Exhibit 10.10
Execution
Copy
Brookstone Company,
Inc.
$185,000,000 12.00% Second Lien
Senior Secured Notes due 2012
Purchase
Agreement
September 23, 2005
Goldman, Sachs &
Co.
As representative of the
Purchasers
named in Schedule I
hereto
c/o Goldman, Sachs &
Co.
85 Broad Street
New York, New York 10004
Ladies and Gentlemen:
Brookstone Company, Inc., a New
Hampshire corporation (the “Company”), proposes,
subject to the terms and conditions stated herein, to issue and
sell to the Purchasers named in Schedule I hereto (the
“Purchasers”) an aggregate of $185,000,000 principal
amount of 12.00% Second Lien Senior Secured Notes due 2012 Notes,
specified above (the “Securities”). The Securities will
be fully and unconditionally guaranteed as to the payment of
principal, premium, if any, and interest (the
“Guarantees”) jointly and severally by Brookstone,
Inc., a Delaware corporation (the “Parent”), and each
other entity named in Schedule II hereto (collectively, the
“Guarantors”).
Concurrently with the closing of the
offering of the Securities, the Company and the Guarantors will
enter into a new senior secured credit facility, to be dated as of
October 4, 2005, in an aggregate of up to $100,000,000 with
Bank of America, N.A. (in its capacity as collateral agent under
the new senior secured credit facility, the “First Lien
Collateral Agent”), Goldman Sachs Credit Partners L.P. and a
syndicate of other financial institutions (as the same may be
amended, modified, supplemented or restated from time to time, the
“Credit Facility”).
The Company and the Guarantors have
agreed to secure the Securities and the Guarantees of the
Securities by second priority security interests granted to Wells
Fargo Bank, N.A., as the collateral agent (the “Collateral
Agent”) for the benefit of the Trustee (as defined below) and
the holders of the Securities and any additional securities issued
pursuant to the Indenture (as defined below) on all of the personal
property of the Company and each of the Guarantors, whether
tangible or intangible (the “Collateral”), subject to
certain exceptions set forth in the Indenture, the Security
Agreement and the IP Security Agreement (each as defined below).
Such second priority security interests will be evidenced by the
security agreement to be dated as of October 4, 2005, among
the Company, the Guarantors and the Collateral Agent (the
“Security Agreement”); the intellectual property
security agreement to be dated as of October 4, 2005, among
the Company, Guarantors and the Collateral Agent (the “IP
Security Agreement”); the intercreditor agreement to be dated
as of October 4, 2005, among the Company, the Guarantors, the
Collateral Agent and the First Lien Collateral Agent (the
“Intercreditor Agreement”); the collateral agency
agreement to be dated as of
October 4, 2005, among the Company, the
Guarantors, the Trustee and the Collateral Agent (the
“Collateral Agency Agreement”); and any account control
agreements to which the Company or any Guarantor is a party that
are in effect at the Time of Delivery (such agreements, together
with the Security Agreement, the IP Security Agreement, the
Intercreditor Agreement and the Collateral Agency Agreement, the
“Security Documents”).
1. The Company and each of the
Guarantors, jointly and severally, represents and warrants to, and
agrees with, each of the Purchasers that:
(a) A preliminary offering circular,
dated September 9, 2005 (the “Preliminary Offering
Circular”) and an offering circular, dated September 23,
2005 (the “Offering Circular”) have been prepared in
connection with the offering of the Securities. Any reference to
the Preliminary Offering Circular or the Offering Circular shall be
deemed to refer to and include any Additional Issuer Information
(as defined in Section 5(f)) furnished by the Company prior to
the completion of the distribution of the Securities. The
Preliminary Offering Circular or the Offering Circular and any
amendments or supplements thereto did not and will not, as of their
respective dates, contain an untrue statement of a material fact or
omit to state a material fact necessary in order to make the
statements therein, in the light of the circumstances under which
they were made, not misleading; provided, however, that this
representation and warranty shall not apply to any statements or
omissions made in reliance upon and in conformity with information
furnished in writing to the Company by a Purchaser through Goldman,
Sachs & Co. expressly for use therein;
(b) Neither the Parent nor any of
its subsidiaries has sustained since the date of the latest audited
financial statements included in the Offering Circular any material
loss or interference with its business from fire, explosion, flood
or other calamity, whether or not covered by insurance, or from any
labor dispute or court or governmental action, order or decree,
otherwise than as set forth or contemplated in the Offering
Circular; and, since the respective dates as of which information
is given in the Offering Circular, and other than as set forth or
contemplated in the Offering Circular on the date hereof, there has
not been any change in the capital stock or long-term debt of the
Parent or any of its subsidiaries or any payment of or declaration
to pay any dividends or other distribution with respect to the
capital stock (or other) of the Parent or any of its subsidiaries
(other than as a result of exercises of stock options or other
equity incentive awards) or any material adverse change, or any
development involving a prospective material adverse change, in or
affecting the general affairs, management, financial position,
stockholders’ equity or results of operations of the Parent
and its subsidiaries, taken as a whole, otherwise than as set forth
or contemplated in the Offering Circular;
(c) The Parent and its subsidiaries
have good and marketable title in fee simple to all real property
and good and marketable title to all personal property owned by
them, in each case free and clear of all liens, encumbrances and
defects except such as are described in the Offering Circular or
such as do not materially affect the value of such property and do
not interfere with the use made and proposed to be made of such
property by the Parent and its subsidiaries; and any real property
and buildings held under lease by the Parent and its subsidiaries
are held by them under valid, subsisting and enforceable leases
with such exceptions as would not, individually or in the
aggregate, have a Material Adverse Effect in light of the use made
and proposed to be made of such property and buildings by the
Parent and its subsidiaries;
(d) The Company has been duly
incorporated and is validly existing as a corporation in good
standing under the laws of the State of New Hampshire, with power
and authority (corporate and other) to own its properties and
conduct its business as described in the Offering Circular, and has
been duly qualified as a foreign corporation for the transaction of
business and is in good standing under the laws of each other
jurisdiction in which it owns or leases properties or conducts
any
2
business so as to require such qualification, or
is subject to no material liability or disability by reason of the
failure to be so qualified in any such jurisdiction; and the Parent
and each of its subsidiaries other than the Company have been duly
incorporated or formed and each is validly existing as a
corporation or a limited liability company, as the case may be, and
is in good standing under the laws of its jurisdiction of
incorporation or formation, as the case may be;
(e) The Parent has an authorized
capitalization as set forth under the caption
“Capitalization” in the Offering Circular, and all of
the issued shares of capital stock of the Parent have been duly and
validly authorized and issued and are fully paid and
non-assessable; and all of the issued shares of capital stock or
limited liability company interests, as applicable, of each of the
