AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JUNE __, 1998
REGISTRATION NO. 333-
==============================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-------------------------
FORM S-4
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
-------------------------
FRENCH FRAGRANCES, INC.
(Exact name of registrant as specified in its charter)
<TABLE>
<CAPTION>
Florida 2844 59-0914138
<S> <C> <C>
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification No.)
<CAPTION>
Oscar E. Marina, Esq.
14100 N.W. 60th Avenue 14100 N.W. 60th Avenue
Miami, Florida 33014 Miami, Florida 33014
(305) 818-8000 (305) 818-8000
<S> <C>
(Address, including zip code, and telephone (Name, address, including zip code, and
number, including area code of registrant's telephone number, including area code,
principal executive office) of agent for service)
</TABLE>
-------------------------
Copies to:
Beatriz Llorens Koltis, Esq.
Steel Hector & Davis LLP
200 S. Biscayne Blvd., Suite 4000
Miami, Florida 33131-2398
(305) 577-2903
-------------------------
Approximate date of proposed commencement of proposed sale to the public:
As soon as practicable after the effective date of this Registration
Statement.
If any of the securities being registered on this Form are to be offered
in connection with the formation of a holding company and there is compliance
with General Instruction G, check the following box. [ ]
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
=============================================================================================
PROPOSED PROPOSED
AMOUNT MAXIMUM MAXIMUM AMOUNT OF
TITLE OF EACH CLASS TO BE OFFERING PRICE AGGREGATE REGISTRATION
OF SECURITIES TO BE REGISTERED REGISTERED PER UNIT OFFERING PRICE FEE
<S> <C> <C> <C> <C>
10-3/8% Senior Notes due 2007,
Series D. . . . . . . . . . . $40,000,000 $106.5%<F1> $42,600,000<F1> $12,567.00
=============================================================================================
<FN>
<F1> Estimated solely for purposes of calculating the registration fee pursuant to Rule
457(f)(2) under the Securities Act of 1933, as amended (the "Securities Act").
</FN>
<PAGE>
</TABLE>
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS
REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH
SECTION 8(A) OF THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID
SECTION 8(A), MAY DETERMINE.
<PAGE>
THE INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE
SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE
UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF
ANY SUCH STATE.
PROSPECTUS
SUBJECT TO COMPLETION, DATED JUNE 23, 1998
FRENCH FRAGRANCES, INC.
OFFER TO EXCHANGE ITS 10-3/8% SENIOR NOTES DUE 2007, SERIES D
FOR ANY AND ALL OUTSTANDING 10-3/8% SENIOR NOTES DUE 2007, SERIES C
THE EXCHANGE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M., NEW
YORK CITY TIME, ON , 1998, UNLESS EXTENDED.
French Fragrances, Inc., a Florida corporation (the "Company") hereby
offers, upon the terms and subject to the conditions set forth in this
Prospectus and the accompanying Letter of Transmittal (the "Letter of
Transmittal" and together with this Prospectus, the "Exchange Offer"), to
exchange its 10-3/8% Senior Notes due 2007, Series D (the "Exchange Notes")
which have been registered under the Securities Act of 1933, as amended (the
"Securities Act") pursuant to a Registration Statement (as defined herein) of
which this Prospectus constitutes a part, for any and all outstanding 10-3/8%
Senior Notes due 2007, Series C (the "Initial Notes," and, together with the
Exchange Notes, the "Senior Notes"), of which $40,000,000 principal amount is
outstanding. The Exchange Offer is not conditioned upon any minimum aggregate
principal amount of Initial Notes being tendered for exchange. However, the
Exchange Offer is subject to the absence of certain conditions which may be
waived by the Company. See "The Exchange Offer-Certain Conditions to the
Exchange Offer." Subject to the absence or waiver of such conditions, the
Company will accept for exchange any and all Initial Notes validly tendered on
or prior to 5:00 p.m., New York City time, on , 1998, unless the
Exchange Offer is extended (the "Expiration Date"). Initial Notes may be
tendered only in integral multiples of $1,000. The date of acceptance and
exchange of the Initial Notes (the "Exchange Date") will be the fourth
business day following the Expiration Date, unless an earlier date is selected
by the Company. Initial Notes tendered pursuant to the Exchange Offer may be
withdrawn at any time prior to 5:00 p.m., New York City time, on the
Expiration Date; otherwise such tenders are irrevocable. The Exchange Notes
will be issued and delivered promptly after the Exchange Date.
The terms of the Exchange Notes are identical in all material respects to
the terms of the Initial Notes, except that the Exchange Notes have been
registered under the Securities Act and are generally freely transferable by
holders thereof and are issued without any covenant upon the Company regarding
registration under the Securities Act. See "The Exchange Offer-Resale of
Exchange Notes." The Exchange Notes will evidence the same debt as the Initial
Notes and will be issued under and be entitled to the benefits of the
Indenture (as defined herein). For a complete description of the terms of the
Exchange Notes, see "Description of the Senior Notes." There will be no cash
proceeds to the Company from this Exchange Offer.
<PAGE>
The Exchange Notes are unsecured senior obligations of the Company, will
rank senior in right of payment to all existing and future Subordinated
Indebtedness (as defined herein) of the Company and will rank pari passu in
right of payment with all existing and future Senior Indebtedness (as defined
herein) of the Company, including indebtedness under the Revolving Credit
Facility (as defined herein) and its 10-3/8% Senior Notes due 2007, Series B
(the "Series B Senior Notes"). The Company's obligations under the Revolving
Credit Facility (as defined herein) are, however, secured by a first priority
lien on all of the Company's accounts receivable and inventory, and,
accordingly, such indebtedness effectively will rank prior to the Exchange
Notes with respect to such assets. The Indenture permits the Company and any
Subsidiary (as defined herein) to incur additional debt, including secured
debt, subject to certain limitations. See "Description of the Senior Notes."
The Initial Notes were originally issued and sold on April 27, 1998 in a
transaction not registered under the Securities Act, in reliance upon the
exemption provided in Section 4(2) of the Securities Act. Accordingly, the
Initial Notes may not be reoffered, resold, or otherwise pledged, hypothecated
or transferred in the United States unless so registered or unless an
applicable exemption from the registration requirements of the Securities Act
is available. Based upon interpretations by the staff of the Securities and
Exchange Commission (the "SEC") issued to third parties, the Company believes
that Exchange Notes issued pursuant to the Exchange Offer in exchange for
Initial Notes may be offered for resale, resold and otherwise transferred by
holders thereof (other than any holder which is a broker-dealer or an
"affiliate" of the Company within the meaning of Rule 405 under the Securities
Act) without compliance with the registration and prospectus delivery
provisions of the Securities Act provided that such Exchange Notes are
acquired in the ordinary course of business and such holders have no
arrangement with any person to participate in the distribution of such
Exchange Notes. Each broker-dealer that receives Exchange Notes for its own
account pursuant to the Exchange Offer must acknowledge that it will deliver a
prospectus in connection with a resale of such Exchange Notes. This
Prospectus, as it may be amended or supplemented from time to time, may be
used by such broker-dealers in connection with such resales. See "The Exchange
Offer-Resale of Exchange Notes."
The Exchange Notes will constitute a new issue of securities with no
established trading market. The Company does not intend to list any Senior
Notes on a national securities exchange or to apply for quotation of any
Senior Notes through the National Association of Securities Dealers Automated
Quotation System. Any Initial Notes not tendered and accepted in the Exchange
Offer will remain outstanding. To the extent that Initial Notes are tendered
and accepted in the Exchange Offer, a Holder's ability to sell untendered and
tendered but unaccepted Initial Notes could be adversely affected. Following
consummation of the Exchange Offer, the holders of Initial Notes will continue
to be subject to the existing restrictions on transfers thereof, and the
Company will have no further obligation to such holders to provide for the
registration under the Securities Act of the Initial Notes held by them. No
assurance can be given as to the liquidity of the trading market for either
the Initial Notes or the Exchange Notes.
SEE "RISK FACTORS" BEGINNING ON PAGE 12 OF THIS PROSPECTUS FOR A DISCUSSION
OF CERTAIN FACTORS THAT SHOULD BE CONSIDERED IN EVALUATING AN INVESTMENT IN
THE EXCHANGE NOTES.
---------------------------
<PAGE>
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THE PROSPECTUS. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.
The date of this Prospectus is , 1998.
<PAGE>
THIS PROSPECTUS INCORPORATES DOCUMENTS BY REFERENCE WHICH ARE NOT
PRESENTED HEREIN OR DELIVERED HEREWITH. THESE DOCUMENTS ARE AVAILABLE UPON
REQUEST FROM WILLIAM J. MUELLER, CHIEF FINANCIAL OFFICER, AT 14100 N.W. 60TH
AVENUE, MIAMI LAKES, FLORIDA 33014, TELEPHONE NUMBER (305) 818-8000. IN ORDER
TO ENSURE TIMELY DELIVERY OF THE DOCUMENTS, ANY REQUEST SHOULD BE MADE BY
, 1998.
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith files reports, proxy statements and other information
with the SEC. Such reports, proxy statements and other information can be
inspected and copied at the Public Reference Section of the SEC's office at
Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549, and at the SEC's
regional offices in New York (7 World Trade Center, 13th Floor, New York, New
York 10048) and Chicago (Citicorp Center, 14th Floor, 500 West Madison Street,
Chicago, Illinois 60661). Copies of such reports, proxy statements and
information may be obtained at prescribed rates from the Public Reference
Section of the SEC at 450 Fifth Street, N.W., Washington, D.C. 20549. In
addition, the SEC maintains a Web site that contains reports, proxy statements
and other information regarding registrants (such as the Company) that file
electronically with the SEC. The address of such site is http://www.sec.gov.
Copies of such information may also be inspected and copied at the library of
the Nasdaq National Market, 1735 K Street, 4th Floor, Washington, D.C. 20006,
upon which the Company's Common Stock is authorized for trading.
The Company has filed with the SEC a Registration Statement on Form S-4
(together with all amendments and exhibits, the "Registration Statement")
under the Securities Act with respect to the Exchange Notes offered hereby.
This Prospectus does not contain all of the information set forth in the
Registration Statement, certain parts of which are omitted in accordance with
the rules and regulations of the SEC. Statements contained in this Prospectus
relating to the contents of any contract or other document referred to herein
are not necessarily complete, and reference is made to the copy of such
contract or other document filed as an exhibit to the Registration Statement.
For further information, reference is hereby made to the Registration
Statement and the documents incorporated herein by reference, which may be
examined without charge at the public reference facilities maintained by the
SEC at Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549. Copies
thereof may be obtained from the SEC upon payment of the prescribed fees.
While any Senior Notes remain outstanding, the Company will make available,
upon request, to any holder and any prospective purchaser of Senior Notes the
information required pursuant to Rule 144A(d)(4) under the Securities Act
during any period in which the Company is not subject to Section 13 or 15(d)
of the Exchange Act. Any such request should be directed to William J.
Mueller, Chief Financial Officer, French Fragrances, Inc., 14100 N.W. 60th
Avenue, Miami, Florida 33014, telephone number (305) 818-8000.
The Indenture provides that the Company will furnish to the Trustee and
the holders of the Senior Notes copies of all periodic reports required to be
filed with the SEC under the Exchange Act and shall mail such periodic reports
to the holders of the Senior Notes within 15 days of filing with the SEC. If
the Company is not subject to the requirements of Section 13 or 15(d) of the
Exchange Act, the Company must nonetheless continue to submit to the Trustee
and the holders of the Senior Notes (i) the annual and quarterly financial
statements, including any notes thereto (and, with respect to annual reports,
<PAGE>
an auditors' report by an accounting firm of established national practice),
including a "Management's Discussion and Analysis of Financial Condition and
Results of Operations," comparable to that which would have been required to
appear in annual or quarterly reports filed under Section 13 or 15(d) of the
Exchange Act and (ii) all current reports that would be required to be filed
with the SEC on Form 8-K if the Company were required to file such reports.
The Indenture provides that the Company will file a copy of such information
and reports with the SEC for public availability (unless the Commission will
not accept such a filing). The Company must provide copies of such information
and reports to the holders of the Senior Notes within 120 days of the
Company's fiscal year end in the case of annual reports, and within 60 days of
the end of each of the Company's first three fiscal quarters in the case of
quarterly reports.
<PAGE>
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents have been filed by the Company with the SEC
pursuant to the Exchange Act (Commission File No. 1-6370) and are hereby
incorporated herein by reference:
(1) The Company's Annual Report on Form 10-K for the fiscal year ended
January 31, 1998; and
(2) the Company's Proxy Statement dated May 22, 1998, relating to its
1998 Annual Meeting of Shareholders;
(3) the Company's Current Report on Form 8-K dated March 31, 1998 filed
on April 15, 1998;
(4) the Company's Current Report on Form 8-K dated April 27, 1998 filed
on May 7, 1998; and
(5) the Company's Quarterly Report on Form 10-Q for the quarterly period
ended April 30, 1998.
All documents filed by the Company pursuant to Section 13(a), 13(c), 14
or 15(d) of the Exchange Act (i) subsequent to the date of the initial
Registration Statement of which this Prospectus is a part and prior to the
effectiveness of such Registration Statement, or (ii) subsequent to the date
of this Prospectus and prior to the termination of the offering made by this
Prospectus, shall be deemed to be incorporated by reference herein and to be a
part hereof from the date of filing thereof.
Any statement contained herein or in a document incorporated or deemed to
be incorporated by reference herein shall be deemed to be modified or
superseded for purposes of this Prospectus to the extent that a statement
contained herein or in any other document subsequently filed with the SEC
which is or is deemed to be incorporated by reference herein modifies or
supersedes such statement. Any such statement so modified or superseded shall
not be deemed, except as so modified or superseded, to constitute a part of
this Prospectus.
The Company will provide without charge to each person to whom this
Prospectus is delivered, upon the written or oral request of such person, a
copy of any or all of the documents incorporated by reference herein (not
including the exhibits to such documents, unless such exhibits are
specifically incorporated by reference in such documents). Requests for such
copies should be directed to William J. Mueller, Chief Financial Officer, at
14100 N.W. 60th Avenue, Miami Lakes, Florida 33014, telephone number (305)
818-8000.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED OR INCORPORATED BY REFERENCE IN
THIS PROSPECTUS AND THE ACCOMPANYING LETTER OF TRANSMITTAL AND, IF GIVEN OR
MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING
BEEN AUTHORIZED BY THE COMPANY OR THE EXCHANGE AGENT. NEITHER THE DELIVERY OF
THIS PROSPECTUS OR THE ACCOMPANYING LETTER OF TRANSMITTAL, OR BOTH TOGETHER,
NOR ANY SALE MADE HEREUNDER SHALL UNDER ANY CIRCUMSTANCES CREATE AN
IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE
THE DATE HEREOF. NEITHER THIS PROSPECTUS NOR THE ACCOMPANYING LETTER OF
TRANSMITTAL, OR BOTH TOGETHER, CONSTITUTE AN OFFER TO SELL OR A SOLICITATION
<PAGE>
OF AN OFFER TO BUY ANY OF THE SECURITIES OFFERED HEREBY BY ANYONE IN ANY
JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION IS NOT AUTHORIZED OR IN WHICH
THE PERSON MAKING SUCH OFFER OR SOLICITATION IS NOT QUALIFIED TO DO SO OR TO
ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION.
<PAGE>
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
In connection with the safe harbor provisions of the Private Securities
Litigation Reform Act of 1995 (the "Reform Act"), the Company is hereby
providing cautionary statements identifying important factors that could cause
the Company's actual results to differ materially from those projected in
forward-looking statements (as such term is defined in the Reform Act) made in
this Prospectus. Any statements that express, or involve discussions as to,
expectations, beliefs, plans, objectives, assumptions or future events or
performance (often, but not always, through the use of words or phrases such
as "will likely result," "are expected to," "will continue," "is anticipated,"
"believes," "estimated," "intends," "plans," "projection" and "outlook") are
not historical facts and may be forward-looking and, accordingly, such
statements involve estimates, assumptions, and uncertainties which could cause
actual results to differ materially from those expressed in the
forward-looking statements. Accordingly, any such statements are qualified in
their entirety by reference to, and are accompanied by, the factors discussed
throughout this Prospectus, and particularly in the risk factors set forth
herein under "Risk Factors." Among the key factors that have a direct bearing
on the Company's results of operations are the substantial indebtedness and
significant debt service obligations of the Company, the Company's ability to
fund future capital requirements, the maintenance of relationships with
suppliers and customers in light of the absence of contracts between the
Company and its suppliers and customers, the Company's ability to implement
its business and acquisition strategy and to successfully integrate acquired
companies and fragrance brands into the Company, changes in the retail
industry, the availability of key personnel and general economic and business
conditions. These and other factors are discussed herein under "Risk Factors,"
Item 1. "Business" and Item 7. "Management's Discussion and Analysis of
Financial Condition and Results of Operations" of the Company's Annual Report
on Form 10-K for the fiscal year ended January 31, 1998 (the "Form 10-K"),
Part I, Item 2. "Management's Discussion and Analysis of Financial Condition
and Results of Operations" of the Company's Quarterly Report on Form 10-Q for
the quarterly period ended April 30, 1998 (the "Form 10-Q") and elsewhere in
this Prospectus.
The Company cautions that the risk factors described herein could cause
actual results or outcomes to differ materially from those expressed in any
forward-looking statements of the Company made by or on behalf of the Company
and that investors should not place undue reliance on any such forward-
looking statements. Further, any forward-looking statement speaks only as of
the date on which such statement is made, and the Company undertakes no
obligation to update any forward-looking statement or statements to reflect
events or circumstances after the date on which such statement is made or to
reflect the occurrence of unanticipated events. New factors emerge from time
to time, and it is not possible for management to predict all of such factors.
Further, management cannot assess the impact of each such factor on the
Company's business or the extent to which any factor, or combination of
factors, may cause actual results to differ materially from those contained in
any forward-looking statements.
<PAGE>
PROSPECTUS SUMMARY
THE FOLLOWING SUMMARY SHOULD BE READ IN CONJUNCTION WITH, AND IS
QUALIFIED IN ITS ENTIRETY BY, THE MORE DETAILED INFORMATION APPEARING
ELSEWHERE IN THIS PROSPECTUS. UNLESS THE CONTEXT OTHERWISE REQUIRES, "THE
COMPANY" REFERS TO FRENCH FRAGRANCES, INC. AND ITS SUBSIDIARIES ON A
CONSOLIDATED BASIS AND THE FRAGRANCE MARKETING AND DISTRIBUTION BUSINESSES
CONDUCTED BY ITS PREDECESSOR.
THE EXCHANGE OFFER
THE EXCHANGE OFFER. . . . The Company is offering to exchange pursuant to the
Exchange Offer up to $40,000,000 aggregate
principal amount of the Exchange Notes for any and
all of its outstanding Initial Notes. The terms of
the Exchange Notes are identical in all material
respects (including principal amount, interest rate
and maturity) to the terms of the Initial Notes for
which they may be exchanged pursuant to the
Exchange Offer, except that the Exchange Notes have
been registered under the Securities Act and are
freely transferrable by holders thereof (other than
as provided herein), and are not subject to any
covenant regarding registration under the
Securities Act. See "The Exchange Offer."
EXPIRATION DATE;
WITHDRAWAL OF TENDER. . . The Exchange Offer will expire at 5:00 p.m., New
York City time, on , 1998, unless the
Exchange Offer is extended by the Company, in which
case the term "Expiration Date" means the latest
date and time to which the Exchange Offer is
extended. See "The Exchange Offer-Expiration Date;
Extension; Termination; Amendment." Tenders may be
withdrawn at any time prior to 5:00 p.m., New York
City time, on the Expiration Date. See "The
Exchange Offer Withdrawal Rights."
INTEREST PAYMENTS . . . . Interest on the Exchange Notes shall accrue from
the last interest payment date (May 15 or November
15, each an "Interest Payment Date") on which
interest was paid on the Initial Notes so
surrendered or, if no interest has been paid
on such Initial Notes, from April 27, 1998.
NO MINIMUM CONDITION. . . The Exchange Offer is not conditioned upon any
minimum aggregate principal amount of Initial Notes
being tendered for exchange.
EXCHANGE DATE . . . . . . The date of acceptance and exchange (the "Exchange
Date") of the Initial Notes will be the fourth
business day following the Expiration Date, unless
an earlier date is selected by the Company and the
Company notifies the Exchange Agent (as defined
herein) of such earlier date.
<PAGE>
CONDITIONS TO THE
EXCHANGE OFFER. . . . . . The Company shall not be required to accept for
exchange, or to issue Exchange Notes in exchange
for, any Initial Notes and may terminate or amend
the Exchange Offer, if any of certain customary
conditions exist, the occurrence of which may be
waived by the Company. The Company currently
expects that each of the conditions will be
satisfied and that no waivers will be necessary.
See "The Exchange Offer-Certain Conditions to the
Exchange Offer."
PROCEDURES FOR TENDERING
INITIAL NOTES . . . . . . Each holder of Initial Notes wishing to tender such
notes must complete, sign and date the Letter of
Transmittal, or a facsimile thereof, in accordance
with the instructions contained herein and therein,
and mail or otherwise deliver such Letter of
Transmittal, or such facsimile, together with the
Initial Notes and any other required documentation
to the Exchange Agent at the address set forth
in the Letter of Transmittal. See "The Exchange
Offer-Procedures for Tendering Initial Notes" and
"Plan of Distribution."
FEDERAL INCOME TAX
CONSEQUENCES. . . . . . . The exchange of Senior Notes pursuant to the
Exchange Offer should not be a taxable event for
federal income tax purposes. See "Certain Federal
Income Tax Consequences."
SPECIAL PROCEDURES FOR
BENEFICIAL OWNERS . . . . Any beneficial owner whose Initial Notes are
registered in the name of a broker, dealer,
commercial bank, trust company or other nominee and
who wishes to tender should contact such registered
holder promptly and instruct such registered holder
to tender on such beneficial owner's behalf. If
such beneficial owner wishes to tender on such
beneficial owner's own behalf, such beneficial
owner must, prior to completing and executing the
Letter of Transmittal and delivering the Initial
Notes, either make appropriate arrangements to
register ownership of the Initial Notes in such
beneficial owner's name or obtain a properly
completed bond power from the registered holder.
The transfer of registered ownership may take
considerable time. See "The Exchange Offer-
Procedures for Tendering Initial Notes."
GUARANTEED DELIVERY
PROCEDURES. . . . . . . . Holders of Initial Notes who wish to tender their
Initial Notes and whose Initial Notes are not
immediately available or who cannot deliver their
Initial Notes, the Letter of Transmittal or any
other documents required by the Letter of
Transmittal to the Exchange Agent prior to the
Expiration Date must tender their Initial Notes
according to the guaranteed delivery procedures set
forth in "The Exchange Offer-Procedures for
Tendering Initial Notes."<PAGE>
ACCEPTANCE OF INITIAL
NOTES AND DELIVERY OF
EXCHANGE NOTES. . . . . . On the Exchange Date, the Company will accept for
exchange any and all Initial Notes which are
properly tendered in the Exchange Offer prior to
5:00 p.m., New York City time, on the Expiration
Date. The Exchange Notes issued pursuant to the
Exchange Offer will be delivered promptly following
the Exchange Date. See "The Exchange Offer-
Acceptance of Initial Notes for Exchange; Delivery
of Exchange Notes."
CONSEQUENCES OF FAILURE
TO EXCHANGE . . . . . . Holders of the Initial Notes who do not tender
their Initial Notes in the Exchange Offer will
continue to hold such Initial Notes and will be
entitled to all the rights and limitations
applicable thereto under the Indenture dated as
of April 27, 1998 between the Company and Marine
Midland Bank relating to the Initial Notes and the
Exchange Notes (the "Indenture"), except for any
such rights under the Registration Rights Agreement
(as defined herein) that by their terms terminate
or cease to have further effectiveness as a result
of the making of, and the acceptance for exchange
of all validly tendered Initial Notes pursuant to,
the Exchange Offer.
Holders of Initial Notes who do not exchange their
Initial Notes for Exchange Notes pursuant to the
Exchange Offer will continue to be subject to the
restrictions on transfer of such Initial Notes as
set forth in the legend thereon as a consequence of
the offer or sale of the Initial Notes pursuant to
an exemption from, or in a transaction not
subject to, the registration requirements of the
Securities Act and applicable state securities
laws. In general, the Initial Notes may not be
offered or sold, unless registered under the
Securities Act, except pursuant to an exemption
from, or in a transaction not subject to, the
Securities Act and applicable state securities
laws. The Company does not currently anticipate
that it will register the Initial Notes under the
Securities Act. To the extent that Initial Notes
are tendered and accepted in the Exchange Offer,
the trading market for untendered or tendered but
unaccepted Initial Notes could be adversely
affected. See "The Exchange Offer-Consequences of
Failure to Exchange."
REGISTRATION RIGHTS . . . The Company entered into a Registration Rights
Agreement dated as of April 27, 1998 (the
"Registration Rights Agreement") with Donaldson
Lufkin & Jenrette Securities Corporation (the
"Initial Purchaser"), for the benefit of all
holders of Initial Notes, in which it agreed to
<PAGE>
make the Exchange Offer. The Registration Rights
Agreement provides that if the Company fails to
consummate the Exchange Offer on or prior to
October 24, 1998), the Company will file a shelf
registration statement (the "Shelf Registration
Statement") to cover resales of Senior Notes by
holders who provide certain information required
for inclusion in the Shelf Registration Statement,
and who agree to be bound by the terms of the
Registration Rights Agreement. Upon a Registration
Default (as defined herein), the Company will be
required to pay certain Liquidated Damages to the
affected holders of Senior Notes. See "Registration
Rights; Liquidated Damages."
EXCHANGE AGENT. . . . . . Marine Midland Bank is serving as exchange agent
(the "Exchange Agent") in connection with the
Exchange Offer. See "The Exchange Offer-Exchange
Agent."
RESALE OF EXCHANGE NOTES. Based upon interpretations by the staff of the SEC
issued to third parties, the Company believes that
Exchange Notes issued pursuant to the Exchange
Offer in exchange for Initial Notes may be offered
for resale, resold and otherwise transferred by
holders thereof (other than any holder which is a
broker-dealer or an "affiliate" of the Company
within the meaning of Rule 405 under the Securities
Act) without compliance with the registration and
prospectus delivery provisions of the Securities
Act provided that such Exchange Notes are acquired
in the ordinary course of business and such holders
have no arrangement with any person to participate
in the distribution of such Exchange Notes. Each
broker-dealer that receives Exchange Notes for its
own account pursuant to the Exchange Offer must
acknowledge that it will deliver a prospectus in
connection with a resale of such Exchange Notes.
This Prospectus, as it may be amended or
supplemented from time to time, may be used by
such broker-dealers in connection with such
resales. See "The Exchange Offer-Resale of Exchange
Notes."
THE EXCHANGE NOTES
ISSUER. . . . . . . . . . French Fragrances, Inc.
SECURITIES OFFERED. . . . $40 million in aggregate principal amount of
10-3/8% Senior Notes due 2007, Series D.
MATURITY DATE . . . . . . May 15, 2007.
INTEREST PAYMENT DATES. . Interest on the Exchange Notes is payable
semi-annually on each of May 15 and November 15,
commencing November 15, 1998.
<PAGE>
RANKING . . . . . . . . . The Exchange Notes will be senior unsecured
obligations of the Company and will rank senior in
right of payment to all existing and future
Subordinated Indebtedness of the Company and pari
passu in right of payment with all existing and
future Senior Indebtedness of the Company,
including indebtedness under the Revolving Credit
Facility and the Series B Senior Notes. The
Revolving Credit Facility is secured by a first
priority lien on all of the Company's accounts
receivable and inventory and, accordingly, such
indebtedness effectively will rank prior to the
Exchange Notes with respect to such assets. See
"Description of the Senior Notes-General."
MANDATORY REDEMPTION. . . None, except as otherwise described below under the
captions "Change of Control" and "Asset Sale
Proceeds."
OPTIONAL REDEMPTION . . . The Exchange Notes will be redeemable at the
option of the Company, in whole or in part, at any
time on or after May 15, 2002, in cash, at the
redemption prices set forth herein, plus accrued
and unpaid interest, if any, thereon to the
redemption date. In addition, at any time prior to
May 15, 2000, the Company, at its option, may
redeem up to 35% of the initially outstanding
aggregate principal amount of the Senior Notes at a
redemption price equal to 109 3/8% of the principal
amount thereof, plus accrued and unpaid interest,
if any, thereon to the redemption date, with
the net proceeds of one or more public equity
offerings generating in each case net proceeds of
at least $15.0 million, provided, among other
things, that at least 65% of the initially
outstanding aggregate principal amount of the
Senior Notes remains outstanding immediately after
any such redemption. See "Description of the Senior
Notes-Optional Redemption."
CHANGE OF CONTROL . . . . Upon a Change of Control (as defined herein), each
holder of Exchange Notes will have the right to
require the Company to repurchase all or any part
of such holder's Exchange Notes at a price in cash
equal to 101% of the aggregate principal amount
thereof, plus accrued and unpaid interest, if any,
thereon to the purchase date. See "Description of
the Senior Notes-Repurchase at the Option of
Holders-Change of Control."
ASSET SALE PROCEEDS . . . The Company will be obligated in certain
circumstances to make an offer to purchase the
Exchange Notes at a purchase price equal to 100% of
the principal amount thereof plus accrued and
unpaid interest, if any, thereon to the purchase
date with the Net Proceeds of Asset Sales. See
"Description of the Senior Notes-Repurchase at the
Option of Holders-Asset Sales."
<PAGE>
CERTAIN COVENANTS . . . . The Indenture will govern the Exchange Notes and
contains certain covenants that, among other
things, limit the ability of the Company and its
Subsidiaries to: (i) incur additional Indebtedness
or issue preferred Equity Interests (each as
defined herein); (ii) pay dividends or make certain
other restricted payments or investments; (iii)
create liens; (iv) enter into certain transactions
with affiliates; (v) enter into agreements
restricting the ability of such Subsidiaries to pay
dividends and make distributions; (vi) merge or
consolidate; or (vii) transfer or sell assets. See
"Description of the Senior Notes-Certain
Covenants."
SUBSIDIARY GUARANTEES . . The Indenture provides that, as a condition of a
Subsidiary (as defined herein) incurring
Indebtedness (as defined herein) under certain
circumstances, such Subsidiary will guarantee the
Company's payment obligations under the Exchange
Notes. Each Subsidiary Guarantee (as defined
herein) will be a senior unsecured obligation of
the Subsidiary Guarantor (as defined herein)
issuing such Subsidiary Guarantee and will rank
pari passu in right of payment with all Guarantor
Senior Indebtedness (as defined herein) of such
Subsidiary Guarantor. As of the Exchange Date, none
of the Subsidiaries will be Subsidiary Guarantors.
See "Description of the Senior Notes Certain
Covenants-Subsidiary Guarantees."
ABSENCE OF PUBLIC
MARKET. . . . . . . . . . There is no public market for the Exchange Notes,
and the Exchange Notes will not be listed on any
securities exchange. The Company has been advised
by the Initial Purchaser that, following
consummation of the Exchange Offer, the Initial
Purchaser intends to make a market in the
Exchange Notes; however, any market making may be
discontinued at any time without notice. If an
active public market does not develop, the market
price and liquidity of the Exchange Notes may be
adversely affected. See "Risk Factors."
For definitions of certain capitalized terms used herein, see
"Description of the Senior Notes."
RISK FACTORS
Prospective investors in the Exchange Notes should carefully consider the
matters set forth under "Risk Factors" beginning on page 12.
<PAGE>
RISK FACTORS
In evaluating an investment in the Exchange Notes being offered hereby,
investors should consider carefully, among other things, the following risk
factors, as well as the other information contained or incorporated by
reference in this Prospectus.
CONSEQUENCES OF FAILURE TO EXCHANGE
Holders of Initial Notes who do not tender their Initial Notes for
Exchange Notes pursuant to the Exchange Offer will continue to be subject to
the restrictions on transfer of such Initial Notes as set forth in the legend
thereon as a consequence of the issuance of the Initial Notes pursuant to
exemptions from, or in transactions not subject to, the registration
requirements of the Securities Act and applicable state securities laws. In
general, the Initial Notes may not be offered or sold unless registered under
the Securities Act and applicable state laws, or pursuant to an exemption
therefrom. The Company does not intend to register the Initial Notes under
the Securities Act, other than in the limited circumstances contemplated by
the Registration Rights Agreement. In addition, any holder of Initial Notes
who tenders in the Exchange Offer for the purpose of participating in a
distribution of the Exchange Notes may be deemed to have received restricted
securities and, if so, will be required to comply with the registration and
prospectus delivery requirements of the Securities Act in connection with any
resale transaction. To the extent that Initial Notes are tendered and
accepted in the Exchange Offer, the trading market for untendered or tendered
but unaccepted Initial Notes could be adversely affected. See "The Exchange
Offer" and "Registration Rights; Liquidated Damages."
SUBSTANTIAL INDEBTEDNESS
The Company has substantial indebtedness and significant debt service
obligations. As of January 31, 1998, after giving effect to the Company's
March 1998 acquisition of certain assets of JP Fragrances, Inc. (the "JPF
Acquisition"), the issuance of the Initial Notes on April 27, 1998, and the
application of the net proceeds therefrom to repay indebtedness under the
Company's existing bank credit facility (the "Revolving Credit Facility") with
Fleet National Bank ("Fleet"), the Company would have had outstanding
indebtedness of approximately $180 million. The Revolving Credit Facility
with Fleet provides for revolving loans of up to $40.0 million and is secured
by a first priority lien on all of the Company's accounts receivable and
inventory, which constitute a substantial portion of the Company's assets.
Both the Indenture and the Revolving Credit Facility permit the Company to
incur substantial additional indebtedness, including secured indebtedness,
subject to certain limitations. See "Description of the Senior Notes Certain
Covenants," Item 7. "Management's Discussion and Analysis of Financial
Condition and Results of Operations-Liquidity and Capital Resources" of the
Form 10-K and Part I, Item 2. "Management's Discussion and Analysis of
Financial Condition and Results of Operations" of the Form 10-Q. On a pro
forma basis for fiscal year ended January 31, 1998, after giving effect to the
JPF Acquisition and the issuance of the Initial Notes, and assuming that the
Series B Senior Notes had been issued on February 1, 1997, the Company would
have had a ratio of earnings to fixed charges of 2.01. For the Company's
ratio of earnings to fixed charges for the last five fiscal years and the
quarterly period ended April 30, 1998, see "The Company."
<PAGE>
The Company's significant leverage could have important consequences to
holders of Senior Notes, including (i) the Company's increased vulnerability
to adverse general and economic conditions, (ii) the Company's ability to
withstand competitive pressures may be limited, (iii) the Company's ability to
obtain additional financing on satisfactory terms may be limited, (iv) the
dedication of a substantial portion of the Company's cash flow to service its
indebtedness, thereby reducing the amount of funds available for operations
and future business opportunities, (v) the extent to which the Revolving
Credit Facility and future borrowings are at variable rates of interest, which
would cause the Company to be more vulnerable to increases in interest rates
and (vi) the Company's financial and operating flexibility may be limited to
the extent its indebtedness contains restrictive covenants. See "Restrictive
Debt Covenants," Item 7. "Management's Discussion and Analysis of Financial
Condition and Results of Operations-Liquidity and Capital Resources" of the
Form 10-K, Item 8. "Financial Statements and Supplementary Data-Notes to
Consolidated Financial Statements, Notes 7, 8 and 10" of the Form 10-K and
Part I, Item 2. "Management's Discussion and Analysis of Financial Condition
and Results of Operations" of the Form 10-Q.
The ability of the Company to make scheduled payments in respect of its
present and future indebtedness, including the Senior Notes, may depend on,
among other things, the Company's ability to successfully execute its current
business plans on a timely and cost effective basis and the Company's future
operating performance, which, to a large extent, may depend upon factors
beyond the Company's control, such as business, economic and competitive
factors.
ABSENCE OF CONTRACTS WITH SUPPLIERS AND CUSTOMERS
As is typical in the fragrance industry, the Company does not have
long-term or exclusive contracts with any of its customers. Except for
contracts relating to brands for which the Company has exclusive distribution
and marketing rights, including the Geoffrey Beene brands of Grey Flannel, Eau
de Grey Flannel and Bowling Green, the Halston brands of Halston, Catalyst,
Z-14 and 1-12, and the brands Colors of Benetton, Hot and Cold, Ombre Rose,
Lapidus, Faconnable, Salvador Dali, Dalissime, Laguna, Cafe and Watt
(collectively, the "Controlled Brands"), the Company does not generally have
long-term or exclusive contracts with its fragrance suppliers. Virtually all
of the suppliers of the over 120 brands which the Company distributes on a
nonexclusive basis (the "Distributed Brands") can, at any time, elect to
supply fragrance products to the Company's customers directly or through
another distributor, or elect to reduce or eliminate the volume of their
products distributed by the Company. Sales to customers and purchases from
suppliers that do not have exclusive distribution contracts with the Company
are generally made pursuant to purchase orders. The Company's ten largest
suppliers of Distributed Brands accounted for approximately 81% of the
Company's cost of sales for the fiscal year ended January 31, 1998. The JPF
Acquisition is expected to increase the proportion of the Company's business
in Distributed Brands. The Company's ten largest customers accounted for
approximately 38% of net sales for the fiscal year ended January 31, 1998.
The loss of, or a significant change in, the relationship between the Company
and any of its key fragrance suppliers or customers could have a material
adverse effect on the business, financial condition and results of operations
of the Company. See Item 1. "Business-Products," "Licensing and Exclusive
Distribution Agreements," and "Distribution" of the Form 10-K.
<PAGE>
The Company does not own or operate any manufacturing facilities and is
dependent on third-party manufacturers and suppliers for all of its supply of
Halston and Geoffrey Beene fragrances and related products and packaging
materials. The Company currently obtains its materials for these products
from a limited number of manufacturers and other suppliers. Delays in the
delivery of raw materials, components or finished products from manufacturers
or suppliers could have a material adverse effect on the business, financial
condition and results of operations of the Company. See Item 1. "Business-
Products" and "Distribution" of the Form 10-K and the Company's Current Report
on Form 8-K dated March 31, 1998 (the "Form 8-K").
RISKS ASSOCIATED WITH MANAGEMENT OF GROWTH AND INTEGRATION OF ACQUISITIONS
In order for the Company to continue to expand successfully, the
Company's management will be required to anticipate the changing and
increasing demands of the Company's growing operations and to implement
appropriate operating procedures and systems. There can be no assurance that
management will correctly anticipate these demands or successfully implement
these procedures and systems on a timely basis. The Company's success will
also depend, in part, upon its ability to identify, acquire and integrate
effectively into its operations new brands and relationships with new
suppliers and new customers, including those associated with recent or future
acquisitions. The Company believes but cannot assure that it will be able to
achieve such integration.
The Company will also need to review continually the adequacy of its
management information systems, including its inventory and distribution
systems. The Company recently completed the installation of a new management
information system which, among other things, is expected to improve
forecasting, purchasing and order tracking capabilities, as well as provide
Year 2000 compliance. Failure to continue to upgrade its information systems,
or unexpected difficulties (such as possible interruptions, delays, losses
and errors in processing of data or purchase orders) encountered with these
systems, including the Company's newly implemented management information
system, during implementation of such new management information systems or at
any time thereafter, could have a material adverse effect on the business,
financial condition and results of operations of the Company.
NO ASSURANCE OF FUTURE GROWTH OR ACQUISITIONS
The Company's strategy is to continue to increase both its Controlled
Brand and Distributed Brand operations. Currently, the Company has no
agreements or commitments for the acquisition of additional brands or
exclusive or non-exclusive distribution arrangements. There can be no
assurance that the Company will be successful in identifying, negotiating and
consummating such acquisitions or arrangements, or that such acquisitions or
arrangements that may be available, if at all, will be on terms acceptable to
the Company.
FUTURE CAPITAL REQUIREMENTS; POSSIBLE INABILITY TO OBTAIN ADDITIONAL FINANCING
The Company's capital requirements have been and will continue to be
significant. To date, the Company has financed its capital requirements
primarily through the Revolving Credit Facility, external financing (including
the issuance of $115 million aggregate principal amount of Series B Senior
Notes and the Initial Notes) and internally generated funds. The Company's
future expansion, if any, will be dependent upon the capital resources
<PAGE>
available to the Company. Excluding any additional working capital
requirements that may result from future acquisitions, including brand
acquisitions, management believes that internally generated funds, available
financing under the Revolving Credit Facility and the net proceeds from the
issuance of the Initial Notes will be sufficient to fund the Company's
operations for the foreseeable future. The Company's future growth and
acquisitions of additional fragrance brands or exclusive distribution rights
may be dependent on the Company's ability to obtain future equity or debt
financing. There can be no assurance that the Company will be able to obtain
additional financing for such purposes or that any additional financing will
be available in amounts required or on terms satisfactory to the Company. See
Item 7. "Management's Discussion and Analysis of Financial Condition and
Results of Operations-Liquidity and Capital Resources" of the Form 10-K and
Part I, Item 2. "Management's Discussion and Analysis of Financial Condition
and Results of Operations" of the Form 10-Q.
SEASONALITY; FLUCTUATIONS IN QUARTERLY SALES
The Company's business is seasonal, with a majority of its sales and
income from operations generated during the second half of its fiscal year as
a result of increased demand by retailers in anticipation of and during the
holiday season. For example, in the fiscal year ended January 31, 1998, 67%
of the Company's net sales were made during the second half of the fiscal
year. Any substantial decrease in sales during such period would likely have
a material adverse effect on the business, financial condition and results of
operations of the Company. Similarly, the Company's working capital needs are
greater during the second half of the fiscal year. In addition, the Company's
sales and profitability may vary from quarter to quarter as a result of a
variety of factors, including the timing of customer orders, additions or
losses of brands or distribution rights and competitive pricing pressures.
COMPETITION
The fragrance industry is highly competitive and at times subject to
rapidly changing consumer preferences and industry trends. The Company
competes with a large number of distributors and manufacturers, many of which
have significantly greater financial, marketing, distribution, personnel and
other resources than the Company, thereby permitting such companies to
implement extensive advertising, pricing and promotional programs. The
Company's products compete for consumer recognition and shelf space with
fragrance products that have achieved significant international, national and
regional brand name recognition and consumer loyalty. The Company's products
also compete with new products, which are regularly introduced and accompanied
by substantial promotional campaigns. These factors, as well as demographic
trends, international, national, regional and local economic conditions,
discount pricing strategies by competitors and direct sales by manufacturers
to the Company's customers could result in increased competition for the
Company and could have a material adverse effect on the business, financial
condition and results of operations of the Company. See Item 1. "Business-
Competition" of the Form 10-K.
RESTRICTIVE DEBT COVENANTS
The Revolving Credit Facility contains, and any refinancing thereof will
likely contain, a number of covenants that, among other things, limit the
Company's ability to incur additional indebtedness, pay certain dividends,
prepay indebtedness, dispose of certain assets, create liens, make capital
expenditures, make certain investments or acquisitions and otherwise restrict
corporate activities. The Revolving Credit Facility requires, and any
refinancing thereof will likely require, the Company to comply with certain
financial ratios and tests, under which the Company would be required to
achieve certain financial and operating results. In addition, the Revolving
Credit Facility is secured by a first priority lien on the Company's accounts
receivable and inventory. The ability of the Company to comply with the
provisions of the Revolving Credit Facility may be affected by events beyond
its control, including prevailing economic conditions, changes in consumer
preferences and changes in the competitive environment, which could impair the
Company's operating performance. A breach of any of the covenants under the
Revolving Credit Facility would result in a default under the Revolving Credit
Facility, in which event, the lender under the Revolving Credit Facility could
elect to declare all outstanding amounts borrowed thereunder, together with
accrued interest thereon, to be due and payable. A payment default or an
acceleration of amounts due under the Revolving Credit Facility would likely
cause a default under the Indenture relating to the Senior Notes and the
indenture relating to the Series B Senior Notes, of which $115 million in
aggregate principal amount are outstanding. Moreover, as a result of the
security afforded to the Revolving Credit Facility, there can be no assurance
that, in the event of such a default or an acceleration, the Company would
have sufficient funds to pay indebtedness outstanding under the Senior Notes
or the Series B Senior Notes after the collateral has been applied to the
obligations under the Revolving Credit Facility. Acceleration of such
indebtedness would have a material adverse effect on the Company. Further,
each of the Indenture and the indenture related to the Series B Senior Notes
contains provisions that limit the Company's activities. See "Description
of the Senior Notes," Item 7. "Management's Discussion and Analysis of
Financial Condition and Results of Operation-Liquidity and Capital Resources"
of the Form 10-K, Item 8. "Financial Statement and Supplementary-Data Notes
to Consolidated Financial Statements, Note 10" of the Form 10-K and Part I,
Item 2. "Management's Discussion and Analysis of Financial Condition and
Results of Operations" of the Form 10-Q.
INABILITY TO REPURCHASE SENIOR NOTES UPON CHANGE OF CONTROL
Upon the occurrence of a Change of Control (as defined herein), at any
time, the Company will be required to offer to repurchase each holder's Senior
Notes, as well as the Series B Senior Notes outstanding, at a repurchase price
equal to 101% of the aggregate principal amount thereof, plus accrued and
unpaid interest, if any, thereon. There can be no assurance that the Company
will have the financial resources to effect any such repurchase. In addition,
such a repurchase would likely cause a default under the Revolving Credit
Facility. See "Description of the Senior Notes-Repurchase at the Option of
the Holders-Change of Control," Item 7. "Management's Discussion and Analysis
of Financial Condition and Results of Operation-Liquidity and Capital
Resources" of the Form 10-K, Item 8. "Financial Statement and Supplementary
Data-Notes to Consolidated Financial Statements, Note 10" of the Form 10-K and
Part I, Item 2. "Management's Discussion and Analysis of Financial Condition
and Results of Operations" of the Form 10-Q.
CONTROL BY EXECUTIVE OFFICERS, DIRECTORS AND THEIR AFFILIATES
As of May 28, 1998, the executive officers and directors of the Company
(including companies under their control) beneficially owned 6,590,612 shares,
or approximately 41%, of the Company's Common Stock (in each case determined
in accordance with Rule 13d-3 under the Exchange Act). The aggregate
beneficial ownership of such persons permits them to have effective control of
the Company and to direct the management and affairs of the Company.
<PAGE>
DEPENDENCE ON KEY PERSONNEL
The Company's success depends to a significant extent upon the
performance of its management team. The Company's future operations could be
materially adversely affected if the services of any of the Company's senior
executives were to cease to be available to the Company. In particular, the
Company is dependent on E. Scott Beattie, its President and Chief Executive
Officer. See Item 1. "Business-Executive Officers of the Company" of the
Form 10-K.
CHANGES IN THE RETAIL INDUSTRY
From time to time, major retailers, including certain of the Company's
customers, have suffered financial difficulties. While no material adverse
effect on the Company's business or financial condition has resulted from the
financial difficulties of any of its customers, there can be no assurance that
this will continue to be the case. In addition, the retail industry has
periodically experienced consolidation and other ownership changes. Major
retailers in the United States and in foreign markets may in the future
consolidate, undergo restructuring or realign their affiliations, which could
decrease the number of stores that sell the Company's products or increase the
ownership concentration within the retail industry. Furthermore, certain
of the Company's customers have indicated to the Company that they are
considering reducing their emphasis on carrying a broad selection of fragrance
products in favor of carrying a smaller number of items. While such changes in
the retail industry or the preferences of the Company's customers to date have
not had a material adverse effect on the Company's business or financial
condition, there can be no assurance as to the future effect of any such
changes.
FRAUDULENT CONVEYANCE
The incurrence by the Company of indebtedness under the Senior Notes to
repay its existing debt, and the issuance of any Subsidiary Guarantee of the
Senior Notes by any Subsidiary Guarantor, may be subject to review under
relevant federal and state fraudulent conveyance laws in a bankruptcy case
involving, or a lawsuit commenced by or on behalf of unpaid creditors of, the
Company or any Subsidiary Guarantor. Under such laws, if a court were to find
that (i)(a) at the time the Senior Notes were issued, the Company or (b) at
the time any Subsidiary Guarantee was issued, the respective Subsidiary
Guarantor, had incurred the indebtedness under the Senior Notes or the
Subsidiary Guarantee, as the case may be, with the intent of delaying or
defrauding creditors or (ii) the Company or the respective Subsidiary
Guarantor, as the case may be, received less than reasonably equivalent value
or fair consideration for the Senior Notes or the Subsidiary Guarantee, as the
case may be, and (x) was insolvent or rendered insolvent by reason of such
transaction, (y) was engaged in a business or transaction for which the assets
remaining with the Company or the respective Subsidiary Guarantor, as the case
may be, constituted unreasonably small capital, or (z) intended to incur, or
believed that it would incur, debts that it would be unable to pay when due,
such court could subordinate the Senior Notes or the Subsidiary Guarantee, as
the case may be, to present or future indebtedness of the Company or the
respective Subsidiary Guarantor, as the case may be, avoid the issuance
of some or all of the debt under the Senior Notes or the Subsidiary Guarantee,
as the case may be, direct the repayment of any amounts paid thereunder to the
Company or the respective Subsidiary Guarantor, as the case may be, or to a
fund for the benefit of the creditors of the Company or the respective
Subsidiary Guarantor, as the case may be, or take other action which would be
detrimental to the holders of the Senior Notes.
<PAGE>
The Company believes that the indebtedness represented by the Senior
Notes was (as to the Initial Notes) and is being (as to the Exchange Notes)
incurred for proper purposes and in good faith, that the Company is receiving
reasonably equivalent value or fair consideration for incurring such
indebtedness, that the Company was, is and will be solvent under the foregoing
standards and that it had, has and will have sufficient capital for carrying
on its business and was, is, and will be able to pay its debts as they mature.
There can be no assurance, however, that a court would reach the same
conclusions.
ABSENCE OF A PUBLIC MARKET FOR EXCHANGE NOTES
The Exchange Notes will constitute a new issue of securities for which
there is no established trading market. The Company does not intend to list
the Exchange Notes on any national securities exchange or to seek the
admission of the Exchange Notes for quotation through the National Association
of Securities Dealers Automated Quotation System. Although the Initial
Purchaser has advised the Company that it currently intends to make a market
in the Exchange Notes, it is not obligated to do so and may discontinue
such market making at any time without notice. In addition, such market
making activity will be subject to the limits imposed by the Securities Act
and the Exchange Act, and may be limited during the Exchange Offer and the
pendency of any Shelf Registration Statement. See "Registration Rights;
Liquidated Damages." There can be no assurance as to the development or
liquidity of any market for the Exchange Notes, the ability of the holders of
the Exchange Notes to sell their Exchange Notes or the price at which the
holders would be able to sell their Exchange Notes. Future trading prices of
the Exchange Notes will depend on many factors, including, among other things,
prevailing interest rates, the Company's operating results and the market for
similar securities.
THE COMPANY
French Fragrances, Inc. ("FFI") was formed as a privately held Florida
corporation on June 26, 1992 by Rafael Kravec and a group of investors
represented by Bedford in order to acquire the fragrance-related net assets of
National Trading Manufacturing, Inc. ("National Trading"). National Trading,
a privately held Florida corporation controlled by Rafael Kravec, the
Company's Chairman of the Board, had been engaged in the manufacture and
distribution of gold jewelry and other gift items and, beginning in 1981, had
also been engaged in the purchase and United States mass-market distribution
of prestige perfumes and other fragrance products. In 1992, Rafael Kravec
determined to acquire the interests of National Trading's three other
shareholders, to cease National Trading's jewelry and gift items business and,
with the financial investment and managerial support of Bedford Capital
Corporation, a Toronto, Canada based merchant banking firm ("Bedford") and the
investors it represented, to concentrate on expanding the fragrance
distribution business, which was acquired from National Trading by FFI on
July 2, 1992.
