Exhibit 10.30
ALLOY, INC
Convertible Senior Debentures due August 1, 2023
PURCHASE AGREEMENT
July 17, 2003
▇▇▇▇▇▇ BROTHERS INC.
CIBC WORLD MARKETS CORP.
▇.▇. ▇▇▇▇▇▇ SECURITIES INC.
▇▇ ▇▇▇▇▇ SECURITIES CORPORATION
c/▇ ▇▇▇▇▇▇ Brothers Inc.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
Alloy, Inc., a Delaware corporation (the "COMPANY"), proposes
to offer and sell to ▇▇▇▇▇▇ Brothers Inc., CIBC World Markets Corp., ▇.▇. ▇▇▇▇▇▇
Securities Inc., and ▇▇ ▇▇▇▇▇ Securities Corporation (the "INITIAL PURCHASERS")
$65,000,000 principal amount of the Company's Convertible Senior Debentures due
August 1, 2023 (the "FIRM OFFERED SECURITIES") to be issued pursuant to the
provisions of an Indenture to be dated as of July 23, 2003 (the "INDENTURE")
between the Company and Deutsche Bank Trust Company Americas, as trustee (the
"TRUSTEE"). In addition, the Company proposes to grant to the Initial Purchasers
an option to purchase up to an additional $13,000,000 principal amount of its
Convertible Senior Debentures due August 1, 2023 (the "ADDITIONAL OFFERED
SECURITIES") on the terms and for the purposes set forth in Section 2(b) hereof.
The Firm Offered Securities and any Additional Offered Securities purchased
pursuant to this Agreement (the "AGREEMENT") are herein called the "OFFERED
SECURITIES." The Offered Securities will be convertible into shares (the
"CONVERSION SHARES") of common stock, par value $0.01 per share, of the Company
(the "COMMON STOCK").
It is understood that the Initial Purchasers will resell the
Offered Securities only inside the United States to qualified institutional
buyers (each, a "QUALIFIED INSTITUTIONAL BUYER") in reliance on Rule 144A under
the U.S. Securities Act of 1933, as amended (the "SECURITIES ACT").
1. Representations, Warranties and Agreements of the
Company. The Company represents and warrants to each Initial Purchaser that:
(a) The Company has prepared an Offering Memorandum dated
the date hereof (the "OFFERING MEMORANDUM") relating to the Offered
Securities. All references to the Offering Memorandum include documents
incorporated therein by reference. Copies of the Offering Memorandum
have been delivered by the Company to the Initial Purchasers and the
Company authorizes the Initial Purchasers to distribute copies thereof
in connection with the offering and resale of the Offered Securities as
provided herein. All documents filed by the Company under the U.S.
Securities Exchange Act of 1934, as amended (the "EXCHANGE ACT"), on or
prior to the date of the Offering Memorandum and any documents filed by
the Company under the Exchange Act after the date of the Offering
Memorandum, in each case, that are incorporated or deemed incorporated
by reference therein, when they were or are filed with the U.S.
Securities and Exchange Commission (the "COMMISSION"), conformed or
will conform, as the case may be, as to form in all material respects
to the applicable requirements of the Exchange Act and the applicable
rules and regulations of the Commission thereunder. The Preliminary
Offering Memorandum and the Offering Memorandum as of their respective
dates did not, and the Offering Memorandum as of the Closing Dates will
not, contain any untrue statement of a material fact or omit to state
any material fact (except, in the case of the Preliminary Offering
Memorandum, for pricing terms and other financial terms intentionally
left blank) necessary in order to make the statements therein, in light
of the circumstances under which they were made, not misleading;
provided that the Company makes no representation or warranty as to
information contained in or omitted from the Offering Memorandum in
reliance upon and in conformity with written information furnished to
the Company by or on behalf of the Initial Purchasers specifically for
inclusion therein.
For purposes of this Agreement, "PRELIMINARY OFFERING
MEMORANDUM" means the preliminary offering memorandum dated July 14,
2003 relating to the Offered Securities; "rules and regulations" means
the rules and regulations of the Commission under the Exchange Act, as
the context requires. Reference made herein to the Offering Memorandum
shall be deemed to refer to and include any documents incorporated by
reference therein as of their respective dates of filing with the
Commission and any reference to any amendment or supplement to the
Offering Memorandum shall be deemed to refer to and include any
documents filed under the Exchange Act after the date of the Offering
Memorandum, as amended by subsequently dated documents, and
incorporated by reference therein.
(b) The Company and each of its subsidiaries (as defined
in Section 12) have been duly incorporated or organized, as applicable,
and are validly existing as corporations, limited liability companies,
trusts or other entities, in good standing under the laws of their
respective jurisdictions of incorporation or organization, are duly
qualified to do business and are in good standing as foreign
corporations or other entities in each jurisdiction in which their
respective
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ownership or lease of property or the conduct of their respective
businesses requires such qualification, and have all power and
authority necessary to own or hold their respective properties and to
conduct the businesses in which they are engaged, in each such case,
except where the failure to be so qualified to be in good standing or
have such power and authority would not reasonably be expected to have
a material adverse effect on the financial condition, business,
prospects or results of operations of the Company and its subsidiaries
taken as a whole (a "MATERIAL ADVERSE EFFECT").
(c) The Company has the authorized capitalization as set
forth in the Offering Memorandum; all the issued shares of capital
stock of the Company have been duly and validly authorized and validly
issued, are fully paid and non-assessable and conform to the
description thereof contained in the Offering Memorandum; all the
shares of capital stock or other equity interests of each subsidiary of
the Company have been duly and validly authorized and issued and are
fully paid and non-assessable and all shares of capital stock, all
limited liability interests and all trust shares of its subsidiaries
are owned directly or indirectly by the Company, free and clear of all
liens, encumbrances, equities or claims. The Conversion Shares have
been duly authorized and validly reserved for issuance upon conversion
of the Offered Securities and are free of preemptive rights, and all
Conversion Shares, when so issued and delivered upon such conversion in
accordance with the terms of the Indenture and the Offered Securities,
will be duly and validly authorized and issued, fully paid and
non-assessable and free and clear of all liens, encumbrances, equities
or claims other than liens created by a holder of the Debentures.
(d) The Offered Securities have been duly authorized by
the Company and, when executed, authenticated and delivered in
accordance with this Agreement and the Indenture, will be valid and
legally binding obligations of the Company enforceable against the
Company in accordance with their terms, except as the enforceability
thereof may be limited by bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium and other similar laws now or
hereafter in effect relating to or affecting rights of creditors and
other obligees generally, by general equitable principles (regardless
of whether such enforceability is considered in a proceeding in equity
or at law) or by an implied covenant of good faith and fair dealing,
and will be entitled to the benefits of the Indenture.
(e) The Company has full right, power and authority to
execute and deliver this Agreement and perform its obligations
hereunder; and this Agreement has been duly authorized, executed and
delivered by the Company and (assuming the due execution and delivery
thereof by the Initial Purchasers) constitutes a valid and legally
binding agreement of the Company enforceable against the Company in
accordance with its terms, except as the enforceability hereof and
thereof may be limited by bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium and other similar laws now or
hereafter in effect relating to or affecting rights of creditors' and
other obligees generally, by general
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equitable principles (regardless of whether such enforceability is
considered in a proceeding in equity or at law) or by an implied
covenant of good faith and fair dealing, and except, further, as
enforceability of the indemnification and contribution provisions
hereof and thereof may be limited by considerations of public policy.
(f) The Company has full right, power and authority to
execute and deliver the Indenture and the Resale Registration Rights
Agreement between the Company and the Initial Purchasers (the
"REGISTRATION RIGHTS AGREEMENT") and perform its obligations
thereunder; each of the Indenture and the Registration Rights Agreement
has been duly authorized and, when duly executed and delivered by the
Company (assuming the due execution and delivery thereof by the Trustee
and the Initial Purchasers, respectively), will constitute a valid and
legally binding agreement of the Company enforceable against the
Company in accordance with its terms, except as the enforceability
thereof may be limited by bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium and other similar laws now or
hereafter in effect relating to or affecting rights of creditors and
other obligees generally, by general equitable principles (regardless
of whether such enforceability is considered in a proceeding in equity
or at law) or by an implied covenant of good faith and fair dealing,
and except further, as enforceability of the indemnification and
contribution provisions thereof may be limited by considerations of
public policy. The Offered Securities, when executed, authenticated and
delivered pursuant to the Indenture, and the Indenture, when executed
and delivered, will conform in all material respects to the respective
statements relating thereto contained in the Offering Memorandum.
