EXHIBIT 1
Weight Watchers International, Inc.
$150,000,000
13% Senior Subordinated Notes due 2009
Euro 100,000,000
13% Senior Subordinated Notes due 2009
PURCHASE AGREEMENT
September 22, 1999
CREDIT SUISSE FIRST BOSTON CORPORATION
SCOTIA CAPITAL MARKETS (USA) INC.
c/o Credit Suisse First Boston Corporation,
Eleven Madison Avenue,
New York, N.Y. 10010-3629
Dear Sirs:
1. Introductory. Weight Watchers International, Inc., a Virginia
corporation (the "Company"), proposes, subject to the terms and conditions
stated herein, to issue and sell to Credit Suisse First Boston Corporation
("CSFBC") and Scotia Capital Markets (USA) Inc. (the "Purchasers")
U.S.$150,000,000 principal amount of its 13% Senior Subordinated Notes due 2009
(the "Dollar Securities") and Euro 100,000,000 principal amount of its 13%
Senior Subordinated Notes due 2009 (the "Euro Securities" and together with the
Dollar Securities, the "Offered Securities") to be issued under two indentures
dated as of September 29, 1999 (collectively, the "Indentures"), between the
Company and Norwest Bank Minnesota, National Association, as Trustee.
The United States Securities Act of 1933 is herein referred to as the
"Securities Act".
The following transactions (collectively, the "Transactions") will occur
concurrently with the consummation of the offering of the Notes (the
"Offering"): Artal Luxembourg S.A. ("Artal") and/or certain of its affiliates
(collectively, the "Investors") intend to consummate a recapitalization
transaction (the "Recapitalization") of the Company, whereby (i) pursuant to a
recapitalization and stock purchase agreement, dated as of July 22, 1999 (the
"Recapitalization Agreement"), among H.J. Heinz Company ("HJH"), the Company and
Newco, (a) the Company will redeem shares of common stock of the Company, par
value $1.00 per share ("Company Shares"), held by HJH (the "Redemption") for
total consideration of $349,500,000, which will be paid through the issuance by
the Company to HJH of redeemable preferred shares of the Company paying
dividends of 6% per annum and redeemable on the eleventh anniversary of the
Closing Date in an aggregate amount equal to
$25,000,000 (the "Preferred Shares") and $324,500,000 of the cash proceeds from
(1) the senior secured credit facilities (the "Senior Credit Facilities") to be
entered into pursuant to a credit agreement (the "Credit Agreement") among the
Company, certain of its subsidiaries and a syndicate of banks and other
financial institutions led by the Bank of Nova Scotia, as administrative agent,
and Credit Suisse First Boston, New York branch, as syndication agent (such
banks and other financial institutions, the "Lenders"), in an aggregate
principal amount of up to $262,000,000 (consisting of term loan facilities (the
"Term Loan Facilities") in an aggregate amount of $237,000,000 and a $25,000,000
revolving credit facility (the "Revolving Facility")) and (2) the Offering, (b)
immediately after the Redemption, HJH shall sell and transfer to Newco, and
Newco shall purchase (the "Stock Purchase" and, together with the Redemption,
the "Recapitalization") from HJH, for cash consideration of $223,700,000,
Company Shares representing 94% of the outstanding Company Shares after giving
effect to the Redemption, (c) the Company will refinance $147,500,000 of
indebtedness incurred in connection with the acquisition of the businesses that
conduct its business in Australia and New Zealand and (d) HJH will continue to
own Company Shares representing 6% of the issued and outstanding Company Shares
(the "Equity Rollover"); (ii) cash in an aggregate amount not to exceed
$25,000,000 will be used to pay the fees and expenses incurred in connection
with the Recapitalization, the Senior Credit Facilities and the Offering; and
(iii) the Company will have unused commitments under the Revolving Facility of
not less than $48,000,000.
This Agreement, the Registration Rights Agreement (as defined
herein) and the Indentures are referred to herein as the "Operative Documents".
The Recapitalization Agreement, the Credit Agreement and the other documents
related to the Transactions are referred to herein collectively as the
"Transaction Documents".
Holders (including subsequent transferees) of the Notes will be
entitled to the benefit of a Registration Rights Agreement of even date herewith
(the "Registration Rights Agreement"), among the Company and the Purchasers,
pursuant to which the Company will be obligated to file with the Securities and
Exchange Commission (the "Commission") (i) a registration statement (the
"Exchange Offer Registration Statement") under the Securities Act registering an
issue of senior subordinated notes of the Company (the "Exchange Securities"),
which shall be identical in all material respects to the Offered Securities
(except that the Exchange Securities will not contain terms with respect to
transfer restrictions) to be offered in exchange for the Offered Securities (the
"Registered Exchange Offer") and (ii) under certain circumstances specified in
the Registration Rights Agreement, a shelf registration statement (the "Shelf
Registration Statement") pursuant to Rule 415 under the Securities Act.
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The Company hereby agrees with the several Purchasers as follows:
2. Representations and Warranties of the Company. The Company represents
and warrants to, and agrees with, the several Purchasers and their selling
affiliates that:
(a) A preliminary confidential offering circular and an offering
circular relating to the Offered Securities to be offered by the
Purchasers have been prepared by the Company. Such preliminary
confidential offering circular (the "Preliminary Offering Circular") and
offering circular (the "Offering Circular"), as supplemented as of the
date of this Agreement, together with any other document approved by the
Company for use in connection with the contemplated resale of the Offered
Securities are hereinafter collectively referred to as the "Offering
Document". On the date of this Agreement, the Offering Document does not
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 under which they were made, not misleading. The
preceding sentence does not apply to statements in or omissions from the
Offering Document based upon written information furnished to the Company
by any Purchaser through CSFBC specifically for use therein, it being
understood and agreed that the only such information is that described as
such in Section 7(b) hereof.
(b) The Company has been duly incorporated and is an existing
corporation in good standing under the laws of the Commonwealth of
Virginia, with power and authority (corporate and other) to own its
properties and conduct its business as described in the Offering Document;
and the Company is duly qualified to do business as a foreign corporation
in good standing in all other jurisdictions in which its ownership or
lease of property or the conduct of its business requires such
qualification, except to the extent that the failure to be so qualified or
be in good standing would not have a material adverse effect on the
condition (financial or otherwise), business, properties or result of
operations of the Company and its subsidiaries, taken as a whole (a
"Material Adverse Effect").
(c) Each Significant Subsidiary (as defined in Rule 1-02(W) of
Regulation S-X) of the Company has been duly incorporated and is an
existing corporation in good standing under the laws of the jurisdiction
of its incorporation or organization, with power and authority (corporate
and other) to own its properties and conduct its business as described in
the Offering Document; and each Significant Subsidiary of the Company is
duly qualified to do business as a foreign corporation in good standing in
all other jurisdictions in which its ownership or lease of property or the
conduct of its business requires such qualification, except to the extent
that the failure to be so qualified or be in good standing would not have
a Material Adverse Effect; all of the issued and outstanding capital stock
of each Significant Subsidiary of the Company has been duly authorized and
validly issued and is fully paid and nonassessable; and the capital stock
of each Significant Subsidiary owned by the Company, directly or through
subsidiaries, is owned free from liens, encumbrances and defects except as
otherwise described in the Offering Document.