Parent’s subsidiaries have been duly and validly authorized
and issued and are fully paid and non-assessable and, except as
otherwise disclosed in the Offering Circular with respect to the
joint ventures of the Parent’s subsidiaries, all of the
issued shares of capital stock or limited liability company
interests, as applicable, of each such subsidiary are owned
directly or indirectly by the Parent, free and clear of all liens,
encumbrances, equities or claims, other than those liens arising
under the “new senior secured credit facility”
described in the Offering Circular or the “existing revolving
credit facility” described in the Offering Circular (as
applicable);
(f) The Securities have been duly
authorized by the Company; the temporary global Security, when
executed, issued and delivered by the Company to and paid for by
the Purchasers pursuant to this Agreement, and authenticated by the
Trustee, will have been duly executed, issued and delivered and
will constitute a valid and legally binding obligation of the
Company entitled to the benefits provided by the indenture to be
dated as of October 4, 2005 (the “Indenture”)
between the Company, the Guarantors and Wells Fargo Bank, N.A., as
Trustee (the “Trustee”), under which they are to be
issued, which will be substantially in the form previously
delivered to you; the Securities in definitive form, when executed,
issued and delivered by the Company in exchange for the temporary
global Security and authenticated by the Trustee in accordance with
the terms of the Indenture, will have been duly executed, issued
and delivered and will constitute valid and legally binding
obligations of the Company entitled to the benefits provided by the
Indenture; the Indenture has been duly authorized by the Company
and the Guarantors and assuming due authorization by the Trustee,
when executed and delivered by the Company and the Guarantors and
the Trustee, will constitute a valid and legally binding
instrument, enforceable in accordance with its terms, subject, as
to enforcement, to bankruptcy, insolvency, reorganization and other
laws of general applicability relating to or affecting
creditors’ rights and to general equity principles; and the
temporary global Security, the Securities and the Indenture will
conform to the descriptions thereof in the Offering
Circular;
(g) The Guarantees to be endorsed on
the Securities have been duly authorized by the Guarantors, and
when executed and delivered in accordance with the terms of the
Indenture and when the Securities are duly executed, issued and
delivered by the Company and authenticated by the Trustee in
accordance with the terms of the Indenture and delivered to and
paid for by the Purchasers in accordance with the terms of this
Agreement and the Indenture, will constitute the valid and legally
binding obligations of each of the Guarantors, enforceable against
each of the Guarantors in accordance with their terms, subject, as
to enforcement, to bankruptcy, insolvency, reorganization and other
laws of general applicability relating to or affecting
creditors’ rights and to general equity principles; and the
Guarantees to be endorsed on the Securities will conform to the
descriptions thereof in the Offering Circular;
(h) Each of the Security Documents
has been duly and validly authorized by the Company and each of the
Guarantors. When each of the Security Documents have been duly
executed and delivered, each of the Security Documents will
constitute the valid and binding agreements of the
3
Company and the Guarantors, enforceable against
the Company and such Guarantors in accordance with their respective
terms, except as enforcement thereof may be limited by bankruptcy,
insolvency, reorganization and other laws of general applicability
relating to or affecting creditors’ rights and except as
enforcement thereof is subject to general principles of equity
(regardless of whether enforcement is considered in a proceeding in
equity or at law);
(i) When each of the Security
Documents has been duly executed and delivered, the Security
Documents will be effective to grant and create, in favor of the
Collateral Agent, for the benefit of each present and future holder
of the Securities, a valid and enforceable security interest in the
Collateral described therein and proceeds and products thereof; and
(i) when financing statements and other filings in appropriate
form are filed in the offices as specified in the Security
Agreement and the IP Security Agreement and (ii) upon the
taking of possession or control by the Collateral Agent of any such
Collateral with respect to which a security interest may be
perfected only by possession or control, the security interest
created by the Security Agreement and the IP Security Agreement,
together with the Collateral Agency Agreement, shall constitute a
fully perfected security interest on, and security interest in all
right, title and interest of the grantors thereunder in such
Collateral (other than such Collateral in which a security interest
cannot be perfected under the UCC (as defined below) as in effect
at the relevant time in the relevant jurisdiction), in each case
subject to no Liens (as defined in the Indenture) other than
Permitted Liens (as defined in the Indenture)(and subject as to
priority, to no Liens other than Permitted Prior Liens(as defined
in the Indenture));
(j) At the Time of Delivery, the
representations and warranties contained in the Security Documents
will be true and correct in all material respects as if made as of
the Time of Delivery;
(k) The Company and each of the
domestic Guarantors is a “registered organization” (as
defined in Article 9 of the Uniform Commercial Code (the
“UCC”) as in effect in the state of New York and the
states in which the Company and each of the domestic Guarantors is
organized) under the law of the jurisdiction in which it is
organized, and at the Time of Delivery the Company and the
Guarantors will have made provision for the prompt perfection of
all security interests granted under the Security Agreement and IP
Security Agreement in Collateral consisting of personal property or
fixtures to the extent such security interests may be perfected by
filing pursuant to the filing of financing statements in connection
with the execution of the Security Agreement and the recordation of
the IP Security Agreement in the United States Copyright Office and
the United States Patent and Trademark Office;
(l) As of the Time of Delivery the
Company and each of the Guarantors will own or otherwise have the
rights it purports to have in the Collateral securing the
Securities free and clear of all Liens (other than Permitted Liens
(as defined in the Indenture)), and no financing statements in
respect of Collateral securing the Securities will be on file in
favor of any person other than those in respect of Permitted Liens
and those for which duly authorized termination statements are
delivered to the Collateral Agent or the First Lien Collateral
Agent at the Time of Delivery;
(m) This Agreement has been duly
authorized, executed and delivered by the Company and each of the
Guarantors;
(n) The Exchange and Registration
Rights Agreement to be dated as of October 4, 2005 among the
Company, the Guarantors and the Purchasers (the “Registration
Rights Agreement”), which will be substantially in the form
previously delivered to you, has been duly authorized by the
Company and each of the Guarantors, and as of the Time of Delivery
(as defined herein), will have been duly executed and delivered by
the Company and each of the Guarantors, and will constitute a valid
and legally binding instrument enforceable against the Company and
each of the Guarantors in
4
accordance with its terms, subject, as to
enforcement, to bankruptcy, insolvency, reorganization and other
laws of general applicability relating to or affecting
creditors’ rights and to general equity principles; and the