(g) The execution, delivery and performance by the
Company of this Agreement, the Registration Rights Agreement and the
Indenture and the issuance of the Offered Securities and the Conversion
Shares and the consummation of the transactions contemplated hereby and
thereby will not conflict with, or result in a breach or violation of
any of the terms or provisions of, or (including with the giving of
notice or the lapse of time or both) constitute a default under, any
indenture, mortgage, deed of trust, loan agreement or other agreement
or instrument to which the Company or any of its subsidiaries is a
party or by which the Company or any of its subsidiaries is bound or to
which any of the properties or assets of the Company or any of its
subsidiaries is subject except for such conflicts, breaches, violations
or defaults that do not have a Material Adverse Effect, nor will such
actions result in any violation of (i) the provisions of the charter,
by-laws or other constitutive documents of the Company or any of its
subsidiaries or (ii) any statute or any order, rule or regulation of
any court or governmental agency or body having jurisdiction over the
Company or any of its subsidiaries or any of their respective
properties or assets; and except for the registration of the Offered
Securities and the Conversion Shares under the Securities Act pursuant
to the provisions of the Registration Rights Agreement, no consent,
approval, authorization or order of, or filing or registration with,
any
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court or governmental agency or body is required for the execution,
delivery and performance of this Agreement, the Registration Rights
Agreement and the Indenture and the issuance of the Offered Securities
and the Conversion Shares and the consummation of the transactions
contemplated hereby and thereby other than such consents, approvals,
authorizations, orders, filings or registrations the failure to make or
obtain would have a Material Adverse Effect.
(h) Except as otherwise described or referred to in the
Offering Memorandum, there are no outstanding warrants or options
issued by the Company to purchase any shares of the capital stock of
the Company or any security convertible into or exchangeable for
capital stock of the Company except for stock options issued to
employees of the Company and its subsidiaries pursuant to the Company's
stock option plans and arrangements and stock purchase plans, and there
are no preemptive or other rights to subscribe for or to purchase from
the Company, and no restrictions upon the voting or transfer of, any
shares of Common Stock pursuant to the Company's charter, by-laws or
other constitutive documents or any agreement or other instrument to
which the Company is a party or by which it is bound, and except for
the Registration Rights Agreement, dated as of November 1, 2001, by and
between Alloy, Target Marketing & Promotions, Inc. and the other
parties named therein, there are no contracts, agreements or
understandings between the Company and any person granting such person
the right to require the Company to file a registration statement under
the Securities Act with respect to any securities of the Company owned
or to be owned by such person or to require the Company to include such
securities in any securities being registered pursuant to any
registration statement filed by the Company under the Securities Act as
to which such registration obligations have not been satisfied
initially by the registration for resale of shares of common stock
previously issued by the Company.
(i) Neither the Company nor any of its subsidiaries has
sustained, since the date of the latest audited consolidated financial
statements included or incorporated by reference in the Offering
Memorandum, any material loss or interference with its business from
fire, explosion, flood or other calamity, whether or not covered by
insurance, or any labor dispute or court or governmental action, order
or decree, in any event which reasonably could be expected to have a
Material Adverse Effect, otherwise than as set forth or contemplated in
the Offering Memorandum; and, since the respective dates as of which
information is given in the Offering Memorandum, there has not been any
change in the capital stock or long-term debt of the Company or any
event which has had or reasonably could be expected to have a Material
Adverse Effect, otherwise than as set forth or contemplated in the
Offering Memorandum.
(j) The consolidated financial statements (including the
related notes and supporting schedules) included or incorporated by
reference in the Offering Memorandum present fairly the financial
condition and results of operations of the entities purported to be
shown thereby at the dates and for the periods
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indicated, and have been prepared in conformity with U.S. generally
accepted accounting principles ("U.S. GAAP") applied on a consistent
basis throughout the periods involved, subject in the case of the
interim financial statements incorporated by reference to the Company's
Quarterly Report on Form 10-Q, to the absence of complete footnote
disclosure as required by GAAP and subject to changes resulting from
normal year-end audit adjustments which adjustments shall not in any
event result in a material and adverse change thereto.
(k) KPMG LLP, whose report is included or incorporated by
reference in the Offering Memorandum, are independent public
accountants within the meaning of the Exchange Act and the Rules and
Regulations.
(l) The Company and each of its subsidiaries own or
possess adequate rights to use all material patents, patent
applications, trademarks, service marks, trade names, trademark
registrations, service ▇▇▇▇ registrations, copyrights, licenses
necessary for the conduct of their respective businesses and have no
reason to believe that the conduct of their respective businesses will
conflict with and have not received any notice of any claim of conflict
with, any such rights of others in each such case except as have not
had and would not reasonably be expected to have a Material Adverse
Effect.
(m) Except as described in the Offering Memorandum, there
are no legal or governmental proceedings pending to which the Company
or any of its subsidiaries is a party or of which any property or
assets of the Company or any of its subsidiaries is the subject which,
if determined adversely to the Company or any of its subsidiaries,
would have or could reasonably be expected to have a Material Adverse
Effect and to the best of the Company's knowledge, no such proceedings
are threatened or contemplated by governmental authorities or
threatened by others.
(n) No labor disturbance by the employees of the Company
or any of its subsidiaries exists or, to the knowledge of the Company,
is imminent.
(o) The Company is in compliance in all material respects
with all presently applicable provisions of the Employee Retirement
Income Security Act of 1974, as amended, including the regulations and
published interpretations thereunder ("ERISA"); no "reportable event"
(as defined in ERISA) has occurred with respect to any "pension plan"
(as defined in ERISA) for which the Company would have any liability;
the Company has not incurred and does not expect to incur liability
under (i) Title IV of ERISA with respect to termination of, or
withdrawal from, any "pension plan" or (ii) Sections 412 or 4971 of the
Internal Revenue Code of 1986, as amended, including the regulations
and published interpretations thereunder (the "CODE"); and each
"pension plan" for which the Company would have any liability that is
intended to be qualified under Section 401(a) of the Code is so
qualified in all material respects and nothing has occurred, whether by
action or by failure to act, which, in each case, would cause
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the loss of such qualification, except as would not reasonably be
expected to have a Material Adverse Effect.
(p) The Company and its subsidiaries have filed all
federal, state and local income and franchise tax returns required to
be filed through the date hereof and has paid all taxes due thereon
which were required to have been paid prior to the date hereof, and no
tax deficiency has been determined adversely to the Company or to any
of its subsidiaries, which deficiency in the case of its subsidiaries
would be reasonably expected to have a Material Adverse Effect.
(q) Since the date as of which information is given in
the Offering Memorandum through the date hereof, and except as may
otherwise be disclosed in the Offering Memorandum, the Company has not
(i) issued or granted any securities other than shares issued pursuant
to employee benefit plans, qualified stock options or other employee
compensation plans pursuant to outstanding options and warrants, (ii)
incurred any liability or obligation, direct or contingent, other than
liabilities and obligations which were incurred in the ordinary course
of business, (iii) entered into any transaction not in the ordinary
course of business or (iv) declared or paid any dividend on its capital
stock.
(r) The Company and its subsidiaries (i) make and keep
accurate books and records and (ii) maintain a system of internal
accounting controls sufficient to provide reasonable assurance that (A)
transactions are executed in accordance with management's general or
specific authorizations; (B) transactions are recorded as necessary to
permit preparation of financial statements in conformity with generally
accepted accounting principles and to maintain asset accountability;
(C) access to assets is permitted only in accordance with management's
general or specific authorization; and (D) the recorded accounting for
assets is compared with the existing assets at reasonable intervals and
appropriate action is taken with respect to any differences.
(s) The Company and each of its subsidiaries have good
and marketable title in fee simple to all real property and good and
marketable title to all personal property owned by them, in each case
free and clear of all liens, encumbrances and defects, except such as
are described in the Offering Memorandum or would not reasonably be
expected to have a Material Adverse Effect; and all real property and
buildings held under lease by the Company and its subsidiaries are held
by them under valid, subsisting and enforceable leases, except for such
failures to be in full force and effect that individually or in the
aggregate could not reasonably be expected to have a Material Adverse
Effect.
(u) The Company and each of its subsidiaries carry, or
are covered by insurance in such amounts and covering such risks as the
Company believes is adequate for the conduct of their respective
businesses and the value of their respective properties.
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(v) None of the Company or any of its subsidiaries (i) is
in violation of its charter, by-laws or other constitutive documents,
(ii) is in default in any material respect, and no event has occurred
which, with notice or lapse of time or both, would constitute such a
default, in the due performance or observance of any term, covenant or
condition contained in any indenture, mortgage, deed of trust, loan
agreement or other agreement or instrument to which it is a party or by
which it is bound or to which any of its properties or assets is
subject that would individually or in the aggregate have a Material
Adverse Effect, or (iii) is in violation of any law, ordinance,
governmental rule, regulation or court decree to which it or its
property may be subject or has failed to obtain any material license,
permit, certificate, franchise or other governmental authorization or
permit necessary to the ownership of its property or to the conduct of
its business, that would individually or in the aggregate have a
Material Adverse Effect.
(w) No securities of the same class (within the meaning
of Rule 144A(d)(3) under the Securities Act) as the Offered Securities
are, or, as of the date of issuance of the Offered Securities, will be,
listed on any national securities exchange registered under Section 6
of the Exchange Act or quoted in an automated inter-dealer quotation
system.
