Exhibit 10.1


 


$172,000,000


 


RAFAELLA
APPAREL GROUP, INC.


 


111⁄4%
Senior Secured Notes due 2011


 


PURCHASE
AGREEMENT


 


June 13, 2005


 


JEFFERIES & COMPANY, INC.

520 Madison Avenue 

New York, NY 10022


 


Ladies and Gentlemen:


 


Rafaella Apparel Group,
Inc., a Delaware corporation (the “Company”) and each of the Guarantors
(as hereinafter defined) hereby agree with you as follows:


 


1.         Issuance of Notes.
Subject to the terms and conditions herein contained, the Company proposes to
issue and sell to Jefferies & Company, Inc. (the “Initial Purchaser”)
$172,000,000 aggregate principal amount at maturity of 111⁄4% Senior Secured Notes due 2011 (each a “Note”
and, collectively, the “Notes”). The Notes will be issued pursuant to an
indenture (the “Indenture”), to be dated as of June 20, 2005, by and
among the Company, the Guarantors party thereto and The Bank of New York, as
trustee (the “Trustee”). Pursuant to the terms of the Redemption
Agreement to be dated the Closing Date (the “Redemption Agreement”), the
proceeds of the Notes will be used to redeem a portion of the Company’s
outstanding common equity interests (the “Redemption”) held by Rafaella
Sportswear, Inc., the predecessor of the Company (the “Predecessor”), as
described under the section of the Final Offering Circular (as defined below)
entitled “The Acquisition Transactions.” Immediately prior to the issuance of the
Notes and consummation of the Redemption, the Predecessor shall, pursuant to
the Contribution Agreement to be dated the Closing Date (the “Contribution Agreement”),
contribute substantially all its assets, subject to certain liabilities, to the
Company (the “Asset Contribution”) and Cerberus Capital Management, L.P.
shall, pursuant to the Securities Purchase Agreement, dated April 15, 2005, as
amended by Amendment No. 1 to the Securities Purchase Agreement, dated May 27,
2005 (the “Securities Purchase Agreement,” the Redemption Agreement and
the Contribution Agreement are collectively referred to as the “Acquisition
Documents”), contribute $40 million to the Company in exchange for
convertible preferred equity interests in the Company (the “Equity
Investment”). Capitalized terms used, but not defined herein, shall have
the meanings set forth in the “Description
of the Notes” section
of the Final Offering Circular (as hereinafter defined). References to the “Transactions”
shall have the meaning set forth in the section of the Final Offering Circular
(as defined below) entitled “Offering
Circular Summary—The Acquisition
Transactions.”


 


The Notes will be offered
and sold to the Initial Purchaser pursuant to an exemption from the
registration requirements under the Securities Act of 1933, as amended (the “Act”).
Upon original issuance thereof, and until such time as the same is no longer
required under the applicable requirements of the Act, the Notes shall bear the
legends set forth under the “Notice to
Investors” section of
the Final Offering Circular, dated the date hereof (the “Final Offering
Circular”). The Company has prepared a preliminary offering circular, dated
May 27, 2005 (the “Preliminary Offering Circular”), and the Final
Offering Circular relating to the offer and sale of the Notes (the “Offering”).
“Offering Circular” means, as of any date or time referred to in this
Agreement, the most recent offering circular (whether the


 

















 


Preliminary Offering Circular or the Final Offering Circular, and any
amendment or supplement to either such document), including exhibits and
schedules thereto.


 


In connection with the
sale of the Notes, the Company will, on the Closing Date, enter into a
revolving credit and security agreement among the Company, the guarantors named
therein and HSBC Bank USA, National Association (“HSBC”), as agent for
Lenders (as defined therein), which provides for a revolving loan facility in
an amount of up to $62.5 (as amended, supplemented, modified, extended or
restated from time to time, the “Credit Agreement”). In connection with
entering into the Credit Agreement, the Trustee and HSBC, as agent for the
Lenders, shall enter into an Intercreditor Agreement, to be dated as of the
Closing Date, in a form reasonably satisfactory to the Initial Purchaser (such
agreement, the “Intercreditor Agreement”).


 


2.         Terms of Offering.
The Initial Purchaser has advised the Company, and the Company understands,
that the Initial Purchaser will make offers to sell (the “Exempt Resales”)
some or all of the Notes purchased by the Initial Purchaser hereunder on the
terms set forth in the Final Offering Circular, as amended or supplemented,
solely to persons (the “Subsequent Purchasers”) whom the Initial
Purchaser (i) reasonably believes to be “qualified institutional buyers” (“OIBs”)
as defined in Rule 144A under the Act, as such may be amended from time to
time, (ii) reasonably believes (based upon written representations made by such
persons to the Initial Purchaser) to be institutional “accredited investors” as
defined in Rule 501(a)(l), (2), (3) or (7) under the Act (“Accredited
Investors”) or (iii) reasonably believes to be non-U.S. persons in reliance
upon Regulation S under the Act.


 


Pursuant to the
Indenture, all Domestic Restricted Subsidiaries of the Company shall fully and
unconditionally guarantee, on a senior secured basis, to each holder of the
Notes and the Trustee, the full performance of the Company’s obligations under
the Indenture and the Notes (each such subsidiary being referred to herein as a
“Guarantor” and each such guarantee being referred to herein as a “Guarantee”).


 


Pursuant to the terms of
the Collateral Agreements, all of the obligations under the Notes and the
Indenture will be secured by a second priority lien and security interest in
substantially all of the assets of the Company and the Guarantors (subject to a
prior ranking lien by the lenders under the Credit Agreement as outlined in the
Intercreditor Agreement and certain other Permitted Liens) other than certain
funds to be deposited in an escrow account in connection with the consummation
of the Equity Investment.


 


Holders of the Notes
(including Subsequent Purchasers) will have the registration rights set forth
in the registration rights agreement applicable to the Notes (the “Registration
Rights Agreement”), to be executed on and dated as of the Closing Date (as
defined herein). Pursuant to the Registration Rights Agreement, the Company
will agree, among other things, to file with the Securities and Exchange
Commission (the “SEC”) (a) a registration statement under the Act
relating to Senior Secured Notes (the “Exchange Notes”), which shall be
identical to the Notes (except that the Exchange Notes shall have been
registered pursuant to such registration statement and will not be subject to
restrictions on transfer or contain additional interest provisions) to be
offered in exchange for the Notes (such offer to exchange being referred to as
the “Exchange Offer”), and/or (b) under certain circumstances, a shelf
registration statement pursuant to Rule 415 under the Act (the “Shelf
Registration Statement”) relating to the resale by certain holders of the
Notes. If required under the Registration Rights Agreement, the Company will
issue Exchange Notes to the Initial Purchaser (the “Private Exchange Notes”).
If the Company fails to satisfy its obligations under the Registration Rights
Agreement, it will be required to pay additional interest to the holders of the
Notes under certain circumstances.


 


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This Agreement, the
Indenture, the Collateral Agreements, the Registration Rights Agreement, the
Notes, the Guarantees, the Exchange Notes and the Private Exchange Notes are
collectively referred to herein as the “Offering Documents.”


 


3.         Purchase, Sale and
Delivery. On the basis of the representations, warranties, agreements
and covenants herein contained and subject to the terms and conditions herein
set forth, the Company agrees to issue and sell to the Initial Purchaser, and
the Initial Purchaser agrees to purchase from the Company, the Notes at a
purchase price of 92.0% of the aggregate principal amount at maturity thereof.
Delivery to the Initial Purchaser of and payment for the Notes shall be made at
a Closing (the “Closing”) to be held at 10:00 a.m., New York time, on
June 20, 2005 (the “Closing Date”) at the New York offices of Schulte
Roth & Zabel LLP.


 


The Company shall deliver
to the Initial Purchaser one or more certificates representing the Notes in
definitive form, registered in such names and denominations as the Initial
Purchaser may request, at least one business day prior to the Closing, against
payment by the Initial Purchaser of the purchase price therefor by immediately
available Federal funds bank wire transfer to such bank account or accounts as
the Company shall designate to the Initial Purchaser at least two business days
prior to the Closing. The certificates representing the Notes in definitive
form shall be made available to the Initial Purchaser for inspection at the New
York offices of Schulte Roth & Zabel LLP (or such other place as shall be
reasonably acceptable to the Initial Purchaser) not later than 10:00 a.m. one
business day immediately preceding the Closing Date. Notes to be represented by
one or more definitive global securities in book-entry form will be deposited
on the Closing Date, by or on behalf of the Company, with The Depository Trust
Company (“DTC”) or its designated custodian, and registered in the name
of Cede & Co.


 


4.         Representations and
Warranties of the Company. The Company represents and warrants to the
Initial Purchaser that, as of the date hereof and as of the Closing Date:


 


(a)                     The Preliminary
Offering Circular as of its date did not, the Final Offering Circular as of its
date did not, nor any amendment or supplement thereto, as of the date thereof
and at all times subsequent thereto up to the Closing Date, contain any untrue
statement of a material fact, or omit to state a material fact (except for
pricing terms intentionally left blank in the case of the Preliminary Offering
Circular) 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 set forth in this Section 4(a) do not apply to
(x) statements or omissions made in reliance upon and in conformity with
information relating to the Initial Purchaser and furnished to the Company in
writing by the Initial Purchaser expressly for use in the Preliminary Offering
Circular, the Final Offering Circular or any amendment or supplement thereto or
(y) statements or omissions contained in the Preliminary Offering Circular that
were added or modified in the Final Offering Circular or any amendment or
supplement thereto. No injunction or order has been issued that either (i)
asserts that any of the transactions contemplated by the Offering Documents is
subject to the registration requirements of the Act or (ii) would prevent or
suspend the issuance or sale of any of the Notes or the use of the Preliminary
Offering Circular, the Final Offering Circular or any amendment or supplement
thereto, in any jurisdiction. Each of the Preliminary Offering Circular and the
Final Offering Circular, as of their respective dates, contained, and the Final
Offering Circular, as amended or supplemented as of the Closing Date, will
contain, all the information specified in, and meet the requirements of, Rule
144A(d)(4) under the Act, except for statements or omissions contained in the
Preliminary Offering Circular that were added or modified in the Final Offering
Circular or any amendment or supplement thereto.


