EXHIBIT 1.01
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G+G RETAIL, INC.
and
G&G RETAIL HOLDINGS, INC.
107,000 Units consisting of
11% Series A Senior Notes due 2006
of G+G Retail, Inc.
and
Warrants to purchase 8209 shares of Class D Common Stock
of G&G Retail Holdings, Inc.
representing 7.5% of the fully-diluted common stock
of G&G Retail Holdings, Inc.
Purchase Agreement
May 6, 1999
U.S. BANCORP INVESTMENTS, INC.
CIBC WORLD MARKETS CORP.
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107,000 Units consisting of
11% Series A Senior Notes due 2006
of
G+G Retail, Inc.
and
Warrants to purchase 8209 shares of Class D Common Stock
of
G&G Retail Holdings, Inc.
representing 7.5% of the fully-diluted common stock
of G&G Retail Holdings, Inc.
PURCHASE AGREEMENT
May 6, 1999
U.S. Bancorp Investments, Inc.
CIBC World Markets Corp.
c/o U.S. Bancorp Libra
156 West 56th Street, Suite 901
New York, New York 10019
Dear Sirs:
G+G Retail, Inc., a Delaware corporation (the "Company"), and G&G
Retail Holdings, Inc., a Delaware corporation ("Holdings" and, together with the
Company, the "Issuers") propose to issue and sell to U.S. Bancorp Investments,
Inc. and CIBC World Markets Corp. (each, an "Initial Purchaser" and,
collectively, the "Initial Purchasers") an aggregate of 107,000 Units, each Unit
consisting of $1,000 in principal amount of 11% Series A Senior Notes due 2006
of the Company (the "Series A Notes") and one Warrant (a "Warrant") to purchase
.07672 shares of Class D Common Stock of Holdings, par value $.001 per share
(such shares aggregating to 7.5% of the fully-diluted common stock of Holdings
as of the Closing Date, the "Warrant Shares" and, together with the Notes, the
"Units"), subject to the terms and conditions set forth herein. The Series A
Notes are to be issued pursuant to the provisions of an indenture (the
"Indenture"), to be dated as of the Closing Date (as defined below), between the
Company and U.S. Bank Trust National Association, as trustee (the "Trustee").
The Series A Notes and the Series B Notes (as defined below) issuable in
exchange therefor are collectively referred to herein as the "Notes." The
Warrants are to be issued pursuant to a Warrant Agreement (the "Warrant
Agreement"), to be dated as of the Closing Date, between Holdings and U.S. Bank
Trust National Association, as warrant agent (the "Warrant Agent"). The Units
are to be issued pursuant to a Unit Agreement (the "Unit Agreement"), to be
dated as of the Closing Date, among Holdings, the Company and U.S. Bank Trust
National Association, as unit agent (the "Unit Agent"). As used herein, the term
"Securities" shall mean, collectively, the Units, the
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Notes, the Warrants and the Warrant Shares. Capitalized terms used but not
defined herein shall have the meanings given to such terms in the Indenture.
1. Offering Memorandum. The Securities will be offered and sold to
the Initial Purchasers pursuant to one or more exemptions from the registration
requirements under the Securities Act of 1933, as amended (the "Act"). The
Company has prepared a preliminary offering memorandum, dated April 15, 1999
(the "Preliminary Offering Memorandum") relating to the Notes and the Issuers
have prepared a final offering memorandum, dated May 10, 1999 (the "Offering
Memorandum"), relating to the Units.
Upon original issuance thereof, and until such time as the same is
no longer required pursuant to the Act, the Securities (and all securities
issued in exchange therefor, in substitution thereof or upon conversion thereof)
shall bear the following legend:
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE
OFFERED OR SOLD WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR
BENEFIT OF, U.S. PERSONS EXCEPT AS SET FORTH BELOW. BY ITS ACQUISITION
HEREOF, THE HOLDER (1) REPRESENTS THAT (A) IT IS A "QUALIFIED
INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT),
(B) IT IS NOT A U.S. PERSON AND IS ACQUIRING THIS SECURITY IN AN OFFSHORE
TRANSACTION IN COMPLIANCE WITH RULE 903 OR 904 UNDER THE SECURITIES ACT
OR (C) IT IS AN ACCREDITED INVESTOR (AS DEFINED IN RULE 501(a)(1), (2),
(3), OR (7) UNDER THE SECURITIES ACT) (AN "ACCREDITED INVESTOR"), (2)
AGREES THAT IT WILL NOT RESELL OR OTHERWISE TRANSFER THIS SECURITY EXCEPT
(A) TO THE COMPANY OR ANY SUBSIDIARY THEREOF, (B) INSIDE THE UNITED
STATES TO A QUALIFIED INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A
UNDER THE SECURITIES ACT, (C) INSIDE THE UNITED STATES TO AN ACCREDITED
INVESTOR THAT, PRIOR TO SUCH TRANSFER, FURNISHES (OR HAS FURNISHED ON ITS
BEHALF BY A U.S. BROKER-DEALER) TO THE TRUSTEE A SIGNED LETTER CONTAINING
CERTAIN REPRESENTATIONS AND AGREEMENTS RELATING TO THE RESTRICTIONS ON
TRANSFER OF THIS SECURITY (THE FORM OF WHICH LETTER CAN BE OBTAINED FROM
THE TRUSTEE FOR THIS SECURITY), (D) OUTSIDE THE UNITED STATES IN AN
OFFSHORE TRANSACTION IN COMPLIANCE WITH RULE 903 OR 904 UNDER THE
SECURITIES ACT (IF AVAILABLE), (E) PURSUANT TO THE EXEMPTION FROM
REGISTRATION PROVIDED BY RULE 144 UNDER THE SECURITIES ACT (IF
AVAILABLE), OR (F) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER
THE SECURITIES ACT, AND (3) AGREES THAT IT WILL GIVE TO EACH PERSON TO
WHOM THIS SECURITY IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF
THIS LEGEND. IN CONNECTION WITH ANY TRANSFER OF THIS SECURITY, IF THE
PROPOSED TRANSFEREE IS AN ACCREDITED
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INVESTOR, THE HOLDER MUST, PRIOR TO SUCH TRANSFER, FURNISH TO THE
[TRUSTEE][WARRANT AGENT] AND THE COMPANY SUCH CERTIFICATIONS, LEGAL
OPINIONS OR OTHER INFORMATION AS EITHER OF THEM MAY REASONABLY REQUIRE TO
CONFIRM THAT SUCH TRANSFER IS BEING MADE PURSUANT TO AN EXEMPTION FROM, OR
IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT. AS USED HEREIN, THE TERMS "OFFSHORE TRANSACTION," "UNITED
STATES" AND "U.S. PERSON" HAVE THE MEANINGS GIVEN TO THEM BY REGULATION S
UNDER THE SECURITIES ACT.
2. Agreements to Sell and Purchase. On the basis of the
representations, warranties and covenants contained in this Agreement, and
subject to the terms and conditions contained herein, the Issuers agree to issue
and sell to the Initial Purchasers, and each Initial Purchaser agrees, severally
and not jointly, to purchase from the Issuers, the number of Units set forth
opposite the name of such Initial Purchaser on Schedule A hereto at a purchase
price equal to $903.46 per Unit (the "Purchase Price").
3. Terms of Offering. The Initial Purchasers have advised the
Issuers that the Initial Purchasers will make offers (the "Exempt Resales") of
the Units purchased hereunder on the terms set forth in the Offering Memorandum,
as amended or supplemented, solely to (i) persons whom the Initial Purchasers
reasonably believe to be "qualified institutional buyers" as defined in Rule
144A under the Act ("QIBs"), and (ii) persons permitted to purchase the Units in
offshore transactions in reliance upon Regulation S under the Act (each, a
"Regulation S Purchaser") (such persons specified in clauses (i) and (ii) being
referred to herein as the "Eligible Purchasers"). The Initial Purchasers will
offer the Units to Eligible Purchasers initially at a price equal to $931.40 per
Unit. Such price may be changed at any time without notice.
Holders (including subsequent transferees) of the Series A Notes
will have the registration rights set forth in the registration rights agreement
related thereto (the "Debt Registration Rights Agreement"), to be dated the
Closing Date, in substantially the form of Exhibit A hereto, for so long as such
Series A Notes constitute "Transfer Restricted Securities" (as defined in the
Debt Registration Rights Agreement). Holders (including subsequent transferees)
of the Warrants and Warrant Shares will have the registration rights described
in the Offering Memorandum which will be set forth in the registration rights
agreement (the "Equity Registration Rights Agreement" and, together with the
Debt Registration Rights Agreement, the "Registration Rights Agreements"), to be
dated the Closing Date, for so long as such Warrants and Warrant Shares
constitute Transfer Restricted Securities.
Pursuant to the Debt Registration Rights Agreement, the Company will
agree to file with the Securities and Exchange Commission (the "Commission")
under the circumstances set forth therein, (i) a registration statement under
the Act (the "Exchange Offer Registration Statement") relating to the Company's
11% Series B Senior Notes (the "Series B Notes"), to be
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offered in exchange for the Series A Notes (such offer to exchange being
referred to as the "Exchange Offer") and (ii) a shelf registration statement
pursuant to Rule 415 under the Act (the "Shelf Registration Statement" and,
together with the Exchange Offer Registration Statement, the "Debt Registration
Statements") relating to the resale by certain holders of the Series A Notes and
to use its best efforts to cause such Debt Registration Statements to be
declared and remain effective and usable for the periods specified in the Debt
Registration Rights Agreement and to consummate the Exchange Offer.
Pursuant to the Equity Registration Rights Agreement, Holdings will
agree (i) to file with the Commission a registration statement under the Act for
the sale of the Warrant Shares upon a demand by the holders of a majority of the
Warrant Shares any time after six months following certain public offerings of
Holdings common stock and (ii) to include the Warrant Shares in any filing of a
registration statement pertaining to Holdings common stock upon and following a
qualified public offering of Holdings common stock (in each case, the
registration statements filed are referred to as the "Equity Registration
Statements" and, together with the Debt Registration Statements, the
"Registration Statements") as described in the Offering Memorandum.
This Agreement, the Indenture, the Notes, the Warrant Agreement, the
Warrants, the Unit Agreement, the Units and the Registration Rights Agreements
are hereinafter sometimes referred to collectively as the "Operative Documents."