Registration Rights Agreement will conform to the descriptions
thereof in the Offering Circular;
(o) The Exchange Securities have
been duly and validly authorized for issuance by the Company, and
when executed, issued and delivered by the Company and
authenticated by the Trustee in accordance with the terms of the
Indenture, the Registration Rights Agreement and the Exchange
Offer, will be the valid and legally binding obligations of the
Company, enforceable against the Company in accordance with their
terms and entitled to the benefits of the Indenture, subject, as to
enforcement, to applicable bankruptcy, insolvency, reorganization
and other laws of general applicability relating to or affecting
creditors’ rights and to general equity
principles;
(p) The Guarantees to be endorsed on
the Exchange Securities have been duly authorized by each of the
Guarantors, and when executed and delivered in accordance with the
terms of the Indenture and when the Exchange Securities are duly
executed, issued and delivered by the Company and authenticated by
the Trustee in accordance with the terms of the Registration Rights
Agreement, the Exchange Offer and the Indenture, will constitute
the valid and legally binding obligations of each of the
Guarantors, enforceable against each of the Guarantors in
accordance with their terms, subject, as to enforcement, to
applicable bankruptcy, insolvency, reorganization, and other laws
of general applicability relating to or affecting creditors’
rights and to general equity principles;
(q) None of the transactions
contemplated by this Agreement (including, without limitation, the
use of the proceeds from the sale of the Securities) will violate
or result in a violation of Section 7 of the United States
Securities Exchange Act of 1934, as amended (the “Exchange
Act”), or any regulation promulgated thereunder, including,
without limitation, Regulations T, U, and X of the Board of
Governors of the Federal Reserve System, in each case as the same
may be in effect or as the same may hereafter be in effect at the
Time of Delivery;
(r) Prior to the date hereof,
neither the Company nor any of its affiliates nor any of the
Guarantors has taken any action which is designed to or which has
constituted or which might have been expected to cause or result in
stabilization or manipulation of the price of any security of the
Company in connection with the offering of the
Securities;
(s) The issue and sale of the
Securities and the compliance by the Company and the Guarantors
with all of the provisions of the Securities, the Indenture, the
Registration Rights Agreement, the Security Agreement, the IP
Security Agreement, the Intercreditor Agreement and this Agreement
and the consummation of the transactions herein and therein
contemplated (i) will not conflict with or result in a breach
or violation of any of the terms or provisions of, or constitute a
default under, any indenture, mortgage, deed of trust, loan
agreement or other agreement or instrument to which the Parent or
any of its subsidiaries is a party or by which the Parent or any of
its subsidiaries is bound or to which any of the property or assets
of the Parent or any of its subsidiaries is subject, (ii) will
not result in any violation of the provisions of the respective
Certificate of Incorporation or By-laws of the Company or each of
the Guarantors, (iii) will not result in a violation of any
statute or order, rule or regulation of any court or governmental
agency or body having jurisdiction over the Parent or any of its
subsidiaries or any of their properties and (iv) will not
result in the imposition of a lien, other than liens permitted
under the Credit Facility, on any assets of the Company or any of
the Guarantors, except in the case of clauses (i) and
(iii) above, for such conflicts, breaches, violations,
defaults or liens that, individually or in the aggregate, would not
have a material adverse effect on the business, management,
condition (financial or otherwise), or results of operations of the
Parent and its
5
subsidiaries, taken as a whole (any such event,
“Material Adverse Effect”); and, assuming the accuracy
of the representations and warranties of the Purchasers in
Section 3 of this Agreement, no consent, approval,
authorization, order, registration or qualification of or with any
such court or governmental agency or body is required for the issue
and sale of the Securities or the consummation by the Company and
each of the Guarantors of the transactions contemplated by this
Agreement, the Indenture, the Security Documents or the
Registration Rights Agreement, except for the filing of a
registration statement by the Company and each of the Guarantors
with the Securities and Exchange Commission (the
“Commission”) pursuant to the United States Securities
Act of 1933, as amended (the “Securities Act”) pursuant
to the Registration Rights Agreement, such consents, approvals,
authorizations, registrations or qualifications as may be required
under state securities or Blue Sky laws or the private placement or
equivalent provisions of the securities laws of any jurisdiction
outside the United States in connection with the purchase and
distribution of the Securities by the Purchasers and the
qualification of the Indenture (or any substantially identical
indenture referred to in the Registration Rights Agreement) under
the Trust Indenture Act of 1939 and the filings required to perfect
the Collateral Agent’s security interests granted pursuant to
the Security Documents;
(t) Neither the Parent nor any of
its subsidiaries is in violation of (i) its Certificate of
Incorporation or By-laws or other organization documents, as the
case may be, or (ii) is in default in the performance or
observance of any material obligation, covenant or condition
contained in any indenture, mortgage, deed of trust, loan
agreement, lease or other agreement or instrument to which it is a
party or by which it or any of its properties may be bound, except,
in the case of clause (ii) above, for such violations or
defaults that, individually or in the aggregate would have a
Material Adverse Effect;
(u) The statements set forth in the
Offering Circular under the caption “Description of
Notes,” insofar as they purport to constitute a summary of
the terms of the Securities and the statements in the Offering
Circular under the captions “Certain United States Federal
Tax Considerations” and “Underwriting,” insofar
as they purport to describe the provisions of the laws and
documents referred to therein, are accurate and complete in all
material respects;
(v) [Intentionally
Omitted];
(w) Other than as set forth in the
Offering Circular, there are no legal or governmental proceedings
pending to which the Parent or any of its subsidiaries is a party
or of which any property of the Parent or any of its subsidiaries
is the subject which, if determined adversely to the Parent or any
of its subsidiaries, would, individually or in the aggregate, have
a Material Adverse Effect; and, to the best knowledge of the Parent
and its subsidiaries, no such proceedings are threatened or
contemplated by governmental authorities or threatened by
others;
(x) When the Securities are issued
and delivered pursuant to this Agreement, the Securities will not
be of the same class (within the meaning of Rule 144A under the
Securities Act) as securities which are listed on a national
securities exchange registered under Section 6 of the Exchange
Act or quoted in a U.S. automated inter-dealer quotation
system;
(y) Neither the Company nor any
Guarantor is, or after giving effect to the offering and sale of
the Securities and the consummation of the transactions
contemplated in the Offering Circular, will be, an
“investment company”, as such term is defined in the
United States Investment Company Act of 1940, as amended (the
“Investment Company Act”);
(z) Neither the Company nor any
Guarantor nor any person acting on its or their behalf has offered