After the acquisition, the Company experienced significant growth as a
distributor of prestige fragrances to the United States mass market. To
further enhance its distribution relationships, profitability and industry
position, the Company began acquiring ownership of or exclusive United States
distribution rights to a selection of prestige fragrance and cosmetic brands.
As a result of its growth, the Company determined that its then existing
physical facilities had become inadequate. On November 30, 1995, it acquired
<PAGE>
its present distribution facility in Miami Lakes, Florida (the "Miami Lakes
Facility") and became a publicly held company through the merger of FFI with
and into Suave Shoe Corporation ("Suave"), a publicly held company that had
previously discontinued its shoe manufacturing and distribution operations
(the "Merger"). Following the Merger, Suave, as the surviving corporation,
changed its name to French Fragrances, Inc., and its operations consist
entirely of the fragrance business of FFI, which was the acquiror in the
Merger for financial reporting purposes.
The Company's ratio of earnings to fixed charges for the fiscal years
ended June 30, 1994, the seven months ended January 31, 1994, the seven months
ended January 31, 1995, the twelve months ended January 31, 1995, the fiscal
year ended January 31, 1996, the fiscal year ended January 31, 1997, the
fiscal year ended January 31, 1998 and the three months ended April 30, 1998
was 2.00, 2.19, 3.82, 3.13, 2.19, 2.88, 2.60 and 1.14, respectively. This
information has been derived from the audited and unaudited consolidated
financial statements of the Company and FFI for the relevant periods.
Effective January 31, 1995, FFI changed its fiscal year end to January 31 from
June 30. For this reason, the seven months ended January 31, 1995 and 1994
are presented. The foregoing data should be read in conjunction with the
consolidated financial statements of the Company and related notes and the
other financial information incorporated herein by reference.
The Company's principal executive offices are located at 14100 N.W. 60th
Avenue, Miami Lakes, Florida 33014, and its telephone number is (305)
818-8000.
The Company's Common Stock is traded on the Nasdaq National Market under
the symbol "FRAG." The closing sales price of the Common Stock on June 23,
1998 was $15.9375 per share.
<PAGE>
THE EXCHANGE OFFER
GENERAL
The Company hereby offers, upon the terms and subject to the conditions
set forth in this Prospectus and in the accompanying Letter of Transmittal
(which together constitute the Exchange Offer), to exchange up to $40 million
aggregate principal amount of Exchange Notes for a like aggregate principal
amount of Initial Notes properly tendered on or prior to the Expiration Date
and not withdrawn as permitted pursuant to the procedures described below. The
Exchange Offer is being made with respect to any and all of the Initial Notes.
As of the date of this Prospectus, $40 million aggregate principal amount
of the Initial Notes is outstanding. This Prospectus, together with the Letter
of Transmittal, is first being sent on or about , 1998, to all
holders of Initial Notes registered on the note register of the Company. The
Company's obligation to accept Initial Notes for exchange pursuant to the
Exchange Offer is subject to the satisfaction or waiver by the Company of
certain conditions set forth under "Certain Conditions to the Exchange Offer"
below. The Company currently expects that each of the conditions will be
satisfied and that no waivers will be necessary.
PURPOSE OF THE EXCHANGE OFFER
The Initial Notes were issued on April 27, 1998 in a transaction exempt
from the registration requirements of the Securities Act. Accordingly, the
Initial Notes may not be reoffered, resold, or otherwise transferred unless so
registered or unless an applicable exemption from the registration and
prospectus delivery requirements of the Securities Act is available.
In connection with the issuance and sale of the Initial Notes, the
Company entered into the Registration Rights Agreement, which requires the
Company to file with the Commission a registration statement relating to the
Exchange Offer not later than 60 days after the date of issuance of the
Initial Notes, and to use its reasonable best efforts to cause the
registration statement relating to the Exchange Offer to become effective
under the Securities Act not later than 150 days after the date of issuance of
the Initial Notes and the Exchange Offer to be consummated not later than 30
business days after the date of the effectiveness of the Registration
Statement (or use its reasonable best efforts to cause to become effective
a shelf registration statement with respect to resales of the Initial Notes by
the 150th calendar day after the date on which the Company becomes obligated
to file such shelf registration statement). A copy of the Registration Rights
Agreement has been filed as an exhibit to the Registration Statement.
The Exchange Offer is being made by the Company to satisfy its
obligations with respect to the Registration Rights Agreement. The term
"holder," with respect to the Exchange Offer, means any person in whose name
Initial Notes are registered on the note register of the Company or any other
person who has obtained a properly completed bond power from the registered
holder, or any person whose Initial Notes are held of record by The Depository
Trust Company. Other than pursuant to the Registration Rights Agreement,
the Company is not required to file any registration statement to register any
outstanding Initial Notes. Holders of Initial Notes who do not tender their
Initial Notes or whose Initial Notes are tendered but not accepted would have
to rely on exemptions to registration requirements under the securities laws,
including the Securities Act, if they wish to sell their Initial Notes.
<PAGE>
The Company is making the Exchange Offer in reliance on the position of
the staff of the SEC as set forth in certain interpretive letters addressed to
third parties in other transactions. However, the Company has not sought its
own interpretive letter and there can be no assurance that the staff would
make a similar determination with respect to the Exchange Offer as it has in
such interpretive letters to third parties. Based on these interpretations by
the staff, the Company believes that the Exchange Notes issued pursuant to the
Exchange Offer in exchange for Initial Notes may be offered for resale, resold
and otherwise transferred by a holder (other than any holder who is a
broker-dealer or an "affiliate" of the Company within the meaning of Rule 405
of the Securities Act) without further compliance with the registration and
prospectus delivery requirements of the Securities Act, provided that such
Exchange Notes are acquired in the ordinary course of such holder's business
and that such holder is not participating, and has no arrangement or
understanding with any person to participate, in a distribution (within the
meaning of the Securities Act) of such Exchange Notes. See " Resale of
Exchange Notes." Each broker-dealer that receives Exchange Notes for its own
account in exchange for Initial Notes, where such Initial Notes were acquired
by such broker-dealer as a result of market-making activities or other trading
activities, must acknowledge that it will deliver a prospectus in connection
with any resale of such Exchange Notes. See "Plan of Distribution."
TERMS OF THE EXCHANGE
The Company hereby offers to exchange, subject to the conditions set
forth herein and in the Letter of Transmittal accompanying this Prospectus,
$1,000 in principal amount of Exchange Notes for each $1,000 in principal
amount of the Initial Notes. The terms of the Exchange Notes are identical in
all material respects to the terms of the Initial Notes for which they may be
exchanged pursuant to this Exchange Offer, except that the Exchange Notes will
generally be freely transferable by holders thereof and will not be subject to
any covenant regarding registration under the Securities Act. The Exchange
Notes will evidence the same indebtedness as the Initial Notes and will be
entitled to the benefits of the Indenture. See "Description of the Senior
Notes."
The Exchange Offer is not conditioned upon any minimum aggregate
principal amount of Initial Notes being tendered for exchange.
The Company has not requested, and does not intend to request, an
interpretation by the staff of the SEC with respect to whether the Exchange
Notes issued pursuant to the Exchange Offer in exchange for the Initial Notes
may be offered for sale, resold or otherwise transferred by any holder without
compliance with the registration and prospectus delivery provisions of the
Securities Act. Instead, based on an interpretation by the staff of the SEC
set forth in a series of no-action letters issued to third parties, the
Company believes that Exchange Notes issued pursuant to the Exchange Offer in
exchange for Initial Notes may be offered for sale, resold and otherwise
transferred by any holder of such Exchange Notes (other than any such holder
that is a broker-dealer or is an "affiliate" of the Company within the meaning
of Rule 405 under the Securities Act) without compliance with the registration
and prospectus delivery provisions of the Securities Act, provided that such
Exchange Notes are acquired in the ordinary course of such holder's business
and such holder has no arrangement or understanding with any person to
participate in the distribution of such Exchange Notes and neither such holder
nor any other such person is engaging in or intends to engage in a
distribution of such Exchange Notes. Since the SEC has not considered the
<PAGE>
Exchange Offer in the context of a no-action letter, there can be no assurance
that the staff of the SEC would make a similar determination with respect to
the Exchange Offer. Any holder who is an affiliate of the Company or who
tenders in the Exchange Offer for the purpose of participating in a
distribution of the Exchange Notes may be deemed to have received restricted
securities and cannot rely on such interpretation by the staff of the SEC and
must comply with the registration and prospectus delivery requirements of the
Securities Act in connection with any resale transaction. Each holder, other
than a broker-dealer, must acknowledge that it is not engaged in, and does not
intend to engage in, a distribution of Exchange Notes. Each broker-dealer that
receives Exchange Notes for its own account in exchange for Initial Notes,
where such Initial Notes were acquired by such broker-dealer as a result of
market-making activities or other trading activities, must acknowledge
that it will deliver a prospectus in connection with any resale of such
Exchange Notes. See "Plan of Distribution."
Interest on the Exchange Notes will accrue from the last Interest Payment
Date on which interest was paid on the Initial Notes so surrendered or, if no
interest has been paid on such Initial Notes, from April 27, 1998.
Tendering holders of the Initial Notes shall not be required to pay
brokerage commissions or fees or, subject to the instructions in the Letter of
Transmittal, transfer taxes with respect to the exchange of the Initial Notes
pursuant to the Exchange Offer.
EXPIRATION DATE; EXTENSION; TERMINATION; AMENDMENT
The Exchange Offer will expire at 5:00 p.m., New York City time, on
1998, unless the Company has extended the period of time for which
the Exchange Offer is open (such date, as it may be extended, is referred to
herein as the "Expiration Date"). The Expiration Date will be at least 20
business days after the commencement of the Exchange Offer in accordance with
Rule 14e-1(a) under the Exchange Act. The Company expressly reserves the
right, at any time or from time to time, in its sole discretion, to extend the
period of time during which the Exchange Offer is open, and thereby delay
acceptance for exchange of any Initial Notes, by giving oral or written notice
to the Exchange Agent and by timely public announcement no later than 9:00
a.m. New York City time, on the next business day after the previously
scheduled Expiration Date. During any such extension, all Initial Notes
previously tendered will remain subject to the Exchange Offer unless properly
withdrawn.
The Company expressly reserves the right to (i) terminate or amend the
Exchange Offer and not to accept for exchange any Initial Notes not
theretofore accepted for exchange upon the occurrence of any of the events
specified below under "Certain Conditions to the Exchange Offer" which have
not been waived by the Company and (ii) amend the terms of the Exchange Offer
in any manner which, in its good faith judgment, is advantageous to the
holders of the Initial Notes, whether before or after any tender of the
Initial Notes. If any such termination or amendment occurs, the Company will
notify the Exchange Agent and will either issue a press release or give oral
or written notice to the holders of the Initial Notes as promptly as
practicable.
For purposes of the Exchange Offer, a "business day" means any day other
than Saturday, Sunday or a date on which banking institutions are required or
authorized by New York State law to be closed, and consists of the time period
<PAGE>
from 12:01 a.m. through 12:00 midnight, New York City time. Unless the Company
terminates the Exchange Offer prior to 5:00 p.m., New York City time, on the
Expiration Date, the Company will, subject to the conditions described under
"Certain Conditions to the Exchange Offer," exchange the Exchange Notes for
the Initial Notes on the Exchange Date.
PROCEDURES FOR TENDERING INITIAL NOTES
The tender to the Company of Initial Notes by a holder thereof as set
forth below and the acceptance thereof by the Company will constitute a
binding agreement between the tendering holder and the Company upon the terms
and subject to the conditions set forth in this Prospectus and in the
accompanying Letter of Transmittal.
A holder of Initial Notes may tender the same by (i) properly completing
and signing the Letter of Transmittal or a facsimile thereof (all references
in this Prospectus to the Letter of Transmittal shall be deemed to include a
facsimile thereof) and delivering the same, together with the certificate or
certificates representing the Initial Notes being tendered and any required
signature guarantees and any other documents required by the Letter of
Transmittal, to the Exchange Agent at its address set forth below (see
"Exchange Agent") on or prior to the Expiration Date (or complying with the
procedure for book-entry transfer described below) or (ii) complying with the
guaranteed delivery procedures described below.
Any beneficial owner whose Initial Notes are registered in the name of a
broker, dealer, commercial bank, trust company or other nominee and who wishes
to tender such Initial Notes should contact such registered holder promptly
and instruct such registered holder to tender on such beneficial owner's
behalf. If such beneficial owner wishes to tender Initial Notes on such
beneficial owner's own behalf, such beneficial owner must, prior to completing
and executing the Letter of Transmittal and delivering the Initial Notes,
either make appropriate arrangements to register ownership of the Initial
Notes in such beneficial owner's name or obtain a properly completed bond
power from the registered holder. The transfer of registered ownership may
take considerable time.
THE METHOD OF DELIVERY OF INITIAL NOTES, LETTERS OF TRANSMITTAL AND ALL
OF THE REQUIRED DOCUMENTS IS AT THE ELECTION AND RISK OF THE HOLDER. IF SUCH
DELIVERY IS BY MAIL, IT IS RECOMMENDED THAT REGISTERED MAIL PROPERLY INSURED,
WITH RETURN RECEIPT REQUESTED, BE USED. IN ALL CASES, SUFFICIENT TIME SHOULD
BE ALLOWED TO INSURE TIMELY DELIVERY. NO INITIAL NOTES OR LETTERS OF
TRANSMITTAL SHOULD BE SENT TO THE COMPANY.
If tendered Initial Notes are registered in the name of the signer of the
Letter of Transmittal and the Exchange Notes to be issued in exchange therefor
are to be issued (and any untendered Initial Notes are to be reissued) in the
name of the registered holder (which term, for the purposes described herein,
shall include any participant in The Depository Trust Company (the "Book-Entry
Transfer Facility") whose name appears on a security listing as the owner of
Initial Notes), the signature of such signer need not be guaranteed. In any
other case, the tendered Initial Notes must be endorsed or accompanied by
written instruments of transfer in form satisfactory to the Company and duly
executed by the registered holder, and the signature on the endorsement or
instrument of transfer must be guaranteed by a bank, broker, dealer, credit
union, savings association, clearing agency or other institution (each an
"Eligible Institution") that is a member of a recognized signature guarantee
<PAGE>
medallion program within the meaning of Rule 17Ad-15 under the Exchange
Act. If the Exchange Notes and/or Initial Notes not exchanged are to be
delivered to an address other than that of the registered holder appearing on
the note register for the Initial Notes, the signature in the Letter of
Transmittal must be guaranteed by an Eligible Institution.
The Exchange Agent will make a request within two business days after the
date of receipt of this Prospectus to establish accounts with respect to the
Initial Notes at the Book-Entry Transfer Facility for the purpose of
facilitating the Exchange Offer, and subject to the establishment thereof, any
financial institution that is a participant in the Book-Entry Transfer
Facility's system may make book-entry delivery of Initial Notes by causing
such Book-Entry Transfer Facility to transfer such Initial Notes into the
Exchange Agent's account with respect to the Initial Notes in accordance with
the Book-Entry Transfer Facility's procedures for such transfer. Although
delivery of Initial Notes may be effected through book-entry transfer into the
Exchange Agent's account at the Book-Entry Transfer Facility, an appropriate
Letter of Transmittal with any required signature guarantee and all other
required documents must in each case be transmitted to and received or
confirmed by the Exchange Agent at its address set forth below on or prior to
the Expiration Date, or, if the guaranteed delivery procedures described below
are complied with, within the time period provided under such procedures.
If a holder desires to tender Initial Notes in the Exchange Offer and
time will not permit a Letter of Transmittal or Initial Notes to reach the
Exchange Agent before the Expiration Date or the procedure for book-entry
transfer cannot be completed on a timely basis, a tender may be effected if
the Exchange Agent has received at its address set forth below on or prior to
the Expiration Date, a letter, telegram or facsimile transmission (receipt
confirmed by telephone and an original delivered by guaranteed overnight
courier) from an Eligible Institution setting forth the name and address of
the tendering holder, the names in which the Initial Notes are registered and,
if possible, the certificate numbers of the Initial Notes to be tendered,
and stating that the tender is being made thereby and guaranteeing that within
three business days after the Expiration Date, the Initial Notes in proper
form for transfer (or a confirmation of book-entry transfer of such Initial
Notes into the Exchange Agent's account at the Book-Entry Transfer Facility),
will be delivered by such Eligible Institution together with a properly
completed and duly executed Letter of Transmittal (and any other required
documents). Unless Initial Notes being tendered by the above-described method
are deposited with the Exchange Agent within the time period set forth above
(accompanied or preceded by a properly completed Letter of Transmittal and any
other required documents), the Company may, at its option, reject the tender.
Copies of the notice of guaranteed delivery ("Notice of Guaranteed Delivery")
which may be used by Eligible Institutions for the purposes described in this
paragraph are available from the Exchange Agent.
A tender will be deemed to have been received as of the date when (i) the
tendering holder's properly completed and duly signed Letter of Transmittal
accompanied by the Initial Notes (or a confirmation of book-entry transfer of
such Initial Notes into the Exchange Agent's account at the Book-Entry
Transfer Facility) is received by the Exchange Agent, or (ii) a Notice of
Guaranteed Delivery or letter, telegram or facsimile transmission to similar
effect (as provided above) from an Eligible Institution is received by the
Exchange Agent. Issuances of Exchange Notes in exchange for Initial Notes
tendered pursuant to a Notice of Guaranteed Delivery or letter, telegram or
facsimile transmission to similar effect (as provided above) by an Eligible
Institution will be made only against deposit of the Letter of Transmittal
(and any other required documents) and the tendered Initial Notes.
<PAGE>
All questions as to the validity, form, eligibility (including time of
receipt) and acceptance of Initial Notes tendered for exchange will be
determined by the Company in its sole discretion, which determination shall be
final and binding on all parties. The Company reserves the absolute right to
reject any and all tenders of any particular Initial Notes not properly
tendered or not to accept any particular Initial Notes which acceptance might,
in the judgment of the Company or its counsel, be unlawful. The Company also
reserves the absolute right to waive any defects or irregularities or
conditions of the Exchange Offer as to any particular Initial Notes either
before or after the Expiration Date (including the right to waive the
ineligibility of any holder who seeks to tender Initial Notes in the Exchange
Offer). The interpretation of the terms and conditions of the Exchange Offer
(including the Letter of Transmittal and the instructions thereto) by the
Company shall be final and binding on all parties. Unless waived, any defects
or irregularities in connection with tenders of Initial Notes for exchange
must be cured within such reasonable period of time as the Company shall
determine. Neither the Company, the Exchange Agent nor any other person shall
be under any duty to give notification of any defect or irregularity with
respect to any tender of Initial Notes for exchange, nor shall any of them
incur any liability for failure to give such notification.
If the Letter of Transmittal is signed by a person or persons other than
the registered holder or holders of Initial Notes, such Initial Notes must be
endorsed or accompanied by appropriate powers of attorney, in either case
signed exactly as the name or names of the registered holder or holders appear
on the Initial Notes.
If the Letter of Transmittal or any Initial Notes or powers of attorney
are signed by trustees, executors, administrators, guardians,
attorneys-in-fact, officers of corporations or others acting in a fiduciary
or representative capacity, such persons should so indicate when signing, and,
unless waived by the Company, proper evidence satisfactory to the Company of
their authority to so act must be submitted.
By tendering, each holder will represent to the Company that, among other
things, the Exchange Notes acquired pursuant to the Exchange Offer are being
acquired in the ordinary course of business of the person receiving such
Exchange Notes, whether or not such person is the holder, that neither the
holder nor any such other person has an arrangement or understanding with any
person to participate in the distribution of such Exchange Notes and that
neither the holder nor any such other person is an "affiliate," as defined
under Rule 405 of the Securities Act, of the Company, or if it is an
affiliate, it will comply with the registration and prospectus requirements of
the Securities Act to the extent applicable.
Each broker-dealer that receives Exchange Notes for its own account in
exchange for Initial Notes where such Initial Notes were acquired by such
broker-dealer as a result of market-making activities or other trading
activities (other than Initial Notes acquired directly from the Company) must
acknowledge that it will deliver a prospectus in connection with any resale of
such Exchange Notes. See "Plan of Distribution."
TERMS AND CONDITIONS OF THE LETTER OF TRANSMITTAL
The Letter of Transmittal contains, among other things, the following
terms and conditions, which are part of the Exchange Offer.
<PAGE>
The party tendering Initial Notes for exchange (the "Transferor")
exchanges, assigns and transfers the Initial Notes to the Company and
irrevocably constitutes and appoints the Exchange Agent as the Transferor's
agent and attorney-in-fact to cause the Initial Notes to be assigned,
transferred and exchanged. The Transferor represents and warrants that it has
full power and authority to tender, exchange, assign and transfer the Initial
Notes and to acquire Exchange Notes issuable upon the exchange of such
tendered Initial Notes, and that, when the same are accepted for exchange, the
Company will acquire good and unencumbered title to the tendered Initial
Notes, free and clear of all liens, restrictions, charges and encumbrances and
not subject to any adverse claim. The Transferor also warrants that it will,
upon request, execute and deliver any additional documents deemed by the
Exchange Agent or the Company to be necessary or desirable to complete the
exchange, assignment and transfer of tendered Initial Notes or transfer
ownership of such Initial Notes on the account books maintained by a
Book-Entry Transfer Facility. The Transferor further agrees that acceptance of
any tendered Initial Notes by the Company and the issuance of Exchange Notes
in exchange therefor shall constitute performance in full by the Company of
certain of its obligations under the Registration Rights Agreement. All
authority conferred by the Transferor will survive the death or incapacity of
the Transferor and every obligation of the Transferor shall be binding upon
the heirs, legal representatives, successors, assigns, executors and
administrators of such Transferor.
The Transferor certifies that it is not an "affiliate" of the Company
within the meaning of Rule 405 under the Securities Act and that it is
acquiring the Exchange Notes offered hereby in the ordinary course
of such Transferor's business and that such Transferor has no arrangement with
any person to participate in the distribution of such Exchange Notes. Each
holder, other than a broker-dealer, must acknowledge that it is not engaged
in, and does not intend to engage in, a distribution of Exchange Notes. Each
Transferor which is a broker-dealer receiving Exchange Notes for its own
account must acknowledge that it will deliver a prospectus in connection with
any resale of such Exchange Notes. By so acknowledging and by delivering
a prospectus, a broker-dealer will not be deemed to admit that it is an
"underwriter" within the meaning of the Securities Act. This Prospectus, as it
may be amended or supplemented from time to time, may be used by a
broker-dealer in connection with resales of Exchange Notes received in
exchange for Initial Notes where such Initial Notes were acquired by such
broker-dealer as a result of market-making activities or other trading
activities. The Company will, for a period of one year after the Exchange
Date, make copies of this Prospectus available to any broker-dealer for use in
connection with any such resale.
WITHDRAWAL RIGHTS
Tenders of Initial Notes may be withdrawn at any time prior to 5:00 p.m.,
New York City time, on the Expiration Date.
For a withdrawal to be effective, a written notice of withdrawal sent by
telegram, facsimile transmission (receipt confirmed by telephone) or letter
must be received by the Exchange Agent at the address set forth herein prior
to the Expiration Date. Any such notice of withdrawal must (i) specify the
name of the person having tendered the Initial Notes to be withdrawn (the
"Depositor"), (ii) identify the Initial Notes to be withdrawn (including the
certificate number or numbers and principal amount of such Initial Notes),
(iii) specify the principal amount of Initial Notes to be withdrawn, (iv)
include a statement that such holder is withdrawing his election to have such
Initial Notes exchanged, (v) be signed by the holder in the same manner as the
original signature on the Letter of Transmittal by which such Initial Notes
were tendered or as otherwise described above (including any required
signature guarantees) or be accompanied by documents of transfer sufficient to
have the Trustee under the Indenture register the transfer of such Initial
Notes into the name of the person withdrawing the tender and (vi) specify the
name in which any such Initial Notes are to be registered, if different from
that of the Depositor. The Exchange Agent will return the properly withdrawn
Initial Notes promptly following receipt of notice of withdrawal. If Initial
Notes have been tendered pursuant to the procedure for book-entry transfer,
any notice of withdrawal must specify the name and number of the account at
the Book-Entry Transfer Facility to be credited with the withdrawn Initial
Notes or otherwise comply with the Book-Entry Transfer Facility's procedure.
All questions as to the validity of notices of withdrawals, including time of
receipt, will be determined by the Company in its sole discretion
and such determination will be final and binding on all parties.
Any Initial Notes so withdrawn will be deemed not to have been validly
tendered for exchange for purposes of the Exchange Offer. Any Initial Notes
which have been tendered for exchange but which are not exchanged for any
reason will be returned to the holder thereof without cost to such holder (or,
in the case of Initial Notes tendered by book-entry transfer into the Exchange
Agent's account at the Book-Entry Transfer Facility pursuant to the book-entry
transfer procedures described above, such Initial Notes will be credited to an
account with such Book-Entry Transfer Facility specified by the holder) as
soon as practicable after withdrawal, rejection of tender or termination of
the Exchange Offer. Properly withdrawn Initial Notes may be retendered by
following one of the procedures described under "Procedures for Tendering
Initial Notes" above at any time on or prior to the Expiration Date.
ACCEPTANCE OF INITIAL NOTES FOR EXCHANGE; DELIVERY OF EXCHANGE NOTES
Upon satisfaction or waiver of all of the conditions to the Exchange
Offer, the Company will accept, promptly on the Exchange Date, all Initial
Notes properly tendered and will issue the Exchange Notes promptly after such
acceptance. See "Certain Conditions to the Exchange Offer" below. For purposes
of the Exchange Offer, the Company shall be deemed to have accepted properly
tendered Initial Notes for exchange when, as and if the Company has given oral
or written notice thereof to the Exchange Agent.
For each Initial Note accepted for exchange, the holder of such Initial
Note will receive an Exchange Note having a principal amount equal to that of
the surrendered Initial Note.
In all cases, issuance of Exchange Notes for Initial Notes that are
accepted for exchange pursuant to the Exchange Offer will be made only after
timely receipt by the Exchange Agent of certificates for such Initial Notes or
a timely book-entry confirmation of such Initial Notes into the Exchange
Agent's account at the Book-Entry Transfer Facility, a properly completed and
duly executed Letter of Transmittal and all other required documents. If any
tendered Initial Notes are not accepted for any reason set forth in the terms
and conditions of the Exchange Offer or if Initial Notes are submitted for a
greater principal amount than the holder desires to exchange, such unaccepted
or non-exchanged Initial Notes will be returned without expense to the
tendering holder thereof (or, in the case of Initial Notes tendered by
book-entry transfer into the Exchange Agent's account at the Book-Entry
Transfer Facility pursuant to the book-entry transfer procedures described
above, such non-exchanged Initial Notes will be credited to an account with
such Book-Entry Transfer Facility specified by the holder) as promptly as
practicable after the Exchange Date.
<PAGE>
CERTAIN CONDITIONS TO THE EXCHANGE OFFER
Notwithstanding any other provision of the Exchange Offer, or any
extension of the Exchange Offer, the Company shall not be required to accept
for exchange, or to issue Exchange Notes in exchange for, any Initial Notes
and may terminate or amend the Exchange Offer (by oral or written notice to
the Exchange Agent or by a timely press release) if at any time before the
acceptance of such Initial Notes for exchange or the exchange of the Exchange
Notes for such Initial Notes, any of the following conditions exist:
(a) any action or proceeding is instituted or threatened in any court
or by or before any governmental agency or regulatory authority or any
injunction, order or decree is issued with respect to the Exchange Offer
which, in the sole judgment of the Company, might materially impair the
ability of the Company to proceed with the Exchange Offer or have a
material adverse effect on the contemplated benefits of the Exchange
Offer to the Company; or
(b) any change (or any development involving a prospective change)
shall have occurred or be threatened in the business, properties, assets,
liabilities, financial condition, operations, results of operations or
prospects of the Company that is or may be adverse to the Company, or the
Company shall have become aware of facts that have or may have adverse
significance with respect to the value of the Initial Notes or the
Exchange Notes or that may materially impair the contemplated
benefits of the Exchange Offer to the Company; or
(c) any law, rule or regulation or applicable interpretations of the
staff of the SEC is issued or promulgated which, in the good faith
determination of the Company, do not permit the Company to effect the
Exchange Offer; or
(d) any governmental approval has not been obtained, which approval the
Company, in its sole discretion, deems necessary for the consummation of
the Exchange Offer; or
(e) there shall have been proposed, adopted or enacted any law, statute,
rule or regulation (or an amendment to any existing law statute, rule or
regulation) which, in the sole judgment of the Company, might materially
impair the ability of the Company to proceed with the Exchange Offer
or have a material adverse effect on the contemplated benefits of the
Exchange Offer to the Company; or
(f) there shall occur a change in the current interpretation by the
staff of the SEC which permits the Exchange Notes issued pursuant to the
Exchange Offer in exchange for Initial Notes to be offered for resale,
resold and otherwise transferred by holders thereof (other than any such
holder that is a broker-dealer or an "affiliate" of the Company within
the meaning of Rule 405 under the Securities Act) without compliance with
the registration and prospectus delivery provisions of the Securities
Act provided that such Exchange Notes are acquired in the ordinary course
of such holders' business and such holders have no arrangement with any
person to participate in the distribution of such Exchange Notes; or
(g) there shall have occurred (i) any general suspension of, shortening
of hours for, or limitation on prices for, trading in securities on any
national securities exchange or in the over-the-counter market (whether
<PAGE>
or not mandatory), (ii) any limitation by any governmental agency or
authority which may adversely affect the ability of the Company to
complete the transactions contemplated by the Exchange Offer, (iii) a
declaration of a banking moratorium or any suspension of payments
in respect of banks by Federal or state authorities in the United States
(whether or not mandatory), (iv) a commencement of a war, armed
hostilities or other international or national crisis directly or
indirectly involving the United States, (v) any limitation (whether or
not mandatory) by any governmental authority on, or other event having a
reasonable likelihood of affecting, the extension of credit by banks or
other leading institutions in the United States, or (vi) in the case of
any of the foregoing existing at the time of the commencement of the
Exchange Offer, a material acceleration or worsening thereof.
The Company expressly reserves the right to terminate the Exchange Offer
and not accept for exchange any Initial Notes upon the occurrence of any of
the foregoing conditions (which represent all of the material conditions to
the acceptance by the Company of properly tendered Initial Notes). In
addition, the Company may amend the Exchange Offer at any time prior to the
Expiration Date if any of the conditions set forth above occur. Moreover,
regardless of whether any of such conditions has occurred, the Company
may amend the Exchange Offer in any manner which, in its good faith judgment,
is advantageous to holders of the Initial Notes.
The foregoing conditions are for the sole benefit of the Company and may
be asserted by the Company regardless of the circumstances giving rise to any
such condition or may be waived by the Company in whole or in part at any time
and from time to time in its sole discretion. The failure by the Company at
any time to exercise any of the foregoing rights shall not be deemed a waiver
of any such right and each such right shall be deemed an ongoing right which
may be asserted at any time and from time to time. If the Company waives or
amends the foregoing conditions, it will, if required by law, extend the
Exchange Offer for a minimum of five business days from the date that the
Company first gives notice, by public announcement or otherwise, of such
waiver or amendment, if the Expiration Date would otherwise occur within such
five business-day period. Any determination by the Company concerning the
events described above will be final and binding upon all parties.
In addition, the Company will not accept for exchange any Initial Notes
tendered, and no Exchange Notes will be issued in exchange for any such
Initial Notes, if at such time any stop order shall be threatened or in effect
with respect to the Registration Statement of which this Prospectus
constitutes a part or the qualification of the Indenture under the Trust
Indenture Act of 1939, as amended. In any such event the Company is required
to use every reasonable effort to obtain the withdrawal of any stop order at
the earliest possible time.
The Exchange Offer is not conditioned upon any minimum principal amount
of Initial Notes being tendered for exchange.
EXCHANGE AGENT
Marine Midland Bank has been appointed as the Exchange Agent for the
Exchange Offer. All executed Letters of Transmittal should be directed to the
Exchange Agent at one of the addresses set forth below:
<PAGE>
BY HAND/OVERNIGHT COURIER: BY MAIL:
Marine Midland Bank (insured or registered recommended)
Attention: Corporate Trust Marine Midland Bank
Operations Attention: Corporate Trust
140 Broadway, Level A Operations
New York, New York 10005-1180 140 Broadway, Level A
New York, New York 10005-1180
BY FACSIMILE: (212) 658-2292
Attention: Paulette Shaw
Telephone: (212) 658-5931
Questions and requests for assistance, requests for additional copies of this
Prospectus or of the Letter of Transmittal and requests for Notices of
Guaranteed Delivery should be directed to the Exchange Agent at the address
and telephone number set forth in the Letter of Transmittal.
DELIVERY TO AN ADDRESS OTHER THAN AS SET FORTH IN THE LETTER OF
TRANSMITTAL, OR TRANSMISSIONS OF INSTRUCTIONS VIA A FACSIMILE OR TELEX NUMBER
OTHER THAN THE ONES SET FORTH IN THE LETTER OF TRANSMITTAL, WILL NOT
CONSTITUTE A VALID DELIVERY.
SOLICITATION OF TENDERS; FEES AND EXPENSES
The Company has not retained any dealer-manager in connection with the
Exchange Offer and will not make any payments to brokers, dealers or others
soliciting acceptances of the Exchange Offer. The Company, however, will pay
the Exchange Agent reasonable and customary fees for its services and will
reimburse it for its reasonable out-of-pocket expenses in connection
therewith. The Company will also pay brokerage houses and other custodians,
nominees and fiduciaries the reasonable out-of-pocket expenses incurred by
them in forwarding copies of this and other related documents to the
beneficial owners of the Initial Notes and in handling or forwarding tenders
for their customers.
The estimated cash expenses to be incurred in connection with the
Exchange Offer will be paid by the Company and are estimated in the aggregate
to be approximately $100,000, which includes fees and expenses of the Exchange
Agent, Trustee, registration fees, accounting, legal, printing and related
fees and expenses.
No person has been authorized to give any information or to make any
representations in connection with the Exchange Offer other than those
contained in this Prospectus. If given or made, such information or
representations should not be relied upon as having been authorized by the
Company.
Neither the delivery of this Prospectus nor any exchange made hereunder
shall, under any circumstances, create any implication that there has been no
change in the affairs of the Company since the respective dates as of which
information is given herein. The Exchange Offer is not being made to (nor will
tenders be accepted from or on behalf of) holders of Initial Notes in any
jurisdiction in which the making of the Exchange Offer or the acceptance
thereof would not be in compliance with the laws of such jurisdiction.
However, the Company may, at its discretion, take such action as it may deem
necessary to make the Exchange Offer in any such jurisdiction and extend the
Exchange Offer to holders of Initial Notes in such jurisdiction.
<PAGE>
TRANSFER TAXES
The Company will pay all transfer taxes, if any, applicable to the
exchange of Initial Notes pursuant to the Exchange Offer. If, however,
certificates representing Exchange Notes or Initial Notes for principal
amounts not tendered or accepted for exchange are to be delivered to, or are
to be issued in the name of, any person other than the registered holder of
the Initial Notes tendered, or if tendered Initial Notes are registered in the
name of any person other than the person signing the Letter of Transmittal, or
if a transfer tax is imposed for any reason other than the exchange of Initial
Notes pursuant to the Exchange Offer, then the amount of any such transfer
taxes (whether imposed on the registered holder or any other persons) will be
payable by the tendering holder. If satisfactory evidence of payment of such
taxes or exemption therefrom is not submitted with the Letter of Transmittal,
the amount of such transfer taxes will be billed directly to such tendering
holder.
ACCOUNTING TREATMENT
The Exchange Notes will be recorded at the carrying value of the Initial
Notes as reflected in the Company's accounting records on the Exchange Date.
Accordingly, no gain or loss for accounting purposes will be recognized by the
Company upon the exchange of Exchange Notes for Initial Notes. Expenses
incurred in connection with the issuance of the Exchange Notes will be
amortized over the term of the Exchange Notes.
CONSEQUENCES OF FAILURE TO EXCHANGE
Holders of Initial Notes who do not tender their Initial Notes for
Exchange Notes pursuant to the Exchange Offer will continue to be subject to
the restrictions on transfer of such Initial Notes as set forth in the legend
thereon. Initial Notes not exchanged pursuant to the Exchange Offer will
continue to remain outstanding in accordance with their terms. In general, the
Initial Notes may not be offered or sold unless registered under the
Securities Act, except pursuant to an exemption from, or in a transaction not
subject to, the Securities Act and applicable state securities laws. The
Company does not currently anticipate that it will register the Initial Notes
under the Securities Act.
Participation in the Exchange Offer is voluntary, and holders of Initial
Notes should carefully consider whether to participate. Holders of Initial
Notes are urged to consult their financial and tax advisors in making their
own decision whether or not to tender their Initial Notes. See "Certain
Federal Income Tax Consequences."
As a result of the making of, and upon acceptance for exchange of all
validly tendered Initial Notes pursuant to the terms of, this Exchange Offer,
the Company will have fulfilled a covenant contained in the Registration
Rights Agreement. Holders of Initial Notes who do not tender their Initial
Notes in the Exchange Offer will continue to hold such Initial Notes and will
be entitled to all the rights and limitations applicable thereto under the
Indenture, except for any such rights under the Registration Rights Agreement
that by their terms terminate or cease to have further effectiveness as a
result of the making of this Exchange Offer. All untendered Initial Notes will
continue to be subject to the restrictions on transfer set forth in the
legend thereon. To the extent that Initial Notes are tendered and accepted in
the Exchange Offer, the trading market for untendered Initial Notes could be
adversely affected.
<PAGE>
The Company may in the future seek to acquire, subject to the terms of
the Indenture, untendered Initial Notes in open market or privately negotiated
transactions, through subsequent exchange offers or otherwise. The Company has
no obligation and no present plan to acquire any Initial Notes which are not
tendered in the Exchange Offer.
RESALE OF EXCHANGE NOTES
The Company is making the Exchange Offer in reliance on the position of
the staff of the SEC as set forth in certain interpretive letters addressed to
third parties in other transactions. However, the Company has not sought its
own interpretive letter and there can be no assurance that the staff would
make a similar determination with respect to the Exchange Offer as it has in
such interpretive letters to third parties. Based on these interpretations by
the staff, the Company believes that the Exchange Notes issued pursuant to the
Exchange Offer in exchange for Initial Notes may be offered for resale, resold
and otherwise transferred by a holder (other than any holder who is a
broker-dealer or an "affiliate" of the Company within the meaning of Rule 405
of the Securities Act) without further compliance with the registration and
prospectus delivery requirements of the Securities Act, provided that such
Exchange Notes are acquired in the ordinary course of such holder's business
and that such holder is not participating, and has no arrangement or
understanding with any person to participate, in a distribution (within the
meaning of the Securities Act) of such Exchange Notes. However, any holder who
is an "affiliate" of the Company or who has an arrangement or understanding
with respect to the distribution of the Exchange Notes to be acquired pursuant
to the Exchange Offer, or any broker-dealer who purchased Initial Notes from
the Company to resell pursuant to Rule 144A or any other available exemption
under the Securities Act (i) cannot rely on the applicable interpretations
of the staff and (ii) must comply with the registration and prospectus
delivery requirements of the Securities Act. A broker-dealer who holds Initial
Notes that were acquired for its own account as a result of market-making or
other trading activities may be deemed to be an "underwriter" within the
meaning of the Securities Act and must, therefore, deliver a prospectus
meeting the requirements of the Securities Act in connection with any resale
of Exchange Notes. Each such broker-dealer that receives Exchange Notes for
its own account in exchange for Initial Notes, where such Initial Notes were
acquired by such broker-dealer as a result of market-making activities or
other trading activities (other than Initial Notes acquired directly from
the Company) must acknowledge in the Letter of Transmittal that it will
deliver a prospectus in connection with any resale of such Exchange Notes.
This Prospectus, as it may be amended or supplemented from time to time, may
be used by such broker-dealers in connection with such resales. See "Plan of
Distribution."
In addition, to comply with the securities laws of certain jurisdictions,
if applicable, the Exchange Notes may not be offered or sold unless they have
been registered or qualified for sale in such jurisdiction or an exemption
from registration or qualification is available and is complied with. The
Company has agreed, pursuant to the Registration Rights Agreement and subject
to certain specified limitations therein, to register or qualify the Exchange
Notes for offer or sale under the securities or blue sky laws of such
jurisdictions as any holder of the Exchange Notes reasonably requests. Such
registration or qualification may require the imposition of restrictions or
conditions (including suitability requirements for offerees or purchasers) in
connection with the offer or sale of any Exchange Notes.
<PAGE>
DESCRIPTION OF THE SENIOR NOTES
GENERAL
The Initial Notes were, and the Exchange Notes will be, issued pursuant
to an indenture dated as of April 27, 1998 (the "Indenture") between the
Company and Marine Midland Bank, as trustee (the "Trustee"), a copy of which
is filed as an exhibit to the Registration Statement of which this Prospectus
forms a part. The terms of the Senior Notes include those stated in the
Indenture and those made part of the Indenture by reference to the Trust
Indenture Act of 1939, as amended (the "Trust Indenture Act"). Upon the
issuance of the Exchange Notes, if any, or the effectiveness of a Shelf
Registration Statement (as defined herein), the Indenture will be subject to
and governed by the Trust Indenture Act. The Senior Notes are subject to all
such terms, and holders of Senior Notes are referred to the Indenture and the
Trust Indenture Act for a statement thereof. The following summary of the
material provisions of the Indenture does not purport to be complete and is
qualified in its entirety by reference to the Indenture, including the
definitions therein of certain terms used below. The definitions of certain
terms used in the following summary are set forth below under "Certain
Definitions." Unless the context requires otherwise, references to the Senior
Notes shall include the Exchange Notes.
The Senior Notes are unsecured senior obligations of the Company, rank
senior in right of payment to all existing and future Subordinated
Indebtedness of the Company and rank pari passu in right of payment with all
existing and future Senior Indebtedness of the Company, including indebtedness
under the Revolving Credit Facility and the Series B Senior Notes. As of
January 31, 1998, after giving effect to the JPF Acquisition, the issuance of
the Initial Notes and the application of the net proceeds therefrom, the
Company would have had approximately $180 million of total indebtedness. The
Indenture limits the ability of the Company and its Subsidiaries to incur
additional indebtedness; however, subject to certain limitations, the Company
and its Subsidiaries are permitted to incur certain indebtedness, which may be
secured. See "Certain Covenants."
PRINCIPAL, MATURITY AND INTEREST
The Senior Notes are limited in aggregate principal amount to $40 million
and will mature on May 15, 2007. Interest on the Senior Notes accrues at the
rate of 10-3/8% per annum and will be payable in cash semi-annually in arrears
on May 15 and November 15, commencing on November 15, 1998, to holders of
record on the immediately preceding May 1 and November 1, respectively.
Interest on the Senior Notes accrues from the most recent date to which
interest has been paid or, if no interest has been paid, from the date of
original issuance. Interest will be computed on the basis of a 360-day year
comprised of twelve 30-day months. Principal, premium, if any, and interest
on the Senior Notes will be payable at the office or agency of the Company
maintained for such purpose within the City and State of New York or, at the
option of the Company, payment of interest may be made by check mailed to the
holders of the Senior Notes at their respective addresses set forth in the
register of holders of Senior Notes. Until otherwise designated by the
Company, the Company's office or agency in New York will be the office of the
Trustee maintained for such purpose. The Exchange Notes will be issued in
registered form, without coupons, in denominations of $1,000 and integral
multiples thereof.
<PAGE>
OPTIONAL REDEMPTION
The Senior Notes are not redeemable at the Company's option prior to May
15, 2002. Thereafter, the Senior Notes are subject to redemption, at the
option of the Company, in whole or in part, upon not less than 30 nor more
than 60 days' notice, in cash, at the redemption prices (expressed as
percentages of principal amount) set forth below, plus accrued and unpaid
interest, if any, thereon to the applicable redemption date, if redeemed
during the twelve-month period beginning on May 15 of the years indicated
below:
<TABLE>
<CAPTION>
YEAR PERCENTAGE
---- ----------
<S> <C>
2002. . . . . . . . . . . . . . . . .105.188%
2003. . . . . . . . . . . . . . . . .103.458%
2004. . . . . . . . . . . . . . . . .101.729%
2005 and thereafter . . . . . . . . .100.000%
</TABLE>
Notwithstanding the foregoing, at any time prior to May 15, 2000, the
Company, at its option, may on any one or more occasions redeem up to 35% of
the initially outstanding aggregate principal amount of Senior Notes at a
redemption price equal to 109 3/8% of the principal amount thereof, plus
accrued and unpaid interest, if any, thereon to the redemption date, with the
net proceeds of one or more public equity offerings of the Company generating
in each case net proceeds of at least $15.0 million; provided that at least
65% of the initially outstanding aggregate principal amount of Senior Notes
remains outstanding immediately after the occurrence of any such redemption;
and provided, further, that such redemption occurs within 60 days of the date
of the closing of any such public equity offering of the Company.
MANDATORY REDEMPTION
Except as set forth below under "Repurchase at the Option of Holders,"
the Company is not required to make mandatory redemption or sinking fund
payments with respect to the Senior Notes.
REPURCHASE AT THE OPTION OF HOLDERS
CHANGE OF CONTROL
Upon the occurrence of a Change of Control, each holder of Senior Notes
will have the right to require the Company to repurchase all or any part
(equal to $1,000 or an integral multiple thereof) of such holder's Senior
Notes pursuant to the offer described below (the "Change of Control Offer") at
an offer price in cash equal to 101% of the aggregate principal amount
thereof, plus accrued and unpaid interest, if any, thereon to the date of
purchase (the "Change of Control Payment"). Within 60 days following any
Change of Control, the Company will mail a notice to each holder describing
the transaction or transactions that constitute the Change of Control and
offering to repurchase Senior Notes pursuant to the procedures required
by the Indenture and described in such notice. The Company will comply with
the requirements of Rule 14e-1 under the Exchange Act and any other securities
laws and regulations thereunder to the extent such laws and regulations are
applicable in connection with the repurchase of the Senior Notes as a result
of a Change of Control.
<PAGE>
On the payment date set forth in the Change of Control Offer (the "Change
of Control Payment Date"), the Company will, to the extent lawful, (i) accept
for payment all Senior Notes or portions thereof properly tendered pursuant to
the Change of Control Offer, (ii) deposit with the Paying Agent an amount
equal to the Change of Control Payment in respect of all Senior Notes or
portions thereof so tendered and (iii) deliver or cause to be delivered to the
Trustee the Senior Notes so accepted together with an Officers' Certificate
stating the aggregate principal amount of Senior Notes or portions thereof
being purchased by the Company. The Paying Agent will promptly mail to each
holder of Senior Notes so tendered the Change of Control Payment for such
Senior Notes, and the Trustee will promptly authenticate and mail (or cause to
be transferred by book entry) to each holder a new Senior Note equal in
principal amount to any unpurchased portion of the Senior Notes surrendered,
if any; provided that each such new Senior Note will be in a principal amount
of $1,000 or an integral multiple thereof. The Company will publicly announce
the results of the Change of Control Offer on or as soon as practicable after
the Change of Control Payment Date.
"CHANGE OF CONTROL" means the occurrence of any of the following: (i) the
sale, lease, transfer, conveyance or other disposition (other than by way of
merger or consolidation), in one or a series of related transactions, of all
or substantially all of the assets of the Company and its Subsidiaries taken
as a whole to any "person" (as such term is used in Section 13(d)(3) of the
Exchange Act) (other than the Principals or their Related Parties (as defined
below)), (ii) the adoption of a plan relating to the liquidation or
dissolution of the Company, (iii) the consummation of any transaction or
series of transactions (including, without limitation, any merger or
consolidation) the result of which is that any "person" (as defined above)
(other than the Principals and their Related Parties) becomes the "beneficial
owner" (as such term is defined in Rule 13d-3 and Rule 13d-5 under the
Exchange Act), directly or indirectly, of (a) 35% or more of the voting
Capital Interests of the Company and (b) more of the voting Capital Interests
of the Company than are, in the aggregate, beneficially owned by the
Principals and their Related Parties at the time of such consummation, or (iv)
the first day on which a majority of the members of the Board of Directors are
not Continuing Directors. For purposes of this definition, any transfer of an
equity interest of an entity that was formed for the purpose of acquiring
voting Capital Interests of the Company will be deemed to be a transfer
of such portion of such voting Capital Interests as corresponds to the portion
of the equity of such entity that has been so transferred.
The definition of Change of Control includes a phrase relating to the
sale, lease, transfer, conveyance or other disposition of "all or
substantially all" of the assets of the Company and its Subsidiaries taken as
a whole. Although there is a developing body of case law interpreting the
phrase "substantially all," there is no precise established definition of the
phrase under applicable law. Accordingly, the ability of a holder of
Senior Notes to require the Company to repurchase such Senior Notes as a
result of a sale, lease, transfer, conveyance or other disposition of less
than all of the assets of the Company and its Subsidiaries taken as
a whole to another person or group may be uncertain.
"CONTINUING DIRECTORS" means, as of any date of determination, any member
of the Board of Directors who (i) was a member of such Board of Directors on
the date of the Indenture or (ii) was nominated for election or elected to
such Board of Directors with the approval of (a) a majority of the
Principals who were beneficial owners of voting Capital Interests of the
<PAGE>
Company at the time of such nomination or election or (b) a majority of the
Continuing Directors who were members of such Board of Directors at the time
of such nomination or election.
"PRINCIPALS" means Rafael Kravec, E. Scott Beattie, J.W. Nevil Thomas,
Fred Berens and Richard C.W. Mauran.
"RELATED PARTY" with respect to any Principal means (a) any spouse or
immediate family member of such Principal or (b) any trust, corporation,
partnership or other entity, the beneficiaries, stockholders, partners, owners
or Persons beneficially holding an 80% or more controlling interest of which
consist of such Principal and/or such other Persons referred to in the
immediately preceding clause (a).
Except as described above with respect to a Change of Control, the
Indenture does not contain provisions that permit the holders of the Senior
Notes to require that the Company repurchase or redeem the Senior Notes in the
event of a takeover, recapitalization or similar restructuring.
ASSET SALES
The Indenture provides that the Company will not, and will not permit any
of its Subsidiaries to, engage in an Asset Sale, unless (a) the Company (or
the Subsidiary, as the case may be) receives consideration at the time of such
Asset Sale at least equal to the fair market value (evidenced by a resolution
of the Board of Directors set forth in an Officers' Certificate delivered to
the Trustee) of the assets or Equity Interests issued or sold or otherwise
disposed of and (b) at least 75% of the consideration therefor received
by the Company or such Subsidiary is in the form of cash or Cash Equivalents;
provided that the amount of (i) any liabilities (as shown on the Company's or
such Subsidiary's most recent balance sheet or in the notes thereto) of the
Company or any Subsidiary (other than liabilities that are by their terms
subordinated to the Senior Notes or any guarantee thereof) that are assumed by
the transferee of any such assets and (ii) any securities, notes or other
obligations received by the Company or any such Subsidiary from such
transferee that are promptly converted by the Company or such Subsidiary into
cash (to the extent of the cash received), will be deemed to be cash for
purposes of this provision.