4. Delivery and Payment.
(a) Delivery of, and payment of the Purchase Price for, the
Units shall be made at the offices of Latham & Watkins, New York, New York or
such other location as may be mutually acceptable. Such delivery and payment
shall be made at 12:30 p.m. New York City time, on May 17, 1999 or at such other
time on the same date or such other date as shall be agreed upon by the Initial
Purchasers and the Issuers in writing. The time and date of such delivery and
the payment for the Units are herein called the "Closing Date."
5. Agreements of the Issuers. Each Issuer hereby agrees with the
Initial Purchasers as follows:
(a) To advise the Initial Purchasers promptly and, if
requested by the Initial Purchasers, confirm such advice in writing, (i) of the
issuance by any state securities commission of any stop order suspending the
qualification or exemption from qualification of any Securities for offering or
sale in any jurisdiction designated by the Initial Purchasers pursuant to
Section 5(e) hereof, or the initiation of any proceeding by any state securities
commission or any other federal or state regulatory authority for such purpose
and (ii) of the happening of any event during the period referred to in Section
5(c) below that makes any statement of a material fact made in the Preliminary
Offering Memorandum or the Offering Memorandum untrue or that requires any
additions to or changes in the Preliminary Offering Memorandum or the Offering
Memorandum in order to make the statements therein not misleading. The Issuers
shall use their reasonable best efforts to prevent the issuance of any stop
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order or order suspending the qualification or exemption of any Securities under
any state securities or Blue Sky laws and, if at any time any state securities
commission or other federal or state regulatory authority shall issue an order
suspending the qualification or exemption of any Securities under any state
securities or Blue Sky laws, the Issuers shall use their reasonable best efforts
to obtain the withdrawal or lifting of such order at the earliest possible time.
(b) To furnish the Initial Purchasers and those persons
identified by the Initial Purchasers to the Issuers as many copies of the
Preliminary Offering Memorandum and the Offering Memorandum, and any amendments
or supplements thereto, as the Initial Purchasers may reasonably request for the
time period specified in Section 5(c). Subject to the Initial Purchasers'
compliance with the representations and warranties and agreements set forth in
Section 7 hereof, the Issuers consent to the use of the Preliminary Offering
Memorandum and the Offering Memorandum, and any amendments and supplements
thereto required pursuant hereto, by the Initial Purchasers in connection with
Exempt Resales.
(c) During (1) the period commencing on the date hereof and
ending on the date the Offering Memorandum is first mailed in connection with
Exempt Resales by the Initial Purchasers and (2) such period thereafter as in
the opinion of counsel for the Initial Purchasers an Offering Memorandum is
required by law to be delivered in connection with Exempt Resales by the Initial
Purchasers, and in connection with market-making activities of the Initial
Purchasers for so long as any Securities are outstanding, (i) not to make any
amendment or supplement to the Offering Memorandum of which the Initial
Purchasers shall not previously have been advised or to which the Initial
Purchasers shall reasonably object after being so advised and (ii) to prepare
promptly upon the Initial Purchasers' reasonable request, any amendment or
supplement to the Offering Memorandum which may be necessary or advisable in
connection with such Exempt Resales or such market-making activities.
(d) If, during the periods referred to in Section 5(c) above,
any event shall occur or condition shall exist as a result of which, in the
opinion of counsel to the Initial Purchasers, it becomes necessary to amend or
supplement the Offering Memorandum in order to make the statements therein, in
the light of the circumstances when such Offering Memorandum is delivered to an
Eligible Purchaser, not misleading, or if, in the opinion of counsel to the
Initial Purchasers, it is necessary to amend or supplement the Offering
Memorandum to comply with any applicable law, forthwith to prepare an
appropriate amendment or supplement to such Offering Memorandum so that the
statements therein, as so amended or supplemented, will not, in the light of the
circumstances when it is so delivered, be misleading, or so that such Offering
Memorandum will comply with applicable law, and to furnish to the Initial
Purchasers and such other persons as the Initial Purchasers may designate such
number of copies thereof as the Initial Purchasers may reasonably request.
(e) Prior to the sale of all Units pursuant to Exempt Resales
as contemplated hereby, to cooperate with the Initial Purchasers and counsel to
the Initial Purchasers in connection with the registration or qualification of
the Units for offer and sale to the Initial Purchasers and pursuant to Exempt
Resales under the securities or Blue Sky laws of such jurisdictions as the
Initial Purchasers may request and to continue such registration or
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qualification in effect so long as required for Exempt Resales and to file such
consents to service of process or other documents as may be necessary in order
to effect such registration or qualification; provided, however, that neither
Issuer shall be required in connection therewith to qualify as a foreign
corporation in any jurisdiction in which it is not now so qualified or to take
any action that would subject it to general consent to service of process or
taxation in any jurisdiction in which it is not now so subject.
(f) So long as the Securities are outstanding and the
Indenture or Warrant Agreement so requires, (i) to mail and make generally
available (in the time period required to file a Form 10-K with the Commission
if either Issuer was required to file such form) after the end of each fiscal
year to the record holders of the Notes or Warrants, a financial report of the
Issuers and their subsidiaries on a consolidated basis (and a similar financial
report of all unconsolidated subsidiaries, if any), all such financial reports
to include a consolidated balance sheet, a consolidated statement of operations,
a consolidated statement of cash flows and a consolidated statement of
stockholders' equity as of the end of and for such fiscal year, together with
comparable information as of the end of and for the preceding year, certified by
the Issuers' independent public accountants and (ii) to mail and make generally
available (in the time period required to file a Form 10-Q with the Commission
if either Issuer were required to file such form) after the end of each
quarterly period (except for the last quarterly period of each fiscal year) to
such holders, a consolidated balance sheet, a consolidated statement of
operations and a consolidated statement of cash flows (and similar financial
reports of all unconsolidated subsidiaries, if any) as of the end of and for
such period, and for the period from the beginning of such year to the close of
such quarterly period, together with comparable information for the
corresponding periods of the preceding year.
(g) So long as the Securities are outstanding, to furnish to
the Initial Purchasers as soon as available copies of all reports or other
communications furnished by either Issuer to its security holders or furnished
to or filed with the Commission or any national securities exchange on which any
class of securities of either Issuer is listed and such other publicly available
information concerning the Issuers and/or their subsidiaries as the Initial
Purchasers may reasonably request.
(h) So long as any of the Securities remain outstanding and
during any period in which an Issuer is not subject to Section 13 or 15(d) of
the Securities Exchange Act of 1934, as amended (the "Exchange Act"), to make
available to any holder of Securities in connection with any sale thereof and
any prospective purchaser of such Securities from such holder, upon request, the
information ("Rule 144A Information") required by Rule 144A(d)(4) under the Act
concerning the Issuers or the Securities.
(i) Whether or not the transactions contemplated in this
Agreement are consummated or this Agreement is terminated, to pay or cause to be
paid all expenses incident to the performance of the obligations of the Issuers
under this Agreement, including: (i) the fees, disbursements and expenses of
counsel to the Issuers and accountants of the Issuers in connection with the
sale and delivery of the Securities to the Initial Purchasers and pursuant to
Exempt Resales, and all other fees and expenses in connection with the
preparation, printing,
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filing and distribution of the Preliminary Offering Memorandum, the Offering
Memorandum and all amendments and supplements to any of the foregoing (including
financial statements), including the mailing and delivering of copies thereof to
the Initial Purchasers and persons designated by it in the quantities specified
herein, (ii) all costs and expenses related to the transfer and delivery of the
Securities to the Initial Purchasers and pursuant to Exempt Resales, including
any transfer or other taxes payable thereon, (iii) all costs of printing or
producing this Agreement, the other Operative Documents and any other agreements
or documents in connection with the offering, purchase, sale or delivery of the
Securities, (iv) all expenses in connection with the registration or
qualification of the Securities for offer and sale under the securities or Blue
Sky laws of the several states and all costs of printing or producing any
preliminary and supplemental Blue Sky memoranda in connection therewith
(including the filing fees and fees and disbursements of counsel for the Initial
Purchasers in connection with such registration or qualification and memoranda
relating thereto), (v) the cost of printing certificates representing the
Securities, (vi) all expenses and listing fees in connection with the
application for quotation of the Securities in the National Association of
Securities Dealers, Inc. ("NASD") Automated Quotation System - PORTAL
("PORTAL"), (vii) the fees and expenses of the Trustee, the Warrant Agent, the
Unit Agent and their counsel in connection with the Indenture, the Notes, the
Warrant Agreement, the Warrants, the Unit Agreement and the Unit, (viii) the
costs and charges of any transfer agent, registrar and/or depositary (including
DTC), (ix) any fees charged by rating agencies for the rating of the Notes, (x)
all costs and expenses associated with the performance of the Issuers of their
obligations under the Operative Documents, (xi) all reasonable and documented
out-of-pocket expenses (including reasonable legal fees and expenses) of U.S.
Bancorp Investments, Inc. incurred in connection with the sale and delivery of
the Securities; provided that the aggregate amount of such out-of-pocket
expenses incurred shall not exceed $250,000, as pursuant to an Engagement Letter
among Libra Investments, Inc., G+G Retail, Inc., and the other parties thereto,
dated as of July 15, 1998; provided, further, that such costs and expenses shall
only be payable (x) if (A) an agreement has been reached on or before the
Closing Date (in any event prior to the consummation of the offering) whereby
Cerberus G&G Retail L.L.C. ("Cerberus") waives or otherwise relinquishes its
anti-dilution adjustment rights as a result of the issuance of the Warrants and
the issuance of shares underlying the Warrants, or (B) the Initial Purchasers
cure or satisfy the effects of the anti-dilution adjustment rights with respect
to the Warrants whereby Pegasus Partners, L.P., Pegasus Related Partners, L.P.,
Pegasus G&G Retail, L.P. and Pegasus G&G Retail II, L.P. do not experience
ratable dilution of their common shares of Holdings, or (y) if the Company
otherwise agrees and (xii) and all other costs and expenses incident to the
performance of the obligations of the Issuers hereunder for which provision is
not otherwise made in this Section.