or sold the Securities by means of any general solicitation or
general advertising within the meaning of Rule 502(c) under the Act
or, with respect to Securities sold outside the United States
to
6
non-U.S. persons (as defined in Rule 902 under
the Act), by means of any directed selling efforts within the
meaning of Rule 902 under the Securities Act and the Company, any
affiliate of the Company and any person acting on its or their
behalf has complied with and will implement the “offering
restriction” within the meaning of such Rule 902;
(aa) Within the preceding six
months, neither the Company nor any other person acting on behalf
of the Company (other than the Purchasers and their affiliates as
to whom the Company and the Guarantors make no representation) has
offered or sold to any person any Securities, or any securities of
the same or a similar class as the Securities, other than
Securities offered or sold to the Purchasers hereunder. The Company
and each of the Guarantors will take reasonable precautions
designed to insure that any offer or sale, direct or indirect, in
the United States or to any U.S. person (as defined in Rule 902
under the Act) of any Securities or any substantially similar
security issued by the Company or any of the Guarantors, within six
months subsequent to the date on which the distribution of the
Securities has been completed (as notified to the Company by
Goldman, Sachs & Co.), is made under restrictions and
other circumstances reasonably designed not to affect the status of
the offer and sale of the Securities in the United States and to
U.S. persons contemplated by this Agreement as transactions exempt
from the registration provisions of the Securities Act;
(bb) The Parent maintains a system
of internal control over financial reporting (as such term is
defined in Rule 13a-15(f) of the Exchange Act) in accordance with
the requirements of the Exchange Act which has been designed by the
Parent’s principal executive officer and principal financial
officer (as such terms are defined in the Exchange Act), or under
their supervision, to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial
statements for external purposes in accordance with generally
accepted accounting principles. The Parent’s internal control
over financial reporting was effective as of January 29, 2005 and
the Parent is not aware of any material weaknesses in its internal
control over financial reporting;
(cc) Since January 29, 2005,
there has been no change in the Parent’s internal control
over financial reporting that has materially affected, or is
reasonably likely to materially affect, the Parent’s internal
control over financial reporting;
(dd) The Parent maintains disclosure
controls and procedures (as such term is defined in Rule 13a-15(e)
of the Exchange Act) in accordance with the requirements of the
Exchange Act; such disclosure controls and procedures have been
designed to ensure that material information relating to the Parent
and its subsidiaries is made known to the Company’s principal
executive officer and principal financial officer by others within
those entities; such disclosure controls and procedures were
effective as of July 30, 2005.
(ee) PricewaterhouseCoopers LLP,
which has audited certain financial statements of the Parent and
its subsidiaries is an independent registered public accounting
firm as required by the Act and the rules and regulations of the
Commission thereunder;
(ff) Each of the Parent and its
subsidiaries (either individually or together) owns or possesses or
has the right to use the licenses, 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, and material to, individually or in the aggregate,
its operations, except where the failure to own, possess or have
the right to use would not, individually or in the aggregate, have
a Material Adverse Effect; and neither the Parent nor any of its
subsidiaries have received any notice of infringement of or
conflict with asserted rights of others with respect to the
foregoing which, individually or in the aggregate, would result
have a Material Adverse Effect. To the
7
knowledge of the Parent and its subsidiaries,
the use of such Intellectual Property in connection with the
business and operations of the Company and its subsidiaries as
described in the Offering Circular does not infringe on the rights
of any person, except as would not, individually or in the
aggregate, have a Material Adverse Effect;
(gg) All tax returns required to be
filed by the Parent and its subsidiaries in all jurisdictions have
been timely and duly filed, other than those filings being
contested in good faith or, except in the case in which failure to
so file would not have a Material Adverse Effect. There are no tax
returns of the Parent or its subsidiaries that are currently being
audited by state, local or federal taxing authorities or agencies
(and with respect to which the Parent or its subsidiaries have
received notice), except such audits as 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, 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, or
those as would not have a Material Adverse Effect;
(hh) Each of the Parent and its
subsidiaries is in compliance with all presently applicable
provisions of the Employee Retirement Income Security Act of 1974,
as amended, including the regulations and published interpretations
thereunder (“ERISA”), except for any non-compliance
which would not have a Material Adverse Effect; no
“reportable event” (as defined in ERISA) has occurred
with respect to any “pension plan” (as defined in
Section 3(2) of ERISA) for which the Parent or any of its
subsidiaries would have any liability, except such as would not
have a Material Adverse Effect; neither the Parent nor any of its
subsidiaries has incurred or expects to incur liability under
(i) Title IV of ERISA with respect to termination of, or
withdrawal from, any “defined benefit pension plan” as
defined in Section 3(35) of ERISA or
(ii) Section 412 or 4971 of the Internal Revenue Code of
1986, as amended, including the regulations and published
interpretations thereunder (the “Code”), in each case,
except as would not have a Material Adverse Effect; and each
“pension plan” for which the Parent and its
subsidiaries would have any liability, except as would not have a
Material Adverse Effect, that is intended to be qualified under
Section 401(a) of the Code is so qualified in all material
respects and nothing has occurred, whether by action or by failure
to act, which would cause the loss of such qualification, except,
in each case, as would not have a Material Adverse
Effect;
(ii) Except for such matters as
would not, individually or in the aggregate, have a Material
Adverse Effect, (i) the Parent and its subsidiaries are not in
violation of environmental, safety or similar laws or regulations
applicable to them or their business or property relating to the
protection of human health and safety, the environment or hazardous
or toxic substances or wastes, pollutants or contaminants
(collectively, the “Environmental Laws”), (ii) the
Parent and its subsidiaries have all permits, licenses and
approvals required under the applicable Environmental Laws and are
not in violation of any term or condition of such permits, licenses
or approvals, (iii) there are no pending or, to the knowledge
of the Parent and its subsidiaries, threatened, administrative,
regulatory or judicial actions, suits, demands, demand letters,
claims, liens, notices of noncompliance or violation, investigation
or proceedings relating to any Environmental Laws against the
Parent and its subsidiaries and (iv) to the knowledge of the
Parent and its subsidiaries, there are no events or circumstances
that might reasonably be expected to form the basis of an order for
clean-up or remediation, or any action, suit or proceeding by any
private party or governmental body or agency, against or affecting
the Parent and its subsidiaries relating to the Environmental
Laws.
