EXHIBIT 10.27
EXECUTION COPY
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BERRY PLASTICS CORPORATION
BPC HOLDING CORPORATION
BERRY PLASTICS ACQUISITION CORPORATION
BERRY IOWA CORPORATION
BERRY STERLING CORPORATION
BERRY TRI-PLAS CORPORATION
AEROCON, INC.
PACKERWARE CORPORATION, a Kansas corporation
PACKERWARE CORPORATION, a Delaware corporation
BERRY PLASTICS DESIGN CORPORATION
VENTURE PACKAGING, INC.
VENTURE PACKAGING MIDWEST, INC., an Ohio corporation
VENTURE PACKAGING MIDWEST, INC., a Delaware corporation
VENTURE PACKAGING SOUTHEAST, INC., a South Carolina corporation
VENTURE PACKAGING SOUTHEAST, INC., a Delaware corporation
NIM HOLDINGS LIMITED
NORWICH INJECTION MOULDERS LIMITED
NORWICH ACQUISITION LIMITED
KNIGHT PLASTICS, INC.
$75,000,000
11% Series A Senior Subordinated Notes due 2007
PURCHASE AGREEMENT
June 29, 1999
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
CHASE SECURITIES INC.
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$75,000,000
11% Series A Senior Subordinated Notes due 2007
of Berry Plastics Corporation
PURCHASE AGREEMENT
June 29, 1999
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
CHASE SECURITIES INC.
c/o Donaldson, Lufkin & Jenrette
Securities Corporation
277 Park Avenue
New York, New York 10172
Ladies and Gentlemen:
Each of Berry Plastics Corporation, a Delaware corporation (the
"COMPANY"), BPC Holding Corporation, a Delaware corporation ("HOLDING"), Berry
Plastics Acquisition Corporation, a Delaware corporation, Berry Iowa
Corporation, a Delaware corporation, Berry Sterling Corporation, a Delaware
corporation, Berry Tri-Plas Corporation, a Delaware corporation, AeroCon, Inc.,
a Delaware corporation, PackerWare Corporation, a Kansas corporation, PackerWare
Corporation, a Delaware corporation, Berry Plastics Design Corporation, a
Delaware corporation, Venture Packaging, Inc., a Delaware corporation, Venture
Packaging Midwest, Inc., an Ohio corporation, Venture Packaging Midwest, Inc., a
Delaware corporation, Venture Packaging Southeast, Inc., a South Carolina
corporation, Venture Packaging Southeast, a Delaware corporation, NIM Holdings
Limited, a company organized under the laws of England and Wales, Norwich
Injection Moulders Limited, a company organized under the laws of England and
Wales, Knight Plastics, Inc., a Delaware corporation, and Norwich Acquisition
Limited, a company organized under the laws of England and Wales (collectively
with Holding, the "GUARANTORS" which term, as used herein, shall, at and after
the Closing Date (as defined herein), include all successor entities, CPI
Holding Corporation, a Delaware corporation ("CPI") and Cardinal Packaging,
Inc., an Ohio corporation ("CARDINAL PACKAGING")), agree with you as follows:
1. ISSUANCE OF SECURITIES. The Company proposes to issue and sell to
Donaldson, Lufkin & Jenrette Securities Corporation and Chase Securities Inc.
(each an "INITIAL PURCHASER" and collectively, the "INITIAL PURCHASERS")
$75,000,000 in aggregate principal amount of 11% Series A Senior Subordinated
Notes due 2007 (the "SERIES A NOTES"). The Series A Notes and the Series B Notes
(as defined below) issuable in exchange therefor are collectively referred to
herein as the "NOTES." The Notes will be guaranteed (the "NOTE GUARANTEES") by
each of the Guarantors. The Notes are to be issued pursuant to the provisions of
an indenture
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(the "INDENTURE") to be dated July 6, 1999, among the Company, the Guarantors
and United States Trust Company of New York, as trustee (the "TRUSTEE").
Capitalized terms used but not defined herein shall have the meanings given to
such terms in the Indenture.
The offering of the Series A Notes is being made in connection with
the acquisition (the "ACQUISITION") by the Company of CPI, pursuant to that
certain Stock Purchase Agreement dated June 18, 1999 (the "ACQUISITION
Agreement"), among the Company, CPI, Cardinal Packaging and the shareholders of
CPI.
The Series A Notes will be offered and sold to you pursuant to an
exemption from the registration requirements under the Securities Act of 1933,
as amended (the "ACT"). The Company has prepared a preliminary offering
memorandum (the "PRELIMINARY OFFERING MEMORANDUM"), dated June 18, 1999 and a
final offering memorandum, dated June 29, 1999 (the "OFFERING MEMORANDUM"),
relating to Holding, the Company and its subsidiaries, the Notes and the Note
Guarantees.