Within 180 days after the receipt of any Net Proceeds from an Asset Sale,
the Company may apply such Net Proceeds (a) to permanently reduce Senior
Indebtedness, (b) to permanently reduce Indebtedness permitted to be incurred
pursuant to clause (i) of the second paragraph of the covenant described below
under "Certain Covenants-Incurrence of Indebtedness and Issuance of
Disqualified Stock" or (c) to an Investment in another business, the making of
a capital expenditure or the acquisition of other tangible assets, in each
case, in the same or a similar or related line of business as the Company and
its Subsidiaries were engaged in on the date of the Indenture. Any Net
Proceeds from Asset Sales that are not applied or invested as provided in the
first sentence of this paragraph will be deemed to constitute "Excess
Proceeds." Within 30 days after the aggregate amount of Excess Proceeds
exceeds $10.0 million, the Company will be required to make an offer to all
holders of Senior Notes (an "Asset Sale Offer") to purchase the maximum
principal amount of Senior Notes that may be purchased out of the Excess
Proceeds, at an offer price in cash in an amount equal to 100% of the
principal amount thereof, plus accrued and unpaid interest, if any, thereon
to the date of purchase (the "Asset Sale Offer Price"), in accordance with the
<PAGE>
procedures set forth in the Indenture; provided that if by reason of the
comparable provision in the indenture relating to the Series B Senior Notes,
the Company is required to make a similar offer to the holders of the Series B
Senior Notes, the Excess Proceeds may first be applied to the purchase of the
Series B Senior Notes and, to the extent so applied, the Excess Proceeds
available for the purchase of Senior Notes shall be correspondingly reduced.
To the extent that the aggregate amount of Senior Notes tendered pursuant to
an Asset Sale Offer is less than the Excess Proceeds available to purchase
Senior Notes, the Company and its Subsidiaries may use any remaining Excess
Proceeds for general corporate purposes. If the aggregate principal amount of
Senior Notes surrendered by holders thereof exceeds the amount of Excess
Proceeds available to purchase Senior Notes, the Trustee will select the
Senior Notes to be purchased on a pro rata basis. Upon completion of such
offer to purchase, the amount of Excess Proceeds will be reset at zero.
SELECTION AND NOTICE
If less than all of the Senior Notes are to be redeemed at any time,
selection of Senior Notes for redemption will be made by the Trustee in
compliance with the requirements of the principal national securities
exchange, if any, on which the Senior Notes are listed, or, if the Senior
Notes are not so listed, on a pro rata basis, by lot or by such method as the
Trustee shall deem fair and appropriate; provided that no Senior Notes of
$1,000 or less will be redeemed in part. Notices of redemption will be mailed
by first class mail at least 30 but not more than 60 days before the
redemption date to each holder of Senior Notes to be redeemed at its
registered address. If any Senior Note is to be redeemed in part only, the
notice of redemption that relates to such Senior Note will state the portion
of the principal amount thereof to be redeemed. A new Senior Note in principal
amount equal to the unredeemed portion thereof will be issued in the name of
the holder thereof upon cancellation of the original Senior Note. On and after
the redemption date, interest ceases to accrue on Senior Notes or portions
thereof called for redemption unless the Company defaults in making the
redemption payment.
CERTAIN COVENANTS
RESTRICTED PAYMENTS
The Indenture provides that the Company will not, and will not permit any
of its Subsidiaries to, directly or indirectly, (i) declare or pay any
dividend or make any distribution on account of the Company's or any of its
Subsidiaries' Equity Interests (including, without limitation, any such
distribution by such Persons in connection with any merger or consolidation
involving the Company) (other than dividends or distributions payable in
Equity Interests (other than Disqualified Stock) of the Company or dividends
or distributions payable to the Company or any Subsidiary of the Company);
(ii) purchase, redeem or otherwise acquire or retire for value any Equity
Interests of the Company or any direct or indirect parent of the Company;
(iii) make any principal payment on, or purchase, redeem, defease or otherwise
acquire or retire for value any Subordinated Indebtedness, except at scheduled
maturity; or (iv) make any Restricted Investment (all such payments and other
actions set forth in clauses (i) through (iv) above being collectively
referred to as "Restricted Payments"), unless, at the time of and after giving
effect to such Restricted Payment:
<PAGE>
(A) no Default or Event of Default shall have occurred and be
continuing or would occur as a consequence thereof; and
(B) the Company would, at the time of such Restricted Payment and
after giving pro forma effect thereto as if such Restricted Payment had
been made at the beginning of the most recently ended four fiscal
quarters for which financial statements are available, have been
permitted to incur at least $1.00 of additional Indebtedness pursuant to
the Fixed Charge Coverage Ratio test set forth in the first paragraph of
the covenant described below under the caption "Incurrence of
Indebtedness and Issuance of Disqualified Stock"; and
(C) such Restricted Payment, together with the aggregate of all
other Restricted Payments made by the Company and its Subsidiaries after
the date of the Indenture (excluding Restricted Payments permitted by
clauses (ii) and (iii) of the next succeeding paragraph), is less than
the sum of (1) 50% of the Consolidated Net Income of the Company for the
period (taken as one accounting period) from the beginning of the first
fiscal quarter commencing after the date of the Indenture to the end of
the Company's most recently ended fiscal quarter for which internal
financial statements are available at the time of such Restricted Payment
(or, if such Consolidated Net Income for such period is a deficit, less
100% of such deficit), plus (2) 100% of the aggregate net cash proceeds
received by the Company from the issuance or sale since the date of the
Indenture of Equity Interests of the Company or of debt securities of the
Company that have been converted into such Equity Interests (other than
Equity Interests (or convertible debt securities) sold to a Subsidiary of
the Company and other than Disqualified Stock or debt securities that
have been converted into Disqualified Stock or Equity Interests issued
upon conversion of the Company's Series B Convertible Preferred Stock,
$.01 par value, or Series C Convertible Preferred Stock, $.01 par value,
outstanding on the date of the Indenture), plus (3) to the extent that
any Restricted Investment that was made after the date of the Indenture
is sold for cash or otherwise liquidated or repaid for cash, the lesser
of (x) the cash return of capital with respect to such Restricted
Investment (less the cost of disposition, if any) and (y) the initial
amount of such Restricted Investment.
The foregoing provisions will not prohibit (i) the payment of any
dividend or distribution within 60 days after the date of declaration thereof,
if at said date of declaration such payment would have complied with the
provisions of the Indenture; (ii) the redemption, repurchase, retirement or
other acquisition of any Equity Interests of the Company in exchange for, or
out of the proceeds of, the substantially concurrent sale (other than to a
Subsidiary of the Company) of other Equity Interests of the Company (other
than any Disqualified Stock); provided that the amount of any such net cash
proceeds that are utilized for any such redemption, repurchase, retirement or
other acquisition will be excluded from clause (C)(2) of the preceding
paragraph; and (iii) the defeasance, redemption or repurchase of Subordinated
Indebtedness with the net cash proceeds from an incurrence of Permitted
Refinancing Indebtedness or the substantially concurrent sale (other than to a
Subsidiary of the Company) of Equity Interests of the Company (other than
Disqualified Stock); provided that the amount of any such net cash proceeds
that are utilized for any such redemption, repurchase, retirement or other
acquisition will be excluded from clause (C)(2) of the preceding paragraph.
<PAGE>
The amount of all Restricted Payments (other than cash) will be the fair
market value (evidenced by a resolution of the Board of Directors set forth in
an Officers' Certificate delivered to the Trustee) on the date of the
Restricted Payment of the asset(s) proposed to be transferred by the Company
or such Subsidiary, as the case may be, pursuant to the Restricted Payment.
Not later than the date of making any Restricted Payment, the Company will
deliver to the Trustee an Officers' Certificate stating that such Restricted
Payment is permitted and setting forth the basis upon which the calculations
required by the covenant "Restricted Payments" were computed, which
calculations may be based upon the Company's latest available
financial statements.
INCURRENCE OF INDEBTEDNESS AND ISSUANCE OF DISQUALIFIED STOCK
The Indenture provides that the Company will not, and will not permit any
of its Subsidiaries to, directly or indirectly, create, incur, issue, assume,
guaranty or otherwise become directly or indirectly liable, contingently or
otherwise, with respect to (collectively, "incur") any Indebtedness (including
Acquired Debt) and that the Company will not issue any Disqualified Stock;
provided that the Company may incur Indebtedness (including Acquired Debt) or
issue Disqualified Stock and any Subsidiary may incur Indebtedness (including
Acquired Debt), if, (i) in each case, the Fixed Charge Coverage Ratio for the
Company's most recently ended four full fiscal quarters for which internal
financial statements are available immediately preceding the date on which
such additional Indebtedness is incurred or such Disqualified Stock is issued
would have been at least (a) 2.00 to 1, on or prior to May 15, 1999 and (b)
2.25 to 1, thereafter, in each case, determined on a pro forma basis
(including a pro forma application of the net proceeds therefrom), as if the
additional Indebtedness had been incurred, or the Disqualified Stock had been
issued, as the case may be, at the beginning of such four-quarter period and
(ii) in the case of incurrence of Indebtedness by a Subsidiary (other than
Acquired Debt), such Subsidiary guarantees on a senior unsecured basis (a
"Subsidiary Guarantee") the Company's payment obligations under the Senior
Notes (each such Subsidiary, a "Subsidiary Guarantor"). See "Subsidiary
Guarantees" and "Limitations on Issuances of Guarantees of Indebtedness."
The foregoing provisions do not apply to:
(i) the incurrence by the Company and any Subsidiary Guarantor of
Senior Revolving Debt and letters of credit pursuant to any Credit
Facility for working capital purposes (with letters of credit being
deemed to have a principal amount equal to the maximum potential
liability of the Company thereunder) in an aggregate principal amount not
to exceed the amount of the Borrowing Base;
(ii) the incurrence by the Company of the Existing Indebtedness;
(iii) the incurrence by the Company of the Indebtedness represented
by the Senior Notes and the incurrence by any Subsidiary Guarantor of the
Indebtedness represented by its Subsidiary Guarantee;
(iv) the incurrence by the Company and any Subsidiary Guarantor of
Permitted Refinancing Indebtedness in exchange for, or the net proceeds
of which are used to extend, refinance, renew, replace, defease or
refund, Indebtedness that was permitted by the Indenture to be incurred;
<PAGE>
(v) the incurrence by the Company or any Subsidiary Guarantor of
intercompany Indebtedness between or among the Company and any of its
Subsidiaries; provided that (A) any subsequent issuance or transfer of
Equity Interests that results in any such Indebtedness being held
by a Person other than a Wholly Owned Subsidiary and (B) any sale or
other transfer of any such Indebtedness to a Person that is not either
the Company or a Wholly Owned Subsidiary will be deemed, in each case, to
constitute an incurrence of such Indebtedness by the Company or such
Subsidiary, as the case may be;
(vi) the incurrence by the Company and any Subsidiary Guarantor of
Indebtedness (A) represented by Capital Lease Obligations, mortgage
financings or purchase money obligations, in each case incurred for the
purpose of financing up to all or any part of the purchase price or cost
of construction or improvement of property used in the business of the
Company or such Subsidiary Guarantor, or (B) represented by mortgage
financing secured solely by the Miami Lakes Facility (in addition to
Indebtedness permitted to be incurred pursuant to clauses (ii) or (iv)
above in this covenant) in a principal amount for (A) and (B) in the
aggregate not to exceed $7.5 million at any time outstanding;
(vii) the incurrence by the Company and any Subsidiary Guarantor of
Hedging Obligations in the ordinary course of business of the Company or
such Subsidiary Guarantor, as the case may be;
(viii) the incurrence by the Company and any Subsidiary Guarantor of
statutory obligations, surety or appeal bonds, performance bonds or other
obligations of a like nature incurred in the ordinary course of business
of the Company or such Subsidiary Guarantor, as the case may be; and
(ix) the incurrence by the Company and any Subsidiary Guarantor of
Indebtedness not otherwise permitted under the Indenture in an aggregate
amount for all such Indebtedness not to exceed $7.5 million at any time
outstanding.
The Company will not incur any secured Indebtedness which is not Senior
Indebtedness. No Subsidiary Guarantor will incur any secured Indebtedness
which is not Guarantor Senior Indebtedness.
LIENS
The Indenture provides that the Company will not, and will not permit any
of its Subsidiaries to, create, incur, assume or otherwise cause or suffer to
exist or become effective any Lien of any kind (other than Permitted Liens)
upon any of their property or assets, now owned or hereafter acquired, unless
all payments due under the Indenture and the Senior Notes, and all obligations
under the Subsidiary Guarantees, if any, are secured on an equal and ratable
basis with the obligations so secured until such time as such obligations are
no longer secured by a Lien.
DIVIDEND AND OTHER PAYMENT RESTRICTIONS AFFECTING SUBSIDIARIES
The Indenture provides that the Company will not, and will not permit any
of its Subsidiaries to, directly or indirectly, create or otherwise cause or
suffer to exist or become effective any encumbrance or restriction on the
ability of any Subsidiary to (a)(i) pay dividends or make any other
distributions to the Company or any of its Subsidiaries (A) on their Capital
Interests or (B) with respect to any other interest or participation in, or
measured by, its profits, or (ii) pay any Indebtedness owed to the Company or
any of its Subsidiaries, (b) make loans or advances to the Company or any of
its Subsidiaries or (c) transfer any of its properties or assets to the
Company or any of its Subsidiaries, except for such encumbrances or
restrictions existing under or by reason of (i) Existing Indebtedness as in
effect on the date of the Indenture, including, without limitation, the Series
B Senior Notes and the indenture related thereto, (ii) any Credit Facility,
provided that any amendments, modifications, restatements, renewals,
increases, supplements, refundings, replacements or refinancings thereto are
no more restrictive with respect to such dividend and other payment
restrictions than those contained in the Revolving Credit Facility as in
effect on the date of the Indenture, (iii) the Indenture and the Senior Notes,
(iv) applicable law, (v) by reason of customary non-assignment provisions in
leases entered into in the ordinary course of business and consistent with
past practices, (vi) Capital Lease Obligations, mortgage financings or
purchase money obligations for property acquired in the ordinary course of
business or mortgage financings secured by the Miami Lakes Facility that
impose restrictions of the nature described in clause (c) above on the
property so acquired or the Miami Lakes Facility, as the case may be, (vii)
existing with respect to any Person or the property or assets of such Person
acquired by the Company or any of its Subsidiaries, at the time of such
acquisition and not incurred in contemplation thereof, which encumbrances or
restrictions are not applicable to any Person or the property or assets of any
Person other than such Person or the property or assets of such Person so
acquired, or (viii) Permitted Refinancing Indebtedness, provided that the
restrictions contained in the agreements governing such Permitted Refinancing
Indebtedness are no more restrictive than those contained in the agreements
governing the Indebtedness being refinanced.
MERGER, CONSOLIDATION, OR SALE OF ASSETS
The Indenture provides that the Company may not consolidate or merge with
or into (whether or not the Company is the surviving corporation), or sell,
assign, transfer, lease, convey or otherwise dispose of all or substantially
all of its assets in one or more related transactions to, another corporation,
Person or entity, unless (i) the Company is the surviving Person or the entity
or the Person formed by or surviving any such consolidation or merger (if
other than the Company) or to which such sale, assignment, transfer, lease,
conveyance or other disposition shall have been made is organized and existing
under the laws of the United States, any state thereof or the District of
Columbia; (ii) the entity or Person formed by or surviving any such
consolidation or merger (if other than the Company) or the entity or Person to
which such sale, assignment, transfer, lease, conveyance or other disposition
shall have been made assumes all the obligations of the Company under the
Senior Notes and the Indenture pursuant to a supplemental indenture in a form
reasonably satisfactory to the Trustee; (iii) immediately after such
transaction no Default or Event of Default exists; and (iv) the Company or the
entity or Person formed by or surviving any such consolidation or merger, or
to which such sale, assignment, transfer, lease, conveyance or other
disposition shall have been made (A) will have Consolidated Net Worth
immediately after the transaction equal to or greater than the
Consolidated Net Worth of the Company immediately preceding the transaction
and (B) except in the case of a transaction the principal purpose and effect
of which is to change the Company's state of incorporation, will, at the time
of such transaction and after giving pro forma effect thereto as if such
transaction had occurred at the beginning of the applicable four-quarter
period, be permitted to incur at least $1.00 of additional Indebtedness
pursuant to the Fixed Charge Coverage Ratio test set forth in the first
paragraph of the covenant described above under the caption "Incurrence of
Indebtedness and Issuance of Disqualified Stock."
<PAGE>
Transactions with Affiliates
The Indenture provides that the Company will not, and will not permit any
of its Subsidiaries to, sell, lease, transfer or otherwise dispose of any of
its properties or assets to, or purchase any property or assets from, or enter
into or make any contract, agreement, understanding, loan, advance or
guarantee with, or for the benefit of, any Affiliate (each of the foregoing,
an "Affiliate Transaction"), unless (a) such Affiliate Transaction is on terms
that are no less favorable to the Company or the relevant Subsidiary than
those that would have been obtained in a comparable transaction by the Company
or such Subsidiary with an unrelated Person and (b) the Company delivers to
the Trustee (i) with respect to any Affiliate Transaction involving
aggregate consideration in excess of $1.0 million, a resolution of the Board
of Directors set forth in an Officers' Certificate certifying that such
Affiliate Transaction complies with clause (a) above and that such
Affiliate Transaction has been approved by a majority of the disinterested
members of the Board of Directors and (ii) with respect to any Affiliate
Transaction involving aggregate consideration in excess of $5.0 million,
an opinion as to the fairness to the Company or such Subsidiary of such
Affiliate Transaction from a financial point of view issued by a
nationally-recognized investment banking firm; provided that (A) any
reasonable employment, compensation, bonus or benefit arrangement entered into
by the Company or any of its Subsidiaries in the ordinary course of business
of the Company or such Subsidiary, including without limitation, (x) the grant
of stock options, stock appreciation rights or other stock-based incentive
awards (other than Disqualified Stock) in the ordinary course of business of
the Company or such Subsidiary, as the case may be, provided that any
non-stock payments by the Company or any Subsidiary in connection with
the grant or exercise or other settlement of such stock options, stock
appreciation rights or other stock-based incentive awards are permitted under
the provisions of the Indenture described above under "Restricted
Payments" and (y) the payment of bonuses to officers of the Company from the
Company's 6% Bonus Pool and any renewals, extensions or amendments thereof,
provided that amounts paid thereunder with respect to any fiscal year shall
not exceed in the aggregate 6% of the Company's pre-tax profits for such
fiscal year as determined pursuant to the terms of the 6% Bonus Pool as in
effect on the date of the Indenture, (B) transactions between or among the
Company and/or its Subsidiaries, (C) the payment of reasonable fees,
expense reimbursement and customary indemnification, advances and other
similar arrangements to directors and officers of the Company, (D) reasonable
loans or advances to employees of the Company and its Subsidiaries in the
ordinary course of business of the Company or such Subsidiary, as the case may
be, (E) transactions permitted by the provisions of the Indenture described
above under the caption "Restricted Payments," (F) scheduled payments of
principal and interest with respect to Existing Indebtedness and (G)
scheduled payments pursuant to the lease of the National Trading Facility as
in effect on the date of the Indenture, in each case, shall not be deemed to
be Affiliate Transactions.
SALE AND LEASEBACK TRANSACTIONS
The Indenture provides that the Company will not, and will not permit any
of its Subsidiaries to, enter into any sale and leaseback transaction;
provided that the Company and any Subsidiary Guarantor may enter into a sale
and leaseback transaction if (a) the Company or such Subsidiary Guarantor
could have (i) incurred Indebtedness in an amount equal to the Attributable
Debt relating to such sale and leaseback transaction pursuant to the covenant
<PAGE>
described above under the caption "Incurrence of Indebtedness and Issuance of
Disqualified Stock" and (ii) incurred a Lien to secure such Indebtedness
pursuant to the covenant described above under the caption "Liens," (b) the
gross cash proceeds of such sale and leaseback transaction are at least equal
to the fair market value (as determined in good faith by the Board of
Directors and set forth in an Officers' Certificate delivered to the Trustee)
of the property that is the subject of such sale and leaseback transaction and
(c) the transfer of assets in such sale and leaseback transaction is permitted
by, and the Company or such Subsidiary Guarantor applies the proceeds of such
transaction in compliance with, the covenant described above under the caption
"Repurchase at the Option of Holders Asset Sales."
LIMITATION ON ISSUANCES AND SALES OF CAPITAL INTERESTS OF WHOLLY OWNED
SUBSIDIARIES
The Indenture provides that the Company (a) will not, and will not permit
any Wholly Owned Subsidiary of the Company to, transfer, convey, sell, lease
or otherwise dispose of (including by way of merger, consolidation or similar
transaction) any Capital Interests of any Wholly Owned Subsidiary of the
Company to any Person (other than the Company or a Wholly Owned Subsidiary of
the Company), unless (i) such transfer, conveyance, sale, lease or other
disposition is of all the Capital Interests of such Wholly Owned Subsidiary
and (ii) the cash Net Proceeds from such transfer, conveyance, sale, lease or
other disposition are applied in accordance with the covenant described above
under the caption "Repurchase at the Option of Holders-Asset Sales," and (b)
will not permit any Wholly Owned Subsidiary of the Company to issue any of its
Equity Interests (other than, if necessary, Capital Interests constituting
directors' qualifying shares or interests) to any Person other than to the
Company or a Wholly Owned Subsidiary of the Company, except to the extent that
(x) in the case of clause (a) above, such transfer, conveyance, sale, lease or
other disposition is by a Wholly Owned Subsidiary of any such Capital
Interests to a Subsidiary of the Company and does not constitute an Asset Sale
by reason of clause (a) of the last sentence of the definition of "Asset Sale"
and (y) in the case of clause (b) above, any such issuance of Equity Interests
is to a Subsidiary of the Company and does not constitute an Asset Sale by
reason of clause (b) of the last sentence of the definition of "Asset Sale."
LIMITATION ON PREFERRED STOCK OR PREFERRED EQUITY INTERESTS OF
SUBSIDIARIES
The Indenture provides that the Company will not permit any of its
Subsidiaries to issue or sell any preferred stock or preferred Equity
Interests (other than to the Company or to a Wholly Owned Subsidiary
of the Company) or permit any Person (other than the Company or a Wholly Owned
Subsidiary of the Company) to own any preferred stock or preferred Equity
Interests of any Subsidiary.
BUSINESS ACTIVITIES
The Indenture provides that the Company will not, and will not permit any
Significant Subsidiary to, engage in any business other than such business
activities as the Company and its Subsidiaries are engaged in on the date of
the Indenture and such business activities similar or reasonably related
thereto.
<PAGE>
PAYMENTS FOR CONSENT
The Indenture provides that neither the Company nor any of its
Subsidiaries will, directly or indirectly, pay or cause to be paid any
consideration, whether by way of interest, fee or otherwise, to any
holder of any Senior Notes for or as an inducement to any consent, waiver or
amendment of any of the terms or provisions of the Indenture or the Senior
Notes, unless such consideration is offered to be paid or agreed
to be paid to all holders of the Senior Notes that consent, waive or agree to
amend in the time frame set forth in the solicitation documents relating to
such consent, waiver or agreement.
REPORTS
The Indenture provides that, whether or not required by the rules and
regulations of the Commission, so long as any Senior Notes are outstanding,
the Company will furnish to the holders of Senior Notes (i) all quarterly and
annual financial information that would be required to be contained in a
filing with the Commission on Forms 10-Q and 10-K if the Company were required
to file such forms, including a "Management's Discussion and Analysis of
Financial Condition and Results of Operations" and, with respect to the annual
information only, a report thereon by the Company's certified independent
accountants and (ii) all current reports that would be required to be filed
with the Commission on Form 8-K if the Company were required to file such
reports. In addition, whether or not required by the rules and regulations of
the Commission, the Company will file a copy of all such information and
reports with the Commission for public availability (unless the Commission
will not accept such a filing) and make such information available to
securities analysts and prospective investors upon request.
SUBSIDIARY GUARANTEES
As described above under the caption "Incurrence of Indebtedness and
Issuance of Disqualified Stock," the Indenture permits any Subsidiary to incur
Indebtedness under certain circumstances, provided that, in certain cases,
such Subsidiary guarantees on a senior unsecured basis the Company's payment
obligations under the Senior Notes. To effect such Guarantee, such Subsidiary
will, no later than the incurrence of such Indebtedness, execute and deliver
to the Trustee a supplemental indenture to the Indenture providing for the
Guarantee of the payment of the Senior Notes by such Subsidiary Guarantor.
Each Subsidiary Guarantee will be a senior unsecured obligation of the
Subsidiary Guarantor issuing such Subsidiary Guarantee and will rank pari
passu in right of payment with all Guarantor Senior Indebtedness
of such Subsidiary Guarantor. The obligations of each Subsidiary Guarantor
under its Subsidiary Guarantee will be limited so as to not to constitute a
fraudulent conveyance under applicable law. See "Risk Factors-Fraudulent
Conveyance."
The Indenture provides that no Subsidiary Guarantor may consolidate with
or merge with or into (whether or not such Subsidiary Guarantor is the
surviving Person), another corporation, Person or entity whether or not
affiliated with such Subsidiary Guarantor (other than the Company or a
Subsidiary Guarantor), unless (i) subject to the provisions of the following
paragraph, the Person formed by or surviving any such consolidation or merger
(if other than such Subsidiary Guarantor) assumes all the obligations of
such Subsidiary Guarantor, pursuant to a supplemental indenture in form and
substance reasonably satisfactory to the Trustee, under the Senior Notes and
<PAGE>
the Indenture, (ii) immediately after giving effect to such transaction, no
Default or Event of Default exists and (iii) such Subsidiary Guarantor, or any
Person formed by or surviving any such consolidation or merger, would be
permitted by virtue of the Company's pro forma Fixed Charge Coverage Ratio to
incur, immediately after giving effect to such transaction, at least
$1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage Ratio
test set forth in the covenant described above under the caption "Incurrence
of Indebtedness and Issuance of Disqualified Stock"; provided that the
foregoing provisions will not apply to any Asset Sale subject to the
provisions described above under the caption "Repurchase at the Option of
Holders-Asset Sales."
The Indenture provides that, (i) in the event of a sale or other
disposition of all, or substantially all, of the assets of any Subsidiary
Guarantor, by way of merger, consolidation or otherwise, or a sale or other
disposition of all of the capital stock of any Subsidiary Guarantor, such
Subsidiary Guarantor (in the event of a sale or other disposition, by way of
such a merger, consolidation or otherwise, of all of the capital stock
of such Subsidiary Guarantor) or the corporation acquiring the property (in
the event of a sale or other disposition of all, or substantially all, of the
assets of such Subsidiary Guarantor) will be released and relieved of any
obligations under its Subsidiary Guarantee; provided that the Net Proceeds of
such sale or other disposition are applied in accordance with the applicable
provisions of the Indenture described above under the caption "Repurchase at
the Option of Holders-Asset Sales," (ii) in the event the Subsidiary
Guarantee was issued by reason of the incurrence of Indebtedness by a
Subsidiary Guarantor permitted pursuant to the covenant described above under
the caption "Incurrence of Indebtedness and Issuance of Disqualified Stock,"
upon the payment in full, whether at maturity or otherwise, of all
Indebtedness incurred by such Subsidiary Guarantor in accordance with such
covenant, such Subsidiary Guarantor will be released and relieved of any
obligations under such Subsidiary Guarantee or (iii) in the event the
Subsidiary Guarantee was issued by reason of the Guarantee or securing of
payment of Indebtedness other than the Senior Notes pursuant to the covenant
described below under the caption "Limitations on Issuances of Guarantees of
Indebtedness," upon the release or discharge of the Guarantee by the
Subsidiary Guarantor of all such Indebtedness, except a discharge by or as a
result of payment under such Guarantee, such Subsidiary Guarantor will be
released and relieved of any obligations under such Subsidiary Guarantee.
LIMITATIONS ON ISSUANCES OF GUARANTEES OF INDEBTEDNESS
The Indenture provides that the Company will not permit any Subsidiary,
directly or indirectly, to guarantee or secure the payment of any Indebtedness
other than the Senior Notes, unless such Subsidiary simultaneously executes
and delivers a supplemental indenture to the Indenture providing for the
Guarantee of the payment of the Senior Notes by such Subsidiary, which
Guarantee will rank senior to or pari passu with such Subsidiary's Guarantee
of, or pledge to secure, such other Indebtedness. Notwithstanding the
foregoing, any such Guarantee by a Subsidiary of the Senior Notes will provide
by its terms that it will be automatically and unconditionally released and
discharged upon either (a) the release or discharge of such Guarantee of such
other Indebtedness, except a discharge by or as a result of payment under such
Guarantee, or (b) any sale, exchange or transfer, to any Person not an
Affiliate of the Company, of all of the Company's Capital Interests in, or all
or substantially all the assets of, such Subsidiary, which sale, exchange or
transfer is made in compliance with the applicable provisions of the
Indenture. The form of such Guarantee is attached as an exhibit to the
Indenture.
<PAGE>
EVENTS OF DEFAULT AND REMEDIES
The Indenture provides that each of the following constitutes an Event of
Default: (i) default for 30 days in the payment when due of interest on the
Senior Notes; (ii) default in the payment of all or any part of the principal,
or premium, if any, on the Senior Notes when and as the same becomes due and
payable at maturity, upon redemption, by acceleration, or otherwise,
including, without limitation, the payment of the Change of Control Payment or
the Asset Sale Offer Price, or otherwise; (iii) failure by the Company or any
of its Subsidiaries to observe or perform in all material respects the
covenants set forth in the Indenture described above under the captions
"Certain Covenants-Restricted Payments," "Incurrence of Indebtedness and
Issuance of Disqualified Stock," "Liens" and "Merger, Consolidation or Sale of
Assets"; (iv) failure by the Company or any of its Subsidiaries to observe or
perform in all material respects any other covenant or agreement on the part
of the Company or such Subsidiary contained in the Senior Notes or the
Indenture and the continuance of such failure for a period of 30 days after
written notice is given to the Company by the Trustee or to the Company and
the Trustee by the holders of at least 25% in aggregate principal amount of
the Senior Notes then outstanding, specifying such default, requiring that it
be remedied and stating that such notice is a "Notice of Default"; (v) default
under any mortgage, indenture or instrument under which there may be issued or
by which there may be secured or evidenced any Indebtedness by the
Company or any of its Subsidiaries (or the payment of which is guaranteed by
the Company or any of its Subsidiaries) whether such Indebtedness or guarantee
now exists, or is created after the date of the Indenture, which default (A)
is caused by a failure to pay principal of or premium, if any, or interest on
such Indebtedness prior to the expiration of the grace period provided in such
Indebtedness on the date of such default (a "Payment Default") or (B) results
in the acceleration of such Indebtedness prior to its express maturity and, in
each of (A) and (B), the principal amount of any such Indebtedness, together
with the principal amount of any other such Indebtedness under which there has
been a Payment Default or the maturity of which has been so accelerated,
aggregates $3.0 million or more; (vi) failure by the Company or any of its
Subsidiaries to pay final non-appealable judgments aggregating in excess of
$3.0 million, which judgments are not paid, discharged or stayed for a period
of 60 consecutive days; (vii) except as permitted by the Indenture, any
Subsidiary Guarantee shall be held in any judicial proceeding to be
unenforceable or invalid or shall cease for any reason to be in full force and
effect or any Subsidiary Guarantor, or any Person acting on behalf of any
Subsidiary Guarantor, shall deny or disaffirm its obligations under its
Subsidiary Guarantee; and (viii) certain events of bankruptcy or insolvency
with respect to the Company or any of its Significant Subsidiaries or any
group of Subsidiaries that, taken together, would constitute a Significant
Subsidiary.
If any Event of Default occurs and is continuing, the Trustee or the
holders of at least 25% in principal amount of the then outstanding Senior
Notes may declare all the Senior Notes to be due and payable immediately.
Notwithstanding the foregoing, in the case of an Event of Default arising from
certain events of bankruptcy or insolvency, with respect to the Company, any
Significant Subsidiary or any group of Subsidiaries that, taken together,
would constitute a Significant Subsidiary, all outstanding Senior Notes
will become due and payable without further action or notice. Holders of the
Senior Notes may not enforce the Indenture or the Senior Notes except as
provided in the Indenture. Subject to certain limitations, holders of a
majority in principal amount of the then outstanding Senior Notes may direct
<PAGE>
the Trustee in its exercise of any trust or power. The Trustee may withhold
from holders of the Senior Notes notice of any continuing Default or Event of
Default (except a Default or Event of Default relating to the payment of
principal or interest) if it determines that withholding notice is in their
interest.
In the case of any Event of Default occurring by reason of any willful
action (or inaction) taken (or not taken) by or on behalf of the Company with
the intention of avoiding payment of the premium that the Company would have
had to pay if the Company then had elected to redeem the Senior Notes pursuant
to the optional redemption provisions of the Indenture, an equivalent premium
will also become and be immediately due and payable to the extent permitted by
law upon the acceleration of the Senior Notes. If an Event of Default occurs
prior to May 15, 2002 by reason of any willful action (or inaction) taken (or
not taken) by or on behalf of the Company with the intention of avoiding the
prohibition on redemption of the Senior Notes prior to May 15, 2002, then the
premium specified in the Indenture will also become immediately due and
payable to the extent permitted by law upon the acceleration of the Senior
Notes.
The holders of a majority in aggregate principal amount of the Senior
Notes then outstanding by notice to the Trustee may on behalf of the holders
of all of the Senior Notes waive any existing Default or Event of Default and
its consequences under the Indenture except a continuing Default or Event of
Default in the payment of interest on, or the principal of, the Senior Notes,
and except as to payments required under the covenants described above under
the captions "Repurchase at the Option of Holders-Change of Control" and
"Asset Sales."
The Company is required to deliver to the Trustee annually a statement
regarding compliance with the Indenture, and the Company is required upon
becoming aware of any Default or Event of Default to deliver to the Trustee a
statement specifying such Default or Event of Default.
NO PERSONAL LIABILITY OF DIRECTORS, OFFICERS, EMPLOYEES, PARTNERS AND
STOCKHOLDERS
No director, officer, employee, incorporator, partner or stockholder of
the Company or any Subsidiary of the Company, as such, has any liability for
any obligations of the Company or any Subsidiary Guarantor under the Senior
Notes, any Subsidiary Guarantee or the Indenture or for any claim based on, in
respect of, or by reason of, such obligations or their creation. Each holder
of Senior Notes by accepting a Senior Note waives and releases all such
liability. The waiver and release are part of the consideration for issuance
of the Senior Notes. Such waiver may not be effective to waive liabilities
under the federal securities laws, and it is the view of the Commission that
such a waiver is against public policy.
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
The Company may, at its option and at any time, elect to have all of its
obligations discharged with respect to the outstanding Senior Notes ("Legal
Defeasance") except for (i) the rights of holders of outstanding Senior Notes
to receive payments in respect of the principal of, premium, if any, and
interest on such Senior Notes when such payments are due from the trust
referred to below, (ii) the Company's obligations with respect to the Senior
Notes concerning issuing temporary Senior Notes, registration of Senior Notes,
mutilated, destroyed, lost or stolen Senior Notes and the maintenance of an
office or agency for payment and money for security payments held in trust,
(iii) the rights, powers, trusts, duties and immunities of the Trustee, and
the Company's obligations in connection therewith and (iv) the Legal
Defeasance provisions of the Indenture. In addition, the Company may, at its
option and at any time, elect to have the obligations of the Company released
with respect to certain covenants that are described in the Indenture
("Covenant Defeasance") and thereafter any omission to comply with such
obligations will not constitute a Default or Event of Default with respect to
the Senior Notes. In the event Covenant Defeasance occurs, certain events (not
including non-payment, bankruptcy, receivership, rehabilitation and insolvency
events) described under "Events of Default and Remedies" will no longer
constitute an Event of Default with respect to the Senior Notes.
In order to exercise either Legal Defeasance or Covenant Defeasance, (i)
the Company must irrevocably deposit with the Trustee, in trust, for the
benefit of the holders of the Senior Notes, cash in U.S. dollars, non-callable
Government Securities, or a combination thereof, in such amounts as will be
sufficient, in the opinion of a nationally recognized firm of independent
public accountants, to pay the principal of, premium, if any, and interest on
the outstanding Senior Notes on the stated maturity or on the applicable
redemption date, as the case may be, and the Company must specify whether the
Senior Notes are being defeased to maturity or to a particular redemption
date; (ii) in the case of Legal Defeasance, the Company shall have delivered
to the Trustee an opinion of counsel in the United States reasonably
acceptable to the Trustee confirming that (A) the Company has received from,
or there has been published by, the Internal Revenue Service a ruling or (B)
since the date of the Indenture, there has been a change in the applicable
federal income tax law, in either case to the effect that, and based thereon
such opinion of counsel will confirm that, the holders of the outstanding
Senior Notes will not recognize income, gain or loss for federal income tax
purposes as a result of such Legal Defeasance and will be subject to federal
income tax on the same amounts, in the same manner and at the same times as
would have been the case if such Legal Defeasance had not occurred; (iii) in
the case of Covenant Defeasance, the Company shall have delivered to the
Trustee an opinion of counsel in the United States reasonably acceptable to
the Trustee confirming that the holders of the outstanding Senior Notes will
not recognize income, gain or loss for federal income tax purposes as a result
of such Covenant Defeasance and will be subject to federal income tax on the
same amounts, in the same manner and at the same times as would have been the
case if such Covenant Defeasance had not occurred; (iv) no Default or Event of
Default shall have occurred and be continuing on the date of such deposit
(other than a Default or Event of Default resulting from the borrowing of
funds to be applied to such deposit) or insofar as Events of Default from
bankruptcy or insolvency events are concerned, at any time in the period
ending on the 91st day after the date of deposit; (v) such Legal Defeasance or
Covenant Defeasance will not result in a breach or violation of, or constitute
a default under any material agreement or instrument (other than the
Indenture) to which the Company or any of its Subsidiaries is a party or by
which the Company or any of its Subsidiaries is bound; (vi) the Company must
have delivered to the Trustee an opinion of counsel to the effect that after
the 91st day following the deposit, assuming that no holder of a Senior Note
is an "insider" as defined in Section 101(31) of the U.S. Bankruptcy
Code and assuming that prior to such 91st day no voluntary or involuntary
bankruptcy case has been commenced with respect to the Company, such deposit
will not constitute a preference as defined in Section 547 of the U.S.
Bankruptcy Code, and, assuming such a bankruptcy case is commenced on or after
such 91st day, the trust funds will not constitute property included within
the estate of the debtor; (vii) the Company must deliver to the Trustee an
Officers' Certificate stating that the deposit was not made by the Company
with the intent of preferring the holders of Senior Notes over the other
creditors of the Company with the intent of defeating, hindering, delaying or
defrauding creditors of the Company or others; and (viii) the Company must
deliver to the Trustee an Officers' Certificate and an opinion of counsel,
each stating that all conditions precedent provided for in the Indenture
relating to the Legal Defeasance or the Covenant Defeasance have been complied
with.
TRANSFER AND EXCHANGE
A holder may transfer or exchange Senior Notes in accordance with the
Indenture. The Registrar and the Trustee may require a holder, among other
things, to furnish appropriate endorsements and transfer documents, and the
Company may require a holder to pay any taxes and fees required by law or
permitted by the Indenture. The Company is not required to transfer or
exchange any Senior Note selected for redemption. Also, the Company is not
required to transfer or exchange any Senior Note for a period of 15 days
before a selection of Senior Notes to be redeemed.
The registered holder of a Senior Note will be treated as the owner of it
for all purposes.
AMENDMENT, SUPPLEMENT AND WAIVER
Except as provided in the next two succeeding paragraphs, the Indenture
or the Senior Notes may be amended or supplemented with the consent of the
holders of at least a majority in principal amount of the Senior Notes then
outstanding (including consents obtained in connection with a tender offer or
exchange offer for Senior Notes), and any existing Default or compliance with
any provision of the Indenture or the Senior Notes may be waived with the
consent of the holders of a majority in principal amount of the then
outstanding Senior Notes (including consents obtained in connection with a
tender offer or exchange offer for Senior Notes).
Without the consent of each holder affected, an amendment or waiver may
not (with respect to any Senior Notes held by a non-consenting holder) (i)
reduce the principal amount of Senior Notes whose holders must consent to an
amendment, supplement or waiver, (ii) reduce the principal of or change the
fixed maturity of any Senior Note or alter the provisions with respect to the
redemption of the Senior Notes, (iii) reduce the rate of or change the time
for payment of interest, including default interest, on any Senior Note,
(iv) waive a Default or Event of Default in the payment of principal of or
premium, if any, or interest on the Senior Notes including, without
limitation, payment of the Change of Control Payment or the Asset Sale
Offer Price (except a rescission of acceleration of the Senior Notes by the
holders of at least a majority in aggregate principal amount of the then
outstanding Senior Notes and a waiver of the payment default that resulted
from such acceleration), (v) make any Senior Note payable in money other than
that stated in the Senior Notes, (vi) make any change in the provisions of the
Indenture relating to waivers of Defaults or the rights of holders of Senior
Notes to receive payments of principal of or premium, if any, or interest on
the Senior Notes, (vii) waive a redemption payment with respect to any Senior
Note or (viii) make any change in the foregoing amendment and waiver
provisions.
Notwithstanding the foregoing, without the consent of any holder of
Senior Notes, the Company and the Trustee may amend or supplement the
Indenture, the Senior Notes or any Subsidiary Guarantee to cure any ambiguity,
defect or inconsistency, to provide for uncertificated Senior Notes in
addition to or in place of certificated Senior Notes, to provide for the
assumption of the Company's or any Subsidiary Guarantor's obligations to
holders of Senior Notes in the case of a merger, consolidation or other
similar business combination, to make any change that would provide any
additional rights or benefits to the holders of Senior Notes or that does not
materially adversely affect the legal rights under the Indenture of any such
holder, to provide for Subsidiary Guarantees of the Senior Notes or to comply
with requirements of the Commission in order to effect or maintain the
qualification of the Indenture under the Trust Indenture Act.
CONCERNING THE TRUSTEE
The Indenture contains certain limitations on the rights of the Trustee,
should it become a creditor of the Company, to obtain payment of claims in
certain cases, or to realize on certain property received in respect of any
such claim as security or otherwise. The Trustee will be permitted to engage
in other transactions; however, if it acquires any conflicting interest it
must (i) eliminate such conflict within 90 days, (ii) apply to the Commission
for permission to continue or (iii) resign.
The holders of a majority in principal amount of the then outstanding
Senior Notes will have the right to direct the time, method and place of
conducting any proceeding for exercising any remedy available to the Trustee,
subject to certain exceptions. The Indenture provides that in case an Event of
Default shall occur (which shall not be cured), the Trustee will be required,
in the exercise of its power, to use the degree of care of a prudent man in
the conduct of his own affairs. Subject to such provisions, the Trustee will
be under no obligation to exercise any of its rights or powers under the
Indenture at the request of any holder of Senior Notes, unless such holder
shall have offered to the Trustee security and indemnity satisfactory to
it against any loss, liability or expense.
ADDITIONAL INFORMATION
Anyone who receives this Prospectus may obtain a copy of the Indenture
without charge by writing to French Fragrances, Inc., 14100 N.W. 60th Avenue,
Miami Lakes, Florida 33014, Attention: Chief Financial Officer.
CERTAIN DEFINITIONS
Set forth below are certain defined terms used in the Indenture.
Reference is made to the Indenture for a full disclosure of all such terms, as
well as any other capitalized terms used herein for which no definition is
provided.
"Acquired Debt" means, with respect to any specified Person, (i)
Indebtedness of any other Person existing at the time such other Person is
merged with or into or became a Subsidiary of such specified Person, provided
that such Indebtedness was not incurred in contemplation of such other Person
merging with or into or becoming a Subsidiary of such specified Person and
(ii) Indebtedness secured by a Lien encumbering any asset acquired by such
specified Person, provided that such Indebtedness was not incurred in
contemplation of such acquisition.
"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For purposes of this definition, "control"
(including, with correlative meanings, the terms "controlling," "controlled
by" and "under common control with"), as used with respect to any Person,
means the possession, directly or indirectly, of the power to direct or cause
<PAGE>
the direction of the management or policies of such Person, whether through
the ownership of voting securities, by agreement or otherwise; provided that
beneficial ownership of 10% or more of the voting securities of a Person will
be deemed to be control.
"Asset Sale" means (a) the sale, lease, conveyance or other disposition
of any assets (including, without limitation, by way of a sale and leaseback
or by way of merger, consolidation or similar transaction) other than sales of
inventory in the ordinary course of business consistent with past practices
(provided that the sale, lease, conveyance or other disposition of all or
substantially all of the assets of the Company and its Subsidiaries taken as a
whole will be governed by the provisions of the Indenture described above
under the caption "Repurchase at the Option of Holders-Change of Control"
and/or the provisions described above under the caption "Certain
Covenants-Merger, Consolidation or Sale of Assets" and not by the provisions
of the Asset Sale covenant), (b) the issuance by any Subsidiary of Equity
Interests of such Subsidiary and (c) the disposition by the Company or any of
its Subsidiaries of Equity Interests of any of the Company's Subsidiaries, in
the case of either clause (a), (b) or (c), whether in a single transaction or
a series of related transactions, (i) that have a fair market value in excess
of $1.0 million or (ii) for net proceeds in excess of $1.0 million.
Notwithstanding the foregoing, (a) a transfer of assets by the Company to a
Wholly Owned Subsidiary that is a Subsidiary Guarantor, or by a Subsidiary to
the Company or to another Subsidiary, (b) an issuance of Equity Interests by a
Subsidiary to the Company or to another Subsidiary, (c) a Restricted Payment
that is permitted by the covenant described above under the caption "Certain
Covenants-Restricted Payments," (d) any sale and leaseback transaction
otherwise permitted pursuant to the covenant described above under the caption
"Certain Covenants-Sale and Leaseback Transactions" and (e) sales of accounts
receivable in the ordinary course of business of the Company consistent with
past practices for the purpose of insuring against the risk of
uncollectibility pursuant to the Heller Arrangement (or any replacement
thereof on terms that are no less favorable to the Company), in each case will
not be deemed to be Asset Sales.
"Attributable Debt" in respect of a sale and leaseback transaction means,
at the time of determination, the present value (discounted at the rate of
interest implicit in such transaction, determined in accordance with GAAP) of
the obligation of the lessee for net rental payments during the remaining term
of the lease included in such sale and leaseback transaction (including any
period for which such lease has been extended or may, at the option of the
lessor, be extended).
"Board of Directors" means the Board of Directors of the Company or any
authorized committee of the Board of Directors, except that for the purposes
of the definitions of the terms "Change of Control" and "Continuing
Directors," the term "Board of Directors" shall mean the entire Board of
Directors of the Company and not any authorized committee of the Board of
Directors.
"Borrowing Base" means, as of any date, an amount equal to (a) 85% of the
face amount of all accounts receivable owned by the Company and its
Subsidiaries as of such date that are not more than 90 days past due, plus (b)
65% of the book value (calculated on an average cost basis) of all inventory
owned by the Company and its Subsidiaries as of such date, minus (c) any
amount applied pursuant to the second paragraph of the covenant described
above under the caption "Repurchase at the Option of Holders-Asset
<PAGE>
Sales" to permanently reduce Indebtedness permitted to be incurred pursuant to
clause (i) of the second paragraph of the covenant described above under the
caption "Certain Covenants-Incurrence of Indebtedness and Issuance of
Disqualified Stock," all calculated on a consolidated basis and in accordance
with GAAP. To the extent that information is not available as to the amount
of accounts receivable or inventory as of a specific date, the Company may
utilize the most recent available information for purposes of calculating the
Borrowing Base.
"Capital Interests" means (i) in the case of a corporation, corporate
stock, (ii) in the case of an association or other business entity, any and
all shares, interests, participations, rights or other equivalents (however
designated) of corporate stock, (iii) in the case of a partnership,
partnership interests (whether general or limited) and (iv) any other interest
or participation that confers on a Person the right to receive a share of the
profits and losses of, or distributions of assets of, the issuing Person.
"Capital Lease Obligation" means, at the time any determination thereof
is to be made, the amount of the liability in respect of a capital lease that
would at such time be required to be capitalized on a balance sheet in
accordance with GAAP.
"Cash Equivalents" means (i) United States dollars, (ii) securities
issued or directly and fully guaranteed or insured by the United States
government or any agency or instrumentality thereof having maturities of not
more than six months from the date of acquisition, (iii) certificates of
deposit and Eurodollar time deposits with maturities of six months or less
from the date of acquisition, bankers' acceptances with maturities not
exceeding six months and overnight bank deposits or demand deposits, in
each case with any lender party to any Credit Facility or with any domestic
commercial bank having capital and surplus in excess of $1.0 billion, (iv)
repurchase obligations with a term of not more than seven days for
underlying securities of the types described in clauses (ii) and (iii) above
entered into with any financial institution meeting the qualifications
specified in clause (iii) above, (v) commercial paper having the highest
rating obtainable from Moody's Investors Service, Inc. or Standard & Poor's
Ratings Service, a division of The McGraw-Hill Companies, Inc., and in each
case maturing within six months after the date of acquisition and (vi)
investments in money market funds all of whose assets comprise securities of
the types described in clauses (i), (ii) and (iii) above.
"Commission" means the Securities and Exchange Commission.
"Consolidated Cash Flow" means with respect to any Person for any period,
the Consolidated Net Income of such Person and its Subsidiaries for such
period plus (i) an amount equal to any extraordinary loss plus any net loss
realized in connection with an Asset Sale (including, without limitation,
dispositions pursuant to sale and leaseback transactions) (to the extent such
losses were deducted in computing such Consolidated Net Income), plus (ii) the
provision for taxes based on income or profits of such Person and
its Subsidiaries for such period, to the extent that such provision for taxes
was included in computing such Consolidated Net Income, plus (iii)
consolidated interest expense of such Person and its Subsidiaries for such
period, whether paid or accrued and whether or not capitalized (including,
without limitation, amortization of original issue discount, non-cash interest
payments, the interest component of any deferred payment obligations, the
interest component of all payments associated with Capital Lease Obligations,
<PAGE>
imputed interest with respect to Attributable Debt, commissions, discounts and
other fees and charges incurred in respect of letter of credit or bankers'
acceptance financings, and net payments (if any) pursuant to Hedging
Obligations), to the extent that any such expense was deducted in computing
such Consolidated Net Income, plus (iv) all items classified as "depreciation"
or "amortization" on such Person's statement of operations and other non-cash
charges (including non-cash, equity-based compensation charges, but excluding
any non-cash charge to the extent that it represents an accrual of or reserve
for cash charges in any future period or amortization of a prepaid cash
expense that was paid in a prior period) of such Person and its Subsidiaries
for such period to the extent that such depreciation, amortization and other
non-cash charges were deducted in computing such Consolidated Net Income.
Notwithstanding the foregoing, the provision for taxes on the income or
profits of, and the depreciation and amortization and other non-cash charges
of, a Subsidiary of the referent Person will be added to Consolidated Net
Income to compute Consolidated Cash Flow only to the extent (and in the same
proportion) that the Net Income of such Subsidiary was included in calculating
the Consolidated Net Income of such Person and only if a corresponding amount
would be permitted at the date of determination to be dividended to the
Company by such Subsidiary without prior approval (that has not been
obtained), pursuant to the terms of its organizational documents and all
agreements, instruments, judgments, decrees, orders, statutes, rules and
governmental regulations applicable to that Subsidiary or its stockholders.
