering restrictions requirement of Regulation S.
(m) No Stabilization. Neither the Company nor any of the Guarantors will
take, directly or indirectly, any action designed to or that could reasonably be
expected to cause or result in any stabilization or manipulation of the price of
the Securities.
5. Conditions of Initial Purchasers' Obligations. The obligation of each
Initial Purchaser to purchase Securities on the Closing Date as provided herein
is subject to the performance by the Company and each of the Guarantors of their
respective covenants and other obligations hereunder and to the following
additional conditions:
(a) Representations and Warranties. The representations and warranties of
the Company and the Guarantors contained herein shall be true and correct on the
date hereof and on and as of the Closing Date; and the statements of the
Company, the Guarantors and their respective officers made in any certificates
delivered pursuant to this Agreement shall be true and correct on and as of the
Closing Date.
(b) No Downgrade. Subsequent to the execution and delivery of this
Agreement, (i) no downgrading shall have occurred in the rating accorded the
Securities or any other debt securities or preferred stock issued or guaranteed
by the Company or any of the Guarantors by any "nationally recognized
statistical rating organization", as such term is defined by the Commission for
purposes of Rule 436(g)(2) under the Securities Act; and (ii) no such
organization shall have publicly announced that it has under surveillance or
review, or has changed its outlook with respect to, its rating of the
20
Securities or of any other debt securities or preferred stock issued or
guaranteed by the Company or any of the Guarantors (other than an announcement
with positive implications of a possible upgrading).
(c) No Material Adverse Change. Subsequent to the execution and delivery of
this Agreement, no event or condition of a type described in Section 3(d) hereof
shall have occurred or shall exist, which event or condition is not described in
the Offering Memorandum (excluding any amendment or supplement thereto or any
document filed with the Commission after the date hereof and incorporated by
reference therein) and the effect of which in the judgment of the Representative
makes it impracticable or inadvisable to proceed with the offering, sale or
delivery of the Securities on the terms and in the manner contemplated by this
Agreement and the Offering Memorandum.
(d) Officer's Certificate. The Representative shall have received on and as
of the Closing Date a certificate of an executive officer of the Company and of
each Guarantor who has specific knowledge of the Company's or such Guarantor's
financial matters and is satisfactory to the Representative (i) confirming that
such officer has carefully reviewed the Offering Memorandum and, to the
knowledge of such officer, the representation set forth in Section 3(a) hereof
is true and correct, (ii) confirming that the other representations and
warranties of the Company and the Guarantors in this Agreement are true and
correct and that the Company and the Guarantors have complied with all
agreements and satisfied all conditions on their part to be performed or
satisfied hereunder at or prior to the Closing Date and (iii) to the effect set
forth in paragraphs (b) and (c) above.
(e) Comfort Letters. On the date of this Agreement and on the Closing Date,
(i) Deloitte & Touche LLP shall have furnished to the Representative,
at the request of the Company, letters, dated the respective dates of
delivery thereof and addressed to the Initial Purchasers, in form and
substance reasonably satisfactory to the Representative, containing
statements and information of the type customarily included in accountants'
"comfort letters" to underwriters with respect to the (x) financial
statements and certain financial information of the Company and its
subsidiaries and (y) pro forma financial information and the related notes
thereto contained in the Preliminary Offering Memorandum and the Offering
Memorandum; provided that the letter delivered on the Closing Date shall
use a "cut-off" date no more than three business days prior to the Closing
Date; and
(ii) KPMG S.A. shall have furnished to the Representative, at the
request of the Company, letters, dated the respective dates of delivery
thereof and addressed to the Initial Purchasers, in form and substance
reasonably satisfactory to the Representative, containing statements and
information of the type customarily included in accountants' "comfort
letters" to underwriters with respect to the financial statements and
certain financial information of Rossignol and its subsidiaries; provided
that the letter delivered on the Closing Date shall use a "cut-off" date no
more than three business days prior to the Closing Date.
21
(f) Opinion of Counsel for the Company. Hewitt & O'Neil LLP, counsel for
the Company, shall have furnished to the Representative, at the request of the
Company, their written opinion, dated the Closing Date and addressed to the
Initial Purchasers, in form and substance reasonably satisfactory to the
Representative, to the effect set forth in Annex B hereto.
(g) Opinion of Special Counsel for the Company. Skadden, Arps, Slate,
Meagher & Flom LLP & Affiliates, local counsel to the Company in the State of
New York, shall have furnished to the Representative, at the request of the
Company, their written opinion, dated the Closing Date and addressed to the
Initial Purchasers, in form and substance reasonably satisfactory to the
Representative, to the effect set forth in Annex C.