(j) To use its reasonable best efforts to effect the inclusion
of the Units, Warrants and Notes in PORTAL and to maintain the listing of the
Units, Warrants and Notes on PORTAL for so long as such securities are
outstanding.
(k) To use its reasonable best efforts to obtain the approval
of DTC for "book-entry" transfer of the Securities, and to comply with all of
its agreements set forth in the
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representation letters of the Issuers to DTC relating to the approval of the
Securities by DTC for "book-entry" transfer.
(l) Not to sell, offer for sale or solicit offers to buy or
otherwise negotiate in respect of any security (as defined in the Act) that
would be integrated with the sale of the Units to the Initial Purchasers or
pursuant to Exempt Resales in a manner that would require the registration of
any such sale of the Units under the Act.
(m) Not to voluntarily claim, and to actively resist any
attempts to claim, the benefit of any usury laws against the holders of any
Securities.
(n) To use its reasonable best efforts to cause the Exchange
Offer to be made in the appropriate form to permit Series B Notes registered
pursuant to the Act to be offered in exchange for the Series A Notes, and to
comply with all applicable federal and state securities laws in connection with
the Exchange Offer.
(o) To comply with all of its agreements set forth in the
Registration Rights Agreements.
(p) To use its reasonable best efforts to do and perform all
things required or necessary to be done and performed under this Agreement by it
prior to the Closing Date and to satisfy all conditions precedent to the
delivery of the Units.
(q) To repay all outstanding indebtedness under the Senior
Bridge Notes (as defined in the Offering Memorandum) on or prior to the Closing
Date.
6. Representations, Warranties and Agreements of the Issuers. As of
the date hereof and as of the Closing Date, the Issuers, jointly and severally,
represent and warrant to, and agree with, the Initial Purchasers that:
(a) The Preliminary Offering Memorandum and the Offering
Memorandum do not, and any supplement or amendment to them will not, as of their
respective dates, contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading, except that the representations and warranties contained
in this paragraph (a) shall not apply to statements in or omissions from the
Preliminary Offering Memorandum or the Offering Memorandum (or any supplement or
amendment thereto) based upon information relating to the Initial Purchasers
furnished to the Issuers in writing by the Initial Purchasers expressly for use
therein. To the knowledge of the Issuers, no stop order preventing the use of
the Preliminary Offering Memorandum or the Offering Memorandum, or any amendment
or supplement thereto, or any order asserting that any of the transactions
contemplated by this Agreement are subject to the registration requirements of
the Act, has been issued.
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(b) Each of the Issuers and their subsidiaries has been duly
incorporated, is validly existing as a corporation in good standing under the
laws of its jurisdiction of incorporation and has the corporate power and
authority to carry on its business as described in the Preliminary Offering
Memorandum and the Offering Memorandum and to own, lease and operate its
properties, and each is duly qualified and is in good standing as a foreign
corporation authorized to do business in each jurisdiction in which the nature
of its business or its ownership or leasing of property requires such
qualification, except where the failure to be so qualified could not reasonably
be expected to have a material adverse effect on the business, prospects,
financial condition or results of operations of the Issuers and their
subsidiaries, taken as a whole (a "Material Adverse Effect").
(c) All outstanding shares of capital stock of the Issuers
have been duly authorized and validly issued and are fully paid, non-assessable
and not subject to any preemptive or similar rights, except as described in the
Offering Memorandum.
(d) The entities listed on Schedule B hereto are the only
subsidiaries, direct or indirect, of the Issuers. All of the outstanding shares
of capital stock of each of the Issuers' subsidiaries have been duly authorized
and validly issued and are fully paid and non-assessable, and are owned by the
Issuers, directly or indirectly through one or more subsidiaries, free and clear
of any security interest, claim, lien, encumbrance or adverse interest of any
nature (each, a "Lien"), other than Liens disclosed in the Offering Memorandum.
(e) The Warrants, when issued on the Closing Date, will
provide for the right to purchase 7.499% of the fully-diluted common shares of
Holdings, subject to certain exceptions set forth in the Offering Memorandum;
(f) This Agreement has been duly authorized, executed and
delivered by the Issuers.
(g) The Indenture has been duly authorized by the Company and,
on the Closing Date, will have been duly executed and delivered by the Company.
When the Indenture has been duly executed and delivered by the Company and the
other parties thereto, the Indenture will be a valid and binding agreement of
the Company, enforceable against the Company in accordance with its terms except
as (i) the enforceability thereof may be limited by bankruptcy, insolvency,
reorganization or similar laws affecting creditors' rights generally and (ii)
rights of acceleration and the availability of equitable remedies may be limited
by equitable principles of general applicability. 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 "TIA" or "Trust Indenture Act"), and the
rules and regulations of the Commission applicable to an indenture which is
qualified thereunder.
(h) Each of the Issuers has duly and validly authorized the
issuance of the Securities to be issued by it as part of a Unit.
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(i) The Series A Notes have been duly authorized and, on the
Closing Date, will have been duly executed and delivered by the Company. When
the Series A Notes have been issued, executed and authenticated in accordance
with the provisions of the Indenture and delivered to and paid for by the
Initial Purchasers in accordance with the terms of this Agreement, the Series A
Notes will be entitled to the benefits of the Indenture and will be valid and
binding obligations of the Company, enforceable in accordance with their terms
except as (i) the enforceability thereof may be limited by bankruptcy,
insolvency, reorganization or similar laws affecting creditors' rights generally
and (ii) rights of acceleration and the availability of equitable remedies may
be limited by equitable principles of general applicability. On the Closing
Date, the Series A Notes will conform as to legal matters in all material
respects to the description thereof contained in the Offering Memorandum.
(j) On the Closing Date, the Series B Notes will have been
duly authorized by the Company. When the Series B Notes are issued, executed and
authenticated in accordance with the terms of the Exchange Offer and the
Indenture, the Series B Notes will be entitled to the benefits of the Indenture
and will be the valid and binding obligations of the Company, enforceable
against the Company in accordance with their terms, except as (i) the
enforceability thereof may be limited by bankruptcy, insolvency, reorganization
or similar laws affecting creditors' rights generally and (ii) rights of
acceleration and the availability of equitable remedies may be limited by
equitable principles of general applicability.
(k) The Warrants have been duly authorized by Holdings and, on
the Closing Date, will have been validly delivered by Holdings. When the
Warrants are issued, the Warrants will be valid and binding obligations of
Holdings, enforceable against Holdings in accordance with their terms, except as
(i) the enforceability thereof may be limited by bankruptcy, insolvency,
reorganization or similar laws affecting creditors' rights generally and (ii)
rights of acceleration and the availability of equitable remedies may be limited
by equitable principles of general applicability. The Offering Memorandum
contains an accurate summary, in all material respects, of the terms of the
Warrants.
(l) The Offering Memorandum contains an accurate summary, in
all material respects, of the terms of the Units.
(m) The Warrant Shares have been duly and validly authorized
for issuance by Holdings, and when issued pursuant to the terms of the Warrants
and the Warrant Agreement will be fully paid and nonassessable and will not be
subject to any preemptive or similar rights. The Offering Memorandum contains an
accurate summary, in all material respects, of the terms of the Warrant Shares.
(n) The Debt Registration Rights Agreement has been duly
authorized by the Company and, on the Closing Date, will have been duly executed
and delivered by the Company. When the Debt Registration Rights Agreement has
been duly executed and delivered by the Company and the other parties thereto,
the Debt Registration Rights Agreement will be a valid and binding agreement of
the Company, enforceable against the Company in accordance with its terms except
as (i) the enforceability thereof may be limited by bankruptcy, insolvency,
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reorganization or similar laws affecting creditors' rights generally, (ii)
rights of acceleration and the availability of equitable remedies may be limited
by equitable principles of general applicability, (iii) rights to
indemnification and contribution thereunder may be limited by federal and state
securities laws and public policy considerations and (iv) enforcement of any
provision requiring the payment of liquidated damages may be limited by public
policy considerations. On the Closing Date, the Debt Registration Rights
Agreement will conform as to legal matters in all material respects to the
description thereof in the Offering Memorandum.
(o) The Equity Registration Rights Agreement has been duly and
validly authorized by Holdings and, when duly executed and delivered by
Holdings, will be a valid and binding agreement of Holdings, enforceable against
it in accordance with its terms, except as (i) the enforceability thereof may be
limited by bankruptcy, insolvency, reorganization or similar laws affecting
creditors' rights, (ii) rights of acceleration and the availability of equitable
remedies may be limited by equitable principles of general applicability and
(iii) to the extent that rights to indemnification and contribution thereunder
may be limited by federal or state securities laws or public policy relating
thereto. The Offering Memorandum contains an accurate summary, in all material
respects, of the terms of the Equity Registration Rights Agreement.
(p) The Warrant Agreement has been duly and validly authorized
by Holdings and, when duly executed and delivered by Holdings, will be a valid
and binding agreement of Holdings, enforceable against it in accordance with its
terms, except as (i) the enforceability thereof may be limited by bankruptcy,
insolvency, reorganization or similar laws affecting creditors' rights
generally, (ii) rights of acceleration and the availability of equitable
remedies may be limited by equitable principles of general applicability and
(iii) to the extent that rights to indemnification and contribution thereunder
may be limited by federal or state securities laws or public policy relating
thereto. The Offering Memorandum contains an accurate summary, in all material
respects, of the terms of the Warrant Agreement.
(q) The Unit Agreement has been duly and validly authorized by
the Issuers and, when duly executed and delivered by the Issuers, will be a
valid and binding agreement of the Issuers, enforceable against it in accordance
with its terms, except as (i) the enforceability thereof may be limited by
bankruptcy, insolvency, reorganization or similar laws affecting creditors'
rights generally, (ii) rights of acceleration and the availability of equitable
remedies may be limited by equitable principles of general applicability and
(iii) to the extent that rights to indemnification and contribution thereunder
may be limited by federal or state securities laws or public policy relating
thereto. The Offering Memorandum contains an accurate summary, in all material
respects, of the terms of the Unit Agreement.