8
(jj) Each certificate signed by any
officer of the Company and/or any of the Guarantors and delivered
to the Purchasers or counsel to the Purchasers pursuant to this
Agreement shall be deemed to be a representation and warranty by
the Company or such Guarantor, as the case may be, to the
Purchasers as to the matters covered thereby.
2. Subject to the terms and
conditions herein set forth, the Company agrees to issue and sell
to each of the Purchasers, and each of the Purchasers agrees,
severally and not jointly, to purchase from the Company, at a
purchase price of 96.333% of the principal amount thereof, plus
accrued interest, if any, from October 4, 2005 to the Time of
Delivery hereunder, the principal amount of Securities set forth
opposite the name of such Purchaser in Schedule I attached
hereto.
3. Upon the authorization by you of
the release of the Securities, the several Purchasers propose to
offer the Securities for sale upon the terms and conditions set
forth in this Agreement and the Offering Circular and each
Purchaser hereby represents and warrants to, and agrees with the
Company that:
(a) It will offer and sell the
Securities only to: (i) persons who it reasonably believes are
“qualified institutional buyers” (“QIBs”)
within the meaning of Rule 144A under the Act in transactions
meeting the requirements of Rule 144A and (ii) upon the terms
and conditions set forth in Annex I attached hereto;
and
(b) It is an Institutional
Accredited Investor; and
(c) It has not solicited offers and
will not offer or sell the Securities by any form of general
solicitation or general advertising, including but not limited to
the methods described in Rule 502(c) under the Securities
Act.
4. (a) The Securities to be
purchased by each Purchaser hereunder, in such authorized
denominations and registered in such names as Goldman,
Sachs & Co. may request upon at least forty-eight
hours’ prior notice to the Company, will be represented by
one or more definitive global Securities in book-entry form which
will be deposited by or on behalf of the Company with The
Depository Trust Company (“DTC”) or its designated
custodian. The Company will deliver the Securities to Goldman,
Sachs & Co., for the account of each Purchaser, against
payment by or on behalf of such Purchaser of the purchase price
therefor by wire transfer in Federal (same day) funds to an account
designated by the Company, by causing DTC to credit the Securities
to the account of Goldman, Sachs & Co. at DTC. The Company
will cause the certificates representing the Securities to be made
available to Goldman, Sachs & Co. for checking at least
twenty-four hours prior to the Time of Delivery (as defined below)
at the office of DTC or its designated custodian (the
“Designated Office”). The time and date of such
delivery and payment shall be 9:30 a.m., New York City time, on
October 4, 2005 or such other time and date as Goldman,
Sachs & Co. and the Company may agree upon in writing.
Such time and date are herein called the “Time of
Delivery.”
(b) The documents to be delivered at
the Time of Delivery by or on behalf of the parties hereto pursuant
to Section 7 hereof, including the cross-receipt for the
Securities and any additional documents requested by the Purchasers
pursuant to Section 7(i) hereof, will be delivered at such
time and date at Kaye Scholer LLP, 425 Park Avenue, New York, New
York 10022 (the “Closing Location”), and the Securities
will be delivered to the Designated Office, all at the Time of
Delivery. A meeting will be held at the Closing Location at 3:00
p.m., New York City time, on the New York Business Day next
preceding the Time of Delivery, at which meeting the final drafts
of the documents to be delivered pursuant to the preceding sentence
will be available for review by the parties hereto. For the
purposes of this Section 4, “New York Business
Day” shall mean each Monday, Tuesday, Wednesday, Thursday and
Friday which is not a day on which banking institutions in New York
are generally authorized or obligated by law or executive order to
close.