 


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(b)                    Each
corporation, partnership, or other entity in which the Company, directly or
indirectly through any of its subsidiaries, owns more than fifty percent (50%)
of any class of equity securities or interests is listed on Schedule I
attached hereto (the “Subsidiaries”).


 


(c)                     Each of the
Company and its Subsidiaries (i) has been duly organized or formed, as the case
may be, is validly existing and is in good standing under the laws of its
jurisdiction of organization, (ii) has all requisite power and authority to
carry on its business and to own, lease and operate its properties and assets,
and (iii) is duly qualified or licensed to do business and is in good standing
as a foreign corporation, partnership or other entity, as the case may be,
authorized to do business in each jurisdiction in which the nature of such
businesses or the ownership or leasing of such properties requires such
qualification, except where the failure to be so qualified would not,
individually or in the aggregate, have a material adverse effect on (A) the
properties, business, prospects, operations, earnings, assets, liabilities or
condition (financial or otherwise) of the Company and the Subsidiaries, taken
as a whole, (B) the ability of the Company to perform its obligations in all
material respects under any Document, (C) the enforceability of the Collateral
Agreements or the attachment, perfection or priority of any of the Liens or
security interests intended to be created thereby, (D) the validity or
enforceability of any of the Offering Documents, or (E) the consummation of any
of the transactions contemplated under any of the Offering Documents (each, a “Material
Adverse Effect”).


 


(d)                    All of the
issued and outstanding shares of capital stock of the Company and the
Subsidiaries have been duly authorized and validly issued, are fully paid and
nonassessable, and were not issued in violation of, and are not subject to, any
preemptive or similar rights. Except as set forth in the table under the
caption “Capitalization” in the Final Offering Circular (including
the introduction and footnotes thereto), immediately following the Closing,
neither the Company nor any of the Subsidiaries will have any liabilities,
absolute, accrued, contingent or otherwise, other than (A) liabilities that are
reflected in the Financial Statements (as hereinafter defined) or (B)
liabilities incurred subsequent to the date thereof in the ordinary course of
business, consistent with past practice, or in connection with the
Transactions, that would not, individually or in the aggregate, have a Material
Adverse Effect. All of the outstanding shares of capital stock or other equity
interests of each of the Subsidiaries are owned, directly or indirectly, by the
Company, free and clear of all liens, security interests, mortgages, pledges,
charges, equities, claims or restrictions on transferability or encumbrances of
any kind (collectively, “Liens”), other than those imposed by the Act
and the securities or “Blue Sky” laws of certain domestic or foreign
jurisdictions or Permitted Liens. Except as disclosed in the Offering Circular,
there are no outstanding (A) options, warrants or other rights to purchase from
the Company or any of the Subsidiaries, (B) agreements, contracts, arrangements
or other obligations of the Company or any of the Subsidiaries to issue or (C)
other rights to convert any obligation into or exchange any securities for, in
the case of each of clauses (A) through (C), shares of capital stock of or
other ownership or equity interests in the Company or any of the Subsidiaries.


 


(e)                     No holder of
securities of the Company or any of the Subsidiaries will be entitled to have
such securities registered under the registration statement required to be
filed by the Company and the Guarantors with respect to the Notes pursuant to
the Registration Rights Agreement.


 


(f)                       The Company
and each of the Subsidiaries have the requisite corporate power and authority
to execute, deliver and perform their respective obligations under the Offering
Documents to which they are a party and to consummate the transactions
contemplated thereby.


 


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(g)                    This Agreement
has been duly and validly authorized, executed and delivered by the Company and
the Guarantors. Each of the Indenture and the Collateral Agreements have been
duly and validly authorized by the Company and the Guarantors. Each of the
Indenture and the Collateral Agreements, when executed and delivered by the
Company and the Guarantors, will constitute a legal, valid and binding obligation
of each of the Company and Guarantors, enforceable against each of the Company
and the Guarantors in accordance with its terms, except that the enforcement
thereof may be subject to (i) bankruptcy, insolvency, reorganization,
receivership, moratorium, fraudulent conveyance or other similar laws now or
hereafter in effect relating to creditors’ rights generally and (ii) general
principles of equity (whether applied by a court of law or equity) and the
discretion of the court before which any proceeding therefor may be brought.


 


(h)                    The
Registration Rights Agreement has been duly and validly authorized by the
Company and the Guarantors. The Registration Rights Agreement, when executed
and delivered by the Company and the Guarantors, will constitute a legal, valid
and binding obligation of the Company and the Guarantors, enforceable against
the Company and the Guarantors in accordance with its terms, except that (A)
the enforcement thereof may be subject to (i) bankruptcy, insolvency,
reorganization, receivership, moratorium, fraudulent conveyance or other
similar laws now or hereafter in effect relating to creditors’ rights generally
and (ii) general principles of equity (whether applied by a court of law or
equity) and the discretion of the court before which any proceeding therefor
may be brought and (B) any rights to indemnity or contribution thereunder may
be limited by federal and state securities laws and public policy
considerations.


 


(i)                        The Notes,
when issued, will be in the form contemplated by the Indenture. When executed
and delivered by the Company and the Guarantors, the Indenture will meet the
requirements for qualification under the Trust Indenture Act of 1939, as
amended (the “TIA”). The Notes, Exchange Notes and Private Exchange
Notes have each been duly and validly authorized by the Company and when
delivered to and paid for by the Initial Purchaser in accordance with the terms
of this Agreement and the Indenture, will have been duly executed, issued and
delivered and will be legal, valid and binding obligations of the Company,
entitled to the benefit of the Indenture and the Collateral Agreements and the
Registration Rights Agreement and enforceable against the Company in accordance
with their terms, except that the enforcement thereof may be subject to (i)
bankruptcy, insolvency, reorganization, receivership, moratorium, fraudulent
conveyance or other similar laws now or hereafter in effect relating to
creditors’ rights generally and (ii) general principles of equity (whether
applied by a court of law or equity) and the discretion of the court before
which any proceeding therefor may be brought.


 


(j)                        The
Guarantees have been duly and validly authorized by the Guarantors and, when
executed by the Guarantors, will have been duly executed, issued and delivered
and will be legal, valid and binding obligations of the Guarantors, entitled to
the benefit of the Indenture and the Collateral Agreements and the Registration
Rights Agreement and enforceable against the Guarantors in accordance with
their terms, except that the enforcement thereof may be subject to (i)
bankruptcy, insolvency, reorganization, receivership, moratorium, fraudulent
conveyance or other similar laws now or hereafter in effect relating to
creditors’ rights generally and (ii) general principles of equity (whether
applied by a court of law or equity) and the discretion of the court before
which any proceeding therefor may be brought.


 


(k)                     Neither the
Company nor any of the Subsidiaries is in violation of its certificate of incorporation,
by-laws or other organizational documents (the “Charter Documents”).
Neither the Company nor any of the Subsidiaries is (i) in violation of any
Federal, state, local or foreign statute, law (including, without limitation,
common law) or ordinance, or any judgment, decree, rule,


 


5

















 


regulation or order
(collectively, “Applicable Law”) of any federal, state, local and
other governmental authority, governmental or regulatory agency or body, court,
arbitrator or self-regulatory organization, domestic or foreign (each, a “Governmental
Authority”), applicable to any of them or any of their respective
properties, or (ii) in breach of or default under any bond, debenture, note or
other evidence of indebtedness, indenture, mortgage, deed of trust, lease or
any other agreement or instrument to which any of them is a party or by which
any of them or their respective property is bound (collectively, “Applicable
Agreements”), except for such violations, breaches or defaults that would
not, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect. There exists no condition that, with the passage of
time or otherwise, would constitute (a) a violation of such Charter Documents
or Applicable Laws, (b) a breach of or default under any Applicable Agreement,
except for such breaches that would not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect, or (c) result in the
imposition of any penalty or the acceleration of any indebtedness.


 


(l)                        Neither
the execution, delivery or performance of the Offering Documents nor the
consummation of any transactions contemplated therein will conflict with,
violate, constitute a breach of or a default (with the passage of time or
otherwise) under, require the consent of any person (other than consents
already obtained and in full force and effect) under, result in the imposition
of a Lien on any assets of the Company or any of its respective Subsidiaries
(except for Liens pursuant to the Collateral Agreements and the Credit
Agreement), or result in an acceleration of indebtedness under or pursuant to
(i) the Charter Documents, (ii) any Applicable Agreement that have not
resulted, or would not be expected to result, individually or in the aggregate,
in a Material Adverse Effect, or (iii) any Applicable Law. After consummation
of the Offering and transactions contemplated in the Offering Documents, no
Default or Event of Default under the Indenture will exist.


 


(m)                  When executed
and delivered, the Offering Documents and the documents governing the
Transactions, including the Contribution Agreement and the Redemption Agreement
dated as of the Closing Date, will conform in all material respects to the
descriptions thereof in the Final Offering Circular.


 


(n)                    No consent,
approval, authorization or order of any Governmental Authority, or third party
is required for the issuance and sale by the Company of the Notes to the
Initial Purchaser or the consummation by the Company of the other transactions
contemplated hereby, except such as have been obtained and such as may be
required under state securities or “Blue Sky” laws in connection with the
purchase and resale of the Notes by the Initial Purchaser.


 


(o)                    Except as
disclosed in the Final Offering Circular under the caption “Business—Legal
Proceedings,” there is no action, claim, suit, demand, hearing, notice of
violation or deficiency, or proceeding, domestic or foreign (collectively, “Proceedings”),
pending or, to the knowledge of the Company or any of the Subsidiaries after
reasonable inquiry, threatened, that either (i) seeks to restrain, enjoin,
prevent the consummation of or otherwise challenge any of the Offering
Documents or any of the transactions contemplated therein or (ii) would,
individually or in the aggregate, have a Material Adverse Effect. The Company
is not subject to any judgment, order, decree, rule or regulation of any
Governmental Authority that would, individually or in the aggregate, have a
Material Adverse Effect.