"Consolidated Net Income" means, with respect to any Person for any
period, the aggregate of the Net Income of such Person and its Subsidiaries
for such period, on a consolidated basis, determined in accordance with GAAP;
provided that (i) the Net Income (but not loss) of any Person that is not a
Subsidiary or that is accounted for by the equity method of accounting will be
included only to the extent of the amount of dividends or distributions paid
in cash to the referent Person or a Wholly Owned Subsidiary thereof, (ii)
the Net Income of any Subsidiary will be excluded to the extent that the
declaration or payment of dividends or similar distributions by that
Subsidiary of that Net Income is not at the date of determination permitted
without prior approval (that has not been obtained) pursuant to the terms of
its organizational documents and all agreements, instruments, judgments,
decrees, orders, statutes, rules or governmental regulations applicable to
that Subsidiary or its stockholders, (iii) the Net Income of any Person
acquired in a pooling of interests transaction for any period prior to the
date of such acquisition will be excluded, (iv) the cumulative effect of a
change in accounting principles will be excluded, (v) Consolidated Net Income
will not include any gain (but shall include any loss), together with any
related provision for taxes on such gain (but not such loss), realized in
connection with (A) any Asset Sale (including, without limitation,
dispositions pursuant to sale and leaseback transactions) or (B) the
disposition of any securities by such Person or any of its Subsidiaries or the
extinguishment of any Indebtedness of such Person or any of its Subsidiaries
and (vi) Consolidated Net Income will not include any extraordinary or
nonrecurring gain (but shall include any loss), together with any related
provision for taxes on such extraordinary or nonrecurring gain (but not such
loss).
"Consolidated Net Worth" means, with respect to any Person, the sum of
(i) the consolidated equity of the holders of common Equity Interests in such
Person and its consolidated Subsidiaries plus (ii) the respective amounts
reported on such Person's most recent balance sheet with respect to any series
of preferred stock or preferred Equity Interests; provided that the preferred
stock or preferred Equity Interests will be included in Consolidated Net Worth
only if such preferred stock or preferred Equity Interests are not
Disqualified Stock, less (x) all write-ups (other than write-ups resulting
from foreign currency translations and write-ups of tangible assets of a going
concern business made within twelve months after the acquisition of such
business) subsequent to the date of the most recently completed fiscal quarter
in the book value of any asset owned by such Person or a consolidated
Subsidiary of such Person, (y) all investments in unconsolidated Subsidiaries
and in Persons that are not Subsidiaries (except, in each case, investments in
marketable securities), and (z) all unamortized debt discount and expense and
unamortized deferred financing charges, all of the foregoing determined in
accordance with GAAP.
"Credit Facility" means any credit facility entered into by and among the
Company, any Subsidiary Guarantor and the lending institutions party thereto,
including any credit agreement, related notes, Guarantees, collateral
documents, instruments and agreements executed in connection therewith, and in
each case as amended, modified, renewed, refunded, replaced or refinanced from
time to time.
"Default" means any event that is or with the passage of time or the
giving of notice or both would be an Event of Default.
"Disqualified Stock" means any Equity Interest that, by its terms (or by
the terms of any security into which it is convertible or for which it is
exchangeable), or upon the happening of any event, matures or is mandatorily
redeemable, pursuant to a sinking fund obligation or otherwise, or is
redeemable at the option of the holder thereof, in whole or in part, on or
prior to the 91st day after the date on which the Senior Notes mature.
"Equity Interests" means Capital Interests and all warrants, options or
other rights to acquire Capital Interests (but excluding any debt security
that is convertible into, or exchangeable for, Capital Interests).
"Exchange Act" means the Securities Exchange Act of 1934, as amended, and
the rules and regulations of the Commission promulgated thereunder.
"Existing Indebtedness" means the aggregate principal amount of
Indebtedness of the Company and its Subsidiaries in existence on the date of
the Indenture, until such amounts are repaid.
"Fixed Charges" means, with respect to any Person for any period, the sum
of (i) the consolidated interest expense of such Person and its Subsidiaries
for such period, whether paid or accrued (including, without limitation,
amortization of original issue discount, non-cash interest payments, the
interest component of any deferred payment obligations, the interest component
of all payments associated with Capital Lease Obligations, imputed interest
with respect to Attributable Debt, commissions, discounts and other fees and
charges incurred in respect of letter of credit or bankers' acceptance
financings, and net payments (if any) pursuant to Hedging Obligations but
excluding amortization of deferred financing fees), (ii) the consolidated
interest expense of such Person and its Subsidiaries that was capitalized
during such period, (iii) any interest expense on Indebtedness of another
Person that is Guaranteed by such Person or one of its Subsidiaries or secured
by a Lien on assets of such Person or one of its Subsidiaries (whether or not
such Guarantee or Lien is called upon) and (iv) the product of (a) the amount
of dividends or distributions paid, whether or not in cash, in respect of
preferred stock or preferred Equity Interests of such Person, other than
dividend payments on Equity Interests payable solely in Equity Interests of
the Company, times (b) a fraction, the numerator of which is one and the
<PAGE>
denominator of which is one minus the then current combined federal, state and
local statutory tax rate of such Person, expressed as a decimal, in the case
of clauses (i) through (iv), determined on a consolidated basis and, in the
case of clauses (i) through (iii), determined in accordance with GAAP.
"Fixed Charge Coverage Ratio" means with respect to any Person for any
period, the ratio of the Consolidated Cash Flow of such Person and its
Subsidiaries for such period to the Fixed Charges of such Person and its
Subsidiaries for such period. In the event that the Company or any of its
Subsidiaries incurs, assumes, Guarantees or redeems any Indebtedness (other
than revolving borrowings under any Credit Facility) or issues or redeems
preferred stock or preferred Equity Interests subsequent to the commencement
of the period for which the Fixed Charge Coverage Ratio is being calculated
but prior to the date on which the event for which the calculation of the
Fixed Charge Coverage Ratio is made (the "Calculation Date"), then the Fixed
Charge Coverage Ratio shall be calculated giving pro forma effect to such
incurrence, assumption, Guarantee or redemption of Indebtedness, or such
issuance or redemption of preferred stock or preferred Equity Interests, as if
the same had occurred at the beginning of the applicable four-quarter
reference period. For purposes of making the computation referred to above,
(i) acquisitions that have been made by the Company or any of its
Subsidiaries, including through mergers or consolidations and including any
related financing transactions, during the four-quarter reference period or
subsequent to such reference period and on or prior to the Calculation Date
shall be deemed to have occurred on the first day of the four-quarter
reference period, (ii) the Consolidated Cash Flow attributable to discontinued
operations, as determined in accordance with GAAP, and operations or
businesses disposed of prior to the Calculation Date, shall be excluded, and
(iii) the Fixed Charges attributable to discontinued operations, as determined
in accordance with GAAP, and operations or businesses disposed of prior to the
Calculation Date, shall be excluded, but only to the extent that the
obligations giving rise to such Fixed Charges will not be obligations of the
referent Person or any of its Subsidiaries following the Calculation Date.
"GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other statements by such
other entity as have been approved by a significant segment of the accounting
profession, which are in effect on the date of the Indenture.
"Guarantee" means a guarantee (other than by endorsement of negotiable
instruments for collection in the ordinary course of business), direct or
indirect, in any manner (including, without limitation, letters of credit and
reimbursement agreements in respect thereof), of all or any part of any
Indebtedness.
"Guarantor Senior Indebtedness" means any Indebtedness permitted to be
incurred by any Subsidiary Guarantor under the terms of the Indenture, unless
the instrument under which such Indebtedness is incurred expressly provides
that it is subordinated in right of payment to such Subsidiary Guarantor's
Subsidiary Guarantee. Notwithstanding the foregoing, Guarantor Senior
Indebtedness shall not include (i) any Obligation of such Subsidiary Guarantor
to any Subsidiary of such Subsidiary Guarantor, (ii) any liability for
federal, state, local or other taxes owed or owing by such Subsidiary
Guarantor, (iii) any accounts payable or other liability to trade creditors
arising in the ordinary course of business of the Subsidiary Guarantor
<PAGE>
(including Guarantees thereof or instruments evidencing such liabilities),
(iv) any Indebtedness, Guarantee or Obligation of the Subsidiary Guarantor
that is contractually subordinated or junior in any respect to any other
Indebtedness, Guarantee or Obligation of such Subsidiary Guarantor or (v)
any Indebtedness incurred in violation of the Indenture.
"Hedging Obligations" means, with respect to any Person, the obligations
of such Person under (i) interest rate swap agreements, interest rate cap
agreements and interest rate collar agreements, (ii) other agreements or
arrangements designed to protect such Person against fluctuations in interest
rates and (iii) agreements entered into for the purpose of fixing or hedging
the risks associated with fluctuations in foreign currency exchange rates.
"Heller Arrangement" means the arrangement pursuant to an agreement dated
July 13, 1993 between the Company and Heller Intercredit Company, a division
of Heller Financial, Inc., pursuant to which the Company insured from risk of
uncollectibility a portion of the Company's accounts receivable.
"Indebtedness" means, with respect to any Person, any indebtedness of
such Person, whether or not contingent, in respect of borrowed money or
evidenced by bonds, notes, debentures or similar instruments or letters of
credit (or reimbursement agreements in respect thereof) or banker's
acceptances or representing Capital Lease Obligations or the balance deferred
and unpaid of the purchase price of any property or representing any Hedging
Obligations, except any such balance that constitutes an accrued expense or
trade payable, if and to the extent any of the foregoing indebtedness (other
than letters of credit and Hedging Obligations) would appear as a liability on
a balance sheet of such Person prepared in accordance with GAAP, as well as
all indebtedness of others secured by a Lien on any asset of such Person
(whether or not such indebtedness is assumed by such Person) and, to the
extent not otherwise included, the Guarantee by such Person of any
indebtedness of any other Person.
"Investments" means, with respect to any Person, all investments by such
Person in other Persons (including Affiliates) in the forms of direct or
indirect loans (including Guarantees of Indebtedness or other obligations but
excluding advances to customers in the ordinary course of business that are
recorded as accounts receivable on the balance sheet of such Person or its
Subsidiaries in accordance with GAAP), advances or capital contributions
(excluding commission, travel and similar advances to officers and employees
made in the ordinary course of business), purchases or other acquisitions for
consideration consisting of Indebtedness, Equity Interests or other securities
and all other items that are or would be classified as investments on a
balance sheet prepared in accordance with GAAP; provided that an acquisition
of assets, Equity Interests or other securities by the Company for
consideration consisting of common equity securities of the Company will not
be deemed to be an Investment.
"Lien" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind in respect of such asset,
whether or not filed, recorded or otherwise perfected under applicable law
(including any conditional sale or other title retention agreement, any lease
in the nature thereof, any option or other agreement to sell or give a
security interest in and any filing of or agreement to give any financing
statement under the Uniform Commercial Code (or equivalent statutes) of any
jurisdiction).
<PAGE>
"Miami Lakes Facility" means the land and buildings comprising the
Company's executive offices and distribution facility at 14100 N.W. 60th
Avenue, Miami Lakes, Florida 33014.
"National Trading Facility" means the land and buildings leased by the
Company from National Trading Manufacturing, Inc. located at 15595 N.W. 15th
Avenue, Miami, Florida 33169.
"Net Income" means, with respect to any Person, the net income (loss) of
such Person, determined in accordance with GAAP.
"Net Proceeds" means the aggregate cash proceeds received by the Company
or any of its Subsidiaries in respect of any Asset Sale (including, without
limitation, any cash received upon the sale or other disposition of any
non-cash consideration received in any Asset Sale), net of the direct costs
relating to such Asset Sale (including, without limitation, legal, accounting
and investment banking fees, regulatory compliance costs and sales
commissions) and any relocation expenses incurred as a result thereof, taxes
paid or payable as a result thereof (after taking into account any available
tax credits or deductions and any tax sharing arrangements), amounts required
to be applied to the repayment of Indebtedness (other than Senior Revolving
Debt) secured by a Lien on the asset or assets that were the subject of such
Asset Sale and any reserve for adjustment in respect of the sale price of such
asset or assets established in accordance with GAAP.
"Obligations" means any principal, interest, penalties, fees,
indemnifications, reimbursements, damages and other liabilities payable under
the documentation governing any Indebtedness.
"Permitted Investments" means (a) any Investments in the Company or in a
Wholly Owned Subsidiary of the Company that is engaged in the same or a
similar or related line of business as the Company and its Subsidiaries were
engaged in on the date of the Indenture; (b) any Investments in Cash
Equivalents; (c) Investments by the Company or any Subsidiary of the Company
in a Person, if as a result of such Investment (i) such Person becomes a
Wholly Owned Subsidiary of the Company that is engaged in the same or a
similar or related line of business as the Company and its Subsidiaries were
engaged in on the date of the Indenture or (ii) such Person is merged,
consolidated or amalgamated with or into, or transfers or conveys
substantially all of its assets to, or is liquidated into, the Company or a
Wholly Owned Subsidiary of the Company that is engaged in the same or a
similar or related line of business as the Company and its Subsidiaries were
engaged in on the date of the Indenture; (d) Investments made as a result of
the receipt of non-cash consideration from an Asset Sale that was made
pursuant to and in compliance with the covenant described above under the
caption "-Repurchase at the Option of Holders-Asset Sales"; (e) Investments
in endorsements of negotiable instruments and similar negotiable documents in
the ordinary course of business; (f) Investments existing on the date of the
Indenture; (g) Investments in obligations of account debtors to the Company or
any of its Subsidiaries and stock or obligations issued to the Company or any
such Subsidiary by any Person, in each case, in connection with the
insolvency, bankruptcy, receivership or reorganization of such Person or a
composition or readjustment of such Person's Indebtedness; and (h) other
Investments in any one or more Persons that do not exceed $5.0 million in the
aggregate at any time outstanding.
<PAGE>
"Permitted Liens" means (i) Liens on accounts receivable and inventory
securing Indebtedness permitted to be incurred under clause (i) of the second
paragraph of the covenant described above under "-Certain Covenants-Incurrence
of Indebtedness and Issuance of Disqualified Stock"; (ii) Liens in favor
of the Company; (iii) Liens to secure Indebtedness permitted to be incurred
pursuant to the first paragraph of the covenant described above under
"-Certain Covenants-Incurrence of Indebtedness and Issuance of Disqualified
Stock" that is incurred to finance the acquisition of property or assets
acquired by the Company or any Subsidiary after the date of the Indenture, so
long as (A) such Indebtedness is incurred and the Lien securing such
Indebtedness is created within 90 days of such acquisition and (B) such Lien
does not extend to any property or assets of the Company or any Subsidiary
other than the property and assets so acquired; (iv) Liens on property of a
Person existing at the time such Person is merged into, consolidated with or
acquired by the Company or any Subsidiary of the Company; provided that such
Liens were not incurred in contemplation of such merger or consolidation and
do not extend to any assets other than those of the Person merged into or
consolidated with the Company or any Subsidiary or those of an unrelated third
party; (v) Liens on property existing at the time of acquisition thereof by
the Company or any Subsidiary of the Company, provided that such Liens were
not incurred in contemplation of such acquisition; (vi) Liens to secure the
performance of statutory obligations, surety or appeal bonds, performance
bonds or other obligations of a like nature incurred in the ordinary course of
business of the Company or any Subsidiary of the Company; (vii) Liens to
secure Indebtedness permitted by clause (vi) of the second paragraph of the
covenant described above under "-Certain Covenants-Incurrence of Indebtedness
and Issuance of Disqualified Stock" covering only the assets acquired,
constructed or improved with such Indebtedness or the Miami Lakes Facility, as
the case may be; (viii) Liens existing on the date of the Indenture; (ix)
Liens for taxes, assessments or governmental charges or claims that are not
yet delinquent or that are being contested in good faith by appropriate
proceedings promptly instituted and diligently pursued, provided that any
reserve or other appropriate provision as is required in conformity with GAAP
shall have been made therefor; (x) Liens securing Permitted Refinancing
Indebtedness, provided that such Liens do not extend to or cover any assets or
property other than the collateral securing the Indebtedness to be refinanced;
(xi) Liens arising by operation of law in connection with judgments, which do
not give rise to an Event of Default with respect thereto; (xii) easements,
rights of way, zoning restrictions and other similar encumbrances or title
defects which do not materially detract from the value of the property or the
assets subject thereto or interfere with the ordinary conduct of the business
of the Company and its Subsidiaries, taken as a whole; (xiii) Liens securing
Attributable Debt with respect to any sale and leaseback transaction in an
aggregate amount not to exceed the aggregate principal amount of Attributable
Debt permitted to be incurred pursuant to the covenant described above under
"-Certain Covenants-Incurrence of Indebtedness and Issuance of Disqualified
Stock," provided that such Liens do not extend to or cover any assets or
property other than the collateral securing such Attributable Debt; (xiv)
Liens on sales of accounts receivable that do not constitute an "Asset
Sale" pursuant to clause (e) of the definition thereof and (xv) Liens incurred
in the ordinary course of business of the Company or any Subsidiary of the
Company with respect to obligations that (A) are not incurred in connection
with the borrowing of money or the obtaining of advances or credit (other than
trade credit in the ordinary course of business) and (B) do not in the
aggregate materially detract from the value of the property subject thereto or
materially impair the use thereof in the operation of business by the Company
or such Subsidiary.
<PAGE>
"Permitted Refinancing Indebtedness" means any Indebtedness of the
Company or any of its Subsidiaries issued in exchange for, or the net proceeds
of which are used to extend, refinance, renew, replace, defease or refund
other Indebtedness of the Company or any of its Subsidiaries; provided that
(i) the principal amount of such Permitted Refinancing Indebtedness does not
exceed the principal amount of the Indebtedness so extended, refinanced,
renewed, replaced, defeased or refunded (plus the amount of reasonable
expenses incurred in connection therewith); (ii) such Permitted Refinancing
Indebtedness has a final maturity date later than the final maturity date of,
and has a Weighted Average Life to Maturity equal to or greater than the
Weighted Average Life to Maturity of, the Indebtedness being extended,
refinanced, renewed, replaced, defeased or refunded; (iii) if the Indebtedness
being extended, refinanced, renewed, replaced, defeased or refunded is
subordinated in right of payment to the Senior Notes, such Permitted
Refinancing Indebtedness has a final maturity date later than the final
maturity date of, and is subordinated in right of payment to, the Senior Notes
on terms at least as favorable to the holders of Senior Notes as those
contained in the documentation governing the Indebtedness being extended,
refinanced, renewed, replaced, defeased or refunded; and (iv) such
Indebtedness is incurred either by the Company or by the Subsidiary that
is the obligor on the Indebtedness being extended, refinanced, renewed,
replaced, defeased or refunded.
"Restricted Investment" means an Investment other than a Permitted
Investment.
"Revolving Credit Facility" means the revolving credit facility dated as
of May 13, 1997, between the Company and Fleet National Bank, as amended.
"Securities Act" means the Securities Act of 1933, as amended, and the
rules and regulations of the Commission promulgated thereunder.
"Senior Indebtedness" means any Indebtedness which ranks pari passu in
right of payment with, and which is not expressly by its terms subordinated in
right of payment of principal, interest or premium, if any, to the Senior
Notes, whether or not such Indebtedness is secured.
"Senior Revolving Debt" means revolving credit borrowings under any
Credit Facility.
"Series B Senior Notes" means the Company's 10-3/8% Senior Notes due
2007, Series B.
"Significant Subsidiary" means any Subsidiary that would be a
"significant subsidiary" as defined in Article 1, Rule 1-02 of Regulation S-X,
promulgated pursuant to the Securities Act, as such Regulation is in effect on
the date of the Indenture; provided that each Subsidiary Guarantor will be
deemed a Significant Subsidiary.
"6% Bonus Pool" means the annual bonus pool created by the Company for
members of senior management and other key employees and consultants equal to
6% of the pre-tax profit of the Company.
"Subordinated Indebtedness" means any Indebtedness which is expressly by
its terms subordinated in right of payment of principal, interest or premium,
if any, to the Senior Notes.
<PAGE>
"Subsidiary" means, with respect to any Person, any corporation,
association or other business entity of which more than 50% of the total
voting power of Capital Interests entitled (without regard to the occurrence
of any contingency) to vote in the election of directors, managers or trustees
thereof is at the time owned or controlled, directly or indirectly, by such
Person or one or more of the other Subsidiaries of that Person (or a
combination thereof).
"Subsidiary Guarantor" means any Subsidiary of the Company that executes
a Subsidiary Guarantee in accordance with the provisions of the Indenture, and
its successors and assigns.
"Weighted Average Life To Maturity" means, when applied to any
Indebtedness at any date, the number of years obtained by dividing (a) the sum
of the products obtained by multiplying (i) the amount of each then remaining
installment, sinking fund, serial maturity or other required payment of
principal, including payment at final maturity, in respect thereof, by (ii)
the number of years (calculated to the nearest one-twelfth) that will elapse
between such date and the making of such payment, by (b) the then outstanding
principal amount of such Indebtedness.
"Wholly Owned Subsidiary" of any Person means a Subsidiary of such
Person, all of the outstanding Capital Interests or other ownership interests
of which (other than directors' qualifying shares or interests) are at the
time owned by such Person or by one or more Wholly Owned Subsidiaries of such
Person (or a combination thereof).
BOOK-ENTRY; DELIVERY; FORM AND TRANSFER
The Initial Notes were offered and sold to Qualified Institutional Buyers
as defined in Rule 144A under the Securities Act ("QIBs") in the form of one
or more registered global notes without interest coupons (collectively, the
"U.S. Global Notes"). Exchange Notes issued in exchange for each of the U.S.
Global Notes initially will be represented by one or more Notes in registered,
global form without interest coupons (collectively, the "Global Notes"). Upon
issuance, the Global Notes will be deposited with the Trustee, as custodian
for The Depository Trust Company ("DTC"), in New York, New York, and
registered in the name of DTC or its nominee for credit to the accounts of
DTC's Direct and Indirect Participants (as defined below).
The Global Notes may be transferred, in whole and not in part, only to
another nominee of DTC or to a successor of DTC or its nominee in certain
limited circumstances. Beneficial interests in the Global Notes may be
exchanged for Exchange Notes in certificated form in certain limited
circumstances. See "-Transfer of Interests in Global Notes for Certificated
Notes." In addition, transfer of beneficial interests in any Global Notes
will be subject to the applicable rules and procedures of DTC and its Direct
or Indirect Participants, which may change from time to time.
Initially, the Trustee will act as Paying Agent and Registrar. The Senior
Notes may be presented for registration of transfer and exchange at the
offices of the Registrar.
DEPOSITARY PROCEDURES
DTC has advised the Company that DTC is a limited-purpose trust company
created to hold securities for its participating organizations (collectively,
<PAGE>
the "Direct Participants") and to facilitate the clearance and settlement of
transactions in those securities between Direct Participants through
electronic book-entry changes in accounts of Direct Participants. The Direct
Participants include securities brokers and dealers (including the Initial
Purchaser), banks, trust companies, clearing corporations and certain other
organizations. Access to DTC's system is also available to other entities
that clear through or maintain a direct or indirect custodial relationship
with a Direct Participant (collectively, the "Indirect Participants").
DTC has also advised the Company that, pursuant to DTC's procedures, (i)
upon deposit of the Global Notes, DTC will credit the accounts of the Direct
Participants which receive Exchange Notes with corresponding portions of the
principal amount of the Global Notes, and (ii) DTC will maintain records of
the ownership interests of such Direct Participants in the Global Notes and
the transfer of ownership interests by and between Direct Participants. DTC
will not maintain records of the ownership interests of, or the transfer of
ownership interests by and between, Indirect Participants or other owners of
beneficial interests in the Global Notes. Direct Participants and Indirect
Participants must maintain their own records of the ownership interests of,
and the transfer of ownership interests by and between, Indirect Participants
and other owners of beneficial interests in the Global Notes.
Investors in the U.S. Global Notes may hold their interests therein
directly through DTC if they are Direct Participants in DTC or indirectly
through organizations that are Direct Participants in DTC. All ownership
interests in any Global Notes are subject to the procedures and requirements
of DTC.
The laws of some states in the United States require that certain persons
take physical delivery in definitive, certificated form, of securities that
they own. This may limit or curtail the ability to transfer beneficial
interests in a Global Note to such persons. Because DTC can act only on
behalf of Direct Participants, which in turn act on behalf of Indirect
Participants and others, the ability of a person having a beneficial interest
in a Global Note to pledge such interest to persons or entities that are not
Direct Participants in DTC, or to otherwise take actions in respect of such
interests, may be affected by the lack of physical certificates evidencing
such interests. For certain other restrictions on the transferability of the
Exchange Notes, see "-Transfers of Interests in Global Notes for Certificated
Notes."
EXCEPT AS DESCRIBED IN "-TRANSFERS OF INTERESTS IN GLOBAL NOTES FOR
CERTIFICATED NOTES," OWNERS OF BENEFICIAL INTERESTS IN THE GLOBAL NOTES WILL
NOT HAVE EXCHANGE NOTES REGISTERED IN THEIR NAMES, WILL NOT RECEIVE PHYSICAL
DELIVERY OF EXCHANGE NOTES IN CERTIFICATED FORM AND WILL NOT BE CONSIDERED THE
REGISTERED OWNERS OR HOLDERS THEREOF UNDER THE INDENTURE FOR ANY PURPOSE.
Under the terms of the Indenture, the Company and the Trustee will treat
the persons in whose names the Exchange Notes, including the Global Notes, are
registered as the owners thereof for the purpose of receiving payments and for
any and all other purposes whatsoever. Payments in respect of the principal,
premium and interest on Global Notes registered in the name of DTC or its
nominee will be payable by the Trustee to DTC or its nominee as the registered
holder under the Indenture. Consequently, neither the Company, the Trustee
nor any agent of the Company or the Trustee has or will have any
responsibility or liability for (i) any aspect of DTC's records or any Direct
Participant's or Indirect Participant's records relating to or payments made
<PAGE>
on account of beneficial ownership interests in the Global Notes or for
maintaining, supervising or reviewing any of DTC's records or any Direct
Participant's or Indirect Participant's records relating to the beneficial
ownership interests in any Global Note or (ii) any other matter relating to
the actions and practices of DTC or any of its Direct Participants or Indirect
Participants.
DTC has advised the Company that its current payment practice (for
payments of principal, interest and the like) with respect to securities such
as the Exchange Notes is to credit the accounts of the relevant Direct
Participants with such payment on the payment date in amounts proportionate to
such Direct Participant's respective ownership interests in the Global Notes
as shown on DTC's records. Payments by Direct Participants and Indirect
Participants to the beneficial owners of the Exchange Notes will be governed
by standing instructions and customary practices between them and will not be
the responsibility of DTC, the Trustee or the Company. Neither the Company
nor the Trustee will be liable for any delay by DTC or its Direct Participants
or Indirect Participants in identifying the beneficial owners of the Exchange
Notes, and the Company and the Trustee may conclusively rely on and will be
protected in relying on instructions from DTC or its nominee as the registered
owner of the Exchange Notes, for all purposes.
The Global Notes will trade in DTC's Same-Day Funds Settlement System
and, therefore, transfers between Direct Participants in DTC will be effected
in accordance with DTC's procedures, and will be settled in immediately
available funds. Transfers between Indirect Participants who hold an interest
through a Direct Participant will be effected in accordance with the
procedures of such Direct Participant but generally will settle in immediately
available funds.
DTC has advised the Company that it will take any action permitted to be
taken by a holder of Exchange Notes only at the direction of one or more
Direct Participants to whose account interests in the Global Notes are
credited and only in respect of such portion of the aggregate principal amount
of the Exchange Notes to which such Direct Participant or Direct Participants
has or have given direction. However, if there is an Event of Default under
the Senior Notes, DTC reserves the right to exchange Global Notes (without the
direction of one or more of its Direct Participants) for Exchange Notes in
certificated form, and to distribute such certificated forms of Exchange Notes
to its Direct Participants. See "-Transfers of Interests in Global Notes for
Certificated Notes."
Although DTC has agreed to the foregoing procedures to facilitate
transfers of interests in the Global Notes among participants in DTC, it is
under no obligation to perform or to continue to perform such procedures, and
such procedures may be discontinued at any time. None of the Company, the
Initial Purchaser or the Trustee shall have any responsibility for the
performance by DTC or its respective Direct and Indirect Participants of their
respective obligations under the rules and procedures governing any of their
operations.
The information in this section concerning DTC and its book-entry systems
has been obtained from sources that the Company believes to be reliable, but
the Company takes no responsibility for the accuracy thereof.
<PAGE>
TRANSFERS OF INTERESTS IN GLOBAL NOTES FOR CERTIFICATED NOTES
An entire Global Note may be exchanged for definitive Exchange Notes in
registered, certificated form without interest coupons ("Certificated Notes")
if (i) DTC (x) notifies the Company that it is unwilling or unable to continue
as depositary for the Global Notes and the Company thereupon fails to appoint
a successor depositary within 90 days or (y) has ceased to be a clearing
agency registered under the Exchange Act, (ii) the Company, at its option,
notifies the Trustee in writing that it elects to cause the issuance of the
Certificated Notes or (iii) there shall have occurred and be continuing a
Default or an Event of Default with respect to the Exchange Notes. In any such
case, the Company will notify the Trustee in writing that, upon surrender by
the Direct and Indirect Participants of their interest in such Global Note,
Certificated Notes will be issued to each person that such Direct and Indirect
Participants and DTC identify as being the beneficial owner of the related
Exchange Notes.
Beneficial interests in Global Notes held by any Direct or Indirect
Participant may also be exchanged for Certificated Notes upon request to DTC
by such Direct Participant (for itself or on behalf of an Indirect
Participant) and by DTC to the Trustee in accordance with customary DTC
procedures. Certificated Notes delivered in exchange for any beneficial
interest in any Global Note will be registered in the names, and issued in any
approved denominations, requested by DTC on behalf of such Direct or Indirect
Participants (in accordance with DTC's customary procedures).
Neither the Company nor the Trustee will be liable for any delay by the
holder of any Global Note or DTC in identifying the beneficial owners of
Exchange Notes, and the Company and the Trustee may conclusively rely on, and
will be protected in relying on, instructions from the holder of the Global
Note or DTC for all purposes.
REGISTRATION RIGHTS; LIQUIDATED DAMAGES
The Company and the Initial Purchaser, for the benefit of the holders of
Senior Notes, entered into a Registration Rights Agreement (the "Registration
Rights Agreement") dated as of April 27, 1998. Pursuant to the Registration
Rights Agreement, the Company filed with the SEC the Registration Statement
with respect to the Exchange Offer (the "Exchange Offer Registration
Statement"). If any holder of Transfer Restricted Senior Notes (as defined
below) notifies the Company, within 20 business days following the
consummation of the Exchange Offer, that (A) such holder was prohibited by law
or SEC policy from participating in the Exchange Offer, or (B) such holder may
not resell the Exchange Notes acquired by it in the Exchange Offer to the
public without delivering a prospectus and this Prospectus is not appropriate
or available for such resales by such holder, the Company will file with the
SEC a shelf registration statement (the "Shelf Registration Statement") to
cover resales of the Transfer Restricted Senior Notes by the holders
thereof who satisfy certain conditions relating to the provision of
information in connection with the Shelf Registration Statement. The Company
will use reasonable best efforts to cause the Shelf Registration
Statement to be declared effective as promptly as possible by the SEC. For
purposes of the foregoing, "Transfer Restricted Senior Notes" means each
Senior Note until the earliest to occur of (i) the date on which such Senior
Note is exchanged in the Exchange Offer for an Exchange Note which may be
resold to the public by the holder thereof without complying with the
prospectus delivery requirements of the Securities Act, (ii) the date on which
<PAGE>
such Senior Note has been sold or otherwise disposed of in accordance with the
Shelf Registration Statement, (iii) the date on which such Senior Note is
disposed of by a broker-dealer as contemplated by the Exchange Offer
Registration Statement (including delivery of this Prospectus) and (iv)
the date on which such Senior Note is distributed to the public pursuant to
Rule 144 under the Securities Act.
A holder of Transfer Restricted Senior Notes who sells such Senior Notes
pursuant to the Shelf Registration Statement will generally be required to be
named as a selling security holder in the related prospectus and to deliver a
prospectus to purchasers, will be subject to certain of the civil liability
provisions under the Securities Act in connection with such sales and will be
bound by the provisions of the Registration Rights Agreement that are
applicable to such a holder (including certain indemnification obligations).
The Registration Rights Agreement provides that the Company will use
reasonable best efforts to issue Exchange Notes in exchange for all Initial
Notes tendered in the Exchange Offer. If the Company is obligated to file the
Shelf Registration Statement, the Company will file the Shelf Registration
Statement with the SEC on or prior to 30 days after such filing obligation
arises and use reasonable best efforts to cause the Shelf Registration
Statement to be declared effective by the SEC on or prior to 150 days after
such obligation arises; provided that if the Company has not consummated the
Exchange Offer by October 24, 1998, then the Company will file the Shelf
Registration Statement with the SEC on or prior to October 25, 1998. The
Company shall use reasonable best efforts to keep such Shelf Registration
Statement continuously effective, supplemented and amended until April 27,
2000 or such shorter period that will terminate when all the Senior Notes
covered by the Shelf Registration Statement have been sold pursuant to the
Shelf Registration Statement or are eligible for sale under Rule 144(k) under
the Securities Act; provided, however that, if the Company is engaged in a
material acquisition or disposition and in certain other circumstances,
the Company may suspend offers and sales under the Shelf Registration
Statement, subject to certain conditions, for up to 30 days in each year
during which the Shelf Registration Statement is required to be effective. If
(a) the Company fails to file the Shelf Registration Statement on or before
the date specified for such filing, (b) the Shelf Registration Statement is
not declared effective by the SEC on or prior to the date specified for such
effectiveness, (c) the Company fails to consummate the Exchange Offer on or
prior to , 1998, (d) the Shelf Registration Statement or the
Exchange Offer Registration Statement is declared effective but thereafter,
subject to certain exceptions, ceases to be effective for a period of one
business day or (e) at any time when the prospectus is required by the
Securities Act to be delivered in connection with sales of the Transfer
Restricted Senior Notes, the Company shall conclude, or the holders of a
majority in principal amount of the affected Transfer Restricted Senior Notes
shall reasonably conclude, based on the advice of their counsel, and shall
give notice to the Company, that either (A) any event shall have occurred or
fact exist as a result of which it is necessary to amend or supplement the
prospectus in order that it will not include an untrue statement of a material
fact or omit to state a material fact necessary in order to make the
statements made, in light of the circumstances under which they were made, not
misleading, or (B) it shall be necessary to amend or supplement such
Registration Statement or the prospectus in order to comply with the
requirements of the Securities Act or the rules of the SEC thereunder, and in
the case of clause (A) or (B), such Registration Statement is not
appropriately amended by an effective post-effective amendment, or the
<PAGE>
prospectus is not amended or supplemented, in a manner reasonably satisfactory
to the holders of Transfer Restricted Senior Notes so as to be declared
effective and made usable within one business day after the Company shall so
conclude or shall receive the above-mentioned notice from holders of Transfer
Restricted Senior Notes (each such event referred to in clauses (a) through
(e) above, a "Registration Default"), then the Company will pay as liquidated
damages ("Liquidated Damages") to each holder of Transfer Restricted Senior
Notes, with respect to the first 90-day period immediately following the
occurrence of such Registration Default in an amount equal to $0.05 per week
for each $1,000 principal amount of Senior Notes held by such holder. The
amount of the Liquidated Damages will increase by an additional $0.05 per week
per $1,000 principal amount of Senior Notes with respect to each subsequent
90-day period until all Registration Defaults have been cured, up to a maximum
amount of Liquidated Damages of $0.50 per week for each $1,000 principal
amount of Senior Notes. Liquidated Damages will not accrue during any period
the Company is permitted, as set forth above, to suspend offerings and sales
when the Company is engaged in a material acquisition or disposition or in
certain other circumstances. All accrued Liquidated Damages will be paid by
the Company to the holder of the U.S. Global Notes or the Global Notes,
as the case may be, by wire transfer of immediately available same day funds.
With respect to Certificated Notes, such Liquidated Damages will be paid by
the Company to the holder of a Certificated Note, by mailing a check to each
such holder's registered address. Following the cure of all Registration
Defaults, the accrual of Liquidated Damages will cease.
Holders of Transfer Restricted Senior Notes will be required to make
certain representations to the Company (as described herein under the caption
"-The Exchange Offer-Procedures for Tendering Initial Notes") in order to
participate in the Exchange Offer and will be required to deliver information
to be used in connection with the Shelf Registration Statement and to provide
comments on the Shelf Registration Statement within the time periods set forth
in the Registration Rights Agreement in order to have their Transfer
Restricted Senior Notes included in the Shelf Registration Statement and
benefit from the provisions regarding Liquidated Damages set forth above.
Holders of Transfer Restricted Notes will be responsible for the fees and
disbursements, if any, of their counsel, accountants and any other advisors,
and for underwriting commissions and discounts, brokerage commissions, agent
fees (other than the fees of the Exchange Agent for the Exchange Offer) and
transfer taxes relating to the Exchange Offer Registration Statement or the
Shelf Registration Statement.
The foregoing description of the Registration Rights Agreement is a
summary only and does not purport to be complete. This summary is qualified in
its entirety by reference to all provisions of the Registration Rights
Agreement, which has been filed as an exhibit to the Registration Statement of
which this Prospectus forms a part.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The exchange of an Initial Note for an Exchange Note pursuant to the
Exchange Offer should not be treated as an exchange for United States federal
income tax purposes and, therefore, will not be a taxable event. Accordingly,
an Exchange Note should be treated as a continuation of the corresponding
Initial Note and, as a result, an exchanging holder should not recognize any
gain or loss on the exchange, his holding period for the Exchange Note would
include his holding period for the Initial Note, his basis in the Exchange
Note would be the same as his basis in the Initial Note, and the tax treatment
of any bond premium previously recognized with respect to the Initial Note
should not change.
<PAGE>
IN ANY EVENT, PERSONS CONSIDERING THE EXCHANGE OF INITIAL NOTES FOR
EXCHANGE NOTES SHOULD CONSULT THEIR OWN TAX ADVISORS CONCERNING THE
UNITED STATES FEDERAL INCOME TAX CONSEQUENCES IN LIGHT OF THEIR
PARTICULAR SITUATIONS AS WELL AS ANY CONSEQUENCES ARISING UNDER THE
LAWS OF ANY OTHER TAXING JURISDICTIONS.
PLAN OF DISTRIBUTION
There has previously been only a limited secondary market and no public
market for the Initial Notes. The Company does not intend to apply for the
listing of the Senior Notes on a national securities exchange or for their
quotation through The Nasdaq Stock Market. The Initial Notes are eligible for
trading in the PORTAL market. The Company has been advised by the Initial
Purchaser that the Initial Purchaser currently intends to make a market in the
Senior Notes; however, the Initial Purchaser is not obligated to do so and any
market making may be discontinued by the Initial Purchaser at any time. In
addition, such market making activity may be limited during the Exchange
Offer. Therefore, there can be no assurance that an active market for the
Initial Notes or the Exchange Notes will develop.
If a trading market develops for the Initial Notes or the Exchange Notes,
future trading prices of such securities will depend on many factors,
including, among other things, prevailing interest rates, the Company's
results of operations and the market for similar securities. Depending on such
factors, such securities may trade at a discount from their offering price.
With respect to resale of Exchange Notes, based on an interpretation by
the staff of the SEC set forth in no-action letters issued to third parties,
the Company believes that a holder (other than a person that is an affiliate
of the Company within the meaning of Rule 405 under the Securities Act or
"broker" or "dealer" registered under the Exchange Act) who exchanges Initial
Notes for Exchange Notes in the ordinary course of business and who is not
participating, does not intend to participate, and has no arrangement or
understanding with any person to participate, in the distribution of the
Exchange Notes, will be allowed to resell the Exchange Notes to the public
without further registration under the Securities Act and without delivering
to the purchasers of the Exchange Notes a prospectus that satisfies the
requirements of Section 10 thereof. However, if any holder acquires Exchange
Notes in the Exchange Offer for the purpose of distributing or participating
in a distribution of the Exchange Notes, such holder cannot rely on the
position of the staff of the SEC enunciated in Exxon Capital Holdings
Corporation (available May 13, 1988) or similar no-action or interpretive
letters and must comply with the registration and prospectus delivery
requirements of the Securities Act in connection with a secondary resale
transaction, and such secondary resale transaction must be covered by an
effective registration statement containing the selling security holder
information required by Item 507 or 508, as applicable, of Regulation S-K if
the resales are of Exchange Notes obtained by such holder in exchange for
Initial Notes acquired by such holder directly from the Company or an
affiliate thereof, unless an exemption from registration is otherwise
available.
As contemplated by the above no-action letters and the Registration
Rights Agreement, each holder accepting the Exchange Offer is required to
represent to the Company in the Letter of Transmittal that (i) the Exchange
Notes are to be acquired by the holder in the ordinary course of business,
(ii) the holder is not engaging and does not intend to engage in the
<PAGE>
distribution of the Exchange Notes, and (iii) the holder acknowledges that if
such holder participates in the Exchange Offer for the purpose of distributing
the Exchange Notes such holder must comply with the registration and
prospectus delivery requirements of the Securities Act and cannot rely on the
above no-action letters.
Any broker or dealer registered under the Exchange Act (each a
"Broker-Dealer") who holds Initial Notes that were acquired for its own
account as a result of market-making activities or other trading activities
(other than Initial Notes acquired directly from the Company) may exchange
such Initial Notes for Exchange Notes pursuant to the Exchange Offer; however,
such Broker-Dealer may be deemed an underwriter within the meaning of the
Securities Act and, therefore, must deliver a prospectus meeting the
requirements of the Securities Act in connection with any resales of the
Exchange Notes received by it in the Exchange Offer, which prospectus delivery
requirement may be satisfied by the delivery by such Broker-Dealer of this
Prospectus. The Company has agreed to cause the Exchange Offer Registration
Statement, of which this Prospectus is a part, to remain continuously
effective for a period of one year from the Exchange Date, and to make this
Prospectus, as amended or supplemented, available to any such Broker-Dealer
for use in connection with resales. Any Broker-Dealer Participating in the
Exchange Offer will be required to acknowledge that it will deliver a
prospectus in connection with any resales of Exchange Notes received by
it in the Exchange Offer. The delivery by a Broker-Dealer of a prospectus in
connection with resales of Exchange Notes shall not be deemed to be an
admission by such Broker-Dealer that it is an underwriter within the meaning
of the Securities Act.
The Company will not receive any proceeds from any sale of Exchange Notes
by Broker-Dealers. Exchange Notes received by Broker-Dealers for their own
account pursuant to the Exchange Offer may be sold from time to time in one or
more transactions in the over-the-counter market, in negotiated transactions
through the writing of options on the Exchange Notes or a combination of such
methods of resale, at market prices prevailing at the time of resale, at
prices related to such prevailing market prices or negotiated prices. Any such
resale may be made directly to a purchaser or to or through brokers or dealers
who may receive compensation in the form of commissions or concessions from
any such Broker-Dealer and/or the purchasers of any such Exchange Notes.
The Company has agreed to pay all expenses incident to the Exchange Offer
other than fees and disbursements of counsel, accountants and any advisors to
holders of Initial Notes, underwriting commissions and discounts, brokerage
commissions, agent fees (other than the fees of the Exchange Agent) and
transfer taxes relating to the Exchange Offer Registration Statement.
LEGAL MATTERS
The validity of the Exchange Notes offered hereby will be passed upon for
the Company by Steel Hector & Davis LLP, Miami, Florida.
EXPERTS
The financial statements incorporated in this Prospectus by reference
from the Company's Annual Report on Form 10-K for the year ended January 31,
1998 have been audited by Deloitte & Touche LLP, independent auditors, as
stated in their report, which is incorporated herein by reference, and have
been so incorporated in reliance upon the report of such firm given upon their
authority as experts in accounting and auditing.
<PAGE>
The balance sheet as of December 31, 1997 and the related statements of
income and retained earnings and cash flows for the year then ended of J.P.
Fragrances, Inc., included in the Company's Form 8-K, dated March 31, 1998
which is incorporated by reference in this Prospectus have been audited by
Richard A. Eisner & Company, LLP, independent auditors, and are incorporated
by reference herein in reliance upon the report of such firm given upon their
authority as experts in accounting and auditing.
<PAGE>
<TABLE>
<S> <C>
No dealer, salesperson, or other person
has been authorized to give any information
or to make any representations not contained
in this Prospectus and, if given or made,
such information or representations must not
be relied upon as having been authorized by FRENCH FRAGRANCES, INC.
the Company. This Prospectus does not Offer to Exchange its
constitute an offer to sell, or solicitation 10-3/8% Senior Notes due 2007, Series D
of an offer to buy, the Senior Notes to any for any and all outstanding
person in any jurisdiction in which such an 10-3/8% Senior Notes due 2007, Series C
offer to sell or solicitation would be unlawful.
Neither the delivery of this Prospectus nor any
sale made hereunder shall, under any
circumstances, create any implication that the
information contained herein is correct as of
any time subsequent to the date hereof.
____________________
TABLE OF CONTENTS
PAGE ____________________
Available Information......................... 2
Incorporation of Certain Documents PROSPECTUS
by Reference................................ 3 ____________________
Cautionary Note Regarding Forward-
Looking Statements.......................... 4
Prospectus Summary............................ 5
Risk Factors.................................. 12
The Company................................... 18
The Exchange Offer............................ 19
Description of the Senior Notes............... 31
Registration Rights; Liquidated Damages....... 58
Certain Federal Income Tax
Consequences................................ 60
Plan of Distribution.......................... 60
Legal Matters................................. 62
Experts....................................... 62
__________, 1998
</TABLE>
<PAGE>
PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
Item 20. Indemnification of Directors and Officers.
The Company has authority under Section 607.0850 of the Florida Business
Corporation Act (the "FBCA") to indemnify its directors and officers to the
extent provided for in such statute. The Company's Amended and Restated
Articles of Incorporation provide that, to the fullest extent permitted
by applicable law, as amended from time to time, the Company will indemnify
any person who was or is a director or officer of the Company, or serves or
served in such capacity with any other enterprise at the request of the
Company, against all fines, liabilities, settlements, costs and expenses
asserted against or incurred by such person in his capacity or arising out of
his status as such officer or director. The Company may also indemnify
employees or agents of the Company if the Company's Board so approves.
This indemnification includes the right to advancement of expenses when
allowed pursuant to applicable law.
The provisions of the FBCA authorize a corporation to indemnify its
officers and directors in connection with actions, suits and proceedings
brought against them if the person acted in good faith and in a manner which
the person reasonably believed to be in, or not opposed to, the best interests
of the corporation and, with respect to any criminal actions, had no
reasonable cause to believe the person's conduct was unlawful. Unless
pursuant to a determination by a court, the determination of whether a
director, officer or employee has acted in accordance with the applicable
standard of conduct must be made by (i) a majority vote of directors who were
not parties to the proceeding or a committee consisting solely of two or more
directors not parties to the proceedings, (ii) independent legal counsel
selected by a majority vote of the directors who were not parties to the
proceeding or committee of directors (or selected by the full board if a
quorum or committee can not be obtained), or (iii) the affirmative vote of
the majority of the corporation's shareholders who were not parties to the
proceeding.
The FBCA further provides that a corporation may make any other or
further indemnity by resolution, bylaw, agreement, vote of shareholders
disinterested directors or otherwise, except with respect to certain
enumerated acts or omissions of such persons. Florida law prohibits
indemnification or advancement of expenses if a judgment or other final
adjudication establishes that the actions of a director, officer or employee
constitute (i) a violation of criminal law, unless the person had reasonable
cause to believe his conduct was unlawful, (ii) a transaction from which such
person derived an improper personal benefit, (iii) willful misconduct or
conscious disregard for the best interests of the corporation in the case of a
derivative action by a shareholder, or (iv) in the case of a director, a
circumstance under which a director would be liable for improper distributions
under Section 607.0834 of the FBCA. The FBCA does not affect a director's
responsibilities under any other law, such as federal securities laws.
At present, there is no pending litigation or other proceeding involving
a director or officer of the Company as to which indemnification is being
sought, nor is the Company aware of any threatened litigation that may result
in claims for indemnification by any officer or director.
The Company maintains directors' and officers' liability insurance for
its directors and officers.
<PAGE>
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(a) Exhibits.
Exhibit
Number Description
- ------- ------------------------------------------------------------------
3.1 Amended and Restated Articles of Incorporation of the Company dated
March 6, 1996 (incorporated herein by reference to Exhibit 3.1
filed as a part of the Company's Form 10-K for the fiscal year
ended January 31, 1996 (Commission File No. 1-6370)).
3.2 Amendment dated September 19, 1996 to the Amended and Restated
Articles of Incorporation of the Company (incorporated by reference
to Exhibit 4.4 filed as part of the Company's Form 10-Q for the
quarter ended October 31, 1996 (Commission File No. 1-6370)).
3.3 By-Laws of the Company (incorporated herein by reference to Exhibit
3.2 filed as a part of the Company's Form 10-K for the fiscal year
ended January 31, 1996 (Commission File No. 1-6370)).
4.1 Indenture, dated as of May 13, 1997, between the Company and Marine
Midland Bank, as trustee (incorporated herein by reference to
Exhibit 4.1 filed as a part of the Company's Form 8-K dated May 13,
1997 (including forms of 10-3/8% Senior Note due 2007, Series A and
10-3/8% Senior Note due 2007, Series B) (Commission File No.
1-6370)).
4.2 Credit Agreement, dated as of May 13, 1997, by and among the Company
and Fleet National Bank (incorporated herein by reference to Exhibit
4.3 filed as a part of the Company's Form 8-K dated May 13, 1997
(Commission File No. 1-6370)).
4.3 First Amendment to Credit Agreement and Other Transaction Documents
dated December 31, 1997 between the Company and Fleet National Bank
(incorporated herein by reference to Exhibit 4.3 filed as a part of
the Company's Form 10-K for the fiscal year ended January 31, 1998
(Commission File No. 1-6370)).
4.4 Letter Agreement dated March 23, 1998 between French Fragrances,
Inc. and Fleet National Bank (incorporated herein by reference to
Exhibit 4.3 filed as a part of the Company's Form 10-K for the
fiscal year ended January 31, 1998 (Commission File No. 1-6370)).
4.5 Indenture, dated as of April 27, 1998, between the Company and
Marine Midland Bank, as trustee (incorporated herein by reference to
Exhibit 4.1 filed as a part of the Company's Form 8-K dated April
27, 1998 (including forms of 10-3/8% Senior Note due 2007, Series C
and 10-3/8% Senior Note due 2007, Series D) (Commission File No.
1-6370)).
4.6 Registration Rights Agreement, dated as of April 27, 1998, between
the Company and Donaldson, Lufkin & Jenrette Securities Corporation
(incorporated herein by reference to Exhibit 4.2 filed as a part of
the Company's Form 8-K dated April 27, 1998) (Commission File No.
1-6370)).
5.1 Opinion of Steel Hector & Davis LLP.
<PAGE>
10.1 Registration Rights Agreement dated as of November 30, 1995, among
the Company, Bedford Capital Corporation ("Bedford"), Fred Berens,
Rafael Kravec and Eugene Ramos (incorporated herein by reference to
Exhibit 10.1 filed as a part of the Company's Form 10-K for the
fiscal year ended September 30, 1995 (Commission File No. 1-6370)).
