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EXHIBIT 10.5
SECURITIES PURCHASE AGREEMENT
DATED AS OF MAY 31, 2000
AMONG
HUNTSMAN PACKAGING CORPORATION
AND
THE PURCHASERS NAMED HEREIN
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TABLE OF CONTENTS
Article I DEFINED TERMS; RULES OF CONSTRUCTION...........................................................................1
1.1 Defined Terms..............................................................................................1
1.2 Rules of Construction......................................................................................7
Article II PURCHASE AND SALE OF SHARES; CLOSING..........................................................................8
2.1 Restated Charter...........................................................................................8
2.2 Authorization of Issuance of Purchased Securities..........................................................8
2.3 Sale of Purchased Securities...............................................................................8
2.4 Closing....................................................................................................8
2.5 Closing Deliveries.........................................................................................9
2.6 Use of Proceeds............................................................................................9
2.7 Closing Fee................................................................................................9
Article III REPRESENTATIONS AND WARRANTIES ABOUT THE COMPANY.............................................................9
3.1 Offering Memorandum........................................................................................9
3.2 Private Sale..............................................................................................10
3.3 Organization Etc..........................................................................................10
3.4 Capitalization............................................................................................10
3.5 Authorization, Etc........................................................................................11
3.6 Execution; Enforceability.................................................................................12
3.7 No Conflict; Consents.....................................................................................12
3.8 Financial Reports, Etc....................................................................................13
3.9 Litigation................................................................................................13
3.10 Adverse Actions...........................................................................................14
3.11 No Violation of Charters, Etc.............................................................................14
3.12 Permits...................................................................................................14
3.13 Taxes.....................................................................................................15
3.14 Investment Company; Holding Company.......................................................................15
3.15 Accounting Controls.......................................................................................15
3.16 Insurance.................................................................................................15
3.17 Intellectual Property.....................................................................................15
3.18 Title to Assets Etc.......................................................................................16
3.19 Labor Matters.............................................................................................16
3.20 ERISA Matters.............................................................................................16
3.21 Environmental Matters.....................................................................................16
3.22 Illegal Payments..........................................................................................17
3.23 Solvency..................................................................................................17
3.24 Brokers...................................................................................................18
3.25 Absence of Changes........................................................................................18
Article IV REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS.............................................................18
4.1 Authorization of the Documents............................................................................18
4.2 Investment Representations................................................................................19
Article V CONDITIONS TO CLOSING.........................................................................................19
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5.1 Conditions to Purchasers' Obligations.....................................................................19
5.2 Conditions to the Company's Obligations...................................................................21
Article VI TRANSFER OF SECURITIES.......................................................................................21
6.1 Restriction on Transfer...................................................................................21
6.2 Restrictive Legends.......................................................................................21
6.3 Notice of Transfer........................................................................................22
6.4 Transfer Pursuant to Rule 144.............................................................................23
6.5 Minimum Transfer..........................................................................................24
Article VII COVENANTS OF THE COMPANY....................................................................................24
7.1 Transactions with Affiliates..............................................................................24
7.2 Information Rights........................................................................................26
7.3 Books; Inspection Rights..................................................................................27
7.4 Merger and Consolidation..................................................................................27
7.5 Payments for Consents.....................................................................................28
7.6 Amendment of Restated Charter.............................................................................28
Article VIII MISCELLANEOUS..............................................................................................29
8.1 Expenses, Etc.............................................................................................29
8.2 Further Assurances........................................................................................30
8.3 Specific Performance; Remedies............................................................................30
8.4 Successors and Assigns....................................................................................30
8.5 Entire Agreement..........................................................................................30
8.6 Notices...................................................................................................31
8.7 Amendments, Modifications and Waivers.....................................................................32
8.8 Governing Law.............................................................................................32
8.9 No Third Party Reliance...................................................................................32
8.10 Submission to Jurisdiction................................................................................33
8.11 Severability..............................................................................................33
8.12 Independence of Agreements, Covenants, Representations and Warranties.....................................33
8.13 Survival of Representation, Warranties, Etc...............................................................34
8.14 Counterparts; Facsimile Signatures........................................................................34
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SCHEDULES AND EXHIBITS
SCHEDULES
Schedule I Purchasers and Purchase Price
Schedule 3.4(a) Ownership of Common Stock
EXHIBITS
Exhibit A Registration Rights Agreement
Exhibit B Restated Charter
Exhibit C Stockholders' Agreement
Exhibit D Warrant Agreement
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SECURITIES PURCHASE
AGREEMENT dated as of May 31,
2000, among HUNTSMAN PACKAGING
CORPORATION, a Utah corporation
(the "Company"), and the
Purchasers listed on Schedule I
hereto (collectively, the
"Purchasers").
WHEREAS, the Company is in the business of manufacturing and distributing
value-added films and flexible packaging for food, personal care, medical,
agricultural and industrial applications (the "Business").
WHEREAS, the Company desires to raise $100,000,000 in preferred equity
financing, and the Purchasers, severally and not jointly, desire to purchase
from the Company an aggregate of (i) 100,000 shares of Series A Preferred Stock
(as defined herein) and (ii) warrants to purchase 43,242 shares of Common Stock
(as defined herein), in each case on the terms and subject to the conditions
provided herein;
NOW THEREFORE, in consideration of the foregoing and the covenants,
agreements, representations and warranties contained in this Agreement, and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged by the parties, the parties hereto hereby agree as follows:
ARTICLE I
DEFINED TERMS; RULES OF CONSTRUCTION
1.1 DEFINED TERMS.
Capitalized terms used and not otherwise defined in this Agreement have
the meanings given to them below or in the other locations of this Agreement
specified below (or, if not defined herein, have the meanings ascribed to them
in the Restated Charter (as defined below)):
"Affiliate" of any specified Person means (i) any other Person,
directly or indirectly, controlling or controlled by or under direct or indirect
common control with such specified Person and (ii) for purposes of Section 7.1
only, any beneficial owner of shares representing 10% or more of the total
voting power of the Voting Stock (on a fully diluted basis) of the Company or of
rights or warrants to purchase such Voting Stock (whether or not currently
exercisable) and any Person who would be an Affiliate of any such beneficial
owner pursuant to clause (i). For the purposes of this definition, "control"
when used with respect to any Person means the power to direct the management
and policies of such Person, directly or indirectly, whether through the
ownership of voting securities, by contract or otherwise; and the terms
"controlling" and "controlled" have meanings correlative to the foregoing.
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"Affiliate Transaction" shall have the meaning given to such term
in Section 7.1(a).
"Agreement" shall have the meaning given to such term in Section
1.2.
"Board" means the Board of Directors of the Company or any
committee thereof duly authorized to act on behalf of the Board of Directors.
"Business" has the meaning given to it in the Preamble to this
Agreement.
"Business Day" means any day that is not (a) Pioneer Day in the
State of Utah; (b) a Saturday, Sunday, or legal holiday or (c) a day on
which banks are not required to be open in New York, New York.
"Capital Stock" of any Person means any and all shares, interests,
rights to purchase, warrants, options, participations or other equivalents of or
interests in (however designated) equity of such Person, including any Preferred
Stock, but excluding any debt securities convertible into such equity.
"CDI" means Chase Domestic Investments, L.L.C., a Delaware limited
liability company.
"Change of Control" means the occurrence of any of the following
events:
(a) prior to the first public offering of common stock of the
Company, the Permitted Holders cease to be the "beneficial owner" (as defined in
Rules 13-d-3 and 13d-5 under the Exchange Act), directly or indirectly, or a
majority in the aggregate of the total voting power of the Voting Stock of the
Company, whether as a result of issuance of securities of the Company, any
merger, consolidation, liquidation or dissolution of the Company, any direct or
indirect transfer of securities by any Permitted Holder or otherwise (for
purposes of this clause (a) and clause (b) below, the Permitted Holders shall be
deemed to beneficially own any Voting Stock of an entity (the "specified
entity") held by any other entity (the "parent entity") so long as the Permitted
Holders beneficially own (as so defined), directly or indirectly, in the
aggregate a majority of the voting power of the Voting Stock of the parent
entity);
(b) (i) any "person" (as such term is used in Sections 13(d)
and 14(d) of the Exchange Act, including any group acting for the purpose of
acquiring, holding or disposing of securities within the meaning of Rule
13-d-5(b)(1) under the Exchange Act), other than one or more Permitted Holders,
is or becomes the beneficial owner (as defined in clause (a) above, except that
for purposes of this clause (b) a person (including a Permitted Holder) shall be
deemed to have "beneficial ownership" of all shares that any such person has the
right to acquire, whether such right is exercisable immediately, only after the
passage of time, upon the happening of any event or otherwise), directly or
indirectly, of more than 50% of the total voting power of the Voting Stock of
the Company and (ii) the Permitted Holders "beneficially own" (as defined in
clause (a) above), directly or indirectly, in the aggregate a lesser percentage
of the total voting power of the Voting Stock of the Company than such other
person and do not have the
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right or ability by the voting power, contract or otherwise to elect or
designate for election a majority of the Board (for the purposes of this clause
(b), such other person shall be deemed to beneficially own any Voting Stock of a
specified entity held by a parent entity, if such other person is the beneficial
owner (as defined in this clause (b)), directly or indirectly, of more than 50%
of the voting power of the Voting Stock of such parent entity and the Permitted
Holders "beneficially own" (as defined in clause (b) above), directly or
indirectly, in the aggregate a lesser percentage of the voting power of the
Voting Stock of such parent entity and do not have the right or ability by
voting power, contract or otherwise to elect or designate for election a
majority of the Board of Directors of such parent entity);
(c) during any period of two consecutive years, individuals who
at the beginning of such period constituted the Board (together with any new
directors (i) selected in accordance with the Stockholders Agreement so long as
such agreement is in effect or otherwise nominated by the Permitted Holders or
(ii) whose election by the Board or whose nomination for election by the
stockholders of the Company was approved by a vote of at least a majority of the
members of the Board then still in office who were either directors at the
beginning of such period or whose election or nomination for election was
previously so approved by the Board or in accordance with the Stockholders
Agreement or otherwise by the Permitted Holders) cease for any reason to
constitute a majority of the Board then in office;
(d) the adoption of a plan relating to the liquidation or
dissolution of the Company; or
(e) the merger or consolidation of the Company with or into
another Person or the merger of another Person with or into the Company, or the
sale of all or substantially all the assets of the Company to another Person
(other than a Person that is controlled by the Permitted Holders), and, in the
case of any such merger or consolidation, the securities of the Company that are
outstanding immediately prior to such transaction and which represent 100% of
the aggregate voting power of the Voting Stock of the Company are changed into
or exchanged for cash, securities or property, unless pursuant to such
transaction such securities are changed into or exchanged for, in addition to
any other consideration, securities of the surviving Person or transferee that
represent immediately after such transaction, at least a majority of the
aggregate voting power of the Voting Stock of the surviving Person or
transferee.