(x) No registration of the Offered Securities or the
Conversion Shares under the Securities Act and no qualification of an
indenture under the U.S. Trust Indenture Act of 1939, as amended, is
required in connection with the offer, sale and delivery of the Offered
Securities or in connection with the conversion of the Offered
Securities into Conversion Shares, in each case, in the manner
contemplated by the Offering Memorandum, this Agreement and the
Indenture.
(y) Neither the Company nor to its knowledge, any of its
subsidiaries, nor any director, officer, agent, employee or other
person associated with or acting on behalf of the Company or to its
knowledge, any of its subsidiaries, has used any corporate funds for
any unlawful contribution, gift, entertainment or other unlawful
expense relating to political activity; made any direct or indirect
unlawful payment to any foreign or domestic government official or
employee from corporate funds; violated or is in violation of any
provision of the Foreign Corrupt Practices Act of 1977; or made any
bribe, rebate, payoff, influence payment, kickback or other unlawful
payment.
(z) There has been no storage, disposal, generation,
manufacture, refinement, transportation, handling or treatment of toxic
wastes, medical wastes, hazardous wastes or hazardous substances by the
Company or to its knowledge, any of its subsidiaries (or, to the
knowledge of the Company, any of their predecessors in interest) at,
upon or from any of the property now or previously owned or leased by
the Company or its subsidiaries in violation of any applicable law,
ordinance, rule, regulation, order, judgment, decree or permit or which
would require remedial action under any applicable law, ordinance,
rule, regulation, order, judgment, decree or permit; there has been no
material spill, discharge,
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leak, emission, injection, escape, dumping or release of any kind onto
such property or into the environment surrounding such property of any
toxic wastes, medical wastes, solid wastes, hazardous wastes or
hazardous substances due to or caused by the Company or any of its
subsidiaries or with respect to which the Company or any of its
subsidiaries have knowledge; and the terms "HAZARDOUS WASTES", "TOXIC
WASTES", "HAZARDOUS SUBSTANCES" and "MEDICAL WASTES" shall have the
meanings specified in any applicable local, state, federal and foreign
laws or regulations with respect to environmental protection.
(aa) Neither the Company nor any subsidiary is, or, after
giving effect to the offering and sale of the Offered Securities and
the application of the net proceeds therefrom will be, an "investment
company" within the meaning of such term under the Investment Company
Act of 1940, as amended.
(bb) The Company understands that the Initial Purchasers
and, for purposes of the opinions to be delivered to the Initial
Purchasers pursuant hereto, counsel to the Company and counsel to the
Initial Purchasers will rely upon the accuracy and truth as to factual
matters of the foregoing representations and the Company hereby
consents to such reliance.
2. Purchase, Sale and Delivery of the Offered
Securities.
(a) On the basis of the representations, warranties and
agreements herein contained, but subject to the terms and conditions
herein set forth, the Company agrees to sell to the Initial Purchasers,
and the Initial Purchasers agree to purchase from the Company, at a
purchase price of 96.75% of the principal amount thereof, $65,000,000
principal amount of Firm Offered Securities.
(b) The Company hereby grants to the Initial Purchasers
an option to purchase from the Company, solely for the purpose of
covering over-allotments in the sale of Firm Offered Securities, all or
any portion of the Additional Offered Securities. The option granted
hereunder may be exercised at any time within thirty (30) days from the
date hereof at a purchase price of 96.75% of the principal amount
thereof.
(c) Payment for the Firm Offered Securities shall be made
against delivery of the Firm Offered Securities at a closing to be held
at the offices of Weil, Gotshal & ▇▇▇▇▇▇ LLP at 10:00 A.M., local time,
on July 23, 2003, or at such other time on the same or such other date,
as shall be determined by the Initial Purchasers and the Company. The
time and date of such payment are herein referred to as the Firm
Closing Date.
(d) Payment for any Additional Offered Securities shall
be made against delivery of the Additional Offered Securities at a
closing to be held at the offices of Weil, Gotshal & ▇▇▇▇▇▇ LLP at
10:00 A.M., local time, on such date (which may be the same as the
Closing Date but shall in no event be earlier than
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either the Closing Date or the second business day after the date on
which the option shall have been exercised nor later than five business
days after the giving of the notice hereinafter referred to) as shall
be designated in a written notice from the Initial Purchasers to the
Company of their determination to purchase an aggregate principal
amount, specified in said notice, of Additional Offered Securities. The
time and date of such payment are hereinafter referred to as the Option
Closing Date. The Firm Closing Date and the Option Closing Date are
herein individually referred to as the "Closing Date" and collectively
referred to as the "Closing Dates."
(e) On each Closing Date, payment for the Firm Offered
Securities and Additional Offered Securities shall be made by certified
or official bank check or checks, or by wire transfer, payable to the
order of the Company, in Federal (same day) funds. On each Closing
Date, payment will be made against delivery of one or more global
Debentures in registered form to be deposited with, on behalf of, The
Depository Trust Company ("DTC") and registered in the name of Cede &
Co., as nominee for DTC, in such denominations and registered in such
names as the Initial Purchasers shall request. Time shall be of the
essence, and delivery at the time and place specified pursuant to this
Agreement is a further condition to the obligation of the Initial
Purchasers hereunder. With respect to each Closing Date, the Company
shall make available the certificates representing the Offered
Securities to be resold for inspection by the Initial Purchasers in New
York, New York not later than 2:00 p.m., New York City time, on the
business day prior to such Closing Date.
3. Representations, Warranties and Agreements of the
Initial Purchasers. Each Initial Purchaser, severally and not jointly:
(a) represents and warrants that it is a Qualified
Institutional Buyer and that it will offer the Offered Securities for
resale only upon the terms and conditions set forth in this Agreement
and in the Offering Memorandum.
(b) acknowledges that the Offered Securities have not
been registered under the Securities Act and may not be offered or sold
within the United States or to, or for the benefit of, U.S. persons
except pursuant to an exemption from the registration requirements of
the Securities Act; represents, warrants and agrees that it has only
offered the Offered Securities, and will only offer and sell the
Offered Securities inside the United States to persons whom the Initial
Purchasers reasonably believes to be Qualified Institutional Buyers.
(c) represents, warrants and agrees that it has not and
will not solicit offers for, or offer or sell the Offered Securities
purchased from the Company hereunder by means of any form of general
solicitation or general advertising (as those terms are used in
Regulation D under the Securities Act), including, but not limited to
(i) any advertisement, article, notice or other communication published
in any newspaper, magazine or similar media or broadcast over
television or
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radio, or (ii) any seminar or meeting whose attendees have been invited
by any general solicitation or general advertising. Each Initial
Purchaser agrees, with respect to resales made in reliance on Rule
144A, other than through the Private Offerings Resales and Trading
through Automated Linkages ("PORTAL") market, of any of the Offered
Securities purchased from the Company hereunder, to deliver either with
the confirmation of such resale or otherwise prior to settlement of
such resale a notice to the effect that the resale of such Offered
Securities has been made in reliance upon the exemption from the
registration requirements of the Securities Act provided by Rule 144A.
(d) at or before the time that it effects any resale of
the Debentures, such Initial Purchaser shall have delivered to the
prospective purchaser a copy of the Offering Memorandum together with
all supplements and amendments prepared by the Company and delivered to
such Initial Purchaser prior to the date of such resale.
(e) understands that the Company and, for purposes of the
opinions to be delivered to the Initial Purchasers pursuant hereto,
counsel to the Company and counsel to the Initial Purchasers will rely
upon the accuracy of the foregoing representations and hereby consents
to such reliance.
4. Certain Agreements of the Company.
(a) The Company agrees with the Initial Purchasers that:
(i) The Company will advise the Initial
Purchasers promptly of any proposed amendment or supplement to
the Offering Memorandum and will not effect such amendment or
supplement without the Initial Purchasers' consent, which
consent shall not be unreasonably withheld. If at any time
prior to the completion of the resale of the Offered
Securities by the Initial Purchasers, any event occurs as a
result of which the Offering Memorandum as then amended or
supplemented would include an untrue statement of a material
fact or omit to state any material fact necessary in order to
make the statements therein, in the light of the circumstances
under which they were made, not misleading, or if it is
necessary at such time to amend or supplement the Offering
Memorandum to comply with any applicable law, the Company
promptly will notify the Initial Purchasers of such event and
promptly prepare an amendment or supplement to the Offering
Memorandum which will correct such statement or omission or
effect such compliance. Neither the Initial Purchasers'
consent to, nor the Initial Purchasers' delivery of, any such
amendment to or supplement of shall constitute a waiver of any
of the conditions set forth in Section 5 hereof.
(ii) The Company will furnish promptly to the
Initial Purchasers copies of the Offering Memorandum and all
amendments and
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supplements thereto, in each case as soon as available and in
such quantities as it may reasonably request.