Upon original issuance thereof, and until such time as the same is
no longer required under the applicable requirements of the Act, the Series A
Notes (and all securities issued in exchange therefor or in substitution
thereof) shall bear the following legend:
THE SECURITY (OR ITS PREDECESSOR) EVIDENCED HEREBY WAS ORIGINALLY ISSUED
IN A TRANSACTION EXEMPT FROM REGISTRATION UNDER SECTION 5 OF THE UNITED
STATES SECURITIES ACT OF 1933 (THE "SECURITIES ACT"), AND THE SECURITY
EVIDENCED HEREBY MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE
ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM. EACH
PURCHASER OF THE SECURITY EVIDENCED HEREBY IS HEREBY NOTIFIED THAT THE
SELLER MAY BE RELYING ON THE EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF
THE SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER. THE HOLDER OF THE
SECURITY EVIDENCED HEREBY AGREES FOR THE BENEFIT OF THE COMPANY THAT (A)
SUCH SECURITY MAY BE RESOLD, PLEDGED OR OTHERWISE TRANSFERRED, ONLY (1)(a)
INSIDE THE UNITED STATES TO A PERSON WHO THE SELLER REASONABLY BELIEVES IS
A QUALIFIED INSTITUTIONAL BUYER (AS DEFINED IN RULE 144A UNDER THE
SECURITIES ACT) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A
UNDER THE SECURITIES ACT, (b) IN AN OFFSHORE TRANSACTION MEETING THE
REQUIREMENTS OF RULE 903 OR 904 OF THE SECURITIES ACT, (c) IN A
TRANSACTION MEETING THE REQUIREMENTS OF RULE 144 OR (d) IN ACCORDANCE WITH
ANOTHER EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT
(AND BASED UPON AN OPINION OF COUNSEL IF THE COMPANY AND THE GUARANTORS SO
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REQUEST), (2) TO THE COMPANY, OR (3) PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE SECURITIES ACT AND, IN EACH CASE, IN ACCORDANCE WITH
THE APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR ANY
OTHER APPLICABLE JURISDICTION AND (B) THE HOLDER WILL, AND EACH SUBSEQUENT
HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER FROM IT OF THE SECURITY
EVIDENCED HEREBY OF THE RESALE RESTRICTIONS SET FORTH IN (A) ABOVE.
AS USED HEREIN, THE TERMS "OFFSHORE TRANSACTION" AND "UNITED STATES" HAVE
THE MEANINGS GIVEN TO THEM BY RULE 902 OF REGULATION S UNDER THE
SECURITIES ACT. THE INDENTURE CONTAINS A PROVISION REQUIRING THE TRUSTEE
TO REFUSE TO REGISTER ANY TRANSFER OF THIS NOTE IN VIOLATION OF THE
FOREGOING."
You have advised the Company that you will make offers (the "EXEMPT
RESALES") of the Series A Notes purchased by you hereunder on the terms set
forth in the Offering Memorandum, as amended or supplemented, solely to (i)
persons (each, a "144A PURCHASER") whom you reasonably believe to be "qualified
institutional buyers" as defined in Rule 144A under the Act ("QIBS") and (ii)
persons permitted to purchase the Series A Notes in offshore transactions in
reliance upon Regulation S under the Act (each, a "REGULATION S PURCHASER")
(such persons specified in clauses (i) and (ii) being referred to herein as the
"ELIGIBLE PURCHASERS").
Holders (including subsequent transferees) of the Series A Notes
will have the registration rights set forth in the registration rights agreement
(the "REGISTRATION RIGHTS AGREEMENT"), to be dated the Closing Date (as defined
herein), in substantially the form of EXHIBIT A hereto, for so long as such
Series A Notes constitute "TRANSFER RESTRICTED SECURITIES" (as defined in the
Registration Rights Agreement). Pursuant to the Registration Rights Agreement,
the Company and the Guarantors will agree to file with the Securities and
Exchange Commission (the "COMMISSION") within 45 days of the Closing Date and
under the circumstances set forth therein, (i) a registration statement under
the Act (the "EXCHANGE OFFER REGISTRATION STATEMENT") relating to the Company's
11% Series B Senior Subordinated Notes due 2007 (the "SERIES B NOTES") to be
offered in exchange for the Series A Notes (such offer to exchange being
referred to as the "REGISTERED EXCHANGE OFFER") and (ii) under the circumstances
set forth in the Registration Rights Agreement, a shelf registration statement
pursuant to Rule 415 under the Act (the "SHELF REGISTRATION STATEMENT" and,
together with the Exchange Offer Registration Statement, the "REGISTRATION
STATEMENTS") relating to the resale by certain holders of the Series A Notes,
and to use their best efforts to cause such Registration Statements to be
declared effective within the time periods set forth in the Registration Rights
Agreement. This Agreement, the Indenture, the Notes, the Note Guarantees, the
Registration Rights Agreement and the Acquisition Agreement are hereinafter
referred to collectively as the "OPERATIVE DOCUMENTS." As used in this Purchase
Agreement (this "AGREEMENT"), the term
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"SUBSIDIARY" shall mean any subsidiary of the Company before the Acquisition
and, at and after the Closing Date, shall mean any Subsidiary of the Company
immediately after the Acquisition.