9
5. Each of the Company and the
Guarantors jointly and severally agrees with each of the
Purchasers:
(a) To prepare the Offering Circular
in a form reasonably approved by you; to make no amendment or any
supplement to the Offering Circular unless the Purchasers shall
previously have been advised thereof and shall not have reasonably
objected thereto within a reasonable time after being furnished a
copy thereof;
(b) Promptly from time to time to
take such action as you may reasonably request to qualify the
Securities for offering and sale under the securities laws of such
jurisdictions as you may request and to comply with such laws so as
to permit the continuance of sales and dealings therein in such
jurisdictions for as long as may be necessary to complete the
distribution of the Securities, provided that in connection
therewith neither the Company nor any Guarantor shall be required
to (i) qualify as a foreign corporation or file a general
consent to service of process in any jurisdiction, (ii) take
any other action that would subject it to general service of
process or taxation in excess of a nominal amount in respect of
doing business in any jurisdiction in which it is not otherwise
subject or (iii) make any changes to its organizational
documents;
(c) To furnish the Purchasers with
written and electronic copies of the Offering Circular in such
quantities as you may from time to time reasonably request, and if,
at any time prior to the earlier to occur of (i) receipt by
the Company of a written confirmation from the Purchasers of the
completion of the resale by the Purchasers of the Securities or
(ii) expiration of nine months after the date of the Offering
Circular, any event shall have occurred as a result of which the
Offering Circular as then amended or supplemented would include an
untrue statement of a material fact or omit to state any material
fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made when such
Offering Circular is delivered, not misleading, or, if for any
other reason it shall be necessary or desirable during such same
period to amend or supplement the Offering Circular, to notify you
and upon your request to prepare and furnish without charge to each
Purchaser and to any dealer in securities as many written and
electronic copies as you may from time to time reasonably request
of an amended Offering Circular or a supplement to the Offering
Circular which will correct such statement or omission or effect
such compliance;
(d) During the period beginning from
the date hereof and continuing until the date six months after the
Time of Delivery, not to offer, sell contract to sell or otherwise
dispose of, except as provided hereunder or in the Registration
Rights Agreement any securities of the Company that are
substantially similar to the Securities;
(e) Not to be or become, at any time
prior to the expiration of two years after the Time of Delivery, an
open-end investment company, unit investment trust, closed-end
investment company or face-amount certificate company that is or is
required to be registered under Section 8 of the Investment
Company Act;
(f) At any time when the Company is
not subject to Section 13 or 15(d) of the Exchange Act, for
the benefit of holders from time to time of Securities, to furnish
at its expense, upon request, to holders of Securities and
prospective purchasers of securities information (the
“Additional Issuer Information”) satisfying the
requirements of subsection (d)(4)(i) of Rule 144A under the
Act;
10
(g) If requested by you, to use its
commercially reasonable efforts to cause such Designated Securities
to be eligible for the PORTAL trading system of the National
Association of Securities Dealers, Inc.;
(h) So long as any notes are
outstanding, (i) to furnish to the holders of the Securities
or cause the Trustee to furnish to the holders of Securities and
post to its website or (ii) to file with the Securities and
Exchange Commission (the “SEC”), transmit to the
Trustee an electronic or paper copy of, and if the Company has a
website, post to its website, in each case within the time periods
that such reports would be required to be filed with the SEC if the
rules and regulations of the SEC were applicable to the Company
(x) all quarterly and annual reports that would be required to
be filed with the SEC on Forms 10-Q and 10-K if the Company were
required to file such reports and (y) 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; to prepare all such
reports in all material respects in accordance with all of the
rules and regulations applicable to such reports; to include a
report on the Company’s consolidated financial statements by
the Company’s certified independent accountants in each
annual report on Form 10-K;
(i) During the period of two years
after the Time of Delivery, the Parent and Company will not, and
will not permit any of their “affiliates” (as defined
in Rule 144 under the Securities Act) over which either of them
exercises control to, resell any of the Securities which constitute
“restricted securities” under Rule 144 that have been
reacquired by any of them;
(j) Pursuant and subject to the
Registration Rights Agreement, the Company and the Guarantors shall
file with the Commission within 120 days following the Time of
Delivery and use its commercially reasonable efforts to cause to be
declared or become effective under the Securities Act, on or prior
to 240 days after the Time of Delivery, a registration statement on
Form S-4 providing for the registration of a new series of debt
securities of the Company (the “Exchange Securities”)
having substantially identical terms as the Securities except that
the Exchange Securities will be registered pursuant to an effective
Registration Statement under the Securities Act (the
“Exchange Offer”), and to the extent required by the
Registration Rights Agreement, a shelf registration statement
pursuant to Rule 415 under the Securities Act related to the resale
by certain holders of the Securities, and to use its commercially
reasonable efforts to cause such shelf registration statement to be
declared effective, and shall exchange of the Securities for the
Exchange Securities; and
(k) To use the net proceeds received
by it from the sale of the Securities pursuant to this Agreement in
the manner specified in the Offering Circular under the caption
“Use of Proceeds.”
6. The Company and the Guarantors,
jointly and severally, covenant and agree with the several
Purchasers that the Company will pay or cause to be paid the
following: (i) the fees, disbursements and expenses of the
Company’s and Guarantors’ counsel and accountants in
connection with the issue of the Securities and all other expenses
in connection with the preparation, printing and filing of the
Preliminary Offering Circular and the Offering Circular and any
amendments and supplements thereto and the mailing and delivering
of copies thereof to the Purchasers and dealers; (ii) the cost
of printing or producing any Agreement among Purchasers, this
Agreement, the Indenture, the Registration Rights Agreement, the
Intercreditor Agreement, the Security Agreement, the IP Security
Agreement, the Blue Sky and legal investment surveys, closing
documents (including any compilations thereof) and any other
documents in connection with the offering, purchase, sale and
delivery of the Securities (but not, however, the legal fees and
expenses of counsel to the Purchasers incurred in connection with
the foregoing, except as provided in Section 11 hereof) ;
(iii) all expenses in connection with the qualification of the
Securities for offering and sale under state securities laws as
provided in Section 5(b) hereof, including the reasonable fees
and disbursements
11
of counsel for the Purchasers in connection with
such qualification and in connection with the Blue Sky and legal
investment surveys; (iv) any fees charged by securities rating
services for rating the Securities; (v) the cost of preparing
the Securities; (vi) the fees and expenses of the Trustee and
any agent of the Trustee and the fees and disbursements of counsel
for the Trustee in connection with the Indenture and the
Securities; (vii) any cost incurred in connection with the
designation of the Securities for trading in PORTAL; and
(viii) all other costs and expenses incident to the
performance of its obligations hereunder which are not otherwise
specifically provided for in this Section. It is understood,
however, that, except as provided in this Section 6, and
Sections 8 and 11 hereof, the Purchasers will pay all of their own
costs and expenses, including the fees of their counsel, transfer
taxes on resale of any of the Securities by them, and any
advertising expenses connected with any offers they may
make.