(r) Neither of the Issuers nor any of their subsidiaries is
(i) in violation of its respective charter or by-laws (other than immaterial
violations with respect to the establishment of, and election of directors to,
certain committees which shall be cured prior to the Closing Date) or (ii) in
default in the performance of any obligation, agreement, covenant or condition
contained in any indenture, loan agreement, mortgage, lease or other agreement
or instrument that is material to the Issuers and their subsidiaries, taken as a
whole, to which the
11
Issuers or any of their subsidiaries is a party or by which the Issuers or any
of their subsidiaries or their respective property is bound, except in the case
of clause (ii), for such defaults that would not, singly or in the aggregate,
have a Material Adverse Effect .
(s) The execution, delivery and performance of this Agreement
and the other Operative Documents by the Issuers, compliance by the Issuers with
all provisions hereof and thereof and the consummation of the transactions
contemplated hereby and thereby will not, (i) assuming the accuracy of the
Initial Purchasers' representations, warranties and agreements set forth in
Section 7 hereof, require any consent, approval, authorization or other order
of, or qualification with, any court or governmental body or agency (except such
as have been obtained and such as may be required under the securities or Blue
Sky laws of the various states and such as may be required under the Act or the
TIA in connection with the transactions contemplated by the Registration Rights
Agreements), (ii) conflict with or constitute a breach of any of the terms or
provisions of, or a default under, (A) the charter or by-laws of the Issuers or
any of their subsidiaries or (B) any indenture, loan agreement, mortgage, lease
or other agreement or instrument that is material to the Issuers and their
subsidiaries, taken as a whole, to which the Issuers or any of their
subsidiaries is a party or by which the Issuers or any of their subsidiaries or
their respective property is bound, except in the case of (B), for such
conflicts, breaches or defaults that would not, singly or in the aggregate, have
a Material Adverse Effect, (iii) violate or conflict with any applicable law or
any rule, regulation, judgment, order or decree of any court or any governmental
body or agency having jurisdiction over the Issuers, any of their subsidiaries
or their respective property, except for such violations or conflicts that would
not, singly or in the aggregate, have a Material Adverse Effect, (iv) result in
the imposition or creation of (or the obligation to create or impose) a Lien
under any material agreement or instrument to which the Issuers or any of their
subsidiaries is a party or by which the Issuers or any of their subsidiaries or
their respective property is bound, or (v) result in the termination, suspension
or revocation of any Authorization (as defined below) of the Issuers or any of
their subsidiaries or result in any other impairment of the rights of the holder
of any such Authorization, except for such terminations, suspensions or
revocations or other impairments that would not, singly or in the aggregate,
have a Material Adverse Effect.
(t) There are no legal or governmental proceedings pending or,
to the knowledge of the Issuers, threatened to which the Issuers or any of their
subsidiaries is or, to the knowledge of the Issuers, could be a party or to
which any of their respective property is or, to the knowledge of the Issuers,
could be subject, which could reasonably be expected to result, singly or in the
aggregate, in a Material Adverse Effect.
(u) Neither of the Issuers nor any of their subsidiaries has
violated any foreign, federal, state or local law or regulation relating to the
protection of human health and safety, the environment or hazardous or toxic
substances or wastes, pollutants or contaminants ("Environmental Laws"), any
provisions of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), or any provisions of the Foreign Corrupt Practices Act or the rules
and regulations promulgated thereunder, except for such violations which, singly
or in the aggregate, could not reasonably be expected to have a Material Adverse
Effect.
12
(v) There are no costs or liabilities associated with
Environmental Laws (including, without limitation, any capital or operating
expenditures required for clean-up, closure of properties or compliance with
Environmental Laws or any Authorization, any related constraints on operating
activities and any potential liabilities to third parties) which would, singly
or in the aggregate, have a Material Adverse Effect.
(w) Each of the Issuers and their subsidiaries has such
permits, licenses, consents, exemptions, franchises, authorizations and other
approvals (each, an "Authorization") of, and has made all filings with and
notices to, all governmental or regulatory authorities and self-regulatory
organizations and all courts and other tribunals, including without limitation,
under any applicable Environmental Laws, as are necessary to own, lease, license
and operate its respective properties and to conduct its business, except where
the failure to have any such Authorization or to make any such filing or notice
could not reasonably be expected to, singly or in the aggregate, have a Material
Adverse Effect. Each such Authorization is valid and in full force and effect
and each of the Issuers and their subsidiaries is in compliance with all the
terms and conditions thereof and with the rules and regulations of the
authorities and governing bodies having jurisdiction with respect thereto; and
to the knowledge of the Issuers, no event has occurred (including, without
limitation, the receipt of any notice from any authority or governing body)
which allows or, after notice or lapse of time or both, would allow, revocation,
suspension or termination of any such Authorization or results or, after notice
or lapse of time or both, would result in any other impairment of the rights of
the holder of any such Authorization; and such Authorizations contain no
restrictions that are burdensome to the Issuers or any of their subsidiaries;
except where such failure to be valid and in full force and effect or to be in
compliance, the occurrence of any such event or the presence of any such
restriction could not reasonably be expected to, singly or in the aggregate,
have a Material Adverse Effect.
(x) Ernst & Young LLP, which has certified the financial
statements included in the Preliminary Offering Memorandum and the Offering
Memorandum, are independent auditors with respect to the Issuers, as required by
the Act and the Exchange Act. The historical financial statements, together with
related schedules and notes, set forth in the Preliminary Offering Memorandum
and the Offering Memorandum comply as to form in all material respects with the
requirements applicable to registration statements on Form S-1 under the Act.
(y) The historical financial statements, together with related
notes set forth in the Offering Memorandum (and any amendment or supplement
thereto), present fairly, in all material respects, the consolidated financial
position, results of operations and cash flows of Holdings and its subsidiaries
and the Company and its subsidiaries, in each case, on the basis stated in the
Offering Memorandum at the respective dates or for the respective periods to
which they apply; such historical financial statements and related notes have
been prepared in accordance with generally accepted accounting principles
consistently applied throughout the periods involved, except as disclosed
therein; and, subject to the qualifications stated in the Preliminary Offering
Memorandum and the Offering Memorandum, the other historical financial and
statistical information and data set forth in the Offering Memorandum (and any
amendment
13
or supplement thereto) are, in all material respects, accurately presented and
prepared on a basis consistent with such financial statements and the books and
records of the Issuers (to the extent applicable, in the case of statistical
information).
(z) The pro forma financial statements included in the
Preliminary Offering Memorandum and the Offering Memorandum have been prepared
on a basis consistent with the historical financial statements of the Issuers
and their subsidiaries and give effect to assumptions used in the preparation
thereof on a reasonable basis and in good faith and present fairly in all
material respects the historical and proposed transactions contemplated by the
Preliminary Offering Memorandum and the Offering Memorandum. Subject to the
qualifications stated in the Preliminary Offering Memorandum and the Offering
Memorandum, the other pro forma financial and statistical information and data
included in the Offering Memorandum are, in all material respects, accurately
presented and prepared on a basis consistent with the pro forma financial
statements.
(aa) Neither Issuer is and, after giving effect to the
offering and sale of the Securities and the application of the net proceeds
thereof as described in the Offering Memorandum, neither Issuer will be, an
"investment company," as such term is defined in the Investment Company Act of
1940, as amended.
(bb) There are no contracts, agreements or understandings
between either of the Issuers and any person granting such person the right to
require either of the Issuers to file a registration statement under the Act
with respect to any securities of the Issuers or to require the Issuers to
include such securities with the Securities registered pursuant to any
Registration Statement, except as disclosed by the Offering Memorandum.
(cc) Neither the Issuers nor any of their subsidiaries nor any
agent thereof acting on the behalf of them has taken, and none of them will
take, any action that might cause this Agreement or the issuance or sale of the
Securities to violate Regulation G (12 C.F.R. Part 207), Regulation T (12 C.F.R.
Part 220), Regulation U (12 C.F.R. Part 221) or Regulation X (12 C.F.R. Part
224) of the Board of Governors of the Federal Reserve System.
(dd) No "nationally recognized statistical rating
organization" as such term is defined for purposes of Rule 436(g)(2) under the
Act (i) has imposed (or has informed any executive officer of the Issuers that
it is considering imposing) any condition (financial or otherwise) on the
Issuers' retaining any rating assigned to the Issuers or any securities of the
Issuers or (ii) has indicated to any executive officer of the Issuers that it is
considering (a) the downgrading, suspension, or withdrawal of, or any review for
a possible change that does not indicate the direction of the possible change
in, any rating so assigned or (b) any change in the outlook for any rating of
the Issuers or any securities of the Issuers.
(ee) Since the respective dates as of which information is
given in the Offering Memorandum, other than as set forth in or contemplated by
the Offering Memorandum (exclusive of any amendments or supplements thereto
subsequent to the date of this Agreement), (i) there has not occurred any
material adverse change or any development which could
14
reasonably be expected to result in a material adverse change in the condition,
financial or otherwise, or the earnings, business, management or operations of
either Issuer and its subsidiaries, taken as a whole, (ii) there has not been
any material adverse change or any development which could reasonably be
expected to result in a material adverse change in the capital stock or in the
long-term debt of the either Issuer or any of its subsidiaries and (iii) neither
Issuer nor any of their subsidiaries has incurred any material liability or
obligation, direct or contingent.
(ff) Each of the Preliminary Offering Memorandum and the
Offering Memorandum, as of its date, contains all the information specified in,
and meeting the requirements of, Rule 144A(d)(4) under the Act.
(gg) When the Securities are issued and delivered by the
Issuers pursuant to this Agreement, the Securities will not be of the same class
(within the meaning of Rule 144A under the Act) as any security of the Issuers
that is listed on a national securities exchange registered under Section 6 of
the Exchange Act or that is quoted in a United States automated inter-dealer
quotation system.
(hh) No form of general solicitation or general advertising
(as defined in Regulation D under the Act) was used by the Issuers or any of
their representatives (other than the Initial Purchasers, as to whom the Issuers
make no representation) in connection with the offer and sale of the Securities
contemplated hereby, including, but not limited to, articles, notices or other
communications published in any newspaper, magazine, or similar medium or
broadcast over television or radio, or any seminar or meeting whose attendees
have been invited by any general solicitation or general advertising. No
securities of the same class as the Securities have been issued and sold by the
Issuers within the six-month period immediately prior to the date hereof.
(ii) Assuming the accuracy of the Initial Purchasers'
representations, warranties and agreements set forth in Section 7 hereof, prior
to the effectiveness of any Registration Statement, the Indenture is not
required to be qualified under the TIA.