2. AGREEMENTS TO SELL AND PURCHASE. On the basis of the
representations and warranties contained in this Agreement, and subject to the
terms and conditions contained herein, the Company agrees to issue and sell to
the Initial Purchasers, and each Initial Purchaser agrees, severally and not
jointly, to purchase from the Company the principal amount of Series A Notes set
forth opposite the name of such Initial Purchaser on Schedule A hereto at a
purchase price equal to 97% of the principal amount thereof ( the "PURCHASE
Price").
3. DELIVERY AND PAYMENT. Delivery to you of and payment for the
Series A Notes shall be made at 9:00 A.M., New York City time, on July 6, 1999
(the "CLOSING DATE") at the offices of O'Sullivan Graev & Karabell, LLP, 30
Rockefeller Plaza, New York, New York 10112, or such other time or place as you
shall reasonably designate.
One or more Series A Notes in definitive global form, registered in
the name of Cede & Co., as nominee of The Depository Trust Company ("DTC"),
having an aggregate amount corresponding to the aggregate amount of the Series A
Notes sold pursuant to Exempt Resales to QIBs and Regulation S Purchasers
(collectively, the "GLOBAL NOTE"), shall be delivered by the Company to the
Initial Purchasers (or as the Initial Purchasers direct), against payment by the
Initial Purchasers of the Purchase Price, by wire transfer of immediately
available funds to such account or accounts as the Company shall specify,
provided that the Company shall give at least two business days' prior written
notice to the Initial Purchasers of the information required to effect such wire
transfers. The Global Note shall be made available to the Initial Purchasers for
inspection not later than 9:30 A.M. on the business day immediately preceding
the Closing Date.
4. AGREEMENTS OF THE COMPANY AND THE GUARANTORS. Each of the Company
and the Guarantors hereby agrees with you as follows:
(a) To advise you promptly and, if requested by you, confirm
such advice in writing, (i) of the issuance by any state securities
commission of any stop order suspending the qualification or exemption
from qualification of any Series A Notes for offering or sale in any
jurisdiction, or the initiation of any proceeding for such purpose by the
Commission or any state securities commission or other regulatory
authority and (ii) of the happening of any event which makes any statement
of a material fact made in the Preliminary Offering Memorandum or the
Offering Memorandum untrue or which requires the making of any additions
to or changes in the Preliminary Offering Memorandum or the Offering
Memorandum in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading. The Company and
the Guarantors shall use their reasonable best efforts to prevent the
issuance of any stop order or order suspending the qualification or
exemption of the Series A Notes under any state securities or Blue Sky
laws, and, if at any time any state securities commission issues an order
suspending the qualification or exemption of the
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Series A Notes, the Company and the Guarantors shall use every reasonable
effort to obtain the withdrawal or lifting of such order at the earliest
possible time.
(b) To furnish to you without charge as many copies of the
Preliminary Offering Memorandum and the Offering Memorandum, and any
amendments or supplements thereto, as you may reasonably request. The
Company and the Guarantors consent to the use of the Preliminary Offering
Memorandum and the Offering Memorandum, and any amendments and supplements
thereto, required pursuant to this Agreement by you in connection with the
Exempt Resales.
(c) Not to amend or supplement the Offering Memorandum prior
to the Closing Date unless you shall previously have been advised of, and
shall not have reasonably objected to, such amendment or supplement within
a reasonable time, but in any event not longer than five business days
after being furnished a copy of such amendment or supplement. The Company
and the Guarantors shall promptly prepare, upon any reasonable request by
you, any amendment or supplement to the Preliminary Offering Memorandum
and the Offering Memorandum that may be necessary or advisable in
connection with Exempt Resales.
(d) If, in connection with any Exempt Resales or market making
transactions after the date of this Agreement and prior to the
consummation of the Registered Exchange Offer, any event shall occur that,
in the judgment of the Company and the Guarantors or in the judgment of
counsel to you, makes any statement of a material fact in the Offering
Memorandum untrue or that requires the making of any additions to or
changes in the Offering Memorandum in order to make the statements in the
Offering Memorandum, in the light of the circumstances at the time that
the Offering Memorandum is delivered to prospective Eligible Purchasers,
not misleading, or if it is necessary to amend or supplement the Offering
Memorandum to comply with all applicable laws, the Company and the
Guarantors shall promptly notify you of such event and prepare an
appropriate amendment or supplement to the Offering Memorandum so that (i)
the statements in the Offering Memorandum as amended or supplemented will,
in the light of the circumstances at the time that the Offering Memorandum
is delivered to prospective Eligible Purchasers, not be misleading and
(ii) the Offering Memorandum will comply with applicable law.