(iii) During the period of two years after the
Closing Date, the Company will, upon request, furnish to the
Initial Purchasers and any holder of Offered Securities a copy
of the restrictions on transfer applicable to such Offered
Securities.
(iv) The Company will not resell any Offered
Securities which have been acquired by it during the period of
two years after the Closing Date and which constitute
"restricted securities" under Rule 144, otherwise than
pursuant to an effective registration statement under the
Securities Act.
(v) (A) For a period of 90 days from the date of
the Offering Memorandum, it shall not directly or indirectly,
(1) (A) offer for sale, sell, pledge or otherwise dispose of
(or enter into any transaction or device which is designed to,
or could be expected to, result in the disposition by any
person at any time in the future of) any shares of Common
Stock or securities convertible into or exchangeable for
Common Stock (other than Common Stock and shares issued
pursuant to employee benefit plans, qualified stock option
plans or other employee compensation plans existing on the
date hereof or pursuant to currently outstanding options,
warrants or rights), or (B) sell or grant options, rights or
warrants with respect to any shares of Common Stock or
securities convertible into or exchangeable for Common Stock
(other than the grant of options pursuant to option plans
existing on the date hereof), or (2) enter into any swap or
other derivatives transaction that transfers to another, in
whole or in part, any of the economic benefits or risks of
ownership of such shares of Common Stock, whether any such
transaction described in clause (1) or (2) above is to be
settled by delivery of Common Stock or other securities, in
cash or otherwise, in each case without the prior written
consent of ▇▇▇▇▇▇ Brothers Inc. on behalf of the Initial
Purchasers; provided, however, that the foregoing restrictions
shall not apply for shares of Common Stock issued by the
Company pursuant to an acquisition not in excess of 20% of the
outstanding shares of Common Stock as of the date of this
Agreement and (B) to cause each officer and director of the
Company identified on Schedule 2 to furnish to the Initial
Purchasers, a letter or letters, substantially in the form of
Exhibit A hereto.
(vi) The Company will reserve and keep available
at all times, free of preemptive rights, the full number of
Conversion Shares issuable upon conversion of the Offered
Securities.
(vii) The Company will use all reasonable efforts
to effect, prior to the time the Offered Securities may be
converted, the designation or
12
listing subject to notice of issuance, of the Conversion
Shares issuable upon such conversion on the Nasdaq National
Market or on such market or exchange on which the Common Stock
is then quoted or listed.
(viii) The Company will use all reasonable efforts
to arrange for qualification of the Offered Securities for
sale under the laws of such jurisdictions as the Initial
Purchasers may reasonably designate and to maintain such
qualifications in effect so long as reasonably required for
the distribution of the Offered Securities; provided, however,
that the Company will not be obligated to qualify to do
business as a foreign corporation in any state in which it is
not so qualified or to file a general consent to service of
process in any jurisdiction.
(ix) The Company agrees to pay (A) the fees and
expenses of its counsel and accountants and the Trustee and
any transfer agents, conversion agents and paying agents; (B)
costs associated with the packaging and initial delivery of
the certificates evidencing the Offered Securities and the
preparation and printing of the certificates evidencing the
Offered Securities, this Agreement, the Indenture, the
Registration Rights Agreement, the Offering Memorandum and any
information provided by the Company pursuant to Section
4(a)(ii) and (xi) hereof and any other document relating to
the issuance of the Offered Securities; (C) the cost of
obtaining approval for the trading of the Offered Securities
through the PORTAL market and the designation or listing of
the Common Stock issuable upon the conversion of the Offered
Securities on the Nasdaq National Market or on such market or
exchange on which the Common Stock is then quoted or listed;
(D) the costs and expenses of the Company relating to investor
presentations on any "ROAD SHOW" undertaken in connection with
the marketing of the offering of the Offered Securities,
including, without limitation, expenses associated with the
production of road show slides and graphics, fees and expenses
of any consultants engaged in connection with the road show
presentations with the prior approval of the Company, travel
and lodging expenses of the Initial Purchasers and officers of
the Company and any such consultants, and the cost of any
aircraft chartered in connection with the road show; (E) all
fees and expenses of DTC; (F) the costs of qualifying the
Offered Securities for offering and sale under any state
securities or blue sky laws, including reasonable legal fees
and expenses of counsel for the Initial Purchasers in
connection therewith; and (G) all other costs, fees and
expenses incident to the performance of its obligations
hereunder which are not specifically provided for above.
(x) So long as any of the Offered Securities are
"restricted securities" within the meaning of Rule 144(a)(3)
under the Securities Act, the Company will, during any period
in which it is not subject to and in compliance with Section
13 or 15(d) of the Exchange Act, provide to each
13
holder of such restricted securities and to each prospective
purchaser (as designated by such holder) upon request of such
holder or prospective purchaser, any information required to
be provided by Rule 144A(d)(4) under the Securities Act. This
covenant is intended to be for the benefit of the holders, and
the prospective purchasers designated by such holders, from
time to time of such restricted securities.
(xi) The Company will use all reasonable efforts
to cause the Offered Securities to be eligible for the PORTAL
trading system of the National Association of Securities
Dealers, Inc. and to cause the Offered Securities to be
eligible for clearance and settlement through the facilities
of DTC.
5. Conditions of the Obligations of the Initial
Purchasers. The respective obligations of the Initial Purchasers to
purchase and pay for the Firm Offered Securities on the Firm Closing
Date and the Additional Offered Securities on the Option Closing Date
will be subject to the accuracy of the representations and warranties
on the part of the Company when made and as of such respective dates,
to the accuracy of the statements of officers of the Company made in
certificates delivered pursuant to the provisions hereof, to the
performance by the Company of its respective obligations hereunder and
to the following additional conditions precedent:
(a) No Initial Purchaser shall have been advised by the
Company or shall have discovered and disclosed to the Company that the
Offering Memorandum or any amendment or supplement thereto, contains an
untrue statement of fact which, in the opinion of counsel for the
Initial Purchasers, is material, or omits to state a fact which, in the
opinion of counsel for the Initial Purchasers, is material and is
required to be stated therein or is necessary to make the statements
therein not misleading.
(b) All corporate proceedings and other legal matters
incident to the authorization, form and validity of this Agreement, the
Indenture, the Registration Rights Agreement, the Offered Securities
and the Offering Memorandum, and all other legal matters relating to
this Agreement and the transactions contemplated hereby shall be
reasonably satisfactory in all respects to the Initial Purchasers.
(c) On each Closing Date, there shall have been furnished
to the Initial Purchasers the opinion (addressed to the Initial
Purchasers) of ▇▇▇▇▇▇ ▇▇▇▇▇▇ Zavis & Rosenman, counsel for the Company,
dated such Closing Date and in form and substance reasonably
satisfactory to counsel for the Initial Purchasers, substantially to
the effect that:
(i) The Company and each of its subsidiaries
have been duly incorporated or organized, as applicable, and
are validly existing as corporations, limited liability
companies, trusts or other entities, in good standing under
the laws of their respective jurisdictions of incorporation or
14
organization and have all corporate, limited liability company
or trust power and authority, as applicable, necessary to own
or hold their respective properties and conduct the businesses
in which they are engaged;
(ii) The Company has an authorized capitalization
as set forth in the Offering Memorandum, and all of the issued
shares of capital stock of the Company have been duly and
validly authorized and issued, are fully paid and
non-assessable and conform to the description thereof
contained in the Offering Memorandum; and all of the issued
shares of capital stock, limited liability company interest or
trust shares, as applicable, of each subsidiary of the Company
have been duly and validly authorized and issued and to the
extent they are shares of capital stock of a corporation, are
fully paid, non-assessable and are owned directly or
indirectly by the Company, and to such counsel's knowledge,
free and clear of all liens, encumbrances, equities or claims;
(iii) The Conversion Shares have been duly and
validly authorized and, when issued and delivered against
payment therefor will be duly and validly issued, fully paid
and non-assessable;
(iv) Except as set forth in the Offering
Memorandum, to the knowledge of such counsel, there are no
outstanding warrants or options issued by the Company to
purchase any shares of capital stock of the Company or any
security convertible or exchangeable for capital stock of the
Company and there are no preemptive or other rights to
subscribe for or to purchase, nor any restriction upon the
voting or transfer of, any shares of the Stock pursuant to the
Company's charter or by laws or any agreement or other
instrument known to such counsel;
(v) This Agreement has been duly authorized,
executed and delivered by the Company;
(vi) Each of the Indenture and the Registration
Rights Agreement has been duly authorized, executed and
delivered by the Company and, assuming due authorization,
execution and delivery by the other parties thereto,
constitutes the valid and legally binding agreement of the
Company. The Indenture is enforceable against the Company in
accordance with its terms, except as the enforceability
thereof may be limited by bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium and other similar laws
now or hereafter in effect relating to or affecting rights of
creditors and other obligees generally, by general equitable
principles (regardless of whether such enforceability is
considered in a proceeding in equity or at law) or by an
implied covenant of good faith and fair dealing and except
further as enforceability of the
15
indemnification and contribution provisions thereof, may be
limited by considerations of public policy;
(vii) The Offered Securities have been duly
authorized by the Company and, when executed, authenticated
and delivered in accordance with this Agreement and the
Indenture, will be valid and legally binding obligations of
the Company enforceable against the Company in accordance with
their terms, except in all cases as the enforceability thereof
may be limited by bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium and other similar laws
now or hereafter in effect relating to or affecting rights of
creditors and other obligees generally, by general equitable
principles (regardless of whether such enforceability is
considered in a proceeding in equity or at law) or by an
implied covenant of good faith and fair dealing, and except
further as enforceability of the indemnification and
contribution provisions thereof, may be limited by
considerations of public policy will be entitled to the
benefits of the Indenture;
(viii) The statements in the Offering Memorandum
under the captions "Description of the Debentures,"
"Description of Capital Stock" and "Notice to Investors"
insofar as they purport to summarize the provisions of the
Indenture, the Offered Securities and the Common Stock
(including the Conversion Shares) are true and accurate in all
material respects;
(ix) The statements in the Offering Memorandum
under the caption "Certain United States Federal Income Tax
Considerations" as to matters of U.S. tax law and regulation
are true and accurate in all material respects;
(x) No registration of the Offered Securities or
the Conversion Shares under the Securities Act and no
qualification of the Indenture or an indenture under the U.S.