(h) Opinion of General Counsel. Charles Exon, Executive Vice President,
Business & Legal Affairs, Secretary and General Counsel of the Company, shall
have furnished to the Representative, at the request of the Company, his written
opinion, dated the Closing Date and addressed to the Initial Purchasers, in form
and substance reasonably satisfactory to the Representative, to the effect set
forth in Annex D hereto.
(i) Opinion of Counsel for the Initial Purchasers. The Representative shall
have received on and as of the Closing Date an opinion and negative assurance
letter of Simpson Thacher & Bartlett LLP, counsel for the Initial Purchasers,
with respect to such matters as the Representative may reasonably request, and
such counsel shall have received such documents and information as they may
reasonably request to enable them to pass upon such matters.
(j) No Legal Impediment to Issuance. No action shall have been taken and no
statute, rule, regulation or order shall have been enacted, adopted or issued by
any federal, state or foreign governmental or regulatory authority that would,
as of the Closing Date, prevent the issuance or sale of the Securities or the
issuance of the Guarantees; and no injunction or order of any federal, state or
foreign court shall have been issued that would, as of the Closing Date, prevent
the issuance or sale of the Securities or the issuance of the Guarantees.
(k) Good Standing. The Representative shall have received on and as of the
Closing Date satisfactory evidence of the good standing of the Company and the
Guarantors in their respective jurisdictions of organization and their good
standing in such other jurisdictions as the Representative may reasonably
request, in each case in writing or any standard form of telecommunication, from
the appropriate governmental authorities of such jurisdictions.
(l) Registration Rights Agreement. The Initial Purchasers shall have
received a counterpart of the Registration Rights Agreement that shall have been
executed and delivered by a duly authorized officer of the Company and each of
the Guarantors.
22
(m) PORTAL and DTC. The Securities shall have been approved by the NASD for
trading in the PORTAL Market and shall be eligible for clearance and settlement
through DTC.
(n) Additional Documents. On or prior to the Closing Date, the Company and
the Guarantors shall have furnished to the Representative such further
certificates and documents as the Representative may reasonably request.
(o) Escrow Agreement. In the event that, prior to the Closing Date, the
Company does not receive official notice from the AMF and Euronext Paris that a
sufficient number of shares have been tendered in the Tender Offer and are not
withdrawable such that the Company will own shares representing a minimum of 80%
of the voting and economic interests of Rossignol upon consummation of the
Tender Offer, the Initial Purchasers shall have received counterparts of the
Escrow Agreement, which shall have been executed and delivered by a duly
authorized officer of each of the Company and the Escrow Agent, and the Company
shall have deposited $18,638,888.90 in the Escrow Account (in addition to the
net proceeds from the offering of the Securities deposited in the Escrow Account
pursuant to Section 2 of this Agreement) in accordance with the provisions of
the Escrow Agreement.
(p) Management Comfort Letter. On the date of this Agreement and on the
Closing Date, Steven Brink, the Chief Executive Officer and Treasurer of the
Company, shall have furnished to the Representative, at the request of the
Company, letters, dated the respective dates of delivery thereof and addressed
to the Initial Purchasers, in form and substance reasonably satisfactory to the
Representative, to the effect set forth in Annex E hereto.
All opinions, letters, certificates and evidence 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.
6. Indemnification and Contribution.
(a) Indemnification of the Initial Purchasers. The Company and each of the
Guarantors jointly and severally agree to indemnify and hold harmless each
Initial Purchaser, its affiliates, directors and officers and each person, if
any, who controls such Initial Purchaser within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act, from and against any and all
losses, claims, damages and liabilities (including, without limitation, legal
fees and other expenses reasonably incurred in connection with any suit, action
or proceeding or any claim asserted, as such fees and expenses are incurred),
joint or several, that arise out of, or are based upon, any untrue statement or
alleged untrue statement of a material fact contained in the Preliminary
Offering Memorandum or the Offering Memorandum (or any amendment or supplement
thereto) or any omission or alleged omission to state therein a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading, except insofar as such
losses, claims,
23
damages or liabilities arise out of, or are based upon, any untrue statement or
omission or alleged untrue statement or omission made in reliance upon and in
conformity with any information relating to any Initial Purchaser furnished to
the Company in writing by such Initial Purchaser through the Representative
expressly for use therein; provided, that with respect to any such untrue
statement in or omission from the Preliminary Offering Memorandum, the indemnity
agreement contained in this paragraph (a) shall not inure to the benefit of any
Initial Purchaser to the extent that the sale to the person asserting any such
loss, claim, damage or liability was an initial resale by such Initial Purchaser
and any such loss, claim, damage or liability of or with respect to such Initial
Purchaser results from the fact that both (i) a copy of the Offering Memorandum
(excluding any documents incorporated by reference therein) 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 (ii) the untrue statement in or omission from such
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 with the provisions of Section 4 hereof.