"Closing" has the meaning given to it in Section 2.4.
"Closing Date" has the meaning given to it in Section 2.4.
"Code" means the Internal Revenue Code of 1986, as amended, and
the rules and regulations promulgated thereunder.
"Commission" means the Securities and Exchange Commission or any
other Federal agency at the time administering the Securities Act.
"Common Stock" means the Company's common stock, no par value.
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"Company" has the meaning given to it in the caption to this
Agreement.
"Credit Agreement" shall mean the Credit Agreement dated as of the
date hereof among the Company, ASPEN Industrial, S.A. de C.V., the Lenders party
thereto, Bankers Trust Company, as Administrative Agent and Collateral Agent,
The Chase Manhattan Bank, as Syndication Agent and The Bank of Nova Scotia, as
Documentation Agent.
"Documents" means the Restated Charter, this Agreement, the
Warrant Agreement, the Warrants, the Recapitalization Agreement, the Assignment
and Assumption Agreement dated as of the date hereof between CDI and the other
Purchasers, the Stockholders' Agreement and the Registration Rights Agreement.
"ERISA" has the meaning given to such term in Section 3.20.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, and the rules and regulations of the Commission promulgated thereunder,
all as the same shall be in effect from time to time.
"Existing Management Stockholders" means each of ▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇, ▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇.
"Final Memorandum" means the final offering memorandum dated May
25, 2000, to be used in connection with the sale of the New Notes.
"Fundamental Documents" means the documents by which any Person
(other than an individual) establishes its legal existence or which govern its
internal affairs. The Fundamental Documents of the Company as of the date hereof
are the Restated Charter and the Bylaws of the Company.
"GAAP" means generally accepted accounting principles in the
United States, as in effect from time to time, consistently applied.
"Indebtedness" has the meaning given to such terms in the New
Notes Indenture.
"Indemnitee" has the meaning given to such term in Section 8.1(b).
"Lien" means any mortgage, pledge, security interest, encumbrance,
restriction, lien or charge of any kind (including any conditional sale or other
title retention agreement or lease in the nature thereof).
"Material Adverse Effect" has the meaning given to such term in
Section 3.3.
"New Notes" means the Company's 13% Senior Subordinated Notes due
2010 issued on the date hereof pursuant to the New Notes Purchase Agreement.
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"New Notes Indenture" means the Indenture dated as of the date
hereof, among the Company, as Issuer, the Guarantors party thereto and The Bank
of New York, as Trustee.
"New Notes Purchase Agreement" means the Purchase Agreement dated
as of May 25, 2000, among the Company and the Initial Purchasers signatory
thereto relating to the New Notes and the Note Warrants.
"Note Warrants" means the warrants to purchase shares of Common
Stock issued in connection with the New Notes Purchase Agreement.
"Note Warrant Agreement" means the Note Warrant Agreement dated as
of the date hereof between the Company and The Bank of New York, as Warrant
Agent.
"Permitted Holders" means each of (i) Chase Capital Partners and
its Affiliates, (ii) CDI and its Affiliates, (iii) The ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Trust, (iv) the Existing Management Stockholders and their Related Parties and
(v) any Person acting in the capacity of an underwriter in connection with a
public or private offering of the Company's Capital Stock.
"Person" shall be construed as broadly as possible and shall
include an individual or natural person, a partnership (including a limited
liability partnership), a corporation, an association, a joint stock company, a
limited liability company, a trust, a joint venture, an unincorporated
organization and a governmental authority.
"Preliminary Memorandum" means the preliminary offering memorandum
dated May 11, 2000 used in connection with the offering of the New Notes.
"Purchased Securities" has the meaning given to such term in
Section 2.2.
"Purchaser" has the meaning given to it in the caption to this
Agreement and any Person succeeding to the rights of a Purchaser pursuant to the
terms hereof.
"Preferred Shares" means the shares of Series A Preferred Stock
being purchased pursuant to this Agreement.
"Recapitalization Agreement" means the Recapitalization Agreement
dated as of March 31, 2000, between the Company, the selling stockholders listed
therein and CDI, as amended and in effect on the date hereof.
"Registration Rights Agreement" means the Registration Rights
Agreement dated as of the date hereof among the Company, the Purchasers and the
other stockholders and other securityholders of the Company party thereto, in
substantially the form set forth in Exhibit A.
"Related Parties" means with respect to a Person (a) that is a
natural person (1) any spouse, parent or lineal descendant (including adopted
children) of such Person or (2) the estate of such Person during any period in
which such estate holds
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Capital Stock of the Company for the benefit of any person referred to in clause
(a)(1) and (b) any trust, corporation, partnership, limited liability company or
other entity, the beneficiaries, stockholders, partners, owners or Persons
beneficially owning an interest of more than 50% of which consist of such Person
and/or such other Persons referred to in the immediately preceding clause (a).
"Requisite Purchasers" means, as of any date of determination,
Purchasers holding Preferred Shares representing at least sixty percent (60%) of
the Preferred Shares then issued and then outstanding.
"Restated Charter" means the Third Amended and Restated Articles
of Incorporation of the Company, substantially in the form set forth in Exhibit
B.
"Restricted Securities" means the Purchased Securities, any
securities issued with respect to the Purchased Securities by way of a stock
dividend or stock split or in connection with a combination of shares,
recapitalization, merger, consolidation or other reorganization, to the extent
such Securities have not been sold to the public pursuant to (a) registration
under the Securities Act or (b) Rule 144 (or similar or successor rule)
promulgated under the Securities Act.
"Restricted Subsidiary" shall have the meaning given to such term
in the New Notes Indenture.
"Security" has the meaning given to the term "security" in Section
2(1) of the Securities Act.
"Securities Act" means the Securities Act of 1933, as amended, or
any successor Federal statute, and the rules and regulations of the Commission
promulgated thereunder, all as the same shall be in effect from time to time
"Series A Preferred Stock" means the Company's Series A Cumulative
Exchangeable Redeemable Preferred Stock, no par value.
"Stockholders' Agreement" means the Stockholders' Agreement dated
as of the date hereof among the Company and the stockholders and other
securityholders of the Company party thereto, in substantially the form set
forth in Exhibit C.
"Subsidiary" or "subsidiary" means, with respect to any Person,
any other Person of which more than fifty percent (50%) of the shares of stock
or other interests entitled to vote in the election of directors or comparable
Persons performing similar functions (excluding shares or other interests
entitled to vote only upon the failure to pay dividends thereon or other
contingencies) are at the time owned or controlled, directly or indirectly
through one or more Subsidiaries, by such Person. Unless the context otherwise
requires, the term "Subsidiary" means a Subsidiary of the Company.
"Successor Company" has the meaning given to such term in Section
7.4.
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"Transactions" has the meaning given to such term in the Final
Memorandum.
"Transaction Documents" means the Recapitalization Agreement, the
New Notes Indenture, the Registration Rights Agreement (as defined in the New
Notes Indenture), the New Notes, the New Notes Purchase Agreement, the Note
Warrant Agreement, the Credit Agreement, the instruments and agreements executed
and delivered in connection with the Credit Agreement and the other Documents.
"Trustee" has the meaning given to it in the Indenture.
"Voting Stock" of a Person means all classes of Capital Stock or
other interests (including partnership interests) of such Person then
outstanding and normally entitled (without regard to the occurrence of any
contingency) to vote in the election of directors, managers or trustees thereof.
"Warrant Agreement" means the Warrant Agreement dated as of the
date hereof among the Company and the initial holders party thereto, in
substantially the form set forth in Exhibit D.
"Warrants" means the warrants to purchase shares of Common Stock
issued pursuant to the Warrant Agreement.
"Warrant Shares" has the meaning given to such term in the Warrant
Agreement.
1.2 RULES OF CONSTRUCTION.
The term this "Agreement" means this agreement together with all
schedules and exhibits hereto, as the same may from time to time be amended,
modified, supplemented or restated in accordance with the terms hereof. The use
in this Agreement of the term "including" means "including, without limitation."
The words "herein," "hereof," "hereunder" and other words of similar import
refer to this Agreement as a whole, including the schedules and exhibits, as the
same may from time to time be amended, modified, supplemented or restated, and
not to any particular section, subsection, paragraph, subparagraph or clause
contained in this Agreement. All references to sections, schedules and exhibits
mean the sections of this Agreement and the schedules and exhibits attached to
this Agreement, except where otherwise stated. The title of and the section and
paragraph headings in this Agreement are for convenience of reference only and
shall not govern or affect the interpretation of any of the terms or provisions
of this Agreement. The use herein of the masculine, feminine or neuter forms
shall also denote the other forms, as in each case the context may require or
permit. Where specific language is used to clarify by example a general
statement contained herein, such specific language shall not be deemed to
modify, limit or restrict in any manner the construction of the general
statement to which it relates. The language used in this Agreement has been
chosen by the parties to express their mutual intent, and no rule of strict
construction shall be applied against any party. Unless expressly provided
otherwise, the measure of a period of one month or year for purposes of this
Agreement shall be that date of the
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following month or year corresponding to the starting date, provided that if no
corresponding date exists, the measure shall be that date of the following month
or year corresponding to the next day following the starting date. For example,
one month following February 18 is March 18, and one month following March 31 is
May 1.
ARTICLE II
PURCHASE AND SALE OF SHARES; CLOSING
2.1 RESTATED CHARTER.
Prior to the Closing, the Company has filed with the Secretary of State
of the State of Utah the Restated Charter. The Restated Charter designates
100,000 shares of Series A Preferred Stock and sets forth the powers,
preferences and relative, participating, optional or other special rights and
qualifications, limitations or restrictions thereof.
2.2 AUTHORIZATION OF ISSUANCE OF PURCHASED SECURITIES.
The Company has authorized the issuance at the Closing of (i) an
aggregate of 100,000 shares of Series A Preferred Stock and (ii) Warrants to
purchase an aggregate of 43,242 shares of Common Stock (the "Purchased
Securities").
2.3 SALE OF PURCHASED SECURITIES.
(a) At the Closing, subject to the satisfaction or waiver of the
conditions set forth in Article V, the Company shall issue and sell to each
Purchaser, and each Purchaser shall severally purchase from the Company, the
numbers of Purchased Securities set forth opposite its name on Schedule I for
the aggregate purchase price set forth opposite its name on such Schedule I.