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(d) Each of the Indentures has been duly authorized by the Company;
the Offered Securities have been duly authorized; and when the Offered
Securities are delivered and paid for pursuant to this Agreement on the
Closing Date (as defined below), each of the Indentures will have been
duly executed and delivered (assuming due authorization, execution and
delivery by the Trustee), such Offered Securities will have been duly
executed, authenticated, issued and delivered (assuming authentication by
the Trustee in accordance with the provisions of the Indentures) and will
conform to the description thereof contained in the Offering Document and
the Indentures and such Offered Securities will constitute valid and
legally binding obligations of the Company, enforceable in accordance with
their terms, subject to (i) the effects of bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and other similar laws
relating to or affecting creditors' rights generally, (ii) general
equitable principles (whether considered in a proceeding in equity or at
law) and (iii) an implied covenant of good faith and fair dealing.
(e) Except as disclosed in the Offering Document, there are no
contracts, agreements or understandings between the Company and any person
that would give rise to a valid claim against the Company or any Purchaser
for a brokerage commission, finder's fee or other like payment.
(f) No consent, approval, authorization, or order of, or filing
with, any governmental agency or body or any court is required for the
consummation of (i) the Transactions or (ii) the transactions contemplated
by the Operative Documents in connection with the issuance and sale of the
Offered Securities by the Company except as may be required under the
Securities Act, the Trust Indenture Act of 1939, as amended (the "TIA")
and the rules and regulations of the Commission thereunder with respect to
the Registration Statement or the Shelf Registration Statement and the
transactions contemplated by the Registration Rights Agreement, or any
state or foreign securities laws or by the regulations of the National
Association of Securities Dealers, Inc. (the "NASD").
(g) Assuming the accuracy of the representations, and the
performance of the agreements of the Purchasers contained herein the
execution, delivery and performance of the Operative Documents and the
issuance and sale of the Offered Securities to the Purchasers in the
manner contemplated herein and compliance with the terms and provisions
thereof will not result in a breach or violation of any of the terms and
provisions of, or constitute a default under, any statute, any rule,
regulation or order of any governmental agency or body or any court,
domestic or foreign, having jurisdiction over the Company or any
subsidiary of the Company or any of their properties, or any agreement or
instrument to which the Company or any such subsidiary is a party or by
which the Company or any such subsidiary is bound or to which any of the
properties of the Company or any such subsidiary is subject (except, where
such breach, violation or default would not individually or in the
aggregate have a Material Adverse Effect), or the charter or by-laws of
the Company or any such subsidiary, and the Company has full power and
authority to authorize, issue and sell the Offered Securities as
contemplated by this Agreement.
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(h) Each of the Transaction Documents (i) if such party is a
signatory thereto, has been duly authorized by the Company, (ii) as of the
Closing Date, if such party is a signatory thereto, will have been
executed and delivered by the Company and (iii) conforms in all material
respects to the description thereof contained in the Offering Document.
Each of the Transaction Documents will, when so executed, constitute a
valid and legally binding obligation of the Company and will be
enforceable in accordance with its terms, subject to (i) the effects of
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium
and other similar laws relating to or affecting creditors' rights
generally, (ii) general equitable principles (whether considered in a
proceeding in equity or at law) and (iii) an implied covenant of good
faith and fair dealing.
(i) Assuming the accuracy of the representation and warranties of
the other parties thereto, the execution, delivery and performance of the
Transaction Documents by the Company (to the extent a party thereto) and
compliance with the terms and provisions of any such Transaction Document
will not result in a breach or violation of any of the terms and
provisions of, or constitute a default under, any statute, any rule,
regulation or order of any governmental agency or body or any court,
domestic or foreign, having jurisdiction over the Company or any
subsidiary of the Company or any of their properties, or any agreement or
instrument to which the Company or any such subsidiary is a party or by
which the Company or any such subsidiary is bound or to which any of the
properties of the Company or any such subsidiary is subject (except, where
such breach, violation or default would not individually or in the
aggregate have a Material Adverse Effect), or the charter or by-laws of
the Company or any such subsidiary, and the Company has full power and
authority to authorize, issue and sell the Offered Securities as
contemplated by this Agreement.
(j) This Agreement and the Registration Rights Agreement have been
duly authorized, executed and delivered by the Company.
(k) Except as disclosed in the Offering Document, the Company and
its subsidiaries hold any leased real or personal property under valid and
enforceable leases with no exceptions that would materially interfere with
the use made or to be made thereof by them, except where such failure
would not, individually or in the aggregate have a Material Adverse
Effect.
(l) The Company and its subsidiaries possess adequate certificates,
authorities or permits issued by appropriate governmental agencies or
bodies necessary to conduct the business now operated by them and have not
received any notice of proceedings relating to the revocation or
modification of any such certificate, authority or permit that, if
determined adversely to the Company or any of its subsidiaries, would
individually or in the aggregate have a Material Adverse Effect.
(m) No labor dispute with the employees of the Company or any
subsidiary exists or, to the knowledge of the Company, is imminent that
might have a Material Adverse Effect.
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(n) Except as disclosed in the Offering Document, the Company and
its subsidiaries own, possess or can acquire on reasonable terms, adequate
trademarks, trade names and other rights to inventions, know-how, patents,
copyrights, confidential information and other intellectual property
(collectively, "intellectual property rights") necessary to conduct the
business now operated by them, or presently employed by them, and have not
received any notice of infringement of or conflict with asserted rights of
others with respect to any intellectual property rights that, if
determined adversely to the Company or any of its subsidiaries, would
individually or in the aggregate have a Material Adverse Effect.
(o) Except as disclosed in the Offering Document, neither the
Company nor any of its subsidiaries is in violation of any statute, any
rule, regulation, decision or order of any governmental agency or body or
any court, domestic or foreign, relating to the use, disposal or release
of hazardous or toxic substances or relating to the protection or
restoration of the environment or human exposure to hazardous or toxic
substances (collectively, "environmental laws"), owns or operates any real
property contaminated with any substance that is subject to any
environmental laws, is liable for any off-site disposal or contamination
pursuant to any environmental laws, or is subject to any claim relating to
any environmental laws, which violation, contamination, liability or claim
would individually or in the aggregate have a Material Adverse Effect; and
the Company is not aware of any pending investigation which might lead to
such a claim.
(p) Except as disclosed in the Offering Document, there are no
pending actions, suits or proceedings against or affecting the Company,
any of its subsidiaries or any of their respective properties that, if
determined adversely to the Company or any of its subsidiaries, would
individually or in the aggregate have a Material Adverse Effect, or would
materially and adversely affect the ability of the Company to perform its
obligations under the Operative Documents or which are otherwise material
in the context of the sale of the Offered Securities; and no such actions,
suits or proceedings are, to the Company's knowledge, threatened or
contemplated.