 


(p)                    The Company
and its Subsidiaries possess all licenses, permits, certificates, consents,
orders, approvals and other authorizations from, and has made all declarations
and filings with, all Governmental Authorities, presently required or necessary
to own or lease, as the case may be,


 


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and to operate their
respective properties and to carry on their respective businesses as now or
proposed to be conducted as set forth in the Final Offering Circular (“Permits”),
except where the failure to obtain such Permits would not, individually or in
the aggregate, have a Material Adverse Effect; each of the Company and its
respective Subsidiaries has fulfilled and performed all of its obligations with
respect to such Permits and no event has occurred that allows, or after notice
or lapse of time would allow, revocation or termination thereof or results, or
after notice or lapse of time would result, in any other impairment of the
rights of the holder of any such Permit; in each case except as would not
reasonably be expected to, individually or in the aggregate, have a Material
Adverse Effect; and none of the Company or its respective Subsidiaries has
received any notice of any proceeding relating to revocation or modification of
any such Permit, except as described in the Final Offering Circular or except
where such revocation or modification would not, individually or in the
aggregate, have a Material Adverse Effect.


 


(q)                    Neither the
Company nor any of its Subsidiaries owns any real property. Each of the Company
and its respective Subsidiaries has good title to all personal property owned
by it and good and marketable title to all leasehold estates in real and
personal property being leased by it and, as of the Closing Date, free and
clear of all Liens (other than Permitted Liens). All Applicable Agreements to
which the Company or any of its respective Subsidiaries is a party or by which
any of them is bound are valid and enforceable against each of the Company or
such Subsidiary, as applicable, and are valid and enforceable against the other
party or parties thereto and are in full force and effect with only such
exceptions as would not, individually or in the aggregate, have a Material
Adverse Effect.


 


(r)                       All Tax
returns required to be filed by the Company and each of the Subsidiaries have
been filed and all such returns are true, complete, and correct in all material
respects. All material Taxes that are due from the Company and its respective
Subsidiaries have been paid other than those (i) currently payable without
penalty or interest or (ii) being contested in good faith and by appropriate
proceedings and for which adequate reserves have been established in accordance
with generally accepted accounting principles of the United States,
consistently applied (“GAAP”). To the knowledge of the Company, there
are no actual or proposed Tax assessments against the Company or any of the
Subsidiaries that would, individually or in the aggregate, have a Material
Adverse Effect. The accruals and reserves on the books and records of the
Company and its respective Subsidiaries in respect of any material Tax
liability for any period not finally determined are adequate to meet any
assessments of Tax for any such period. For purposes of this Agreement, the
term “Tax” and “Taxes” shall mean all Federal, state, local and foreign taxes,
and other assessments of a similar nature (whether imposed directly or through
withholding), including any interest, additions to tax or penalties applicable
thereto.


 


(s)                     Each of the
Company and the Subsidiaries owns, or has a valid and enforceable license to
use, 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 (collectively, “Intellectual Property”) used in the
conduct of its business which, as of the Closing Date, free and clear of all
Liens, other than Permitted Liens. No claims or notices of any potential claim
have been asserted against the Company or its Subsidiaries in writing by any
party challenging the use of any such Intellectual Property by the Company or
any of the Subsidiaries, or (iii) questioning the validity or effectiveness or
enforceability of the Intellectual Property. To the knowledge of the Company,
the use of such Intellectual Property by the Company or any of the Subsidiaries
in a manner consistent with past practices does not infringe on the
Intellectual Property rights of any other person.


 


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(t)                       Except as
disclosed in the Final Offering Circular, to the best of the Company’s
knowledge, (i) material financial transactions of the Predecessor are executed
in accordance with management’s general or specific authorization, (ii)
material transactions of the Predecessor are recorded as necessary to permit
preparation of financial statements in conformity with GAAP, and to maintain
asset accountability, and (iii) access to the Predecessor’s assets is permitted
only in accordance with management’s general or specific authorization.


 


(u)                    The audited
consolidated financial statements and related notes of the Predecessor and its
subsidiaries contained in the Final Offering Circular (the “Financial
Statements”) present fairly in all material respects the financial
position, results of operations and cash flows of the Predecessor and its
consolidated subsidiaries, as of the respective dates and for the respective
periods to which they apply and have been prepared in accordance with GAAP and
the requirements of Regulation S-X of the Act. The financial data set forth
under “Summary Historical and Unaudited Pro Forma Consolidated Financial Data”
and “Selected Historical Financial Data” included in the Final Offering
Circular has been prepared on a basis consistent with that of the Financial
Statements and present fairly the financial position in all material respects
and results of operations of the Predecessor and its consolidated subsidiaries
as of the respective dates and for the respective periods indicated. The
unaudited pro forma financial information and related notes contained in the
Final Offering Circular have been prepared in accordance with the requirements
of Regulation S-X and give effect to assumptions used in the’ preparation
thereof on a reasonable basis and in good faith. All other financial,
statistical, market and industry-related data included in the Final Offering
Circular are fairly and accurately presented and are based on or derived from
sources that the Company believes to be reliable and accurate.


 


(v)                    Subsequent to
the respective dates as of which information is given in the Final Offering
Circular, except as disclosed in the Final Offering Circular, (i) none of the
Predecessor or its subsidiaries or the Company or any of its Subsidiaries has
incurred any material liabilities, direct or contingent, or has entered into
any material transactions not in the ordinary course of business, (ii) there
has not been any material decrease in the capital stock or any material
increase in long-term indebtedness or any material increase in short-term
indebtedness of the Predecessor or the Company, or any payment of or
declaration to pay any dividends or any other distribution with respect to the
Predecessor or the Company, except the distribution to the shareholders of our
Predecessor prior to consummation of the Transactions in order to reduce the
estimated net worth as calculated in accordance with the Contribution Agreement
to an amount closer to the $26.7 million target net worth, and (iii) there has
not been any material adverse change in the properties, business, prospects,
operations, earnings, assets, liabilities or condition (financial or otherwise)
of the Predecessor and its subsidiaries or the Company and the Subsidiaries in
the aggregate (each of clauses (i), (ii) and (iii), a “Material Adverse
Change”). To the knowledge of the Company, there is no event that is
reasonably likely to occur, which if it were to occur, would, individually or
in the aggregate, have a Material Adverse Effect.


 


(w)                  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 the
Company that it is considering imposing) any condition (financial or otherwise)
on the Company, retaining any rating assigned to the Company or any of the
Subsidiaries or to any securities of the Company or any of the Subsidiaries or
(ii) has indicated to the Company 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


 


8

















 


outlook for any rating of
the Company or any of the Subsidiaries or any securities of the Company or any
of the Subsidiaries.


 


(x)                      All
indebtedness represented by the Notes is being incurred for proper purposes and
in good faith. On the Closing Date, after giving pro forma effect to the
Transactions, the Company and each Guarantor (i) will have sufficient capital
for carrying on its business and (ii) will be able to pay its debts as they
mature.


 


(y)                    The Company
has not and, to its knowledge, no one acting on its behalf has, (i) taken,
directly or indirectly, any action designed to cause or to result in, or that
has constituted or that might reasonably be expected to constitute, the
stabilization or manipulation of the price of any security of the Company to
facilitate the sale or resale of any of the Notes, (ii) sold, bid for,
purchased or paid anyone any compensation for soliciting purchases of any of
the Notes or (iii) except as disclosed in the Final Offering Circular, paid or
agreed to pay to any person any compensation for soliciting another to purchase
any other securities of the Company; provided, that no representation is made
in this subsection with respect to the actions of the Initial Purchaser.


 


(z)                      Without
limiting any provision herein, no registration under the Act and no
qualification of the Indenture under the TIA is required for the sale of the
Notes to the Initial Purchaser as contemplated hereby or for the Exempt
Resales, assuming (i) that the purchasers in the Exempt Resales are QIBs or
Accredited Investors or non-U.S. persons (as defined under Regulation S of the
Act) and (ii) the accuracy of the Initial Purchaser’s representations contained
herein.


 


(aa)               The Notes are
eligible for resale pursuant to Rule 144A under the Act and no other securities
of the Company are of the same class (within the meaning of Rule 144A under the
Act) as the Notes and listed on a national securities exchange registered under
Section 6 of the Securities Exchange Act of 1934, as amended (the “Exchange
Act”), or quoted in a U.S. automated inter-dealer quotation system. No
securities of the Company of the same class as the Notes have been offered,
issued or sold by the Company or any of its respective Affiliates within the
six-month period immediately prior to the date hereof.


 


(bb)             Neither of the
Company nor any of its Affiliates or other person acting on behalf of the
Company has offered or sold the Notes by means of any general solicitation or
general advertising within the meaning of Rule 502(c) under the Act or, with
respect to Notes sold outside the United States to non-U.S. persons (as defined
in Rule 902 under the Act), by means of any directed selling efforts within the
meaning of Rule 902 under the Act, and the Company, any Affiliate of the
Company and any person acting on behalf of the Company have complied with and
will implement the “offering restrictions” within the meaning of such Rule 902;
provided, that no representation is made in this subsection with respect
to the actions of the Initial Purchaser.


 


(cc)               With respect to
each employee benefit plan (as defined in Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended (“ERISA”)) and each
other employee benefit plan, program, policy or arrangement (“Benefit Plans”)
maintained, sponsored or contributed to by the Company, the Subsidiaries or any
entity that would be deemed a “single employer” with the Company or any
Subsidiary under Section 414(b), (c), (m) or (o) of the Code or Section 4001 of
ERISA (an “ERISA Affiliate”), no condition exists or event or
transaction has occurred in connection with any Benefit Plan that could result
in the Company or any ERISA Affiliate incurring any liability, fine or penalty
that could individually or in the aggregate have a Material Adverse Effect.
None of the Company, any Subsidiary, any ERISA Affiliate or any of their
respective predecessors has ever contributed to, contributes to, has ever been
required to


 


9

















 


contribute to, or
otherwise participated in or participates in or in any way, directly or
indirectly, has any liability with respect to any plan subject to Section 412
of the Code, Section 302 of ERISA or Title IV of ERISA, including, without limitation,
any “multiemployer plan” (within the meaning of Sections 3(37) or 4001(a)(3) of
ERISA or Section 414(f) of the Code) or any single employer pension plan
(within the meaning of Section 4001(a)(15) of ERISA) which is subject to
Sections 4063,4064 and 4069 of ERISA.