Trust Indenture Act of 1939, as amended, is required in
connection with the offer, sale and delivery of the Offered
Securities or in connection with the conversion of the Offered
Securities into Conversion Shares, in each case, in the manner
contemplated by the Offering Memorandum, this Agreement and
the Indenture;
(xi) Except as set forth in the Offering
Memorandum, to our knowledge, there is no litigation,
proceeding or governmental investigation pending or overtly
threatened against the Company that relates to any of the
transactions contemplated by the Agreement;
(xii) The execution, delivery and compliance by
the Company with all of the provisions of this Agreement, the
Registration Rights Agreement, and the Indenture and the
issuance of the Offered Securities
16
and the Conversion Shares and the consummation of the
transactions contemplated hereby and thereby will not conflict
with or result in a breach or violation of any of the terms or
provisions of, or constitute a default under, any material
indenture, mortgage, deed of trust, loan agreement or other
material agreement or instrument known to such counsel to
which the Company or any of its subsidiaries is a party or by
which the Company or any of its subsidiaries is bound or to
which any of the property or assets of the Company or any of
its subsidiaries is subject, nor will such actions result in
any violation of the provisions of the charter or by-laws of
the Company or any of its subsidiaries or the charter, by-laws
or other organizational documents of any of its subsidiaries
or in the violation of any statute or any order, rule or
regulation known to such counsel of any court or governmental
agency or body having jurisdiction over the Company or any of
its subsidiaries or any of their properties or assets; and,
assuming the accuracy of the representations of the Initial
Purchasers set forth in Section 3 of the Purchase Agreement
and further assuming (a) no changes in the applicable facts,
laws or regulations and (b) the due compliance by the Company
with the requirements of the Securities Act with respect to
the performance by the Company of its obligations under the
Registration Rights Agreement, except for the registration of
the Offered Securities and the Conversion Shares under the
Securities Act as required pursuant to the Registration Rights
Agreement, no consent, approval, authorization or order of, or
filing or registration with, any such court or governmental
agency or body is required for the execution, delivery and
performance of this Agreement, the Registration Rights
Agreement and the Indenture and the issuance of the Offered
Securities and the Conversion Shares by the Company and the
consummation of the transactions contemplated hereby and
thereby, except (i) for such consents, approvals,
authorizations, orders, filings or registrations as have been
obtained or made and (ii) for such consents, approvals,
authorizations, orders, filings or registrations, the failure
to make or obtain would not have a Material Averse Effect.
(xiii) Neither the Company nor any subsidiary is an
"investment company," or an entity "controlled" by "investment
company," within the meaning of such term under the Investment
Company Act of 1940, as amended;
(xiv) The Offered Securities satisfy the
eligibility requirements of Rule 144A(d)3 under the Securities
Act;
(xv) To the knowledge of such counsel, none of
the Company or its significant subsidiaries (A) is in
violation of its charter or by-laws (B) is in default in any
material respect, and no event has occurred which, with notice
or lapse of time or both, would constitute such a default, in
the due performance or observance of any time period, covenant
or condition
17
contained in this Agreement, the Registration Rights Agreement
or the Indenture, or (C) is in violation of any law,
ordinance, governmental rule, regulation or court decree to
which it or its properties or assets may be subject or has
failed to obtain any material license, permit, certificate,
franchise or other governmental authorization or permit
necessary to the ownership of its properties or assets or to
the conduct of its business, which violation or failure to
obtain reasonably could be expected to have a Material Adverse
Effect; and
(xvi) Each document incorporated by reference in
the Offering Memorandum (except for financial statements and
schedules and other financial data included therein as to
which such counsel need not express any opinion), when filed
with the Commission complied as to form in all material
respects with the requirements of the Exchange Act and the
rules and regulations promulgated thereunder.
In rendering such opinion, such counsel may state that its
opinion is limited to matters governed by the Federal laws of the United States
of America, the laws of the State of New York and the General Corporation Law of
the State of Delaware. Such opinion shall also be to the effect that (x) such
counsel has acted as counsel to the Company on a regular basis, and has acted as
counsel to the Company in connection with the preparation of the Offering
Memorandum and such counsel has participated in conferences with officers and
other representatives of the Company, representatives of the independent public
accountants of the Company and representatives of the Initial Purchasers at
which the contents of the Offering Memorandum was discussed and (y) based on the
foregoing, no facts have come to the attention of such counsel which lead it to
believe (I) that the Offering Memorandum as of its date, contained any untrue
statement of a material fact or omitted to state a material fact required to be
stated therein or necessary in order to make the statements therein not
misleading (except for financial statements and schedules and other financial
data included therein as to which such counsel need not express any opinion), or
(II) any document incorporated by reference in the Offering Memorandum (except
for financial statements and schedules and other financial data included therein
as to which such counsel need not express any opinion) when they were filed with
the Commission contained an untrue statement of a material fact or omitted to
state a material fact necessary in order to make the statements therein, in
light of the circumstances is which they were made, not misleading. The
foregoing opinion and statement may be qualified by a statement to the effect
that such counsel 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 clause (xi) and (xii) above).
(d) The Company shall have furnished to the Initial
Purchasers a certificate, dated such Closing Date, signed on behalf of
the Company of its Chairman of the Board , its President or a Vice
President and its Chief Financial Officer of the Company to the effect
that: (i) the representations and warranties of the Company contained
in this Agreement are true and correct in all material
18
respects, as if made at and as of such Closing Date, and the Company
has complied in all material respects with all the agreements and
satisfied all the conditions on its part to be complied with or
satisfied at or prior to such Closing Date; (ii) the signers of said
certificate have carefully examined the Offering Memorandum, and any
amendments or supplements thereto (including any documents filed under
the Exchange Act and deemed to be incorporated by reference in the
Offering Memorandum), and in their opinion such documents do not
include any untrue statement of material fact or omit to state any
material fact required to be included therein in order to make the
statements therein, in the light of the circumstances under which they
were made, not misleading; and (iii) since the date of the most recent
financial statements incorporated by reference in the Offering
Memorandum there has occurred no event required to be set forth in an
amendment or supplement to the Offering Memorandum which has not been
so set forth.
(e) The Initial Purchasers shall have received a letter
(the "INITIAL LETTER") of KPMG LLP, dated the date hereof and addressed
to the Initial Purchasers, confirming that they are independent
certified public accountants with respect to the Company and its
Subsidiaries within the meaning of the Securities Act and the Rules and
Regulations and are in compliance with the requirements relating to
qualification of accountants under Rule 2-01 of Regulation S-X of the
Securities and Exchange Commission and stating, as of the date hereof
(or, with respect to matters involving changes or developments since
the respective dates as of which specified financial information is
given or incorporated in the Offering Memorandum, as of a date not more
than five days prior to the date hereof), the conclusions and findings
of such firm with respect to the financial information and other
matters ordinarily covered by accountants' "comfort letters" to Initial
Purchasers. On each Closing Date, you shall have furnished to the
Initial Purchasers a letter from such accountants, addressed to the
Initial Purchasers and dated such Closing Date confirming the
information set forth in the initial letter.