(q) The historical financial statements included in the Offering
Document present fairly the financial position of the Company and its
consolidated subsidiaries as of the dates shown and their results of
operations and cash flows for the periods shown, and such financial
statements have been prepared in conformity with the generally accepted
accounting principles in the United States applied on a consistent basis;
and the assumptions used in preparing the pro forma financial statements
included in the Offering Document provide a reasonable basis for
presenting the significant effects directly attributable to the
transactions or events described therein, the related pro forma
adjustments give appropriate effect to those assumptions, and the pro
forma columns therein reflect the proper application of those adjustments
to the corresponding historical financial statement amounts.
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(r) Except as disclosed in the Offering Document, since the date of
the latest audited financial statements included in the Offering Document
there has been no material adverse change, nor any development or event
involving a prospective material adverse change, in the condition
(financial or other), business, properties or results of operations of the
Company and its subsidiaries taken as a whole, and, except as disclosed in
or contemplated by the Offering Document, there has been no dividend or
distribution of any kind declared, paid or made by the Company on any
class of its capital stock.
(s) The Company is not an open-end investment company, unit
investment trust or face-amount certificate company that is or is required
to be registered under Section 8 of the United States Investment Company
Act of 1940 (the "Investment Company Act"); and the Company is not and,
after giving effect to the offering and sale of the Offered Securities and
the application of the proceeds thereof as described in the Offering
Document, will not be an "investment company" as defined in the Investment
Company Act.
(t) No securities of the same class (within the meaning of Rule
144A(d)(3) under the Securities Act) as the Offered Securities are listed
on any national securities exchange registered under Section 6 of the
United States Securities Exchange Act of 1934 (the "Exchange Act") or
quoted in a U.S. automated inter-dealer quotation system.
(u) Assuming the accuracy of the representations and the performance
of the Purchasers, contained herein, the offer and sale of the Offered
Securities in the manner contemplated by this Agreement will be exempt
from the registration requirements of the Securities Act by reason of
Section 4(2) thereof and Regulation S ("Regulation S") thereunder; and it
is not necessary to qualify an indenture in respect of the Offered
Securities under the United States Trust Indenture Act of 1939, as amended
(the "Trust Indenture Act").
(v) Neither the Company, nor any of its affiliates, nor any person
acting on its or their behalf (i) has, within the six-month period prior
to the date hereof, offered or sold in the United States or to any U.S.
person (as such terms are defined in Regulation S) the Offered Securities
or any security of the same class or series as the Offered Securities or
(ii) has offered or will offer or sell the Offered Securities (A) in the
United States by means of any form of general solicitation or general
advertising within the meaning of Rule 502(c) under the Securities Act or
(B) with respect to any such securities sold in reliance on Rule 903 of
Regulation S, by means of any directed selling efforts within the meaning
of Rule 902(c) of Regulation S. The Company, its affiliates and any person
acting on its or their behalf have complied and will comply with the
offering restrictions requirement of Regulation S. The Company has not
entered and will not enter into any contractual arrangement with respect
to the distribution of the Offered Securities except for this Agreement.
3. Purchase, Sale and Delivery of Offered Securities. On the basis of the
representations, warranties and agreements herein contained, but subject to the
terms and conditions herein set forth, the
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Company agrees to sell to the Purchasers, and the Purchasers agree, severally
and not jointly, to purchase from the Company, at a purchase price of 100% of
the principal amount thereof plus accrued interest from September 29, 1999, to
the Closing Date (as hereinafter defined), the respective principal amounts of
Dollar Securities set forth opposite the names of the several Purchasers in
Schedule A hereto and, at a purchase price of 100% of the principal amount
thereof plus accrued interest from September 29, 1999, to the Closing Date, the
respective principal amounts of the Euro Securities set forth opposite the names
of the several Purchasers in Schedule A hereto.
The Company will deliver against payment of the purchase price the Offered
Securities in the form of one or more global Securities in definitive form (the
"Global Securities") deposited with the Trustee as custodian for The Depository
Trust Company ("DTC") and registered in the name of Cede & Co., as nominee for
DTC. Interests in any permanent Global Securities will be held only in
book-entry form through DTC, except in the limited circumstances described in
the Offering Document. Payment for the Offered Securities shall be made by the
Purchasers in Federal (same day) funds by official check or checks or wire
transfer to an account at a bank acceptable to CSFBC drawn to the order of
Weight Watchers International, Inc. at the office of Simpson Thacher & Bartlett,
425 Lexington Avenue, New York, NY 10017, at 9:00 A.M. (New York time), on
September 29, 1999, or at such other time not later than seven full business
days thereafter as CSFBC and the Company determine, such time being herein
referred to as the "Closing Date", against delivery to the Trustee as custodian
for DTC of the Global Securities representing all of the Securities. The Global
Securities will be made available for checking at the office of Simpson,
Thatcher & Bartlett at least 24 hours prior to the Closing Date.
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4. Representations by Purchasers and Their Selling Affiliates; Resale by
Purchasers.
(a) Each Purchaser and their sellng affiliates severally represent
and warrant to the Company that it is an "accredited investor" within the
meaning of Regulation D under the Securities Act.
(b) Each Purchaser severally acknowledges that the Offered
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 in accordance with Regulation S or
pursuant to an exemption from the registration requirements of the
Securities Act. Each Purchaser severally represents and agrees that it has
offered and sold the Offered Securities, and will offer and sell the
Offered Securities only in accordance with Rule 903 or Rule 144A under the
Securities Act ("Rule 144A"). Accordingly, neither such Purchaser nor its
affiliates, nor any persons acting on its or their behalf, have engaged or
will engage in any directed selling efforts with respect to the Offered
Securities, and such Purchaser, its affiliates and all persons acting on
its or their behalf have complied and will comply with the offering
restrictions requirement of Regulation S and Rule 144A.
(c) Each Purchaser severally agrees that it and each of its
affiliates has not entered and will not enter into any contractual
arrangement with respect to the distribution of the Offered Securities
except for any such arrangements with the other Purchasers or affiliates
of the other Purchasers or with the prior written consent of the Company.
(d) Each Purchaser severally agrees that it and each of its
affiliates will not offer or sell the Offered Securities in the United
States by means of any form of general solicitation or general advertising
within the meaning of Rule 502(c) under the Securities Act, including, but
not limited to (i) any advertisement, article, notice or other
communication published in any newspaper, magazine or similar media or
broadcast over television or radio, or (ii) any seminar or meeting whose
attendees have been invited by any general solicitation or general
advertising. Each Purchaser severally agrees, with respect to resales made
in reliance on Rule 144A of any of the Offered Securities, to deliver
either with the confirmation of such resale or otherwise prior to
settlement of such resale a notice to the effect that the resale of such
Offered Securities has been made in reliance upon the exemption from the
registration requirements of the Securities Act provided by Rule 144A.