 


(dd)             (i) Neither the
Company nor any of the Subsidiaries is party to or bound by any collective
bargaining agreement with any labor organization; (ii) none of the employees of
the Company or any Subsidiary is represented by a labor union, and, to the
knowledge of the Company, no petition has been filed, nor has any proceeding
been instituted by any employee or group of employees with any labor relations
board or commission seeking recognition of a collective bargaining
representative; (iii) to the knowledge of the Company, (a) there is no
organizational effort currently being made or threatened by or on behalf of any
labor organization or trade union to organize any employees of the Company or
any Subsidiary, and (b) no demand for recognition of any employees of the
Company or any Subsidiary has been made by or on behalf of any labor
organization or trade union; (iv) no labor strike, work stoppage, slowdown or
other material labor dispute is pending against the Company or the
Subsidiaries, or, to the knowledge of the Company after reasonable inquiry,
threatened against the Company or the Subsidiaries; (v) the Company and any
Subsidiary has paid or made provision for payment of all salaries, wages, and
vacation pay accrued through the Closing Date, are in compliance in all
material respects with (a) all federal and state laws respecting employment and
employment practices, terms and conditions of employment, collective
bargaining, immigration, wages, hours and benefits, non-discrimination in employment,
workers compensation, the collection and payment of withholding and/or payroll
taxes and similar taxes (except for non-compliance which, individually or in
the aggregate, would not have a Material Adverse Effect); (vi) to the knowledge
of the Company after reasonable inquiry, there is no threatened or pending
liability against the Company or the Subsidiaries pursuant to the Worker
Adjustment Retraining and Notification Act of 1988, as amended (“WARN”),
or any similar state or local law; (vii) there is no employment-related charge,
complaint, grievance, investigation, unfair labor practice claim or inquiry of
any kind pending against the Company or the Subsidiaries that could,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect; (viii) to the knowledge of the Company after reasonable
inquiry, no employee or agent of the Company or the Subsidiaries has committed
any act or omission giving rise to liability for any violation identified in
subsection (vi) and (vii) above, other than such acts or omissions that would
not, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect; and (ix) no term or condition of employment exists
through arbitration awards, settlement agreements, or side agreement that is
contrary to the express terms of any applicable collective bargaining
agreement.


 


(ee)               None of the
transactions contemplated in the Offering Documents or the application of the
proceeds by the Company or any of the Subsidiaries of the proceeds of the Notes
will violate or result in a violation of Section 7 of the Exchange Act
(including, without limitation, 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).


 


(ff)                   Neither the
Company nor any of the Subsidiaries is an open-end investment company, unit
investment trust or face-amount certificate company that is or is required to
be registered under Section 8 of the United States Investment Company Act of
1940 (the “Investment Company Act”); and neither the Company nor any of
the Subsidiaries, after giving effect to the Offering


 


10

















 


and sale of the Notes and
the application of the proceeds thereof as described in the Final Offering
Circular, will be an “investment company” as defined in the Investment Company
Act.


 


(gg)             The Company has not
engaged any broker, finder, commission agent or other person (other than the
Initial Purchaser) in connection with the Offering or any of the transactions
contemplated in the Offering Documents, and the Company is not under any
obligation to pay any broker’s fee or commission in connection with such
transactions (other than commissions or fees to the Initial Purchaser).


 


(hh)             Each of the Company
and the Subsidiaries (i) is in compliance with any and all applicable foreign,
federal, state and local laws and regulations relating to health and safety, or
the pollution or the protection of the environment or hazardous or toxic
substances, wastes, pollutants or contaminants (collectively and individually,
“Environmental Laws”), (ii) has received and is in compliance with all
permits, licenses or other approvals required of them under applicable
Environmental Laws to conduct its respective businesses and (iii) has not
received notice of, and does not have knowledge of, any actual or potential
liability for damages to natural resources or the investigation or remediation
of any disposal, release or existence of hazardous or toxic substances or
wastes, pollutants or contaminants, in each case, except where such
non-compliance with Environmental Laws, failure to receive and comply with
required permits, licenses or other approvals, or liability would not, individually
or in the aggregate, have a Material Adverse Effect, whether or not arising
from transactions in the ordinary course of business. Neither the Company nor
any of the Subsidiaries has been named as a “potentially responsible party”
under the Comprehensive Environmental Response, Compensation, and Liability Act
of 1980, as amended or any similar state or local laws or regulations, or is
required under any foreign Environmental Laws to investigate or remediate any
pollutants or contaminates, except where such requirement would not,
individually or in the aggregate, have a Material Adverse Effect, whether or
not arising from transactions in the ordinary course of business. None of the
transactions contemplated by this Agreement will trigger any filing requirement
or other action under the New Jersey Industrial Site Recovery Act (N.J.A.C.
§7:26B, et. seq.), as amended, or any rules or regulations
promulgated thereunder.


 


(ii)                     Except as
described in the Final Offering Circular, as of the Closing Date, there will be
no encumbrances or restrictions on the ability of any Subsidiary of the Company
(x) to pay dividends or make other distributions on such Subsidiary’s capital
stock or to pay any indebtedness to the Company or any other Subsidiary of the
Company, (y) to make loans or advances or pay any indebtedness to, or
investments in, the Company or any other Subsidiary of the Company or (z) to
transfer any of its property or assets to the Company or any other Subsidiary
of the Company.


 


(jj)                     (A) Each of
the Collateral Agreements creates a valid and enforceable security interest in
favor of the Collateral Agent for the benefit of the Secured Parties in those
types of Collateral (as defined in the Security Agreement) in which a security
interest may be created under Article 8 or Article 9 of the Uniform Commercial
Code as in effect in the State of New York (the “New York UCC”) (such
Collateral, the “Article 8 Collateral” or the “Article 9 Collateral,”
as appropriate).


 


(B)                   When Uniform
Commercial Code financing statements naming each of the Company and each
Domestic Restricted Subsidiary as debtor and the Collateral Agent as secured
party are completed in appropriate form for filing and duly filed in the filing
offices in the States identified in Schedule I hereto opposite the name of the
Company or such Domestic Restricted Subsidiary, as the case may be, all


 


11

















 


security interests in all
Article 9 Collateral which can be perfected under the Uniform Commercial Code
as in effect in such State by the filing of a financing statement in such State
will be perfected. No further action will be required in order to perfect such
security interests. To our knowledge, no mortgage, recording, registration,
stamp or other similar tax or fee will be due upon the execution, delivery,
recordation, filing or performance, as the case may be, of any financing
statements referred to in this clause (B), except nominal filing fees.


 


(C)                   Upon delivery
to, and the continued possession by, HSBC, as representative (as defined in
Section 1-201(35) of the New York UCC) for the Secured Parties and the Lender
(in such capacity, the “Control Collateral Sub-Agent”), in the State of New
York of the certificates evidencing all of the shares of pledged Equity
Interests (as defined in the Security Agreement) (the “Pledged Shares”),
together with stock powers or other powers of transfer executed in blank and
assuming the Control Collateral Sub-Agent has no notice of any adverse claim to
the Pledged Shares, the Control Collateral Sub-Agent will have the status of a
“protected purchaser” with respect to the Pledged Shares under (and as defined
in) Section 8-303(a) of the NY UCC.


 


(D)                  Upon the
crediting of any financial assets (as defined in the New York UCC) to a Securities
Account (as defined in the Security Agreement) that is the subject of a
Securities Account Control Agreement that has been executed and delivered by
the Company or the applicable Domestic Restricted Subsidiary, as the case may
be, the securities intermediary identified therein and the Collateral Agent,
the Collateral Agent for the benefit of the Secured Parties (as defined in the
Security Agreement) will have “control” (as defined in Section 8-106 of the New
York UCC) over such Securities Account and in the financial assets contained
therein, and the security interest in such Securities Account and financial
assets will be perfected. No recordation or filing need be made, and no other
action need be taken, in order to perfect the Collateral Agent’s security
interest in such Securities Account or such financial assets.


 


(E)                    Upon the
execution and delivery of each Control Agreement relating to any Deposit
Account (as defined in the Security Agreement) of the Company or any Domestic
Restricted Subsidiary by the Company or such Domestic Restricted Subsidiary, as
the case may be, the depositary identified therein and the Collateral Agent,
the Collateral Agent for the benefit of the Secured Parties (as defined in the
Security Agreement) will have “control” (as defined in Section 9-104(a) of the
New York UCC) over such Deposit Account and all cash, checks, drafts, notes,
bills of exchange, money orders and other like instruments held therein, and
the security interest in such Deposit Account will be perfected. No recordation
or filing need be made, and no other action need be taken, in order to perfect
the Collateral Agent’s security interest in such Deposit Accounts.


 


(F)                    As of the
Closing Date and immediately following the Closing, except with respect to Permitted
Liens, there will be no currently effective financing statement, security
agreement, chattel mortgage, real estate mortgage or other document filed or
recorded with any filing records, registry, or other public office, that
purports to cover, affect or give notice of any present or possible future Lien
on, or security interest in, any assets or property of the Company or


 


12

















 


any Domestic Restricted
Subsidiary or any rights thereunder.


 


(kk)               Each certificate
signed by any officer of the Company, or any Subsidiary thereof, delivered to
the Initial Purchaser shall be deemed a representation and warranty by the
Company or any such Subsidiary thereof (and not individually by such officer)
to the Initial Purchaser with respect to the matters covered thereby.


 


(ll)                     Each of the
Company and each of its respective Subsidiaries are insured by insurers of
recognized financial responsibility against such losses and risks and in such
amounts as are prudent and customary in the businesses in which they are
engaged. All policies of insurance insuring the Company or any of its
respective Subsidiaries or their respective businesses, assets, employees,
officers and directors are in full force and effect. The Company and the
Subsidiaries are in compliance with the terms of such policies and instruments
in all material respects, and there are no claims by the Company or any of the
Subsidiaries under any such policy or instrument as to which any insurance
company is denying liability or defending under a reservation of rights clause.
Neither the Company nor any such Subsidiary has been refused any insurance
coverage sought or applied for, and neither the Company nor any such Subsidiary
has any reason to believe that it will not be able to renew its existing
insurance coverage as and when such coverage expires or to obtain similar
coverage from similar insurers as may be necessary to continue its business at
a cost that would not, individually or in the aggregate, have a Material
Adverse Effect.