(f) Subsequent to the execution and delivery of this
Agreement there shall not have occurred any of the following: (i)
trading in securities generally on the New York Stock Exchange or the
American Stock Exchange or in the over-the-counter market, or trading
in any securities of the Company on any exchange or in the
over-the-counter market, shall have been suspended or the settlement of
such trading generally shall have been materially disrupted or minimum
prices shall have been established on any such exchange or such market
by the Commission, by such exchange or by any other regulatory body or
governmental authority having jurisdiction, (ii) a banking moratorium
shall have been declared by Federal or state authorities, (iii) the
United States shall have become engaged in hostilities (other than such
hostilities existing as of the date hereof), there shall have been an
escalation in hostilities involving the United States or there shall
have been a declaration of a national emergency or war by the United
States or (iv) there shall have occurred such a material adverse change
in general
19
economic, political or financial conditions, including without
limitation as a result of terrorist activities after the date hereof
(or the effect of international conditions on the financial markets in
the United States shall be such) as to make it, in the judgment of the
Initial Purchasers, impracticable or inadvisable to proceed with the
payment for and delivery of the Offered Securities.
(g) The Initial Purchasers shall have received from Weil,
Gotshal & ▇▇▇▇▇▇ LLP, counsel for the Initial Purchasers, such opinion
or opinions, dated such Closing Date, with respect to the validity of
the Indenture, the Offered Securities, the Offering Memorandum, and
other related matters as they may reasonably require, and the Company
shall have furnished to such counsel such documents as they reasonably
request for the purpose of enabling them to pass upon such matters.
(h) The Offered Securities shall have been (A) approved
by the National Association of Securities Dealers, Inc., as being
eligible for trading in the PORTAL market and (B) accepted for
settlement through the facilities of DTC.
(i) Neither the Company nor any of its subsidiaries shall
have sustained since the date of the latest audited financial
statements included in the Offering Memorandum (A) any loss or
interference with its business from fire, explosion, flood or other
calamity, whether or not covered by insurance, or from any labor
dispute or court or governmental action, order or decree, which loss or
interference could reasonably be expected to have a Material Adverse
Effect, otherwise than as set forth or contemplated in the Memorandum
or (B) since such date there shall not have been any change in the
capital stock or long-term debt of the Company or any of its
subsidiaries or any change, or any development involving a prospective
change, in or affecting the general affairs, management, financial
position, stockholders' equity or results of operations of the Company
and its subsidiaries, otherwise than as set forth or contemplated in
the Offering Memorandum, the effect of which, in any such case
described in clause (A) or (B), is, in the judgment of the Initial
Purchasers, so material and adverse as to make it impracticable or
inadvisable to proceed with the public offering or the delivery of the
Offered Securities being delivered on such Closing Date on the terms
and in the manner contemplated in the Offering Memorandum.
(j) The Registration Rights Agreement shall have been
executed and delivered and be substantially in the form of Exhibit A
hereto.
All such opinions, certificates, letters and documents shall
be in compliance with the provisions hereof only if they are reasonably
satisfactory in form and substance to the Initial Purchasers. The Company shall
furnish to the Initial Purchasers conformed copies of such opinions,
certificates, letters and other documents in such number as the Initial
Purchasers shall reasonably request. If any of the conditions specified in this
Section 5 shall not have been fulfilled when and as required by this
20
Agreement, this Agreement and all obligations of the Initial Purchasers
hereunder may be canceled at, or at any time prior to, each Closing Date, by the
Initial Purchasers. Any such cancellation shall be without liability of the
Initial Purchasers to the Company. Notice of such cancellation shall be given to
the Company in writing, or by telegraph or telephone and confirmed in writing.
6. Indemnification and Contribution.
(a) The Company shall indemnify and hold harmless each
Initial Purchaser, its directors, officers, employees and agents and
each person, if any, who controls any Initial Purchasers within the
meaning of either the Securities Act or the Exchange Act, from and
against any loss, claim, damage or liability, joint or several, or any
action in respect thereof (including, but not limited to, any loss,
claim, damage, liability or action relating to purchases and sales of
Offered Securities), to which that Initial Purchaser or any such
director, officer, employee or controlling person may become subject,
under either the Securities Act or Exchange Act otherwise, insofar as
such loss, claim, damage, liability or action arises out of, or is
based upon, (i) any untrue statement or alleged untrue statement of a
material fact contained (A) in the Preliminary Offering Memorandum or
the Offering Memorandum, or any amendment or supplement thereto or the
reports filed pursuant to the Exchange Act and incorporated by
reference in the Offering Memorandum or (B) in any materials or
information provided to investors by, or with the approval of, the
Company in connection with the marketing of the offering of the Offered
Securities ("MARKETING MATERIALS") including any roadshow or investor
presentations made to investors by the Company (whether in person or
electronically) in any blue sky application or other document prepared
or executed by the Company (or based upon any written information
furnished by the Company) specifically for the purpose of qualifying
any or all of the Offered Securities under the securities laws of any
state or other jurisdiction (any such application, document or
information being hereinafter called a "Blue Sky Application"), or (ii)
the omission or alleged omission to state in the Preliminary Offering
Memorandum or Offering Memorandum, or any amendment or supplement
thereto, or the reports filed pursuant to the Exchange Act incorporated
by reference in the Offering Memorandum or in any Marketing Materials
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, (iii) any act or failure to act or any
alleged act or failure to act by any Initial Purchaser in connection
with, or relating in any manner to, the Offered Securities or the
offering contemplated hereby, and that is included as part of or
referred to in any loss, claim, damage, liability or action arising out
of or based upon matters covered by clause (i) or (ii) above (provided
that the Company shall not be liable under this clause (iii) to the
extent that it is determined in a final judgment by a court of
competent jurisdiction that such loss, claim, damage, liability or
action resulted directly from any such acts or failures to act
undertaken or omitted to be taken by such Initial Purchaser through its
gross negligence or
21
willful misconduct), and shall reimburse each Initial Purchaser and
each such director, officer, employee, agent or controlling person
promptly upon demand for any legal or other expenses reasonably
incurred by that Initial Purchaser, director, officer, employee, agent
or controlling person in connection with investigating or defending or
preparing to defend against any such loss, claim, damage, liability or
action as such expenses are incurred; provided, however, that the
Company shall not be liable in any such case to the extent that any
such loss, claim, damage, liability or action arises out of, or is
based upon, any untrue statement or alleged untrue statement or
omission or alleged omission made in the Preliminary Offering
Memorandum or Offering Memorandum, or in any such amendment or
supplement, in reliance upon and in conformity with written information
concerning such Initial Purchaser furnished to the Company through the
Initial Purchasers by or on behalf of any Initial Purchaser
specifically for inclusion therein which information consists solely of
the information specified in Section 6(e). The foregoing indemnity
agreement is in addition to any liability which the Company may
otherwise have to any Initial Purchaser or to any director, officer,
employee, agent or controlling person of that Initial Purchaser.
(b) Each Initial Purchaser, severally and not jointly,
shall indemnify and hold harmless the Company, its directors, officers,
employees, agents and each person, if any, who controls the Company
within the meaning of either the Securities Act or the Exchange Act,
from and against any loss, claim, damage or liability, joint or
several, or any action in respect thereof, to which the Company or any
such director, officer, employee or controlling person may become
subject, under the Securities Act or Exchange Act otherwise, insofar as
such loss, claim, damage, liability or action arises out of, or is
based upon, (i) any untrue statement or alleged untrue statement of a
material fact contained in the Preliminary Offering Memorandum or
Offering Memorandum, or any amendment or supplement thereto or (ii) the
omission or alleged omission to state in the Preliminary Offering
Memorandum or Offering Memorandum or any amendment or supplement
thereto or 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, but in each case only to the
extent that the untrue statement or alleged untrue statement or
omission or alleged omission was made in reliance upon and in
conformity with written information concerning such Initial Purchaser
furnished to the Company through the Initial Purchasers by or on behalf
of the Initial Purchasers specifically for inclusion therein; and shall
reimburse the Company and any such director, officer, employee, agent
or controlling persons for any reasonable legal or other expenses
reasonably incurred by the Company or any such director, officer,
employee, agent or controlling person in connection with investigating
or defending or preparing to defend against any such loss, claim,
damage, liability or action as such expenses are incurred. The
foregoing indemnity agreement is in addition to any liability which the
Initial Purchasers may otherwise have to the Company or any such
director, officer, employee or controlling person.