(b) Indemnification of the Company. Each Initial Purchaser agrees,
severally and not jointly, to indemnify and hold harmless the Company, each of
the Guarantors, each of their respective directors and officers and each person,
if any, who controls the Company or any of the Guarantors within the meaning of
Section 15 of the Securities Act or Section 20 of the Exchange Act to the same
extent as the indemnity set forth in paragraph (a) above, but only with respect
to any losses, claims, damages or liabilities that arise out of, or are based
upon, any untrue statement or omission or alleged untrue statement or omission
made in reliance upon and in conformity with any information relating to such
Initial Purchaser furnished to the Company in writing by such Initial Purchaser
through the Representative expressly for use in the Preliminary Offering
Memorandum and the Offering Memorandum (or any amendment or supplement thereto),
it being understood and agreed that the only such information consists of the
following: the statements concerning the Initial Purchasers in the third and
tenth paragraphs and the fifth and sixth sentences of the eighth paragraph under
the heading "Plan of Distribution."
(c) Notice and Procedures. If any suit, action, proceeding (including any
governmental or regulatory investigation), claim or demand shall be brought or
asserted against any person in respect of which indemnification may be sought
pursuant to either paragraph (a) or (b) above, such person (the "Indemnified
Person") shall promptly notify the person against whom such indemnification may
be sought (the "Indemnifying Person") in writing; provided that the failure to
notify the Indemnifying Person shall not relieve it from any liability that it
may have under this Section 6 except to the extent that it has been materially
prejudiced (through the forfeiture of substantive rights or defenses) by such
failure; and provided, further, that the failure to notify the Indemnifying
Person shall not relieve it from any liability that it may have to an
Indemnified Person otherwise than under this Section 6. If any such proceeding
shall be brought or asserted against an Indemnified Person and it shall have
notified the Indemnifying Person thereof, the Indemnifying Person shall retain
counsel reasonably satisfactory to the Indemnified Person to represent the
Indemnified Person and any others entitled to indemnification
24
pursuant to this Section 6 that the Indemnifying Person may designate in such
proceeding and shall pay the fees and expenses of such counsel related to such
proceeding, as incurred. In any such proceeding, any Indemnified Person shall
have the right to retain its own counsel, but the fees and expenses of such
counsel shall be at the expense of such Indemnified Person unless (i) the
Indemnifying Person and the Indemnified Person shall have mutually agreed to the
contrary; (ii) the Indemnifying Person has failed within a reasonable time to
retain counsel reasonably satisfactory to the Indemnified Person; (iii) the
Indemnified Person shall have reasonably concluded that there may be legal
defenses available to it that are different from or in addition to those
available to the Indemnifying Person; or (iv) the named parties in any such
proceeding (including any impleaded parties) include both the Indemnifying
Person and the Indemnified Person and representation of both parties by the same
counsel would be inappropriate due to actual or potential differing interests
between them. It is understood and agreed that the Indemnifying Person shall
not, in connection with any proceeding or related proceeding in the same
jurisdiction, be liable for the fees and expenses of more than one separate firm
(in addition to any local counsel) for all Indemnified Persons, and that all
such fees and expenses shall be reimbursed as they are incurred. Any such
separate firm for any Initial Purchaser, its affiliates, directors and officers
and any control persons of such Initial Purchaser shall be designated in writing
by J.P. Morgan Securities Inc., and any such separate firm for the Company, the
Guarantors and any control persons of the Company and the Guarantors shall be
designated in writing by the Company. The Indemnifying Person shall not be
liable for any settlement of any proceeding effected without its written
consent, but if settled with such consent or if there be a final judgment for
the plaintiff, the Indemnifying Person agrees to indemnify each Indemnified
Person from and against any loss or liability by reason of such settlement or
judgment. No Indemnifying Person shall, without the written consent of the
Indemnified Person, effect any settlement of any pending or threatened
proceeding in respect of which any Indemnified Person is or could have been a
party and indemnification could have been sought hereunder by such Indemnified
Person, unless such settlement (x) includes an unconditional release of such
Indemnified Person, in form and substance reasonably satisfactory to such
Indemnified Person, from all liability on claims that are the subject matter of
such proceeding and (y) does not include any statement as to or any admission of
fault, culpability or a failure to act by or on behalf of any Indemnified
Person.