(e) Each Purchaser severally represents and agrees that (i) it has
not offered or sold and prior to the date six months after the date of
issue of the Offered Securities will not offer or sell any Offered
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
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meaning of the Public Offers of Securities Regulations 1995; (ii) it has
complied and will comply with all applicable provisions of the Financial
Services Act 1986 with respect to anything done by it in relation to the
Offered Securities in, from or otherwise involving the United Kingdom; and
(iii) it has only issued or passed on and will only issue or pass on in
the United Kingdom any document received by it in connection with the
issue of the Offered Securities to a person who is of a kind described in
Article 11(3) of the Financial Services Act 1986 (Investment
Advertisements) (Exemptions) Order 1996 or is a person to whom such
document may otherwise lawfully be issued or passed on.
5. Certain Agreements of the Company. The Company agrees with the several
Purchasers that:
(a) The Company will advise CSFBC promptly of any proposal to amend
or supplement the Offering Document and will not effect such amendment or
supplementation without CSFBC's consent, which consent shall not be
unreasonably withheld or delayed. If, at any time prior to the completion
of the resale of the Offered Securities by the Purchasers, any event
occurs as a result of which the Offering Document as then amended or
supplemented would include an untrue statement of a material fact or omit
to state any material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading, the Company promptly will notify CSFBC of such event and
promptly will prepare, at its own expense, an amendment or supplement
which will correct such statement or omission. Neither CSFBC's consent to,
nor the Purchasers' delivery to offerees or investors of, any such
amendment or supplement shall constitute a waiver of any of the conditions
set forth in Section 6.
(b) The Company will furnish to CSFBC copies of any preliminary
offering circular, the Offering Document and all amendments and
supplements to such documents, in each case as soon as available and in
such quantities as CSFBC reasonably requests, and the Company will furnish
to CSFBC on the date hereof three copies of the Offering Document signed
by a duly authorized officer of the Company, one of which will include the
independent accountants' reports therein manually signed by such
independent accountants. At any time when the Company is not subject to
Section 13 or 15(d) of the Exchange Act, the Company will promptly furnish
or cause to be furnished to CSFBC(and, upon request, to each of the other
Purchasers) and, upon request of holders and prospective purchasers of the
Offered Securities, to such holders and purchasers, copies of the
information required to be delivered to holders and prospective purchasers
of the Offered Securities pursuant to Rule 144A(d)(4) under the Securities
Act (or any successor provision thereto) in order to permit compliance
with Rule 144A in connection with resales by such holders of the Offered
Securities. The Company will pay the expenses of printing and distributing
to the Purchasers all such documents.
(c) The Company will arrange for the qualification of the Offered
Securities for sale and the determination of their eligibility for
investment under the laws of such jurisdictions in the United States and
Canada as CSFBC designates and will continue
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such qualifications in effect so long as required for the resale of the
Offered Securities by the Purchasers, provided that the Company will not
be required to qualify as a foreign corporation or to file a general
consent to service of process in any such state or province.
(d) During the period of five years hereafter, the Company will
furnish to CSFBC and, upon request, to each of the other Purchasers, as
soon as practicable after the end of each fiscal year, a copy of its
annual report to stockholders for such year; and the Company will furnish
to CSFBC and, upon request, to each of the other Purchasers (i) as soon as
available, a copy of each report and any definitive proxy statement of the
Company filed with the Commission under the Exchange Act or mailed to
stockholders and (ii) from time to time, such other information concerning
the Company as CSFBC may reasonably request.
(e) During the period of two years after the Closing Date, the
Company will, upon request, furnish to CSFBC, each of the other Purchasers
and any holder of Offered Securities a copy of the restrictions on
transfer applicable to the Offered Securities.
(f) During the period of two years after the Closing Date, 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 Offered
Securities that have been reacquired by any of them.
(g) During the period of two years after the Closing Date, the
Company will not be or become, an open-end investment company, unit
investment trust or face-amount certificate company that is or is required
to be registered under Section 8 of the Investment Company Act.
(h) The Company will pay all expenses incidental to the performance
of its obligations under this Agreement, the Indenture and the
Registration Rights Agreement, including (i) the fees and expenses of the
Trustee and its professional advisers; (ii) all expenses in connection
with the execution, issue, authentication, packaging and initial delivery
of the Offered Securities and, as applicable, the Exchange Securities, the
preparation and printing of this Agreement, the Registration Rights
Agreement, the Offered Securities, the Indenture, the Offering Document
and amendments and supplements thereto, and any other document relating to
the issuance, offer, sale and delivery of the Offered Securities and as
applicable, the Exchange Securities; (iii) the cost of qualifying the
Offered Securities for trading in The PortalSM Market ("PORTAL") and any
expenses incidental thereto; (iv) the cost of any advertising approved by
the Company in connection with the issue of the Offered Securities; (v)
for any expenses (including fees and disbursements of counsel) incurred in
connection with qualification of the Offered Securities or the Exchange
Securities for sale under the laws of such jurisdictions in the United
States and Canada as CSFBC designates and the printing of memoranda
relating thereto; (vi) for any fees charged by investment rating agencies
for the rating of the Securities or the Exchange Securities, and (vii) for
expenses incurred in distributing preliminary offering circulars and the
Offering
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Document (including any amendments and supplements thereto) to the
Purchasers. The Company will also pay or reimburse the Purchasers (to the
extent incurred by them) for all reasonable travel expenses of the
Purchasers and the Company's officers and employees and any other
reasonable expenses of the Purchasers and the Company in connection with
attending or hosting meetings with prospective purchasers of the Offered
Securities from the Purchasers.
(i) In connection with the offering, until CSFBC shall have notified
the Company and the other Purchasers of the completion of the resale of
the Offered Securities, neither the Company nor any of its affiliates has
or will, either alone or with one or more other persons, bid for or
purchase for any account in which it or any of its affiliates has a
beneficial interest any Offered Securities or attempt to induce any person
to purchase any Offered Securities; and neither it nor any of its
affiliates will make bids or purchases for the purpose of creating actual,
or apparent, active trading in, or of raising the price of, the Offered
Securities.
(j) For a period of 135 days after the date of the initial offering
of the Offered Securities by the Purchasers, the Company will not offer,
sell, contract to sell, pledge or otherwise dispose of, directly or
indirectly, any debt securities issued or guaranteed by the Company and
having a maturity of more than one year from the date of issue. The
Company will not at any time offer, sell, contract to sell, pledge or
otherwise dispose of, directly or indirectly, any securities under
circumstances where such offer, sale, pledge, contract or disposition
would cause the exemption afforded by Section 4(2) of the Securities Act
or the safe harbor of Regulation S thereunder to cease to be applicable to
the offer and sale of the Offered Securities.
(k) The Company will use its best efforts in cooperation with the
Purchasers to cause the Offered Securities to be eligible for the PORTAL
trading system of the National Association of Securities Dealers, Inc.
(l) The Company will apply the net proceeds of the offering and the
sale of the Offered Securities in the manner set forth in the Offering
Document under the caption "Sources and Uses of Funds".