(jj) All indebtedness of the Company that will be repaid with
the proceeds of the issuance and sale of the Securities was incurred, and the
indebtedness represented by the Series A Notes is being incurred, for proper
purposes and in good faith, and the Company was not, at the time of the
incurrence of such indebtedness that will be repaid with the proceeds of the
issuance and sale of the Securities, and will not be on the Closing Date (after
giving effect to the application of the proceeds from the issuance of the
Securities), insolvent (as defined in Section 101(32) of Title 11 of the United
States Bankruptcy Code), and the Company had at the time of the incurrence of
such indebtedness that will be repaid with the proceeds of the issuance and sale
of the Securities, and will have on the Closing Date (after giving effect to the
application of the proceeds from the issuance of the Securities), sufficient
capital for carrying on its business and was, at the time of the incurrence of
such indebtedness that will be repaid with the proceeds of the issuance and sale
of the Securities, and will be on the Closing Date (after giving effect to the
application of the proceeds from the issuance of the Securities), able to pay
its debts as they mature.
15
(kk) Neither the Issuers nor any of their affiliates or any
person acting on its or their behalf (other than the Initial Purchasers, as to
whom the Issuers make no representation) has engaged or will engage in any
directed selling efforts within the meaning of Regulation S under the Act
("Regulation S") with respect to the Units.
(ll) Assuming the accuracy of the Initial Purchasers'
representations, warranties and agreements set forth in Section 7 hereof, the
Units offered and sold in reliance on Regulation S have been and will be offered
and sold only in offshore transactions.
(mm) The Issuers and their affiliates and all persons acting
on their behalf (other than the Initial Purchasers, as to whom the Issuers make
no representation) have complied with and will comply with the offering
restrictions requirements of Regulation S in connection with the offering of the
Securities outside the United States and, in connection therewith, the Offering
Memorandum will contain the disclosure required by Rule 902(g)(2).
(nn) The Securities sold in reliance on Regulation S will be
represented upon issuance by a temporary global security that may not be
exchanged for definitive securities until the expiration of the distribution
compliance period referred to in Rule 903(c)(3) of the Act and only upon
certification of beneficial ownership of such Security by non-U.S. persons or
U.S. persons who purchased such Securities in transactions that were exempt from
the registration requirements of the Act.
(oo) The sale of the Securities pursuant to Regulation S is
not part of a plan or scheme on the part of the Issuers to evade the
registration provisions of the Act.
(pp) No registration under the Act of the Securities is
required for the sale of the Securities to the Initial Purchasers as
contemplated hereby or for the Exempt Resales assuming the accuracy of the
Initial Purchasers' representations and warranties and agreements set forth in
Section 7 hereof.
(qq) Each certificate signed by any officer of the Issuers and
delivered to the Initial Purchasers or counsel for the Initial Purchasers on or
after the date hereof but prior to or on the Closing Date shall be deemed to be
a representation and warranty by the Issuers to the Initial Purchasers as to the
matters covered thereby.
(rr) The Issuers and their subsidiaries own or possess, or can
acquire on reasonable terms, all patents, patent rights, licenses, inventions,
copyrights, know-how (including trade secrets and other unpatented and/or
unpatentable proprietary or confidential information, systems or procedures),
trademarks, service marks and trade names ("intellectual property") currently
employed by them in connection with the business now operated by them, except
where the failure to own or possess or otherwise be able to acquire such
intellectual property could not reasonably be expected to, singly or in the
aggregate, have a Material Adverse Effect; and no executive officers of the
Issuers or any of their subsidiaries has received any notice of infringement of
or conflict with asserted rights of others with respect to any of such
intellectual
16
property which, singly or in the aggregate, if the subject of an unfavorable
decision, ruling or finding, would have a Material Adverse Effect.
The Issuers acknowledge that the Initial Purchasers and, for
purposes of the opinions to be delivered to the Initial Purchasers pursuant to
Section 9 hereof, counsel to the Issuers and counsel to the Initial Purchasers
will rely upon the accuracy and truth of the foregoing representations and
hereby consents to such reliance.
7. Initial Purchasers' Representations and Warranties. Each of the
Initial Purchasers, severally and not jointly, represents and warrants to the
Issuers, and agrees that:
(a) Such Initial Purchaser is either a QIB or an Institutional
Accredited Investor, in either case, with such knowledge and experience in
financial and business matters as is necessary in order to evaluate the merits
and risks of an investment in the Securities.
(b) Such Initial Purchaser (A) is not acquiring the Securities
with a view to any distribution thereof or with any present intention of
offering or selling any of the Securities in a transaction that would violate
the Act or the securities laws of any state of the United States or any other
applicable jurisdiction and (B) will be reoffering and reselling the Securities
only (x) to QIBs in reliance on the exemption from the registration requirements
of the Act provided by Rule 144A, (y) in offshore transactions in reliance upon
Regulation S under the Act and (z) in compliance with the laws of any
jurisdiction outside of the United States in which it offers or sells the
Securities.
(c) Such Initial Purchaser agrees that no form of general
solicitation or general advertising (within the meaning of Regulation D under
the Act) has been or will be used by such Initial Purchaser or any of its
representatives in connection with the offer and sale of the Securities pursuant
hereto, including, but not limited to, articles, notices or other communications
published in any newspaper, magazine or similar medium or broadcast over
television or radio, or any seminar or meeting whose attendees have been invited
by any general solicitation or general advertising.
(d) Such Initial Purchaser agrees that, in connection with
Exempt Resales, such Initial Purchaser will solicit offers to buy the Securities
only from, and will offer to sell the Securities only to, Eligible Purchasers.
Each Initial Purchaser further agrees that it will offer to sell the Securities
only to, and will solicit offers to buy the Securities only from, (A) Eligible
Purchasers that the Initial Purchaser reasonably believes are QIBs and (B)
Regulation S Purchasers, in each case, that agree that (x) the Securities
purchased by them may be resold, pledged or otherwise transferred only (I) to
the Issuers or any of their subsidiaries, (II) to a person whom the seller
reasonably believes is a QIB purchasing for its own account or for the account
of a QIB in a transaction meeting the requirements of Rule 144A under the Act,
(III) in an offshore transaction (as defined in Rule 902 under the Act) meeting
the requirements of Rule 903 or 904 of the Act, (IV) in a transaction meeting
the requirements of Rule 144 under the Act, (V) to an Institutional Accredited
Investor that, prior to such transfer, furnishes the Trustee a
17
signed letter containing certain representations and agreements relating to the
restrictions on transfer of such Security (the form of which is substantially
the same as Exhibit D to the Indenture) and, an opinion of counsel acceptable to
the Issuers that such transfer is in compliance with the Act, (VI) in accordance
with another exemption from the registration requirements of the Act (and based
upon an opinion of counsel acceptable to the Issuers) or (VII) pursuant to an
effective registration statement and, in each case, in accordance with the
applicable securities laws of any state of the United States or any other
applicable jurisdiction and (y) they will deliver to each person to whom such
Securities or an interest therein is transferred a notice substantially to the
effect of the foregoing.
(e) Such Initial Purchaser and its affiliates or any person
acting on its or their behalf have not engaged and will not engage in any
directed selling efforts within the meaning of Regulation S with respect to the
Securities.
(f) Assuming the accuracy of the Issuers' representations,
warranties and agreements set forth in Section 6 hereof, the Securities offered
and sold by such Initial Purchaser pursuant hereto in reliance on Regulation S
have been and will be offered and sold only in offshore transactions.
(g) The sale of the Securities offered and sold by such
Initial Purchaser pursuant hereto in reliance on Regulation S is not part of a
plan or scheme on the part of the Initial Purchasers to evade the registration
provisions of the Act.
(h) Such Initial Purchaser agrees that it has not offered or
sold and will not offer or sell the Securities in the United States or to, or
for the benefit or account of, a U.S. Person (other than a distributor), in each
case, as defined in Rule 902 under the Act (i) as part of its distribution at
any time and (ii) otherwise until the end of the distribution compliance period
in connection with the commencement of the offering of the Securities pursuant
hereto and the Closing Date, other than in accordance with Regulation S of the
Act or another exemption from the registration requirements of the Act. Such
Initial Purchaser agrees that, during such distribution compliance period, it
will not cause any advertisement with respect to the Securities (including any
"tombstone" advertisement) to be published in any newspaper or periodical or
posted in any public place and will not issue any circular relating to the
Securities, except such advertisements as are permitted by and include the
statements required by Regulation S.
(i) Such Initial Purchaser and its affiliates and any person
acting on its or their behalf have complied with and will comply with the
offering restrictions requirements of Regulation S in connection with the
offering of the Securities outside the United States.
(j) Such Initial Purchaser agrees that, at or prior to
confirmation of a sale of Securities by it to any distributor (as defined in
Regulation S), dealer or person receiving a selling concession, fee or other
remuneration during the distribution compliance period referred to in Rule
903(b)(3) under the Act, it will send to such distributor, dealer or person
receiving a selling concession, fee or other remuneration a confirmation or
notice to substantially the following effect:
18
"The Securities covered hereby have not been registered under the U.S.
Securities Act of 1933, as amended (the "Securities Act"), and may not
be offered and sold within the United States or to, or for the account
or benefit of, U.S. persons (i) as part of a distribution at any time
or (ii) otherwise until the end of the distribution compliance period
in connection with the commencement of the Offering and the Closing
Date, except in either case in accordance with Regulation S under the
Securities Act (or Rule 144A or to Institutional Accredited Investors
in transactions that are exempt from the registration requirements of
the Securities Act), and in connection with any subsequent sale by you
of the Securities covered hereby in reliance on Regulation S during the
period referred to above to any distributor, dealer or person receiving
a selling concession, fee or other remuneration, you must deliver a
notice to substantially the foregoing effect. Terms used above have the
meanings assigned to them in Regulation S."
(k) Such Initial Purchaser agrees that the Securities offered
and sold in reliance on Regulation S will be represented upon issuance by a
global security that may not be exchanged for definitive securities until the
expiration of the distribution compliance period referred to in Rule 903(b)(3)
of the Act and only upon certification of beneficial ownership of such
Securities by non-U.S. persons or U.S. persons who purchased such Securities in
transactions that were exempt from the registration requirements of the Act.