7. The obligations of the Purchasers
hereunder shall be subject, in their discretion, to the condition
that all representations and warranties and other statements of the
Company and Guarantors herein are, at and as of the Time of
Delivery, true and correct, the condition that the Company shall
have performed all of its obligations hereunder theretofore to be
performed, and the following additional conditions:
(a) Latham & Watkins LLP,
counsel for the Purchasers, shall have furnished to you such
opinion or opinions, dated the Time of Delivery, with respect to
the matters as you may reasonably request, and such counsel shall
have received such papers and information as they may reasonably
request to enable them to pass upon such matters;
(b) Kaye Scholer LLP, counsel for
the Parent and its subsidiaries, shall have furnished to you their
written opinion, dated the Time of Delivery to the effect set forth
in Annex II hereto;
(c) Cook, Little,
Rosenblatt & Manson, P.L.L.C., counsel for Brookstone
Company, Inc., Brookstone International Holdings, Inc., Brookstone
Purchasing, Inc., Brookstone Holdings, Inc., Brookstone Stores,
Inc., Brookstone Properties, Inc. and Gardeners Eden, Inc. shall
have furnished to you their written opinion, dated the Time of
Delivery to the effect set forth in Annex III
hereto;
(d) Daniel Burke, General Counsel of
the Parent, shall have furnished to you his written opinion, dated
the Time of Delivery to the effect set forth in Annex IV
hereto;
(e) On the date of the Offering
Circular prior to the execution of this Agreement and also at the
Time of Delivery, PricewaterhouseCoopers LLP shall have furnished
to you a letter or letters, dated the respective dates of delivery
thereof to the effect set forth in Annex V
hereto;
(f) (i) Neither the Parent nor
any of its subsidiaries shall have sustained since the date of the
latest audited financial statements included in the Offering
Circular any loss or interference with its business from fire,
explosion, flood or other calamity, whether or not covered by
insurance, or from any labor dispute or court or governmental
action, order or decree, otherwise than as set forth or
contemplated in the Offering Circular, and (ii) since the
respective dates as of which information is given in the Offering
Circular there shall not have been any change in the capital stock
or any payment of or declaration to pay any dividends or other
distribution with respect to the capital stock of the Parent or any
of its subsidiaries (other than as a result of exercises of stock
options or other equity incentive awards) or long-term debt of the
Parent or any of its subsidiaries or any change, or any development
involving a prospective change, in or affecting the general
affairs, management, financial position, stockholders’ equity
or results of operations of the Parent and its subsidiaries, taken
as a whole, otherwise than as set forth or contemplated in the
Offering Circular, the effect of which, in any such case described
in clause (i) or (ii), is in the judgment of Goldman,
Sachs & Co. so material and adverse as to make it
impracticable or inadvisable to proceed with the offering or the
delivery of the Securities on the terms and in the manner
contemplated in this Agreement and in the Offering
Circular;
12
(g) On or after the date hereof
(i) no downgrading shall have occurred in the rating accorded
the Securities by any “nationally recognized statistical
rating organization”, as that term is defined by the
Commission for purposes of Rule 436(g)(2) under the Act, and
(ii) no such organization shall have publicly announced that
it has under surveillance or review, with possible negative
implications, its rating of the Securities;
(h) On or after the date hereof
there shall not have occurred any of the following: (i) a
suspension or material limitation in trading in securities
generally on the NYSE or the NASDAQ; (ii) a suspension or
material limitation in trading in the Parent’s securities on
the NYSE or the NASDAQ; (iii) a general moratorium on
commercial banking activities declared by either Federal or New
York State authorities or a material disruption in commercial
banking or securities settlement or clearance services in the
United States; (iv) the outbreak or escalation of hostilities
involving the United States or the declaration by the United States
of a national emergency or war or (v) the occurrence of any
other calamity or crisis or any change in financial, political or
economic conditions in the United States or elsewhere, if the
effect of any such event specified in clause (iv) or
(v) in the judgment of the Goldman, Sachs & Co. makes
it impracticable or inadvisable to proceed with the offering or the
delivery of the Securities on the terms and in the manner
contemplated in the Offering Circular;
(i) The Securities have been
designated for trading on PORTAL;
(j) The Company shall have furnished
or caused to be furnished to you at the Time of Delivery
certificates of officers of the Company satisfactory to you as to
the accuracy of the representations and warranties of the Company
herein at and as of such Time of Delivery, as to the performance by
the Company of all of its obligations hereunder to be performed at
or prior to such Time of Delivery, as to the matters set forth in
subsection (e) of this Section and as to such other matters as
you may reasonably request;
(k) The Collateral Agent shall have
received at the Time of Delivery (or with respect to clause
(v) below, the Company shall have used its commercially
reasonable efforts to deliver):
(i) appropriately completed copies,
which have been duly authorized for filing by the appropriate
Person, of UCC-1 financing statements naming the Company and each
Guarantor as a debtor and the Collateral Agent as the secured
party, or other similar instruments or documents to be filed under
the UCC of all jurisdictions as may be necessary or, in the
reasonable opinion of the Collateral Agent and its counsel,
desirable to perfect the security interests of the Collateral
Agent;
(ii) duly executed, delivered and
completed copies of the Security Agreement and IP Security
Agreement;
(iii) appropriately completed
copies, which have been duly authorized for filing by the
appropriate Person, of Uniform Commercial Code Form UCC-3
termination statements delivered to the First Lien Collateral
Agent, if any, necessary to release all Liens (other than Permitted
Liens (as defined in the Indenture)) of any Person in any
Collateral;
(iv) copies of all lien searches
provided to Bank of America, N.A., the Administrative Agent and
First Lien Collateral Agent for the Credit Facility, together with
copies of all financing statements provided to the First Lien
Collateral Agent that name the Company or any Guarantor (under its
present or previous names) as debtor (none of
13
which shall cover Collateral
described in the Security Documents, except for Permitted Liens (as
defined in the Indenture) and any Liens for which duly authorized
UCC-3 termination statements are delivered to the First Lien
Collateral Agent); and
(v) such other approvals, opinions,
or documents with respect to the Collateral as the Purchasers may
reasonably request in form and substance reasonably satisfactory to
each of them.