12
6. Conditions of the Obligations of the Purchasers. The obligations of the
several Purchasers to purchase and pay for the Offered Securities will be
subject to the accuracy of the representations and warranties on the part of the
Company herein, to the accuracy of the statements of officers of the Company
made pursuant to the provisions hereof, to the performance by the Company of its
obligations hereunder and to the following additional conditions precedent:
(a) The Purchasers shall have received a letter, dated the date of
this Agreement, of PricewaterhouseCoopers LLP confirming that they are
independent public accountants within the meaning of the Securities Act
and the applicable published rules and regulations thereunder ("Rules and
Regulations") and to the effect that:
(i) in their opinion the financial statements examined by them
and included in the Offering Document comply as to form in all
material respects with the accounting requirements of the Securities
Act and the related published Rules and Regulations that would be
applicable if the Offering were registered under the Securities Act;
(ii) they have performed the procedures specified by the
American Institute of Certified Public Accountants for a review of
interim financial information as described in Statement of Auditing
Standards No. 71, Interim Financial Information, on the unaudited
financial statements included in the Offering Document;
(iii) on the basis of the review referred to in clause (ii)
above, a reading of the latest available interim financial
statements of the Company, inquiries of officials of the Company who
have responsibility for financial and accounting matters and other
specified procedures, nothing came to their attention that caused
them to believe that:
(A) the unaudited financial statements included in the
Offering Document do not comply as to form in all material
respects with the applicable accounting requirements of the
Securities Act and the related published Rules and Regulations
that would be applicable if the Offering were registered under
the Securities Act or any material modifications should be
made to such unaudited financial statements for them to be in
conformity with generally accepted accounting principles;
(B) at the date of the latest available balance sheet
read by such accountants, or at a subsequent specified date
not more than three business days prior to the date of this
Agreement, there was any change in the capital stock or any
increase in short-term indebtedness or long-term debt of the
Company and its consolidated subsidiaries or, at the date of
the latest available balance sheet read by such accountants,
there was any decrease in current assets
13
or total assets, as compared with amounts shown on the latest
balance sheet included in the Offering Document; or
(C) for the period from the closing date of the latest
income statement included in the Offering Document to the
closing date of the latest available income statement read by
such accountants there were any decreases, as compared with
the corresponding period of the previous year, in total
revenue, gross profit or net income or in the ratio of
earnings to fixed charges;
except in all cases set forth in clauses (C) and (D) above for
changes, increases or decreases which are described in such
letter;
(iv) they have (a) read the unaudited pro forma condensed
consolidated financial statements included in the Offering Document;
(b) inquired of certain officials of the Company who have
responsibility for financial and accounting matters about (i) the
basis for their determination of the pro forma adjustments and (ii)
whether the unaudited pro forma condensed consolidated financial
statements referred to in clause (a) above comply as to form in all
material respects with the applicable accounting requirements of
Rule 11-02 of Regulation S-X; and (c) proved the arithmetic accuracy
of the application of the pro form adjustments to the historical
amounts in the unaudited pro forma condensed consolidated financial
statements; and
(v) on the basis of the review referred to in clause (iv)
above, nothing came to their attention that caused them to believe
that the unaudited pro forma condensed consolidated financial
statements included in the Offering Document do not comply as to
form in all material respects with the applicable accounting
requirements of Rule 11-02 of Regulation S-X and that the pro form
adjustments have not been properly applied to the historical amounts
in the compilation of those statements; and
(vi) they have compared specified dollar amounts (or
percentages derived from such dollar amounts) and other financial
information contained in the Offering Document (in each case to the
extent that such dollar amounts, percentages and other financial
information are derived from the general accounting records of the
Company and its subsidiaries subject to the internal controls of the
Company's accounting system or are derived directly from such
records by analysis or computation) with the results obtained from
inquiries, a reading of such general accounting records and other
procedures specified in such letter and have found such dollar
amounts, percentages and other financial information to be in
agreement with such results, except as otherwise specified in such
letter.
(b) Subsequent to the execution and delivery of this Agreement,
there shall not have occurred (i) a change in U.S. or
14
international financial, political or economic conditions or currency
exchange rates or exchange controls as would, in the judgment of CSFBC, be
likely to prejudice materially the success of the proposed issue, sale or
distribution of the Offered Securities, whether in the primary market or
in respect of dealings in the secondary market, or (ii) (A) any change, or
any development or event involving a prospective change, in the condition
(financial or other), business, properties or results of operations of the
Company or its subsidiaries which, in the judgment of a majority in
interest of the Purchasers including CSFBC, is material and adverse and
makes it impractical or inadvisable to proceed with completion of the
offering or the sale of and payment for the Offered Securities; (B) any
downgrading in the rating of any debt securities of the Company by any
"nationally recognized statistical rating organization" (as defined for
purposes of Rule 436(g) under the Securities Act), or any public
announcement that any such organization has under surveillance or review
its rating of any debt securities of the Company (other than an
announcement with positive implications of a possible upgrading, and no
implication of a possible downgrading, of such rating); (C) any suspension
or limitation of trading in securities generally on the New York Stock
Exchange, or any setting of minimum prices for trading on such exchange,
or any suspension of trading of any securities of the Company on any
exchange or in the over-the-counter market; (D) any banking moratorium
declared by U.S. Federal or New York authorities; or (E) any outbreak or
escalation of major hostilities in which the United States is involved,
any declaration of war by Congress or any other substantial national or
international calamity or emergency if, in the judgment of a majority in
interest of the Purchasers including CSFBC, the effect of any such
outbreak, escalation, declaration, calamity or emergency makes it
impractical or inadvisable to proceed with completion of the offering or
sale of and payment for the Offered Securities.
15
(c) The Purchasers shall have received an opinion, dated the Closing
Date, of Hunton & Williams, special Virginia counsel for the Company,
that:
(i) the Company has been duly incorporated and is an existing
corporation in good standing under the laws of the Commonwealth of
Virginia, with corporate power and authority to own its properties
and conduct its business as described in the Offering Document;
(ii) each of the Indentures has been duly authorized, executed
and delivered by the Company; the Offered Securities have been duly
authorized, executed, and issued by the Company;
(iii) this Agreement and the Registration Rights Agreement
have each been duly authorized, executed and delivered by the
Company; and
(iv) each of the Transaction Documents has been duly
authorized, executed and delivered by the Company (to the extent a
party thereto).