(e) To cooperate with you and your counsel in connection with
the qualification of the Series A Notes for offer and sale by you and by
dealers under the state securities or Blue Sky laws of such jurisdictions
as you may request (PROVIDED, HOWEVER, that neither the Company nor any
Guarantor shall be obligated to qualify as a foreign corporation in any
jurisdiction in which it is not now so qualified or to take any action
that would subject it to general consent to service of process in any
jurisdiction in which it is not now so subject). The Company and the
Guarantors will continue such qualification in effect so long as required
by law for distribution of the Series A Notes
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and will file such consents to service of process or other documents as
may be necessary in order to effect such qualification.
(f) Whether or not the transactions contemplated by this
Agreement are consummated or this Agreement is terminated, to pay all
costs, expenses, fees and taxes incident to and in connection with: (i)
the preparation, printing, filing and distribution of the Preliminary
Offering Memorandum and the Offering Memorandum (including, without
limitation, financial statements and exhibits) and all amendments and
supplements thereto, (ii) the preparation, printing (including, without
limitation, word processing and duplication costs) and delivery of this
Agreement, the Indenture, the Registration Rights Agreement, all
preliminary and final Blue Sky Memoranda and all other agreements,
memoranda, correspondence and other documents printed and delivered in
connection herewith and with the Exempt Resales, (iii) the issuance and
delivery by the Company and the Guarantors of the Notes and the Note
Guarantees, (iv) the qualification of the Notes and the Note Guarantees
for offer and sale under the securities or Blue Sky laws of the several
states (including, without limitation, the reasonable fees and
disbursements of your counsel relating to such registration or
qualification), (v) furnishing such copies of the Preliminary Offering
Memorandum and the Offering Memorandum, and all amendments and supplements
thereto, as may be reasonably requested for use in connection with the
Exempt Resales, (vi) the preparation of certificates for the Notes and the
Note Guarantees (including, without limitation, printing and engraving
thereof), (vii) the fees, disbursements and expenses of the Company's and
the Guarantors' counsel and accountants, (viii) all expenses and listing
fees in connection with the application for quotation of the Series A
Notes in the National Association of Securities Dealers, Inc. ("NASD")
Automated Quotation System - PORTAL ("PORTAL"), (ix) the rating of the
Notes by rating agencies, if any, (x) all fees and expenses (including
fees and expenses of counsel) of the Company and the Guarantors in
connection with approval of the Notes by DTC for "book-entry" transfer and
(xii) the performance by the Company and the Guarantors of their other
obligations under this Agreement and the other Operative Documents to
which they are a party.
(g) To use the proceeds from the sale of the Series A Notes in
the manner described in the Offering Memorandum under the caption "USE OF
PROCEEDS."
(h) Not to voluntarily claim, and to actively resist any
attempts to claim, the benefit of any usury laws against the holders of
the Notes.
(i) Prior to the Closing Date, to furnish to you, as soon as
they have been prepared, a copy of any unaudited interim consolidated
financial statements of Holding or the Company for any period subsequent
to the period covered by the financial statements appearing in the
Offering Memorandum.
(j) To use its best efforts to do and perform all things
required to be done and performed under this agreement by it prior to or
after the Closing Date and to
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satisfy all conditions precedent on its part to the delivery of the Series
A Notes and the Note Guarantees.
(k) Not to sell, offer for sale or solicit offers to buy or
otherwise negotiate in respect of any security (as defined in the Act)
that would be integrated with the sale of the Series A Notes in a manner
that would require the registration under the Act of the sale to you or
the Eligible Purchasers of Series A Notes.
(l) For so long as any of the Notes remain outstanding and
during any period in which the Company is not subject to Section 13 or
15(d) of the Securities Exchange Act of 1934, as amended (the "EXCHANGE
Act"), to make available to any Eligible Purchaser or beneficial owner of
Notes in connection with any sale thereof and any prospective purchaser of
such Notes from such Eligible Purchaser or beneficial owner, the
information required by Rule 144A(d)(4) under the Act.
(m) To comply with its agreements in the Registration Rights
Agreement, and all agreements set forth in the representation letters of
the Company and the Guarantors to DTC relating to the approval of the
Notes by DTC for "book-entry" transfer.
(n) To cause the Registered Exchange Offer to be made in the
appropriate form, as contemplated by the Registration Rights Agreement, to
permit registration of the Series B Notes and note guarantees thereof to
be offered in exchange for the Series A Notes and Note Guarantees and to
comply with all applicable federal and state securities laws in connection
with the Registered Exchange Offer.
(o) To use its best efforts to effect the inclusion of the
Series A Notes in PORTAL.