(b) The Purchasers and the Company hereby acknowledge and agree
that the Preferred Shares are part of an "investment unit" under principles of
Section 1273(c)(2) of the Code, which includes the Warrants. Notwithstanding
anything to the contrary contained herein, the Purchasers and the Company hereby
further acknowledge and agree that for United States federal income tax purposes
the aggregate "issue price" of the Preferred Shares and the Warrants under
principles of Section 1273(b) of the Code (and for purposes of comparable state
and local income tax laws) shall equal $81,500,000 and $18,500,000,
respectively. The Purchasers and the Company agree to use the foregoing issue
prices for all income tax purposes with respect to this transaction.
2.4 CLOSING.
The closing (the "Closing") hereunder with respect to the issuance and
sale of the Purchased Securities being purchased by each Purchaser and the
consummation of the related transactions contemplated hereby shall, subject to
the satisfaction or waiver of the applicable conditions set forth in Section
5.1, take place at the offices of ▇'▇▇▇▇▇▇▇▇ Graev & Karabell, LLP at ▇▇
▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, on the
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date of the closing of the transactions contemplated by the Recapitalization
Agreement, or at such other time, date or place as agreed to by the parties (the
"Closing Date").
2.5 CLOSING DELIVERIES.
At the Closing, the Company shall deliver to each Purchaser (i) one or
more stock certificates, registered in such Purchaser's name, representing the
Preferred Shares set forth opposite each such Purchaser's name on Schedule I
hereto and (ii) one or more warrant certificates, registered in such Purchaser's
name, representing the Warrants set forth opposite each such Purchaser's name on
Schedule I hereto, against receipt by the Company of a wire transfer of
immediately available funds to an account or accounts designated by the Company,
of an aggregate amount equal to the purchase price for the Purchased Securities
being purchased by such Purchaser at the Closing, net of the Closing Fee payable
by the Company to such Purchaser in accordance with Section 2.7 below.
2.6 USE OF PROCEEDS.
The proceeds received by the Company from the sale of the Purchased
Securities shall be used by the Company solely as set forth under "Sources and
Uses of Funds" in the Final Memorandum.
2.7 CLOSING FEE.
At the Closing, each Purchaser shall receive a closing fee (the "Closing
Fee") equal to 1.5% of the aggregate amount of the purchase price for the
Purchased Securities being purchased by such Purchaser at the Closing. The
Closing Fee shall be deducted from the aggregate purchase price payable by each
Purchaser.
ARTICLE III
REPRESENTATIONS AND WARRANTIES ABOUT THE COMPANY
The Company represents and warrants to, and agrees with, the
Purchasers on and as of the date hereof and the Closing Date that:
3.1 OFFERING MEMORANDUM.
Each of the Preliminary Offering Memorandum and the Final Memorandum, as
of its respective date, did not, and on the Closing Date the Final Memorandum
will not, contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading; provided that the Company makes no representation or
warranty as to information contained in or omitted from the Preliminary Offering
Memorandum or the Final Memorandum in reliance upon and in conformity with
written information, if any, relating to the Purchasers furnished to the Company
by or on behalf of any Purchaser specifically for use therein. The statistical
and market-related data included in the Final Memorandum are based on or derived
from
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sources, including management estimates, that the Company believes to be
reliable. No forward-looking statement (within the meaning of Section 27A of the
Securities Act and Section 21E of the Exchange Act) contained in the Preliminary
Offering Memorandum or the Final Memorandum has been made or reaffirmed without
a reasonable basis or has been disclosed other than in good faith.
3.2 PRIVATE SALE.
Assuming (i) that the Purchased Securities are issued, sold and delivered
under the circumstances contemplated by this Agreement and (ii) the accuracy of
the representations and warranties of the Purchasers contained in Article IV and
their compliance with the agreements set forth herein, it is not necessary, in
connection with the issuance and sale of the Purchased Securities to the
Purchasers to register such Securities under the Securities Act.
3.3 ORGANIZATION ETC.
The Company and each of its subsidiaries have been duly incorporated or
formed and are validly existing as corporations or limited liability companies
in good standing under the laws of their respective jurisdictions of
incorporation or formation, are duly qualified to do business and are in good
standing as foreign corporations or limited liability companies in each
jurisdiction in which their respective ownership or lease of property or the
conduct of their respective businesses requires such qualification, and have all
power and authority necessary to own or hold their respective properties and to
conduct the businesses in which they are engaged, except where the failure to so
qualify or have such power or authority would not, singularly or in the
aggregate, have a material adverse effect on the condition (financial or
otherwise), results of operations, business or prospects of the Company and its
subsidiaries taken as a whole (a "Material Adverse Effect"). ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Films Corporation is the only Subsidiary which is a significant subsidiary (as
defined in Section 1.02(w) of Regulation S-X under the Securities Act and the
Exchange Act).
3.4 CAPITALIZATION.
(a) The authorized capital stock of the Company immediately
after the Closing shall consist of:
(i) 10,000,000 duly authorized shares of Common Stock, of
which (i) 548,508 shares shall be duly and validly issued and outstanding,
fully paid and nonassessable, with no personal liability attached to the
ownership thereof, all of which shall be held of record by the Persons and
in the amounts set forth on Schedule 3.4(a), (ii) no shares shall be held
by the Company as treasury shares, (iii) 8,902 shares shall be duly and
validly reserved for issuance pursuant to outstanding options, (iv) 14,954
shares shall be duly and validly reserved for issuance pursuant to options
or as restricted stock that may be granted or sold after the date hereof to
employees of the Company pursuant to the Company's 2000 Stock Incentive
Plan, (v) 43,242 shares shall be duly and validly reserved
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for issuance pursuant to the Warrants and (vi) 18,532 shares shall be duly
and validly reserved for issuance pursuant to the Note Warrants.
(ii) 200,000 duly authorized shares of Preferred Stock,
100,000 of which shall be designated Series A Cumulative Exchangeable
Redeemable Preferred Stock and shall be duly and validly issued and
outstanding, fully paid and nonassessable, with no personal liability
attached to the ownership thereof, all of which shall be held of record by
the Purchasers and in the amounts set forth on Schedule I, free and clear
of all Liens, other than Liens held by Persons claiming by, through or
under the Purchasers, Liens imposed by the Documents and restrictions under
federal or state securities laws.
(b) All Warrant Shares, if and when issued in accordance with the
Warrants, will be duly and validly issued and outstanding, fully paid and
nonassessable, with no personal liability attached to the ownership thereof.
(c) Other than the Warrants and the Note Warrants and the option
granted to ▇▇▇▇ ▇▇▇▇▇ to purchase 8,902 shares of Common Stock, there are no
outstanding warrants, options, agreements, convertible securities and other
commitments pursuant to which the Company is or may become obligated to issue,
sell or otherwise transfer any equity Securities of the Company.
(d) Except as contemplated by the Stockholders' Agreement, there are
no preemptive rights, rights of first refusal or other similar rights to
purchase or otherwise acquire shares of capital stock or other equity Securities
of the Company pursuant to any Applicable Law, any Fundamental Document of the
Company or any agreement to which the Company is a party or may be bound.
(e) Except as contemplated by the Documents and the Fundamental
Documents of the Company, there is no Lien (including any right of first
refusal, right of first offer, proxy, voting trust or voting agreement) with
respect to the sale or voting of any equity Securities of the Company (whether
outstanding or issuable upon the conversion, exchange or exercise of outstanding
Securities).
(f) Other than as required by the Restated Charter or the
Stockholders' Agreement, there are no obligations to redeem, repurchase or
otherwise acquire shares of capital stock or other equity Securities of the
Company pursuant to any Applicable Law, any Fundamental Documents of the Company
or any agreement to which the Company is a party or may be bound.
(g) Except as contemplated by the Registration Rights Agreement, no
Person has any right to cause the Company to effect the registration under the
Securities Act of any shares of Common Stock or any other equity Securities of
the Company.
3.5 AUTHORIZATION, ETC.
The Company and each of its subsidiaries has full right, power and
authority to execute and deliver this Agreement and the other Transaction
Documents to which it is a
16
party and to perform their respective obligations hereunder and thereunder; and
all requisite action required to be taken for the due and proper authorization,
execution and delivery of each of the Transaction Documents to which the Company
or any of its subsidiaries is a party and the consummation of the transactions
contemplated thereby have been duly and validly taken.
3.6 EXECUTION; ENFORCEABILITY.
This Agreement and each of the other Documents has been duly executed and
delivered by the Company and constitutes a valid and legally binding agreement
of the Company, enforceable against the Company in accordance with its terms,
except to the extent that (i) such enforceability may be subject to (A)
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and
other similar laws affecting creditors' rights generally and (B) general
equitable principles (whether considered in a proceeding in equity or at law)
and (ii) the validity or enforceability of rights to indemnification and
contribution under the Registration Rights Agreement may be limited by Federal
or state securities laws or regulations or the public policy underlying such
laws or regulations.
3.7 NO CONFLICT; CONSENTS.
The execution, delivery and performance by the Company and each of its
subsidiaries of each of the Transaction Documents to which such entity is a
party and the consummation of the transactions contemplated by the Transaction
Documents will not (i) conflict with or result in a breach or violation of any
of the terms or provisions of, or constitute a default under, or, except for
those permitted under the Credit Agreement, result in the creation or imposition
of any Lien upon any property or assets of the Company or any of its
subsidiaries pursuant to, any material indenture, mortgage, deed of trust, loan
agreement or other material agreement or instrument to which the Company or any
of its subsidiaries is a party or by which the Company or any of its
subsidiaries is bound or to which any of the property or assets of the Company
or any of its subsidiaries is subject, except for such conflict, breach or
violation which would not, singularly or in the aggregate, have a Material
Adverse Effect, (ii) result in any violation of the provisions of the charter or
by-laws of the Company or any of its subsidiaries or (iii) result in any
violation of any statute or any judgment, order, decree, rule or regulation of
any court or arbitrator or governmental agency or body having jurisdiction over
the Company or any of its subsidiaries or any of their properties or assets
(assuming compliance by the Purchasers with their representations, warranties
and agreements set forth in Article IV hereof, except for such conflict, breach
or violation which would not, singularly or in the aggregate, have a Material
Adverse Effect; and (assuming compliance by the Purchasers with their
representations, warranties and agreements set forth in Article IV hereof) no
consent, approval, authorization or order of, or filing or registration with,
any such court or arbitrator or governmental agency or body under any such
statute, judgment, order, decree, rule or regulation is required for the
execution, delivery and performance by the Company and each of its subsidiaries
of each of the Transaction Documents to which each is a party and the
consummation of the transactions contemplated by the Transaction Documents,
except for such consents, approvals,
17
authorizations, filings, registrations or qualifications (i) which shall have
been obtained or made on or prior to the Closing Date, (ii) in the case of
performance or compliance with the Registration Rights Agreement and the
Registration Rights Agreement (as defined in the New Notes Indenture), such as
may be required to be obtained or made under the Securities Act and the Trust
Indenture Act of 1939, as amended (iii) as may be required under state or
foreign securities and blue sky laws and the rules and regulations of the
National Association of Securities Dealers, Inc. and (iv) as may be required to
perfect Liens granted under the Credit Agreement.