(d) The Purchasers shall have received an opinion, dated the Closing
Date, of Simpson Thacher & Bartlett, counsel for the Company, that:
(i) each of the Indentures has been duly authorized, executed
and delivered by the Company and, assuming that such Indenture is
the valid and legally binding obligation of the Trustee, constitutes
a valid and legally binding obligation of the Company, enforceable
against the Company in accordance with its terms subject to (i) the
effects of bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and other similar laws relating or
affecting creditors' rights generally, (ii) general equitable
principles (whether considered in a proceeding in equity or at law)
and (iii) an implied covenant of good faith and fair dealing;
(ii) the Offered Securities have been duly authorized,
executed and issued by the Company and, assuming due authentication
thereof by the Trustee and upon payment and delivery in accordance
with this Agreement, will constitute valid and legally binding
obligations of the Company enforceable against the Company in
accordance with their terms and entitled to the benefits of the
relevant Indenture subject to (i) the effects of bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium and
other similar laws relating to or affecting creditors' rights
generally, (ii) general equitable principles (whether considered in
a proceeding in a equity or at law) and (iii) an implied covenant of
good faith and fair dealing;
(iii) no consent, approval, authorization order, registration
or qualification of or with any Federal or New York governmental
agency or to such counsel's knowledge,
16
any Federal or New York court is required for the issue and sale of
the Offered Securities by the Company and the compliance by the
Company with all of the provisions of this Agreement, except for
such consents, approvals, authorizations, registrations or
qualifications as may be required under state securities or Blue Sky
laws in connection with the purchase and distribution of the Offered
Securities by the Purchasers (except, other than as set forth in
paragraph (vi) below, such counsel need give no opinion as to
registration of the Offered Securities under the Securities Act, and
the qualification of the Indentures under the TIA);
(iv) this Agreement and the Registration Rights Agreement have
each been duly authorized, executed and delivered by the Company;
(v) the issue and sale of the Offered Securities by the
Company and the compliance by the Company with all the provisions of
this Agreement will not violate any Federal or New York statute;
(vi) no registration of the Offered Securities under the
Securities Act, and no qualification of the Indenture under the TIA,
is required for the offer and sale of the Offered Securities by the
Company to the Purchasers or the reoffer and resale of the Offered
Securities by the Purchasers to the initial purchasers therefrom
solely in the manner contemplated by the Offering Document, this
Agreement and the Indenture;
(vii) following the issuance of the Offered Securities and the
application of the proceeds therefrom, the Company will not be an
"investment company" within the meaning of and subject to regulation
under the Investment Company Act of 1940, as amended;
(viii) such counsel shall state that they have not
independently verified the accuracy, completeness or fairness of the
statements made or included in the final offering circular and take
no responsibility therefor. Such counsel shall also state that in
the course of the preparation by the Company of the final offering
circular, they participated in conferences with certain officers and
employees of the Company and with representatives of
PricewaterhouseCoopers. Such counsel shall state that based upon
their examination of the final offering circular, their
investigations made in connection with the preparation of the final
offering circular and their participation in the conferences
referred to above, they have no reason to believe that the final
offering circular contained or contains any untrue statement of a
material fact or omitted or omits to state any material fact
necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading, except
that in each case they need to express no belief with respect to the
financial statements or other financial or data contained in the
final offering circular.
17
In rendering such opinion, Simpson Thacher & Bartlett may rely
as to the incorporation of the Company and all other matters
governed by Virginia law upon the opinion of Hunton & Williams
referred to above.
(e) The Purchasers shall have received an opinion, dated the Closing
Date, of Robert Mallow, counsel to the Company that:
(i) the Company is duly qualified to do business as a foreign
corporation in good standing in all other jurisdictions in which its
ownership or lease of property or the conduct of its business
requires such qualification, except to the extent that the failure
to be so qualified or be in good standing would not have a Material
Adverse Effect;
(ii) no consent, approval, authorization or order of, or
filing with, any governmental agency or body or any court is
required for the consummation of (A) the Transactions or (B) the
transactions contemplated by the Operative Documents in connection
with the issuance or sale of the Offered Securities by the Company,
except as may be required under the Securities Act, the TIA and the
rules and regulations of the Commission thereunder with respect to
the Registration Statement or the Shelf Registration Statement and
the transactions contemplated by the Registration Rights Agreement,
or any state or foreign securities laws or by the regulations of the
National Association of Securities Dealers, Inc. (the "NASD");
(iii) the execution, delivery and performance of the Operative
Documents by the Company and the issuance and sale of the Offered
Securities by the Company and compliance with the terms and
provisions thereof will not result in a breach or violation of any
of the terms and provisions of, or constitute a default under, (A)
to such counsel's knowledge, any statute, rule, regulation (assuming
the accuracy of the Purchasers' representations in Section 4
thereof) or order of any governmental agency or body or any court
having jurisdiction over the Company or any subsidiary of the
Company or any of their properties, or (B) the charter or by-laws of
the Company or any such subsidiary;
(iv) the execution, delivery and performance of the
Transaction Documents by the Company (to the extent a party thereto)
and compliance with the terms and provisions thereof will not result
in a breach or violation of any of the terms and provisions of or
constitute a default under (A) to such counsel's knowledge, any
statute, rule or
18
regulation or any order of any governmental agency or body or any
court having jurisdiction over the Company or any subsidiary of the
Company or any of their properties, or (B) the charter or by-laws of
the Company;
(v) each of the Transaction Documents will, when duly
executed and delivered, constitute a valid and legally binding
obligation of the Company (to the extent a party thereto) and is
enforceable in accordance with its terms, subject to (i) the effects
of bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and other similar laws relating to or affecting
creditors' rights generally, (ii) general equitable principles
(whether considered in a proceeding in equity or at law) and (iii)
an implied covenant of good faith and fair dealing; and
(vi) to such counsel's knowledge other than as set forth in
the Offering Document, there are no pending actions, suits or
proceedings against or affecting the Company, any of its
subsidiaries or any of their respective properties that, if
determined adversely to the Company or any of its subsidiaries,
would individually or in the aggregate have a Material Adverse
Effect, or would materially and adversely affect the ability of the
Company to perform its obligations under the Operative Documents, or
which are otherwise material in the context of the sale of the
Offered Securities; and no such actions, suits or proceedings are,
to such counsel's knowledge, threatened or contemplated.
(f) The Purchasers shall have received from Cravath, Swaine & Moore,
counsel for the Purchasers, such opinion or opinions, dated the Closing
Date, with respect to the incorporation of the Company, the validity of
the Offered Securities, the Offering Circular, the exemption from
registration for the offer and sale of the Offered Securities by the
Company to the several Purchasers and the resales by the several
Purchasers as contemplated hereby and other related matters as CSFBC may
require, and the Company shall have furnished to such counsel such
documents as they request for the purpose of enabling them to pass upon
such matters. In rendering such opinion, Cravath, Swaine & Moore may rely
as to the incorporation of the Company and all other matters governed by
Virginia law upon the opinion of Hunton & Williams referred to above.
(g) The Purchasers shall have received a certificate, dated the
Closing Date, of the President or any Vice President and a principal
financial or accounting officer of the Company in which such officers, to
the best of their knowledge after reasonable investigation, shall state
that the representations and warranties of the Company in this Agreement
are true and correct, that the Company has complied with all agreements
and satisfied all conditions on its part to be performed or satisfied
hereunder at or prior to the Closing Date, and that, subsequent to the
date of the most recent financial statements in the Offering Document
there has been no material adverse change, nor any development or event
involving a prospective material adverse change, in the condition
(financial or other), business, properties or results of
19
operations of the Company and its subsidiaries taken as a whole except as
set forth in or contemplated by the Offering Document or as described in
such certificate.
(h) The Purchasers shall have received a letter, dated the Closing
Date, of PricewaterhouseCoopers which meets the requirements of subsection
(a) of this Section, except that the specified date referred to in such
subsection will be a date not more than three days prior to the Closing
Date for the purposes of this subsection.