(p) For so long as any of the Notes are outstanding, to
deliver without charge to the Initial Purchasers, promptly upon their
becoming available, copies of (i) all reports or other publicly available
information that the Company or any of the Guarantors shall mail or
otherwise make available to its securityholders and (ii) all reports,
financial statements and proxy or information statements filed by the
Company or any of the Guarantors with the Commission or any national
securities exchange and such other publicly available information
concerning Holding, the Company or its Subsidiaries, including, without
limitation, press releases.
(q) Neither Holding, the Company nor any of its Subsidiaries
will take, directly or indirectly, any action designed to, or that might
reasonably be expected to, cause or result in stabilization or
manipulation of the price of any security of the Company or any of the
Guarantors to facilitate the sale or resale of the Notes. Except as
permitted by the Act, the Company and the Guarantors will not distribute
any preliminary offering memorandum, offering memorandum or other offering
material in connection with the offering and sale of the Notes.
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(r) To cause CPI and Cardinal Packaging to become parties to
this Agreement by executing the signature pages hereto immediately after
the consummation of the Acquisition.
(s) To comply with the agreements in the Indenture, the
Registration Rights Agreement and each other Operative Document.
5. REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE GUARANTORS.
Each of the Company and the Guarantors represents and warrants to you that:
(a) The Preliminary Offering Memorandum and the Offering
Memorandum (and each supplement and amendment thereto) have been prepared
in connection with the Exempt Resales. The Preliminary Offering Memorandum
and the Offering Memorandum do not, and any supplement or amendment
thereto will not, contain any untrue statement of a material fact or omit
to state any material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading, except that the representations and warranties contained in
this paragraph (a) shall not apply to statements in or omissions from the
Preliminary Offering Memorandum and the Offering Memorandum (or any
supplement or amendment to either of them) made in reliance upon and in
conformity with information relating to you furnished to the Company and
the Guarantors in writing by you expressly for use therein. The Company
and the Guarantors acknowledge for all purposes under this Agreement that
the statements set forth in the stabilization legend and the third,
fourth, sixth and ninth paragraphs under the caption "Plan of
Distribution" in the Preliminary Offering Memorandum and the Offering
Memorandum (or any amendment or supplement) constitute the only written
information furnished to the Company and the Guarantors by each of the
Initial Purchasers expressly for use in the Preliminary Offering
Memorandum and the Offering Memorandum (or any amendment or supplement
thereto).
(b) Each of Holding, the Company and the Subsidiaries is a
duly organized and validly existing corporation in good standing under the
laws of its jurisdiction of incorporation, has the requisite corporate
power and authority to own, lease and operate its properties and to
conduct its business as it is currently being conducted and described in
the Offering Memorandum, and is duly qualified as a foreign corporation
and is in good standing in each jurisdiction where the ownership, leasing
or operation of property or the conduct of its business requires such
qualification, except where the failure to be so qualified would not,
singly or in the aggregate, have a material adverse effect on the
properties, business, results of operations, condition (financial or
otherwise), affairs or prospects of Holding, the Company and the
Subsidiaries taken as a whole (a "MATERIAL ADVERSE EFFECT").
(c) Each of the Company and the Guarantors has all necessary
corporate power and authority to execute and deliver this Agreement, the
Notes and the Acquisition Agreement (in the case only of the Company), the
Note Guarantees (in the
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case only of the Guarantors), the Indenture and the Registration Rights
Agreement, to perform its obligations under this Agreement, the Indenture,
the Acquisition Agreement and the Registration Rights Agreement and to
authorize, issue, sell and deliver the Notes and the Note Guarantees, as
the case may be, as contemplated by this Agreement.
(d) This Agreement has been duly authorized and validly
executed and delivered by the Company and each of the Guarantors and
constitutes a legal, valid and binding agreement of the Company and each
of the Guarantors, enforceable against each of them in accordance with its
terms (assuming the due execution and delivery hereof by you), subject to
applicable bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and similar laws in effect from time to time with respect to
creditors' rights generally and to principles of equity, whether at law or
in equity and except as rights to indemnity and contribution thereunder
may be limited by federal and state securities laws and public policy
considerations underlying such laws.
(e) The issuance and sale of the Series A Notes has been duly
authorized by the Company, and all legally required corporate proceedings
by the Company in connection with the issuance and sale of the Series A
Notes have been taken; each of the Series A Notes, when issued and
delivered to and paid for by the Initial Purchasers in accordance with
this Agreement (assuming the due authentication thereof by the Trustee),
will be a legal, valid and binding obligation of the Company entitled to
the benefits provided by the Indenture, enforceable in accordance with its
terms, subject to applicable bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium and similar laws in effect from
time to time with respect to creditors' rights generally and to principles
of equity, whether at law or in equity and except as rights to indemnity
and contribution thereunder may be limited by federal and state securities
laws and public policy considerations underlying such laws.