(l) The Parent shall have
consummated, or shall consummate concurrently with the issuance of
the Securities, the “transactions” (as defined in the
Offering Circular);
(m) The Company, the Guarantors and
the Trustee shall have entered into the Indenture and the
Purchasers shall have received executed counterparts thereof;
and
(n) The Company, the Guarantors and
the Purchasers shall have entered into the Registration Rights
Agreement and the Purchasers shall have received executed
counterparts thereof.
8. (a) The Company and the
Guarantors will, jointly and severally, indemnify and hold harmless
each Purchaser against any losses, claims, damages or liabilities,
joint or several, to which such Purchaser may become subject, under
the Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are
based upon an untrue statement or alleged untrue statement of a
material fact contained in any Preliminary Offering Circular or the
Offering Circular, or any amendment or supplement thereto, or arise
out of or are based upon the omission or alleged omission to state
therein a material fact necessary to make the statements therein
not misleading, and will reimburse each Purchaser for any legal or
other expenses reasonably incurred by such Purchaser in connection
with investigating or defending any such action or claim as such
expenses are incurred; provided, however, that neither the Company
nor the Guarantors shall be liable in any such case to the extent
that any such loss, claim, damage or liability arises out of or is
based upon an untrue statement or alleged untrue statement or
omission or alleged omission made in any Preliminary Offering
Circular or the Offering Circular or any such amendment or
supplement in reliance upon and in conformity with written
information furnished to the Company by any Purchaser through
Goldman, Sachs & Co. expressly for use therein.
(b) Each Purchaser will indemnify
and hold harmless the Company and the Guarantors against any
losses, claims, damages or liabilities to which the Company and the
Guarantors may become subject, under the Act or otherwise, insofar
as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon an untrue statement
or alleged untrue statement of a material fact contained in any
Preliminary Offering Circular or the Offering Circular, or any
amendment or supplement thereto, or arise out of or are based upon
the omission or alleged omission to state therein a material fact
or necessary to make the statements therein not misleading, in each
case to the extent, but only to the extent, that such untrue
statement or alleged untrue statement or omission or alleged
omission was made in any Preliminary Offering Circular or the
Offering Circular or any such amendment or supplement in reliance
upon and in conformity with written information furnished to the
Company by such Purchaser through Goldman, Sachs & Co.
expressly for use therein; and will reimburse the Company and the
Guarantors for any legal or other expenses reasonably incurred by
the Company and the Guarantors in connection with investigating or
defending any such action or claim as such expenses are
incurred.
(c) Promptly after receipt by an
indemnified party under subsection (a) or (b) above of
notice of the commencement of any action, such indemnified party
shall, if a claim in respect thereof is to be
14
made against the indemnifying party under such
subsection, notify the indemnifying party in writing of the
commencement thereof; but the omission so to notify the
indemnifying party shall not relieve it from any liability which it
may have to any indemnified party otherwise than under such
subsection. In case any such action shall be brought against any
indemnified party and it shall notify the indemnifying party of the
commencement thereof, the indemnifying party shall be entitled to
participate therein and, to the extent that it shall wish, jointly
with any other indemnifying party similarly notified, to assume the
defense thereof, with counsel reasonably satisfactory to such
indemnified party (who shall not, except with the consent of the
indemnified party, be counsel to the indemnifying party), and,
after notice from the indemnifying party to such indemnified party
of its election so to assume the defense thereof, the indemnifying
party shall not be liable to such indemnified party under such
subsection for any legal expenses of other counsel or any other
expenses, in each case subsequently incurred by such indemnified
party, in connection with the defense thereof other than reasonable
costs of investigation. No indemnifying party shall, without the
prior written consent of the indemnified party, effect the
settlement or compromise of, or consent to the entry of any
judgment with respect to, any pending or threatened action or claim
in respect of which indemnification or contribution may be sought
hereunder (whether or not the indemnified party is an actual or
potential party to such action or claim) unless such settlement,
compromise or judgment (i) includes an unconditional release
of the indemnified party from all liability arising out of such
action or claim and (ii) does not include a statement as to,
or an admission of, fault, culpability or a failure to act, by or
on behalf of any indemnified party.
(d) If the indemnification provided
for in this Section 8 is unavailable to or insufficient to
hold harmless an indemnified party under subsection (a) or
(b) above in respect of any losses, claims, damages or
liabilities (or actions in respect thereof) referred to therein,
then each indemnifying party shall contribute to the amount paid or
payable by such indemnified party as a result of such losses,
claims, damages or liabilities (or actions in respect thereof) in
such proportion as is appropriate to reflect the relative benefits
received by the Company and the Guarantors on the one hand and the
Purchasers on the other from the offering of the Securities. If,
however, the allocation provided by the immediately preceding
sentence is not permitted by applicable law or if the indemnified
party failed to give the notice required under subsection
(c) above, then each indemnifying party shall contribute to
such amount paid or payable by such indemnified party in such
proportion as is appropriate to reflect not only such relative
benefits but also the relative fault of the Company and the
Guarantors on the one hand and the Purchasers on the other in
connection with the statements or omissions which resulted in such
losses, claims, damages or liabilities (or actions in respect
thereof), as well as any other relevant equitable considerations.
The relative benefits received by the Company and the Guarantors on
the one hand and the Purchasers on the other shall be deemed to be
in the same proportion as the total net proceeds from the offering
(before deducting expenses) received by the Company and the
Guarantors bear to the total underwriting discounts and commissions
received by the Purchasers. The relative fault shall be determined
by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged
omission to state a material fact relates to information supplied
by the Company and the Guarantors on the one hand or the Purchasers
on the other and the parties’ relative intent, knowledge,
access to information and opportunity to correct or prevent such
statement or omission. The Company and the Guarantors and the
Purchasers agree that it would not be just and equitable if
contribution pursuant to this subsection (d) were determined
by pro rata allocation (even if the Purchasers were treated as one
entity for such purpose) or by any other method of allocation which
does not take account of the equitable considerations referred to
above in this subsection (d). The amount paid or payable by an
indemnified party as a result of the losses, claims, damages or
liabilities (or actions in respect thereof)
15
referred to above in this subsection
(d) shall be deemed to include any legal or other expenses
reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim.
Notwithstanding the provisions of this subsection (d), no Purchaser
shall be required to contribute any amount in excess of the amount
by which the total price at which the Securities underwritten by
it