(i) Concurrently with or prior to the issue and sale of the Offered
Securities by the Company, the Transactions shall be consummated on terms
that conform in all material respects to the description thereof in the
Offering Documents and the Purchasers shall have received true and correct
copies of all documents pertaining thereto and evidence reasonably
satisfactory to the Purchasers of the consummation thereof.
(j) Concurrently with or prior to the issuance and sale of the
Offered Securities by the Company, the Company and [certain subsidiaries]
shall have entered into the Credit Agreement and the initial borrowings
thereunder shall have occurred. The Purchasers shall have received
conformed counterparts thereof and all other documents and agreements
entered into and received thereunder in connection with the closing of the
Credit Agreement. There shall exist at and as of the Closing Date (after
giving effect to the transactions contemplated by this Agreement and the
Transactions) no condition that would constitute a default (or an event
that with notice or lapse of time, or both, would constitute a default)
under the Credit Agreement or any other Transaction Document.
The Company will furnish the Purchasers with such conformed copies of such
opinions, certificates, letters and documents as the Purchasers reasonably
request. CSFBC may in its sole discretion waive on behalf of the Purchasers
compliance with any conditions to the obligations of the Purchasers hereunder.
20
7. Indemnification and Contribution.
(a) The Company will indemnify and hold harmless each Purchaser and
their selling affiliates, directors and officers and each person, if any,
who controls such Purchaser within the meaning of Section 15 of the
Securities Act, against any losses, claims, damages or liabilities, joint
or several, to which--the--such-- Purchaser may become subject, under the
Securities Act or the Exchange Act or otherwise, insofar as such losses,
claims, damages or liabilities (or actions in respect thereof) arise out
of or are based upon any breach of any of the representations and
warranties of the Company contained herein or any untrue statement or
alleged untrue statement of any material fact contained in the Offering
Document, or any amendment or supplement thereto, or any related
preliminary offering circular, or arise out of or are based upon the
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, including any losses, claims,
damages or liabilities arising out of or based upon the Company's failure
to perform its obligations under Section 5(a) of this Agreement, and will
reimburse each Purchaser for any legal or other expenses reasonably
incurred by such Purchaser in connection with investigating or defending
any such loss, claim, damage, liability or action as such expenses are
incurred; provided, however, that the Company will not be liable in any
such case to the extent that any such loss, claim, damage or liability
arises out of or is based upon an untrue statement or alleged untrue
statement in or omission or alleged omission from any of such documents in
reliance upon and in conformity with written information furnished to the
Company by any Purchaser through CSFBC specifically for use therein, it
being understood and agreed that the only such information consists of the
information described as such in subsection (b) below; and provided,
further, that with respect to any untrue statement or alleged untrue
statement in or omission or alleged omission from any preliminary offering
circular the indemnity agreement contained in this subsection (a) shall
not inure to the benefit of any Purchaser that sold the Securities
concerned to the person asserting any such losses, claims, damages or
liabilities, to the extent that such sale was an initial resale by such
Purchaser and any such loss, claim, damage or liability of such Purchaser
results from the fact that there was not sent or given to such person, at
or prior to the written confirmation of the sale of such Securities to
such person, a copy of the Offering Document (exclusive of any material
included therein but not attached thereto) if the Company had previously
furnished copies thereof to such Purchaser.
(b) Each Purchaser will severally and not jointly indemnify and hold
harmless the Company, its directors and officers and each person, if any,
who controls the Company within the meaning of Section 15 of the
Securities Act, against any losses, claims, damages or liabilities to
which the Company may become subject, under the Securities Act or the
Exchange Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon
any untrue statement or alleged untrue statement of any material fact
contained in the Offering Document, or any amendment or supplement
21
thereto, or any related preliminary offering circular, or arise out of or
are based upon the omission or the 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, in
each case to the extent, but only to the extent, that such untrue
statement or alleged untrue statement or omission or alleged omission was
made in reliance upon and in conformity with written information furnished
to the Company by such Purchaser through CSFBC specifically for use
therein, and will reimburse any legal or other expenses reasonably
incurred by the Company in connection with investigating or defending any
such loss, claim, damage, liability or action as such expenses are
incurred, it being understood and agreed that the only such information
furnished by any Purchaser consists of (i) the following information in
the Offering Document furnished on behalf of each Purchaser: under the
caption "Plan of Distribution" paragraphs seven (as to the second sentence
only) and eight and (ii) the following information in the Offering
Document in paragraph nine under the caption "Plan of Distribution"
furnished on behalf of CSFBC or Scotia Capital Markets (USA) Inc., as
indicated: the information regarding Credit Suisse First Boston, New York
branch, and CSFBC, furnished by CSFBC and the information in such
paragraph regarding The Bank of Nova Scotia and Scotia Capital Markets
(USA) Inc. furnished on behalf of Scotia Capital Markets (USA) Inc.;
provided, however, that the Purchasers shall not be liable for any losses,
claims, damages or liabilities arising out of or based upon the Company's
failure to perform its obligations under Section 5(a) of this Agreement.
(c) Promptly after receipt by an indemnified party under this
Section of notice of the commencement of any action, such indemnified
party will, if a claim in respect thereof is to be made against the
indemnifying party under subsection (a) or (b) above, notify the
indemnifying party of the commencement thereof; but the omission so to
notify the indemnifying party will not relieve it from any liability which
it may have to any indemnified party otherwise than under subsection (a)
or (b) above. In case any such action is brought against any indemnified
party and it notifies the indemnifying party of the commencement thereof,
the indemnifying party will be entitled to participate therein and, to the
extent that it may wish, jointly with any other indemnifying party
similarly notified, to assume the defense thereof, with counsel reasonably
satisfactory to such indemnified party (who shall not, except with the
consent of the indemnified party, be counsel to the indemnifying party),
and after notice from the indemnifying party to such indemnified party of
its election so to assume the defense thereof, the indemnifying party will
not be liable to such indemnified party under this Section for any legal
or other expenses subsequently incurred by such indemnified party in
connection with the defense thereof other than reasonable costs of
investigation. No indemnifying party shall, without the prior written
consent of the indemnified party, effect any settlement of any pending or
threatened action in respect of which any indemnified party is or could
have been a party and indemnity could have been sought hereunder by such
indemnified party unless such settlement includes an unconditional release
of such indemnified party from all liability on any claims that are the
22
subject matter of such action and does not include a statement as to or an
admission of fault, culpability or failure to act by or on behalf of any
indemnified party.