(f) The Company has all requisite power to authorize and issue
the Series B Notes; the issuance of the Series B Notes has been duly
authorized by the Company and all legally required corporate proceedings
by the Company in connection with the issuance of the Series B Notes have
been taken; each of the Series B Notes, when and if issued and delivered
in accordance with the terms of the Registration Rights Agreement and the
Indenture, will be validly executed, issued and delivered and (assuming
the due authentication thereof by the Trustee) will be a legal, valid and
binding obligation of the Company entitled to the benefits provided by the
Indenture, enforceable in accordance with its terms, subject to applicable
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium
and similar laws in effect from time to time with respect to creditors'
rights generally and to principles of equity, whether at law or in equity
and except as rights to indemnity and contribution thereunder may be
limited by federal and state securities laws and public policy
considerations underlying such laws.
(g) The Note Guarantee to be endorsed on the Series A Notes by
each Guarantor has been duly authorized by such Guarantor and, on the
Closing Date, will
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have been duly executed and delivered by each such Guarantor and will
conform to the description thereof in the Offering Memorandum. When the
Series A Notes have been issued, executed and authenticated in accordance
with the Indenture and delivered to and paid for by the Initial Purchasers
in accordance with the terms of this Agreement, the Note Guarantee of each
Guarantor endorsed thereon will constitute valid and legally binding
obligations of such Guarantor, enforceable against such Guarantor in
accordance with its terms and entitled to the benefits of the Indenture,
subject to applicable bankruptcy, insolvency, fraudulent conveyance,
reorganizations, moratorium and similar laws in effect from time to time
with respect to creditors' rights generally and to principles of equity
whether at law or in equity.
(h) The note guarantee to be endorsed on the Series B Notes by
each Guarantor has been duly authorized by such Guarantor and all legally
required corporate proceedings by such Guarantor in connection with the
issuance of such note guarantees have been taken; the note guarantees,
when issued, will have been duly executed and delivered by each such
Guarantor and will conform to the description thereof in the Offering
Memorandum. When the Series B Notes have been issued, executed and
authenticated in accordance with the terms of the Registered Exchange
Offer and the Indenture, the note guarantee of each Guarantor endorsed
thereon will constitute valid and legally binding obligations of such
Guarantor, enforceable against such Guarantor in accordance with its terms
and entitled to the benefits of the Indenture, subject to applicable
bankruptcy, insolvency, fraudulent conveyance, reorganizations, moratorium
and similar laws in effect from time to time with respect to creditors'
rights generally and to principles of equity whether at law or in equity.
(i) The Indenture has been duly authorized by the Company and
each Guarantor and, on the Closing Date, will have been duly executed by
the Company and each Guarantor and will conform to the description thereof
in the Offering Memorandum. When the Indenture has been duly executed and
delivered, the Indenture will be a valid and legally binding agreement of
the Company and each Guarantor, enforceable against each of them in
accordance with its terms, subject to applicable bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and similar laws in
effect from time to time with respect to creditors' rights generally and
to principles of equity, whether at law or in equity and except as rights
to indemnity and contribution thereunder may be limited by federal and
state securities laws and public policy considerations underlying such
laws.
(j) The Registration Rights Agreement has been duly authorized
by the Company and each Guarantor and, on the Closing Date, will have been
duly executed by the Company and each Guarantor and will conform to the
description thereof in the Offering Memorandum. When the Registration
Rights Agreement has been duly executed and delivered, the Registration
Rights Agreement will be a valid and legally binding agreement of the
Company and each Guarantor, enforceable against each of them in accordance
with its terms, subject to applicable bankruptcy, insolvency, fraudulent
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conveyance, reorganization, moratorium and similar laws in effect from
time to time with respect to creditors' rights generally and to principles
of equity, whether at law or in equity and except as rights to indemnity
and contribution thereunder may be limited by federal and state securities
laws and public policy considerations underlying such laws.
(k) The Acquisition Agreement has been duly authorized,
executed and delivered by the Company. The Acquisition Agreement is a
valid and legally binding agreement of the Company, enforceable against
the Company in accordance with its terms, subject to applicable
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium
and similar laws in effect from time to time with respect to creditors'
rights generally and to principles of equity, whether at law or in equity
and except as rights to indemnity and contribution thereunder may be
limited by federal and state securities laws and public policy
considerations underlying such laws.
(l) On the Closing Date, the entities listed on Schedule B
hereto will be the only Subsidiaries, direct or indirect, of the Company.