 


(mm)         Set forth on Schedule
II hereto is a list of all Indebtedness that is to be paid down using the
proceeds of the Offering as of the close of business on the date hereof.


 


(nn)             The Predecessor has
been duly incorporated, is validly existing and is in good standing under the
laws of Delaware. The Contribution Agreement has been duly and validly
authorized by the Predecessor and the Company. When executed and delivered by
the Predecessor and the Company, the Contribution Agreement will constitute a
legal, valid and binding obligation of each of the Predecessor and the Company,
enforceable against each of the Predecessor and the Company in accordance with
its terms. The assets contributed pursuant to the Contribution Agreement
constitute substantially all of the assets of the Predecessor as reflected on
the Balance Sheet of the Predecessor as of December 31, 2004 included in the
Final Offering Circular.


 


5.         Covenants of the
Company and the Guarantors. Each of the Company and the Guarantors jointly
and severally agrees:


 


(a)                     At any time
prior to the date of the completion of the resale of the Notes by the Initial
Purchaser, to (i) advise the Initial Purchaser promptly after obtaining
knowledge (and, if requested by the Initial Purchaser, confirm such advice in
writing) of (A) the issuance by any state securities commission of any stop
order suspending the qualification or exemption from qualification of any of
the Notes for offer or sale in any jurisdiction, or the initiation of any
proceeding for such purpose by any state securities commission or other
regulatory authority, or (B) the happening of any event that makes any
statement of a material fact made in the Final Offering Circular untrue or that
requires the making of any additions to or changes in the Final Offering
Circular in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading, (ii) use its
commercially reasonable efforts to prevent the issuance of any stop order or
order suspending the qualification or exemption from qualification of any of
the Notes under any state securities or Blue Sky laws, and (iii) if, at any
time, any state securities commission or other regulatory authority shall issue
an order suspending the qualification or exemption from


 


13

















 


qualification of any of
the Notes under any such laws, use its commercially reasonable efforts to
obtain the withdrawal or lifting of such order at the earliest possible time.


 


(b)                    To (i) furnish
the Initial Purchaser, without charge, as many copies of the Final Offering
Circular, and any amendments or supplements thereto, as the Initial Purchaser
may reasonably request, and (ii) promptly prepare, upon the Initial Purchaser’s
reasonable request, any amendment or supplement to the Offering Circular that
the Initial Purchaser, upon written advice of legal counsel, determines may be
necessary in connection with Exempt Resales (and the Company hereby consents to
the use of the Preliminary Offering Circular and the Final Offering Circular,
and any amendments and supplements thereto, by the Initial Purchaser in
connection with Exempt Resales).


 


(c)                     Not to amend
or supplement the Offering Circular prior to the Closing Date, or at any time prior
to the completion of the resale by the Initial Purchaser of all the Notes
purchased by the Initial Purchaser, unless the Initial Purchaser shall
previously have been advised thereof and shall have provided its written
consent thereto.


 


(d)                    Until the date
upon which the Initial Purchaser shall have completed the resale of the Notes,
(i) if any event shall occur as a result of which, in the reasonable judgment
of the Company or the Initial Purchaser, it becomes necessary or advisable to
amend or supplement the Final Offering Circular 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 to amend or supplement the Final Offering
Circular to comply with Applicable Law, to prepare, at the expense of the
Company, an appropriate amendment or supplement to the Final Offering Circular
(in form and substance reasonably satisfactory to the Initial Purchaser) so
that (A) as so amended or supplemented, the Final Offering Circular will not
include an untrue statement of material fact or omit to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading, and (B) the Final
Offering Circular will comply with Applicable Law and (ii) if, in the
reasonable judgment of the Company, it becomes necessary or advisable to amend
or supplement the Final Offering Circular so that the Final Offering Circular
will contain all of the information specified in, and meet the requirements of,
Rule 144A(d)(4) of the Act, to prepare an appropriate amendment or supplement
to the Final Offering Circular (in form and substance reasonably satisfactory
to the Initial Purchaser) so that the Final Offering Circular, as so amended or
supplemented, will contain the information specified in, and meet the
requirements of, such Rule.


 


(e)                     To cooperate
with the Initial Purchaser and the Initial Purchaser’s counsel in connection
with the qualification of the Notes under the securities or Blue Sky laws of
such jurisdictions as the Initial Purchaser may reasonably request and continue
such qualification in effect so long as reasonably required for Exempt Resales.


 


(f)                       Upon
consummation of the Offering and the transactions contemplated under the
Offering Documents, each of the Company and the Guarantors jointly and
severally agree to pay (i) all costs, expenses, fees and taxes incident to and
in connection with: (A) the preparation, printing and distribution of the
Preliminary Offering Circular and the Final Offering Circular and all
amendments and supplements thereto (including, without limitation, financial
statements and exhibits), and all other agreements, memoranda, correspondence
and other documents prepared and delivered in connection herewith, (B) the
negotiation, printing, processing and distribution (including, without
limitation, word processing and duplication costs) and delivery of, each of the
Offering Documents, (C) the preparation, issuance and delivery of the Notes,
(D) the qualification


 


14

















 


of the Notes for offer
and sale under the securities or Blue Sky laws of the several states
(including, without limitation, the fees and disbursements of the Initial
Purchaser’s counsel relating to such registration or qualification) and (E)
furnishing such copies of the Preliminary Offering Circular and the Final
Offering Circular, and all amendments and supplements thereto, as may
reasonably be requested for use by the Initial Purchaser, (ii) all reasonable
fees and expenses of the counsel, accountants and any other experts or advisors
retained by the Company, (iii) all expenses and listing fees in connection with
the application for quotation of the Notes on the Private Offerings, Resales
and Trading Automated Linkages (“PORTAL”) market, (iv) all fees and
expenses (including reasonable fees and expenses of counsel) of the Company in
connection with approval of the Notes by DTC for “book-entry” transfer, (v) all
fees charged by rating agencies in connection with the rating of the Notes,
(vi) all fees and expenses (including reasonable fees and expenses of counsel)
of the Trustee and all collateral agents, (vii) all costs and expenses in
connection with the creation and perfection of the security interest in the
Collateral (including without limitation, filing and recording fees, search
fees, taxes and costs of title policies) and (viii) all reasonable fees,
disbursements and out-of-pocket expenses incurred by the Initial Purchaser in
connection with its services to be rendered hereunder including, without
limitation, the reasonable fees, expenses and disbursements and charges of
Proskauer Rose LLP, counsel to the Initial Purchaser, travel and lodging
expenses, word processing charges, messenger and duplicating services,
facsimile expenses and other customary expenditures, it being understood that
no amounts will be due and payable by the Company pursuant to this Agreement
unless and until the Offering is consummated.


 


(g)                    To use the
proceeds of the Offering in the manner described in the Final Offering Circular
under the caption “Use of Proceeds.”


 


(h)                    To do and
perform all things required to be done and performed under the Offering
Documents prior to and after the Closing Date.


 


(i)                        Not to, and
to ensure that no affiliate (as defined in Rule 501(b) of the Act) of the
Company will, 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 Notes in a manner that would require the
registration under the Act of the sale to the Initial Purchaser or to the
Subsequent Purchasers of the Notes.


 


(j)                        For so
long as any of the Notes remain outstanding, during any period in which the
Company is not subject to Section 13 or 15(d) of the Exchange Act, to make
available, upon request, to any owner of the Notes in connection with any sale
thereof and any prospective Subsequent Purchasers of such Notes from such
owner, the information required by Rule 144A(d)(4) under the Act.


 


(k)                     To comply
with the representation letter of the Company to DTC relating to the approval
of the Notes by DTC for “book entry” transfer.


 


(l)                        To use its
commercially reasonable efforts to effect the inclusion of the Notes in Private
Offerings, Resales and Trading through Automated Linkages Market.


 


(m)                  For so long as
any of the Notes remain outstanding, the Company will furnish to the Initial
Purchaser copies of all reports and other communications (financial or
otherwise) furnished by the Company to the Trustee or to the holders of the
Notes and, as soon as available, copies of any


 


15

















 


reports or financial
statements furnished to or filed by the Company with the SEC or any national securities
exchange on which any class of securities of the Company may be listed.


 


(n)                    Except in
connection with the Exchange Offer or the filing of the Shelf Registration
Statement, not to, and not to authorize or permit any person acting on its
behalf to, (i) distribute any offering material in connection with the offer
and sale of the Notes other than the Preliminary Offering Circular and the
Final Offering Circular and any amendments and supplements to the Final
Offering Circular prepared in compliance with this Agreement, or (ii) solicit
any offer to buy or offer to sell the Notes by means of any form of general
solicitation or general advertising (including, without limitation, as such
terms are used in Regulation D under the Act) or in any manner involving a
public offering within the meaning of Section 4(2) of the Act.


 


(o)                    During the
two-year period after the Closing Date (or such shorter period as may be
provided for in Rule 144(k) under the Act, as the same may be in effect from
time to time), to not, and to not permit any current or future Subsidiaries of
either the Company or any other affiliates (as defined in Rule 144A under the
Act) controlled by the Company to, resell any of the Notes that constitute
“restricted securities” under Rule 144 that have been reacquired by the
Company, any current or future Subsidiaries or any other “affiliates” (as
defined in Rule 144A under the Act) controlled by the Company, except pursuant
to an effective registration statement under the Act.


 


(p)                    The Company
shall pay all stamp, documentary and transfer taxes and other duties, if any,
which may be imposed by the United States or any political subdivision thereof
or taxing authority thereof or therein with respect to the issuance of the
Notes or the sale thereof to the Initial Purchaser.


 


(q)                    To use their
commercially reasonable efforts to complete on or prior to the Closing Date all
filings and other similar actions required in connection with the perfection of
security interests as and to the extent contemplated by the Collateral
Agreements.


 


(r)                       To cause
each of the Guarantors to execute counterparts of this Agreement in the form
attached as Exhibit C hereto.


 


6.         Representations and
Warranties of the Initial Purchaser. The Initial Purchaser represents
and warrants that:


 


(a)                     It is a QIB
as defined in Rule 144A under the Act and it will offer the Notes for resale
only upon the terms and conditions set forth in this Agreement and in the Final
Offering Circular.