10.2 Amendment dated as of March 20, 1996 to Registration Rights
Agreement dated as of November 30, 1995, among the Company, Bedford,
Fred Berens, Rafael Kravec and Eugene Ramos (incorporated herein by
reference to Exhibit 10.2 filed as a part of the Company's Form 10-K
for the year ended January 31, 1996 (Commission File No. 1-6370)).
10.3 Second Amendment dated as of July 22, 1996 to Registration Rights
Agreement dated as of November 30, 1995, among the Company, Bedford,
Fred Berens, Rafael Kravec and the Estate of Eugene Ramos
(incorporated by reference to Exhibit 10.3 filed as part of the
Company's Form 10-Q for the quarter ended July 31, 1996 (Commission
File No. 1-6370)).
10.4 Employment Agreement dated as of April 1, 1997, between the Company
and Rafael Kravec (incorporated herein by reference to Exhibit 10.4
filed as a part of the Company's Form 10-K for the year ended
January 31, 1997 (Commission File No. 1-6370)).
10.5 Non-Employee Director Stock Option Plan (incorporated herein by
reference to Exhibit 10.4 filed as a part of the Company's Form 10-K
for the fiscal year ended September 30, 1995 (Commission File No.
1-6370)).
10.6 1995 Stock Option Plan (incorporated herein by reference to Exhibit
10.5 filed as a part of the Company's Form 10-K for the fiscal year
ended September 30, 1995 (Commission File No. 1-6370)).
10.7 Lease Agreement, dated as of July 2, 1992, between FFI and National
Trading (incorporated herein by reference to Exhibit 10.13 filed as
a part of the Company's Form 10-K for the fiscal year ended
September 30, 1995 (Commission File No. 1-6370)).
10.8 Option Agreement, dated July 2, 1992, between FFI and National
Trading and Memorandum of Lease and Option Agreement related thereto
(incorporated herein by reference to Exhibit 10.14 filed as a part
of the Company's Form 10-K for the fiscal year ended September 30,
1995 (Commission File No. 1-6370)).
10.9 Amended and Restated Exclusive Trademark License Agreement, dated
February 29, 1980, between Geoffrey Beene, Inc., and Epocha
Distributors, Inc. (now known as Sanofi Beaute, Inc.) as amended
July 29, 1992 and February 13, 1995 (incorporated herein by
reference to Exhibit 10.15 filed as a part of the Company's Form
10-K for the fiscal year ended September 30, 1995 (Commission File
No. 1-6370)).
10.10 Asset Purchase Agreement dated as of February 1, 1996, by and
between the Company and Halston-Borghese, Inc. and its affiliates
(incorporated herein by reference to Exhibit 2.1 filed as a part of
the Company's Form 8-K dated March 20, 1996 (Commission File
No. 1-6370)).
<PAGE>
10.11 Asset Purchase Agreement dated as of February 25, 1998, among the
Company, J.P. Fragrances, Inc., Joseph A. Pappalardo and Gloria
Pappalardo (incorporated herein by reference to Exhibit 2.1 filed as
a part of the Company's Form 8-K dated March 31, 1998 (Commission
File No. 1-6370)).
10.12 Amendment to Asset Purchase Agreement dated as of March 30, 1998,
among the Company, JPF, Joseph A. Pappalardo and Gloria Pappalardo
(incorporated herein by reference to Exhibit 2.2 filed as a part of
the Company's Form 8-K dated March 31, 1998 (Commission File No.
1-6370)).
10.13 Purchase Agreement, dated April 27, 1998, between the Company and
Donaldson, Lufkin & Jenrette Securities Corporation.
10.14 Lease Agreement dated as of May 4, 1998, between the Company and MAC
Papers, Inc. (incorporated herein by reference to Exhibit 10.13
filed as part of the Company's Form 10-Q for the quarter ended April
30, 1998 (Commission File No. 1-6370)).
12.1 Statement Regarding Computation of Ratios.
21.1 Subsidiaries of the Company (incorporated herein by reference to
Exhibit 21.1 filed as a part of the Company's Form 10-K for the
fiscal year ended January 31, 1998 (Commission File No. 1-6370)).
23.1 Consent of Deloitte & Touche LLP.
23.2 Consent of Steel Hector & Davis LLP (contained in the opinion filed
as Exhibit 5.1).
23.3 Consent of Richard A. Eisner & Company, LLP.
24.1 Power of Attorney (contained on signature page).
25.1 Form T-1 Statement of Eligibility under the Trust Indenture Act of
1939 of Marine Midland Bank, as Trustee.
99.1 Form of Letter of Transmittal.
99.2 Form of Notice of Guaranteed Delivery.
The foregoing list omits instruments defining the rights of holders of long
term debt of the Company where the total amount of securities authorized
thereunder does not exceed 10% of the total assets of the Company. The
Company hereby agrees to furnish a copy of each such instrument or agreement
to the Commission upon request.
(b) Financial Statement Schedules.
All schedules for which provision is made in the applicable accounting
regulations of the Commission are either not required under the related
instructions, are not applicable (and therefore have been omitted), or the
required disclosures are contained in the financial statements included
herein.
<PAGE>
ITEM 22. UNDERTAKINGS.
The undersigned Registrant hereby undertakes:
(1) That, for purposes of determining any liability under the
Securities Act of 1933, each filing of the registrant's annual report
pursuant to Section 13(a) or Section 15(d) of the Securities Exchange Act
of 1934 that is incorporated by reference in this Registration Statement
shall be deemed to be a new registration statement relating to the
securities offered herein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.
(2) That prior to any public reoffering of the securities
registered hereunder through use of a prospectus which is a part of this
Registration Statement, by any person or party who is deemed to be an
underwriter within the meaning of Rule 145(c), such reoffering prospectus
will contain the information called for by the applicable registration
form with respect to reofferings by persons who may be deemed
underwriters, in addition to the information called for by the other
items of the applicable form.
(3) That every prospectus (i) that is filed pursuant to paragraph
(2) immediately preceding, or (ii) that purports to meet the requirements
of Section 10(a)(3) of the Securities Act of 1933 and is used in
connection with an offering of securities subject to Rule 415, will be
filed as a part of an amendment to this Registration Statement and will
not be used until such amendment is effective, and that, for purposes of
determining any liability under the Securities Act of 1933, each such
post-effective amendment shall be deemed to be a new Registration
Statement relating to the securities offered therein, and the offering of
such securities at that time shall be deemed to be the initial bona fide
offering thereof.
(4) That, insofar as indemnification for liabilities arising under
the Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the registrant pursuant to the provisions
described under Item 20 above, or otherwise, the registrant has been
advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and
is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or
controlling person of the registrant in the successful defense of any
action, suit or proceeding) is asserted by such director, officer, or
controlling person in connection with the securities being registered,
the registrant will, unless in the opinion of its counsel the matter has
been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against
public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
(5) To respond to requests for information that is incorporated by
reference in the Prospectus pursuant to Items 4, 10(b), 11 or 13 of Form
S-4, within one business day of receipt of such request, and to send the
incorporated documents by first class mail or other equally prompt means.
This includes information contained in documents filed subsequent to the
effective date of this Registration Statement through the date of
responding to the request.
<PAGE>
POWER OF ATTORNEY
Each director and/or officer of the registrant whose signature appears
below hereby appoints E. Scott Beattie and Oscar E. Marina, Esq., and each of
them severally, as his attorney-in-fact to sign in his name and on his behalf,
in any and all capacities stated below, and to file with the Securities and
Exchange Commission, any and all amendments, including post-effective
amendments, to this registration statement.
SIGNATURES
Pursuant to the requirements of the Securities Act, the registrant has
duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Miami, State of Florida
on June 24, 1998.
FRENCH FRAGRANCES, INC.
By: /s/ E. Scott Beattie
------------------------------------------
E. Scott Beattie
President, Chief Executive Officer and Director
(Principal Executive Officer)
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated:
Signature Title Date
/s/ Rafael Kravec Chairman of the Board and Director June 24, 1998
- -----------------------
Rafael Kravec
/s/ E. Scott Beattie President, Chief Executive Officer June 24, 1998
- ----------------------- and Director
E. Scott Beattie (Principal Executive Officer)
/s/ William J. Mueller Vice President-Operations and June 24, 1998
- ----------------------- Chief Financial Officer
William J. Mueller (Principal Financial and
Accounting Officer)
/s/ J. W. Nevil Thomas Director June 24, 1998
- -----------------------
J. W. Nevil Thomas
/s/ George Dooley Director June 24, 1998
- -----------------------
George Dooley
<PAGE>
EXHBIT INDEX
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
5.1 Opinion of Steel Hector & Davis LLP.
10.13 Purchase Agreement, dated April 27, 1998, between the Company
and Donaldson, Lufkin & Jenrette Securities Corporation.
12.1 Statement Regarding Computation of Ratios.
23.1 Consent of Deloitte & Touche LLP.
23.3 Consent of Richard A. Eisner & Company, LLP.
25.1 Form T-1 Statement of Eligibility under the Trust Indenture Act
of 1939 of Marine Midland Bank, as Trustee.
99.1 Form of Letter of Transmittal.
99.2 Form of Notice of Guaranteed Delivery.
EXHIBIT 5.1
June 23, 1998
French Fragrances, Inc.
14100 N.W. 60th Avenue
Miami Lakes, FL 33014
Gentlemen:
We have acted as counsel to French Fragrances, Inc. (the "Company") in
connection with the preparation and filing with the Securities and Exchange
Commission of a registration statement on Form S-4 to be filed on or about the
date hereof (the "Registration Statement"). The Registration Statement
relates to an exchange offer pursuant to which the Company is offering to
exchange $1,000 in principal amount of its 10 3/8% Senior Notes due 2007,
Series D (the "Exchange Notes"), which Exchange Notes are the subject of the
Registration Statement, for each $1,000 in principal amount of its 10 3/8%
Senior Notes due 2007, Series C (the "Initial Notes"). You have advised us
that $40,000,000 aggregate principal amount of the Initial Notes are currently
outstanding. The Initial Notes were, and the Exchange Notes will be, issued
pursuant to an Indenture dated as of April 27, 1998 (the "Indenture") by and
between the Company and Marine Midland Bank, as trustee (the "Trustee").
In connection therewith, we have examined the Amended and Restated
Articles of Incorporation, as amended, and the Bylaws of the Company; the
minutes of the proceedings of the Company's Board of Directors with respect to
the Registration Statement and the issuance of the Exchange Notes as
contemplated in the Registration Statement; the Indenture and such other
corporate documents and records, certificates of public officials and
questions of law as we deemed necessary or appropriate for the purposes of
this opinion.
In our examination and for all purposes of this opinion, we have assumed
(a) the genuineness of all signatures, (b) the legal capacity of all natural
persons, (c) the authenticity of all documents submitted to us as originals,
(d) the conformity to original documents of all documents submitted to us as
certified or photostatic copies and the authenticity of originals of such
latter documents, (e) the due authorization, execution and delivery of the
Indenture by the Trustee, (f) that the Trustee is duly organized, validly
existing and in good standing under the laws of its jurisdiction of
incorporation and has the requisite power and authority to execute, deliver
and perform the Indenture, (g) that the Indenture constitutes the legal, valid
and binding obligation of the Trustee enforceable against the Trustee in
accordance with its terms, (h) that each certificate of a governmental
authority relied upon for purposes of this opinion and all official public
records (including their proper indexing and filing) are accurate and
complete, (i) that routine procedural matters such as service of process or
qualification to do business in the relevant jurisdictions will be satisfied
by the parties seeking to enforce the Indenture or the Exchange Notes, and (j)
the constitutionality and validity of all relevant laws, regulations and
<PAGE>
French Fragrances, Inc.
June 23, 1998
Page 2
agency actions unless a reported case has otherwise held or widespread concern
has been expressed by commentators as reflected in materials which lawyers
routinely consult.
We have made such examinations of the Federal law of the United States,
the law of the State of Florida, and the law of the State of New York as we
have deemed relevant for purposes of this opinion, and have not made any
independent review of the law of any other state or other jurisdiction. The
opinions expressed herein are limited solely to the Federal law of the United
States, the law of the State of Florida, and the law of the State of New York.
Based upon and subject to the foregoing and the other qualifications,
limitations and assumptions contained herein, we are of the opinion that the
Exchange Notes have been validly authorized and when executed and
authenticated pursuant to the Indenture and when issued and delivered as
contemplated by the Registration Statement, the Exchange Notes will be the
valid and binding obligations of the Company enforceable in accordance with
their terms.
The foregoing opinions are subject to the following qualifications:
(A) Our opinion concerning the validity, binding effect and
enforceability of the Exchange Notes means that (i) a contract has been formed
under applicable law, (ii) a remedy will be available with respect to each
agreement of the Company in the Indenture and the Exchange Notes, or such
agreements will otherwise be given effect, and (iii) subject to the last
sentence of this paragraph and the other qualifications set forth hereinafter,
any remedy expressly provided for in the Indenture and the Exchange Notes will
be given effect as stated. The validity, binding effect and enforceability of
the Exchange Notes may be limited or otherwise affected by (i) bankruptcy,
insolvency, reorganization, moratorium, fraudulent conveyance (including the
Uniform Fraudulent Transfers Act as adopted in Florida and New York) or other
similar statutes, rules, regulations or other laws affecting the enforcement
of creditors' rights and remedies generally, and (ii) the unavailability of,
or limitation on the availability of, a particular right or remedy (whether in
a proceeding in equity or at law) because of an equitable principle or a
requirement as to commercial reasonableness, conscionability or good faith.
(B) We express no opinion as to:
(i) the validity, binding effect or enforceability of any purported
waiver under the Indenture or the Exchange Notes, or any purported
consent thereunder, relating to the rights of the Company or duties owing
to the Company, existing as a matter of law except to the extent the
Company may so waive or consent and has effectively so waived and
consented (whether in the Indenture, the Exchange Notes or otherwise); or
(ii) the validity, binding effect or enforceability of any
provisions in the Indenture or the Exchange Notes (a) restricting access
to legal or equitable redress, (b) purporting to waive or affect any
rights to notice or the obligations of good faith, fair dealing,
diligence and reasonableness, (c) allowing any party to declare
<PAGE>
French Fragrances, Inc.
June 23, 1998
Page 3
indebtedness to be due and payable without notice, (d) providing that the
Trustee's or any other party's failure to exercise any right, remedy or
option under the Indenture or the Exchange Notes shall not operate as a
waiver or that a selection of a remedy will not limit the availability of
another remedy, (e) which, under Florida or New York law, could be deemed
to be unconscionable, to be evidence of bad faith or to be violative of
public policy, (f) providing that forum selection clauses are binding on
the court or courts in the forum selected, (g) releasing, exculpating or
exempting a party from, or requiring indemnification of a party for,
liability for its own actions or inactions, to the extent the action or
inaction involves gross negligence, recklessness, willful misconduct or
unlawful conduct, (h) limiting judicial discretion regarding the
determination of damages and entitlement to attorneys' fees and other
costs, or (i) which deny a party who has materially failed to render or
offer performance required by the Indenture or the Exchange Notes the
opportunity to cure that failure unless permitting a cure would
unreasonably hinder the nondefaulting party from making substitute
arrangements for performance or it was important in the circumstances to
the nondefaulting party that performance occur by the date stated in the
Indenture or the Exchange Notes.
This opinion is limited to the matters stated herein and no opinions may
be implied or inferred beyond the matters expressly stated herein. We have
assumed no obligation to update or supplement our opinions to reflect any
facts or circumstances which may come to our attention or any changes in law
which may occur.
We hereby consent to the filing of this opinion as Exhibit 5.1 to the
Registration Statement and to the reference to us contained therein under the
caption "Legal Matters."
Very truly yours,
/s/ STEEL HECTOR & DAVIS LLP
STEEL HECTOR & DAVIS LLP
TRM/TRW/MFE
MIA9801/33746-2
EXHIBIT 10.13
PURCHASE AGREEMENT
French Fragrances, Inc.
10-3/8% Senior Notes due 2007, Series C
PURCHASE AGREEMENT
------------------
April 20, 1998
DONALDSON, LUFKIN & JENRETTE
Securities Corporation
277 Park Avenue
New York, New York 10172
Ladies & Gentlemen:
French Fragrances, Inc., a Florida corporation
("Company"), agrees with you as follows:
1. Issuance of Securities. The Company proposes to
issue and sell to Donaldson, Lufkin & Jenrette Securities
Corporation (the "Purchaser"), an aggregate of $40 million
principal amount of 10-3/8% Senior Notes due 2007, Series C (the
"Series C Notes"). The Series C Notes are to be issued pursuant
to an indenture (the "Note Indenture") to be dated as of April
27, 1998 between the Company and Marine Midland Bank, as trustee
(the "Trustee").
Capitalized terms used but not defined herein shall
have the meanings given to such terms in the Note Indenture or
the Offering Memorandum, as the case may be.
The Series C Notes will be offered and sold to the
Purchaser pursuant to an exemption from the registration
requirements under the Securities Act of 1933, as amended (the
"Act"). The Company has prepared a final offering memorandum,
dated April 20, 1998 including the Company's Annual Report for
the year ended January 31, 1998 on Form 10-K as Appendix A
thereto and the Company's Current Report on Form 8-K dated March
31, 1998 as Appendix B thereto (collectively, the "Offering
Memorandum"), relating to the Company and the Series C Notes
for the Purchaser's use.
<PAGE>
Upon original issuance thereof, and until such time as
the same is no longer required under the applicable requirements
of the Act, the Series C Notes (and all securities issued in
exchange therefor or in substitution thereof) shall bear the
following legend:
"THIS NOTE (OR ITS PREDECESSOR) HAS NOT BEEN REGISTERED
UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED,
SOLD, PLEDGED OR OTHERWISE TRANSFERRED WITHIN THE UNITED
STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S.
PERSONS, EXCEPT AS SET FORTH IN THE NEXT SENTENCE.
BY ITS ACQUISITION HEREOF OR OF A BENEFICIAL INTEREST
HEREIN, THE HOLDER:
REPRESENTS THAT (A) IT IS A "QUALIFIED INSTITUTIONAL
BUYER" (As defined in Rule 144A under the Securities
Act) (A "QIB") OR (B) IT HAS ACQUIRED THIS NOTE IN AN
OFFSHORE TRANSACTION IN COMPLIANCE WITH REGULATION S
UNDER THE SECURITIES ACT,
(1) AGREES THAT IT WILL NOT RESELL OR OTHERWISE TRANSFER
THIS NOTE EXCEPT (A) TO THE COMPANY, (B) TO A PERSON
WHOM THE SELLER REASONABLY BELIEVES IS A QIB
PURCHASING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A
QIB IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE
144A, (C) IN AN OFFSHORE TRANSACTION MEETING THE
REQUIREMENTS OF RULE 904 OF REGULATION S UNDER THE
SECURITIES ACT, (D) IN A TRANSACTION MEETING THE
REQUIREMENTS OF RULE 144 UNDER THE SECURITIES
ACT, (E) IN ACCORDANCE WITH ANOTHER EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT (AND
IN THE CASE OF CLAUSE (D) OR (E) BASED UPON AN OPINION
OF COUNSEL ACCEPTABLE TO THE COMPANY IF THE COMPANY SO
REQUESTS) OR (F) PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT AND, IN EACH CASE, IN ACCORDANCE WITH THE
APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED
STATES OR ANY OTHER APPLICABLE JURISDICTION,
(2) AGREES THAT IT WILL DELIVER TO EACH PERSON TO WHOM
THIS NOTE OR AN INTEREST HEREIN IS TRANSFERRED A
NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND, AND
(3) ACKNOWLEDGES THAT THE SELLER MAY BE RELYING ON THE
EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER.
<PAGE>
AS USED HEREIN, THE TERMS "OFFSHORE TRANSACTION" AND
"UNITED STATES" HAVE THE MEANINGS GIVEN TO THEM BY RULE
902 OF REGULATION S UNDER THE SECURITIES ACT. THE
INDENTURE CONTAINS A PROVISION REQUIRING THE TRUSTEE TO
REFUSE TO REGISTER ANY TRANSFER OF THIS NOTE IN VIOLATION
OF THE FOREGOING."
The Purchaser has advised the Company that it will make
offers (the "Exempt Resales") of the Series C Notes purchased
hereunder on the terms set forth in the Offering Memorandum, as
amended or supplemented, solely (i) to persons whom the Purchaser
reasonably believes to be "qualified institutional buyers," as
defined in Rule 144A under the Act ("QIBs") and, (ii) to non-U.S.
persons whom the Purchaser reasonably believes are outside the
United States and to whom offers and sales of the Series C Notes
may be made in reliance upon Regulation S under the Act
("Regulation S"), in transactions meeting the requirements of
Regulation S. The QIBs and the non-U.S. persons outside the
United States are referred to herein as the "Eligible
Purchasers." The Purchaser will offer the Series C Notes to such
Eligible Purchasers initially at a price equal to 106.50% of the
principal amount thereof. Such price may be changed at any time
without notice.
Holders (including subsequent transferees) of the
Series C Notes will have the registration rights set forth in the
registration rights agreement relating thereto (the "Registration
Rights Agreement"), to be dated the Closing Date, in
substantially the form of Exhibit A hereto, for so long as such
Series C Notes constitute "Transfer Restricted Securities" (as
defined in the Registration Rights Agreement). Pursuant to the
Registration Rights Agreement, the Company will agree to file
with the Securities and Exchange Commission (the "Commission"),
under the circumstances set forth therein, (i) a registration
statement under the Act (the "Exchange Offer Registration
Statement") relating to the 10-3/8% Series D Senior Notes due
2007 (the "Series D Notes", and together with the Series C Notes,
the "Notes") to be offered in exchange for the Series C Notes
(the "Exchange Offer"), and (ii) a shelf registration statement
pursuant to Rule 415 under the Act (the "Shelf Registration
Statement") relating to the resale by certain holders of the
Series C Notes, and to use its reasonable best efforts to cause
such Registration Statements to be declared effective. This
Purchase Agreement (this "Agreement"), the Notes, the Note
Indenture and the Registration Rights Agreement are hereinafter
sometimes referred to collectively as the "Operative
Documents."
<PAGE>
2. Agreements to Sell and Purchase. On the basis of
the representations and warranties contained in this Agreement,
and subject to its terms and conditions, the Company agrees
to issue and sell to the Purchaser, and the Purchaser agrees to
purchase from the Company $40 million in principal amount of
Series C Notes. The purchase price for the Series C Notes shall
be 103.75% of their principal amount.
3. Delivery and Payment. Delivery to the Purchaser
of and payment for the Series C Notes shall be made at 9:00 a.m.,
New York City time, on April 27, 1998 (the "Closing Date") at the
offices of Fried, Frank, Harris, Shriver & Jacobson, One New York
Plaza, New York, New York 10004, or such other time or place as
the Purchaser and the Company shall designate.
One or more of the Series C Notes in definitive form,
registered in the name of Cede & Company., as nominee of The
Depository Trust Company ("DTC"), having an aggregate principal
amount corresponding to the aggregate principal amount of the
Series C Notes sold pursuant to Exempt Resales to QIBs
(collectively, the "Master Note") and one or more of the Series C
Notes in definitive form, registered in the name of Cede &
Company., as nominee of DTC, having an aggregate principal amount
corresponding to the aggregate principal amount of the Series C
Notes sold pursuant to Exempt Resales to non-U.S. persons in
reliance upon Regulation S (collectively, the "Regulation S
Note"), shall be delivered by the Company to the Purchaser (or as
the Purchaser directs), against payment by the Purchaser of the
purchase price therefor by certified or official bank check or
checks payable in federal (same day) funds to the order of the
Company or as the Company may direct. The Master Note and the
Regulation S Note shall be made available to the Purchaser for
inspection not later than 9:30 a.m. on the business day
immediately preceding the Closing Date.
4. Agreements of the Company. The Company agrees
with the Purchaser as follows:
(a) To advise the Purchaser promptly and, if
requested by the Purchaser, to confirm such advice in
writing, (i) of the issuance by any state securities
commission of any stop order suspending the qualification or
exemption from qualification of any of the Series C Notes
for offering or sale in any jurisdiction, or the initiation
of any proceeding for such purpose by any state securities
commission or other regulatory authority, and (ii) of the
happening of any event that makes any statement of a
<PAGE>
material fact made in the Offering Memorandum untrue or that
requires the making of any additions to or changes in the
Offering Memorandum in order to make the statements therein,
in the light of the circumstances under which they are made,
not misleading. The Company shall use its reasonable best
efforts to prevent the issuance of any stop order or order
suspending the qualification or exemption of any of the
Series C Notes under any state securities or Blue Sky laws,
and if at any time any state securities commission or other
regulatory authority shall issue an order suspending the
qualification or exemption of any of the Series C Notes
under any state securities or Blue Sky laws, the Company
shall use its reasonable best efforts to obtain the
withdrawal or lifting of such order at the earliest possible
time.
(b) To furnish the Purchaser, without charge, as
many copies of the Offering Memorandum, and any amendments
or supplements thereto, as the Purchaser may reasonably
request. The Company consents to the use of the Offering
Memorandum, and any amendments and supplements thereto, by
the Purchaser in connection with Exempt Resales.
(c) Not to amend or supplement the Offering
Memorandum prior to the Closing Date unless the Purchaser
shall previously have been advised thereof and shall have
no reasonable objection thereto after being furnished a copy
thereof. The Company shall promptly prepare, upon the
Purchaser's request, any amendment or supplement to the
Offering Memorandum that may be reasonably necessary or
advisable in connection with Exempt Resales.
(d) If, after the date hereof and prior to
consummation of any Exempt Resales, any event shall occur as
a result of which, in the judgment of the Company or in the
reasonable opinion of Purchaser's counsel, it becomes
necessary to amend or supplement the Offering Memorandum in
order to make the statements therein, in the light of the
circumstances when the Offering Memorandum is delivered to
an Eligible Purchaser which is a prospective purchaser, not
misleading, or if it is necessary to amend or supplement the
Offering Memorandum to comply with applicable law, forthwith
to prepare an appropriate amendment or supplement to the
Offering Memorandum so that statements therein as so amended
or supplemented will not, in the light of the circumstances
when it is so delivered, be misleading, or so that the
Offering Memorandum will comply with applicable law.
<PAGE>
(e) To cooperate with the Purchaser and its
counsel in connection with the qualification of the Series C
Notes under the securities or Blue Sky laws of such
jurisdictions as the Purchaser may request and to continue
such qualification in effect so long as required for the
Exempt Resales; provided, however, that the Company shall
not be required in connection therewith to register or
qualify as a foreign corporation where it is not now so
qualified or to take any action that would subject it to
service of process in suits or taxation, other than as to
matters and transactions relating to the Exempt Resales, in
any jurisdiction where it is not now so subject.
(f) Whether or not the transactions contemplated
by this Agreement are consummated or this Agreement becomes
effective or is terminated, to pay all costs, expenses, fees
and taxes incident to and in connection with: (i) the
preparation, printing, filing and distribution of the
Offering Memorandum (including, without limitation,
financial statements and exhibits) and all amendments and
supplements thereto (but not, however, legal fees and
expenses of Purchaser's counsel incurred in connection with
any of the foregoing), (ii) the preparation (including,
without limitation, word processing and duplication costs)
and delivery of this Agreement and the other Operative
Documents and all other agreements, memoranda,
correspondence and other documents (but not, however,
legal fees and expenses of Purchaser's counsel incurred in
connection with any of the foregoing) and all preliminary
and final Blue Sky memoranda prepared and delivered in
connection herewith and with the Exempt Resales, (iii) the
issuance and delivery by the Company of the Notes, (iv) the
qualification of the Notes for offer and sale under the
securities or Blue Sky laws of the several states
(including, without limitation, the reasonable fees and
disbursements of Purchaser's counsel relating to such
registration or qualification), (v) furnishing such copies
of the Offering Memorandum, and all amendments and
supplements thereto, as may be reasonably requested for use
in connection with Exempt Resales, (vi) the preparation of
certificates for the Notes (including, without limitation,
printing and engraving thereof), (vii) the fees,
disbursements and expenses of the Company's counsel and
accountants, (viii) all expenses and listing fees in
connection with the application for quotation of the Series
C Notes in the National Association of Securities
Dealers, Inc. ("NASD") Automated Quotation System - PORTAL
("PORTAL"), (ix) all fees and expenses (including fees and
<PAGE>
expenses of counsel) of the Company in connection with
approval of the Notes by DTC for "book-entry" transfer and
(x) the performance by the Company of its other obligations
under this Agreement and the other Operative Documents.
(g) To use the proceeds from the sale of the
Series C Notes in the manner described or reflected in the
Offering Memorandum under the caption "Use of Proceeds."
(h) To the extent it may be lawful, not to
voluntarily claim, and to resist actively any attempts to
claim, the benefit of any usury laws against the holders of
any Notes.
(i) To do and perform all things required to be
done and performed under this Agreement by the Purchaser
prior to or after the Closing Date and to satisfy all
conditions precedent on its part to the delivery of the
Series C Notes.
(j) Not to sell, offer for sale or solicit offers
to buy or otherwise negotiate in respect of any security (as
defined in the Act) that would be integrated with the sale
of the Series C Notes in a manner that would require the
registration under the Act of the sale to the Purchaser or
Eligible Purchasers of the Series C Notes.
(k) For so long as any of the Notes remain
outstanding and during any period in which the Company is
not subject to Section 13 or 15(d) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), to
make available, upon request, to any QIB holding Series C
Notes or any beneficial owner of Series C Notes in
connection with any sale thereof and any prospective
purchaser of such Series C Notes from such QIB or beneficial
owner, the information required by Rule 144A(d)(4) under the
Act.
(l) To cause the Exchange Offer to be made in the
appropriate form to permit registration of the Series D
Notes to be offered in exchange for the Series C Notes and
to comply with all applicable federal and state securities
laws in connection with the Exchange Offer.
(m) To comply with all of its agreements set
forth in the Registration Rights Agreement, and all
agreements set forth in the representation letter of the
Company to DTC relating to the approval of the Notes by DTC
for "book-entry" transfer.
<PAGE>
(n) To use its reasonable best efforts to effect
the inclusion of the Series C Notes in PORTAL.
(o) During a period of five years following the
date of this Agreement, to deliver to the Purchaser promptly
upon their becoming available, copies of all current,
regular and periodic reports filed by the Company with the
Commission or any securities exchange or with any
governmental authority succeeding to any of the Commission's
functions.
5. Representations and Warranties.
(a) The Company represents and warrants to the
Purchaser that, as of the date hereof:
(i) The Offering Memorandum has been prepared in
connection with the Exempt Resales. The Offering
Memorandum, as of the date thereof, does not, and will not
as of the Closing Date, and any supplement or amendment to
the Offering Memorandum will not, as of the date thereof,
contain any untrue statement of a material fact or omit to
state any material fact necessary in order to make the
statements therein, in the light of the circumstances under
which they were made, not misleading, except that the
representations and warranties contained in this paragraph
(i) shall not apply to statements in or omissions from the
Offering Memorandum (or any supplement or amendment thereto)
made in reliance upon and in conformity with information
relating to the Purchaser furnished to the Company in
writing by it expressly for use therein. No stop order
preventing the use of the Offering Memorandum, or any
amendment or supplement thereto, or order asserting that any
of the transactions contemplated by this Agreement is
subject to the registration requirements of the Act, has
been issued.
(ii) When the Series C Notes are issued and
delivered pursuant to this Agreement, none of the Series C
Notes will be of the same class (within the meaning of Rule
144A under the Act) as securities of the Company that are
listed on a national securities exchange registered under
Section 6 of the Exchange Act or that are quoted in a
United States automated inter-dealer quotation system.
(iii) Each of the Company and the Subsidiaries has
been duly organized, is validly existing as a corporation in
good standing under the laws of its respective jurisdiction
of incorporation, has all requisite corporate power and
<PAGE>
authority to carry on its business as it is currently being
conducted and as described or reflected in the Offering
Memorandum and to own, lease and operate its properties, and
is duly qualified and in good standing as a foreign
corporation authorized to do business in each jurisdiction
in which the nature of its business or its ownership or
leasing of property requires such qualification, except
where the failure to be so qualified would not have a
material adverse effect on the financial condition, results
of operations, business or prospects of the Company and the
Subsidiaries (as defined below), taken as a whole (a
"Material Adverse Effect").
(iv) The entities listed on Schedule I hereto are
the only subsidiaries, direct or indirect, of the Company
(the "Subsidiaries"). All of the outstanding shares of
capital stock or other securities evidencing equity
ownership of such Subsidiaries of the Company are owned,
directly or indirectly, by the Company or through one or
more subsidiaries, and such shares of capital stock or
securities have been duly authorized and validly issued and
are fully paid and non-assessable, were not issued in
violation of any preemptive or similar rights and are free
and clear of any security interest, claim, lien or
encumbrance (each, a "Lien"). There are no outstanding
subscriptions, rights, warrants, calls, commitments of sale
or options to acquire, or instruments convertible into or
exchangeable for, any such shares of capital stock or other
equity interest of such Subsidiaries.
(v) The Company has all requisite corporate power
and authority to execute, deliver and perform its
obligations under this Agreement, the Notes, the Note
Indenture and the Registration Rights Agreement and to
consummate the transactions contemplated hereby and thereby,
including, without limitation, the corporate power and
authority to issue, sell and deliver the Notes as provided
herein and therein.
(vi) This Agreement has been duly and validly
authorized, executed and delivered by the Company and is the
legally valid and binding agreement of the Company,
enforceable against the Company in accordance with its
terms, except as such enforcement may be limited by
bankruptcy, insolvency, reorganization, moratorium,
fraudulent conveyance (including the Uniform Fraudulent
Transfers Act as adopted in Florida) or other laws affecting
creditors' rights and remedies generally and except as such
<PAGE>
enforcement is subject to general principles of equity
(including, without limitation, standards of materiality,
good faith, fair dealing and reasonableness), regardless of
whether enforcement is considered in a proceeding in equity
or at law, except as any rights to indemnity and
contribution under this Agreement may be limited by federal
and state securities laws and except to the extent that a
waiver of rights under any usury laws may be unenforceable.
(vii) The Note Indenture has been duly and validly
authorized by the Company and on the Closing Date, will be
validly executed and delivered by the Company. When the
Note Indenture has been duly executed and delivered by the
Company, the Note Indenture will be the legally valid and
binding agreement and obligation of the Company, enforceable
against the Company in accordance with its terms, except as
such enforcement may be limited by bankruptcy, insolvency,
reorganization, moratorium, fraudulent conveyance (including
the Uniform Fraudulent Transfers Act as adopted in
Florida) or other laws affecting enforcement of creditors'
rights and remedies generally and except as such enforcement
is subject to general principles of equity (including,
without limitation, standards of materiality, good faith,
fair dealing and reasonableness), regardless of whether
enforcement is considered in a proceeding in equity or at
law, and except to the extent that a waiver of rights under
any usury laws may be unenforceable. The Note Indenture,
when executed and delivered, will conform in all material
respects to the description thereof in the Offering
Memorandum.
(viii) The Series C Notes have been duly and
validly authorized for issuance and sale to the Purchaser by
the Company pursuant to this Agreement and, when executed,
issued and authenticated in accordance with the terms of the
Note Indenture and delivered against payment therefor in
accordance with the terms hereof, will be the legally
valid and binding obligations of the Company, enforceable
against the Company in accordance with their terms and
entitled to the benefits of the Note Indenture, except as
such enforcement may be limited by bankruptcy, insolvency,
reorganization, moratorium, fraudulent conveyance (including
the Uniform Fraudulent Transfers Act as adopted in
Florida) or other laws affecting enforcement of creditors'
rights and remedies generally and except as such enforcement
is subject to general principles of equity (including,
without limitation, standards of materiality, good faith,
fair dealing and reasonableness), regardless of whether
<PAGE>
enforcement is considered in a proceeding in equity or at
law, and except to the extent that a waiver of rights under
any usury laws may be unenforceable. The Series C Notes,
when executed, issued, authenticated and delivered, will
conform in all material respects to the description thereof
in the Offering Memorandum.
(ix) The Series D Notes have been duly and
validly authorized for issuance by the Company, and when
executed, issued and authenticated in accordance with the
terms of the Note Indenture, the Registration Rights
Agreement and the Exchange Offer, will be the legally valid
and binding obligations of the Company, enforceable against
the Company in accordance with their terms and entitled to
the benefits of the Note Indenture, except as such
enforcement may be limited by bankruptcy, insolvency,
reorganization, moratorium, fraudulent conveyance (including
the Uniform Fraudulent Transfers Act as adopted in Florida)
or other laws affecting enforcement of creditors' rights and
remedies generally and except as such enforcement is subject
to general principles of equity (including, without
limitation, standards of materiality, good faith, fair
dealing and reasonableness), regardless of whether
enforcement is considered in a proceeding in equity or at
law, and except to the extent that a waiver of rights under
any usury laws may be unenforceable.
(x) The Registration Rights Agreement has been
duly and validly authorized by the Company and on the
Closing Date will be duly executed and delivered by the
Company. When the Registration Rights Agreement has been
duly executed and delivered by the Company, the Registration
Rights Agreement will be the legally valid and binding
agreement and obligation of the Company, enforceable against
the Company in accordance with its terms, except as such
enforcement may be limited by bankruptcy, insolvency,
reorganization, moratorium, fraudulent conveyance (including
the Uniform Fraudulent Transfers Act as adopted in Florida)
or other laws affecting enforcement of creditors' rights and
remedies generally and except as such enforcement is subject
to general principles of equity (including, without
limitation, standards of materiality, good faith, fair
dealing and reasonableness), regardless of whether
enforcement is considered in a proceeding in equity or at
law, except as any rights to indemnity and contribution
under the Registration Rights Agreement may be limited by
federal and state securities laws and public policy
considerations, and except as enforcement of any provisions
<PAGE>
requiring the payment of liquidated damages may be limited
by applicable law or public policy. The Registration
Rights Agreement, when executed and delivered, will conform
in all material respects to the description thereof in the
Offering Memorandum.
(xi) Neither the Company nor any of the
Subsidiaries is in violation of its respective charter or
bylaws or is in default in the performance of any bond,
debenture, note, indenture, mortgage, deed of trust or other
agreement or instrument to which it is a party or by which
it is bound or to which any of its properties is subject, or
is in violation of any law, statute, rule, regulation,
judgment or court decree applicable to the Company, any of
the Subsidiaries or their assets or properties, except for
any such violations or defaults as would not have a Material
Adverse Effect. There exists no condition that, with
notice, the passage of time or otherwise, would constitute a
default under any such document or instrument, except for
any such default as would not have a Material Adverse
Effect.
(xii) The execution, delivery and performance by
the Company of this Agreement and the other Operative
Documents, the issuance and sale of the Notes, and the
consummation of the transactions contemplated hereby and
thereby will not violate, conflict with or constitute a
breach of any of the terms or provisions of, or a default
under (or an event that with notice or the lapse of time, or
both, would constitute a default), or require consent under,
or result in the imposition of a lien or encumbrance on any
properties of the Company or any of the Subsidiaries, or an
acceleration of indebtedness pursuant to, (i) the charter or
bylaws of the Company or any of the Subsidiaries, (ii) any
bond, debenture, note, indenture, mortgage, deed of trust or
other agreement or instrument to which the Company or any of
the Subsidiaries is a party or by which any of them or their
property is or may be bound, except for any such violation,
conflict, breach or default as would not have a Material
Adverse Effect, (iii) any statute, rule or regulation
applicable to the Company, any of the Subsidiaries or any of
their assets or properties, or (iv) any judgment, order or
decree of any court or governmental agency or authority
having jurisdiction over the Company, any of the
Subsidiaries or their assets or properties. Subject to the
assumptions set forth in clauses (i) and (ii) of Section
5(xxvii), no consent, approval, authorization or order of,
or filing, registration, qualification, license or permit of
or with, any court or governmental agency, body or
administrative agency is required for the execution,
delivery and performance of this Agreement and the other
Operative Documents and the consummation of the transactions
contemplated hereby and thereby, except such as have been
obtained and made (or, in the case of the Registration
Rights Agreement and the transactions contemplated thereby
and by the Note Indenture, will be obtained and made under
the Act and the Trust Indenture Act, or such as may be
required by the NASD, or such as may be required under
state securities or Blue Sky laws or regulations or the
securities laws of non-U.S. jurisdictions. No consents or
waivers from any other person are required for the
execution, delivery and performance of this Agreement and
the other Operative Documents and the consummation of the
transactions contemplated hereby and thereby, other than
such consents and waivers as have been obtained (or, in the
case of the Registration Rights Agreement and the
transactions contemplated thereby and by the Note Indenture,
will be obtained).
(xiii) There is (i) no action, suit or
proceeding before or by any court, arbitrator or
governmental agency, body or official, domestic or foreign,
now pending or, to the knowledge of the Company, threatened
or contemplated to which the Company or any of the
Subsidiaries is or may be a party or to which the business
or property of the Company or any of the Subsidiaries is or
may be subject, (ii) no statute, rule, regulation, or
order that has been enacted, adopted or issued by any
governmental agency or, to the knowledge of the Company,
that has been proposed by any governmental body, (iii) no
injunction, restraining order or order of any nature by a
federal or state court or foreign court of competent
jurisdiction to which the Company or any of the Subsidiaries
is subject that has been issued that, in the case of clauses
(i), (ii) and (iii) above, if adversely determined,
(x) might reasonably be expected to, singly or in the
aggregate, result in a Material Adverse Effect, or (y) would
interfere with or adversely affect the issuance of the Notes
or (z) in any manner draw into question the validity of this
Agreement or any other Operative Document.
(xiv) No action, to the Company's knowledge, has
been taken and no statute, rule or regulation or order has
been enacted, adopted or issued by any governmental agency
that prevents the issuance of the Notes; no injunction,
restraining order or order of any nature by a federal or
<PAGE>
state court of competent jurisdiction has been issued that
prevents the issuance of the Notes or suspends the sale of
the Notes in any jurisdiction referred to in Section 4(e)
hereof; and no action, suit or proceeding is pending against
or affecting or, to the knowledge of the Company, threatened
against, the Company or any of the Subsidiaries before any
court or arbitrator or any governmental body, agency or
official which, if adversely determined, would prohibit,
interfere with or adversely affect the issuance or
marketability of the Notes or in any manner draw into
question the validity of any Operative Document; and, to the
Company's knowledge, every request of any securities
authority or agency of any jurisdiction for additional
information has been complied with in all material respects.
(xv) There is (i) no significant unfair labor
practice complaint pending against the Company or any of the
Subsidiaries nor, to the knowledge of the Company,
threatened against any of them, before the National Labor
Relations Board, any state or local labor relations board or
any foreign labor relations board, and no significant
grievance or significant arbitration proceeding arising out
of or under any collective bargaining agreement is so
pending against the Company or any or the Subsidiaries or,
to the knowledge of the Company, threatened against any of
them, (ii) no significant strike, labor dispute slowdown or
stoppage pending against the Company or any of the
Subsidiaries nor, to the knowledge of the Company,
threatened against the Company or any of the Subsidiaries
and (iii) to the knowledge of the Company, no union
representation question existing with respect to the
employees of the Company and, to the knowledge of the
Company, no union organizing activities are taking place.
Neither the Company nor any of the Subsidiaries has
violated any federal, state or local law or foreign law
relating to discrimination in hiring, promotion or pay of
employees, nor any applicable wage or hour laws, nor any
provision of the Employee Retirement Income Security Act of
1974, as amended ("ERISA"), or the rules and regulations
thereunder, or analogous foreign laws and regulations, other
than any such violation as would not result in a Material
Adverse Effect.
(xvi) Neither the Company nor any of the
Subsidiaries has violated any environmental, safety or
similar law or regulation applicable to it or its business
or property relating to the protection of human health and
<PAGE>
safety, the environment or hazardous or toxic substances or
wastes, pollutants or contaminants ("Environmental Laws"),
lacks any permit, license or other approval required of them
under applicable Environmental Laws or is violating any term
or condition of such permit, license or approval, other than
any such violation or failure to obtain a permit, license or
approval as would not have a Material Adverse Effect.
(xvii) Each of the Company and the Subsidiaries
has (i) good and marketable title to all of the properties
and assets described or reflected in the Offering Memorandum
as owned by it, free and clear of all Liens, except such as
exist on the date hereof and are described or reflected in
the Offering Memorandum or as would not have a Material
Adverse Effect, (ii) peaceful and undisturbed possession
under all leases to which it is party as lessee, (iii) all
licenses, certificates, permits, authorizations, approvals,
franchises and other rights from, and has made all
declarations and filings with, all federal, state and local
authorities, all self-regulatory authorities and all courts
and other tribunals (each an "Authorization") necessary to
engage in the business currently conducted by it in
the manner described or reflected in the Offering
Memorandum, except where failure to hold such Authorizations
or to make any such declaration or filing would not have a
Material Adverse Effect and (iv) no reason to believe that
any governmental body or agency is considering limiting
suspending or revoking any such Authorization. All such
Authorizations (as qualified in clause (iii) above) are
valid and in full force and effect and the Company and the
Subsidiaries are in compliance in all material respects with
the terms and conditions of all such Authorizations (as
qualified in clause (iii) above) and with the rules and
regulations of the regulatory authorities having
jurisdiction with respect thereto, except where the failure
to comply would not have a Material Adverse Effect. All
leases to which the Company or any of the Subsidiaries is a
party are valid and binding in all material respects upon
the Company or such Subsidiary, as the case may be, and, to
the Company's knowledge, upon the other parties thereto, no
material default by the Company or any of the Subsidiaries
has occurred and is continuing thereunder, and, to the
knowledge of the Company, no material defaults by the
landlord are existing under any such lease.
<PAGE>
(xviii) Each of the Company and the Subsidiaries
owns or possesses or otherwise has the right 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, the "Intellectual Property") presently
employed by it in connection with the businesses now
operated by them, and neither the Company nor any of the
Subsidiaries has received any notice of infringement of or
conflict with asserted rights of others with respect
to any of the foregoing. To the knowledge of the Company,
the use of the Intellectual Property in connection with the
business and operations of the Company and the Subsidiaries
does not infringe on the right of any person, which, if
determined adversely to the Company or the Subsidiaries,
would have a Material Adverse Effect.
(xix) All tax returns required to be filed by the
Company or any of the Subsidiaries, in all jurisdictions,
have been so filed, except where the failure to so file
would not have a Material Adverse Effect. All taxes,
including withholding taxes, penalties and interest,
assessments, fees and other charges due or claimed to be due
from such entities or that are due and payable have been
paid, other than those being contested in good faith
and for which adequate reserves have been provided or those
currently payable without penalty or interest, except where
the failure to so pay would not have a Material Adverse
Effect. Neither the Company nor any of the Subsidiaries
knows of any material proposed additional tax assessments
against it or any of the Subsidiaries.
(xx) Neither the Company nor any of the
Subsidiaries is, and after giving effect to the offering and
sale of the Notes and the application of the net proceeds
therefrom in accordance with the Offering Memorandum, none
of them will be, (i) an "investment company" or a company
"controlled" by an "investment company" within the
meaning of the Investment Company Act of 1940, as amended
(the "Investment Company Act"), or analogous foreign laws
and regulations, or (ii) a "holding company" or a
"subsidiary company" or an "affiliate" of a holding company
within the meaning of the Public Utility Holding Company Act
of 1935, as amended, or analogous foreign laws and
regulations.
<PAGE>
(xxi) There are no holders of securities of the
Company who, by reason of the execution by the Company of
this Agreement or any other Operative Document to which it
is a party or the consummation of the transactions
contemplated hereby and thereby, have the right to request
or demand that the Company register under the Act or
analogous foreign laws and regulations securities held by
them.
(xxii) The authorized, issued and outstanding
capital stock of each of the Company and each of the
Subsidiaries has been duly and validly authorized and
issued, is fully paid and nonassessable and was not issued
in violation of or subject to any preemptive or similar
rights. The Company had at January 31, 1998, an authorized
and outstanding capitalization as set forth in the Company's
annual report on Form 10-K for the year ended January 31,
1998 (the "Form 10-K").
(xxiii) Each certificate signed by any officer of
the Company and delivered to the Purchaser or counsel for
the Purchaser shall be deemed to be a representation and
warranty by the Company to the Purchaser as to the matters
covered thereby.
(xxiv) The Company maintains a system of
internal accounting controls sufficient to provide
reasonable assurance that: (i) transactions are executed in
accordance with management's general or specific
authorizations; (ii) transactions are recorded as necessary
to permit preparation of financial statements in conformity
with generally accepted accounting principles and to
maintain accountability for assets; (iii) access to assets
is permitted only in accordance with management's general or
specific authorization and (iv) the recorded accountability
for assets is compared with the existing assets at
reasonable intervals and appropriate action is taken with
respect to any differences.
(xxv) The Company and each of the Subsidiaries
maintain insurance covering their properties, operations,
personnel and businesses. Such insurance insures against
such losses and risks as are adequate in accordance with
customary industry practice to protect the Company and the
Subsidiaries and their businesses. Neither the Company nor
any of the Subsidiaries has received notice from any insurer
or agent of such insurer that substantial capital
<PAGE>
improvements or other expenditures will have to be made
(that have not been undertaken) in order to continue such
insurance. All such insurance is outstanding and duly in
force on the date hereof and will be outstanding and duly in
force on the Closing Date.
(xxvi) Neither the Company nor any of the
Subsidiaries has (i) taken, directly or indirectly, any
action designed to, or that might reasonably be expected to,
cause or result in stabilization or manipulation of the
price of any security of the Company to facilitate the sale
or resale of the Notes or (ii) since the fifth business day
prior to the date of this Agreement (A) sold, bid for,
purchased or paid any person any compensation for soliciting
purchases of, the Notes or (B) paid or agreed to pay to any
person any compensation for soliciting another to purchase
any other securities of the Company.
(xxvii) No registration under the Act of the
Series C Notes is required for the sale of the Series C
Notes to the Purchaser as contemplated hereby or for the
Exempt Resales assuming (i) that the purchasers who buy the
Series C Senior Notes in the Exempt Resales are either QIBs
or non-U.S. persons the Purchaser reasonably believes are
outside the United States to whom offers and sales of the
Series C Notes may be made in reliance upon Regulation S and
(ii) the accuracy of the Purchaser's representations
contained herein. No form of general solicitation and
directed selling efforts or general advertising was used by
the Company, the Subsidiaries or any of its representatives
in connection with the offer and sale of any of the Series C
Notes or in connection with Exempt Resales, including,
but not limited to, articles, notices or other
communications published in any newspaper, magazine, or
similar medium or broadcast over television or radio, or any
seminar or meeting whose attendees have been invited by any
general solicitation or general advertising. The Company
has not (and none of its representatives has) engaged in any
directed selling efforts within the meaning of Rule 902
under the Act in the United States in connection with the
Series C Notes being offered and sold pursuant to Regulation
S. No securities of the same class as the Series C Notes
have been issued and sold by the Company within the
six-month period immediately prior to the date hereof.
(xxviii) Set forth on Exhibit B hereto is a list
of each employee pension or welfare benefit plan with
<PAGE>
respect to which the Company or any corporation considered
an affiliate of the Company within the meaning of Section
407(d)(7) of ERISA (an "Affiliate") is a party in interest
or disqualified person. The execution and delivery of
this Agreement, the other Operative Documents and the sale
of the Series C Notes to be purchased by the Eligible
Purchasers will not involve any prohibited transaction
within the meaning of Section 406 of ERISA or Section 4975
of the Internal Revenue Code of 1986. The representation
made by the Company in the preceding sentence is made in
reliance upon and subject to the accuracy of, and compliance
with, the representations and covenants made or deemed made
by the Eligible Purchasers as set forth in the Offering
Memorandum under the Section entitled "Notices to
Investors."