All of the issued and outstanding shares of capital stock of, or other
ownership interests in, each Subsidiary have been or, in the case of CPI
and Cardinal Packaging, on the Closing Date will be duly and validly
authorized and issued. All of the shares of capital stock of, or other
ownership interests in, each Subsidiary are or, in the case of CPI and
Cardinal Packaging, on the Closing Date will be owned, directly or through
Subsidiaries, by the Company. All such shares of capital stock are or, in
the case of CPI and Cardinal Packaging, on the Closing Date will be fully
paid and nonassessable, and are owned free and clear of any security
interest, mortgage, pledge, claim, lien or encumbrance (each, a "LIEN")
other than those Liens created pursuant to the Credit Facility (as defined
in the Offering Memorandum). There are no outstanding subscriptions,
rights, warrants, options, calls, convertible securities, commitments of
sale or Liens related to or entitling any person to purchase or otherwise
to acquire any shares of the capital stock of, or other ownership interest
in, any Subsidiary.
(m) Except as set forth on Schedule C hereto, neither Holding,
the Company nor any of the Subsidiaries is in violation of its respective
charter or bylaws or in default in the performance of any obligation,
agreement or condition contained in any bond, debenture, note or any other
evidence of indebtedness or any indenture, mortgage, deed of trust or
other contract, lease or other instrument to which Holding, the Company or
any of the Subsidiaries is a party or by which any of them is bound, or to
which any of the property or assets of Holding, the Company or any of the
Subsidiaries is subject. To the knowledge of the Company and the
Guarantors, there exists no condition which, with notice, the passage of
time or otherwise, would constitute a default under any such document or
instrument.
(n) The execution and delivery of this Agreement, the
Indenture, the Registration Rights Agreement, the Acquisition Agreement,
the Notes and the Note Guarantees, the issuance and sale of the Notes and
the Note Guarantees, the performance
11
of this Agreement, the Indenture, the Registration Rights Agreement and
the Acquisition Agreement, compliance by the Company and the Guarantors
with the provisions hereof and thereof and of the Notes and the Note
Guarantees (in each case, to the extent the Company or such Guarantor is a
party thereto), the consummation of each of the transactions contemplated
hereby and thereby, in each case, as applicable, will not result in a
breach or violation of any of the respective charters or bylaws of
Holding, the Company or any of the Subsidiaries or any of the terms or
provisions of, or constitute a default or cause an acceleration of any
obligation under, or result in the imposition or creation of (or the
obligation to create or impose) a Lien with respect to, any bond, note,
debenture or other evidence of indebtedness or any indenture, mortgage,
deed of trust or other agreement or instrument to which Holding, the
Company or any of the Subsidiaries is a party or by which it or any of
them is bound, or to which any properties of Holding, the Company or any
of the Subsidiaries is or may be subject, or contravene any order of any
court or governmental agency or body having jurisdiction over Holding, the
Company or any of the Subsidiaries or any of their properties, or violate
or conflict with any statute, rule or regulation or administrative or
court decree applicable to Holding, the Company or any of the
Subsidiaries, or any of their respective properties.
(o) There is no action, suit or proceeding before or by any
court or governmental agency or body, domestic or foreign, pending against
or affecting Holding, the Company or any of the Subsidiaries, or any of
their respective properties, which is required to be disclosed and is not
so disclosed, in the Preliminary Offering Memorandum or the Offering
Memorandum, or which would result, singly or in the aggregate, in a
Material Adverse Effect or which would materially and adversely affect the
consummation of this Agreement or the transactions contemplated hereby,
and to the best knowledge of the Company and the Guarantors, no such
proceedings are contemplated or threatened.
(p) To the best knowledge of the Company and the Guarantors,
no action has been taken and no statute, rule or regulation or order has
been enacted, adopted or issued by any governmental agency or body which
prevents the issuance of the Notes or the Note Guarantees, prevents or
suspends the use of any Offering Memorandum or suspends the sale of the
Notes or the Note Guarantees, in any jurisdiction referred to in Section
4(e) hereof; no injunction, restraining order or order of any nature by a
federal or state court of competent jurisdiction has been issued with
respect to Holding, the Company or any of the Subsidiaries which would
prevent or suspend the issuance or sale of the Notes or the Note
Guarantees, or the use of any Preliminary Offering Memorandum or Offering
Memorandum in any jurisdiction referred to in Section 4(e) hereof; no
action, suit or proceeding is pending against or, to the best knowledge of
the Company and the Guarantors, threatened against or affecting Holding,
the Company or any of the Subsidiaries before any court or arbitrator or
any governmental body, agency or official, domestic or foreign, which, if
adversely determined, would materially interfere with or adversely affect
the issuance of the Notes or the Note Guarantees, or in any manner draw
into question the validity of this Agreement, the Indenture, the
12
Registration Rights Agreement, the Acquisition Agreement, the Notes or the
Note Guarantees; and every request of the Commission or any securities
authority or agency of any jurisdiction for additional information (to be
included in the Preliminary Offering Memorandum or Offering Memorandum or
otherwise) has been complied with.