(d) Contribution. If the indemnification provided for in paragraphs (a) and
(b) above is unavailable to an Indemnified Person or insufficient in respect of
any losses, claims, damages or liabilities referred to therein, then each
Indemnifying Person under such paragraph, in lieu of indemnifying such
Indemnified Person thereunder, shall contribute to the amount paid or payable by
such Indemnified Person as a result of such losses, claims, damages or
liabilities (i) in such proportion as is appropriate to reflect the relative
benefits received by the Company and the Guarantors on the one hand and the
Initial Purchasers on the other from the offering of the Securities or (ii) if
the allocation provided by clause (i) is not permitted by applicable law, in
such proportion as is appropriate to reflect not only the relative benefits
referred to in clause (i) but also the relative fault of the Company and the
Guarantors on the one hand and the Initial Purchasers on the other in connection
with the statements or omissions that resulted in
25
such losses, claims, damages or liabilities, as well as any other relevant
equitable considerations. The relative benefits received by the Company and the
Guarantors on the one hand and the Initial Purchasers on the other shall be
deemed to be in the same respective proportions as the net proceeds (before
deducting expenses) received by the Company from the sale of the Securities and
the total discounts and commissions received by the Initial Purchasers in
connection therewith, as provided in this Agreement, bear to the aggregate
offering price of the Securities. The relative fault of the Company and the
Guarantors on the one hand and the Initial Purchasers on the other shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to state
a material fact relates to information supplied by the Company or any Guarantor
or by the Initial Purchasers and the parties' relative intent, knowledge, access
to information and opportunity to correct or prevent such statement or omission.
(e) Limitation on Liability. The Company, the Guarantors and the Initial
Purchasers agree that it would not be just and equitable if contribution
pursuant to this Section 6 were determined by pro rata allocation (even if the
Initial Purchasers were treated as one entity for such purpose) or by any other
method of allocation that does not take account of the equitable considerations
referred to in paragraph (d) above. The amount paid or payable by an Indemnified
Person as a result of the losses, claims, damages and liabilities referred to in
paragraph (d) above shall be deemed to include, subject to the limitations set
forth above, any legal or other expenses reasonably incurred by such Indemnified
Person in connection with any such action or claim. Notwithstanding the
provisions of this Section 6, in no event shall an Initial Purchaser 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 offering
of the Securities exceeds the amount of any damages that such Initial Purchaser
has otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. The Initial Purchasers' obligations to contribute
pursuant to this Section 6 are several in proportion to their respective
purchase obligations hereunder and not joint.
(f) Non-Exclusive Remedies. The remedies provided for in this Section 6 are
not exclusive and shall not limit any rights or remedies that may otherwise be
available to any Indemnified Person at law or in equity.
7. Termination. This Agreement may be terminated in the absolute discretion
of the Representative, by notice to the Company, if after the execution and
delivery of this Agreement and prior to the Closing Date (i) trading generally
shall have been suspended or materially limited on the New York Stock Exchange
or the over-the-counter market; (ii) trading of any securities issued or
guaranteed by the Company or any of the Guarantors shall have been suspended on
any exchange or in any over-the-counter market; (iii) a general moratorium on
commercial banking activities shall have been declared by federal or New York
State authorities; or (iv) there shall have occurred any outbreak or escalation
of hostilities or any change in financial markets or any
26
calamity or crisis, either within or outside the United States, that, in the
judgment of the Representative, is material and adverse and makes it
impracticable or inadvisable to proceed with the offering, sale or delivery of
the Securities on the terms and in the manner contemplated by this Agreement and
the Offering Memorandum.
8. Defaulting Initial Purchaser. (a) If, on the Closing Date, any Initial
Purchaser defaults on its obligation to purchase the Securities that it has
agreed to purchase hereunder, the non-defaulting Initial Purchasers may in their
discretion arrange for the purchase of such Securities by other persons
satisfactory to the Company on the terms contained in this Agreement. If, within
36 hours after any such default by any Initial Purchaser, the non-defaulting
Initial Purchasers do not arrange for the purchase of such Securities, then the
Company shall be entitled to a further period of 36 hours within which to
procure other persons satisfactory to the non-defaulting Initial Purchasers to
purchase such Securities on such terms. If other persons become 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 five 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. As used in this Agreement,
the term "Initial Purchaser" includes, for all purposes of this Agreement unless
the context otherwise requires, any person not listed in Schedule 1 hereto that,
pursuant to this Section 8, purchases Securities that a defaulting Initial
Purchaser agreed but failed to purchase.