3.8 FINANCIAL REPORTS, ETC.
To the best knowledge of the Company, each of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP and
Deloitte & Touche LLP are independent certified public accountants with respect
to the Company and its subsidiaries within the meaning of Rule 101 of the Code
of Professional Conduct of the American Institute of Certified Public
Accountants and its interpretations and rulings thereunder. The historical
financial statements (including the related notes) contained in the Final
Memorandum have been prepared in accordance with generally accepted accounting
principles consistently applied throughout the periods covered thereby and
fairly present the financial position of the entities purported to be covered
thereby at the respective dates indicated and the results of their operations
and their cash flows for the respective periods indicated; and the financial
information contained in the Final Memorandum under the headings
"Summary--Summary Historical and Pro Forma Financial Data", "Capitalization",
"Selected Financial Data", "Unaudited Pro Forma Financial Data", "Management's
Discussion and Analysis of Financial Condition and Results of Operations" and
"Management--Executive Compensation" are derived from the accounting records of
the Company and its subsidiaries and accurately present in all material respects
the information purported to be shown thereby. The pro forma financial
information contained in the Final Memorandum has been prepared on a basis
consistent with the historical financial statements contained in the Final
Memorandum (except for the pro forma adjustments specified therein), includes
all material adjustments to the historical financial information required by
Rule 11-02 of Regulation S-X under the Securities Act and the Exchange Act), to
reflect the transactions described in the Final Memorandum, gives effect to
assumptions made on a reasonable basis and fairly presents the historical and
proposed transactions contemplated by the Final Memorandum and the Transaction
Documents. The other historical financial information and data concerning the
Company and its subsidiaries included in the Final Memorandum are accurately
presented in all material respects. The projected financial information
delivered to the Purchasers on or prior to the date hereof was prepared in good
faith based upon assumptions believed to be reasonable at the time.
3.9 LITIGATION.
There are no legal or governmental proceedings pending to which the
Company or any of its subsidiaries is a party or of which any property or assets
of the Company or any of its subsidiaries is the subject which, (A) singularly
or in the aggregate, if determined adversely to the Company or any of its
subsidiaries, could reasonably be expected to have a Material Adverse Effect or
(B) question the validity or enforceability
18
of any of the Transaction Documents or any action taken or to be taken pursuant
thereto; and to the best knowledge of the Company and each of its subsidiaries,
no such proceedings are threatened or contemplated by governmental authorities
or threatened by others.
3.10 ADVERSE ACTIONS.
To the best knowledge of the Company and each of its subsidiaries, (A) no
action has been taken and no statute, rule, regulation or order has been
enacted, adopted or issued by any governmental agency or body which prevents the
issuance of the Purchased Securities or suspends the sale of the Purchased
Securities in any jurisdiction; and (B) no injunction, restraining order or
order of any nature by any federal, state or foreign court of competent
jurisdiction has been issued with respect to the Company or any of its
subsidiaries which would prevent or suspend the issuance or sale of the
Purchased Securities in any jurisdiction; no action, suit or proceeding is
pending against or, to the best knowledge of the Company and each of its
subsidiaries, threatened against or affecting the Company or any of its
subsidiaries before any court or arbitrator or any governmental agency, body or
official, domestic or foreign, which could reasonably be expected to interfere
with or adversely affect the issuance of the Purchased Securities or in any
manner draw into question the validity or enforceability of any of the
Transaction Documents or any action taken or to be taken pursuant thereto.
3.11 NO VIOLATION OF CHARTERS, ETC.
Neither the Company nor any of its subsidiaries, is (i) in violation of
its charter or by-laws (or similar organizational document), (ii) in default,
and no event has occurred which, with notice or lapse of time or both, would
constitute such a default, in the due performance or observance of any term,
covenant or condition contained in any material indenture, mortgage, deed of
trust, loan agreement or other material agreement or instrument to which it is a
party or by which it is bound or to which any of its property or assets is
subject or (iii) in violation of any law, ordinance, governmental rule,
regulation or court decree to which it or its property or assets may be subject,
except in the case of clauses (ii) and (iii) for any such default or violation
which would not, singularly or in the aggregate, have a Material Adverse Effect.
3.12 PERMITS.
The Company and each of its subsidiaries possess all material licenses,
certificates, authorizations and permits issued by, and have made all
declarations and filings with, the appropriate federal, state or foreign
regulatory agencies or bodies which are necessary or desirable for the ownership
of their respective properties or the conduct of their respective businesses as
described in the Final Memorandum, except where the failure to possess or make
the same would not, singularly or in the aggregate, have a Material Adverse
Effect, and neither the Company nor any of its subsidiaries has received
notification of any revocation or modification of any such license, certificate,
authorization or permit or has any reason to believe that any such license,
certificate, authorization or permit will not be renewed in the ordinary course.
19
3.13 TAXES.
Each of Company and each of its subsidiaries has timely filed or caused
to be filed all federal, state, local and foreign income and franchise tax
returns and reports required to have been filed and has paid or caused to be
paid all taxes required to have been paid by it, except (i) any taxes that are
being contested in good faith by appropriate proceedings and for which the
Company or such subsidiary, as applicable, has set aside on its books adequate
reserves or (ii) to the extent that the failure to do so could not reasonably be
expected to result in a Material Adverse Effect.
3.14 INVESTMENT COMPANY; HOLDING COMPANY.
Neither the Company nor any of its subsidiaries is (i) an "investment
company" or a company "controlled by" an investment company within the meaning
of the Investment Company Act of 1940, as amended, and the rules and regulations
of the Commission thereunder or (ii) a "holding company" or a "subsidiary
company" of a holding company or an "affiliate" thereof within the meaning of
the Public Utility Holding Company Act of 1935, as amended.
3.15 ACCOUNTING CONTROLS.
The Company and each of its subsidiaries maintain 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 asset accountability; (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.
3.16 INSURANCE.
The Company and each of its subsidiaries maintains insurance covering
their respective properties, operations, personnel and businesses against loss
or damage of the kinds customarily insured against by entities engaged in the
same or similar businesses as the Company and its subsidiaries, and such
insurance is of such type and in such amounts in accordance with customary
industry practice.
3.17 INTELLECTUAL PROPERTY.
The Company and each of its subsidiaries own or possess adequate rights
to use all material patents, patent applications, trademarks, service marks,
trade names, trademark registrations, service ▇▇▇▇ registrations, copyrights,
licenses and know-how (including trade secrets and other unpatented and/or
unpatentable proprietary or confidential information, systems or procedures)
necessary for the conduct of their respective businesses; and the conduct of
their respective businesses will not conflict with, and the Company and its
subsidiaries have not received any notice of any claim of
20
conflict with, any such rights of others, except for such conflicts which would
not, singularly or in the aggregate, have a Material Adverse Effect.
3.18 TITLE TO ASSETS ETC.
The Company and each of its subsidiaries have good and marketable title
in fee simple to, or have valid rights to lease or otherwise use, all items of
real and personal property which are material to the business of the Company and
its subsidiaries taken as a whole, in each case free and clear of all Liens,
claims and defects and imperfections of title except (A) for Liens permitted
under the Credit Agreement and (B) such as (i) do not materially interfere with
the use made and proposed to be made of such property by the Company and its
subsidiaries or (ii) could not reasonably be expected to have a Material Adverse
Effect.
3.19 LABOR MATTERS.
No labor disturbance by or dispute with the employees generally of the
Company or any of its subsidiaries exists or, to the best knowledge of the
Company and its subsidiaries, is contemplated or threatened.
3.20 ERISA MATTERS.
No "prohibited transaction" (as defined in Section 406 of the Employee
Retirement Income Security Act of 1974, as amended, including the regulations
and published interpretations thereunder ("ERISA"), or Section 4975 of the Code)
or "accumulated funding deficiency" (as defined in Section 302 of ERISA) or any
of the events set forth in Section 4043(b) of ERISA (other than events with
respect to which the 30-day notice requirement under Section 4043 of ERISA has
been waived) has occurred with respect to any employee benefit plan of the
Company or any of its subsidiaries which could reasonably be expected to have a
Material Adverse Effect; each such employee benefit plan is in compliance in all
material respects with applicable law, including ERISA and the Code; the Company
and each of its subsidiaries have not incurred and do not expect to incur
material liability under Title IV of ERISA with respect to the termination of,
or withdrawal from, any pension plan for which the Company or any of its
subsidiaries would have any liability; and each such pension plan 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 could reasonably be expected to cause the loss of such qualification.
3.21 ENVIRONMENTAL MATTERS.
There has been no storage, generation, transportation, handling,
treatment, disposal, discharge, emission or other release of any kind of toxic
or other wastes or other hazardous substances by, due to or caused by the
Company or any of its subsidiaries (or, to the best knowledge of the Company and
its subsidiaries, any other entity (including any predecessor) for whose acts or
omissions the Company or any of its subsidiaries is or could reasonably be
expected to be liable) upon any of the property now or previously owned or
leased by the Company or any of its subsidiaries, or upon any other property, in
21
violation of any statute or any ordinance, rule, regulation, order, judgment,
decree or permit or which would, under any statute or any ordinance, rule
(including rule of common law), regulation, order, judgment, decree or permit,
give rise to any liability, except for any violation or liability that could not
reasonably be expected to have, singularly or in the aggregate with all such
violations and liabilities, a Material Adverse Effect; and there has been no
disposal, discharge, emission or other release of any kind onto such property or
into the environment surrounding such property of any toxic or other wastes or
other hazardous substances with respect to which the Company or any of its
subsidiaries has knowledge, except for any such disposal, discharge, emission or
other release of any kind which could not reasonably be expected to have,
singularly or in the aggregate with all such discharges and other releases, a
Material Adverse Effect.