22
(c) Promptly after receipt by an indemnified party under
this Section 6 of notice of any claim or the commencement of any
action, the indemnified party shall, if a claim in respect thereof is
to be made against the indemnifying party under this Section 6, notify
the indemnifying party in writing of the claim or the commencement of
that action; provided, however, that the failure to notify the
indemnifying party shall not relieve it from any liability which it may
have under this Section 6, except to the extent it has been materially
prejudiced by such failure, or from any liability which it may have to
an indemnified party otherwise than under this Section 6. If any such
claim or action shall be brought against an indemnified party, and it
shall notify the indemnifying party thereof, the indemnifying party
shall be entitled to participate therein and, to the extent that it
wishes, jointly with any other similarly notified indemnifying party,
to assume the defense thereof with counsel reasonably satisfactory to
the indemnified party. After notice from the indemnifying party to the
indemnified party of its election to assume the defense of such claim
or action, the indemnifying party shall not be liable to the
indemnified party under this Section 6 for any legal or other expenses
subsequently incurred by the indemnified party in connection with the
defense thereof other than reasonable costs of investigation; provided,
however, that the Initial Purchasers shall have the right to employ
counsel to represent jointly the Initial Purchasers and their
respective directors, officers, employees, agents and controlling
persons who may be subject to liability arising out of any claim in
respect of which indemnity may be sought by the Initial Purchasers
against the Company under this Section 6 if, in the reasonable judgment
of the Initial Purchasers, it is advisable for the Initial Purchasers,
directors, officers, employees and controlling persons to be jointly
represented by separate counsel, and in that event the fees and
expenses of such separate counsel shall be paid by the indemnifying
party. No indemnifying party shall (i) without the prior written
consent of the indemnified parties (which consent shall not be
unreasonably withheld), settle or compromise or consent to the entry of
any judgment with respect to any pending or threatened claim, action,
suit or proceeding in respect of which indemnification or contribution
may be sought hereunder (whether or not the indemnified parties are
actual or potential parties to such claim or action) unless such
settlement, compromise or consent includes an unconditional release of
each indemnified party from all liability arising out of such claim,
action, suit or proceeding, or (ii) be liable for any settlement of any
such claim, action, suit or proceeding effected without its written
consent (which consent shall not be unreasonably withheld), but if
settled with the written consent of the indemnifying party or if there
be a final judgment in favor of the plaintiff in any such action, the
indemnifying party agrees to indemnify and hold harmless any
indemnified party from and against any loss or liability by reason of
such settlement or judgment.
(d) If the indemnification provided for in this Section 6
shall for any reason be unavailable to or insufficient to hold harmless
an indemnified party under Section 6(a) or 6(b) in respect of any loss,
claim, damage or liability, or any action in respect thereof, referred
to therein, then each indemnifying party shall,
23
in lieu of indemnifying such indemnified party, contribute to the
amount paid or payable by such indemnified party as a result of such
loss, claim, damage or liability, or action in respect thereof, (i) in
such proportion as shall be appropriate to reflect the relative
benefits received by the Company on the one hand and the Initial
Purchasers on the other hand from the offering of the Offered
Securities or (ii) if the allocation provided by clause (i) above is
not permitted by applicable law, in such proportion as is appropriate
to reflect not only the relative benefits referred to in clause (i)
above but also the relative fault of the Company on the one hand and
the Initial Purchasers on the other with respect to the statements or
omissions which resulted in such loss, claim, damage or liability, or
action in respect thereof, as well as any other relevant equitable
considerations. The relative benefits received by the Company on the
one hand and the Initial Purchasers on the other with respect to such
offering shall be deemed to be in the same proportion as the total net
proceeds from the offering of the Offered Securities purchased under
this Agreement (before deducting expenses) received by the Company, on
the one hand, and the total initial purchaser discounts received by the
Initial Purchasers with respect to the Offered Securities purchased
under this Agreement, on the other hand, bear to the total gross
proceeds from the offering of the Offered Securities under this
Agreement. The relative fault shall be determined by reference to
whether the untrue or alleged untrue statement of a material fact or
omission or alleged omission to state a material fact relates to
information supplied by the Company, on the one hand, or the Initial
Purchasers, on the other hand, the intent of the parties and their
relative knowledge, access to information and opportunity to correct or
prevent such statement or omission. The Company and the Initial
Purchasers agree that it would not be just and equitable if
contributions pursuant to this Section 6(d) were to be determined by
pro rata allocation (even if the Initial Purchasers were treated as one
entity for such purposes) or by any other method of allocation which
does not take into account the equitable considerations referred to
herein. The amount paid or payable by an indemnified party as a result
of the loss, claim, damage or liability, or action in respect thereof,
referred to above in this Section 6(d) shall be deemed to include,
subject to the limitations set forth above, for purposes of this
Section 6(d), any legal or other expenses reasonably incurred by such
indemnified party in connection with investigating or defending any
such action or claim. Notwithstanding the provisions of this Section
6(d), no Initial Purchasers shall be required to contribute any amount
in excess of the amount by which the total price at which the Offered
Securities purchased and resold by it exceeds the amount of any damages
which such Initial Purchaser has otherwise paid or become liable to pay
by reason of any untrue or alleged untrue statement or omission or
alleged omission. No person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Securities Act) shall be
entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation, the Initial Purchasers' obligations to
contribute as provided in this Section 6(d) are several in proportion
to their respective obligations and not joint. Each party entitled to
contribution agrees that upon the service of a summons or other initial
legal
24
process upon it in any action instituted against it in respect to which
contribution may be sought, it shall promptly give written notice of
such service to the party or parties from which contribution may be
sought, but the omission so to notify such party or parties of any such
service shall not relieve the party from whom contribution may be
sought for any obligation it may have hereunder or otherwise (except as
specifically provided in subsection (c) hereof). The remedies provided
for in this Section 6 are not exclusive and shall not limit any rights
or remedies which may otherwise be available to any indemnified party
in equity or at law.
(e) The Initial Purchasers severally confirm and the
Company acknowledges that (i) the legend concerning over-allotments on
the cover page, and (ii) the paragraphs under the headings
"Over-Allotment Option", "Stabilization and Short Positions", "Market
for the Debentures" and "Passive Market Making Language for Nasdaq
Traded Issues" under the caption "Plan of Distribution" constitute the
only information concerning the Initial Purchaser furnished in writing
to the Company by or on behalf of the Initial Purchaser specifically
for inclusion in the Offering Memorandum.
7. Defaulting Initial Purchasers.
If, on either Closing Date, any Initial Purchaser defaults in
the performance of its obligations under this Agreement, the remaining
non-defaulting Initial Purchasers shall be obligated to purchase the Offered
Securities which the defaulting Initial Purchaser agreed but failed to purchase
on such Closing Date in the respective proportions which the number of shares of
the Offered Securities set opposite the name of each remaining non-defaulting
Initial Purchaser in Schedule 1 hereto bears to the total number of shares of
the Offered Securities set opposite the names of all the remaining
non-defaulting Initial Purchasers in Schedule 1 hereto; provided, however, that
the remaining non-defaulting Initial Purchasers shall not be obligated to
purchase any of the Offered Securities on such Closing Date if the total number
of Offered Securities which the defaulting Initial Purchaser or Initial
Purchasers agreed but failed to purchase on such date exceeds 9.09% of the total
number of Offered Securities to be purchased on such Closing Date, and any
remaining non-defaulting Initial Purchaser shall not be obligated to purchase
more than 110% of the number of Offered Securities which it agreed to purchase
on such Closing Date pursuant to the terms of Section 2. If the foregoing
maximums are exceeded, the remaining non-defaulting Initial Purchasers, shall
have the right, but shall not be obligated, to purchase, in such proportion as
may be agreed upon among them, all the Offered Securities to be purchased on
such Closing Date. If the remaining Initial Purchasers do not elect to purchase
all of the Offered Securities which the defaulting Initial Purchaser or Initial
Purchasers agreed but failed to purchase on such Closing Date, this Agreement
(or, with respect to the Option Closing Date, the obligation of the Initial
Purchasers to purchase, and of the Company to sell, the Additional Offered
Securities) shall terminate without liability on the part of any non-defaulting
Initial Purchaser or the Company, except that the Company will continue to be
liable for the payment of expenses to the extent set forth in Section 9.
25
Nothing contained herein shall relieve a defaulting Initial
Purchaser of any liability it may have to the Company for damages caused by its
default. If other Initial Purchasers are obligated or agree to purchase the
Offered Securities of a defaulting or withdrawing Initial Purchaser, either the
Initial Purchasers or the Company may postpone the Closing Date for up to seven
full business days in order to effect any changes that in the opinion of counsel
for the Company or counsel for the Initial Purchasers may be necessary in the
Offering Memorandum or in any other document or agreement.
8. Termination. The obligations of the Initial
Purchasers hereunder may be terminated by the Initial Purchasers by notice given
to and received by the Company prior to delivery of and payment for the Offered
Securities if, prior to that time, any of the events described in Sections 5(f)
or 5(i), shall have occurred or if the Initial Purchasers shall decline to
purchase the Offered Securities for any reason permitted under this Agreement.
9. Reimbursement of Initial Purchasers' Expenses. If the
Company shall fail to tender the Offered Securities for delivery to the Initial
Purchasers by reason of any failure, refusal or inability on the part of the
Company to perform any agreement on its part to be performed, or because any
other condition of the Initial Purchasers' obligations hereunder required to be
fulfilled by the Company is not fulfilled, the Company will reimburse the
Initial Purchasers for all reasonable out-of-pocket expenses (including fees and
disbursements of counsel) incurred by the Initial Purchasers in connection with
this Agreement and the proposed purchase of the Offered Securities, and upon
demand the Company shall pay the full amount thereof to the Initial Purchasers.
If this Agreement is terminated pursuant to Section 8 by reason of the default
of one or more Initial Purchasers, the Company shall not be obligated to
reimburse any defaulting Initial Purchaser on account of those expenses.