(b) If, after giving effect to any arrangements for the purchase of the
Securities of a defaulting Initial Purchaser or Initial Purchasers by the
non-defaulting Initial Purchasers and the Company as provided in paragraph (a)
above, the aggregate principal amount of such Securities that remains
unpurchased does not exceed one-eleventh of the aggregate principal amount of
all the Securities, then the Company shall have the right to require each
non-defaulting Initial Purchaser to purchase the principal amount of Securities
that such Initial Purchaser agreed to purchase hereunder plus such Initial
Purchaser's pro rata share (based on the principal amount of Securities that
such Initial Purchaser agreed to purchase hereunder) of the Securities of such
defaulting Initial Purchaser or Initial Purchasers for which such arrangements
have not been made.
(c) If, after giving effect to any arrangements for the purchase of the
Securities of a defaulting Initial Purchaser or Initial Purchasers by the
non-defaulting Initial Purchasers and the Company as provided in paragraph (a)
above, the aggregate principal amount of such Securities that remains
unpurchased exceeds one-eleventh of the aggregate principal amount of all the
Securities, or if the Company shall not exercise the right described in
paragraph (b) above, then this Agreement shall terminate without liability on
the part of the non-defaulting Initial Purchasers. Any termination of this
Agreement pursuant to this Section 8 shall be without liability on the part of
the Company or the Guarantors, except that the Company and each of the
Guarantors will continue to be liable for the payment of expenses as set forth
in Section 9 hereof and
27
except that the provisions of Section 6 hereof shall not terminate and shall
remain in effect.
(d) Nothing contained herein shall relieve a defaulting Initial Purchaser
of any liability it may have to the Company, the Guarantors or any
non-defaulting Initial Purchaser for damages caused by its default.
9. Payment of Expenses. (a) Whether or not the transactions contemplated by
this Agreement are consummated or this Agreement is terminated, the Company and
each of the Guarantors jointly and severally agree to pay or cause to be paid
all reasonable costs and expenses incident to the performance of their
respective obligations hereunder, including without limitation, (i) the costs
incident to the authorization, issuance, sale, preparation and delivery of the
Securities and any taxes payable in that connection; (ii) the costs incident to
the preparation and printing of the Preliminary Offering Memorandum and the
Offering Memorandum (including any amendment or supplement thereto) and the
distribution thereof; (iii) the costs of reproducing and distributing each of
the Transaction Documents; (iv) the fees and expenses of the Company's and the
Guarantors' counsel and independent accountants; (v) the fees and expenses
reasonably incurred in connection with the registration or qualification and
determination of eligibility for investment of the Securities under the laws of
such jurisdictions as the Representative may designate and the preparation,
printing and distribution of a Blue Sky Memorandum (including the related fees
and expenses of counsel for the Initial Purchasers); (vi) any fees charged by
rating agencies for rating the Securities; (vii) the fees and expenses of the
Trustee and any paying agent (including related fees and expenses of any counsel
to such parties); (viii) all expenses and application fees incurred in
connection with the application for the inclusion of the Securities on the
PORTAL Market, the approval of the Securities for book-entry transfer by DTC;
(ix) the fees and expenses of the Escrow Agent; and (x) all expenses incurred by
the Company in connection with any "road show" presentation to potential
investors.
(b) If (i) this Agreement is terminated pursuant to Section 7, (ii) the
Company for any reason fails to tender the Securities for delivery to the
Initial Purchasers or (iii) the Initial Purchasers decline to purchase the
Securities for any reason permitted under this Agreement, the Company and each
of the Guarantors jointly and severally agree to reimburse the Initial
Purchasers for all out-of-pocket costs and expenses (including the fees and
expenses of their counsel) reasonably incurred by the Initial Purchasers in
connection with this Agreement and the offering contemplated hereby.
10. Persons Entitled to Benefit of Agreement. This Agreement shall inure to
the benefit of and be binding upon the parties hereto and their respective
successors and any controlling persons referred to herein, and the affiliates,
officers and directors of each Initial Purchaser referred to in Section 6
hereof. Nothing in this Agreement is intended or shall be construed to give any
other person any legal or equitable right, remedy or claim under or in respect
of this Agreement or any provision contained herein. No purchaser of Securities
from any Initial Purchaser shall be deemed to be a successor merely by reason of
such purchase.