(xxix) Subsequent to the respective dates as of
which information is given in the Offering Memorandum and up
to the Closing Date, except as set forth in the Offering
Memorandum: neither the Company nor any of the Subsidiaries
has incurred or will incur any liabilities or obligations,
direct or contingent, which are material to the Company
and the Subsidiaries taken as a whole (other than accounts
payable in the ordinary course of business), nor entered
into any transaction not in the ordinary course of business;
there has not been, singly or in the aggregate, any material
adverse change, or any development which may reasonably be
expected to involve a material adverse change, in the
properties, business, results of operations, condition
(financial or otherwise), affairs or prospects of the
Company and the Subsidiaries, taken as a whole (a "Material
Adverse Change"); there have not been dividends or
distributions of any kind declared, paid or made by the
Company or any of the Subsidiaries on any class of its
capital stock other than the Company's repurchase for an
aggregate purchase price of approximately $169,000 of 32,202
shares of the Company's Series C Convertible Preferred
Stock, par value $.01 for award pursuant to the Company's
6% Bonus Pool (as defined in the Offering Memorandum) (the
"Series C Preferred Purchase"); there has not been any
material change, or any development that is reasonably
likely to result in a material change, in the capital stock
or the long-term debt, or material increase in the
short-term debt (other than accounts payable incurred in the
ordinary course of business), of the Company or any of the
Subsidiaries from that set forth in the Offering Memorandum.
<PAGE>
(xxx) Neither the Company, the Subsidiaries nor
any agent thereof acting on the behalf of any of them has
taken, and none of them will take, any action that might
cause this Agreement or the issuance or sale of the Notes to
violate Regulation G (12 C.F.R. Part 207), Regulation T (12
C.F.R. Part 220), Regulation U (12 C.F.R. Part 221) or
Regulation X (12 C.F.R. Part 224) of the Board of Governors
of the Federal Reserve System or analogous foreign laws and
regulations.
(xxxi) The accountants who have certified or
shall certify the financial statements and supporting
schedules included or to be included as part of the Offering
Memorandum are independent accountants. The consolidated
historical financial statements of the Company and the
Subsidiaries together with the related notes included in
the Offering Memorandum (and any amendment or supplement
thereto) present fairly the consolidated financial
condition, results of operations and statements of cash flow
of the Company and the Subsidiaries, on the basis stated in
the Offering Memorandum, at the respective dates and for the
respective periods indicated; such statements and related
notes have been prepared in accordance with generally
accepted accounting principles consistently applied
throughout the periods involved, except as disclosed
therein; and the other financial and statistical information
and data relating to the Company set forth in the Offering
Memorandum (and any amendment or supplement thereto) are, in
all material respects, accurately presented and prepared on
a basis consistent with such financial statements and
the books and records of the Company. Based solely on the
audit opinion of Richard A. Eisner LLP, independent public
accountants, the historical financial statements of J.P.
Fragrances, Inc. ("JPF") together with related notes
included in the Offering Memorandum (and any amendment or
supplement thereto) present fairly in all material respects
the financial position and results of operations of JPF, on
the basis stated in the Offering Memorandum, at the
respective dates and for the respective periods indicated in
conformity with generally accepted accounting principles
consistently applied throughout the periods involved. The
pro forma financial statements included in the Offering
Memorandum or forming a part thereof, have been prepared on
a basis consistent with such historical statements, except
for the pro forma adjustments specified therein, and give
effect to assumptions made on a reasonable basis and present
fairly on that basis, the acquisition of JPF, provided,
<PAGE>
however, that to the extent that the foregoing
representation relates to the historical financial
statements of JPF, it is based solely on the audit opinion
of Richard A. Eisner LLP, independent public accountants.
The other pro forma financial and statistical information
and data included in the Offering Memorandum are, in all
material respects, accurately presented and prepared on a
basis consistent with the pro forma financial statements and
the books and records of the Company and the Subsidiaries,
provided, however, that to the extent that the foregoing
representation relates to the historical financial
statements of JPF, it is based solely on the audit opinion
of Richard A. Eisner LLP, independent public accountants.
(xxxii) The present fair saleable value of the
assets of the Company, on a consolidated basis, exceeds the
amount that will be required to be paid on or in respect
of the existing debts and other liabilities (including
contingent liabilities) of the Company as they become
absolute and matured. The assets of the Company, on a
consolidated basis, do not constitute unreasonably small
capital to carry out its business as conducted or as
proposed to be conducted. The Company does not intend to,
nor does it believe that it will, incur debts beyond its
ability to pay such debts as they mature. Upon the issuance
of the Series C Notes, the present fair saleable value of
the assets of the Company, on a consolidated basis, will
exceed the amount that will be required to be paid on or in
respect of the existing debts and other liabilities
(including contingent liabilities) of the Company as they
become absolute and matured. The assets of the Company, on
a consolidated basis, upon the issuance of the Series C
Notes, will not constitute unreasonably small capital to
carry out its business as now conducted, including the
capital needs of the Company, on a consolidated basis,
taking into account the projected capital requirements and
capital availability of the Company.
(xxxiii) There are no contracts, agreements or
understandings between the Company or any of the
Subsidiaries and any person (other than the Purchaser)
that would give rise to a valid claim against the Company,
the Subsidiaries or the Purchaser for a brokerage
commission, finder's fee or like payment in connection with
the issuance, purchase and sale of the Notes.
<PAGE>
(xxxiv) Neither the Company nor any of its
affiliates does business with the government of Cuba or with
any person or affiliate located in Cuba within the meaning
of Section 517.075, Florida Statutes.
(xxxv) No "nationally recognized statistical
rating organization" as such term is defined for purposes of
Rule 436(g)(2) under the Act (i) has, to the Company's
knowledge, imposed (or has informed the Company that it is
considering imposing) any condition (financial or otherwise)
on the Company's retaining any rating assigned to the
Company or any securities of the Company 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 outlook for any rating of the Company or any
securities of the Company.
The Company acknowledges that the Purchaser and, for
purposes of the opinions to be delivered to the Purchaser
pursuant to Section 7 hereof, counsel to the Company and counsel
to the Purchaser will rely upon the accuracy and truth of the
foregoing representations and hereby consents to such reliance.
(b) The Purchaser represents and warrants to the
Company and agrees that:
(i) The Purchaser is a QIB, with such
knowledge and experience in financial and business matters
as are necessary in order to evaluate the merits and risks
of an investment in the Series C Notes.
(ii) The Purchaser (A) is not acquiring the
Series C 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 and
(B) will be reoffering and reselling the Series C Notes only
to QIBs in reliance on the exemption from the registration
requirements of the Act provided by Rule 144A and to
non-U.S. persons it reasonably believes are outside the
United States to whom offers and sales of the Series C Notes
may be made in reliance on Regulation S.
(iii) No form of general solicitation or general
advertising has been or will be used by the Purchaser or any
of its representatives in connection with the offer and sale
<PAGE>
of any of the Series C Notes, including, but not limited to,
articles, notices or other communications published in any
newspaper, magazine, or similar medium or broadcast over
television or radio, or any seminar or meeting whose
attendees have been invited by any general solicitation or
general advertising.
(iv) No form of directed selling efforts within
the meaning of Rule 902 under the Act in the United States
has been or will be used by the Purchaser or any of its
representatives in connection with the offer and sale of any
of the Series C Notes being sold pursuant to Regulation S.
(v) In connection with sales outside the United
States, the Purchaser represents and warrants to and agrees
with the Company that it will not offer, sell or deliver the
Series C Notes to, or for the account or benefit of, U.S.
persons (i) as part of the Purchaser's distribution at any
time except pursuant to Rule 144A or another exemption
from the registration requirements under the Securities Act,
or (ii) otherwise until forty (40) days after the later of
the commencement of the sale of the Series C Notes and the
Closing Date and it will send to each dealer or person
receiving a selling concession, fee or other remuneration to
whom it sells such Series C Notes (whether or not such
dealer or person participated in the offering) during such
period, a confirmation or other notice stating that such
dealer or person receiving a selling concession, fee or
other remuneration is subject to the restrictions on offers
and sales of the Series C Notes within the United States or
to, or for the account or benefit of, U.S. persons
applicable to the Initial Purchaser.
(vi) The Purchaser agrees that, in connection
with the Exempt Resales, it will solicit offers to buy the
Series C Notes only from, and will offer to sell the
Series C Notes only to, QIBs and non-U.S. persons it
reasonably believes are outside the United States to whom
offers and sales of the Series C Notes may be made in
reliance on Regulation S. The Purchaser further agrees (A)
that it will offer to sell the Series C Notes only to, and
will solicit offers to buy the Series C Notes only from (1)
QIBs who in purchasing such Series C Notes will be deemed to
have represented and agreed that they are purchasing the
Series C Notes for their own account or accounts with
respect to which they exercise sole investment discretion
and that they or such accounts are QIBs and (2) non-U.S.
<PAGE>
persons who in purchasing such Series C Notes will be deemed
to have represented and agreed that they are outside the
United States, (B) that, in the case of such QIBs, such QIBs
acknowledge and agree that such Series C Notes will not have
been registered under the Act and may be resold, pledged or
otherwise transferred only (x)(I) to a person who the seller
reasonably believes is a QIB in a transaction meeting the
requirements of Rule 144A, (II) in a transaction meeting the
requirements of Rule 144, (III) to a non-U.S. person in a
transaction meeting the requirements of Rule 904 under the
Act or (IV) in accordance with another exemption from the
registration requirements of the Act (and, in the case of
clauses (II) or (IV), based upon an opinion of counsel if
the Company so requests), (y) to the Company, (z) pursuant
to an effective registration statement under the Act and, in
each case, in accordance with any applicable securities laws
of any state of the United States or any other applicable
jurisdiction and (C) that the holder will, and each
subsequent holder is required to, notify any purchaser from
it of the note evidenced thereby of the resale restrictions
set forth in (B) above.
(vii) The Purchaser also understands that the
Company and, for purposes of the opinions to be delivered to
the Purchaser pursuant to Section 7 hereof, counsel to the
Company and counsel to the Purchaser will rely upon the
accuracy and truth of the foregoing representations and
hereby consents to such reliance.
6. Indemnification.
(a) The Company agrees to indemnify and hold
harmless (i) the Purchaser and (ii) each person, if any, who
controls (within the meaning of Section 15 of the Act or
Section 20 of the Exchange Act) the Purchaser (any of the
persons referred to in this clause (ii) being hereinafter
referred to as a "controlling person"), and (iii) the
respective officers, directors, partners, employees,
representatives and agents of the Purchaser or any
controlling person (any person referred to in clause (i),
(ii) or (iii) may hereinafter be referred to as an
"Indemnified Person") to the fullest extent lawful, from and
against any and all losses, claims, damages, liabilities,
judgments, actions and expenses (including without
limitation and as incurred, reimbursement of all reasonable
costs of investigating, preparing, pursuing or defending any
claim or action, or any investigation or proceeding by any
<PAGE>
governmental agency or body, commenced or threatened,
including the reasonable fees and expenses of counsel to any
Indemnified Person) directly or indirectly caused by,
related to, based upon, arising out of or in connection with
any untrue statement or alleged untrue statement of a
material fact contained in the Offering Memorandum (or any
amendment or supplement thereto), or any omission or alleged
omission to state therein a material fact required to be
stated therein or necessary to make the statements therein
not misleading, except insofar as such losses, claims,
damages, liabilities or expenses are caused by an untrue
statement or omission or alleged untrue statement or
omission that is made in reliance upon and in conformity
with information relating to the Purchaser furnished in
writing to the Company by the Purchaser expressly for use
therein. The Company shall notify the Purchaser promptly of
the institution, threat or assertion of any claim,
proceeding (including any governmental investigation) or
litigation in connection with the matters addressed by this
Agreement which involves the Company or an Indemnified
Person.
(b) In case any action or proceeding (including
any governmental investigation) shall be brought or asserted
against any of the Indemnified Persons with respect to which
indemnity may be sought against the Company, such
Indemnified Person shall promptly notify the Company in
writing (provided, that the failure to give such notice
shall not relieve the Company of its obligations pursuant to
this Agreement, except to the extent the Company or any
Subsidiary is materially prejudiced by such failure). Such
Indemnified Person shall have the right to employ its own
counsel in any such action and the fees and expenses of such
counsel shall be paid, as incurred, by the Indemnified
Person, unless (i) the Company has failed promptly to assume
the defense and employ counsel reasonably satisfactory to
such Indemnified Person, (ii) the Company has authorized the
employment of counsel for the Indemnified Person at the
expense of the Company, or (iii) the named parties to any
such action or proceeding (including any impleaded parties)
include such Indemnified Person and the Company and such
Indemnified Person shall have been advised by counsel that
it has reasonably concluded that a conflict of interest may
exist between the Company and such Indemnified Person in the
conduct of the defense of such action or proceeding. In the
case of each of clause (i), (ii) or (iii) above, the Company
shall pay, as incurred, the fees and expenses of such
<PAGE>
counsel, regardless of whether it is ultimately determined
that an Indemnified Person is not entitled to
indemnification hereunder. The Company shall not, in
connection with any one such action or proceeding or
separate but substantially similar or related actions or
proceedings in the same jurisdiction arising out of the same
general allegations or circumstances, be liable for the
reasonable fees and expenses of more than one separate firm
of attorneys (in addition to any local counsel) at any time
for the Indemnified Persons, which firm shall be designated
by the Purchaser. The Company shall be liable for any
settlement of any such action or proceeding effected with
the Company's prior written consent, which consent will not
be unreasonably withheld, and the Company agrees to
indemnify and hold harmless any Indemnified Person from and
against any loss, claim, damage, liability or expense by
reason of any settlement of any action effected with the
written consent of the Company. Notwithstanding the
immediately preceding sentence, if at any time an
Indemnified Person shall have requested an indemnifying
party to reimburse the Indemnified Person for fees and
expenses of counsel as contemplated by the second sentence
of this paragraph, the indemnifying party agrees that
it shall be liable for any settlement of any proceeding
effected without its written consent if (i) such settlement
is entered into more than sixty business days after receipt
by such indemnifying party of the aforesaid request and (ii)
such indemnifying party shall not have reimbursed the
Indemnified Person in accordance with such request prior to
the date of such settlement. The Company shall not, without
the prior written consent of an Indemnified Person, settle
or compromise or consent to the entry of judgment in or
otherwise seek to terminate any pending or threatened
action, claim, litigation or proceeding in respect of
which indemnification or contribution may be sought
hereunder (whether or not any Indemnified Person is a party
thereto), unless such settlement, compromise, consent or
termination includes an unconditional release of such
Indemnified Person from all liability arising out of such
action, claim, litigation or proceeding.
(c) The Purchaser agrees to indemnify and hold
harmless the Company, and its directors, officers and any
person controlling (within the meaning of Section 15 of
the Act or Section 20 of the Exchange Act) the Company, and
the respective officers, directors, partners, employees,
representatives and agents of each such person, to the same
<PAGE>
extent as the foregoing indemnity from the Company to each
of the Indemnified Persons, but only with respect to claims
and actions based on information relating to the Purchaser
furnished in writing by the Purchaser to the Company
expressly for use in the Offering Memorandum.
The statements in the Offering Memorandum in the
third paragraph, the fourth sentence in the seventh
paragraph and the last paragraph in Plan of Distribution
constitute the only information heretofore furnished to the
Company in writing by the Purchaser expressly for use in the
Offering Memorandum, or any amendment or supplement thereto.
(d) If the indemnification provided for in this
Section 6 is unavailable to an indemnified party in respect
of any losses, claims, damages, liabilities or expenses
referred to herein, then each indemnifying party, in lieu of
indemnifying such indemnified party, shall contribute to the
amount paid or payable by such indemnified party as a result
of such losses, claims, damages, liabilities and expenses
(i) in such proportion as is appropriate to reflect the
relative benefits received by the indemnifying party, on the
one hand, and the indemnified party, on the other hand, from
the offering of the Series C Notes or (ii) if the allocation
provided by clause (i) above is not permitted by applicable
law, in such proportion as is appropriate to reflect not
only the relative benefits referred to in clause (i) above
but also the relative fault of the indemnifying party and
the indemnified party, as well as any other relevant
equitable considerations. The relative benefits received by
the Company, on the one hand, and the Purchaser, on the
other hand, shall be deemed to be in the same proportion as
the total proceeds from the offering of the Series C Notes
(net of discounts and commissions but before deducting
expenses) received by the Company and the total discounts
and commissions received by the Purchaser bear to the total
price of the Series C Notes paid in the Exempt Resales, in
each case as set forth in the table on the cover page of the
Offering Memorandum. The relative fault of the Company, on
the one hand, and the Purchaser, on the other hand, shall be
determined by reference to, among other things, whether the
untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact
related to information supplied by the Company, on the one
hand, and the Purchaser, on the other hand, and the parties'
relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or
omission.
<PAGE>
The Company and the Purchaser agree that it would
not be just and equitable if contribution to this Section
6(d) were determined by pro rata allocation or by any other
method of allocation which does not take account of the
equitable considerations referred to in the immediately
preceding paragraph. The amount paid or payable by an
indemnified party as a result of the losses, claims,
damages, liabilities or expenses referred to in the
immediately preceding paragraph shall be deemed to include,
subject to the limitations set forth above, any legal or
other expenses reasonably incurred by such indemnified party
in connection with investigating or defending any such
action or claim. Notwithstanding the provisions of this
Section 6, neither the Purchaser (nor any of the related
Indemnified Persons) shall be required to contribute, in the
aggregate, any amount in excess of the amount by which the
total discounts and commissions received by the Purchaser
with respect to the Series C Notes, exceeds the amount of
any damages which the Purchaser has otherwise been required
to pay by reason of such untrue or alleged untrue statement
or omission or alleged omission. No person guilty of
fraudulent misrepresentation (within the meaning of
Section 11(f) of the Act) shall be entitled to contribution
from any person who was not guilty of such fraudulent
misrepresentation.
(e) The indemnity set forth herein shall be in
addition to any liability or obligation the Company may
otherwise have to any Indemnified Person.
(f) The Company hereby designates Abelman, Frayne
& Schwab, 150 East 42nd Street, 26th Floor, New York, NY
10017-5612 (Attention: Peter Lynfield) as its authorized
agent upon whom process may be served in any action, suit or
proceeding that may be instituted in any state or federal
court in the State of New York by the Purchaser or any
person controlling the Purchaser asserting a claim for
indemnification or contribution under or pursuant to this
Section 6, and the Company will accept the jurisdiction of
such court in such action, and waive, to the fullest extent
permitted by applicable law, any defense based upon lack of
personal jurisdiction or venue. A copy of any such process
shall be sent or given to the Company at the address for
notices specified in Section 9 hereof.
7. Conditions of Purchaser's Obligations. The
obligations of the Purchaser under this Agreement are subject to
the satisfaction of each of the following conditions:
<PAGE>
(a) All of the representations and warranties of
the Company contained in this Agreement shall be true and
correct in all material respects on the date hereof and on
the Closing Date with the same force and effect as if,
assuming, in the case of the Closing Date, that this
Agreement had been executed on the Closing Date, made on and
as of the date hereof and the Closing Date, respectively.
The Company shall have performed or complied with all of the
agreements herein contained and required to be performed or
complied with in all material respects by it at or prior to
the Closing Date.
(b) The Offering Memorandum shall have been
printed and copies distributed to the Purchaser not later
than 10:00 a.m., New York City time, on the date of this
Agreement or at such later date and time as to which the
Purchaser may agree, and no stop order suspending the
qualification or exemption from qualification of any of the
Series C Notes in any jurisdiction referred to in Section
4(e) shall have been issued and no proceeding for that
purpose shall have been commenced or shall be pending or
threatened.
(c) No action shall have been taken and no
statute, rule, regulation or order shall have been enacted,
adopted or issued by any governmental agency which would,
as of the Closing Date, prevent the issuance of any of the
Series C Notes; no action, suit or proceeding shall be
pending against or affecting or, to the knowledge of the
Company, threatened against the Company or any Subsidiary
before any court or arbitrator or any governmental body,
agency or official that, if adversely determined, (i) would
prohibit, interfere with or adversely affect the issuance of
the Series C Notes, (ii) would reasonably be expected to
have a Material Adverse Effect or (iii) would in any manner
draw into question the validity of this Agreement, the Note
Indenture, the Series C Notes or the Registration Rights
Agreement; and no stop order preventing the use of the
Offering Memorandum, or any amendment or supplement thereto,
or any order asserting that any of the transactions
contemplated by this Agreement is subject to the
registration requirements of the Act shall have been issued.
(d) Since the dates as of which information is
given in the Offering Memorandum and other than as described
or reflected therein, (i) there shall not have been
any material change, or any development that is reasonably
<PAGE>
likely to result in a material change, in the capital stock
or the long-term debt, or material increase in the
short-term debt (other than accounts payable incurred in the
ordinary course of business), of the Company or any of the
Subsidiaries from that set forth in, or contemplated by, the
Offering Memorandum, (ii) no dividend or distribution of any
kind shall have been declared, paid or made by the Company
or any of the Subsidiaries on any class of its capital stock
other than the Series C Preferred Purchase, and (iii)
neither the Company nor any of the Subsidiaries shall have
incurred any liabilities or obligations, direct or
contingent, that are material, individually or in the
aggregate, to the Company and the Subsidiaries, taken as a
whole, and that are required to be disclosed on a balance
sheet in accordance with generally accepted accounting
principles and are not disclosed on the latest balance sheet
included in the Offering Memorandum (other than accounts
payable incurred in the ordinary course of business) or
elsewhere in the Offering Memorandum. Since the date hereof
and since the dates as of which information is given in the
Offering Memorandum, there shall not have been any Material
Adverse Change.
(e) The Purchaser shall have received
certificates, dated the Closing Date, signed by (i) the
President or any Vice President and (ii) a principal
financial or accounting officer of the Company confirming,
as of the Closing Date, the matters set forth in paragraphs
(a), (b), (c) and (d) of this Section 7.
(f) The Purchaser shall have received on the
Closing Date an opinion (satisfactory to Purchaser and its
counsel), dated the Closing Date, of Steel Hector & Davis
LLP, counsel for the Company and the Subsidiaries, to the
effect that:
(i) The Company and each of the
Subsidiaries has been duly organized and is validly existing
as a corporation in good standing under the laws of its
respective jurisdiction of incorporation, has all requisite
corporate power and authority to own, lease and operate its
properties and to conduct its business as it is currently
being conducted and as described or reflected in the
Offering Memorandum, and is duly qualified and in good
standing as a foreign corporation authorized to do business
in each jurisdiction in which, to such counsel's knowledge,
the ownership, leasing and operating of its property and the
<PAGE>
conduct of its business requires such qualification, except
where the failure to be so qualified would not have a
Material Adverse Effect.
(ii) To such counsel's knowledge, the
entities listed on Schedule I hereto are the only
Subsidiaries, direct or indirect, of the Company. All of
the outstanding shares of capital stock or other securities
evidencing equity ownership of such Subsidiaries of the
Company are owned, directly or indirectly, by the Company or
through one or more subsidiaries, and such shares of capital
stock or securities have been duly authorized and validly
issued and are fully paid and non-assessable, and to such
counsel's knowledge, were not issued in violation of any
preemptive or similar rights, free and clear of any security
interest, claim, lien or encumbrance. To such counsel's
knowledge, there are no outstanding subscriptions, rights,
warrants, calls, commitments of sale or options to acquire,
or instruments convertible into or exchangeable for, any
such shares of capital stock or other equity interest of
such Subsidiaries.
(iii) The Company has all requisite corporate
power and authority to execute, deliver and perform its
obligations under this Agreement, the Notes, the Note
Indenture and the Registration Rights Agreement and to
consummate the transactions contemplated hereby or thereby,
including, without limitation, the corporate power and
authority to issue, sell and deliver the Notes as provided
herein.
(iv) The Company has duly and validly authorized,
executed and delivered this Agreement.
(v) The Company has duly and validly authorized,
executed and delivered the Note Indenture and (assuming the
due authorization, execution and delivery thereof by the
Trustee) the Note Indenture is the legally valid agreement
and binding obligation of the Company, enforceable against
the Company in accordance with its terms, except (i) as such
enforcement may be limited by bankruptcy, insolvency,
reorganization, moratorium, fraudulent conveyance (including
the Uniform Fraudulent Transfers Act as adopted in Florida)
or other laws affecting creditors' rights and remedies
generally, (ii) as to general principles of equity
(including, without limitation, standards of materiality,
good faith, fair dealing and reasonableness), regardless of
<PAGE>
whether enforcement is sought in a proceeding at law or in
equity, and (iii) to the extent that a waiver of rights
under any usury laws may be unenforceable. The Note
Indenture conforms in all material respects to the
description thereof in the Offering Memorandum.
(vi) The Series C Notes have been duly and
validly authorized for issuance and sale to the Purchaser by
the Company pursuant to this Agreement and, when
executed, issued and authenticated in accordance with the
terms of the Note Indenture and delivered against payment
therefor in accordance with the terms hereof, will be the
legally valid and binding obligations of the Company,
enforceable against the Company in accordance with their
terms and entitled to the benefits of the Note Indenture,
except (i) as such enforcement may be limited by bankruptcy,
insolvency, reorganization, moratorium, fraudulent
conveyance (including the Uniform Fraudulent Transfers Act
as adopted in Florida) or other laws affecting creditors'
rights and remedies generally, (ii) as to general
principles of equity (including, without limitation,
standards of materiality, good faith, fair dealing and
reasonableness), regardless of whether enforcement is sought
in a proceeding at law or in equity, and (iii) to the extent
that a waiver of rights under any usury laws may be
unenforceable. The Series C Notes, when executed, issued,
authenticated and delivered in accordance with the terms of
the Note Indenture, will conform in all material respects to
the description thereof in the Offering Memorandum.
(vii) The Series D Notes have been duly and
validly authorized for issuance by the Company and, when
executed, issued, authenticated and delivered in accordance
with the terms of the Note Indenture, the Registration
Rights Agreement and the Exchange Offer, will be the legally
valid and binding obligations of the Company, enforceable
against the Company in accordance with their terms and
entitled to the benefits of the Note Indenture, except (i)
as such enforcement may be limited by bankruptcy,
insolvency, reorganization, moratorium, fraudulent
conveyance (including the Uniform Fraudulent Transfers Act
as adopted in Florida) or other laws affecting creditors'
rights and remedies generally, (ii) as to general principles
of equity (including, without limitation, standards of
materiality, good faith, fair dealing and reasonableness),
regardless of whether enforcement is sought in a proceeding
at law or in equity, and (iii) to the extent that a waiver
of rights under any usury laws may be unenforceable.
<PAGE>
(viii) The Registration Rights Agreement has been
duly and validly authorized by the Company and, when duly
executed and delivered by the Company, will be the legally
valid and binding agreement and obligation of the Company,
enforceable against the Company in accordance with its
terms, except (i) as such enforcement may be limited by
bankruptcy, insolvency, reorganization, moratorium,
fraudulent conveyance (including the Uniform Fraudulent
Transfers Act as adopted in Florida) or other laws
affecting creditors' rights and remedies generally, (ii) as
to general principles of equity (including, without
limitation, standards of materiality, good faith, fair
dealing and reasonableness), regardless of whether
enforcement is sought in a proceeding at law or in
equity, (iii) except as any rights to indemnity and
contribution thereunder may be limited by federal and state
securities laws and public policy considerations, and (iv)
except as enforcement of any provisions requiring the
payment of liquidated damages may be limited by applicable
law or public policy. The Registration Rights Agreement,
when executed and delivered, will conform in all material
respects to the description thereof in the Offering
Memorandum.
(ix) When the Series C Notes are issued and
delivered pursuant to this Agreement, none of the Series C
Notes will be of the same class (within the meaning of Rule
144A under the Act) as securities of the Company or any
Subsidiary that are listed on a national securities exchange
registered under Section 6 of the Exchange Act or that are
quoted in a United States automated inter-dealer quotation
system.
(x) No registration under the Act of any of the
Series C Notes is required for the sale of the Series C
Notes to the Purchaser as contemplated hereby or for the
Exempt Resales assuming (i) that each of the Eligible
Purchasers is a QIB or a non-U.S. person the Purchaser
reasonably believes is outside the United States and to whom
offers and sales of the Series C Notes may be made in
reliance upon Regulation S and (ii) the accuracy of the
Purchaser's representations contained herein.
(xi) To such counsel's knowledge, neither the
Company nor any of the Subsidiaries (a) is in violation of
its respective charter or bylaws, (b) is in default in
the performance of any obligation, agreement or condition
<PAGE>
contained in any bond, debenture, note or any other evidence
of indebtedness or in any other loan agreement, indenture,
mortgage or deed of trust or any other agreement that is
material to the Company and known to such counsel to which
it is a party or by which it is bound or to which any of its
properties is subject or (c) is in violation of any law,
statute, rule, regulation, judgment or court decree, known
to such counsel, applicable to the Company or the
subsidiaries, in the case of clause (b) or (c), other than
such violation or default that has not had and will not have
a Material Adverse Effect; provided however that no opinion
need be expressed with respect to the Company's purchase of
fragrance products from Diverted Sources. To such counsel's
knowledge, there exists no condition that, with notice, the
passage of time or otherwise, would constitute such default
under any such document or instrument; provided however that
no opinion need be expressed with respect to the Company's
purchase of fragrance products from Diverted Sources.
(xii) The execution, delivery and performance by
the Company of this Agreement and the other Operative
Documents, the issuance and sale of the Notes, and the
consummation of the transactions contemplated hereby and
thereby will not violate, conflict with or constitute a
breach of any of the terms or provisions of, or a default
under (or an event that with notice or the lapse of time, or
both, would constitute a default), or require consent under,
or result in the imposition of a lien or encumbrance on any
properties of the Company or any of the Subsidiaries, or an
acceleration of indebtedness pursuant to, (i) the charter or
bylaws of the Company or any of the Subsidiaries, (ii) any
bond, debenture, note or any other evidence of indebtedness
or any other loan agreement, indenture, mortgage or deed of
trust or any other agreement that is material to the Company
and known to such counsel to which the Company or any of the
Subsidiaries is a party or by which any of them or their
property is or may be bound, (iii) any statute, rule or
regulation applicable to the Company, any of the
Subsidiaries or their assets or properties; provided however
that no opinion need be expressed with respect to applicable
state or foreign securities or Blue Sky laws, or (iv) any
judgment, order or decree known to such counsel of any court
or governmental agency or authority having jurisdiction over
the Company, any of the Subsidiaries or their assets or
properties. Subject to the assumptions set forth in clauses
(i) and (ii) of Section 7(f)(x), no consent, approval,
authorization or order of, or filing, registration,
<PAGE>
qualification, license or permit of or with, any court or
governmental agency, body or administrative agency is
required for the execution, delivery and performance of this
Agreement and the other Operative Documents and the
consummation of the transactions contemplated hereby and
thereby, except such as have been obtained and made (or, in
the case of the Registration Rights Agreement and the
transactions contemplated thereby and by the Note Indenture,
will be obtained and made under the Act and the Trust
Indenture Act) or such as may be required by NASD or under
state securities or Blue Sky laws and regulations or under
the securities laws of non-U.S. jurisdictions. No consents
or waivers from any other person are required under any
bond, debenture, note or any other evidence of indebtedness
or any other loan agreement, indenture, mortgage or deed of
trust or any other agreement that is material to the Company
and known to such counsel for the execution, delivery and
performance of this Agreement and the other Operative
Documents and the consummation of the transactions
contemplated hereby and thereby, other than such consents
and waivers as have been obtained (or, in the case of the
Registration Rights Agreement and the transactions
contemplated thereby and by the Note Indenture, are
required to be obtained).
(xiii) To the knowledge of such counsel, no
action has been taken and no statute, rule or regulation or
order has been enacted, adopted or issued by any
governmental agency that prevents the issuance of the Notes;
to the knowledge of such counsel, no injunction, restraining
order or order of any nature by a federal or state court of
competent jurisdiction has been issued that prevents the
issuance of the Notes or suspends the sale of the Notes in
any jurisdiction referred to in Section 4(e) hereof; and, to
the knowledge of such counsel, no action, suit or proceeding
is pending or threatened against or affecting, the Company
or any of the Subsidiaries before any court or arbitrator or
any governmental body, agency or official which, if
adversely determined, would prohibit, interfere with or
adversely affect the issuance or marketability of the Notes
or in any manner draw into question the validity of any
Operative Document; and to the knowledge of such counsel
every request of any securities authority or agency of any
jurisdiction for additional information has been complied
with in all material respects (provided however that no
opinion need be expressed as to requests from state or
foreign securities authorities or agencies).
<PAGE>
(xiv) To the knowledge of such counsel, the
Company and each of the Subsidiaries has (i) all
Authorizations necessary to engage in the business currently
conducted by it in the manner described or reflected in the
Offering Memorandum, except where failure to hold such
Authorizations would not have a Material Adverse Effect and
(ii) no reason to believe that any governmental body or
agency is considering limiting, suspending or revoking any
such Authorization. To such counsel's knowledge, all such
Authorizations (as qualified in clause (i) above) are valid
and in full force and effect and the Company and the
Subsidiaries are in compliance in all material respects with
the terms and conditions of all such Authorizations (as
qualified in clause (i) above) and with the rules and
regulations of the regulatory authorities having
jurisdiction with respect thereto. To the knowledge of such
counsel, the lease of the National Trading Facility is valid
and binding and no material default by the Company has
occurred and is continuing thereunder, and no material
defaults by the landlord are existing under such lease.
(xv) To the knowledge of such counsel, neither
the Company nor any of the Subsidiaries has violated any
Environmental Laws, lacks any permits, licenses or
other approvals required of them under applicable
Environmental Laws or is violating any terms and conditions
of any such permit, license or approval, nor, to the
knowledge of such counsel, has the Company or any of the
Subsidiaries violated any federal, state, local or
foreign law relating to discrimination in the hiring,
promotion or pay of employees nor, to the knowledge of such
counsel, any applicable wage or hourly laws, nor any
provisions of ERISA or the rules and regulations promulgated
thereunder or analogous foreign laws and regulations, nor,
to the knowledge of such counsel, has the Company or any of
the Subsidiaries engaged in any unfair labor practice, which
in each case would result in a Material Adverse Effect.
(xvi) Neither the Company nor any of the
Subsidiaries is, and after giving effect to the offering and
sale of the Notes and the application of the net proceeds
therefrom in accordance with the Offering Memorandum, none
of them will be, (i) an "investment company" or a company
"controlled" by an "investment company" within the
meaning of the Investment Company Act of 1940 or analogous
foreign laws and regulations, or (ii) a "holding company" or
a "subsidiary company" or an "affiliate" of a holding
<PAGE>
company within the meaning of the Public Utility Holding
Company Act of 1935, as amended, or analogous foreign laws
and regulations.
(xvii) To the knowledge of such counsel, there
are no holders of securities of the Company or any of the
Subsidiaries who, by reason of the execution by the
Company of this Agreement or any other Operative Document,
or the consummation of the transactions contemplated hereby
and thereby, have the right to request or demand that the
Company or any Subsidiary register under the Act or
analogous foreign laws and regulations securities held by
them.
(xviii) Prior to the effectiveness of the
Exchange Offer Registration Statement or the effectiveness
of the Shelf Registration Statement, the Note Indenture is
not required to be qualified under the Trust Indenture Act.
(xix) The authorized capital stock of the Company
and each of the Subsidiaries as of the date hereof has been
duly and validly authorized and the issued and outstanding
capital stock of the Company and each of the Subsidiaries at
January 31, 1998, has been duly and validly authorized and
issued, is fully paid and nonassessable and was not issued
in violation of or subject to statutory preemptive rights.
The Company had at January 31, 1998, an authorized and, to
the knowledge of such counsel, outstanding capitalization
as set forth in the Company's Form 10-K.
In addition, such counsel shall state that it has
participated in conferences with officers and other
representatives of the Company, representatives of the
independent public accountants for the Company, the Purchaser's
representatives and its counsel in connection with the
preparation of the Offering Memorandum and has considered the
matters required to be stated therein and the statements
contained therein and, although such counsel has not
independently verified the accuracy, completeness or fairness of
such statements (except as indicated above), such counsel advises
the Purchaser that, on the basis of the foregoing, no facts came
to its attention that caused it to believe that the Offering
Memorandum (as amended or supplemented, if applicable), at
the time such Offering Memorandum was circulated or that the
Offering Memorandum, at the Closing Date, contained or contains
an untrue statement of a material fact or omitted or omits to
state a material fact required to be stated therein or necessary
<PAGE>
to make the statements therein, in the light of the circumstances
under which they were made, not misleading. Without limiting the
foregoing, such counsel may further state that they assume no
responsibility for, and have not independently verified, the
accuracy, completeness or fairness of the financial statements,
notes and schedules and other financial data included in the
Offering Memorandum.
The opinions of such counsel described in this
paragraph shall be rendered to the Purchaser at the request of
the Company and shall so state therein.
(g) The Purchaser shall have received on the
Closing Date an opinion (satisfactory to Purchaser and its
counsel) dated the Closing Date, of Oscar E. Marina, Esq.,
general counsel of the Company and the Subsidiaries, to the
effect that, to the knowledge of such counsel, the Company
and each of the Subsidiaries has (i) good and marketable
title to all of the properties and assets described or
reflected in the Offering Memorandum as owned by it, free
and clear of all liens, charges, encumbrances and
restrictions, except such as exist on the date hereof and
are described or reflected in the Offering Memorandum or as
would not have a Material Adverse Effect and (ii) peaceful
and undisturbed possession under all leases to which it is
party as lessee.
(h) The Purchaser shall have received an opinion,
dated the Closing Date, of Fried, Frank, Harris, Shriver &
Jacobson, the Purchaser's counsel, in form and substance
reasonably satisfactory to the Purchaser, covering such
matters as are customarily covered in such opinions.
(i) At the time this Agreement is executed and
delivered by the Company and on the Closing Date, the
Purchaser shall have received letters, substantially in the
form previously approved by the Purchaser, from Deloitte &
Touche LLP, independent public accountants, with respect to
the financial statements and certain financial information
contained in Offering Memorandum.
(j) At the time this Agreement is executed and
delivered by the Company and on the Closing Date, the
Purchaser shall have received a letter, substantially in the
form previously approved by the Purchaser, from Richard A.
Eisner LLP, independent public accountants, certifying that
they are "independent accountants" with the meaning of the
Act.
<PAGE>
(k) Fried, Frank, Harris, Shriver & Jacobson
shall have been furnished with such documents, in addition
to those set forth above, as they may reasonably require for
the purpose of enabling them to review or pass upon the
matters referred to in this Section 7 and in order to
evidence the accuracy, completeness or satisfaction in all
material respects of any of the representations, warranties
or conditions herein contained.
(l) Prior to the Closing Date, the Company shall
have furnished to the Purchaser such further information,
certificates and documents as it may reasonably request.
(m) The Company and the Trustee shall have
entered into the Note Indenture and the Purchaser shall have
received counterparts, conformed as executed, thereof.
(n) The Company shall have entered into the
Registration Rights Agreement and the Purchaser shall have
received counterparts, conformed as executed, thereof.
All opinions, certificates, letters and other documents
required by this Section 7 to be delivered by the Company will be
in compliance with the provisions hereof only if they are
reasonably satisfactory in form and substance to the Purchaser.
The Company will furnish the Purchaser with such conformed copies
of such opinions, certificates, letters and other documents as
it may reasonably request.
8. Effectiveness of Agreement and Termination. This
Agreement shall become effective upon the execution and delivery
of this Agreement by the parties hereto.
This Agreement may be terminated at any time on or
prior to the Closing Date by the Purchaser by written notice to
the Company if any of the following has occurred: (i) any
outbreak or escalation of hostilities or other national or
international calamity or crisis or change in economic conditions
or in the financial markets of the United States or elsewhere
that, in the Purchaser's judgment, is material and adverse and,
in the Purchaser's judgment, makes it impracticable to market the
Series C Notes on the terms and in the manner contemplated in the
Offering Memorandum, (ii) the suspension or material limitation
of trading in securities or other instruments on the New York
Stock Exchange, the American Stock Exchange, the Chicago Board of
Options Exchange, the Chicago Mercantile Exchange, the Chicago
Board of Trade or the Nasdaq National Market or limitation on
<PAGE>
prices for securities or other instruments on any such exchange
or the Nasdaq National Market, (iii) the suspension of trading of
any securities of the Company on any exchange or in the
over-the-counter market, (iv) the enactment, publication, decree
or other promulgation of any federal or state statute,
regulation, rule or order of any court or other governmental
authority which in the Purchaser's opinion materially and
adversely affects, or will materially and adversely affect, the
business, prospects, financial condition or results of operations
of the Company and its subsidiaries, taken as a whole, (v) the
declaration of a banking moratorium by either federal or New York
State authorities or (vi) the taking of any action by any
federal, state or local government or agency in respect of its
monetary or fiscal affairs which in the Purchaser's opinion has a
material adverse effect on the financial markets in the United
States or (vii) 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.
The respective indemnities, contribution agreements,
representations, warranties and other statements of the Company
and the Purchaser set forth in or made pursuant to this Agreement
shall remain operative and in full force and effect, and will
survive delivery of and payment for the Series C Notes,
regardless of (i) any investigation, or statement as to the
results thereof, made by or on behalf of the Purchaser, the
officers or directors of the Purchaser, any person controlling
the Purchaser, the Company, the officers or directors of the
Company or any person controlling the Company, (ii) acceptance of
the Series C Notes and payment for them hereunder and (iii)
termination of this Agreement.
If for any reason the Series C Notes are not delivered
by or on behalf of the Company as provided herein (other than as
a result of any termination of this Agreement pursuant to Section
8), the Company agrees to reimburse the Purchaser for all
out-of-pocket expenses (including the fees and disbursements of
counsel) incurred by the Purchaser. Notwithstanding any
termination of this Agreement, the Company shall be liable for
all expenses which it has agreed to pay pursuant to Section 4(f)
hereof. The Company agrees to reimburse the Purchaser and its
officers, directors and each person, if any, who controls the
Purchaser within the meaning of Section 15 of the Act or
Section 20 of the Exchange Act for any and all fees and expenses
(including without limitation the fees and expenses of counsel)
incurred by the Purchaser in connection with enforcing its rights
under this Agreement (including without limitation its rights
under Section 6).
<PAGE>
Except as otherwise provided, this Agreement has been
and is made solely for the benefit of and shall be binding upon
the Company and the Purchaser, its directors and officers, any
controlling persons referred to herein, the directors and
officers of the Company and their respective 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 Series C Notes from
the Purchaser merely because of such purchase.
9. Miscellaneous. Notices given pursuant to any provision
of this Agreement shall be made in writing by hand-delivery,
first-class mail (registered or certified, return receipt
requested), telecopier or air courier guaranteeing overnight
delivery and shall be addressed as follows: (a) if to
the Company, French Fragrances, Inc., 14100 N.W. 60th Avenue,
Miami Lakes, Florida 33014, Attention: Oscar E. Marina, Esq.,
with a copy to Steel Hector & Davis LLP, 200 South Biscayne
Boulevard, Suite 4000, Miami, Florida 33131, Attention: Beatriz
Llorens Koltis, Esq., and (b) if to the Purchaser, c/o Donaldson,
Lufkin & Jenrette Securities Corporation, 277 Park Avenue, New
York, New York 10172, Attention: Maureen Block, with a copy to
Fried, Frank, Harris, Shriver & Jacobson, One New York Plaza, New
York, New York 10004, Attention: Kenneth R. Blackman,
Esq., or in any case to such other address as the person to be
notified may have requested in writing.
All such notices and communications shall be deemed to
have been duly given: at the time delivered by hand, if
personally delivered; five Business Days after being deposited in
the mail, postage prepaid, if mailed; when receipt is
acknowledged, if telecopied; and on the next business day, if
timely delivered to an air courier guaranteeing overnight
delivery.
This Agreement shall be governed and construed in
accordance with the laws of the State of New York.
This Agreement may be signed in various counterparts
which together shall constitute one and the same instrument.
Please confirm that the foregoing correctly sets forth
the agreement among the Company and the Purchaser.
<PAGE>
Please confirm that the foregoing correctly sets forth
the Agreement among the Company and the Purchaser.
Very truly yours,
FRENCH FRAGRANCES, INC.
By:/s/ William J. Mueller
------------------------------
Name: William J. Mueller
Title: Vice President
Accepted and agreed to as of
the date first above written:
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
By:______________________________
Name:
Title:
<PAGE>
SCHEDULE I
List of Subsidiaries of the Company
G.B. Parfums, Inc.
Halston Parfums, Inc.
FRM Services, Inc.
Fine Fragrances, Inc.
<PAGE>
EXHIBIT A
Registration Rights Agreement
REGISTRATION RIGHTS AGREEMENT
DATED AS OF APRIL 27, 1998
BETWEEN
FRENCH FRAGRANCES, INC.
AND
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
<PAGE>
THIS REGISTRATION RIGHTS AGREEMENT (THIS "AGREEMENT")
IS MADE AND ENTERED INTO AS OF APRIL 27, 1998 BETWEEN FRENCH
FRAGRANCES, INC., A FLORIDA CORPORATION (THE "COMPANY") AND
DONALDSON, LUFKIN & JENRETTE SECURITIES CORPORATION (THE "INITIAL
PURCHASER"), WHO HAS AGREED TO PURCHASE THE COMPANY'S 10-3/8%
SERIES C SENIOR NOTES DUE 2007, SERIES C (THE "SERIES C NOTES")
PURSUANT TO THE PURCHASE AGREEMENT (AS DEFINED BELOW).
THIS AGREEMENT IS MADE PURSUANT TO THE PURCHASE
AGREEMENT, DATED APRIL 20, 1998 (THE "PURCHASE AGREEMENT"),
BETWEEN THE COMPANY AND THE INITIAL PURCHASER. IN ORDER
TO INDUCE THE INITIAL PURCHASER TO PURCHASE THE SERIES C NOTES,
THE COMPANY HAS AGREED TO PROVIDE THE REGISTRATION RIGHTS SET
FORTH IN THIS AGREEMENT. THE EXECUTION AND DELIVERY OF THIS
AGREEMENT IS A CONDITION TO THE OBLIGATIONS OF THE INITIAL
PURCHASER SET FORTH IN SECTION 7 OF THE PURCHASE AGREEMENT.
The parties hereby agree as follows:
SECTION 1. DEFINITIONS
As used in this Agreement, the following capitalized
terms shall have the following meanings:
Act: The Securities Act of 1933, as amended.
Business Day: Any day except a Saturday, Sunday or
other day in the City of New York, or in the city of the
corporate trust office of the Trustee, on which banks are
authorized to close.
Broker-Dealer: Any broker or dealer registered under
the Exchange Act.
Broker-Dealer Transfer Restricted Securities: Series D
Notes that are acquired by a Broker Dealer in the Exchange Offer
in exchange for Series C Notes that such Broker-Dealer acquired
for its own account as a result of market making activities or
other trading activities (other than Series C Notes acquired
directly from the Company or any of its affiliates).
Certificated Securities: As defined in the Indenture.
Closing Date: The date hereof.
Commission: The Securities and Exchange Commission.
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Consummate: An Exchange Offer shall be deemed
"Consummated" for purposes of this Agreement upon the occurrence
of (a) the filing and effectiveness under the Act of the Exchange
Offer Registration Statement relating to the Series D Notes to be
issued in the Exchange Offer, (b) the maintenance of such
Registration Statement continuously effective and the keeping of
the Exchange Offer open for a period not less than the minimum
period required pursuant to Section 3(b) hereof and (c) the
delivery by the Company to the Registrar under the Indenture of
Series D Notes in the same aggregate principal amount as the
aggregate principal amount of Transfer Restricted Securities
tendered by Holders thereof pursuant to the Exchange Offer.
Damages Payment Date: With respect to the Series C
Notes, each Interest Payment Date.
Exchange Act: The Securities Exchange Act of 1934, as
amended.
Exchange Offer: The registration by the Company under
the Act of the Series D Notes pursuant to the Exchange Offer
Registration Statement pursuant to which the Company shall
offer the Holders of all outstanding Transfer Restricted
Securities the opportunity to exchange all such outstanding
Transfer Restricted Securities for Series D Notes in an aggregate
principal amount equal to the aggregate principal amount of the
Transfer Restricted Securities tendered in such exchange offer by
such Holders.
Exchange Offer Registration Statement: The
Registration Statement relating to the Exchange Offer, including
the related Prospectus.
Exempt Resales: The transactions in which the Initial
Purchaser proposes to sell the Series C Notes to certain
"qualified institutional buyers," as such term is defined in Rule
144A under the Act, and to non-U.S. persons whom the Initial
Purchaser reasonably believes are outside the United States and
to whom offers and sales of the Series C Notes may be made in
reliance upon Regulation S under the Act, in transactions meeting
the requirements of Regulation S under the Act.
Global Notes: As defined in the Indenture.
Holders: As defined in Section 2 hereof.
Indemnified Holder: As defined in Section 8(a) hereof.
<PAGE>
Indenture: The Indenture, dated the Closing Date,
between the Company and Marine Midland Bank, as trustee (the
"Trustee"), pursuant to which the Notes are to be issued, as such
Indenture is amended or supplemented from time to time in
accordance with the terms thereof.
Interest Payment Date: As defined in the Indenture and
the Notes.
NASD: National Association of Securities Dealers, Inc.
Notes: The Series C Notes and the Series D Notes.
Person: An individual, partnership, corporation,
trust, unincorporated organization, or a government or agency or
political subdivision thereof.
Prospectus: The prospectus included in a Registration
Statement at the time such Registration Statement is declared
effective, as amended or supplemented by any prospectus
supplement and by all other amendments thereto, including
post-effective amendments, and all material incorporated by
reference into such Prospectus.
Record Holder: With respect to any Damages Payment
Date, each Person who is a Holder of Notes on the record date
with respect to the Interest Payment Date on which such Damages
Payment Date shall occur.
Registration Default: As defined in Section 5 hereof.
Registration Statement: Any registration statement of
the Company relating to (a) an offering of Series D Notes
pursuant to an Exchange Offer or (b) the registration for resale
of Transfer Restricted Securities pursuant to the Shelf
Registration Statement, in each case, (i) which is filed pursuant
to the provisions of this Agreement and (ii) including the
Prospectus included therein, all amendments and supplements
thereto (including post-effective amendments) and all exhibits
and material incorporated by reference therein.
Restricted Broker-Dealer: Any Broker-Dealer which
holds Broker-Dealer Transfer Restricted Securities.
Series D Notes: The Company's 10-3/8% Series D Senior
Notes due 2007 to be issued pursuant to the Indenture (i) in the
Exchange Offer or (ii) upon the request of any Holder of Series C
<PAGE>
Notes covered by a Shelf Registration Statement, in exchange for
such Series C Notes.
Shelf Registration Statement: As defined in Section 4
hereof.
TIA: The Trust Indenture Act of 1939 (15 U.S.C.
Section 77aaa-77bbbb) as in effect on the date of the Indenture.