Such Initial Purchaser acknowledges that the Issuers and, for
purposes of the opinions to be delivered to each Initial Purchaser pursuant to
Section 9 hereof, counsel to the Issuers and counsel to the Initial Purchasers
will rely upon the accuracy and truth of the foregoing representations and such
Initial Purchaser hereby consents to such reliance.
8. Indemnification.
(a) Each of the Issuers, jointly and severally, agree to
indemnify and hold harmless the Initial Purchasers, their directors, officers,
employees and agents and each person, if any, who controls each of the Initial
Purchasers within the meaning of Section 15 of the Act or Section 20 of the
Exchange Act, from and against any and all losses, claims, damages, liabilities
and judgments (including, without limitation, any reasonable legal or other
expenses incurred in connection with investigating or defending any matter,
including any action, that could give rise to any such losses, claims, damages,
liabilities or judgments) caused by any untrue statement or alleged untrue
statement of a material fact contained in the Offering Memorandum (or any
amendment or supplement thereto), the Preliminary Offering Memorandum or any
Rule 144A Information provided by the Issuers to any holder or prospective
purchaser of Securities pursuant to Section 5(h) or caused by any omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading, except insofar as
such losses, claims, damages, liabilities or judgments are caused by any such
untrue statement or omission or alleged untrue statement or omission based upon
information relating to the Initial Purchasers furnished in writing to the
Issuers by such Initial Purchaser; provided, however, that the foregoing
indemnity agreement
19
with respect to any Preliminary Offering Memorandum shall not inure to the
benefit of any Initial Purchaser who failed to deliver an Offering Memorandum,
as then amended or supplemented (so long as the Offering Memorandum and any
amendment or supplement thereto was provided by the Issuers to the several
Initial Purchasers in the requisite quantity and on a timely basis to permit
proper delivery on or prior to the Closing Date), to the person asserting any
losses, claims, damages, liabilities or judgments caused by any untrue statement
or alleged untrue statement of a material fact contained in any Preliminary
Offering Memorandum, or caused by any omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading, if each untrue statement of a material fact
contained in, and each omission or alleged omission of a material fact from,
such Preliminary Offering Memorandum was corrected in the Offering Memorandum
and a court of competent jurisdiction shall have finally determined that such
Initial Purchaser would not have incurred such losses, claims, damages,
liabilities and expenses had the Offering Memorandum been delivered or sent, as
so amended or supplemented.
(b) The Initial Purchasers severally agree to indemnify and
hold harmless the Issuers and their directors, officers, employees and agents
and each person, if any, who controls (within the meaning of Section 15 of the
Act or Section 20 of the Exchange Act) the Issuers, to the same extent as the
foregoing indemnity from the Issuers to the Initial Purchasers but only with
reference to information relating to the Initial Purchasers furnished in writing
to the Issuers by an Initial Purchaser expressly for use in the Preliminary
Offering Memorandum or the Offering Memorandum, and without reference to the
proviso contained therein.
(c) In case any action shall be commenced involving any person
in respect of which indemnity may be sought pursuant to Section 8(a) or 8(b)
(the "indemnified party"), the indemnified party shall promptly notify the
person against whom such indemnity may be sought (the "indemnifying party") in
writing and the indemnifying party shall be entitled to participate therein and,
to the extent that it shall wish, to assume the defense of such action,
including the employment of counsel reasonably satisfactory to the indemnified
party and the payment of all fees and expenses of such counsel, as incurred. Any
indemnified party shall have the right to employ separate counsel in any such
action and participate in the defense thereof, but the fees and expenses of such
counsel shall be at the expense of the indemnified party unless (i) the
employment of such counsel shall have been specifically authorized in writing by
the indemnifying party, (ii) the indemnifying party shall have failed to assume
the defense of such action, or employ counsel reasonably satisfactory to the
indemnified party, within a reasonable amount of time after notice of the
institution of such action by the indemnified party or (iii) the named parties
to any such action (including any impleaded parties) include both the
indemnified party and the indemnifying party, and the indemnified party shall
have been advised by such counsel that there may be one or more legal defenses
available to it which are different from or additional to those available to the
indemnifying party (in which case the indemnifying party shall not have the
right to assume the defense of such action on behalf of the indemnified party).
In any such case as described in clause (i), (ii) or (iii) of the preceding
sentence, the indemnifying party shall not, in connection with any one action or
separate but
20
substantially similar or related actions in the same jurisdiction arising out of
the same general allegations or circumstances, be liable for the fees and
expenses of more than one separate firm of attorneys (in addition to any local
counsel) for all indemnified parties and all such fees and expenses shall be
reimbursed as they are incurred. Such single firm shall be designated in writing
by U.S. Bancorp Investments, Inc., in the case of the parties indemnified
pursuant to Section 8(a), and by the Issuers, in the case of parties indemnified
pursuant to Section 8(b). The indemnifying party shall indemnify and hold
harmless the indemnified party from and against any and all losses, claims,
damages, liabilities and judgments by reason of any settlement of any action (i)
effected with the indemnifying party's written consent or (ii) effected without
its written consent only if the settlement is entered into more than 75 days
after the indemnifying party shall have received a request from the indemnified
party for reimbursement for the fees and expenses of counsel (in any case where
such fees and expenses are at the expense of the indemnifying party) and, prior
to the date of such settlement, the indemnifying party shall have failed to
comply with such reimbursement request and not contested its indemnification
obligations in good faith. No indemnifying party shall, without the prior
written consent of the indemnified party, effect any settlement or compromise
of, or consent to the entry of judgment with respect to, any pending or
threatened action in respect of which the indemnified party is or could have
been a party and indemnity or contribution may be or could have been sought
hereunder by the indemnified party, unless such settlement, compromise or
judgment (i) includes an unconditional release of the indemnified party from all
liability on claims that are or could have been the subject matter of such
action and (ii) does not include a statement as to, or an admission of fault,
culpability or a failure to act, by or on behalf of the indemnified party.
(d) To the extent the indemnification provided for in this
Section 8 is unavailable to an indemnified party or insufficient in respect of
any losses, claims, damages, liabilities or judgments referred to therein, then
each indemnifying party, in lieu of indemnifying such indemnified party, shall
contribute to the amount paid or payable by such indemnified party as a result
of such losses, claims, damages, liabilities and judgments (i) in such
proportion as is appropriate to reflect the relative benefits received by the
Issuers, on the one hand, and the Initial Purchasers on the other hand from the
offering of the Units or (ii) if the allocation provided by clause 8(d)(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 8(d)(i) above but
also the relative fault of the Issuers, on the one hand, and the Initial
Purchasers, on the other hand, in connection with the statements or omissions
which resulted in such losses, claims, damages, liabilities or judgments, as
well as any other relevant equitable considerations. The relative benefits
received by the Issuers, on the one hand and the Initial Purchasers, on the
other hand, shall be deemed to be in the same proportion as the total net
proceeds from the offering of the Units (after underwriting discounts and
commissions, but before deducting expenses) received by the Issuers, and the
total discounts and commissions received by the Initial Purchasers, bear to the
total price to investors of the Units. The relative fault of the Issuers, on the
one hand, and the Initial Purchasers, on the other hand, shall be determined by
reference to, among other things, whether the untrue or alleged untrue statement
of a material fact or the omission or alleged omission to state a material fact
relates to information supplied by the Issuers, on the one hand, or the Initial
21
Purchasers, on the other hand, and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such statement or
omission.
The Issuers and the Initial Purchasers agree that it would not be
just and equitable if contribution pursuant to this Section 8(d) were determined
by pro rata allocation even if the Initial Purchasers were treated as one entity
for such purpose or by any other method of allocation which does not take
account of the equitable considerations referred to in the immediately preceding
paragraph. The amount paid or payable by an indemnified party as a result of the
losses, claims, damages, liabilities or judgments referred to in the immediately
preceding paragraph shall be deemed to include, subject to the limitations set
forth above, any legal or other expenses reasonably incurred by such indemnified
party in connection with investigating or defending any matter, including any
action, that could have given rise to such losses, claims, damages, liabilities
or judgments. Notwithstanding the provisions of this Section 8, the Initial
Purchasers shall not be required to contribute any amount in excess of the
amount by which the total discounts and commissions received by such Initial
Purchasers exceeds the amount of any damages which the Initial Purchasers have
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 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 8(d) are several in proportion to the respective number of Units
purchased by each of the Initial Purchasers hereunder and not joint.
(e) The remedies provided for in this Section 8 are not
exclusive and shall not limit any rights or remedies which may otherwise be
available to any indemnified party at law or in equity.
9. Conditions of Initial Purchasers' Obligations. The obligations of
the Initial Purchasers to purchase the Units under this Agreement are subject to
the satisfaction of each of the following conditions:
(a) All the representations and warranties of the Issuers
contained in this Agreement shall be true and correct in all material respects
on the Closing Date with the same force and effect as if made on and as of the
Closing Date.
(b) On or after the date hereof, (i) there shall not have
occurred any downgrading, suspension or withdrawal of, nor shall any notice have
been given of any potential or intended downgrading, suspension or withdrawal
of, or of any review (or of any potential or intended review) for a possible
change that does not indicate the direction of the possible change in, any
rating of the Issuers or any securities of the Issuers (including, without
limitation, the placing of any of the foregoing ratings on credit watch with
negative or developing implications or under review with an uncertain direction)
by any "nationally recognized statistical rating organization" as such term is
defined for purposes of Rule 436(g)(2) under the Act, (ii) there shall not have
occurred any change, nor shall any notice have been given of any potential or
intended change, in the outlook for any rating of the Issuers or any securities
of the Issuers by
22
any such rating organization and (iii) no such rating organization shall have
given notice that it has assigned (or is considering assigning) a lower rating
to the Notes than that on which the Notes were marketed.