28
11. Survival. The respective indemnities, rights of contribution,
representations, warranties and agreements of the Company, the Guarantors and
the Initial Purchasers contained in this Agreement or made by or on behalf of
the Company, the Guarantors or the Initial Purchasers pursuant 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 of this Agreement or any investigation made by or on behalf
of the Company, the Guarantors or the Initial Purchasers.
12. Certain Defined Terms. For purposes of this Agreement, (a) except where
otherwise expressly provided, the term "affiliate" has the meaning set forth in
Rule 405 under the Securities Act; (b) the term "business day" means any day
other than a day on which banks are permitted or required to be closed in New
York City; (c) the term "Exchange Act" means the Securities Exchange Act of
1934, as amended; and (d) the term "subsidiary" has the meaning set forth in
Rule 405 under the Securities Act.
13. Miscellaneous. (a) Authority of the Representative. Any action by the
Initial Purchasers hereunder may be taken by J.P. Morgan Securities Inc. on
behalf of the Initial Purchasers, and any such action taken by J.P. Morgan
Securities Inc. shall be binding upon the Initial Purchasers.
(b) Notices. All notices and other communications hereunder shall be in
writing and shall be deemed to have been duly given if mailed or transmitted and
confirmed by any standard form of telecommunication. Notices to the Initial
Purchasers shall be given to the Representative c/o J.P. Morgan Securities Inc.,
270 Park Avenue, New York, New York 10017 (fax: (212) 270-1063); Attention:
Thomas Cassin. Notices to the Company and the Guarantors shall be given to them
at Quiksilver, Inc., 15202 Graham Street, Huntington Beach, CA 92649, (fax:
(714) 889-4250); Attention: Charles S. Exon.
(c) Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York.
(d) Counterparts. This Agreement may be signed in counterparts (which may
include counterparts delivered by any standard form of telecommunication), each
of which shall be an original and all of which together shall constitute one and
the same instrument.
(e) Amendments or Waivers. 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.
(f) Headings. The headings herein are included for convenience of reference
only and are not intended to be part of, or to affect the meaning or
interpretation of, this Agreement.
29
If the foregoing is in accordance with your understanding, please
indicate your acceptance of this Agreement by signing in the space provided
below.
Very truly yours,
QUIKSILVER, INC.
By
-------------------------------------
Name:
----------------------------------
Title:
---------------------------------
FIDRA, INC.
By
-------------------------------------
Name:
----------------------------------
Title:
---------------------------------
HAWK DESIGNS, INC.
By
-------------------------------------
Name:
----------------------------------
Title:
---------------------------------
MERVIN MANUFACTURING, INC.
By
-------------------------------------
Name:
----------------------------------
Title:
---------------------------------
QS RETAIL, INC.
By
-------------------------------------
Name:
----------------------------------
Title:
---------------------------------
30
DC SHOES, INC.
By
-------------------------------------
Name:
----------------------------------
Title:
---------------------------------
QUIKSILVER AMERICAS, INC.
By
-------------------------------------
Name:
----------------------------------
Title:
---------------------------------
QS WHOLESALE, INC.
By
-------------------------------------
Name:
----------------------------------
Title:
---------------------------------
Accepted: July 14, 2005
J.P. MORGAN SECURITIES INC.
For itself and on behalf of the several Initial Purchasers listed in Schedule 1
hereto.
By
----------------------------------
Authorized Signatory
31
Schedule 1
Initial Purchaser Principal Amount of Securities
- ------------------------------ ------------------------------
J.P. Morgan Securities Inc. $300,000,000
Banc of America Securities LLC 23,000,000
SG Americas Securities, LLC 23,000,000
BNP Paribas Securities Corp. 15,000,000
Calyon Securities (USA) Inc. 15,000,000
Natexis Bleichroeder Inc. 15,000,000
CIBC World Markets Corp. 4,500,000
Piper Jaffray & Co. 4,500,000
------------
Total $400,000,000
============
Schedule 2
QUIKSILVER, INC.
NAMES AND JURISDICTIONS OF GUARANTORS
Subsidiary Name Jurisdiction
- -------------------------- ------------
DC Shoes, Inc. California
Fidra, Inc. California
Hawk Designs, Inc. California
Mervin Manufacturing, Inc. California
QS Retail, Inc. California
QS Wholesale, Inc. California
Quiksilver Americas, Inc. California
Schedule 3
QUIKSILVER, INC.