3.22 ILLEGAL PAYMENTS.
Neither the Company nor, to the best knowledge of the Company and each of
its subsidiaries, any director, officer, agent, employee or other person
associated with or acting on behalf of the Company or any of its subsidiaries
has (i) used any corporate funds for any unlawful contribution, gift,
entertainment or other unlawful expense relating to political activity; (ii)
made any direct or indirect unlawful payment to any foreign or domestic
government official or employee from corporate funds; (iii) violated or is in
violation of any provision of the Foreign Corrupt Practices Act of 1977; or (iv)
made any bribe, rebate, payoff, influence payment, kickback or other unlawful
payment.
3.23 SOLVENCY.
On and immediately after the Closing Date, the Company (after giving
effect to the Transactions described in the Final Memorandum) will be Solvent.
As used in this paragraph, the term "Solvent" means, with respect to a
particular date, that on such date (i) the present fair market value (or present
fair saleable value) of the assets of the Company is not less than the total
amount required to pay the probable liabilities of the Company on its total
existing debts and liabilities (including contingent liabilities) as they become
absolute and matured, (ii) the Company is able to realize upon its assets and
pay its debts and other liabilities, contingent obligations and commitments as
they mature and become due in the normal course of business, (iii) assuming the
consummation of the Transactions described in the Final Memorandum, the Company
is not incurring debts or liabilities beyond its ability to pay as such debts
and liabilities mature and (iv) the Company is not engaged in any business or
transaction, and is not about to engage in any business or transaction, for
which its property would constitute unreasonably small capital after giving due
consideration to the prevailing practice in the industry in which the Company is
engaged. In computing the amount of such contingent liabilities at any time, it
is intended that such liabilities will be computed at the amount that, in the
light of all the facts and circumstances existing at such time, represents the
amount that can reasonably be expected to become an actual or matured liability.
22
3.24 BROKERS.
Neither the Company nor any of its subsidiaries is a party to any
contract, agreement or understanding with any person that would give rise to a
valid claim against the Company or the Purchasers for a brokerage commission,
finder's fee or like payment in connection with the offering and sale of the
Preferred Shares and the Warrants.
3.25 ABSENCE OF CHANGES.
Since the date as of which information is given in the Final Memorandum,
except as otherwise stated therein, (i) there has been no material adverse
change or any development involving a prospective material adverse change in the
condition, financial or otherwise, or in the earnings, business affairs,
management or business prospects of the Company or any of its subsidiaries,
whether or not arising in the ordinary course of business, (ii) none of the
Company or any of its subsidiaries has incurred any material liability or
obligation, direct or contingent, other than in the ordinary course of business,
(iii) none of the Company or any of its subsidiaries has entered into any
material transaction other than in the ordinary course of business and (iv)
there has not been any material change in the long-term debt of the Company or
any of its subsidiaries, or any dividend or distribution of any kind declared,
paid or made by the Company on any class of its capital stock.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS
Each Purchaser represents and warrants severally, and not jointly as to
any other Purchaser, as follows:
4.1 AUTHORIZATION OF THE DOCUMENTS.
Such Purchaser has all requisite power and authority to execute, deliver
and perform the Documents to which it is a party and the transactions
contemplated thereby, and the execution, delivery and performance by such
Purchaser of the Documents to which it is a party have been duly authorized by
all requisite action by such Purchaser. This Agreement has been duly executed
and delivered by such Purchaser and this Agreement constitutes and, when
executed and delivered by such Purchaser (assuming the due authorization,
execution and delivery by the other parties thereto), each other Document to
which such Purchaser is a party will constitute, a valid and binding obligation
of such Purchaser, enforceable against such Purchaser in accordance with its
terms, subject to (i) applicable bankruptcy, insolvency, reorganization,
fraudulent conveyance, moratorium or other similar laws and subject to general
principles of equity and (ii) the validity or enforceability of rights to
indemnification and contribution under the Registration Rights Agreement may be
limited by Federal or state securities laws or regulations or the public policy
underlying such laws or regulations.
23
4.2 INVESTMENT REPRESENTATIONS.
Solely for establishing that the sale or issuance of the Purchased
Securities to such Purchaser is exempt from the registration requirements of the
Securities Act and comparable provisions of state blue-sky laws and not in any
way to mitigate the responsibility or liability of the Company for any breach of
the representations and warranties made by it in this Agreement, on which such
Purchaser is relying in full in connection with its decision to invest in the
Company:
(a) Such Purchaser is acquiring the Purchased Securities for
its own account, for investment and not with a view to the distribution thereof
in violation of the Securities Act or applicable state securities laws;
(b) Such Purchaser (A) understands that (i) the Purchased
Securities have not been registered under the Securities Act or applicable state
securities laws by reason of their issuance by the Company in a transaction
exempt from the registration requirements of the Securities Act and applicable
state securities laws and (ii) the Purchased Securities and the Warrant Shares
must be held by such Purchaser indefinitely unless a subsequent disposition
thereof is registered under the Securities Act and applicable state securities
laws or is exempt from such registration and (B) has had the opportunity to ask
questions of, and receive answers from, the Company and its management relating
to the business and financial condition of the Business;
(c) Such Purchaser further understands that the exemption from
registration afforded by Rule 144 (the provisions of which are known to such
Purchaser) promulgated under the Securities Act depends on the satisfaction of
various conditions, and that, if applicable, Rule 144 may afford the basis for
sales of Purchased Securities and Warrant Shares in limited amounts;
(d) Such Purchaser has not employed any broker or finder in
connection with the transactions contemplated by this Agreement; and
(e) Such Purchaser is an "accredited investor" (as defined in
Rule 501(a) of Regulation D promulgated under the Securities Act). Such
Purchaser has such knowledge and experience in financial and business matters
that it is capable of evaluating the risks and merits of this investment. Such
Purchaser's representations in this subsection shall in no way limit the
enforceability of any representations made by the Company in any of the
Documents to which it is a party.
ARTICLE V
CONDITIONS TO CLOSING
5.1 CONDITIONS TO PURCHASERS' OBLIGATIONS.
The obligation of each Purchaser to purchase and pay for the Securities
to be purchased hereunder at the Closing is subject to the satisfaction of the
following conditions precedent (unless waived by such Purchaser):
24
(a) The Company shall have filed the Restated Charter with and
such filing shall have been accepted by the Secretary of State of the State of
Utah and the Purchasers shall have received reasonably satisfactory evidence of
such filing;
(b) The Company shall have duly issued and delivered to each
Purchaser one or more stock certificates for the Preferred Shares, and one or
more warrant certificates for the Warrants, purchased by such Purchaser;
(c) The Company shall have duly executed and delivered to each
Purchaser the Registration Rights Agreement and the Stockholders' Agreement;
(d) The Company shall have performed its obligations under, and
shall have complied with, all the covenants and agreements set forth in this
Agreement and the other Documents and all representations and warranties
contained in Article III shall be true and correct as of the date hereof and at
and as of the Closing Date with the same effect as if such representations and
warranties had been made at and as of the Closing Date, and each Purchaser shall
have received a certificate to that effect signed by an officer of the Company;
(e) Each Purchaser shall have received an opinion from Winston
& ▇▇▇▇▇▇ and Stoel Rives (each, counsel to the Company), in a form reasonably
acceptable to the Purchasers;
(f) Each Purchaser shall have received a certificate from the
Secretary or an Assistant Secretary of the Company, dated as of the Closing
Date, certifying (i) that true and complete copies of the Fundamental Documents
of the Company as in effect on the Closing Date are attached thereto, (ii) as to
the incumbency and genuineness of the signatures of each Person executing this
Agreement and the other Documents on behalf of the Company and (iii) the
genuineness of the resolutions (attached thereto) of the board of directors or
similar governing body of the Company authorizing the execution, delivery and
performance of this Agreement and the other Documents to which the Company is a
party and the consummation of the transactions contemplated hereby and thereby;
and
(g) Each of the conditions to the obligations of CDI under the
Recapitalization Agreement shall have been satisfied and each of the conditions
to the obligations of the "Initial Purchasers" under the New Notes Purchase
Agreement and "the Lenders" under Credit Agreement shall have been satisfied
without waiver or amendment (except as disclosed to and reasonably satisfactory
to the Purchasers) and the Purchasers shall be satisfied that the closings under
such agreements will take place concurrently with the Closing.
(h) Each of the Documents shall be in full force and effect and
no term or condition thereof shall have been amended, waived or otherwise
modified without the prior written consent of each Purchaser.
(i) The issuance and sale of the Purchased Securities to the
other Purchasers shall have been consummated simultaneously with the Closing.
25
5.2 CONDITIONS TO THE COMPANY'S OBLIGATIONS.
The obligation of the Company to issue the Purchased Securities at the
Closing is subject to the satisfaction of the following conditions precedent
(unless waived by the Company):
(a) Each Purchaser shall have delivered to the Company by wire
transfer, of immediately available funds to an account or accounts designated by
the Company, an aggregate amount equal to the purchase price for the Purchased
Securities being purchased by such Purchaser, net of the Closing Fee payable by
the Company to such Purchaser in accordance with Section 2.7; and
(b) The Company shall be satisfied that the closings under the
Recapitalization Agreement, the New Notes Purchase Agreement and the Credit
Agreement shall take place concurrently with the Closing.
(c) Each Purchaser shall have duly executed and delivered the
Registration Rights Agreement and the Stockholders' Agreement.
ARTICLE VI
TRANSFER OF SECURITIES
6.1 RESTRICTION ON TRANSFER.
The Restricted Securities shall not be transferable except upon the
conditions specified in this Article VI, which conditions are intended to insure
compliance with the provisions of the Securities Act in respect of the transfer
thereof.
6.2 RESTRICTIVE LEGENDS.
(a) Each certificate evidencing shares of Series A Preferred
Stock which are Restricted Securities and each certificate for any such
securities issued to subsequent transferees of any such certificate shall
(unless otherwise permitted by the provisions of Section 6.3 hereof) be stamped
or otherwise imprinted with a legend in substantially the following form:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED
FOR INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933 OR ANY STATE SECURITIES OR BLUE SKY LAWS. THESE
SECURITIES MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH
REGISTRATION OR AN EXEMPTION THEREFROM UNDER SAID ACT OR
APPLICABLE STATE SECURITIES OR BLUE SKY LAWS.
ADDITIONALLY, THE TRANSFER OF THESE SECURITIES IS SUBJECT TO THE
CONDITIONS SPECIFIED IN THE
26
SECURITIES PURCHASE AGREEMENT DATED AS OF MAY 31, 2000, AMONG THE
ISSUER HEREOF AND CERTAIN OTHER SIGNATORIES THERETO. THE TERMS OF
SUCH SECURITIES PURCHASE AGREEMENT INCLUDE, AMONG OTHER THINGS,
RESTRICTIONS ON TRANSFER. A COPY OF THE SECURITIES PURCHASE
AGREEMENT WILL BE FURNISHED WITHOUT CHARGE BY THE ISSUER HEREOF TO
THE HOLDER OF RECORD OF THIS CERTIFICATE UPON WRITTEN REQUEST."