Transfer Restricted Securities: Each Note, until the
earliest to occur of (a) the date on which such Note is exchanged
in the Exchange Offer and entitled to be resold to the public by
the Holder thereof without complying with the prospectus delivery
requirements of the Act, (b) the date on which such Note has been
disposed of in accordance with a Shelf Registration Statement,
(c) the date on which such Note is disposed of by a Broker-Dealer
pursuant to the "Plan of Distribution" contemplated by the
Exchange Offer Registration Statement (including delivery of the
Prospectus contained therein) and (d) the date on which such Note
is distributed to the public pursuant to Rule 144 under the Act.
Underwritten Registration or Underwritten Offering: A
registration in which securities of the Company are sold to an
underwriter for reoffering to the public.
SECTION 2. HOLDERS
A Person is deemed to be a Holder of Transfer
Restricted Securities (each, a "Holder") whenever such Person
owns Transfer Restricted Securities.
SECTION 3. REGISTERED EXCHANGE OFFER
(a) Unless the Exchange Offer shall not be permitted
by applicable law or Commission policy (after the procedures set
forth in Section 6(a)(i) below have been complied with), the
Company shall (i) cause to be filed with the Commission as soon
as practicable after the Closing Date, but in no event later than
60 days after the Closing Date, the Exchange Offer Registration
Statement, (ii) use its reasonable best efforts to cause such
Exchange Offer Registration Statement to become effective at the
earliest possible time, but in no event later than 150 days after
the Closing Date, (iii) in connection with the foregoing, (A)
file all pre-effective amendments to such Exchange Offer
Registration Statement as may be necessary in order to cause such
Exchange Offer Registration Statement to become effective, (B)
file, if applicable, a post-effective amendment to such Exchange
<PAGE>
Offer Registration Statement pursuant to Rule 430A under the Act
and (C) cause all necessary filings, if any, in connection with
the registration and qualification of the Series D Notes to be
made under the Blue Sky laws of such jurisdictions as are
necessary to permit Consummation of the Exchange Offer, and (iv)
upon the effectiveness of such Exchange Offer Registration
Statement, commence and Consummate the Exchange Offer. The
Exchange Offer shall be on the appropriate form permitting
registration of the Series D Notes to be offered in exchange for
the Series C Notes that are Transfer Restricted Securities and to
permit sales of Broker-Dealer Transfer Restricted Securities by
Restricted Broker-Dealers as contemplated by Section 3(c) below.
(b) The Company shall use its reasonable best efforts
to cause the Exchange Offer Registration Statement to be
effective continuously, and shall keep the Exchange Offer open
for a period of not less than the minimum period required under
applicable federal and state securities laws to Consummate the
Exchange Offer; provided, however, that in no event shall such
period be less than 20 Business Days. The Company shall cause
the Exchange Offer to comply with all applicable federal and
state securities laws. No securities other than the Notes shall
be included in the Exchange Offer Registration Statement. The
Company shall use its reasonable best efforts to commence the
Exchange Offer on or prior to 30 Business Days after the Exchange
Offer Registration Statement has become effective.
(c) The Company shall include a "Plan of Distribution"
section in the Prospectus contained in the Exchange Offer
Registration Statement and indicate therein that any Restricted
Broker-Dealer who holds Series C Notes that are Transfer
Restricted Securities and that were acquired for the account of
such Broker-Dealer as a result of market-making activities or
other trading activities, may exchange such Series C Notes (other
than Transfer Restricted Securities acquired directly from the
Company or any Affiliate of the Company) pursuant to the Exchange
Offer; however, such Broker-Dealer may be deemed to be an
"underwriter" within the meaning of the Act and must, therefore,
deliver a prospectus meeting the requirements of the Act in
connection with its initial sale of each Series D Note received
by such Broker-Dealer in the Exchange Offer, which prospectus
delivery requirement may be satisfied by the delivery by such
Broker-Dealer of the Prospectus contained in the Exchange Offer
Registration Statement. Such "Plan of Distribution" section
shall also contain all other information with respect to such
sales of Broker-Dealer Transfer Restricted Securities by
Restricted Broker-Dealers that the Commission may require in
<PAGE>
order to permit such sales pursuant thereto, but such "Plan of
Distribution" shall not be required to name any such
Broker-Dealer or disclose the amount of Notes held by any such
Broker-Dealer, except to the extent required by the Commission as
a result of a change in policy after the date of this Agreement.
The Company shall use its reasonable best efforts to
keep the Exchange Offer Registration Statement continuously
effective, supplemented and amended as required by the
provisions of Section 6(c) below to the extent necessary to
ensure that it is available for sales of Broker-Dealer Transfer
Restricted Securities by Restricted Broker-Dealers, and to ensure
that such Registration Statement conforms with the requirements
of this Agreement, the Act and the policies, rules and
regulations of the Commission as announced from time to time, for
a period equal to the shorter of (A) one year from the date on
which the Exchange Offer is Consummated and (B) the date on which
all Transfer Restricted Securities acquired in the Exchange Offer
by Restricted Broker-Dealers have been sold to the public by such
Restricted Broker-Dealers.
The Company shall provide sufficient copies of the
latest version of such Prospectus to such Restricted
Broker-Dealers promptly upon request, and in no event later than
one day after such request, at any time during such one-year
period in order to facilitate such sales.
SECTION 4. SHELF REGISTRATION
(a) Shelf Registration. If (i) the Company is not
required to file an Exchange Offer Registration Statement with
respect to the Series D Notes because the Exchange Offer is not
permitted by applicable law or Commission policy (after the
procedures set forth in Section 6(a)(i) below have been complied
with) or if (ii) any Holder of Transfer Restricted Securities
shall notify the Company within 20 Business Days following the
Consummation of the Exchange Offer that (A) such Holder was
prohibited by law or Commission policy from participating in the
Exchange Offer or (B) such Holder may not resell the Series D
Notes acquired by it in the Exchange Offer to the public without
delivering a prospectus and the Prospectus contained in the
Exchange Offer Registration Statement is not appropriate or
available for such resales by such Holder or (C) such Holder is a
Broker-Dealer and holds Series C Notes acquired directly from the
Company or one of its affiliates, then the Company shall (x)
cause to be filed, on or prior to 30 days after the date on
which the Company determines that it is not required to file the
<PAGE>
Exchange Offer Registration Statement pursuant to clause (i)
above or 30 days after the date on which the Company receives the
notice specified in clause (ii) above, a shelf registration
statement pursuant to Rule 415 under the Act (which may be an
amendment to the Exchange Offer Registration Statement (in either
event, the "Shelf Registration Statement")), relating to all
Transfer Restricted Securities the Holders of which shall have
provided the information required pursuant to Section 4(b)
hereof, and shall (y) use its reasonable best efforts to cause
such Shelf Registration Statement to become effective on or prior
to 150 days after the date on which the Company becomes obligated
to file such Shelf Registration Statement; provided that if the
Company has not consummated the Exchange Offer within 180 days
of the Closing Date, then the Company will file the Shelf
Registration Statement with the Commission on or prior to the
181st date after the Closing Date. If, after the Company has
filed an Exchange Offer Registration Statement which satisfies
the requirements of Section 3(a) above, the Company is required
to file and make effective a Shelf Registration Statement solely
because the Exchange Offer shall not be permitted under
applicable law or Commission policy, then the filing of the
Exchange Offer Registration Statement shall be deemed to satisfy
the requirements of clause (x) above. Such an event shall have
no effect on the requirements of clause (y) above. The Company
shall use its reasonable best efforts to keep the Shelf
Registration Statement discussed in this Section 4(a)
continuously effective, supplemented and amended as required by
and subject to the provisions of Sections 6(b) and (c) hereof to
the extent necessary to ensure that it is available for
sales of Transfer Restricted Securities by the Holders thereof
entitled to the benefit of this Section 4(a), and to ensure that
it conforms with the requirements of this Agreement, the Act and
the policies, rules and regulations of the Commission as
announced from time to time, for a period of at least two years
(as extended pursuant to Section 6(d)) following the Closing Date
or such shorter period that will terminate when all the Transfer
Restricted Securities covered by the Shelf Registration Statement
have been sold pursuant to the Shelf Registration Statement or
are eligible for sale under Rule 144(k) under the Act.
(b) Provision by Holders of Certain Information in
Connection with the Shelf Registration Statement. No Holder of
Transfer Restricted Securities may include any of its Transfer
Restricted Securities in any Shelf Registration Statement
pursuant to this Agreement unless and until such Holder furnishes
to the Company in writing, within 20 days after receipt of a
request therefor, such information specified in Item 507 of
<PAGE>
Regulation S-K under the Act for use in connection with
any Shelf Registration Statement or Prospectus or preliminary
Prospectus included therein. No Holder of Transfer Restricted
Securities shall be entitled to Liquidated Damages pursuant to
Section 5 hereof unless and until such Holder shall have used its
reasonable best efforts to provide all such information. Each
Holder as to which any Shelf Registration Statement is being
effected agrees to furnish promptly to the Company all
information required to be disclosed in order to make the
information previously furnished to the Company by such Holder
not materially misleading.
SECTION 5. LIQUIDATED DAMAGES
If (i) the Company fails to file any Registration
Statement required by this Agreement with the Commission on or
prior to the date specified for such filing in this Agreement,
(ii) any such Registration Statement has not been declared
effective by the Commission on or prior to the date specified for
such effectiveness in this Agreement, (iii) the Company fails to
Consummate the Exchange Offer within 30 Business Days after the
Exchange Offer Registration Statement is first declared effective
by the Commission, (iv) subject to the provisions of Section
6(c)(i) below, any Registration Statement required by this
Agreement is filed and declared effective but shall thereafter
cease to be effective for a period of one business day without
being succeeded immediately by a post-effective amendment to such
Registration Statement that cures such failure and that is itself
declared effective immediately or (v) subject to the provisions
of Section 6(c)(i) below, at any time when a prospectus is
required by the Act to be delivered in connection with sales of
the Transfer Restricted Securities, the Company shall conclude,
or the Holders of a majority in principal amount of the affected
Transfer Restricted Securities shall reasonably conclude, based
on the advice of their counsel, and shall give notice to the
Company, that either (A) any event shall have occurred or fact
exist as a result of which it is necessary to amend or
supplement the prospectus in order that it will not include an
untrue statement of a material fact or omit to state a material
fact necessary in order to make the statements made, in light of
the circumstances under which they were made, not misleading, or
(B) it shall be necessary to amend or supplement such
Registration Statement or a Prospectus in order to comply with
the requirements of the Act or the rules of the Commission
thereunder, and in the case of clause (A) or (B), such
Registration Statement is not appropriately amended by an
effective post-effective amendment, or the Prospectus is not
<PAGE>
amended or supplemented, in a manner reasonably satisfactory to
the Holders of Transfer Restricted Securities so as to be
declared effective or made usable within one business day after
the Company shall so conclude or shall receive the
above-mentioned notice from Holders of Transfer Restricted
Securities (each such event referred to in clauses (i) through
(v), a "Registration Default"), then the Company agrees to pay
liquidated damages to each Holder of Transfer Restricted
Securities with respect to the first 90-day period immediately
following the occurrence of such Registration Default in an
amount equal to $.05 per week per $1,000 principal amount of
Transfer Restricted Securities held by such Holder for each week
or portion thereof that the Registration Default continues. The
amount of the liquidated damages shall increase by an additional
$.05 per week per $1,000 in principal amount of Transfer
Restricted Securities with respect to each subsequent 90-day
period until all Registration Defaults have been cured, up to a
maximum amount of liquidated damages of $.50 per week per
$1,000 principal amount of Transfer Restricted Securities.
Notwithstanding anything to the contrary set forth herein, (1)
upon filing of the Exchange Offer Registration Statement (and/or,
if applicable, the Shelf Registration Statement), in the case of
(i) above, (2) upon the effectiveness of the Exchange Offer
Registration Statement (and/or, if applicable, the Shelf
Registration Statement), in the case of (ii) above, (3) upon
Consummation of the Exchange Offer, in the case of (iii) above,
(4) upon the filing of a post-effective amendment to the
Registration Statement, or an amendment or supplement to the
Prospectus, or an additional Registration Statement, in each case
that causes the Exchange Offer Registration Statement (and/or, if
applicable, the Shelf Registration Statement) to again be
declared effective or made usable in the case of (iv) and (v)
above, or (5) once the Transfer Restricted Securities are
eligible for resale under Rule 144(k) under the Act, the
liquidated damages payable with respect to the Transfer
Restricted Securities as a result of such clause (i), (ii),
(iii), (iv) or (v), as applicable, shall cease.
All accrued liquidated damages shall be paid to the
Holder of the Global Note by wire transfer of immediately
available funds or by federal funds check and to Holders of
Certificated Securities by mailing checks to their registered
addresses on each Damages Payment Date. All obligations of the
Company set forth in the preceding paragraph that are outstanding
with respect to any Transfer Restricted Security at the time such
security ceases to be a Transfer Restricted Security shall
survive until such time as all such obligations with respect to
such security shall have been satisfied in full.
<PAGE>
SECTION 6. REGISTRATION PROCEDURES
(a) Exchange Offer Registration Statement. In
connection with the Exchange Offer, the Company shall comply with
all applicable provisions of Section 6(c) below, shall use its
reasonable best efforts to effect such exchange and to permit the
sale of Broker-Dealer Transfer Restricted Securities being sold
in accordance with the intended method or methods of distribution
thereof, and shall comply with all of the following provisions:
(i) If, following the date hereof there has been
published a change in Commission policy with respect to
exchange offers such as the Exchange Offer, such that
in the reasonable opinion of counsel to the Company there is
a substantial question as to whether the Exchange Offer is
permitted by applicable federal law, the Company hereby
agrees to seek a no-action letter or other favorable
decision from the Commission allowing the Company to
Consummate an Exchange Offer for such Series C Notes. The
Company hereby agrees to pursue the issuance of such a
decision to the Commission staff level, but shall not be
required to take commercially unreasonable action to effect
a change of Commission policy. In connection with the
foregoing, the Company hereby agrees to take all such other
actions as are requested by the Commission or otherwise
required in connection with the issuance of such decision,
including without limitation (A) participating in telephonic
conferences with the Commission, (B) delivering to the
Commission staff an analysis prepared by counsel to the
Company setting forth the legal bases, if any, upon which
such counsel has concluded that such an Exchange Offer
should be permitted and (C) diligently pursuing a resolution
(which need not be favorable) by the Commission staff of
such submission.
(ii) As a condition to its participation in the
Exchange Offer pursuant to the terms of this Agreement, each
Holder of Transfer Restricted Securities shall furnish, upon
the request of the Company, prior to the Consummation of the
Exchange Offer, a written representation to the Company
(which may be contained in the letter of transmittal
contemplated by the Exchange Offer Registration Statement)
to the effect that (A) it is not an affiliate of the
Company, (B) it is not engaged in, and does not intend to
engage in, and has no arrangement or understanding with any
person to participate in, a distribution of the
Series D Notes to be issued in the Exchange Offer and (C) it
<PAGE>
is acquiring the Series D Notes in its ordinary course of
business. The Exchange Offer Registration Statement shall
disclose that any Broker-Dealer and any such Holder using
the Exchange Offer to participate in a distribution of the
securities to be acquired in the Exchange Offer (1) may not
under Commission policy as in effect on the date of this
Agreement rely on the position of the Commission enunciated
in Morgan Stanley and Co., Inc. (available June 5, 1991) and
Exxon Capital Holdings Corporation (available May 13, 1988),
as interpreted in the Commission's letter to Shearman &
Sterling dated July 2, 1993, and similar no-action letters
(including, if applicable, any no-action letter obtained
pursuant to clause (i) above), and (2) must comply with the
registration and prospectus delivery requirements of the Act
in connection with a secondary resale transaction and that
such a secondary resale transaction must be covered by an
effective registration statement containing the selling
security Holder information required by Item 507 or 508, as
applicable, of Regulation S-K if the resales are of Series D
Notes obtained by such Holder in exchange for Series C Notes
acquired by such Holder directly from the Company or an
affiliate thereof.
(iii) If the Commission requests, prior to
effectiveness of the Exchange Offer Registration Statement,
the Company shall provide a supplemental letter to the
Commission (A) stating that the Company is registering the
Exchange Offer in reliance on the position of the Commission
enunciated in Exxon Capital Holdings Corporation (available
May 13, 1988), Morgan Stanley and Company., Inc. (available
June 5, 1991) and, if applicable, any no-action letter
obtained pursuant to clause (i) above, (B) including a
representation that the Company has not entered into any
arrangement or understanding with any Person to distribute
the Series D Notes to be received in the Exchange Offer and
that, to the best of the Company's information and belief,
each Holder participating in the Exchange Offer is
acquiring the Series D Notes in its ordinary course of
business and has no arrangement or understanding with any
Person to participate in the distribution of the Series D
Notes received in the Exchange Offer and (C) any other
undertaking or representation required by the Commission as
set forth in any no-action letter obtained pursuant to
clause (i) above.
(b) Shelf Registration Statement. In connection with
the Shelf Registration Statement, the Company shall comply with
<PAGE>
all the provisions of Section 6(c) below and shall use its
reasonable best efforts to effect such registration to permit the
sale of the Transfer Restricted Securities being sold in
accordance with the intended method or methods of distribution
thereof (as indicated in the information furnished to the Company
pursuant to Section 4(b) hereof), and pursuant thereto the
Company will prepare and file with the Commission a Registration
Statement relating to the registration on any appropriate form
under the Act, which form shall be available for the sale
of the Transfer Restricted Securities in accordance with the
intended method or methods of distribution thereof within the
time periods and otherwise in accordance with the provisions
hereof.
(c) General Provisions. In connection with any
Registration Statement and any related Prospectus required by
this Agreement to permit the sale or resale of Transfer
Restricted Securities (including, without limitation, any
Exchange Offer Registration Statement and the related Prospectus,
to the extent that the same are required to be available to
permit sales of Broker-Dealer Transfer Restricted Securities by
Restricted Broker-Dealers), the Company shall:
(i) use its reasonable best efforts to keep such
Registration Statement continuously effective and provide
all requisite financial statements for the period specified
in Section 3 or 4 of this Agreement, as applicable. Upon
the occurrence of any event that would cause any such
Registration Statement or the Prospectus contained therein
(A) to contain a material misstatement or omission or (B)
not to be effective and usable for resale of Transfer
Restricted Securities during the period required by this
Agreement, the Company shall give notice promptly to the
underwriter(s), if any, and selling Holders of the
occurrence of such event and file promptly an appropriate
amendment to such Registration Statement, (1) in the case of
clause (A), correcting any such misstatement or omission,
and (2) in the case of clauses (A) and (B), use its
reasonable best efforts to cause such amendment to be
declared effective and such Registration Statement and the
related Prospectus to become usable for their intended
purpose(s) as soon as practicable thereafter.
Notwithstanding the foregoing, the Company may suspend the
offering and sales under the Exchange Offer Registration
Statement subsequent to the Consummation of the Exchange
Offer or the Shelf Registration Statement for up to 30 days
in each year during which such Exchange Offer Registration
<PAGE>
Statement is required to be effective and usable hereunder
subsequent to the Consummation of the Exchange Offer or such
Shelf Registration Statement is required to be effective and
usable hereunder (measured from the date of effectiveness of
such Shelf Registration Statement to successive
anniversaries thereof) if (A) either (y)(I) the Company
shall be engaged in a material acquisition or disposition
and (II)(aa) such acquisition or disposition is required to
be disclosed in the Exchange Offer Registration Statement or
the Shelf Registration Statement, the related Prospectus or
any amendment or supplement thereto, or the failure by the
Company to disclose such transaction in the Exchange Offer
Registration Statement or the Shelf Registration Statement
or related Prospectus, or any amendment or supplement
thereto, as then amended or supplemented, would cause such
Exchange Offer Registration Statement or Shelf Registration
Statement, Prospectus or amendment or supplement thereto, to
contain an untrue statement of material fact or omit to
state a material fact necessary in order to make the
statement therein not misleading, in light of the
circumstances under which they were made, (bb) information
regarding the existence of such acquisition or disposition
has not then been publicly disclosed by or on behalf of the
Company and (cc) a majority of the Board of Directors of the
Company determines in the exercise of its good faith
judgment that disclosure of such acquisition or disposition
would not be in the best interest of the Company or would
have a material adverse effect on the consummation of such
acquisition or disposition or (z) a majority of the Board of
Directors of the Company determines in the exercise of its
good faith judgment that compliance with the disclosure
obligations set forth in this Section 6(c)(i) would
otherwise have a material adverse effect on the Company and
its subsidiaries, taken as a whole, and (B) the Company
notifies the Holders within two business days after such
Board of Directors makes the relevant determination set
forth in clause (A); provided, however, that in each such
case the applicable period specified in Section 3
(subsequent to the Consummation of the Exchange Offer) and
Section 4 hereof during which the applicable Exchange Offer
Registration Statement or Shelf Registration Statement is
required to be kept effective and usable shall be extended
by the number of days during which such effectiveness was
suspended pursuant to the foregoing and Liquidated Damages
shall not apply during any period the Company is
permitted to suspend offerings and sales under this
sentence;
<PAGE>
(ii) prepare and file with the Commission such
amendments and post-effective amendments to the Registration
Statement as may be necessary to keep the Registration
Statement effective for the applicable period set forth in
Section 3 or 4 hereof, or such shorter period as will
terminate when all Transfer Restricted Securities covered by
such Registration Statement have been sold; cause the
Prospectus to be supplemented by any required Prospectus
supplement, and as so supplemented to be filed pursuant to
Rule 424 under the Act, and to comply fully with Rules 424,
430A and 462, as applicable, under the Act in a timely
manner; and comply with the provisions of the Act with
respect to the disposition of all securities covered by such
Registration Statement during the applicable period in
accordance with the intended method or methods of
distribution by the sellers thereof set forth in such
Registration Statement or supplement to the Prospectus;
(iii) advise the underwriter(s), if any, and
selling Holders promptly and, if requested by such Persons,
confirm such advice in writing, (A) when the Prospectus or
any Prospectus supplement or post-effective amendment has
been filed, and, with respect to any Registration Statement
or any post-effective amendment thereto, when the same has
become effective, (B) of any request by the Commission for
amendments to the Registration Statement or amendments or
supplements to the Prospectus or for additional information
relating thereto, (C) of the issuance by the Commission of
any stop order suspending the effectiveness of the
Registration Statement under the Act or of the suspension by
any state securities commission of the qualification of the
Transfer Restricted Securities for offering or sale in any
jurisdiction, or the initiation of any proceeding for any of
the preceding purposes, and (D) of the existence of any fact
or the happening of any event that makes any statement of a
material fact made in the Registration Statement, the
Prospectus, any amendment or supplement thereto or any
document incorporated by reference therein untrue, or that
requires the making of any additions to or changes in the
Registration Statement in order to make the statements
therein not misleading, or that requires the making of any
additions to or changes in the Prospectus in order to make
the statements therein, in the light of the circumstances
under which they were made, not misleading. If at any time
the Commission shall issue any stop order suspending the
effectiveness of the Registration Statement, or any state
securities commission or other regulatory authority shall
<PAGE>
issue an order suspending the qualification or exemption
from qualification of the Transfer Restricted
Securities under state securities or Blue Sky laws, the
Company shall use its reasonable best efforts to obtain the
withdrawal or lifting of such order at the earliest possible
time;
(iv) furnish to the Initial Purchaser, each
selling Holder named in any Registration Statement or
Prospectus and each of the underwriter(s) in connection with
such sale, if any, before filing with the Commission, copies
of any Registration Statement or any Prospectus included
therein or any amendments or supplements to any such
Registration Statement or Prospectus (including all
documents incorporated by reference after the initial
filing of such Registration Statement), which documents will
be subject to the review and comment of such Holders and
underwriter(s) in connection with such sale, if any, for a
period of at least five Business Days, and the Company will
not file any such Registration Statement or Prospectus or
any amendment or supplement to any such Registration
Statement or Prospectus (including all such documents
incorporated by reference) to which the selling Holders of
the Transfer Restricted Securities covered by such
Registration Statement or the underwriter(s) in connection
with such sale, if any, shall reasonably object within five
Business Days after the receipt thereof;
(v) promptly prior to the filing of any document
that is to be incorporated by reference into a Registration
Statement or Prospectus, provide copies of such document
to the selling Holders and to the underwriter(s) in
connection with such sale, if any, make the
Company's representatives available for discussion of such
document and other customary due diligence matters, and
include such information in such document prior to the
filing thereof as such selling Holders or underwriter(s), if
any, reasonably may request;
(vi) make available at reasonable times for
inspection by the selling Holders, any managing underwriter
participating in any disposition pursuant to such
Registration Statement and any attorney or accountant
retained by such selling Holders or any of such
underwriter(s), all financial and other records, pertinent
corporate documents and properties of the Company and its
subsidiaries cause the Company's and its subsidiaries'
<PAGE>
officers, directors and employees to supply all information
reasonably requested by any such Holder, underwriter,
attorney or accountant in connection with such Registration
Statement or any post-effective amendment thereto subsequent
to the filing thereof and prior to its effectiveness;
(vii) if requested by any selling Holders or the
underwriter(s) in connection with such sale, if any,
promptly include in any Registration Statement or
Prospectus, pursuant to a supplement or post-effective
amendment if necessary, such information as such selling
Holders and underwriter(s), if any, may reasonably request
to have included therein, including, without limitation,
information relating to the "Plan of Distribution" of the
Transfer Restricted Securities, information with respect to
the principal amount of Transfer Restricted Securities being
sold to such underwriter(s), the purchase price being paid
therefor and any other terms of the offering of the Transfer
Restricted Securities to be sold in such offering; and make
all required filings of such Prospectus supplement or
post-effective amendment as soon as practicable after the
Company is notified of the matters to be included in such
Prospectus supplement or post-effective amendment;
(viii) furnish to each selling Holder and each of
the underwriter(s) in connection with such sale, if any,
without charge, at least one copy of the Registration
Statement, as first filed with the Commission, and of each
amendment thereto, including all documents incorporated by
reference therein and all exhibits (including, at the
request of such selling Holder and such underwriter(s),
exhibits incorporated therein by reference);
(ix) deliver to each selling Holder and each of
the underwriter(s), if any, without charge, as many copies
of the Prospectus (including each preliminary prospectus)
and any amendment or supplement thereto as such Persons
reasonably may request; the Company hereby consents to the
use (in accordance with law) of the Prospectus and any
amendment or supplement thereto by each of the selling
Holders and each of the underwriter(s), if any, in
connection with the offering and the sale of the Transfer
Restricted Securities covered by the Prospectus or any
amendment or supplement thereto;
(x) enter into such agreements (including an
underwriting agreement) and make such representations and
<PAGE>
warranties and take all such other actions in connection
therewith in order to expedite or facilitate the disposition
of the Transfer Restricted Securities pursuant to any
Registration Statement contemplated by this Agreement as may
be reasonably requested by any Holder of Transfer Restricted
Securities or underwriter in connection with any sale or
resale pursuant to any Registration Statement contemplated
by this Agreement, and in such connection, whether or not an
underwriting agreement is entered into and whether or not
the registration is an Underwritten Registration, the
Company shall:
(A) furnish (or in the case of paragraphs (2) and (3),
use its reasonable best efforts to furnish) to each
selling Holder, the Trustee under the Indenture and each
underwriter, if any, upon the effectiveness of the Shelf
Registration Statement and to each Restricted
Broker-Dealer upon Consummation of the Exchange Offer:
(1) a certificate, dated the date of Consummation
of the Exchange Offer or the date of effectiveness
of the Shelf Registration Statement, as the case may
be, signed on behalf of the Company by (x) the
President or any Vice President and (y) a principal
financial or accounting officer of the Company,
confirming, as of the date thereof, the matters set
forth in paragraphs (a) through (d) of Section 7 of
the Purchase Agreement and such other similar
matters as the Holders, underwriter(s) and/or
Restricted Broker Dealers may reasonably request;
(2) an opinion, dated the date of Consummation of
the Exchange Offer or the date of effectiveness of
the Shelf Registration Statement, as the case may
be, of counsel for the Company covering matters
similar to those set forth in paragraph (f) of
Section 7 of the Purchase Agreement and such other
matter as the Holders, underwriters and/or
Restricted Broker Dealers may reasonably request,
and in any event including a statement to the effect
that such counsel has participated in conferences
with officers and other representatives of the
Company, representatives of the independent public
accountants for the Company and has considered the
matters required to be stated therein and the
statements contained therein, although such counsel
has not independently verified the accuracy,
<PAGE>
completeness or fairness of such statements; and
that such counsel advises that, on the basis of the
foregoing (relying as to materiality to a large
extent upon facts provided to such counsel by
officers and other representatives of the Company
and without independent check or verification), no
facts came to such counsel's attention that caused
such counsel to believe that the applicable
Registration Statement, at the time such
Registration Statement or any post-effective
amendment thereto became effective and, in the case
of the Exchange Offer Registration Statement, as of
the date of Consummation of the Exchange Offer,
contained an untrue statement of a material fact
or omitted to state a material fact required to be
stated therein or necessary to make the statements
therein not misleading, or that the Prospectus
contained in such Registration Statement as of its
date and, in the case of the opinion dated the date
of Consummation of the Exchange Offer, as of the
date of Consummation, contained an untrue statement
of a material fact or omitted 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. Without
limiting the foregoing, such counsel may state
further that such counsel assumes no responsibility
for, and expresses no opinion as to, the accuracy,
completeness or fairness of the financial
statements, notes and schedules and other financial
data included in any Registration Statement
contemplated by this Agreement or the related
Prospectus; and
(3) a customary comfort letter, dated as of the
date of effectiveness of the Shelf Registration
Statement or the date of Consummation of the
Exchange Offer, as the case may be, from the
Company's independent accountants, in the customary
form and covering matters of the type customarily
covered in comfort letters to underwriters in
connection with primary underwritten offerings, and
affirming the matters set forth in the comfort
letters delivered pursuant to Section 7 of the
Purchase Agreement, without exception;
(B) set forth in full or incorporate by reference in
<PAGE>
the underwriting agreement, if any, in connection with
any sale or resale pursuant to any Shelf Registration
Statement the indemnification provisions and procedures
of Section 8 hereof with respect to all parties to be
indemnified pursuant to said Section; and
(C) deliver such other documents and certificates as
may be reasonably requested by the selling Holders, the
underwriter(s), if any, and Restricted Broker Dealers, if
any, to evidence compliance with clause (A) above and
with any customary conditions contained in the
underwriting agreement or other agreement entered into by
the Company pursuant to this clause (x).
The above shall be done at each closing under such
underwriting or similar agreement, as and to the extent
required thereunder, and if at any time the representations and
warranties of the Company contemplated in (A)(1) above cease to
be true and correct, the Company shall so advise the
underwriter(s), if any, the selling Holders and each Restricted
Broker-Dealer promptly and if requested by such Persons, shall
confirm such advice in writing;
(xi) prior to any public offering of Transfer
Restricted Securities, cooperate with the selling Holders,
the underwriter(s), if any, and their respective counsel in
connection with the registration and qualification of the
Transfer Restricted Securities under the securities or Blue
Sky laws of such jurisdictions as the selling Holders or
underwriter(s), if any, may request and do any and all other
acts or things necessary or advisable to enable the
disposition in such jurisdictions of the Transfer Restricted
Securities covered by the applicable Registration Statement;
provided, however, that the Company shall not be required to
register or qualify as a foreign corporation where it is not
now so qualified or to take any action that would subject it
to the service of process in suits or to taxation, other
than as to matters and transactions relating to the
Registration Statement, in any jurisdiction where it is not
now so subject;
(xii) issue, upon the request of any Holder of
Series C Notes covered by any Shelf Registration Statement
contemplated by this Agreement, Series D Notes having an
aggregate principal amount equal to the aggregate principal
amount of Series C Notes surrendered to the Company by such
Holder in exchange therefor or being sold by such Holder;
<PAGE>
such Series D Notes to be registered in the name of such
Holder or in the name of the purchaser(s) of such Notes, as
the case may be; in return, the Series C Notes held by such
Holder shall be surrendered to the Company for cancellation;
(xiii) in connection with any sale of Transfer
Restricted Securities that will result in such securities no
longer being Transfer Restricted Securities, cooperate with
the selling Holders and the underwriter(s), if any, to
facilitate the timely preparation and delivery of
certificates representing Transfer Restricted Securities to
be sold and not bearing any restrictive legends; and to
register such Transfer Restricted Securities in such
denominations and such names as the Holders or the
underwriter(s), if any, may request at least two Business
Days prior to such sale of Transfer Restricted Securities;
(xiv) use its reasonable best efforts to cause
the disposition of the Transfer Restricted Securities
covered by the Registration Statement to be registered with
or approved by such other governmental agencies or
authorities as may be necessary to enable the seller or
sellers thereof or the underwriter(s), if any, to consummate
the disposition of such Transfer Restricted Securities,
subject to the proviso contained in clause (xi) above;
(xv) subject to Section 6(c)(i), if any fact or
event contemplated by Section 6(c)(iii)(D) above shall exist
or have occurred, prepare a supplement or post-effective
amendment to the Registration Statement or related
Prospectus or any document incorporated therein by reference
or file any other required document so that, as thereafter
delivered to the purchasers of Transfer Restricted
Securities, the Prospectus will not contain an untrue
statement of a material fact or omit to state any material
fact necessary to make the statements therein, in the light
of the circumstances under which they were made, not
misleading;
(xvi) provide a CUSIP number for all Transfer
Restricted Securities not later than the effective date of a
Registration Statement covering such Transfer Restricted
Securities and provide the Trustee under the Indenture with
printed certificates for the Transfer Restricted Securities
which are in a form eligible for deposit with The Depository
Trust Company;
<PAGE>
(xvii) cooperate and assist in any filings
required to be made with the NASD and in the performance of
any due diligence investigation by any underwriter
(including any "qualified independent underwriter") that is
required to be retained in accordance with the rules and
regulations of the NASD, and use its reasonable best efforts
to cause such Registration Statement to become effective and
approved by such governmental agencies or authorities as may
be necessary to enable the Holders selling Transfer
Restricted Securities to consummate the disposition of such
Transfer Restricted Securities;
(xviii) otherwise use its reasonable best efforts
to comply with all applicable rules and regulations of the
Commission, and make generally available to its security
Holders with regard to any applicable Registration
Statement, as soon as practicable, a consolidated earnings
statement meeting the requirements of Rule 158 (which need
not be audited) covering a twelve-month period beginning
after the effective date of the Registration Statement (as
such term is defined in paragraph (c) of Rule 158 under the
Act);
(xix) use its reasonable best efforts to cause
the Indenture to be qualified under the TIA not later than
the effective date of the first Registration Statement
required by this Agreement and, in connection therewith,
cooperate with the Trustee and the Holders of Notes to
effect such changes to the Indenture as may be required for
such Indenture to be so qualified in accordance with the
terms of the TIA; and execute, and use its reasonable best
efforts to cause the Trustee to execute, all documents that
may be required to effect such changes and all other forms
and documents required to be filed with the Commission to
enable such Indenture to be so qualified in a timely manner;
and
(xx) provide promptly to each Holder upon request
each document filed with the Commission pursuant to the
requirements of Section 13 or Section 15(d) of the Exchange
Act.
(d) Restrictions on Holders. Each Holder agrees by
acquisition of a Transfer Restricted Security that, upon receipt
of the notice referred to in Section 6(c)(i) or any notice from
the Company of the existence of any fact of the kind described in
Sections 6(c)(iii)(B),(C)or (D) hereof, such Holder will
<PAGE>
forthwith discontinue disposition of Transfer Restricted
Securities pursuant to the applicable Registration Statement
until such Holder's receipt of the copies of the supplemented
or amended Prospectus contemplated by Section 6(c)(xv) hereof, or
until it is advised in writing by the Company that the use of the
Prospectus may be resumed, and has received copies of any
additional or supplemental filings that are incorporated by
reference in the Prospectus (the "Advice"). If so directed by
the Company, each Holder will deliver to the Company (at the
Company's expense) all copies, other than permanent file copies
then in such Holder's possession, of the Prospectus covering such
Transfer Restricted Securities that was current at the time of
receipt of either such notice. In the event the Company shall
give any such notice, the time period regarding the effectiveness
of such Registration Statement set forth in Section 3 or 4
hereof, as applicable, shall be extended by the number of days
during the period from and including the date of the giving of
such notice pursuant to Section 6(c)(i) or Sections
6(c)(iii)(B),(C) or (D) hereof to and including the date when
each selling Holder covered by such Registration Statement shall
have received the copies of the supplemented or amended
Prospectus contemplated by Section 6(c)(xv) hereof or shall have
received the Advice.
SECTION 7. REGISTRATION EXPENSES
All expenses incident to the Company's performance of
or compliance with this Agreement will be borne by the Company,
regardless of whether a Registration Statement becomes effective,
including without limitation: (i) all registration and filing
fees and expenses (including filings made by the Initial
Purchaser or any Holder with the NASD (and, if applicable, the
reasonable fees and expenses of any "qualified independent
underwriter" and its counsel that may be required by the rules
and regulations of the NASD)); (ii) all fees and expenses of
compliance with federal securities and state Blue Sky or
securities laws; (iii) all expenses of printing (including
printing certificates for the Series D Notes to be issued in the
Exchange Offer and printing of Prospectuses), messenger and
delivery services and telephone; (iv) all fees and disbursements
of counsel for the Company; (v) all application and filing fees
in connection with listing the Notes on a national securities
exchange or automated quotation system pursuant to the
requirements hereof; (vi) all fees and disbursements of
independent certified public accountants of the Company
(including the expenses of any special audit and comfort letters
required by or incident to such performance); and (vii) all fees
<PAGE>
and reasonable out-of-pocket disbursements of the Trustee and the
Exchange Agent, including all fees and disbursements of counsel
for the Trustee and the Exchange Agent.
The Company will, in any event, bear its internal
expenses (including, without limitation, all salaries and
expenses of its officers and employees performing legal or
accounting duties), the expenses of any annual audit and the fees
and expenses of any Person, including special experts, retained
by the Company. The Company shall not be responsible for fees
and disbursements of counsel, accountants or any other advisors
to the Initial Purchaser or Holder, underwriting commissions and
discounts, brokerage commissions, agent fees (other than fees of
the Exchange Agent as specified above) and transfer taxes
relating to any Registration Statement filed pursuant to this
Agreement.
SECTION 8. INDEMNIFICATION
(a) The Company agrees to indemnify and hold harmless
(i) each Holder and (ii) each person, if any, who controls
(within the meaning of Section 15 of the Act or Section 20 of the
Exchange Act) any Holder (any of the persons referred to in this
clause (ii) being hereinafter referred to as a "controlling
person") and (iii) the respective officers, directors, partners,
employees, representatives and agents of any Holder or any
controlling person (any person referred to in clause (i), (ii) or
(iii) may hereinafter be referred to as an "Indemnified Holder"),
to the fullest extent lawful, from and against any and all
losses, claims, damages, liabilities, judgments, actions and
expenses (including without limitation and as incurred,
reimbursement of all reasonable costs of investigating,
preparing, pursuing or defending any claim or action, or any
investigation or proceeding by any governmental agency or body,
commenced or threatened, including the reasonable fees and
expenses of counsel to any Indemnified Holder) directly or
indirectly caused by, related to, based upon, arising out of or
in connection with any untrue statement or alleged untrue
statement of a material fact contained in any Registration
Statement, preliminary prospectus or Prospectus (or any amendment
or supplement thereto), or any omission or alleged omission to
state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, except
insofar as such losses, claims, damages, liabilities or expenses
are caused by an untrue statement or omission or alleged untrue
statement or omission that is made in reliance upon and in
conformity with information relating to any of the Holders
<PAGE>
furnished in writing to the Company by any of the Holders
expressly for use therein.
In case any action or proceeding (including any
governmental or regulatory investigation or proceeding) shall be
brought or asserted against any of the Indemnified Holders with
respect to which indemnity may be sought against the Company,
such Indemnified Holder (or the Indemnified Holder controlled by
such controlling person) shall promptly notify the Company in
writing (provided that the failure to give such notice shall not
relieve the Company of its obligations pursuant to this
Agreement, except to the extent the Company or any Subsidiary is
materially prejudiced by such failure). In case any such action
or proceeding shall be brought or asserted against any of the
Indemnified Holders and such Indemnified Holder shall notify the
Company of the commencement thereof, the Company shall be
entitled to participate therein and, to the extent it shall wish,
to assume the defense thereof, with counsel reasonably
satisfactory to such Indemnified Holder. Such Indemnified Holder
shall have the right to employ its own counsel in any such action
and the fees and expenses of such counsel shall be paid, as
incurred, by such Indemnified Holder, unless (i) the Company has
failed promptly to assume the defense and employ counsel
reasonably satisfactory to such Indemnified Holder, (ii) the
Company has authorized the employment of counsel for the
Indemnified Holder at the expense of the Company, or (iii) the
named parties to any such action or proceeding (including any
impleaded parties) include such Indemnified Holder and the
Company and such Indemnified Holder shall have been advised by
counsel that it has reasonably concluded that a conflict of
interest may exist between the Company and such Indemnified
Holder in the conduct of the defense of such action or
proceeding. In the case of each of clause (i), (ii), or
(iii) above, the Company shall pay, as incurred, the fees and
expenses of such counsel, regardless of whether it is ultimately
determined that an Indemnified Holder is not entitled to
indemnification hereunder. The Company shall not, in connection
with any one such action or proceeding or separate but
substantially similar or related actions or proceedings in the
same jurisdiction arising out of the same general allegations or
circumstances, be liable for the reasonable fees and expenses
of more than one separate firm of attorneys (in addition to any
local counsel) at any time for such Indemnified Holders, which
firm shall be designated by the Holders of a majority in
principal amount of Transfer Restricted Securities involved in
such action or proceeding. The Company shall be liable for any
settlement of any such action or proceeding effected with the
<PAGE>
Company's prior written consent, which consent shall not be
withheld unreasonably, and the Company agrees to indemnify and
hold harmless each Indemnified Holder from and against any loss,
claim, damage, liability or expense by reason of any settlement
of any action effected with the written consent of the Company.
The Company shall not, without the prior written consent of each
Indemnified Holder, settle or compromise or consent to the entry
of judgment in or otherwise seek to terminate any pending or
threatened action, claim, litigation or proceeding in respect of
which indemnification or contribution may be sought hereunder
(whether or not any Indemnified Holder is a party thereto),
unless such settlement, compromise, consent or termination
includes an unconditional release of each Indemnified Holder from
all liability arising out of such action, claim, litigation or
proceeding.
(b) Each Holder of Transfer Restricted Securities
agrees, severally and not jointly, to indemnify and hold harmless
the Company, and its respective directors, officers, and any
person controlling (within the meaning of Section 15 of the Act
or Section 20 of the Exchange Act) the Company, and the
respective officers, directors, partners, employees,
representatives and agents of each such person, to the same
extent as the foregoing indemnity from the Company to each of the
Indemnified Holders, but only with respect to claims and actions
based on information relating to such Holder furnished in writing
by such Holder expressly for use in any Registration Statement.
In case any action or proceeding shall be brought against the
Company or its directors or officers or any such controlling
person in respect of which indemnity may be sought against a
Holder of Transfer Restricted Securities, such Holder shall have
the rights and duties given the Company, and the Company, such
directors or officers or such controlling person shall have the
rights and duties given to each Holder by the preceding
paragraph. In no event shall any Holder be liable or responsible
for any amount in excess of the amount by which the total amount
received by such Holder with respect to its sale of Transfer
Restricted Securities pursuant to a Registration Statement
exceeds the sum of (i) the amount paid by such Holder for such
Transfer Restricted Securities and (ii) the amount of any damages
which such Holder has otherwise been required to pay by reason of
such untrue or alleged untrue statement or omission or alleged
omission.
(c) If the indemnification provided for in this
Section 8 is unavailable to an indemnified party under Section
8(a) or Section 8(b) hereof (other than by reason of exceptions
<PAGE>
provided in those Sections) in respect of any losses, claims,
damages, liabilities or expenses referred to therein, then each
applicable indemnifying party, in lieu of indemnifying such
indemnified party, shall contribute to the amount paid or payable
by such indemnified party as a result of such losses, claims,
damages, liabilities or expenses in such proportion as is
appropriate to reflect the relative benefits received by the
Company, on the one hand, and the Holders, on the other hand,
from their sale of Transfer Restricted Securities or if such
allocation is not permitted by applicable law, the relative fault
of the Company, on the one hand, and of the Indemnified Holder,
on the other hand, in connection with the statements or omissions
which resulted in such losses, claims, damages, liabilities or
expenses, as well as any other relevant equitable considerations.
The relative fault of the Company, on the one hand, and of the
Indemnified Holder, on the other hand, shall be determined by
reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged
omission to state a material fact relates to information
supplied by the Company or by the Indemnified Holder and the
parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission.
The Company and each Holder of Transfer Restricted
Securities agree that it would not be just and equitable if
contribution pursuant to this Section 8(c) were determined by pro
rata allocation (even if the Holders were treated as one entity
for such purpose) or by any other method of allocation which does
not take account of the equitable considerations referred to in
the immediately preceding paragraph. The amount paid or payable
by an indemnified party as a result of the losses, claims,
damages, liabilities or expenses referred to in the immediately
preceding paragraph shall be deemed to include, subject to the
limitations set forth above, any legal or other expenses
reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim.
Notwithstanding the provisions of this Section 8, no Holder or
its related Indemnified Holders shall be required to contribute,
in the aggregate, any amount in excess of the amount by which the
total received by such Holder with respect to the sale of its
Transfer Restricted Securities pursuant to a Registration
Statement exceeds the sum of (A) the amount paid by such Holder
for such Transfer Restricted Securities and (B) the amount of any
damages which such Holder has otherwise been required to pay by
reason of such untrue or alleged untrue statement or omission or
alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the
<PAGE>
Act) shall be entitled to contribution from any person who was
not guilty of such fraudulent misrepresentation. The Holders'
obligations to contribute pursuant to this Section 8(c) are
several in proportion to the respective principal amount of
Series C Notes held by each of the Holders hereunder and not
joint.
SECTION 9. RULE 144A
The Company hereby agrees with each Holder, for so long
as any Transfer Restricted Securities remain outstanding and
during any period in which the Company is not subject to Section
13 or 15(d) of the Securities Exchange Act, to make available,
upon request of any Holder of Transfer Restricted Securities, to
any Holder or beneficial owner of Transfer Restricted Securities
in connection with any sale thereof and any prospective purchaser
of such Transfer Restricted Securities designated by such Holder
or beneficial owner, the information required by Rule 144A(d)(4)
under the Act in order to permit resales of such Transfer
Restricted Securities pursuant to Rule 144A.
SECTION 10. UNDERWRITTEN REGISTRATIONS
No Holder may participate in any Underwritten
Registration hereunder unless such Holder (a) agrees to sell such
Holder's Transfer Restricted Securities on the basis provided in
customary underwriting arrangements entered into in connection
therewith and (b) completes and executes all reasonable
questionnaires, powers of attorney, and other documents required
under the terms of such underwriting arrangements.
SECTION 11. SELECTION OF UNDERWRITERS
For any Underwritten Offering, the investment banker or
investment bankers and manager or managers for any Underwritten
Offering that will administer such offering will be selected by
the Holders of a majority in aggregate principal amount of the
Transfer Restricted Securities included in such offering. Such
investment bankers and managers are referred to herein as the
"underwriters."
SECTION 12. MISCELLANEOUS
(a) Remedies. Each Holder, in addition to being
entitled to exercise all rights provided herein, in the
Indenture, the Purchase Agreement or granted by law, including
recovery of liquidated or other damages, will be entitled to
<PAGE>
specific performance of its rights under this Agreement. The
Company agrees that monetary damages would not be adequate
compensation for any loss incurred by reason of a breach by them
of the provisions of this Agreement and hereby agrees to waive
the defense in any action for specific performance that a remedy
at law would be adequate.
(b) No Inconsistent Agreements. The Company will not,
on or after the date of this Agreement, enter into any agreement
with respect to its securities that is inconsistent with the
rights granted to the Holders in this Agreement or otherwise
conflicts with the provisions hereof. The Company has not
previously entered into any agreement granting any registration
rights pursuant to which the holders of such rights have the
right to demand or request that the Company register the
securities held by them as a result of the filing of any
Registration Statement required to be filed hereunder. The
rights granted to the Holders hereunder do not in any way
conflict with and are not inconsistent with the rights granted to
the holders of the Company's securities under any agreement in
effect on the date hereof.
(c) Adjustments Affecting the Notes. The Company will
not take any action, or voluntarily permit any change to occur,
with respect to the Notes that would materially and adversely
affect the ability of the Holders to Consummate any Exchange
Offer.
(d) Amendments and Waivers. The provisions of this
Agreement may not be amended, modified or supplemented, and
waivers or consents to or departures from the provisions
hereof may not be given unless (i) in the case of Section 5
hereof and this Section 12(d)(i), the Company has obtained the
written consent of Holders of all outstanding Transfer Restricted
Securities and (ii) in the case of all other provisions hereof,
the Company has obtained the written consent of Holders of a
majority of the outstanding principal amount of Transfer
Restricted Securities. Notwithstanding the foregoing, a waiver
or consent to departure from the provisions hereof that relates
exclusively to the rights of Holders whose securities are being
tendered pursuant to the Exchange Offer and that does not affect
directly or indirectly the rights of other Holders whose
securities are not being tendered pursuant to such Exchange Offer
may be given by the Holders of a majority of the outstanding
principal amount of Transfer Restricted Securities subject to
such Exchange Offer. The Company will promptly furnish to the
Trustee under the Indenture a copy of any amendment, modification
or supplement to this Agreement.
<PAGE>
(e) Notices. All notices and other communications
provided for or permitted hereunder shall be made in writing by
hand-delivery, first-class mail (registered or certified, return
receipt requested), telex, telecopier, or air courier
guaranteeing overnight delivery:
(i) if to a Holder, at the address set forth on
the records of the Registrar under the Indenture, with a
copy to the Registrar under the Indenture; and
(ii) if to the Company:
French Fragrances, Inc.
14100 N.W. 60th Avenue
Miami Lakes, Florida 33014
Telecopier No.: (305) 818-8020
Attention: Oscar E. Marina, Esq.
With a copy to:
Steel Hector & Davis LLP
200 South Biscayne Boulevard
Suite 4000
Miami, Florida 33131-2398
Telecopier No.: (305) 577-7001
Attention: Beatriz Llorens Koltis, Esq.
All such notices and communications shall be deemed to
have been duly given: at the time delivered by hand, if
personally delivered; five Business Days after being deposited in
the mail, postage prepaid, if mailed; when receipt is
acknowledged, if telecopied; and on the next business day, if
timely delivered to an air courier guaranteeing overnight
delivery.
Copies of all such notices, demands or other
communications shall be concurrently delivered by the Person
giving the same to the Trustee at the address specified in the
Indenture.
(f) Successors and Assigns. This Agreement shall
inure to the benefit of and be binding upon the successors and
assigns of each of the parties, including without limitation and
without the need for an express assignment, subsequent Holders of
Transfer Restricted Securities; provided, however, that this
Agreement shall not inure to the benefit of or be binding
<PAGE>
upon a successor or assign of a Holder unless and to the extent
such successor or assign acquired Transfer Restricted Securities
directly from such Holder.
(g) Counterparts. This Agreement may be executed in
any number of counterparts and by the parties hereto in separate
counterparts, each of which when so executed shall be deemed to
be an original and all of which taken together shall constitute
one and the same agreement.
(h) Headings. The headings in this Agreement are for
convenience of reference only and shall not limit or otherwise
affect the meaning hereof.