NAMES AND JURISDICTIONS OF SUBSIDIARIES
Subsidiary Name Jurisdiction
- ----------------------------------------- ------------
DC Direct, Inc. California
DC Shoes, Inc. California
Fidra, Inc. California
Hawk Designs, Inc. California
Mervin Manufacturing, Inc. California
Mt. Waimea, Inc. California
QS Optics, Inc. California
QS Retail, Inc. California
QS Wholesale, Inc. California
Quiksilver Alps LLC California
Quiksilver Americas, Inc. California
Quiksilver Entertainment, Inc. California
Quiksilver Links LLC California
Quiksilver Wetsuits, Inc. California
Roger Cleveland Golf Company, Inc. California
Rossignol Ski Company Inc. Delaware
Skis Dynastar Inc. Delaware
Carribean Pty Ltd. Australia
DC Australia Pty Ltd. Australia
Pavilion Productions Pty Ltd. Australia
QS Retail Pty Ltd. Australia
QSJ Holdings Pty Ltd. Australia
Quiksilver Australia Pty Ltd. Australia
Quiksilver International Pty Ltd. Australia
Ug Manufacturing Co. Pty Ltd. Australia
UMTT Pty Ltd. Australia
Watermoons Pty Ltd. Australia
Rossignol Osterrich GmbH Austria
Skis Dynastar Canada Ltee/Ltd Canada
Skis Rossignol Canada Ltee/Ltd Canada
Free Trade Zone Co. China
Longman WOFE China
Andaya s.ar.l. France
Cariboo s.ar.l France
DC Europe s.ar.l France
Emerald Coast SA (renamed from Gotcha SA) France
Grand Chavin Snowboards S.A France
Infoborn s.ar.l France
Kokolo s.ar.l. France
Look Fixations S.A. France
Subsidiary Name Jurisdiction
- ----------------------------------------- ------------
Na Pali Entertainment s.ar.l France
Na Pali Europe s.ar.l France
Na Pali SAS France
Omareef Europe SAS France
Skis Dynastar S.A. France
Skis Rossignol S.A. France
Tavarua SCI France
Zebraska s.ar.l France
Kauai GmbH Germany
Makaha GmbH Germany
Rossignol Ski Deutschland GmbH Germany
DC Shoes International Ltd. Hong Kong
HK JV Company Hong Kong
Main Bridge Limited Hong Kong
QS (Australia) Sourcing Ltd. Hong Kong
Quiksilver Asia Sourcing Ltd. Hong Kong
Quiksilver Glorious Sun Licensing Limited Hong Kong
Quiksilver Greater China Ltd. Hong Kong
PT Quiksilver Indonesia Indonesia
Namotu, Ltd. Ireland
Haapiti SRL Italy
Moorea SRL Italy
Rossignol Lange S.p.A. Italy
Rossignol Sci S.p.A. Italy
Rossignol Ski Poles Italy
Groupe Rossignol K.K. Japan
Quiksilver Japan K.K. Japan
QS Holdings s.ar.l Luxemborg
Urban Surf Malaysia
Pukalani BV Netherlands
Tuvalu BV Netherlands
Ug Manufacturing Co. Pty Ltd. New Zealand
Rawaki SP z.o.o. Poland
Kiribatti Lda Portugal
Tarawa Lda Portugal
Bakio SL Spain
Quiksilver Europa, SL. Spain
Skis Rossignol De Espana S.A. Spain
Sumbawa SL Spain
Lange International S.A. Switzerland
Longboarder GmbH Switzerland
Rossignol Ski A.G. Switzerland
Sunshine S.A. Switzerland
Town Surf Thailand
Escatade Ltd. U.K.
2
Subsidiary Name Jurisdiction
- ----------------------------------------- ------------
Lanai Ltd. U.K.
Molokai Ltd. U K.
3
Annex A
Restrictions on Offers and Sales Outside the United States
In connection with offers and sales of Securities outside the United
States:
(a) Each Initial Purchaser acknowledges that 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.
(b) Each Initial Purchaser, severally and not jointly, represents, warrants
and agrees that:
(i) 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 under the Securities Act ("Regulation S")
or Rule 144A or any other available exemption from registration under the
Securities Act.
(ii) 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.
(iii) At or prior to the confirmation of sale of any Securities sold
in reliance on Regulation S, such Initial Purchaser will have sent to each
distributor, dealer or other person receiving a selling concession, fee or
other remuneration that purchase Securities from it during the distribution
compliance 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."
(iv) Such Initial Purchaser 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 paragraph (a) and this paragraph (b) and not otherwise defined in
this Agreement have the meanings given to them by Regulation S.