(b) Each certificate evidencing Warrants which are Restricted
Securities and each certificate for any such securities issued to subsequent
transferees of any such certificate shall (unless otherwise permitted by the
provisions of Section 6.3 hereof) be stamped or otherwise imprinted with a
legend in substantially the following form:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED
FOR INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933 OR ANY STATE SECURITIES OR BLUE SKY LAWS. THESE
SECURITIES MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH
REGISTRATION OR AN EXEMPTION THEREFROM UNDER SAID ACT OR
APPLICABLE STATE SECURITIES OR BLUE SKY LAWS.
ADDITIONALLY, THE TRANSFER OF THESE SECURITIES IS SUBJECT TO THE
CONDITIONS SPECIFIED IN THE SECURITIES PURCHASE AGREEMENT AND A
STOCKHOLDERS' AGREEMENT, EACH DATED AS OF MAY 31, 2000, AMONG THE
ISSUER HEREOF AND CERTAIN OTHER SIGNATORIES THERETO. THE TERMS OF
SUCH SECURITIES PURCHASE AGREEMENT AND STOCKHOLDERS' AGREEMENT
INCLUDE, AMONG OTHER THINGS, RESTRICTIONS ON TRANSFER. A COPY OF
THE SECURITIES PURCHASE AGREEMENT AND STOCKHOLDERS' AGREEMENT WILL
BE FURNISHED WITHOUT CHARGE BY THE ISSUER HEREOF TO THE HOLDER OF
RECORD OF THIS CERTIFICATE UPON WRITTEN REQUEST."
6.3 NOTICE OF TRANSFER.
(a) The holder of any Restricted Securities, by acceptance thereof
agrees, prior to any transfer of any Restricted Securities, to give written
notice to the Company of such holder's intention to effect such transfer and to
comply in all other respects with the provisions of this Section 6.3. Each such
notice shall describe the manner and circumstances of the proposed transfer and
shall be accompanied, if reasonably requested by the Company, by the written
opinion, addressed to the Company, of counsel for the holder of Restricted
Securities, as to whether in the opinion of such counsel (which opinion and
counsel shall be reasonably satisfactory to the Company and which counsel
27
may be the in-house counsel of such holder) such proposed transfer involves a
transaction requiring registration of such Restricted Securities under the
Securities Act; provided, however, that (i) in the case of a holder of
Restricted Securities which is a partnership or a limited liability company, no
such opinion of counsel shall be necessary for a transfer by such holder of
Restricted Securities to a partner or member of such holder of Restricted
Securities, or a retired partner or member of such holder who retires after the
date hereof, or the estate of any such partner or member or retired partner or
member, if in each case the transferee agrees in writing to be subject to the
terms of this Article VI to the same extent as if such transferee were
originally a signatory to this Agreement, (ii) in the case of a holder of
Restricted Securities which is a corporation or a limited liability company, no
such opinion of counsel shall be necessary for a transfer by such holder of
Restricted Securities to an Affiliate, officer, director, member or manager of
such entity and (iii) no such opinion shall be required in connection with a
transfer pursuant to Rule 144 (as amended from time to time) promulgated under
the Securities Act (or successor rule thereto), provided, that the Company,
shall be provided with customary written representations relating to such
transaction.
(b) If in the opinion of such counsel (if such opinion is
required hereunder) the proposed transfer of Restricted Securities may be
effected without registration under the Securities Act, the holder of Restricted
Securities shall thereupon be entitled to transfer Restricted Securities in
accordance with the terms of the notice delivered by it to the Company.
(c) Each certificate or other instrument evidencing the securities
issued upon the transfer of any Restricted Securities (and each certificate or
other instrument evidencing any untransferred balance of such securities) shall
bear the legend set forth in Section 6.2 hereof unless (i) in the opinion of
such counsel registration of future transfer is not required by the applicable
provisions of the Securities Act or (ii) the Company shall have waived the
requirement of such legends; provided, however, that such legend shall not be
required on any certificate or other instrument evidencing the securities issued
upon such transfer in the event such transfer shall be made in compliance with
the requirements of Rule 144 (as amended from time to time) promulgated under
the Securities Act (or successor rule thereto).
6.4 TRANSFER PURSUANT TO RULE 144.
The Company agrees to make publicly available the current information
with respect to the Company that is required by Rule 144(c) under the Securities
Act and otherwise to take any other action or to execute any certificates
necessary to permit a transfer by any holder of Restricted Securities to qualify
for the exemption set forth in Rule 144. Without limiting the foregoing, if such
information is not publicly available, then, upon a holder's request, the
Company will provide such information to such holder or any prospective
purchaser designated by such holder.
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6.5 MINIMUM TRANSFER
If the provisions of this Article VI have been complied with, any
Purchaser may transfer Preferred Shares subject to a minimum transfer amount of
5,000 shares (subject to adjustment for splits, reverse splits and other like
events) until such time as the Purchaser holds less than 5,000 shares, in which
case the Purchaser shall not transfer less than all the shares it holds.
ARTICLE VII
COVENANTS OF THE COMPANY
7.1 TRANSACTIONS WITH AFFILIATES.
(a) The Company will not and will not permit any Restricted
Subsidiary to, directly or indirectly, enter into or conduct any transaction
(including the purchase, sale, lease or exchange of any property or the
rendering of any service) with any Affiliate of the Company (an "Affiliate
Transaction") unless such transaction is on terms:
(i) that are no less favorable to the Company or such
Restricted Subsidiary, as the case may be, than those that could be
obtained at the time of such transaction in arm's-length dealings with a
Person who is not such an Affiliate,
(ii) that, in the event such Affiliate Transaction
involves an aggregate amount in excess of five million dollars
($5,000,000), (A) are set forth in writing, and (B) except as provided in
clause (a)(iii) below, have been approved by a majority of the members of
the Board having no personal stake in such Affiliate Transaction (if any
such members exist), and
(iii) that, in the event (A) such Affiliate Transaction
involves an amount in excess of ten million dollars ($10,000,000) or (B)
if there are no members of the Board having no personal stake in such
Affiliate Transaction and such Affiliate Transaction involves an
aggregate amount in excess of five million dollars ($5,000,000), have
been determined by a nationally recognized appraisal, accounting or
investment banking firm to be fair, from a financial standpoint, to the
Company and its Restricted Subsidiaries.
(b) The provisions of the foregoing paragraph (a) will not
prohibit:
(i) any payment or distribution permitted to be paid
pursuant to Section 3.3(b)(i) of the Restated Charter;
(ii) any issuance of securities, or other payments,
awards or grants in cash, securities or otherwise pursuant to, or the
funding of, employment arrangements, options to purchase Capital Stock of
the Company and equity
29
ownership, restricted stock plans, long-term incentive plans, stock
appreciation rights plans, participation plans or similar employee
benefits plans approved by the Board,
(iii) the grant of options (and the exercise thereof) to
purchase Capital Stock of the Company or similar rights to employees and
directors of the Company pursuant to plans approved by the Board;
(iv) loans or advances to officers, directors or
employees in the ordinary course of business, but in any event not to
exceed two million dollars ($2,000,000) in the aggregate outstanding at
any one time,
(v) the payment of reasonable fees to directors of the
Company and its Subsidiaries who are not employees of the Company or its
Subsidiaries and other reasonable fees, compensation, benefits and
indemnities paid or entered into by the Company or its Restricted
Subsidiaries in the ordinary course of business to or with the officers,
directors or employees of the Company and its Restricted Subsidiaries,
(vi) any transaction between the Company and a Restricted
Subsidiary or between Restricted Subsidiaries,
(vii) the provision by Persons who may be deemed
Affiliates or stockholders of the Company (other than Chase Capital
Partners and Persons controlled by Chase Capital Partners) of investment
banking, commercial banking, trust, lending or financing, investment,
underwriting, placement agent, financial advisory or similar services to
the Company or its Subsidiaries performed after the Closing Date,
provided that the terms are no less favorable to the Company or such
Restricted Subsidiary, as the case may be, than those that could be
obtained at the time of such transaction in arm's-length dealings with a
Person who is not such an Affiliate (as determined in good faith by a
majority of the members of the Board who do not have a material direct or
indirect financial interest in or with respect to the transaction being
considered),
(viii) sales of Capital Stock to Permitted Holders approved
by a majority of the members of the Board who do not have a material
direct or indirect financial interest in or with respect to the
transaction being considered, or
(ix) the existence or performance by the Company or any
Restricted Subsidiary under any agreement as in effect as of the Closing
Date (including the Recapitalization Agreement and the agreements to be
entered into pursuant thereto or any amendment thereto) or replacement
agreement therefor or any transaction contemplated thereby (including
pursuant to any amendment thereto or replacement agreement therefor) so
long as such amendment or replacement is not more disadvantageous to the
Purchasers in any material respect than the original agreement as in
effect on the Closing Date.
30
7.2 INFORMATION RIGHTS.
The Company will furnish to each Purchaser:
(a) within 90 days after the end of each fiscal year of the Company,
its audited consolidated balance sheet and related statements of operations,
stockholders' equity and cash flows as of the end of and for such year, setting
forth in each case in comparative form the figures for the previous fiscal year,
all reported on by ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP or other independent public accountants
of recognized national standing (without a "going concern" or like qualification
or exception and without any qualification or exception as to the scope of such
audit other than as to Unrestricted Subsidiaries (as defined in the Credit
Agreement)) to the effect that such consolidated financial statements present
fairly in all material respects the financial condition and results of
operations of the Company and its consolidated Subsidiaries on a consolidated
basis in accordance with GAAP consistently applied;
(b) within 45 days after the end of each of the first three fiscal
quarters of each fiscal year of the Company, its consolidated balance sheet and
related statements of operations, stockholders' equity and cash flows as of the
end of and for such fiscal quarter and the then elapsed portion of the fiscal
year, setting forth in each case in comparative form the figures for the
corresponding period or periods of (or, in the case of the balance sheet, as of
the end of) the previous fiscal year, all certified by one of its financial
officers as presenting fairly in all material respects the financial condition
and results of operations of the Company and its consolidated Subsidiaries on a
consolidated basis in accordance with GAAP consistently applied, subject to
normal year-end audit adjustments and the absence of footnotes;
(c) concurrently with any delivery of financial statements under
clause (a) or (b) above, a certificate of a financial officer of the Company (i)
certifying as to whether an Event of Noncompliance has occurred, or a default or
event of default has occurred under the New Notes Indenture or the Credit
Agreement and, if an Event of Noncompliance or a default or event of default has
occurred, specifying the details thereof and any action taken or proposed to be
taken with respect thereto and (ii) stating whether any change in GAAP or in the
application thereof has occurred since the date of the Company's audited
financial statements referred to in Section 3.8 and, if any such change has
occurred, specifying the effect of such change on the financial statements
accompanying such certificate.