 


(b)                    It is not
acquiring the Notes with a view to any distribution thereof that would violate
the Act or the securities laws of any state of the United States or any other
applicable jurisdiction. In connection with the Exempt Resales, it will solicit
offers to buy the Notes only from, and will offer and sell the Notes only to,
(A) persons reasonably believed by the Initial Purchaser to be QIBs or (B)
persons reasonably believed by the Initial Purchaser to be Accredited Investors
or (C) non-U.S. persons reasonably believed by the Initial Purchaser to be a
purchaser referred to in Regulation S under the Act; provided, however,
that in purchasing such Notes, such persons are deemed to have represented and
agreed as provided under the caption “Notice
to Investors” contained in the Final Offering Circular.


 


(c)                     No form of
general solicitation or general advertising in violation of the Act has been or
will be used nor will any offers in any manner involving a public offering
within the meaning of Section 4(2) of the Act or, with respect to Notes to be
sold in reliance on Regulation S, by means of any


 


16

















 


directed selling efforts
be made by such Initial Purchaser or any of its representatives in connection
with the offer and sale of any of the Notes.


 


(d)                    The Initial
Purchaser will deliver to each Subsequent Purchaser of the Notes, in connection
with its original distribution of the Notes, a copy of the Final Offering
Circular, as amended and supplemented at the date of such delivery.


 


7.         Conditions.
The obligations of the Initial Purchaser to purchase the Notes under this
Agreement are subject to the performance by each of the Company and the
Guarantors of their respective covenants and obligations hereunder and the
satisfaction of each of the following conditions:


 


(a)                     All the
representations and warranties of the Company and the Guarantors contained in
this Agreement and in each of the Offering Documents shall be true and correct
in all material respects as of the date hereof and at the Closing Date. On or
prior to the Closing Date, the Company and each other party to the Offering
Documents (other than the Initial Purchaser) shall have performed or complied
with all of the agreements and satisfied all conditions on their respective
parts to be performed, complied with or satisfied pursuant to the Offering
Documents (other than conditions to be satisfied by such other parties, which
the failure to so satisfy would not, individually or in the aggregate, have a
Material Adverse Effect).


 


(b)                    No injunction,
restraining order or order of any nature by a Governmental Authority shall have
been issued as of the Closing Date that would prevent or materially interfere
with the consummation of the Offering or any of the transactions contemplated
under the Offering Documents; and no stop order suspending the qualification or
exemption from qualification of any of the Notes in any jurisdiction shall have
been issued and no Proceeding for that purpose shall have been commenced or, to
the knowledge of the Company after reasonable inquiry, be pending or
contemplated as of the Closing Date.


 


(c)                     No action
shall have been taken and no Applicable Law shall have been enacted, adopted or
issued that would, as of the Closing Date, prevent the consummation of the
Offering or any of the transactions contemplated under the Offering Documents.
No Proceeding shall be pending or, to the knowledge of the Company, threatened
other than Proceedings that (A) if adversely determined would not, individually
or in the aggregate, adversely affect the issuance or marketability of the
Notes, and (B) would not, individually or in the aggregate, have a Material
Adverse Effect.


 


(d)                    Subsequent to
the respective dates as of which data and information is given in the Final
Offering Circular, there shall not have been any Material Adverse Change.


 


(e)                     The Notes
shall have been designated PORTAL securities in accordance with the rules and
regulations adopted by the National Association of Securities Dealers, Inc.
relating to trading in The PORTAL Market.


 


(f)                       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 Company or any
securities of the Company (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


 


17

















 


any change, nor shall any
notice have been given of any potential or intended change, in the outlook for
any rating of the Company or any securities of the Company by 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.


 


(g)                    The Initial
Purchaser shall have received on the Closing Date:


 


(i)                       certificates
dated the Closing Date, signed by (1) the Chief Executive Officer and (2) the
principal financial or accounting officer of the Company, on behalf of the
Company, to the effect that (a) the representations and warranties set forth in
Section 4 hereof, in each of the Offering Documents are true and correct in all
material respects with the same force and effect as though expressly made at
the Closing Date, (b) the Company has performed and complied with all
agreements and satisfied all conditions in all material respects on its part to
be performed or satisfied at or prior to the Closing Date, (c) at the Closing
Date, since the date hereof or since the date of the most recent financial
statements in the Final Offering Circular (exclusive of any amendment or
supplement thereto after the date hereof), no event or events have occurred, no
information has become known nor does any condition exist that, individually or
in the aggregate, would have a Material Adverse Effect, (d) since the date of
the most recent financial statements in the Final Offering Circular (exclusive
of any amendment or supplement thereto after the date hereof), other than as
described in the Final Offering Circular or contemplated hereby, none of the
Predecessor or its subsidiaries or the Company or any Subsidiary of the Company
has incurred any liabilities or obligations, direct or contingent, not in the
ordinary course of business, that are material to the Company and the
Subsidiaries, taken as a whole, or entered into any transactions not in the ordinary
course of business that are material to the business, condition (financial or
otherwise) or results of operations or prospects of the Company and the
Subsidiaries, taken as a whole, and there has not been any change in the
capital stock or equity interest, as applicable, or long-term indebtedness of
the Predecessor or its subsidiaries or the Company or any Subsidiary of the
Company that is material to the business, condition (financial or otherwise) or
results of operations or prospects of the Company and the Subsidiaries, taken
as a whole, and (e) the sale of the Notes has not been enjoined (temporarily or
permanently);.


 


(ii)                    a certificate,
dated the Closing Date, executed by the Secretary of the Company and each
Guarantor, certifying such matters as the Initial Purchaser may reasonably
request;


 


(iii)                 a solvency
opinion, dated the Closing Date, in form reasonably satisfactory to the Initial
Purchaser covering such matters as are customarily covered in such opinions;


 


(iv)                the opinion of
Schulte Roth & Zabel LLP, counsel to the Company, dated the Closing Date,
in the form of Exhibit A attached hereto;


 


(v)                   the opinion of
Kronish Lieb Weiner & Hellman LLP, counsel to the Predecessor, dated the
Closing Date, in the form of Exhibit B attached hereto; and


 


(vi)                an opinion, dated
the Closing Date, of Proskauer Rose LLP, counsel to the Initial Purchaser, in
form satisfactory to the Initial Purchaser covering such matters as are
customarily covered in such opinions.


 


(h)                    The Initial
Purchaser shall have received from Berenson LLP, independent auditors, with
respect to the Predecessor and the Company, (A) a customary comfort letter,
dated the date of the Final


 


18

















 


Offering Circular, in
form and substance reasonably satisfactory to the Initial Purchaser and its
counsel, with respect to the financial statements and certain financial
information contained in the Final Offering Circular, and (B) a customary
comfort letter, dated the Closing Date, in form and substance reasonably
satisfactory to the Initial Purchaser and its counsel, to the effect that
Berenson LLP reaffirms the statements made in its letter furnished pursuant to
clause (A).


 


(i)                        Each of
the Offering Documents shall have been executed and delivered by all parties
thereto, and the Initial Purchaser shall have received a fully executed
original of each Document.


 


(j)                        The
Initial Purchaser shall have received copies of all opinions, certificates,
letters and other documents delivered under or in connection with the Offering
or any transaction contemplated in the Offering Documents.


 


(k)                     The terms of
each Document shall conform in all material respects to the description thereof
in the Final Offering Circular.


 


(l)                        The
Collateral Agent shall have received (with a copy for the Initial Purchaser) on
the Closing Date:


 


(i)                       appropriately
completed copies of Uniform Commercial Code financing statements naming the
Company and each Guarantor as a debtor and the Collateral Agent as the secured
party, or other similar instruments or documents to be filed under the UCC of
all jurisdictions as may be necessary or, in the reasonable opinion of the
Collateral Agent and its counsel, desirable to perfect the security interests
of the Collateral Agent pursuant to the Security Agreement;


 


(ii)                    appropriately
completed copies of Uniform Commercial Code Form UCC 3 termination statements,
if any, necessary to release all Liens (other than Permitted Liens) of any
Person in any collateral described in any Security Agreement previously granted
by any Person;


 


(iii)                 certified copies
of Uniform Commercial Code Requests for Information or Copies (Form UCC 11), or
a similar search report certified by a party acceptable to the Collateral
Agent, dated a date reasonably near to the Closing Date, listing all effective
financing statements which name the Company or any Guarantor (under its present
name and any previous names) as the debtor, together with copies of such
financing statements (none of which shall cover any collateral described in any
Collateral Agreement, other than such financing statements that evidence
Permitted Liens);


 


(iv)                such other
approvals, opinions, or documents as the Collateral Agent may reasonably
request in form and substance reasonably satisfactory to the Collateral Agent;
and


 


(v)                   the Collateral
Agent and its counsel shall be satisfied that (i) the Lien granted to the
Collateral Agent, for the benefit of the Secured Parties in the collateral
described above is of the priority described in the Final Offering Circular; and
(ii) no Lien exists on any of the collateral described above other than the
Lien created in favor of the Collateral Agent, for the benefit of the Secured
Parties, pursuant to a Collateral Agreement, in each case subject to the
Permitted Liens.


 


(m)                  Provision shall
have been made for the filing of all Uniform Commercial Code financing
statements or other similar financing statements and Uniform Commercial Code
Form UCC-3


 


19

















 


termination statements
required pursuant to clauses (1)(i) and (ii) above reasonably
acceptable to the Collateral Agent.


 


(n)                    The Initial
Purchaser shall have received written evidence (including the execution of the
Contribution Agreement), reasonably satisfactory to the Initial Purchaser, that
the Asset Contribution has been consummated as described under the section of
the Offering Circular entitled “The
Acquisition Transactions.”


 


(o)                    The Initial
Purchaser shall have received written evidence, reasonably satisfactory to the
Initial Purchaser, that the Equity Investment has been consummated as described
under the section of the Offering Circular entitled “The Acquisition Transactions.”


 


(p)                    The Company
and the Guarantors shall have entered into the Credit Agreement as described
under the section of the Offering Circular entitled “Certain Indebtedness.”


 


(r)                       Each of the
Subsidiaries shall have executed counterparts of this Agreement in the form
attached as Exhibit C hereto and delivered copies of such executed
counterparts to the Initial Purchaser.