(c) Since the respective dates as of which information is
given in the Offering Memorandum other than as set forth in the Offering
Memorandum (exclusive of any amendments or supplements thereto subsequent to the
date of this Agreement), (i) there shall not have occurred any change or any
development involving a prospective change in the condition, financial or
otherwise, or the earnings, business, management or operations of the Issuers
and their subsidiaries, taken as a whole, (ii) there shall not have been any
change or any development involving a prospective change in the capital stock or
in the long-term debt of the Issuers or any of their subsidiaries and (iii)
neither the Issuers nor any of their subsidiaries shall have incurred any
liability or obligation, direct or contingent, the effect of which, in any such
case described in clause 9(c)(i), 9(c)(ii) or 9(c)(iii), in the good faith
judgment of the Initial Purchasers, is material and adverse and, in the good
faith judgment of the Initial Purchasers, makes it impracticable to market the
Units on the terms and in the manner contemplated in the Offering Memorandum.
(d) The Initial Purchasers shall have received on the Closing
Date a certificate dated the Closing Date, signed by the President and the Chief
Financial Officer of each of the Issuers, confirming the matters set forth in
Sections 6(ee), 9(a) and 9(b) and stating that each of the Issuers has complied
with all the agreements and satisfied all of the conditions herein contained and
required to be complied with or satisfied on or prior to the Closing Date.
(e) The Initial Purchasers shall have received on the Closing
Date an opinion (satisfactory to the Initial Purchasers and counsel for the
Initial Purchasers), dated the Closing Date, of Kaye, Scholer, Fierman, Hays &
Handler, LLP, counsel for the Issuers, to the effect that:
(i) each Issuer has been duly incorporated, is validly
existing as a corporation in good standing under the laws of
its jurisdiction of incorporation and has the corporate power
and authority to carry on its business as described in the
Offering Memorandum and to own, lease and operate its
properties;
(ii) each Issuer is duly qualified and is in good
standing as a foreign corporation authorized to do business in
each jurisdiction listed on a schedule to the opinion;
(iii) all the outstanding shares of capital stock of
each Issuer have been duly authorized and validly issued and
are fully paid, non-assessable and, except as otherwise
described in the Offering Memorandum, under the each Issuer's
certificate of incorporation, the Delaware General Corporate
Law, and the Material Agreements referred to below, not
subject to any preemptive or similar rights;
23
(iv) the Series A Notes have been duly authorized and,
when executed and authenticated in accordance with the
provisions of the Indenture and delivered to and paid for by
the Initial Purchasers in accordance with the terms of this
Agreement, will be entitled to the benefits of the Indenture
and will be valid and binding obligations of the Company,
enforceable in accordance with their terms, subject to
bankruptcy, insolvency, reorganization, fraudulent conveyance,
moratorium and similar laws affecting the enforcement of
creditors' rights in general and to general principles of
equity (regardless whether considered in a proceeding at law
or in equity) (collectively, the "Exceptions");
(v) the Warrants have been duly authorized by
Holdings and, on the Closing Date, when countersigned by the
Warrant Agent and issued and delivered in accordance with the
terms of this Agreement and the Warrant Agreement, the
Warrants will be the valid and binding obligations of
Holdings, enforceable against Holdings in accordance with
their terms, subject to the Exceptions;
(vi) the Units have been duly authorized by the
Issuers and, on the Closing Date, when countersigned by the
Unit Agent and issued and delivered in accordance with the
terms of this Agreement and the Unit Agreement, the Units will
be the valid and binding obligations of the Issuers,
enforceable against the Issuers in accordance with their
terms, subject to the Exceptions;
(vii) the Warrant Shares have been duly and validly
authorized for issuance by Holdings, and when issued and
delivered upon payment of the exercise price pursuant to the
terms of the Warrants and the Warrant Agreement will be fully
paid and nonassessable and, except as otherwise described in
the Offering Memorandum, under Holding's certificate of
incorporation, the Delaware General Corporate Law, and the
Material Agreements referred to below, will not be subject to
any preemptive or similar statutory rights;
(viii) the Indenture has been duly authorized, executed
and delivered by the Company and is a valid and binding
agreement of the Company, enforceable against the Company in
accordance with its terms, subject to the Exceptions;
(ix) this Agreement has been duly authorized, executed
and delivered by the Issuers;
(x) The Debt Registration Rights Agreement has been
duly authorized, executed and delivered by the Company and is
a valid and
24
binding agreement of the Company, enforceable against the
Company in accordance with its terms, subject to the
Exceptions and except as (x) rights to indemnification and
contribution thereunder may be limited by federal and state
securities laws and public policy considerations and (y)
enforcement of any provision requiring the payment of
liquidated damages may be limited by public policy
considerations;
(xi) the Warrant Agreement has been duly and validly
authorized, executed and delivered by Holdings and is a valid
and binding agreement of Holdings, enforceable against
Holdings in accordance with its terms, subject to the
Exceptions;
(xii) the Equity Registration Rights Agreement has been
duly authorized, executed and delivered by Holdings and is a
valid and binding agreement of Holdings, enforceable against
Holdings in accordance with its terms, subject to the
Exceptions and except as rights to indemnification and
contribution thereunder may be limited by federal and state
securities laws and public policy considerations;
(xiii) the Unit Agreement has been duly and validly
authorized, executed and delivered by the Issuers and is a
valid and binding agreement of the Issuers, enforceable
against the Issuers in accordance with its terms, subject to
the Exceptions;
(xiv) the Series B Senior Notes have been duly
authorized;
(xv) the statements under the captions "Description of
Notes," "Description of Warrants," and "Description of Units"
in the Offering Memorandum, insofar as such statements
constitute a summary of the terms of the Series A Notes, the
Warrants and the Units fairly present in all material respects
the terms of the Series A Notes, the Warrants and the Units;
(xvi) the statements under the caption "Certain Federal
Income Tax Considerations" to the extent they describe
statutes, rules or regulations or legal conclusions with
respect to their application, have been reviewed by us and are
correct in all material respects;
(xvii) the execution, delivery and performance of this
Agreement and the other Operative Documents by the Issuers,
the compliance by the Issuers with all provisions hereof and
thereof and the consummation of the transactions contemplated
hereby and thereby will not (i) require any consent, approval,
authorization or other order of, or qualification with, any
court or governmental body or agency (except such as have been
obtained and such as may be required under the securities or
Blue Sky
25
laws of the various states and, with respect to the Exchange
Offer and the transactions contemplated by the Registration
Rights Agreements, under the Act and the TIA), (ii) violate or
constitute a breach of any of the terms or provisions of, or a
default under, the charter or by-laws of the Issuers or any of
the agreements set forth in officer's certificates of the
Issuers accompanying the opinion (the "Material Agreements"),
(iii) to such counsel`s knowledge, violate or conflict with
any applicable law or any rule, regulation, judgment, order or
decree of any court or any governmental body or agency having
jurisdiction over the Issuers or their property, or (iv)
result in the imposition or creation of (or the obligation to
create or impose) a Lien under the Material Agreements.
(xviii) neither Issuer is and, after giving effect to
the offering and sale of the Securities and the application of
the net proceeds thereof as described in the Offering
Memorandum, will be, an "investment company" as such term is
defined in the Investment Company Act of 1940, as amended;
(xix) to such counsel's knowledge based solely on a
review of the minute books of the Issuers, the Material
Agreements and officer's certificates of the Issuers
accompanying the opinion, there are no contracts, agreements
or understandings between the Issuers and any person granting
such person the right to require the Issuers to file a
registration statement under the Act with respect to any
securities of the Issuers or to require the Issuers to include
such securities with the Securities registered pursuant to any
Registration Statement, except as disclosed in the Offering
Memorandum;
(xx) the Indenture complies as to form in all material
respects with the requirements of the TIA, and the rules and
regulations of the Commission applicable to an indenture which
is qualified thereunder. It is not necessary in connection
with the offer, sale and delivery of the Securities to the
Initial Purchasers in the manner contemplated by this
Agreement or in connection with the Exempt Resales to qualify
the Indenture under the TIA assuming (i) each person to whom
the Initial Purchasers initially offer or sell the Securities
in accordance with Section 3 of this Agreement and the
Offering Memorandum is a QIB or a Regulation S Purchaser, (ii)
the accuracy of, and compliance with, the Initial Purchaser's
representations, warranties and agreements contained in
Section 7 of this Agreement, (iii) the accuracy of the
representations and warranties of the Issuers set forth in
Sections 6(gg), (hh), (kk), (ll), (mm), (nn) and (oo) of this
Agreement.
(xxi) no registration under the Act of the Securities is
required for the sale of the Securities to the Initial
Purchasers as contemplated by
26
this Agreement or for the Exempt Resales assuming (i) each
person to whom the Initial Purchasers initially offer or sell
the Securities in accordance with Section 3 of this Agreement
and the Offering Memorandum is a QIB or a Regulation S
Purchaser, (ii) the accuracy of, and compliance with, the
Initial Purchaser's representations, warranties and agreements
contained in Section 7 of this Agreement, (iii) the accuracy
of the representations and warranties of the Issuers set forth
in Sections 6(gg), (hh), (kk), (ll), (mm), (nn) and (oo) of
this Agreement.
Such counsel shall also state that, to its knowledge based solely on
the statements set forth in officer's certificates of the Issuers accompanying
its opinion and a review of such firm's own litigation docket and other than as
set forth in the Offering Memorandum, there is no action or proceeding,
governmental or otherwise, pending to which the Issuers or G & G Retail of
Puerto Rico, Inc. ("G&G Puerto Rico") is a party or to which the properties or
assets of the Issuers or G&G Puerto Rico are subject, that if determined
adversely to the Issuers or G&G Puerto Rico, would have a Material Adverse
Effect.
Such counsel shall also state that, while it does not opine upon and
does not assume any responsibility for the accuracy, completeness or fairness of
the statements contained in the Offering Memorandum (other than as set forth in
such counsel's opinions in paragraphs (xv) and (xvi) above) and such counsel has
not made any independent check or verification thereof, it has participated in
conferences with officers and other representatives of the Issuers and with the
Initial Purchasers and their representatives in connection with the preparation
of the Offering Memorandum, and based upon these conferences and such counsel's
review of the documents referenced above (such counsel's determination of
materiality being based in part upon the opinions, representations and
statements of the officers and other representatives of the Issuers), no facts
have come to such counsel's attention which lead it to believe that the Offering
Memorandum as of its date or as of the Closing Date contained or contains any
untrue statement of a material fact or omitted or omits to state any material
fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading (it
being understood that such counsel expresses no opinion or belief on the
financial data, statements and related notes, the financial statement schedules
and other financial, accounting and statistical data and the teen market data
included in the Offering Memorandum or omitted therefrom).