(d) at least 30 days prior to the commencement of each fiscal year of
the Borrower, a consolidated budget for such fiscal year (in the form provided
to the Lenders (as defined in the Credit Agreement), including a projected
consolidated balance sheet and related statements of projected operations and
cash flow as of the end of and for such fiscal year) and, promptly when
available, any significant revisions of such budget;
(e) promptly after the same become publicly available, copies of all
periodic and other reports, proxy statements and other materials filed by the
Borrower or
31
any Subsidiary with the Commission or with any national securities exchange, as
the case may be;
(f) promptly following the commencement thereof, notice and
description in reasonable detail of any litigation or proceeding to which the
Company or any of its Subsidiaries is a party, except for any litigation or
proceeding which could not reasonably be expected to result in a Material
Adverse Effect;
(g) promptly following the occurrence thereof, notice and a
description in reasonable detail of any Material Adverse Effect;
(h) as promptly as practicable (but in any event no earlier
than required under the Credit Agreement or New Notes Indenture, as the case may
be), notice of any Default (as defined in the Credit Agreement) under the Credit
Agreement or an Event of Default (as defined in the New Notes Indenture) under
the New Notes Indenture; and
(i) promptly following any request therefor, such other
information regarding the operations, business affairs and financial condition
of the Company or any Subsidiary, or compliance with the terms of any Document,
as or any Purchaser may reasonably request.
7.3 BOOKS; INSPECTION RIGHTS
The Company will, and will cause each of its Subsidiaries to, keep proper
books of record and account in which full, true and correct entries are made in
all material respects of all dealings and transactions in relation to its
business and activities. The Company will, and will cause each of its
Subsidiaries to, permit any representatives designated by any Purchaser, upon
reasonable prior notice, to visit and inspect its properties, to examine and
make extracts from its books and records, and to discuss its affairs, finances
and condition with its officers and independent accountants (and the Company
shall be provided the opportunity to participate in any such discussions with
such independent accountants), all at such reasonable times and as often as
reasonably requested.
7.4 MERGER AND CONSOLIDATION
(a) The Company will not consolidate or consummate a share
exchange with, or merge with or into, or convey, transfer or lease all or
substantially all its assets to, any Person, unless, on or prior to the
consummation of such transaction, all the shares of Series A Preferred Stock are
redeemed in accordance with the Restated Charter, or unless:
(i) the resulting, surviving or transferee Person (the
"Successor Company") will be a corporation organized and existing under
the laws of the United States of America, any State thereof or the
District of Columbia;
(ii) (x) the Successor Company (if not the Company) shall
expressly assume, by an amendment to this Agreement in form and substance
32
satisfactory to the Requisite Purchasers, all the obligations of the
Company hereunder and (y) the Series A Preferred Stock shall be converted
or exchanged for and shall become shares of such Successor Company,
having in respect of such Successor Company the same powers, preferences
and relative participating, optional or other special rights, and the
qualifications, limitations or restrictions thereto, that the Series A
Preferred Stock had immediately prior to such transaction;
(iii) immediately after giving effect to such transaction
(and treating any indebtedness which becomes an obligation of the
Successor Company or any Restricted Subsidiary as a result of such
transaction as having been incurred by the Successor Company or such
Restricted Subsidiary at the time of such transaction), no default or
event of default shall have occurred and be continuing under the Credit
Agreement or the New Notes Indenture and no Event of Noncompliance shall
have occurred and be continuing;
(iv) immediately after giving effect to such transaction,
the Successor Company would be able to incur an additional $1.00 of
Indebtedness under Section 4.03(a) of the New Notes Indenture as in
effect on the date hereof; and
(v) the Company shall have delivered to the holders of
the Series A Preferred Stock an Officers' Certificate stating that such
consolidation, share exchange, merger, transfer or lease comply with this
Section 7.4.
(b) The Successor Company shall succeed to, and be substituted for,
and may exercise every right and power of, the Company to the extent set forth
in this Agreement, but in the case of a lease of all or substantially all its
assets, the Company shall not be released from its obligations with respect to
the Series A Preferred Stock. Notwithstanding clauses (iii) and (iv) above, (1)
any Subsidiary of the Company may consolidate or consummate a share exchange
with, merge into or transfer all or part of its properties and assets to the
Company and (2) the Company may merge with an Affiliate incorporated solely for
the purpose of reincorporating the Company in another jurisdiction to realize
tax or other benefits.
7.5 PAYMENTS FOR CONSENTS.
If the Company agrees to make any payment to any Purchaser in exchange
for the granting of any waiver or consent under, or the entering into of any
amendment to, the Restated Charter or this Agreement or the Warrant Agreement,
the Company shall offer to all Purchasers to make payments, ratably based on the
number of Preferred Shares or Warrants, as applicable, held, to all Purchasers
who agree so such waiver, consent or amendment.
7.6 AMENDMENT OF RESTATED CHARTER.
The Company shall not amend Section 3.3(b)(vii)(4)(B) of the Restated
Charter without the affirmative written consent or approval of holders of record
of the Series A
33
Preferred Stock holding not less than 90% of the then outstanding shares of
Series A Preferred Stock.
ARTICLE VIII
MISCELLANEOUS
8.1 EXPENSES, ETC.
(a) The Company shall pay (i) all reasonable out-of-pocket
expenses incurred by CDI, including the reasonable fees, charges and
disbursements of counsel for CDI, in connection with the preparation the
Documents or any amendments, modifications or waivers of the provisions thereof
(whether or not the transactions contemplated hereby or thereby shall be
consummated), (ii) reasonable fees, charges and disbursements of counsel for the
Purchasers other than CDI, in connection with the review and negotiation of the
Documents, (iii) reasonable fees, charges and disbursements of one counsel for
the Purchasers other than CDI, in connection with any amendments, modifications
or waivers of the provisions of the Documents (iv) any stamp or similar taxes
which may be determined to be payable in connection with the execution, delivery
or performance of the Documents or any modification, amendment or alteration of
the terms or provisions of the Documents and any issue taxes in respect of the
issuance of any Purchased Securities to the Purchasers and (v) all out-of-pocket
expenses incurred by the Purchasers including the fees, charges and
disbursements of any counsel for the Purchasers, in connection with the
enforcement or protection of its rights in connection with the Documents,
including its rights under this Section, or in connection with the Purchased
Securities, including all such out-of-pocket expenses incurred during any
workout, restructuring or negotiations in respect of such Securities.
(b) The Company shall indemnify the Purchasers and each of their
respective Affiliates (each such Person being called an "Indemnitee") against,
and hold each Indemnitee harmless from, any and all losses, claims, damages,
liabilities and related expenses (including, without limitation and as incurred,
reasonable costs of investigating, preparing or defending any such claim or
action, whether or not such Indemnitee is a party thereto), including the
reasonable fees, charges and disbursements of any counsel for any Indemnitee,
incurred by or asserted against any Indemnitee arising out of, in connection
with, or as a result of (i) the execution, delivery or performance of any
Document or the consummation of the Transactions or any other transactions
contemplated hereby, or (ii) any actual or prospective claim, litigation,
investigation or proceeding relating to any of the foregoing, whether based on
contract, tort or any other theory and regardless of whether any Indemnitee is a
party thereto; provided that such indemnity shall not, as to any Indemnitee, be
available to the extent that such losses, claims, damages, liabilities or
related expenses resulted from the gross negligence or willful misconduct of
such Indemnitee or any Affiliate of such Indemnitee (or of any officer,
director, employee, advisor or agent of such Indemnitee or any such Indemnitee's
Affiliates) or to the extent such damages constitute special, indirect or
consequential damages (as opposed to direct or actual damages); and provided
further that, for the
34
purposes of the foregoing proviso, the Company and its Subsidiaries shall be
deemed not to be Affiliates of any Purchaser.
(c) To the extent permitted by applicable law, the Company shall
not assert, and it hereby waives, any claim against any Indemnitee, on any
theory of liability, for special, indirect, consequential or punitive damages
(as opposed to direct or actual damages) arising out of, in connection with, or
as a result of, this Agreement or any other Document, the Transactions or the
use of the proceeds of the Purchased Securities
(d) All amounts due under this Section shall be payable promptly
after written demand therefor.
8.2 FURTHER ASSURANCES.
The Company shall duly execute and deliver, or cause to be duly executed
and delivered, at its own cost and expense, such further instruments and
documents and to take all such action, in each case as may be necessary or
proper in the reasonable judgment of the Purchasers to carry out the provisions
and purposes of the Agreement and the other Documents.
8.3 SPECIFIC PERFORMANCE; REMEDIES.
Damages in the event of breach of this Agreement or any other Document by
the Company would be difficult, if not impossible, to ascertain, and it is
therefore agreed that the Purchasers, in addition to and without limiting any
other remedy or right it may have (other than the limitations on remedies
specified in Section 3.3(b)(viii) of the Restated Charter), will have the right
to an injunction or other equitable relief in any court of competent
jurisdiction, enjoining any such breach, and enforcing specifically the terms
and provisions hereof and thereof, and the Company hereby waives any and all
defenses it may have on the ground of lack of jurisdiction or competence of the
court to grant such an injunction or other equitable relief. Subject to the
limitations set forth in Section 3.3(b)(viii) of the Restated Charter, the
existence of this right to specific performance will not preclude the Purchasers
from pursuing any other rights and remedies at law or in equity which the
Purchasers may have.
8.4 SUCCESSORS AND ASSIGNS.
This Agreement shall bind and inure to the benefit of the Company and the
Purchasers and their respective successors, permitted assigns, heirs and
personal representatives. Upon the transfer of any Purchased Securities in
accordance with the terms of this Agreement, the transferee shall be bound by,
and entitled to the benefits of, this Agreement with respect to such transferred
Purchased Securities in the same manner as the transferring Purchaser.
8.5 ENTIRE AGREEMENT.
This Agreement and the other writings referred to herein or delivered
pursuant hereto which form a part hereof contain the entire agreement among the
parties with
35
respect to the subject matter hereof and thereof and supersede all prior and
contemporaneous arrangements or understandings with respect thereto.