(d) If the indemnification provided for in this Section is
unavailable or insufficient to hold harmless an indemnified party under
subsection (a) or (b) above, then each indemnifying party shall contribute
to the amount paid or payable by such indemnified party as a result of the
losses, claims, damages or liabilities referred to in subsection (a) or
(b) above (i) in such proportion as is appropriate to reflect the relative
benefits received by the Company on the one hand and the Purchasers on the
other from the offering of the Offered Securities or (ii) if the
allocation provided by clause (i) above is not permitted by applicable
law, in such proportion as is appropriate to reflect not only the relative
benefits referred to in clause (i) above but also the relative fault of
the Company on the one hand and the Purchasers on the other in connection
with the statements or omissions which resulted in such losses, claims,
damages or liabilities as well as any other relevant equitable
considerations. The relative benefits received by the Company on the one
hand and the Purchasers on the other shall be deemed to be in the same
proportion as the total net proceeds from the offering (before deducting
expenses) received by the Company bear to the total discounts and
commissions received by the Purchasers from the Company under this
Agreement. The relative fault shall be determined by reference to, among
other things, whether the untrue or alleged untrue statement of a material
fact or the omission or alleged omission to state a material fact relates
to information supplied by the Company or the Purchasers and the parties'
relative intent, knowledge, access to information and opportunity to
correct or prevent such untrue statement or omission. The amount paid by
an indemnified party as a result of the losses, claims, damages or
liabilities referred to in the first sentence of this subsection (d) shall
be deemed to include any legal or other expenses reasonably incurred by
such indemnified party in connection with investigating or defending any
action or claim which is the subject of this subsection (d).
Notwithstanding the provisions of this subsection (d), no Purchaser shall
be required to contribute any amount in excess of the amount by which the
total price at which the Offered Securities purchased by it were resold
exceeds the amount of any damages which such Purchaser has otherwise been
required to pay by reason of such untrue or alleged untrue statement or
omission or alleged omission. The Purchasers' obligations in this
subsection (d) to contribute are several in proportion to their respective
purchase obligations and not joint.
(e) The obligations of the Company under this Section shall be in
addition to any liability which the Company may otherwise have and shall
extend, upon the same terms and conditions, to each person, if any, who
controls any Purchaser within the meaning of the Securities Act or the
Exchange Act; and the obligations of the Purchasers under this Section
shall be in addition to any liability which the respective Purchasers may
otherwise have and shall extend, upon the same terms and conditions, to
each person, if any, who controls the Company within the meaning of the
Securities Act or the Exchange Act.
23
8. Default of Purchasers. If any Purchaser or Purchasers default in their
obligations to purchase Offered Securities hereunder and the aggregate principal
amount of Offered Securities that such defaulting Purchaser or Purchasers agreed
but failed to purchase does not exceed 10% of the total principal amount of
Offered Securities, CSFBC may make arrangements satisfactory to the Company for
the purchase of such Offered Securities by other persons, including any of the
Purchasers, but if no such arrangements are made by the Closing Date, the
non-defaulting Purchasers shall be obligated severally, in proportion to their
respective commitments hereunder, to purchase the Offered Securities that such
defaulting Purchasers agreed but failed to purchase. If any Purchaser or
Purchasers so default and the aggregate principal amount of Offered Securities
with respect to which such default or defaults occur exceeds 10% of the total
principal amount of Offered Securities and arrangements satisfactory to CSFBC
and the Company for the purchase of such Offered Securities by other persons are
not made within 36 hours after such default, this Agreement will terminate
without liability on the part of any non-defaulting Purchaser or the Company,
except as provided in Section 9. As used in this Agreement, the term "Purchaser"
includes any person substituted for a Purchaser under this Section. Nothing
herein will relieve a defaulting Purchaser from liability for its default.
9. Survival of Certain Representations and Obligations. The respective
indemnities, agreements, representations, warranties and other statements of the
Company or its officers and of the several Purchasers set forth in or made
pursuant to this Agreement will remain in full force and effect, regardless of
any investigation, or statement as to the results thereof, made by or on behalf
of any Purchaser, the Company or any of their respective representatives,
officers or directors or any controlling person, and will survive delivery of
and payment for the Offered Securities. If this Agreement is terminated pursuant
to Section 8 or if for any reason the purchase of the Offered Securities by the
Purchasers is not consummated, the Company shall remain responsible for the
expenses to be paid or reimbursed by it pursuant to Section 5(h) and the
respective obligations of the Company and the Purchasers pursuant to Section 7
shall remain in effect. If the purchase of the Offered Securities by the
Purchasers is not consummated for any reason other than solely because of the
termination of this Agreement pursuant to Section 8 or the occurrence of any
event specified in clause (C), (D) or (E) of Section 6(b)(ii), the Company will
reimburse the Purchasers for all out-of-pocket expenses (including fees and
disbursements of counsel) reasonably incurred by them in connection with the
offering of the Offered Securities.
24
10. Notices. All communications hereunder will be in writing and, if sent
to the Purchasers will be mailed, delivered or telegraphed and confirmed to the
Purchasers, c/o Credit Suisse First Boston Corporation, Eleven Madison Avenue,
New York, N.Y. 10010-3629, Attention: Investment Banking Department -
Transactions Advisory Group, or, if sent to the Company, will be mailed,
delivered or telegraphed and confirmed to it at Weight Watchers International,
Inc., 175 Crossways Park West, Woodbury, NY 11797, Attention General Counsel;
provided, however, that any notice to a Purchaser pursuant to Section 7 will be
mailed, delivered or telegraphed and confirmed to such Purchaser.
11. Successors. This Agreement will inure to the benefit of and be binding
upon the parties hereto and their respective successors and affiliates, and the
controlling persons referred to in Section 7, and no other person will have any
right or obligation hereunder, except that holders of Offered Securities shall
be entitled to enforce the agreements for their benefit contained in the second
and third sentences of Section 5(b) hereof against the Company as if such
holders were parties thereto.
12. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, but all such
counterparts shall together constitute one and the same Agreement.
13. Applicable Law. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of New York without regard to principles
of conflicts of laws.
The Company hereby submits to the non-exclusive jurisdiction of the
Federal and state courts in the Borough of Manhattan in The City of New York in
any suit or proceeding arising out of or relating to this Agreement or the
transactions contemplated hereby.
25
If the foregoing is in accordance with the Purchasers' understanding of
our agreement, kindly sign and return to us one of the counterparts hereof,
whereupon it will become a binding agreement between the Company and the several
Purchasers in accordance with its terms.
Very truly yours,
WEIGHT WATCHERS INTERNATIONAL, INC.
By /s/ Daniel D. DeBolt
Name: Daniel D. DeBolt
Title: Chief Financial Officer
The foregoing Purchase Agreement
is hereby confirmed and accepted
as of the date first above written.
CREDIT SUISSE FIRST BOSTON CORPORATION
SCOTIA CAPITAL MARKETS (USA) INC.
Acting on behalf of themselves
and as the Representatives of
the several Purchasers
By CREDIT SUISSE FIRST BOSTON CORPORATION
By /s/ Malcom Price
Name: Malcolm Price
Title: Managing Director
26
SCHEDULE A
Principal
Amount of
Dollar
Manager Securities
------- ----------
Credit Suisse First Boston Corporation................. $90,000,000
Scotia Capital Markets (USA) Inc....................... 60,000,000
Total................................ $150,000,000
============
Principal
Amount of
Euro
Manager Securities
------- ----------
Credit Suisse First Boston Corporation................. E 60,000,000
Scotia Capital Markets (USA) Inc....................... 40,000,000
Total................................ E 100,000,000
=============