 


8.                         Indemnification
and Contribution.


 


(a)                     Each of the
Company and the Guarantors jointly and severally agree to indemnify and hold
harmless the Initial Purchaser, and each person, if any, who controls the
Initial Purchaser within the meaning of Section 15 of the Act or Section 20 of
the Exchange Act, against any losses, claims, damages or liabilities of any
kind to which the Initial Purchaser or such controlling person may become
subject under the Act, the Exchange Act or otherwise, insofar as any such
losses, claims, damages or liabilities (or actions in respect thereof) arise
out of or are based upon:


 


(i)                       any untrue
statement or alleged untrue statement of any material fact contained in any
Offering Circular or any amendment or supplement thereto;


 


(ii)                    the omission
or alleged omission to state, in any Offering Circular or any amendment or
supplement thereto, a 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; or


 


(iii)                 any breach by the
Company or any of the Guarantors of their respective representations,
warranties and agreements set forth herein;


 


and, subject to the
provisions hereof, will reimburse, as incurred, the Initial Purchaser and each
such controlling person for any legal or other expenses reasonably incurred by
the Initial Purchaser or such controlling person in connection with
investigating, defending against or appearing as a third-party witness in
connection with any such loss, claim, damage, liability or action in respect
thereof; provided, however, that the Company and the Guarantors
will not be liable in any such case to the extent (but only to the extent) that
any such loss, claim, damage or liability is finally judicially determined by a
court of competent jurisdiction in a final, unappealable judgment, to have
resulted solely from any untrue statement or alleged untrue statement or
omission or alleged omission made in any Offering Circular or any amendment or
supplement thereto in reliance upon and in conformity with written information
concerning the Initial Purchaser furnished to the Company by the Initial
Purchaser specifically for use therein. This indemnity agreement will be in
addition to any liability that the Company and the Guarantors may otherwise
have to the indemnified parties. The Company and the Guarantors


 


20

















 


shall not be liable under
this Section 8 for any settlement of any claim or action effected without their
prior written consent, which shall not be unreasonably withheld; and provided further, however,
that this indemnity, as to the Preliminary Offering Circular, shall not inure
to the benefit of the Initial Purchaser (or any person controlling such Initial
Purchaser) on account of any loss, claim, damage or liability arising from the
sale of Notes to any person by such Initial Purchaser if such Initial Purchaser
failed to send or give a copy of the Final Offering Circular (as the same may
be supplemented or amended) to such person at or prior to the written
confirmation of the sale of the Notes to such person, and the untrue statement
or alleged untrue statement or omission or alleged omission of a material fact
in such Preliminary Offering Circular was corrected in the Final Offering
Circular, unless such failure resulted from noncompliance by the Company with
Section 5(b).


 


(b)                    The Initial
Purchaser agrees to indemnify and hold harmless each of the Company, the
Guarantors and their respective directors, officers and each person, if any,
who controls the Company or the Guarantors within the meaning of Section 15 of
the Act or Section 20 of the Exchange Act against any losses, claims, damages
or liabilities to which the Company, the Guarantors or any such director,
officer or controlling person may become subject under the Act, the Exchange
Act or otherwise, insofar as such losses, claims, damages or liabilities (or
actions in respect thereof) are finally judicially determined by a court of
competent jurisdiction in a final, unappealable judgment, to have resulted
solely from (i) any untrue statement or alleged untrue statement of any
material fact contained in any Offering Circular or any amendment or supplement
thereto or (ii) the omission or the alleged omission to state therein a
material fact required to be stated in any Offering Circular or any amendment
or supplement thereto or necessary to make the statements therein not
misleading, in each case to the extent (but only to the extent) that such untrue
statement or alleged untrue statement or omission or alleged omission was made
in reliance upon and in conformity with written information concerning such
Initial Purchaser, furnished to the Company or its agents by the Initial
Purchaser specifically for use therein; and, subject to the limitation set
forth immediately preceding this clause, will reimburse, as incurred, any legal
or other expenses incurred by the Company, each of the Guarantors or any such
director, officer or controlling person in connection with any such loss,
claim, damage, liability or action in respect thereof. This indemnity agreement
will be in addition to any liability that the Initial Purchaser may otherwise
have to the indemnified parties.


 


(c)                     As promptly
as reasonably practicable after receipt by an indemnified party under this
Section 8 of notice of the commencement of any action for which such
indemnified party is entitled to indemnification under this Section 8, such
indemnified party will, if a claim in respect thereof is to be made against the
indemnifying party under this Section 8, notify the indemnifying party of the
commencement thereof in writing; but the omission to so notify the indemnifying
party (i) will not relieve such indemnifying party from any liability under paragraph
(a) or (b) above unless and only to the extent it is materially prejudiced as a
result thereof and (ii) will not, in any event, relieve the indemnifying party
from any obligations to any indemnified party other than the indemnification
obligation provided in paragraphs (a) and (b) above. In case any such action is
brought against any indemnified party, and it notifies the indemnifying party
of the commencement thereof, the indemnifying party will be entitled to
participate therein and, to the extent that it may determine, jointly with any
other indemnifying party similarly notified, to assume the defense thereof,
with counsel reasonably satisfactory to such indemnified party; provided,
however, that if (i) the use of counsel chosen by the indemnifying party
to represent the indemnified party would present such counsel with a conflict
of interest, (ii) the defendants in any such action include both the
indemnified party and the indemnifying party, and the indemnified party shall
have been advised by counsel in writing that there may be one or more legal
defenses


 


21

















 


available to it and/or
other indemnified parties that are different from or additional to those
available to the indemnifying party, or (iii) the indemnifying party shall not
have employed counsel reasonably satisfactory to the indemnified party to
represent the indemnified party within a reasonable time after receipt by the
indemnifying party of notice of the institution of such action, then, in each
such case, the indemnifying party shall not have the right to direct the
defense of such action on behalf of such indemnified party or parties and such
indemnified party or parties shall have the right to select one separate
counsel to defend such action on behalf of such indemnified party or parties at
the expense of the indemnifying party. After notice from the indemnifying party
to such indemnified party of its election so to assume the defense thereof and
approval by such indemnified party of counsel appointed to defend such action,
the indemnifying party will not be liable to such indemnified party under this
Section 8 for any legal or other expenses, other than reasonable costs of
investigation, subsequently incurred by such indemnified party in connection
with the defense thereof, unless (i) the indemnified party shall have employed
separate counsel in accordance with the proviso to the immediately preceding
sentence (it being understood, however, that in connection with such action the
indemnifying party shall not be liable for the expenses of more than one
separate counsel (in addition to one local counsel) in any one action or
separate but substantially similar actions in the same jurisdiction arising out
of the same general allegations or circumstances, designated by the Initial
Purchaser in the case of paragraph (a) of this Section 8 or the Company in the
case of paragraph (b) of this Section 8, representing the indemnified parties
under such paragraph (a) or paragraph (b), as the case may be, who are parties
to such action or actions) or (ii) the indemnifying party has authorized in
writing the employment of counsel for the indemnified party at the expense of
the indemnifying party. After such notice from the indemnifying party to such indemnified
party, the indemnifying party will not be liable for the costs and expenses of
any settlement of such action effected by such indemnified party without the
prior written consent of the indemnifying party (which consent shall not be
unreasonably withheld), unless such indemnified party waived in writing its
rights under this Section 8, in which case the indemnified party may effect
such a settlement without such consent; provided that, in any case, any
settlement shall be subject to paragraph (d) of this Section 8.


 


(d)                    No
indemnifying party shall be liable under this Section 8 for any settlement of
any claim or action (or threatened claim or action) effected without its
written consent, which shall not be unreasonably withheld, but if a claim or
action is settled with its written consent, or if there is a final judgment for
the plaintiff with respect to any such claim or action, each indemnifying party
jointly and severally agrees, subject to the exceptions and limitations set
forth above, to indemnify and hold harmless each indemnified party from and
against any and all losses, claims, damages or liabilities (and legal and other
expenses as set forth above) incurred by reason of such settlement or judgment.
No indemnifying party shall, without the prior written consent of the
indemnified party (which consent shall not be unreasonably withheld), effect
any settlement or compromise of any pending or threatened proceeding in respect
of which the indemnified party is or could have been a party, or indemnity
could have been sought hereunder by the indemnified party, unless such
settlement (A) includes an unconditional written release of the indemnified
party, in form and substance reasonably satisfactory to the indemnified party,
from all liability on claims that are the subject matter of such proceeding and
(B) does not include any statement as to an admission of fault, culpability or
failure to act by or on behalf of the indemnified party.


 


(e)                     In
circumstances in which the indemnity agreement provided for in the preceding
paragraphs of this Section 8 is unavailable to, or insufficient to hold
harmless, an indemnified party in respect of any losses, claims, damages or
liabilities (or actions in respect thereof), each indemnifying party, in order
to provide for just and equitable contributions, shall contribute to the amount
paid or


 


22

















 


payable by such
indemnified party as a result of such losses, claims, damages or liabilities
(or actions in respect thereof) in such proportion as is appropriate to reflect
(i) the relative benefits received by the indemnifying party or parties, on the
one hand, and the indemnified party, on the other hand, from the Offering or
(ii) if the allocation provided by the foregoing clause (i) is not permitted by
applicable law, not only such relative benefits but also the relative fault of
the indemnifying party or parties, on the one hand, and the indemnified party,
on the other, in connection with the statements or omissions or alleged
statements or omissions that resulted in such losses, claims, damages or
liabilities (or actions in respect thereof). The relative benefits received by
the Company and the Guarantors, on the one hand, and the Initial Purchaser, on
the other hand, shall be deemed to be in the same proportion as the total
proceeds from the Offering (before deducting expenses) received by the Company
to the total discounts and commissions received by the Initial Purchaser. The
relative fault of the parties shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a material fact or
the omission or alleged omission to state a material fact relates to
information supplied by the Company, on the one hand, or the Initial Purchaser,
on the other hand, the parties’ relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission or
alleged statement or omissions, and any other equitable considerations
appropriate in the circumstances.