8.6 NOTICES.
All notices, claims, requests, demands or other communications which are
required or otherwise delivered hereunder shall be deemed to be sufficient and
duly given if contained in a written instrument (i) personally delivered or sent
by telecopier, (ii) sent by nationally-recognized overnight courier guaranteeing
next Business Day delivery or (iii) sent by first class, registered or certified
mail, postage prepaid, return receipt requested, addressed as follows:
(a) if to the Company, to:
Huntsman Packaging Corporation
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
with copies to:
Chase Domestic Investments, L.L.C.
▇/▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇ Avenue of the Americas, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
and to:
▇'▇▇▇▇▇▇▇▇ Graev & Karabell, LLP
▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. Nissan
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
(b) if to any Purchaser, to such Purchaser's address as set forth
on Schedule I hereto.
Any notice, demand or request so delivered shall constitute valid notice
under this Agreement and shall be deemed to have been received (i) on the day of
actual delivery in the case of personal delivery, if delivered on a Business Day
(otherwise on the next
36
Business Day), (ii) on the next Business Day after the date when sent in the
case of delivery by nationally-recognized overnight courier, (iii) on the fifth
Business Day after the date of deposit in the U.S. mail in the case of mailing
or (iv) upon receipt in the case of a facsimile transmission if received on a
Business Day (otherwise on the next Business Day). Any party hereto may from
time to time by notice in writing served upon the other as aforesaid designate a
different mailing address or a different Person to which all such notices,
demands or requests thereafter are to be addressed.
8.7 AMENDMENTS, MODIFICATIONS AND WAIVERS.
The terms and provisions of this Agreement may not be modified or
amended, nor may any of the provisions hereof be waived, temporarily or
permanently, except pursuant to a written instrument executed by the Company and
the Requisite Purchasers; provided however that any such amendment, modification
or waiver that would adversely affect the rights hereunder of any Purchaser, in
its capacity as a Purchaser, without similarly affecting the rights hereunder of
all Purchasers, in their capacities as Purchasers, shall not be effective as to
such Purchaser without its prior written consent. No waiver by any party shall
operate or be construed as a waiver of any subsequent breach by any other party.
8.8 GOVERNING LAW.
THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF NEW YORK (WITHOUT GIVING EFFECT TO PRINCIPLES OF CONFLICTS
OF LAWS EXCEPT TO THE EXTENT THAT THE NEW YORK CONFLICTS OF LAWS PRINCIPLES
WOULD APPLY THE APPLICABLE LAWS OF THE STATE OF THE COMPANY'S ORGANIZATION TO
INTERNAL MATTERS RELATING TO ENTITIES SUCH AS THE COMPANY ORGANIZED THEREUNDER).
8.9 NO THIRD PARTY RELIANCE.
Anything contained herein to the contrary notwithstanding, the
representations and warranties of the Company contained in this Agreement (a)
are being given by the Company as an inducement to the Purchasers to enter into
this Agreement and the other Documents (and the Company acknowledges that the
Purchasers have expressly relied thereon) and (b) are solely for the benefit of
the Purchasers and their respective successors and assigns. Accordingly, no
third party (including, without limitation, any holder of capital stock of the
Company) or anyone acting on behalf of any thereof other than the Purchasers,
and each of them and their respective successors and assigns, shall be a third
party or other beneficiary of such representations and warranties and no such
third party shall have any rights of contribution against the Purchasers or the
Company with respect to such representations or warranties or any matter subject
to or resulting in indemnification under this Agreement or otherwise.
37
8.10 SUBMISSION TO JURISDICTION.
Any legal action or proceeding with respect to this Agreement may be
brought in the courts of the State of New York and the United States of America
for the Southern District of New York and, by execution and delivery of this
Agreement, the Company hereby accepts for itself and in respect of its property,
generally and unconditionally, the jurisdiction of the aforesaid courts. The
Company hereby irrevocably waives, in connection with any such action or
proceeding, any objection, including, without limitation, any objection to the
venue or based on the grounds of forum non conveniens, which it may now or
hereafter have to the bringing of any such action or proceeding in such
respective jurisdictions. The Company hereby irrevocably consents to the service
of process of any of the aforementioned courts in any such action or proceeding
by the mailing of copies thereof by registered or certified mail, postage
prepaid, to it at its address as set forth herein. Nothing herein shall affect
the right of the Purchasers to serve process in any other manner permitted by
law or to commence legal proceedings or otherwise proceed against the Company in
any other jurisdiction.
8.11 SEVERABILITY.
It is the desire and intent of the parties that the provisions of this
Agreement be enforced to the fullest extent permissible under the law and public
policies applied in each jurisdiction in which enforcement is sought.
Accordingly, in the event that any provision of this Agreement would be held in
any jurisdiction to be invalid, prohibited or unenforceable for any reason, such
provision, as to such jurisdiction, shall be ineffective, without invalidating
the remaining provisions of this Agreement or affecting the validity or
enforceability of such provision in any jurisdiction. Notwithstanding the
foregoing, if such provision could be more narrowly drawn so as not be invalid,
prohibited or unenforceable in such jurisdiction, it shall, as to such
jurisdiction, be so narrowly drawn, without invalidating the remaining
provisions of this Agreement or affecting the validity or enforceability of such
provision in any other jurisdiction.
8.12 INDEPENDENCE OF AGREEMENTS, COVENANTS, REPRESENTATIONS AND WARRANTIES.
All agreements and covenants hereunder shall be given independent effect
so that if a certain action or condition constitutes a default under a certain
agreement or covenant, the fact that such action or condition is permitted by
another agreement or covenant shall not affect the occurrence of such default,
unless expressly permitted under an exception to such initial covenant. In
addition, all representations and warranties hereunder shall be given
independent effect so that if a particular representation or warranty proves to
be incorrect or is breached, the fact that another representation or warranty
concerning the same or similar subject matter is correct or is not breached will
not affect the incorrectness of or a breach of a representation and warranty
hereunder.
38
8.13 SURVIVAL OF REPRESENTATION, WARRANTIES, ETC.
The representations, warranties, covenants and agreements contained in
this Agreement or any other instrument delivered pursuant to this Agreement
shall survive the Closing hereunder.
8.14 COUNTERPARTS; FACSIMILE SIGNATURES.
This Agreement may be executed in any number of counterparts, and each
such counterpart hereof shall be deemed to be an original instrument, but all
such counterparts together shall constitute but one agreement. Facsimile
counterpart signatures to this Agreement shall be acceptable and binding.
* * * *
39
IN WITNESS WHEREOF, the parties hereto have executed this Securities
Purchase Agreement as of the date first above written.
HUNTSMAN PACKAGING
CORPORATION
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Executive Vice President
and General Counsel
PURCHASERS
CHASE DOMESTIC INVESTMENTS,
L.L.C.
By: Chase Capital Investments L.P.,
its Sole Member
By: Chase Capital Partners,
as Investment Manager
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: General Partner
NEW YORK LIFE CAPITAL
PARTNERS, L.P.
By: NYLCAP Manager LLC, its
Investment Manager
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Title: Its Authorized Representative
40
THE NORTHWESTERN MUTUAL
LIFE INSURANCE COMPANY
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Its Authorized Representative
FIRST UNION CAPITAL PARTNERS,
LLC
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ III
------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ III
Title: Senior Vice President
41
SCHEDULE I
----------------------------------------------------------------------------------------------------------------------------------
NUMBER OF NUMBER OF WARRANT SHARES TOTAL PURCHASE PRICE OF
NAME AND ADDRESS PREFERRED SHARES PURCHASED SECURITIES
----------------------------------------------------------------------------------------------------------------------------------
Chase Domestic Investments, L.L.C. 52,000 22,486 $52,000,000
▇/▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇ Avenue of the Americas, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇'▇▇▇▇▇▇▇▇ Graev & Karabell, LLP
▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
----------------------------------------------------------------------------------------------------------------------------------
42
----------------------------------------------------------------------------------------------------------------------------------
NUMBER OF NUMBER OF WARRANT SHARES TOTAL PURCHASE PRICE OF
NAME AND ADDRESS PREFERRED SHARES PURCHASED SECURITIES
----------------------------------------------------------------------------------------------------------------------------------
New York Life Capital Partners, L.P. 24,000 10,378 $24,000,000
▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
Akin, Gump, Strauss, ▇▇▇▇▇ & ▇▇▇▇, LLP
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
and to:
Office of the General Counsel
New York Life Insurance Company
▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
----------------------------------------------------------------------------------------------------------------------------------
43
----------------------------------------------------------------------------------------------------------------------------------
NUMBER OF NUMBER OF WARRANT SHARES TOTAL PURCHASE PRICE OF
NAME AND ADDRESS PREFERRED SHARES PURCHASED SECURITIES
----------------------------------------------------------------------------------------------------------------------------------
The Northwestern Mutual Life Insurance Company 12,000 5,189 $12,000,000
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
Akin, Gump, Strauss, ▇▇▇▇▇ & ▇▇▇▇, LLP
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
----------------------------------------------------------------------------------------------------------------------------------
44
----------------------------------------------------------------------------------------------------------------------------------
NUMBER OF NUMBER OF WARRANT SHARES TOTAL PURCHASE PRICE OF
NAME AND ADDRESS PREFERRED SHARES PURCHASED SECURITIES
----------------------------------------------------------------------------------------------------------------------------------
First Union Capital Partners, LLC 12,000 5,189 $12,000,000
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ III
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, L.L.P.
Bank of America Corporate Center, Suite 4200
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, III
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
----------------------------------------------------------------------------------------------------------------------------------
TOTAL 100,000 43,242 $100,000,000
----------------------------------------------------------------------------------------------------------------------------------
45
SCHEDULE 3.4(a)
OWNERSHIP OF COMMON STOCK
See attached. The figures opposite the caption "Management Options" include
amounts issued as restricted common stock or options. At closing an aggregate of
32,750 shares of restricted common stock are being issued (14,500 shares of
which are being issued to ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, 7,750 shares of which are being
issued to ▇▇▇▇ ▇. ▇▇▇▇▇, 6,750 shares of which are being issued to ▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇ and 3,750 shares of which are being issued to ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇) and
14,954 shares are being reserved for issuance either as restricted common stock
or options. The 7,464 shares shown under the column "Warrants/Options Issued at
Close" represent the portion of the 32,750 shares of restricted common stock
that will vest in January 2001. Such shares were shown separately because they
are included in the base for purposes of calculating the 7% amount of shares to
be covered by the Warrants issued together with the Series A Preferred Stock.