(c) 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 United Kingdom Public Offers
of Securities Regulations 1995 (as amended);
(ii) it has only communicated or caused to be communicated and will
only communicate or cause to be communicated any invitation or inducement
to engage in investment activity (within the meaning of Section 21 of the
United Kingdom Financial Services and Markets Act 2000 (the "FSMA"))
received by it in connection with the issue or sale of any Securities in
circumstances in which Section 21(1) of the FSMA does not apply to the
Company or the Guarantors; and
(iii) it has complied and will comply with all applicable provisions
of the FSMA with respect to anything done by it in relation to the
Securities in, from or otherwise involving the United Kingdom.
(d) Each Initial Purchaser acknowledges that no action has been or will be
taken by the Company that would permit a public offering of the Securities, or
possession or distribution of the Preliminary Offering Memorandum, the Offering
Memorandum or any other offering or publicity material relating to the
Securities, in any country or jurisdiction where action for that purpose is
required.
2
Annex B
Form of Opinion of Hewitt & O'Neil LLP
Annex C
Form of Opinion of Special Counsel for the Company
Annex D
Form of Opinion of Charles Exon
Annex E
Form of Management Comfort Letter
I, Steven Brink, Chief Financial Officer and Treasurer of Quiksilver,
Inc. (the "Company"), hereby certify that I have responsibility for financial
and accounting matters with respect to the Company and have read and am familiar
with the consolidated financial statements of the Company and its subsidiaries
as of October 31, 2003 and 2004 and for the three years ended October 30, 2004
and as of April 30, 2005 and the six months ended April 30, 2005, and I am
familiar with the Company's accounting records.
In connection with the Offering Memorandum, dated July 14, 2005,
relating to the offering of $400,000,000 of 6 7/8% Senior Notes, due 2015 (the
"Senior Notes") by the Company (the "Offering Memorandum"), I hereby further
certify that:
1. To my knowledge, with respect to the period from May 1, 2005 to July 14,
2005:
(a) at July 14, 2005, there was no material change in the capital stock,
increase in short or long-term debt or any decreases in consolidated
net current assets or stockholders' equity of the Company as compared
with amounts shown on the April 30, 2005 unaudited condensed
consolidated balance sheet, or
(b) for the period from May 1, 2005 to July 14, 2005, there were no
material decreases in consolidated net revenues or decreases in
consolidated net income, as compared with the corresponding period in
the preceding year,
except in all instances for changes, increases or decreases that the
Offering Memorandum discloses have occurred or are contemplated to occur.
2. Except with respect to (i) the Company's preliminary allocation of the
purchase price for Skis Rossignol S.A. ("Rossignol") among Rossignol's
tangible and intangible assets not being sufficiently complete to
adequately support such allocation and (ii) the pro forma financial
statements not separately disclosing the components or useful lives of
identifiable intangible assets because the data necessary for such
disclosure is not currently available:
(a) the unaudited pro forma condensed consolidated financial statements
included in the Offering Memorandum comply as to form in all material
respects with the applicable accounting requirements of Rule 11-02 of
Regulation S-X, and
(b) the pro forma adjustments to the historical amounts in the unaudited
pro forma condensed consolidated financial statements have been
properly applied.
3. For purposes of this letter, I have also read the items identified by you
on the attached copy of selected pages of the Offering Memorandum, the
Company's Annual Report on Form 10-K for the fiscal year ended October 31,
2004 and the Company's Quarterly Reports on Form 10-Q for the quarterly
periods ended January 31, 2005 and April 30, 2005 and have performed the
following procedures, which were applied as indicated with respect to the
symbols explained below:
PROCEDURE DESCRIPTION
- --------- -----------
(A) Derived the dollar amount, percentage, ratio or numerical amount
from the Company's accounting records or Rossignol's accounting
records, as applicable, after giving pro forma effect to the
acquisition of Rossignol (assuming the Company acquires 100% of
Rossignol) and the related financings, as set forth in the schedules
attached hereto in Annex A.
(B) Derived the dollar amount, percentage, ratio or numerical amount
from the Company's accounting records, as set forth in the schedules
attached hereto in Annex B.
(C) Compared the dollar amount or percentage shown to a schedule
prepared by the Company's accounting personnel and found them to be
in agreement. In addition I proved the arithmetical accuracy, as
applicable of the total dollar amount or percentage using data
contained in the schedule, attached hereto in Annex C.
I am not aware of any material adverse change or transaction since
April 30, 2005 affecting the financial position or results of operations of the
Company, otherwise than as set forth or contemplated in the Offering Memorandum.
2
Exhibit A
Form of Registration Rights Agreement