 


(f)                       The
Company, the Guarantors and the Initial Purchaser agree that it would not be
equitable if the amount of such contribution determined pursuant to the
immediately preceding paragraph (e) were determined by pro rata or per capita
allocation or by any other method of allocation that does not take into account
the equitable considerations referred to in the first sentence of the
immediately preceding paragraph (e). Notwithstanding any other provision of
this Section 8, the Initial Purchaser shall not be obligated to make
contributions hereunder that in the aggregate exceed the total discounts,
commissions and other compensation received by such Initial Purchaser under
this Agreement, less the aggregate amount of any damages that such Initial
Purchaser has otherwise been required to pay by reason of the untrue or alleged
untrue statements or the omissions or alleged omissions to state a material
fact. No person guilty of fraudulent misrepresentation (within the meaning of
Section 1l(f) of the Act) shall be entitled to contribution from any person who
was not guilty of such fraudulent misrepresentation. For purposes of the
immediately preceding paragraph (e), each person, if any, who controls the
Initial Purchaser within the meaning of Section 15 of the Act or Section 20 of
the Exchange Act shall have the same rights to contribution as the Initial
Purchaser, and each director or manager, as applicable, of the Company and the
Guarantors, each officer of the Company and the Guarantors and each person, if
any, who controls the Company or the Guarantors within the meaning of Section
15 of the Act or Section 20 of the Exchange Act, shall have the same rights to
contribution as the Company and the Guarantors.


 


9.         Termination.
The Initial Purchaser may terminate this Agreement at any time prior to the
Closing Date by written notice to the Company if any of the following has
occurred:


 


(a)                     since the
date hereof, any Material Adverse Effect or development involving or reasonably
expected to result in a prospective Material Adverse Effect that could, in the
Initial Purchaser’s reasonable judgment, be expected to (i) make it
impracticable or inadvisable to proceed with the offering or delivery of the
Notes on the terms and in the manner contemplated in the Final Offering Circular,
or (ii) materially impair the investment quality of any of the Notes;


 


(b)                    the failure of
the Company or the Guarantors to satisfy the conditions contained in Section
7(a) hereof on or prior to the Closing Date;


 


23

















 


(c)                     any outbreak
or escalation of hostilities or other national or international calamity or
crisis, including acts of terrorism, or material adverse change or disruption
in economic conditions in, or in the financial markets of, the United States
(it being understood that any such change or disruption shall be relative to
such conditions and markets as in effect on the date hereof), if the effect of
such outbreak, escalation, calamity, crisis, act or material adverse change in
the economic conditions in, or in the financial markets of, the United States
could be reasonably expected to make it, in the Initial Purchaser’s reasonable
judgment, impracticable or inadvisable to market or proceed with the offering
or delivery of the Notes on the terms and in the manner contemplated in the
Final Offering Circular or to enforce contracts for the sale of any of the
Notes;


 


(d)                    the suspension
or limitation of trading generally in securities on the New York Stock
Exchange, the American Stock Exchange or the NASDAQ National Market or any
setting of limitations on prices for securities on any such exchange or NASDAQ
National Market;


 


(e)                     the
enactment, publication, decree or other promulgation after the date hereof of
any Applicable Law that, in the Initial Purchaser’s counsel’s reasonable
opinion, materially and adversely affects, or could be reasonably expected to
materially and adversely affect, the properties, business, prospects,
operations, earnings, assets, liabilities or condition (financial or otherwise)
of the Company and the Subsidiaries, taken as a whole;


 


(f)                       any
securities of the Company shall have been downgraded or placed on any “watch
list” for possible downgrading by any “nationally recognized statistical rating
organization,” as such term is defined for purposes of Rule 436(g)(2) under the
Act; or


 


(g)                    the
declaration of a banking moratorium by any Governmental Authority; or the
taking of any action by any Governmental Authority after the date hereof in
respect of its monetary or fiscal affairs that, in the Initial Purchaser’s
opinion, could reasonably be expected to have a material adverse effect on the
financial markets in the United States or elsewhere.


 


10.      Survival of
Representations and Indemnities. The representations and warranties,
covenants, indemnities and contribution and expense reimbursement provisions
and other agreements, representations and warranties of the Company, the
Guarantors and Initial Purchaser set forth in or made pursuant to this
Agreement shall remain operative and in full force and effect, and will
survive, regardless of (i) any investigation, or statement as to the results
thereof, made by or on behalf of the Initial Purchaser, (ii) acceptance of the
Notes, and payment for them hereunder, and (iii) any termination of this
Agreement.


 


11.      Default by the Initial
Purchaser. If the Initial Purchaser shall breach its obligations to
purchase the Notes that it has agreed to purchase hereunder on the Closing Date
and arrangements satisfactory to the Company for the purchase of such Notes are
not made within 36 hours after such default, this Agreement shall terminate
with respect to the Initial Purchaser without liability on the part of the
Company or the Guarantors. Nothing herein shall relieve the Initial Purchaser
from liability for its default.


 


12.      Information Supplied by
the Initial Purchaser. The statements set forth on the cover page of
the Offering Circular with respect to price and in the first sentence of the
third paragraph and the first and second sentences of the last paragraph under
the heading “Plan of Distribution” in
the Offering Circular (to the extent such statements relate to the Initial
Purchaser) constitute the only


 


24

















 


information furnished by the Initial Purchaser to the Company or the
Subsidiaries for the purposes of Sections 4(a) and 8 hereof.


 


13.      Miscellaneous.


 


(a)                     Notices given
pursuant to any provision of this Agreement shall be addressed as follows: (i)
if to the Company, to: 1411 Broadway, 2nd Floor, New York, New York
10018, Attention: Chief Executive Officer, with a copy to: Schulte Roth &
Zabel LLP, 919 Third Avenue, New York, New York 10022, Attention: David
Rosewater, Esq., and (ii) if to the Initial Purchaser, to: Jefferies & Company,
Inc., 11100 Santa Monica Boulevard, 10th Floor, Los Angeles, California 90025,
Attention: Lloyd H. Feller, Esq., with a copy to: Proskauer Rose LLP, 1585
Broadway, New York, New York 10036, Attention: Julie M. Allen, Esq. (or in any
case to such other address as the person to be notified may have requested in
writing).


 


(b)                    This Agreement
has been and is made solely for the benefit of and shall be binding upon the
Company and the Guarantors, the Initial Purchaser and, to the extent provided
in Section 8 hereof, the controlling persons, officers, directors, partners,
employees, representatives and agents referred to in Section 8, and their
respective heirs, executors, administrators, 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 Notes from the Initial
Purchaser merely because of such purchase. Notwithstanding the foregoing, it is
expressly understood and agreed that each purchaser who purchases Notes from
the Initial Purchaser is intended to be a beneficiary of the covenants of the
Company and the Guarantors contained in the Registration Rights Agreement to
the same extent as if the Notes were sold and those covenants were made
directly to such purchaser by the Company and the Guarantors, and each such
purchaser shall have the right to take action against the Company and the
Guarantors to enforce, and obtain damages for any breach of, those covenants.


 


(c)                     THE VALIDITY
AND INTERPRETATION OF THIS AGREEMENT, AND THE TERMS AND CONDITIONS SET FORTH
HEREIN SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE AND TO BE PERFORMED WHOLLY
THEREIN.


 


(d)                    EACH OF THE
COMPANY AND THE GUARANTORS HEREBY EXPRESSLY AND IRREVOCABLY (I) SUBMITS TO THE
NON-EXCLUSIVE JURISDICTION OF THE FEDERAL AND STATE COURTS SITTING IN THE
BOROUGH OF MANHATTAN IN THE CITY OF NEW YORK IN ANY SUIT OR PROCEEDING ARISING
OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED THEREBY;
AND (II) WAIVES (A) ITS RIGHT TO A TRIAL BY JURY IN ANY LEGAL ACTION OR
PROCEEDING RELATING TO THIS AGREEMENT, THE TRANSACTIONS CONTEMPLATED HEREBY, OR
ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR
WRITTEN) OR ACTIONS OF THE INITIAL PURCHASER AND FOR ANY COUNTERCLAIM RELATED
TO ANY OF THE FOREGOING AND (B) ANY OBLIGATION WHICH IT MAY HAVE OR HEREAFTER
MAY HAVE TO THE LAYING OF VENUE OF ANY SUCH LITIGATION BROUGHT IN ANY SUCH
COURT REFERRED TO ABOVE AND ANY CLAIM THAT ANY SUCH LITIGATION HAS BEEN BROUGHT
IN AN INCONVENIENT FORUM.


 


25

















 


(e)                     This
Agreement may be signed in various counterparts, which together shall
constitute one and the same instrument.


 


(f)                       The
headings in this Agreement are for convenience of reference only and shall not
limit or otherwise affect the meaning hereof.


 


(g)                    If any term,
provision, covenant or restriction of this Agreement is held by a court of
competent jurisdiction to be invalid, illegal, void or unenforceable, the
remainder of the terms, provisions, covenants and restrictions set forth herein
shall remain in full force and effect and shall in no way be affected, impaired
or invalidated, and the parties hereto shall use their best efforts to find and
employ an alternative means to achieve the same or substantially the same
result as that contemplated by such term, provision, covenant or restriction.
It is hereby stipulated and declared to be the intention of the parties that
they would have executed the remaining terms, provisions, covenants and
restrictions without including any of such that may be hereafter declared
invalid, illegal, void or unenforceable.


 


(h)                    This Agreement
may be amended, modified or supplemented, and waivers or consents to departures
from the provisions hereof may be given, provided that the same are in
writing and signed by all of the signatories hereto.


 


26

















 


Please confirm that the
foregoing correctly sets forth the agreement between the Company, the
Guarantors and the Initial Purchaser.


 


	
   

  	
   

  	
  Very truly yours,

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  RAFAELLA APPAREL GROUP, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Ronald Frankel

  
	
   

  	
   

  	
   

  	
  Name:  Ronald
  Frankel

  
	
   

  	
   

  	
   

  	
  Title: President

  



 


 


Purchase
Agreement


 

















 


	
  Accepted and Agreed to:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  JEFFERIES & COMPANY, INC.

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ Andrew Booth

  	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
  Andrew Booth

  	
   

  	
   

  
	
   

  	
  Title:

  	
  Managing Director

  	
   

  	
   

  
							



 


 


Purchase
Agreement