(i) Governing Law. THIS AGREEMENT SHALL BE GOVERNED
BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW
YORK, WITHOUT REGARD TO THE CONFLICT OF LAWS RULES THEREOF.
(j) Severability. In the event that any one or more
of the provisions contained herein, or the application thereof in
any circumstance, is held invalid, illegal or unenforceable, the
validity, legality and enforceability of any such provision in
every other respect and of the remaining provisions contained
herein shall not be affected or impaired thereby.
(k) Entire Agreement. This Agreement is intended by
the parties as a final expression of their agreement and intended
to be a complete and exclusive statement of the agreement and
understanding of the parties hereto in respect of the subject
matter contained herein. There are no restrictions, promises,
warranties or undertakings, other than those set forth or
referred to herein with respect to the registration rights
granted with respect to the Transfer Restricted Securities. This
Agreement supersedes all prior agreements and understandings
between the parties with respect to such subject matter.
<PAGE>
IN WITNESS WHEREOF, the parties have executed this
Agreement as of the date first written above.
FRENCH FRAGRANCES, INC.
By: /s/ WILLIAM J. MUELLER
------------------------
Name: William J. Mueller
Title: Vice President - Operations,
Chief Financial Officer
and Treasurer
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
By: /s/ William J.R. Wilson
--------------------------
Name: William J.R. Wilson
Title: Vice President
<PAGE>
EXHIBIT B
EMPLOYEE PENSION AND WELFARE BENEFIT PLANS
------------------------------------------
Employee Pension Plans: None
Welfare Benefit Plans: The Company's employees are leased
from The Vincam Group, Inc. which
provides the Company's employees
with a health and dental insurance
plan and a life insurance plan
through Prudential, and the Company
maintains a separate disability
plan through UNUM. The Company
also maintains two stock option
plans (the 1995 Stock Option Plan
and the Non-employee Directors
Stock Plan).
<TABLE>
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
<CAPTION>
Fiscal Seven Months Seven Months Twelve Months
Year Ended Ended Ended Ended
June 30, January 31, January 31, January 31,
1994 1994 1995 1995
----------- ------------ ------------ -------------
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
Earnings, as defined:
Net income $1,541,877 $ 990,146 $3,982,014 $4,533,764
Fixed charges,
as below 1,546,240 834,722 1,413,636 2,125,153
---------- ---------- ---------- ----------
Total earnings,
as defined $3,088,117 $1,824,868 $5,395,650 $6,658,917
========== ========== ========== ==========
Fixed charges,
as defined:
Interest expense $1,546,240 $ 834,722 $1,413,636 $2,125,153
---------- ---------- ---------- ----------
Total fixed charges,
as defined $1,546,240 $ 834,722 $1,413,636 $2,125,153
========== ========== ========== ==========
Ratio of earnings to
fixed charges 2.00 2.19 3.82 3.13
========== ========== ========== ==========
</TABLE>
<PAGE>
<PAGE>
(RESTUBBED TABLE CONTINUED FROM ABOVE)
<TABLE>
<CAPTION>
Year Ended
January 31, April 30,
1996 1997 1998 1998
-------------------------------------- ---------------
<S> <C> <C> <C> <C>
Earnings, as defined:
Net income $4,937,809 $12,900,095 $19,763,795 $ 486,999
Fixed charges, as
defined below 4,517,576 6,852,612 12,390,622 3,563,598
---------- ----------- ----------- ----------
Total earnings, as defined $9,455,385 $19,752,707 $32,154,417 $4,050,597
========== =========== =========== ==========
Fixed charges, as defined:
Interest expense $4,157,576 $ 6,852,612 $12,390,622 $3,566,005
Amortization of bond
premium -- -- -- (2,407)
---------- ----------- ----------- ----------
Total fixed charges,
as defined $4,157,576 $ 6,852,612 $12,390,622 $3,563,598
========== =========== =========== ==========
Ratio of earnings to
fixed charges 2.19 2.88 2.60 1.14
========== =========== =========== ==========
</TABLE>
EXHIBIT 23.1
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Registration
Statement of French Fragrances, Inc. on Form S-4 of our report
dated March 31, 1998, appearing in the Annual Report on Form 10-K
of French Fragrances, Inc. for the year ended January 31, 1998
and to the reference to us under the heading "Experts" in the
Prospectus which is a part of this Registration Statement.
/s/ Deloitte & Touche LLP
DELOITTE & TOUCHE LLP
Miami, Florida
June 22, 1998
EXHIBIT 23.3
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this
Registration Statement of French Fragrances, Inc. on Form S-4 of
our report dated March 11, 1998 on our audit of the financial
statements of J.P. Fragrances, Inc. as of and for the year ended
December 31, 1997 included in the Company's Current Report
on Form 8-K, dated March 31, 1998.
We also consent to the reference to us under the heading
"Experts" in the Prospectus which is a part of this Registration
Statement.
/s/ Richard A. Eisner & Company, LLP
RICHARD A. EISNER & COMPANY, LLP
New York, New York
June 22, 1998
EXHIBIT 25.1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------
FORM T-1
STATEMENT OF ELIGIBILITY UNDER THE TRUST
INDENTURE ACT OF 1939 OF A CORPORATION
DESIGNATED TO ACT AS TRUSTEE
----------
CHECK IF AN APPLICATION TO DETERMINE
ELIGIBILITY OF A TRUSTEE PURSUANT TO
SECTION 305(b)
----------
MARINE MIDLAND BANK
(Exact name of trustee as specified in its charter)
New York 16-1057879
(Jurisdiction of incorporation (I.R.S. Employer
or organization if not a U.S. Identification No.)
national bank)
140 Broadway, New York, N.Y. 10005-1180
(212) 658-1000 (Zip Code)
(Address of principal executive offices)
Warren L. Tischler, SVP
Marine Midland Bank
140 Broadway
New York, New York 10005-1180
Telephone: (212) 658-1792
(Name, address and telephone number of agent for service)
FRENCH FRAGRANCES, INC.
(Exact name of obligor as specified in its charter)
Florida 59-0914138
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
14100 N.W. 60th Avenue
Miami, Florida 33014
(305) 818-8000 (Zip Code)
(Address of principal executive offices)
10-3/8 % SENIOR NOTES DUE 2007, SERIES D
(Title of Indenture Securities)
<PAGE>
General
Item 1. General Information.
Furnish the following information as to the trustee:
(a) Name and address of each examining or supervisory
authority to which it is subject.
State of New York Banking Department.
Federal Deposit Insurance Corporation,
Washington, D.C.
Board of Governors of the Federal Reserve System,
Washington, D.C.
(b) Whether it is authorized to exercise corporate trust
powers.
Yes.
Item 2. Affiliations with Obligor.
If the obligor is an affiliate of the trustee, describe
each such affiliation.
None
Item 16. List of Exhibits.
Exhibit
- -------
T1A(i) * - Copy of the Organization
Certificate of
Marine Midland Bank.
T1A(ii) * - Certificate of the State of
New York Banking Department
dated December 31, 1993 as
to the authority of Marine
Midland Bank to commence
business.
T1A(iii) - Not applicable.
<PAGE>
T1A(iv) * - Copy of the existing By-Laws
of Marine Midland Bank as
adopted on January 20, 1994.
T1A(v) - Not applicable.
T1A(vi) * - Consent of Marine Midland
Bank required by Section
321(b) of the Trust
Indenture Act of 1939.
T1A(vii) - Copy of the latest report of
condition of the trustee
(December 31, 1997),
published pursuant to law or
the requirement of its
supervisory or examining
authority.
T1A(viii) - Not applicable.
T1A(ix) - Not applicable.
* Exhibits previously filed with the Securities and
Exchange Commission with Registration No. 33-53693 and
incorporated herein by reference thereto.
<PAGE>
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939,
the Trustee, Marine Midland Bank, a banking corporation and trust
company organized under the laws of the State of New York, has
duly caused this statement of eligibility to be signed on its
behalf by the undersigned, thereunto duly authorized, all in the
City of New York and State of New York on the 8th day of June,
1998.
MARINE MIDLAND BANK
By: /s/ Frank J. Godino
-------------------
Frank J. Godino
Vice President
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT T1A (VII)
Board of Governors of the
Federal Reserve System
OMB Number: 7100-0036
Federal Deposit
Insurance Corporation
OMB Number: 3064-0052
Office of the Comptroller
of the Currency
OMB Number: 1557-0081
FEDERAL FINANCIAL INSTITUTIONS EXAMINATION COUNCIL Expires March 31, 1999
- --------------------------------------------------------------------------------------
Please refer to page 1,
Table of Contents, for
the required disclosure
of estimated burden.
- --------------------------------------------------------------------------------------
CONSOLIDATED REPORTS OF CONDITION AND INCOME FOR A BANK WITH DOMESTIC AND FOREIGN
OFFICES--FFIEC 031
<S> <C>
REPORT AT THE CLOSE OF BUSINESS DECEMBER 31,
1997 (971231)
This report is required by law; 12 U.S.C. (RCRI 9999)
ss.324 (State member banks); 12 U.S.C. This report form is to be filed
ss.1817 (State nonmember banks); and 12 by banks with branches and
U.S.C. ss.161 (National Banks). consolidated subsidiaries in
territories and possessions,
Edge or Agreement subsidiaries,
foreign branches, consolidated
foreign subsidiaries, or
International Banking Facilities.
NOTE: The Reports of Condition and Income The Reports of Condition and
must be signed by an authorized officer and Income are to be prepared in
the Report of Condition must be attested to accordance with Federal regulatory
by not less than two directors (trustees) authority instructions.
for State nonmember banks and three directors
for State member and National Banks. We, the undersigned directors
(trustees), attest to the
I, GERALD A. RONNING, EXECUTIVE VICE PRESIDENT correctness of this Report of
& CONTROLLER Condition (including the supporting
-------------------------------------------- schedules) and declare that it has
Name and Title of Officer Authorized to Sign been examined by us and to the best
Report of our knowledge and belief has
been prepared in conformance with
of the named bank do hereby declare that these the instructions issued by the
Reports of Condition and Income (including the appropriate Federal regulatory
supporting schedules) have been prepared in authority and is true and correct.
conformance with the instructions issued by
the appropriate Federal regulatory authority
and are true to the best of my knowledge and
believe.
<PAGE>
<S> <C>
/s/ MALCOLM BURNETT
----------------------------------
/s/ GERALD A. RONNING Director (Trustee)
- ----------------------------------------------
Signature of Officer Authorized to Sign Report
/s/ BERNARD J. KENNEDY
1/26/98 ----------------------------------
- ---------------------------------------------- Director (Trustee)
Date of Signature
/s/ SAL H. ALFIERO
-----------------------------------
Director (Trustee)
SUBMISSION OF REPORTS
Each Bank must prepare its Reports of Condition (b) in hard-copy (paper) form and
and Income either: arrange for another party to
convert the paper report to
(a) in automated formand then file the computer automated for. That party (if
data file directly with the banking other than EDS) must transmit
agencies' collection agent, Electronic the bank's computer data file
Data System Corporation (EDS), by modem or to EDS.
computer diskette; or
To fulfill the signature and
attestation requirement for the
Reports of Condition and Income for
this report date, attach this
signature page to the hard-copy of
the completed report that the bank
places in its files.
- ---------------------------------------------------------------------------------------
FDIC Certificate Number [0][0][5][8][9]
(RCRI 9030)
/TABLE
<PAGE>
REPORT OF CONDITION
Consolidating domestic and foreign subsidiaries of the
Marine Midland Bank of Buffalo
Name of Bank City
in the state of New York, at the close of business
December 31, 1997
ASSETS
Thousands
of dollars
Cash and balances due from depository
institutions:
Noninterest-bearing balances
currency and coin.................................... $ 928,754
Interest-bearing balances ........................... 2,571,410
Held-to-maturity securities.......................... 0
Available-for-sale securities........................ 3,968,837
Federal funds sold and securities purchased
under agreements to resell........................... 497,992
Loans and lease financing receivables:
Loans and leases net of unearned
income............................................... 21,550,115
LESS: Allowance for loan and lease
losses............................................... 407,355
LESS: Allocated transfer risk reserve................ 0
Loans and lease, net of unearned
income, allowance, and reserve....................... 21,142,760
Trading assets....................................... 979,454
Premises and fixed assets (including
capitalized leases).................................. 225,646
Other real estate owned................................. 8,092
Investments in unconsolidated
subsidiaries and associated companies................... 0
Customers' liability to this bank on
acceptances outstanding................................. 24,795
Intangible assets....................................... 479,713
Other assets............................................ 488,168
Total assets............................................ 31,315,621
<PAGE>
LIABILITIES
Deposits:
In domestic offices.................................. 20,072,724
Noninterest-bearing.................................. 4,090,858
Interest-bearing..................................... 15,981,866
In foreign offices, Edge, and Agreement
subsidiaries, and IBFs.................................. 3,834,827
Noninterest-bearing.................................. 0
Interest-bearing..................................... 3,834,827
Federal funds purchased and securities sold
under agreements to repurchase....................... 2,007,482
Demand notes issued to the U.S. Treasury................ 192,186
Trading Liabilities..................................... 215,748
Other borrowed money:
With a remaining maturity of one year
or less.............................................. 1,402,449
With a remaining maturity of more than
one year through three years......................... 63,601
With a remaining maturity of more than
three years.......................................... 61,707
Bank's liability on acceptances
executed and outstanding................................ 24,795
Subordinated notes and debentures....................... 497,774
Other liabilities....................................... 719,423
Total liabilities....................................... 29,092,716
EQUITY CAPITAL
Perpetual preferred stock and related
surplus................................................. 0
Common Stock............................................ 205,000
Surplus................................................. 1,984,326
Undivided profits and capital reserves.................. 8,678
Net unrealized holding gains (losses)
on available-for-sale securities........................ 24,901
Cumulative foreign currency translation
adjustments............................................. 0
Total equity capital.................................... 2,222,905
Total liabilities, limited-life
preferred stock, and equity capital..................... 31,315,621
EXHIBIT 99.1
LETTER OF TRANSMITTAL
FRENCH FRAGRANCES, INC.
OFFER TO EXCHANGE
10-3/8% SENIOR NOTES DUE 2007, SERIES D
FOR ANY AND ALL OUTSTANDING
10-3/8% SENIOR NOTES DUE 2007, SERIES C
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+ THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON _____, +
+ 1998 (THE "EXPIRATION DATE") UNLESS EXTENDED BY FRENCH FRAGRANCES, INC. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
EXCHANGE AGENT:
MARINE MIDLAND BANK
BY HAND/OVERNIGHT COURIER: BY MAIL:
Marine Midland Bank (Insured or registered recommended)
140 Broadway, Level A Marine Midland Bank
New York, New York 10005-1180 140 Broadway, Level A
Attention: Paulette Shaw New York, New York 10005-1180
Attention: Paulette Shaw
By Facsimile:
(212) 658-2292
(For Eligible Institutions Only)
By Telephone:
(212) 658-5931
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET
FORTH ABOVE OR TRANSMISSION VIA A FACSIMILE TRANSMISSION TO A NUMBER OTHER
THAN AS SET FORTH ABOVE WILL NOT CONSTITUTE A VALID DELIVERY.
The undersigned acknowledges receipt of the Prospectus dated __________,
1998 (the "Prospectus") of French Fragrances, Inc. (the "Company"), and this
Letter of Transmittal (the "Letter of Transmittal"), which together describe
the Company's offer (the "Exchange Offer") to exchange $1,000 in principal
amount of its new 10 % Senior Notes due 2007, Series D (the "Exchange Notes")
for each $1,000 in principal amount of outstanding 10 % Senior Notes due 2007,
Series C (the "Initial Notes"). The terms of the Exchange Notes are identical
in all material respects (including principal amount, interest rate and
maturity) to the terms of the Initial Notes for which they may be exchanged
pursuant to the Exchange Offer, except that the Exchange Notes are freely
transferable by holders thereof (except as provided herein or in the
Prospectus) and are not subject to any covenant regarding registration under
the Securities Act of 1933, as amended (the "Securities Act").
The undersigned has checked the appropriate boxes below and signed this
Letter of Transmittal to indicate the action the undersigned desires to take
with respect to the Exchange Offer.
PLEASE READ THE ENTIRE LETTER OF TRANSMITTAL AND THE PROSPECTUS
CAREFULLY BEFORE CHECKING ANY BOX BELOW
YOUR BANK OR BROKER CAN ASSIST YOU IN COMPLETING THIS FORM. THE INSTRUCTIONS
INCLUDED WITH THIS LETTER OF TRANSMITTAL MUST BE FOLLOWED. QUESTIONS AND
REQUESTS FOR ASSISTANCE OR FOR ADDITIONAL COPIES OF THE PROSPECTUS AND THIS
LETTER OF TRANSMITTAL MAY BE DIRECTED TO THE EXCHANGE AGENT.
<PAGE>
List below the Initial Notes to which this Letter of Transmittal relates.
If the space provided below is inadequate, the Certificate Numbers and
Principal Amounts should be listed on a separate signed schedule affixed
hereto.
- ------------------------------------------------------------------------------
DESCRIPTION OF INITIAL NOTES TENDERED HEREWITH
- ------------------------------------------------------------------------------
AGGREGATE
PRINCIPAL
NAME(S) AND AMOUNT
ADDRESS(ES) OF REPRESENTED PRINCIPAL
REGISTERED HOLDER(S) CERTIFICATE BY INITIAL AMOUNT
(PLEASE FILL IN) NUMBER NOTES* TENDERED**
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
Total
- ------------------------------------------------------------------------------
* Need not be completed by book-entry holders.
** Unless otherwise indicated, the holder will be deemed to have tendered
the full aggregate principal amount represented by such Initial Notes.
See instruction 2.
<PAGE>
This Letter of Transmittal is to be used either if certificates
representing Initial Notes are to be forwarded herewith or if delivery of
Initial Notes is to be made by book-entry transfer to an account maintained by
the Exchange Agent at The Depository Trust Company (the "Book-Entry Transfer
Facility"), pursuant to the procedures set forth in "The Exchange Offer
Procedures for Tendering Initial Notes" in the Prospectus. Delivery of
documents to the Book-Entry Transfer Facility does not constitute delivery to
the Exchange Agent.
Holders whose Initial Notes are not immediately available or who cannot
deliver their Initial Notes and all other documents required hereby to the
Exchange Agent on or prior to the Expiration Date must tender their Initial
Notes according to the guaranteed delivery procedure set forth in the
Prospectus under the caption "The Exchange Offer Procedures for Tendering
Initial Notes."
[ ] CHECK HERE IF TENDERED INITIAL NOTES ARE BEING DELIVERED BY BOOK-ENTRY
TRANSFER MADE TO AN ACCOUNT MAINTAINED BY THE EXCHANGE AGENT WITH THE
BOOK-ENTRY TRANSFER FACILITY AND COMPLETE THE FOLLOWING:
Name of Tendering Institution_________________________________________
The Depository Trust Company
Account Number________________________________________________________
Transaction Code Number_______________________________________________
[ ] CHECK HERE IF TENDERED INITIAL NOTES ARE BEING DELIVERED PURSUANT TO A
NOTICE OF GUARANTEED DELIVERY AND COMPLETE THE FOLLOWING:
Name of Registered Holder(s)__________________________________________
Name of Eligible Institution that Guaranteed Delivery_________________
Date of Execution of Notice of Guaranteed Delivery____________________
If Delivered by Book-Entry Transfer:__________________________________
Account Number________________________________________________________
[ ] CHECK HERE IF EXCHANGE NOTES ARE TO BE DELIVERED TO PERSON OTHER THAN
PERSON SIGNING THE LETTER OF TRANSMITTAL:
Name__________________________________________________________________
(Please Print)
Address_______________________________________________________________
(Including Zip Code)
[ ] CHECK HERE IF EXCHANGE NOTES ARE TO BE DELIVERED TO ADDRESS DIFFERENT
FROM THAT LISTED ELSEWHERE IN THIS LETTER OF TRANSMITTAL:
Address_______________________________________________________________
(Including Zip Code)
[ ] CHECK HERE IF YOU ARE A BROKER-DEALER AND WISH TO RECEIVE 10 ADDITIONAL
COPIES OF THIS PROSPECTUS AND 10 COPIES OF ANY AMENDMENTS OR SUPPLEMENTS
THERETO:
Name__________________________________________________________________
Address_______________________________________________________________
If the undersigned is not a broker-dealer, the undersigned represents
that it is not engaged in, and does not intend to engage in, a distribution of
Exchange Notes. If the undersigned is a broker-dealer that will receive
Exchange Notes for its own account in exchange for Initial Notes that were
acquired as result of market-making activities or other trading activities
(other than Initial Notes acquired directly from the Company), it acknowledges
that it will deliver a prospectus in connection with any resale of such
Exchange Notes; however, by so acknowledging and by delivering a prospectus,
the undersigned will not be deemed to admit that it is an "underwriter" within
<PAGE>
the meaning of the Securities Act. Any holder who is an "affiliate" of the
Company or who has an arrangement or understanding with respect to the
distribution of the Exchange Notes to be acquired pursuant to the Exchange
Offer, or any broker-dealer who purchased Initial Notes from the Company to
resell pursuant to Rule 144A under the Securities Act or any other available
exemption under the Securities Act must comply with the registration and
prospectus delivery requirements under the Securities Act.
<PAGE>
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY
Ladies and Gentlemen:
Upon the terms and subject to the conditions of the Exchange Offer, the
undersigned hereby tenders to the Company the above-described principal amount
of Initial Notes indicated above. Subject to, and effective upon, the
acceptance for exchange of the Initial Notes tendered herewith, the
undersigned hereby exchanges, assigns and transfers to, or upon the order of,
the Company all right, title and interest in and to such Initial Notes. The
undersigned hereby irrevocably constitutes and appoints the Exchange Agent the
true and lawful agent and attorney-in-fact of the undersigned (with full
knowledge that said Exchange Agent acts as the agent of the Company in
connection with the Exchange Offer) to cause the Initial Notes to be assigned,
transferred and exchanged. The undersigned represents and warrants that it
has full power and authority to tender, exchange, assign and transfer the
Initial Notes and to acquire Exchange Notes issuable upon the exchange of such
tendered Initial Notes, and that, when the same are accepted for exchange, the
Company will acquire good and unencumbered title to the tendered Initial
Notes, free and clear of all liens, restrictions, charges and encumbrances and
not subject to any adverse claim. The undersigned also warrants that it will,
upon request, execute and deliver any additional documents deemed by the
Exchange Agent or the Company to be necessary or desirable to complete the
exchange, assignment and transfer of tendered Initial Notes or transfer
ownership of such Initial Notes on the account books maintained by the
Book-Entry Transfer Facility. The undersigned further agrees that acceptance
of any and all validly tendered Initial Notes by the Company and the issuance
of Exchange Notes in exchange therefor shall constitute performance in full by
the Company of its obligations under the Registration Rights Agreement (as
defined in the Prospectus) and that the Company shall have no further
obligations or liabilities with respect to provisions thereof that by their
terms terminate or cease to have effectiveness as a result of the making of,
and the acceptance for exchange of all validly tendered Initial Notes pursuant
to, the Exchange Offer.
The Exchange Offer is subject to the absence of certain conditions as set
forth in the Prospectus under the caption "The Exchange Offer Certain
Conditions to the Exchange Offer." The undersigned recognizes that as a
result of these conditions (the occurrence of which may be waived, in whole or
in part, by the Company), as more particularly set forth in the Prospectus,
the Company may not be required to exchange any of the Initial Notes tendered
hereby and, in such event, the Initial Notes not exchanged will be returned to
the undersigned at the address shown above. In addition, the Company may
amend the Exchange Offer at any time prior to the Exchange Date if any of the
conditions set forth under "The Exchange Offer Certain Conditions to the
Exchange Offer" occur. By tendering, each holder of Initial Notes represents
that the Exchange Notes acquired in the exchange will be obtained in the
ordinary course of such holder's business (and not in exchange for Initial
Notes acquired directly from the Company), that such holder has no arrangement
with any person to participate in the distribution of such Exchange Notes,
that such holder is not an "affiliate" of the Company within the meaning of
Rule 405 under the Securities Act and that such holder is not engaged in, and
does not intend to engage in, a distribution of the Exchange Notes. Any
holder of Initial Notes who is an affiliate of the Company, who is a
broker-dealer who purchased Initial Notes from the Company to resell pursuant
to Rule 144A or any other available exemption under the Securities Act, or who
is using the Exchange Offer to participate in a distribution of the Exchange
<PAGE>
Notes (i) cannot rely on the position of the staff of the Securities and
Exchange Commission (the "Commission") enunciated in its interpretive letter
with respect to Exxon Capital Holdings Corporation (available May 13, 1988) or
similar letters and (ii) must comply with the registration and prospectus
requirements of the Securities Act in connection with a secondary resale
transaction.
If the undersigned is not a broker-dealer, the undersigned represents
that it is not engaged in, and does not intend to engage in, a distribution of
Exchange Notes and has no arrangement or understanding to participate in a
distribution of Exchange Notes. If the undersigned is a broker-dealer that
will receive Exchange Notes for its own account in exchange for Initial Notes
that were acquired as a result of market-making activities or other trading
activities (other than Initial Notes acquired directly from the Company), it
acknowledges that it will deliver a prospectus in connection with any resale
of such Exchange Notes, however, by so acknowledging and by delivering a
prospectus, the undersigned will not be deemed to admit that it is an
"underwriter" within the meaning of the Securities Act.
All authority herein conferred or agreed to be conferred shall survive
the death or incapacity of the undersigned and every obligation of the
undersigned hereunder shall be binding upon the heirs, legal representatives,
successors, assigns, executors and administrators of the undersigned.
Tendered Initial Notes may be withdrawn at any time prior to the Expiration
Date in accordance with the terms of this Letter of Transmittal. See
Instruction 2.
Certificates for all Exchange Notes delivered in exchange for tendered
Initial Notes and any Initial Notes delivered herewith but not exchanged, and
registered in the name of the undersigned, shall be delivered to the
undersigned at the address shown below the signature of the undersigned.
TENDERING HOLDER(S) SIGN HERE
(Complete accompanying substitute Form W-9)
______________________________________________________________________________
______________________________________________________________________________
Signature(s) of Holder(s)
Dated_____________________ Area Code and Telephone Number______________
(MUST BE SIGNED BY REGISTERED HOLDER(S) EXACTLY AS NAME(S) APPEAR(S) ON
CERTIFICATE(S) FOR INITIAL NOTES. IF SIGNATURE IS BY A TRUSTEE, EXECUTOR,
ADMINISTRATOR, GUARDIAN, ATTORNEY-IN-FACT, OFFICER OF A CORPORATION OR OTHER
PERSON ACTING IN A FIDUCIARY OR REPRESENTATIVE CAPACITY, PLEASE SET FORTH THE
FULL TITLE OF SUCH PERSON.) SEE INSTRUCTION 3.
Name(s)_______________________________________________________________________
______________________________________________________________________________
(Please Print)
Capacity (full title)_________________________________________________________
Address_______________________________________________________________________
(Including Zip Code)
Area Code and Telephone No.___________________________________________________
Taxpayer Identification No.___________________________________________________
<PAGE>
GUARANTEE OF SIGNATURE(S)
(IF REQUIRED-SEE INSTRUCTIONS 1 AND 3)
Authorized Signature__________________________________________________________
Name__________________________________________________________________________
Title_________________________________________________________________________
Address_______________________________________________________________________
Name of Firm__________________________________________________________________
Area Code and Telephone No.___________________________________________________
Dated_________________________________________________________________________
<PAGE>
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE EXCHANGE OFFER
1. DELIVERY OF THIS LETTER OF TRANSMITTAL AND CERTIFICATES.
A holder of Initial Notes may tender the same by (i) properly completing
and signing this Letter of Transmittal or a facsimile hereof (all references
in the Prospectus to the Letter of Transmittal shall be deemed to include a
facsimile thereof) and delivering the same, together with the certificate or
certificates representing the Initial Notes being tendered and any required
signature guarantees and any other document required by this Letter of
Transmittal, to the Exchange Agent at its address set forth above on or prior
to the Expiration Date (or complying with the procedure for book-entry
transfer described below) or (ii) complying with the guaranteed delivery
procedures described below.
THE METHOD OF DELIVERY OF THIS LETTER OF TRANSMITTAL, THE INITIAL NOTES
AND ANY OTHER REQUIRED DOCUMENTS IS AT THE ELECTION AND RISK OF THE HOLDER,
AND EXCEPT AS OTHERWISE PROVIDED BELOW, THE DELIVERY WILL BE DEEMED MADE ONLY
WHEN ACTUALLY RECEIVED OR CONFIRMED BY THE EXCHANGE AGENT. IF SUCH DELIVERY
IS BY MAIL, IT IS SUGGESTED THAT REGISTERED MAIL WITH RETURN RECEIPT
REQUESTED, PROPERLY INSURED, BE USED. IN ALL CASES SUFFICIENT TIME SHOULD BE
ALLOWED TO PERMIT TIMELY DELIVERY. NO INITIAL NOTES OR LETTERS OF TRANSMITTAL
SHOULD BE SENT TO THE COMPANY.
If tendered Initial Notes are registered in the name of the signer of the
Letter of Transmittal and the Exchange Notes to be issued in exchange therefor
are to be issued (and any untendered Initial Notes are to be reissued) in the
name of the registered holder (which term, for the purposes described herein,
shall include any participant in The Depository Trust Company (also referred
to as a "Book-Entry Transfer Facility") whose name appears on a security
listing as the owner of Initial Notes), the signature of such signer need not
be guaranteed. In any other case, the tendered Initial Notes must be endorsed
or accompanied by written instruments of transfer in form satisfactory to the
Company and duly executed by the registered holder, and the signature on the
endorsement or instrument of transfer must be guaranteed by a bank, broker,
dealer, credit union, savings association, clearing agency or other
institution (each an "Eligible Institution") that is a member of a recognized
signature guarantee medallion program within the meaning of Rule 17Ad-15 under
the Securities Exchange Act of 1934, as amended. If the Exchange Notes and/or
Initial Notes not exchanged are to be delivered to an address other than that
of the registered holder appearing on the note register for the Initial Notes,
the signature on the Letter of Transmittal must be guaranteed by an Eligible
Institution.
The Exchange Agent will make a request within two business days after the
date of receipt of the Prospectus to establish accounts with respect to the
Initial Notes at the Book-Entry Transfer Facility for the purpose of
facilitating the Exchange Offer, and subject to the establishment thereof, any
financial institution that is a participant in the Book-Entry Transfer
Facility's system may make book-entry delivery of Initial Notes by causing
such Book-Entry Transfer Facility to transfer such Initial Notes into the
Exchange Agent's account with respect to the Initial Notes in accordance with
the Book-Entry Transfer Facility's procedures for such transfer. Although
delivery of Initial Notes may be effected through book-entry transfer into the
Exchange Agent's account at the Book-Entry Transfer Facility, an appropriate
Letter of Transmittal with any required signature guarantee and all other
required documents must in each case be transmitted to and received or
confirmed by the Exchange Agent on or prior to the Expiration Date, or, if the
<PAGE>
guaranteed delivery procedures described below are complied with, within the
time period provided under such procedures.
If a holder desires to tender Initial Notes in the Exchange Offer and
time will not permit a Letter of Transmittal or Initial Notes to reach the
Exchange Agent before the Expiration Date or the procedure for book-entry
transfer cannot be completed on a timely basis, a tender may be effected if
the Exchange Agent has received on or prior to the Expiration Date, a letter,
telegram or facsimile transmission (receipt confirmed by telephone and an
original delivered by guaranteed overnight courier) from an Eligible
Institution setting forth the name and address of the tendering holder, the
names in which the Initial Notes are registered and, if possible, the
certificate numbers of the Initial Notes to be tendered, and stating that the
tender is being made thereby and guaranteeing that within three business days
after the Expiration Date, the Initial Notes in proper form for transfer (or a
confirmation of book-entry transfer of such Initial Notes into the Exchange
Agent's account at the Book-Entry Transfer Facility), will be delivered by
such Eligible Institution together with a properly completed and duly
executed Letter of Transmittal (and any other required documents). Unless
Initial Notes being tendered by the above-described method are deposited with
the Exchange Agent within the time period set forth above (accompanied or
preceded by a properly completed Letter of Transmittal and any other required
documents), the Company may, at its option, reject the tender. Copies of the
notice of guaranteed delivery ("Notice of Guaranteed Delivery") which may be
used by Eligible Institutions for the purposes described in this paragraph are
available from the Exchange Agent.
A tender will be deemed to have been received as of the date when (i) the
tendering holder's properly completed and duly signed Letter of Transmittal
accompanied by the Initial Notes (or a confirmation of book-entry transfer of
such Initial Notes into the Exchange Agent's account at the Book-Entry
Transfer Facility) is received by the Exchange Agent, or (ii) a Notice of
Guaranteed Delivery or letter, telegram or facsimile transmission to similar
effect (as provided above) from an Eligible Institution is received by the
Exchange Agent. Issuances of Exchange Notes in exchange for Initial Notes
tendered pursuant to a Notice of Guaranteed Delivery or letter, telegram or
facsimile transmission to similar effect (as provided above) by an Eligible
Institution will be made only against deposit of the Letter of Transmittal
(and any other required documents) and the tendered Initial Notes.
If the Letter of Transmittal is signed by a person or persons other than
the registered holder or holders of Initial Notes, such Initial Notes must be
endorsed or accompanied by appropriate powers of attorney, in either case
signed exactly as the name or names of the registered holder or holders appear
on the Initial Notes.
No alternative, conditional, irregular or contingent tenders will be
accepted. All tendering holders, by execution of this Letter of Transmittal
(or facsimile thereof), shall waive any right to receive notice of the
acceptance of the Initial Notes for exchange.
2. PARTIAL TENDERS; WITHDRAWALS.
If less than the entire principal amount of Initial Notes evidenced by a
submitted certificate is tendered, the tendering holder should fill in the
principal amount tendered in the box entitled "Principal Amount Tendered." A
newly issued certificate for the principal amount of Initial Notes submitted
but not tendered will be sent to such holder as soon as practicable after the
<PAGE>
Exchange Date. All Initial Notes delivered to the Exchange Agent will be
deemed to have been tendered unless otherwise clearly indicated.
For a withdrawal to be effective, a written notice of withdrawal sent by
telegram, facsimile transmission (receipt confirmed by telephone) or letter
must be received by the Exchange Agent at the address set forth herein prior
to the Expiration Date. Any such notice of withdrawal must (i) specify the
name of the person having tendered the Initial Notes to be withdrawn (the
"Depositor"), (ii) identify the Initial Notes to be withdrawn (including the
certificate number or numbers and principal amount of such Initial Notes),
(iii) specify the principal amount of Initial Notes to be withdrawn, (iv)
include a statement that such holder is withdrawing his election to have such
Initial Notes exchanged, (v) be signed by the holder in the same manner as the
original signature on the Letter of Transmittal by which such Initial Notes
were tendered or as otherwise described above (including any required
signature guarantees) or be accompanied by documents of transfer sufficient to
have the Trustee under the Indenture register the transfer of such Initial
Notes into the name of the person withdrawing the tender and (vi) specify the
name in which any such Initial Notes are to be registered, if different from
that of the Depositor. The Exchange Agent will return the properly withdrawn
Initial Notes promptly following receipt of notice of withdrawal. If Initial
Notes have been tendered pursuant to the procedure for book-entry transfer,
any notice of withdrawal must specify the name and number of the account at
the Book-Entry Transfer Facility to be credited with the withdrawn Initial
Notes or otherwise comply with the Book-Entry Transfer Facility's procedures.
All questions as to the validity of notices of withdrawals, including time of
receipt, will be determined by the Company in its sole discretion and such
determination will be final and binding on all parties.
Any Initial Notes so withdrawn will be deemed not to have been validly
tendered for exchange for purposes of the Exchange Offer. Any Initial Notes
which have been tendered for exchange but which are not exchanged for any
reason will be returned to the holder thereof without cost to such holder (or,
in the case of Initial Notes tendered by book-entry transfer into the Exchange
Agent's account at the Book-Entry Transfer Facility pursuant to the book-entry
transfer procedures described above, such Initial Notes will be credited to an
account with such Book-Entry Transfer Facility specified by the holder) as
soon as practicable after withdrawal, rejection of tender or termination of
the Exchange Offer. Properly withdrawn Initial Notes may be retendered by
following one of the procedures described under the caption "The Exchange
Offer Procedures for Tendering Initial Notes" in the Prospectus at any time on
or prior to the Expiration Date.
3. SIGNATURE ON THIS LETTER OF TRANSMITTAL; WRITTEN INSTRUMENTS AND
ENDORSEMENTS; GUARANTEE OF SIGNATURES.
If this Letter of Transmittal is signed by the registered holder(s) of
the Initial Notes tendered hereby, the signature must correspond with the
name(s) as written on the face of the certificates without alteration,
enlargement or any change whatsoever.
If any of the Initial Notes tendered hereby are owned of record by two or
more joint owners, all such owners must sign this Letter of Transmittal.
If a number of Initial Notes registered in different names are tendered,
it will be necessary to complete, sign and submit as many separate copies of
this Letter of Transmittal as there are different registrations of Initial
Notes.
<PAGE>
When this Letter of Transmittal is signed by the registered holder or
holders (which term, for the purposes described herein, shall include any
participant in the Book-Entry Transfer Facility whose name appears on a
security listing as the owner of the Initial Notes) of Initial Notes listed
and tendered hereby, no endorsements of certificates or separate written
instruments of transfer or exchange are required.
If this Letter of Transmittal is signed by a person other than the
registered holder or holder of the Initial Notes listed, such Initial Notes
must be endorsed or accompanied by separate written instruments of transfer or
exchange in form satisfactory to the Company and duly executed by the
registered holder, in either case signed exactly as the name or names of the
registered holder or holders appear(s) on the Initial Notes.
If this Letter of Transmittal, any certificates or separate written
instruments of transfer or exchange are signed by trustees, executors,
administrators, guardians, attorneys-in-fact, officers of corporations or
others acting in a fiduciary or representative capacity, such persons should
so indicate when signing, and, unless waived by the Company, proper evidence
satisfactory to the Company of their authority so to act must be submitted.
Endorsements on certificates or signatures on separate written
instruments of transfer or exchange required by this Instruction 3 must be
guaranteed by an Eligible Institution.
Signatures on this Letter of Transmittal need not be guaranteed by an
Eligible Institution, provided the Initial Notes are tendered: (i) by a
registered holder of such Initial Notes, for the holder of such Initial Notes;
or (ii) for the account of an Eligible Institution.
4. TRANSFER TAXES.
The Company shall pay all transfer taxes, if any, applicable to the
transfer and exchange of Initial Notes to it or its order pursuant to the
Exchange Offer. If, however, certificates representing Exchange Notes or
Initial Notes for principal amounts not tendered or accepted for exchange are
to be delivered to, or are to be issued in the name of, any person other than
the registered holder of the Initial Notes tendered, or if tendered Initial
Notes are registered in the name of any person other than the person signing
the Letter of Transmittal, or if a transfer tax is imposed for any reason
other than the exchange of Initial Notes pursuant to the Exchange Offer, then
the amount of any such transfer taxes (whether imposed on the registered
holder or any other persons) will be payable by the tendering holder. If
satisfactory evidence of payment of such taxes or exception therefrom is not
submitted herewith the amount of such transfer taxes will be billed directly
to such tendering holder.
Except as provided in this Instruction 4, it will not be necessary for
transfer tax stamps to be affixed to the Initial Notes listed in this Letter
of Transmittal.
5. WAIVER OF CONDITIONS.
The Company reserves the right to waive in its sole discretion, in whole
or in part, any of the conditions to the Exchange Offer set forth in the
Prospectus.
<PAGE>
6. MUTILATED, LOST, STOLEN OR DESTROYED INITIAL NOTES.
Any holder whose Initial Notes have been mutilated, lost, stolen or
destroyed, should contact the Exchange Agent at the address indicated above
for further instructions.
7. SUBSTITUTE FORM W-9.
Each holder of Initial Notes whose Initial Notes are accepted for
exchange (or other payee) is required to provide a correct taxpayer
identification number ("TIN"), generally the holder's Social Security or
federal employer identification number, and certain other information, on
Substitute Form W-9, which is provided under "Important Tax Information"
below, and to certify that the holder (or other payee) is not subject to
backup withholding. Failure to provide the information on the Substitute Form
W-9 may subject the holder (or other payee) to a $50 penalty imposed by the
Internal Revenue Service and 31% federal income tax backup withholding on
payments made in connection with the Exchange Notes. The box in Part 3 of the
Substitute Form W-9 may be checked if the holder (or other payee) has not been
issued a TIN and has applied for a TIN or intends to apply for a TIN in the
near future. If the box in Part 3 is checked and a TIN is not provided
by the time any payment is made in connection with the Exchange Notes, 31% of
all such payments will be withheld until a TIN is provided.
8. REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES.
Questions relating to the procedure for tendering, as well as requests
for additional copies of the Prospectus and this Letter of Transmittal, may
be directed to the Exchange Agent at the address and telephone number set
forth above. In addition, all questions relating to the Exchange Offer, as
well as requests for assistance or additional copies of the Prospectus
and this Letter of Transmittal, may be directed to French Fragrances, Inc.,
14100 N.W. 60th Avenue, Miami Lakes, Florida 33014, Attention: Corporate
Secretary (telephone 305-818-8000).
IMPORTANT: THIS LETTER OF TRANSMITTAL OR A FACSIMILE HEREOF (TOGETHER
WITH CERTIFICATES FOR INITIAL NOTES OR CONFIRMATION OF BOOK-ENTRY TRANSFER AND
ALL OTHER REQUIRED DOCUMENTS) OR A NOTICE OF GUARANTEED DELIVERY MUST BE
RECEIVED BY THE EXCHANGE AGENT ON OR PRIOR TO THE EXPIRATION DATE.
IMPORTANT TAX INFORMATION
Under U.S. Federal income tax law, a holder of Initial Notes whose
Initial Notes are accepted for exchange may be subject to backup withholding
unless the holder provides Marine Midland Bank (as payor) (the "Paying
Agent"), with either (i) such holder's correct taxpayer identification number
("TIN") on Substitute Form W-9 attached hereto, certifying that the TIN
provided on Substitute Form W-9 is correct (or that such holder of Initial
Notes is awaiting a TIN) and that (A) the holder of Initial Notes has not been
notified by the Internal Revenue Service that he or she is subject to backup
withholding as a result of a failure to report all interest or dividends or
(B) the Internal Revenue Service has notified the holder of Initial Notes that
he or she is no longer subject to backup withholding; or (ii) an adequate
basis for exemption from backup withholding. If such holder of Initial Notes
is an individual, the TIN is such holder's social security number. If the
Paying Agent is not provided with the correct taxpayer identification number,
the holder of Initial Notes may be subject to certain penalties imposed by the
Internal Revenue Service.
<PAGE>
Certain holders of Initial Notes (including, among others, all
corporations and certain foreign individuals) are not subject to these backup
withholding and reporting requirements. Exempt holders of Initial Notes
should indicate their exempt status on Substitute Form W-9. In order for a
foreign individual to qualify as an exempt recipient, the holder must submit a
Form W-8, signed under penalties of perjury, attesting to that individual's
exempt status. A Form W-8 can be obtained from the Paying Agent. See the
enclosed "GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER ON
SUBSTITUTE FORM W-9" for more instructions.
If backup withholding applies, the Paying Agent is required to withhold
31% of any such payments made to the holder of Initial Notes or other payee.
Backup withholding is not an additional tax. Rather, the tax liability of
persons subject to backup withholding will be reduced by the amount of tax
withheld. If withholding results in an overpayment of taxes, a refund may be
obtained from the Internal Revenue Service.
The box in Part 3 of the Substitute Form W-9 may be checked if the
surrendering holder of Initial Notes has not been issued a TIN and has applied
for a TIN or intends to apply for a TIN in the near future. If the box in
Part 3 is checked, the holder of Initial Notes or other payee must also
complete the Certificate of Awaiting Taxpayer Identification Number below
in order to avoid backup withholding. Notwithstanding that the box in Part 3
is checked and the Certificate of Awaiting Taxpayer Identification Number is
completed, the Paying Agent will withhold 31% of all payments made prior to
the time a properly certified TIN is provided to the Paying Agent.
The holder of Initial Notes is required to give the Paying Agent the TIN
(e.g., social security number or employer identification number) of the record
owner of the Initial Notes. If the Initial Notes are in more than one name or
are not in the name of the actual owner, consult the enclosed "Guidelines for
Certification of Taxpayer Identification Number on Substitute Form W-9" for
additional guidance on which number to report.
<TABLE><CAPTION>
- ----------------------------------------------------------------------------------------------
PAYOR'S NAME: MARINE MIDLAND BANK, AS PAYING AGENT
- ----------------------------------------------------------------------------------------------
<S> <C> <C>
PART 1-PLEASE PROVIDE Social security number(s) of Employer
YOUR TIN IN THE BOX AT Identification Number(s)
RIGHT AND CERTIFY BY
SUBSTITUTE SIGNING AND DATING BELOW _____________________________________
----------------------------------------------------------------
FORM W-9 PART 2-CERTIFICATION-Under penalties of perjury, I certify that:
Department of the Treasury (1) The number shown on this form is my correct taxpayer
Internal Revenue Service identification number (or I am waiting for a number to be issued
for me), and
(2) I am not subject to backup withholding because (a) I am
exempt from backup withholding, or (b) I have not been notified
Payor's Request for by the Internal Revenue Service ("IRS") that I am subject to
Payor's Request for backup withholding as a result of a failure to report all
Taxpayer Identification interest or dividends, or (c) the IRS has notified me that I am
Number ("TIN") no longer subject to backup withholding.
CERTIFICATE INSTRUCTIONS: You must cross out item (2) above if
you have been notified by the IRS that you are currently subject
to backup withholding because of under reporting interest or
dividends on your tax return.
----------------------------------------------------------------
Signature_______________________
PART 3-Awaiting TIN [ ]
Date____________________________
----------------------------------------------------------------
</TABLE>
<PAGE>
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN A $50 PENALTY
IMPOSED BY THE INTERNAL REVENUE SERVICE AND BACKUP WITHHOLDING OF
31% OF ANY CASH PAYMENTS MADE TO YOU. PLEASE REVIEW THE ENCLOSED
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER ON
SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS.
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU CHECKED THE BOX
IN PART 3 OF THE SUBSTITUTE FORM W-9.
- ------------------------------------------------------------------------------
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
- ------------------------------------------------------------------------------
I certify under penalties of perjury that a taxpayer identification
number has not been issued to me, and either (1) I have mailed or delivered an
application to receive a taxpayer identification number to the appropriate
Internal Revenue Service Center or Social Security Administration Office or
(2) I intend to mail or deliver an application in the near future. I
understand that if I do not provide a taxpayer identification number by the
time of payment, 31% of all reportable cash payments made to me thereafter
will be withheld until I provide a taxpayer identification number.
_______________________________________ ___________________________
Signature Date
EXHIBIT 99.2
NOTICE OF GUARANTEED DELIVERY
FRENCH FRAGRANCES, INC.
OFFER TO EXCHANGE
10-3/8% SENIOR NOTES DUE 2007, SERIES D
FOR ANY AND ALL OUTSTANDING
10-3/8% SENIOR NOTES DUE 2007, SERIES C
Registered holders of outstanding 10 % Senior Notes due 2007, Series C
(the "Initial Notes") who wish to tender their Initial Notes in exchange for a
like principal amount of 10 Senior Notes due 2007, Series D (the "Exchange
Notes") and whose Initial Notes are not immediately available or who cannot
deliver their Initial Notes and Letter of Transmittal (and any other documents
required by the Letter of Transmittal) to Marine Midland Bank (the "Exchange
Agent") prior to the Expiration Date, may use this Notice of Guaranteed
Delivery or one substantially equivalent hereto. This Notice of Guaranteed
Delivery may be delivered by hand or sent by facsimile transmission (receipt
confirmed by telephone and an original delivered by guaranteed overnight
courier) or mail to the Exchange Agent. See "The Exchange Offer-Procedure for
Tendering Initial Notes" in the Prospectus.
THE EXCHANGE AGENT FOR THE EXCHANGE OFFER IS:
MARINE MIDLAND BANK
By Hand/Overnight Courier: By Mail:
Marine Midland Bank (insured or registered recommended)
140 Broadway, Level A Marine Midland Bank
New York, New York 10005-1180 140 Broadway, Level A
Attention: Paulette Shaw New York, New York 10005-1180
Attention: Paulette Shaw
By Facsimile:
(212) 658-2292
(For Eligible Institutions Only)
By Telephone:
(212) 658-5931
DELIVERY OF THIS NOTICE OF GUARANTEED DELIVERY TO AN ADDRESS OTHER THAN
AS SET FORTH ABOVE OR TRANSMISSION VIA A FACSIMILE TRANSMISSION TO A NUMBER
OTHER THAN AS SET FORTH ABOVE WILL NOT CONSTITUTE A VALID DELIVERY.
This Notice of Guaranteed Delivery is not to be used to guarantee
signatures. If a signature on a Letter of Transmittal is required to be
guaranteed by an Eligible Institution (as defined in the Prospectus), such
signature guarantee must appear in the applicable space provided on the Letter
of Transmittal for Guarantee of Signatures.
<PAGE>
Ladies and Gentlemen:
The undersigned hereby tenders the principal amount of Initial Notes
indicated below, upon the terms and subject to the conditions contained in the
Prospectus dated ______________, 1998 of French Fragrances, Inc. (the
"Prospectus"), receipt of which is hereby acknowledged.
DESCRIPTION OF SECURITIES TENDERED
CERTIFICATE PRINCIPAL
NAME AND ADDRESS OF NUMBER AMOUNT OF
REGISTERED HOLDER AS IT INITIAL INITIAL
NAME OF APPEARS ON THE INITIAL NOTES NOTES
TENDERING HOLDER NOTES (PLEASE PRINT) TENDERED TENDERED
__________________ _______________________ ___________ _________
__________________ _______________________ ___________ _________
__________________ _______________________ ___________ _________
__________________ _______________________ ___________ _________
__________________ _______________________ ___________ _________
THE FOLLOWING GUARANTEE MUST BE COMPLETED
GUARANTEE OF DELIVERY
(NOT TO BE USED FOR SIGNATURE GUARANTEE)
The undersigned, a member of a recognized signature guarantee medallion
program within the meaning of Rule 17Ad-15 under the Securities Exchange Act
of 1934, as amended, hereby guarantees to deliver to the Exchange Agent at one
of its addresses set forth above, the certificates representing the Initial
Notes (or a confirmation of book-entry transfer of such Initial Notes into the
Exchange Agent's account at the Book-Entry Transfer Facility (as defined in
the Prospectus and the Letter of Transmittal)), together with a properly
completed and duly executed Letter of Transmittal (or facsimile thereof), with
any required signature guarantees, and any other documents required by the
Letter of Transmittal within three business days after the Expiration Date (as
defined in the Prospectus and the Letter of Transmittal).
Name of Firm:____________________________ __________________________________
(Authorized signature)
Address:_________________________________
Title:____________________________
_________________________________________
(Zip Code) Name:_____________________________
(Please type or print)
Area Code and Telephone No.:
_________________________________________ Date:_____________________________
NOTE: DO NOT SEND INITIAL NOTES WITH THIS NOTICE OF GUARANTEED DELIVERY.
INITIAL NOTES SHOULD BE SENT WITH YOUR LETTER OF TRANSMITTAL.