The opinion of Kaye, Scholer, Fierman, Hays & Handler, LLP described
in Section 9(e) above shall be rendered to the Initial Purchasers at the request
of the Issuers and shall so state therein.
(f) The Initial Purchasers shall have received on the Closing
Date an opinion, dated the Closing Date, of Latham & Watkins, counsel for the
Initial Purchasers, in form and substance reasonably satisfactory to the Initial
Purchasers.
(g) The Initial Purchasers shall have received, at the time
this Agreement is executed and at the Closing Date, letters dated the date
hereof or the Closing Date,
27
as the case may be, in form and substance satisfactory to the Initial Purchasers
from Ernst & Young LLP, independent auditors, containing the information and
statements of the type ordinarily included in accountants' "comfort letters" to
the Initial Purchasers with respect to the financial statements and certain
financial information contained in the Offering Memorandum.
(h) The Units shall have been approved by the NASD for trading
and duly listed in PORTAL.
(i) The Initial Purchasers shall have received a counterpart,
conformed as executed, of the Indenture which shall have been entered into by
the Company and the Trustee.
(j) The Company shall have executed the Debt Registration
Rights Agreement and the Initial Purchasers shall have received an original copy
thereof, duly executed by the Company.
(i) Holdings shall have executed the Warrant Agreement and the
Warrant Registration Rights Agreement and the Initial Purchaser shall have
received counterparts, conformed as executed thereof.
(k) Holdings shall have executed the Equity Registration
Rights Agreement and the Initial Purchasers shall have received an original copy
thereof, duly executed by Holdings.
(l) The Company shall have issued notice of prepayment to the
Administrative Agent of the Senior Bridge Notes, at least 5 business days prior
to the Closing Date.
(m) The Initial Purchasers shall not have notified the Company
on or before 4:50 p.m. New York time on May 10, 1999 that the Initial
Purchasers, the Company and SunAmerica Investments, Inc. have not agreed to the
terms of the Warrant Agreement and the Equity Registration Rights Agreement and
SunAmerica Investments, Inc. does not remain committed to purchase its full $16
million of Units;
(n) The Initial Purchasers shall not have notified the Company
on or before 3:00 p.m. New York time on May 10, 1999 that any person designated
as a purchaser of a Unit pursuant to Exempt Resales has not received the
Offering Memorandum; and
(o) The Issuers shall not have failed at or prior to the
Closing Date to perform or comply with any of the agreements herein contained
and required to be performed or complied with by the Issuers, as the case may
be, at or prior to the Closing Date.
10. Effectiveness of Agreement and Termination. This Agreement shall
become effective upon the execution and delivery of this Agreement by the
parties hereto.
28
This Agreement may be terminated at any time on or prior to the
Closing Date by the Initial Purchasers by written notice to the Issuers if any
of the following has occurred: (i) any outbreak or escalation of hostilities or
other national or international calamity or crisis or change in economic
conditions or in the financial markets of the United States or elsewhere that,
in the Initial Purchasers' judgment, is material and adverse and, in the Initial
Purchasers' judgment, makes it impracticable to market the Securities on the
terms and in the manner contemplated in the Offering Memorandum, (ii) the
suspension or material limitation of trading in securities or other instruments
on the New York Stock Exchange, the American Stock Exchange, the Chicago Board
of Options Exchange, the Chicago Mercantile Exchange, the Chicago Board of Trade
or the Nasdaq National Market or limitation on prices for securities or other
instruments on any such exchange or the Nasdaq National Market, (iii) the
suspension of trading of any securities of the Issuers on any exchange or in the
over-the-counter market, (iv) the enactment, publication, decree or other
promulgation of any federal or state statute, regulation, rule or order of any
court or other governmental authority which in the opinion of the Initial
Purchasers materially and adversely affects, or will materially and adversely
affect, the business, prospects, financial condition or results of operations of
the Issuers and their subsidiaries, taken as a whole, (v) the declaration of a
banking moratorium by either federal or New York State authorities or (vi) the
taking of any action by any federal, state or local government or agency in
respect of its monetary or fiscal affairs which in the opinion of the Initial
Purchasers has a material adverse effect on the financial markets in the United
States.
If on the Closing Date any one or more of the Initial Purchasers
shall fail or refuse to purchase the Units which it or they have agreed to
purchase hereunder on such date and the aggregate number of the Units which such
defaulting Initial Purchaser or Initial Purchasers, as the case may be, agreed
but failed or refused to purchase is not more than one-tenth of the aggregate
number of the Units to be purchased on such date by all Initial Purchasers, each
non-defaulting Initial Purchaser shall be obligated severally, in the proportion
which the number of the Units set forth opposite its name in Schedule A bears to
the aggregate number of the Units which all the non-defaulting Initial
Purchasers, as the case may be, have agreed to purchase, or in such other
proportion as the Initial Purchasers may specify, to purchase the Units which
such defaulting Initial Purchaser or Initial Purchasers, as the case may be,
agreed but failed or refused to purchase on such date; provided that in no event
shall the aggregate number of the Units which any Initial Purchaser has agreed
to purchase pursuant to Section 2 hereof be increased pursuant to this Section
10 by an amount in excess of one-ninth of such amount of such Units without the
written consent of such Initial Purchaser. If on the Closing Date any Initial
Purchaser or Initial Purchasers shall fail or refuse to purchase the Units and
the aggregate number of Units with respect to which such default occurs is more
than one-tenth of the aggregate number of Units to be purchased by all Initial
Purchasers and arrangements satisfactory to the Initial Purchasers and the
Issuers for purchase of such the Units are not made within 48 hours after such
default, this Agreement will terminate without liability on the part of any
non-defaulting Initial Purchaser and the Issuers. In any such case which does
not result in termination of this Agreement, either the Initial Purchasers or
the Issuers shall have the right to postpone the Closing Date, but in no event
for longer than seven days, in order that the required changes, if any, in the
Offering Memorandum or any other documents or arrangements may be
29
effected. Any action taken under this paragraph shall not relieve any defaulting
Initial Purchaser from liability in respect of any default of any such Initial
Purchaser under this Agreement.
11. Miscellaneous. Notices given pursuant to any provision of this
Agreement shall be in writing and addressed as follows: (i) if to the Issuers,
to G+G Retail, Inc., 520 Eighth Avenue, New York, NY 10018 Attention: Chief
Financial Officer and (ii) if to the Initial Purchasers, U.S. Bancorp Libra, a
division of U.S. Bancorp Investments, Inc., 11766 Wilshire Blvd, Suite 870, Los
Angeles, California 90025 Attention: General Counsel, or in any case to such
other address as the person to be notified may have requested in writing.
The respective indemnities, contribution agreements,
representations, warranties and other statements of the Issuers and the Initial
Purchasers set forth in or made pursuant to this Agreement shall remain
operative and in full force and effect, and will survive delivery of and payment
for the Units, regardless of (i) any investigation, or statement as to the
results thereof, made by or on behalf of the Initial Purchasers, the officers or
directors of the Initial Purchasers, any person controlling the Initial
Purchasers, the Issuers, the officers or directors of the Issuers, or any person
controlling the Issuers, (ii) acceptance of the Units and payment for them
hereunder and (iii) termination of this Agreement.
If for any reason the Units are not delivered by or on behalf of the
Issuers as provided herein (other than as a result of any termination of this
Agreement pursuant to Section 10 or a breach or default by the Initial
Purchasers under this Agreement), the Issuers agree to reimburse the Initial
Purchasers for all out-of-pocket expenses (including the reasonable fees and
disbursements of counsel) incurred by them. Notwithstanding any termination of
this Agreement, the Issuers shall be liable for all expenses which they have
agreed to pay pursuant to Section 5(i) hereof. The Issuers also agree to
reimburse the Initial Purchasers and their officers, directors and each person,
if any, who controls such Initial Purchasers within the meaning of Section 15 of
the Act or Section 20 of the Exchange Act for any and all fees and expenses
(including without limitation the reasonable fees and expenses of counsel)
incurred by them in connection with enforcing their rights under this Agreement
(including without limitation their rights under Section 8).
The Initial Purchasers agree to reimburse the Issuers and their
officers, directors and each person, if any, who controls the Issuers within the
meaning of Section 15 of the Act or Section 20 of the Exchange Act for any and
all fees and expenses (including without limitation the reasonable fees and
expenses of counsel) incurred by them in connection with enforcing their rights
under this Agreement (including without limitation their rights under Section
8).
Except as otherwise provided, this Agreement has been and is made
solely for the benefit of and shall be binding upon the Issuers, the Initial
Purchasers, the Initial Purchasers' directors and officers, any controlling
persons referred to herein, the directors and officers of the Issuers and each
of their successors and assigns, all as and to the extent provided in this
Agreement, and no other person shall acquire or have any right under or by
virtue of this Agreement. The term "successors and assigns" shall not include a
purchaser of any of the Securities from the Initial Purchasers merely because of
such purchase.
30
This Agreement shall be governed and construed in accordance with
the laws of the State of New York without regard to the conflicts of laws
provisions thereof.
This Agreement may be signed in various counterparts which together
shall constitute one and the same instrument.
31
Please confirm that the foregoing correctly sets forth the agreement
among the Issuers and the Initial Purchasers.
Very truly yours,
G+G RETAIL, INC.
By: /s/ Scott Galin
----------------------------
Name: Scott Galin
Title: President and Chief
Operating Officer
G&G RETAIL HOLDINGS, INC.
By: /s/ Michael Kaplan
----------------------------
Name: Michael Kaplan
Title: Vice President and
Chief Financial Officer
U.S. BANCORP INVESTMENTS, INC.
CIBC WORLD MARKETS CORP.
By: /s/ Jean Smith
----------------------------
Name: Jean Smith
Title: Managing Director
32
SCHEDULE A
Number
Initial Purchasers of Units
------------------ --------
U.S. Bancorp Investments, Inc............. 64,200
CIBC World Markets Corp................... 42,800
-------
Total 107,000
33
SCHEDULE B
Subsidiaries
G+G Retail, Inc.
G & G Retail of Puerto Rico, Inc.
34
EXHIBIT A
[FORM OF DEBT REGISTRATION RIGHTS AGREEMENT]
35