10. Notices, Etc. All statements, requests, notices and
agreements hereunder shall be in writing, and:
(a) if to ▇▇▇▇▇▇ Brothers Inc., shall be delivered or
sent by mail, telex or facsimile transmission to ▇▇▇▇▇▇ Brothers Inc., ▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, Attention: Syndicate Department
(Fax: 201524-5980), with a copy, in the case of any notice pursuant to Section
10(d), to the Director of Litigation, Office of the General Counsel, ▇▇▇▇▇▇
Brothers Inc., ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇; if to CIBC World Markets
shall be delivered or sent by mail telex or facsimile transmission to CIBC World
Markets, ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇ (facsimile (▇▇▇) ▇▇▇-▇▇▇▇); if
to ▇.▇. ▇▇▇▇▇▇ Securities Inc. shall be delivered or sent by telex or facsimile
transmission to ▇.▇. ▇▇▇▇▇▇ Securities Inc., ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇ (facsimile ); and if to ▇▇ ▇▇▇▇▇ Securities Corporation shall be
delivered or sent by telex or facsimile transmission to ▇▇ ▇▇▇▇▇ Securities
Corporation, ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇.
26
(b) if to the Company, shall be delivered or sent by
mail, telex or facsimile transmission to the address of the Company set forth in
the Offering Memorandum, Attention: ▇▇▇▇ ▇▇▇▇▇▇▇ (Fax: (▇▇▇) ▇▇▇-▇▇▇▇);
(c) Any such statements, requests, notices or agreements
shall take effect at the time of receipt thereof. The Company shall be entitled
to act and rely upon any request, consent, notice or agreement given or made on
behalf of the Initial Purchasers by ▇▇▇▇▇▇ Brothers Inc. on behalf of the
Initial Purchasers.
11. Survival. The respective indemnities,
representations, warranties and agreements of the Company and the Initial
Purchasers contained in this Agreement or made by or on behalf on them,
respectively, pursuant to this Agreement, shall survive the delivery of and
payment for the Offered Securities and shall remain in full force and effect,
regardless of any investigation made by or on behalf of any of them or any
person controlling any of them.
12. Definition of the Terms . "Business Day" and
"Subsidiary". For purposes of this Agreement, (a) "business day" means each
Monday, Tuesday, Wednesday, Thursday or Friday which is not a day on which
banking institutions in New York are generally authorized or obligated by law or
executive order to close and (b) "subsidiary" has the meaning set forth in Rule
405 promulgated under the Securities Act.
13. Persons Entitled to Benefit of Agreement. This
Agreement shall inure to the benefit of and be binding upon the Initial
Purchasers, the Company and their respective successors and the controlling
persons referred to in Section 6. This Agreement and the terms and provisions
hereof are for the sole benefit of only those persons, except that (x) the
representations, warranties, indemnities and agreements of the Company contained
in this Agreement shall also be deemed to be for the benefit of the directors,
officers, employees and agents of the Initial Purchasers and the person or
persons, if any, who control the Initial Purchasers within the meaning of either
Section 15 of the Securities Act or Section 20 of the Exchange Act and (y) the
representations, warranties, indemnities and agreements of the Initial Purchaser
contained in this Agreement shall be deemed to be for the benefit of directors,
officers, employees and agents of the Company and any person controlling the
Company within the meaning of either Section 15 of the Securities Act or Section
20 of the Exchange Act. Nothing in this Agreement is intended or shall be
construed to give any person, other than the persons referred to in this Section
9, any legal or equitable right, remedy or claim under or in respect of this
Agreement or any provision contained herein.
14. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT
REFERENCE TO THE PRINCIPLES OF CONFLICTS OF LAWS OF THE STATE OF NEW YORK.
27
15. Counterparts. This Agreement may be executed in any
number of counterparts, each of which shall be deemed an original but all of
which shall constitute one and the same instrument.
16. Headings. The headings herein are inserted for
convenience of reference only and are not intended to be part of, or to affect
the meaning or interpretation of, this Agreement.
[Remainder of page intentionally left blank]
28
If the foregoing correctly sets forth the agreement among the
Company, and the Initial Purchasers, please indicate your acceptance in the
space provided for that purpose below.
Very truly yours,
Alloy, Inc.
By /s/ ▇▇▇▇▇▇ ▇.▇▇▇▇▇▇▇
-----------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Chief Financial Officer
29
Accepted:
▇▇▇▇▇▇ BROTHERS INC.
CIBC WORLD MARKETS CORP.
▇.▇. ▇▇▇▇▇▇ SECURITIES INC.
▇▇ ▇▇▇▇▇ SECURITIES CORPORATION
By ▇▇▇▇▇▇ BROTHERS INC.
By /s/ ▇▇▇▇▇ ▇▇▇▇▇▇
Authorized Representative
30
SCHEDULE 1
Initial Purchasers Number of Shares
▇▇▇▇▇▇ Brothers Inc. ................................................ 45,500,000
CIBC World Markets Corp. ............................................. 6,500,000
▇.▇. ▇▇▇▇▇▇ Securities Inc. .......................................... 6,500,000
▇▇ ▇▇▇▇▇ Securities Corporation ..................................... 6,500,000
----------
Total................................................................. 65,000,000
31
SCHEDULE 2
OFFICERS AND DIRECTORS
EXHIBIT A
LOCK-UP LETTER AGREEMENT
July 17, 2003
▇▇▇▇▇▇ BROTHERS INC.
CIBC WORLD MARKETS CORP.
▇.▇. ▇▇▇▇▇▇ SECURITIES INC.
▇▇ ▇▇▇▇▇ SECURITIES CORPORATION
c/▇ ▇▇▇▇▇▇ Brothers Inc.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Dear Sirs:
The undersigned understands that you and certain other firms
propose to enter into a Purchase Agreement (the "PURCHASE AGREEMENT") providing
for the purchase by you and such other firms (the "INITIAL PURCHASERS") of
Convertible Senior Debentures due August 1, 2023 (the "FIRM OFFERED SECURITIES")
of Alloy, Inc. a Delaware corporation (the "Company"), and that the Initial
Purchasers propose to reoffer the Offered Securities to the public (the
"Offering"). Capitalized terms not otherwise defined herein shall have the
meaning(s) set forth in the Purchase Agreement.
In consideration of the execution of the Purchase Agreement by
the Initial Purchasers, and for other good and valuable consideration, the
undersigned hereby irrevocably agrees that, without the prior written consent of
▇▇▇▇▇▇ Brothers Inc., on behalf of the Initial Purchasers, the undersigned will
not, directly or indirectly, (1) offer for sale, sell, pledge, or otherwise
dispose of (or enter into any transaction or device that is designed to, or
could be expected to, result in the disposition by any person at any time in the
future of) any shares of Common Stock (including, without limitation, shares of
Common Stock that may be deemed to be beneficially owned by the undersigned in
accordance with the rules and regulations of the Securities and Exchange
Commission and shares of Common Stock that may be issued upon exercise of any
option or warrant) or securities convertible into or exchangeable for Common
Stock (other than the Offered Securities) owned by the undersigned on the date
of execution of this Lock-Up Letter Agreement or on the date of the completion
of the Offering, or (2) enter into any swap or other derivatives transaction
that transfers to another, in whole or in part, any of the economic benefits or
risks of ownership of such shares of Common Stock, whether any such transaction
described in clause (1) or (2) above is to be settled by delivery of Common
Stock or other securities, in cash or otherwise, for a period of 90 days after
the date of the final Offering
Memorandum relating to the Offering. Capitalized terms not otherwise defined
herein shall have the meaning(s) set forth in the Purchase Agreement.
In furtherance of the foregoing, the Company and its Transfer
Agent are hereby authorized to decline to make any transfer of securities if
such transfer would constitute a violation or breach of this Lock-Up Letter
Agreement.
It is understood that, if the Company notifies you that it
does not intend to proceed with the Offering, if the Purchase Agreement does not
become effective, or if the Purchase Agreement (other than the provisions
thereof which survive termination) shall terminate or be terminated prior to
payment for and delivery of the Offered Securities, we will be released from my
obligations under this Lock-Up Letter Agreement.
The undersigned understands that the Company and the Initial
Purchasers will proceed with the Offering in reliance on this Lock-Up Letter
Agreement.
Whether or not the Offering actually occurs depends on a
number of factors, including market conditions. Any Offering will only be made
pursuant to a Purchase Agreement, the terms of which are subject to negotiation
between the Company and the Initial Purchasers.
The undersigned hereby represents and warrants that the
undersigned has full power and authority to enter into this Lock-Up Letter
Agreement and that, upon request, the undersigned will execute any additional
documents necessary in connection with the enforcement hereof. Any obligations
of the undersigned shall be binding upon the heirs, personal representatives,
successors and assigns of the undersigned.
Very truly yours,
By:______________________________
Name:
Title:
Dated: ____________________
2