(q) Except as set forth in the Offering Memorandum, Holding,
the Company and the Subsidiaries are in compliance with all applicable
existing federal, state and local laws and regulations relating to
protection of human health or the environment or imposing liability or
standards of conduct concerning any Hazardous Material ("ENVIRONMENTAL
Laws"), except where the failure to comply would not have a Material
Adverse Effect. The term "Hazardous Material" means (a) any "hazardous
substance" as defined by the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended, (b) any "hazardous
waste" as defined by the Resource Conservation and Recovery Act, as
amended, (c) any petroleum or petroleum product, (d) any polychlorinated
biphenyl and (e) any pollutant or contaminant or hazardous, dangerous or
toxic chemical, material, waste or substance.
(r) Neither Holding, the Company nor any of the Subsidiaries
has violated any federal, state or local law relating to discrimination in
the hiring, promotion or pay of employees or any applicable wage or hour
laws, nor any provisions of the Employee Retirement Income Security Act of
1974 ("ERISA") or the rules and regulations promulgated thereunder, nor
has Holding, the Company or any of the Subsidiaries engaged in any unfair
labor practice, which in each case would result, singly or in the
aggregate, in a Material Adverse Effect. There is (i) no significant
unfair labor practice complaint pending against Holding, the Company or
any of the Subsidiaries or, to the best knowledge of the Company and the
Guarantors, threatened against any of them before the National Labor
Relations Board or any state or local labor relations board, and no
significant grievance or significant arbitration proceeding arising out of
or under any collective bargaining agreement is so pending against
Holding, the Company or any of the Subsidiaries or, to the best knowledge
of the Company and the Guarantors, threatened against any of them, (ii) no
significant strike, labor dispute, slowdown or stoppage is pending against
Holding, the Company or any of the Subsidiaries or, to the best knowledge
of the Company and the Guarantors, threatened against Holding, the Company
or any of the Subsidiaries and (iii) to the best knowledge of the Company
and the Guarantors, no union representation question exists with respect
to the employees of Holding, the Company or any of the Subsidiaries and no
union organizing activities are taking place, except (with respect to any
matter specified in clause (i), (ii) or (iii) above, singly or in the
aggregate) such as could not have a Material Adverse Effect.
(s) Except (i) as would not result, singly or in the
aggregate, in a Material Adverse Effect, and (ii) for the liens created
pursuant to (A) the Credit Facility (as defined in the Offering
Memorandum), (B) the Nevada Industrial Revenue Bonds (as defined in the
Offering Memorandum), (C) the Pledge, Escrow and Disbursement Agreement
dated June 18, 1996, among Holding, First Trust of New York, National
13
Association ("FIRST TRUST"), as trustee, and First Trust, as escrow agent,
and (D) the Holding Pledge and Security Agreement dated June 18, 1996
between Holding and First Trust, as collateral agent, Holding, the Company
and each of the Subsidiaries has good and marketable title, free and clear
of all Liens (except Liens for taxes not yet due and payable), to all
property and assets reflected in the Company's consolidated financial
statements at and for the fiscal year ended January 2, 1999.
(t) The firms of accountants that have certified or shall
certify the applicable financial statements and supporting schedules of
Holding, the Company and the Subsidiaries as part of the Preliminary
Offering Memorandum and the Offering Memorandum are independent public
accountants, as required by the Act and the Exchange Act. The consolidated
historical and PRO FORMA financial statements, together with related
schedules and notes, set forth in the Preliminary Offering Memorandum and
the Offering Memorandum comply as to form in all material respects with
the requirements of the Act. Such historical financial statements fairly
present in all material respects the financial position of Holding, the
Company and the Subsidiaries at the respective dates indicated and the
results of operations and cash flows for the respective periods indicated,
in accordance with generally accepted accounting principles in the United
States ("GAAP") consistently applied throughout such periods (other than
as set forth on Schedule D hereto). Such PRO FORMA financial statements
have been prepared on a basis consistent with such historical statements,
except for the PRO FORMA adjustments specified therein, and give effect to
assumptions made on a reasonable basis. The other financial and
statistical information and data included in the Preliminary Offering
Memorandum and the Offering Memorandum, historical and PRO FORMA, are, in
all material respects, prepared on a basis consistent with such financial
statements and the books and records of Holding, the Company and the
Subsidiaries, as the case may be.
(u) Subsequent to the respective dates as of which information
is given in the Offering Memorandum and up to the Closing Date (except as
disclosed in the Offering Memorandum), neither Holding, the Company nor
any of the Subsidiaries has incurred any liabilities or obligations,
direct or contingent, which are material, individually or in the
aggregate, to Holding, the Company or any Subsidiary, nor entered into any
transaction not in the ordinary course of business and there has not been,
singly or in the aggregate, any material adverse change, or any
development which may reasonably be expected to involve a material adverse
change, in the properties, business, results of operations, condition
(financial or otherwise), affairs or prospects of Holding, the Company and
their Subsidiaries taken as a whole (each, a "MATERIAL ADVERSE CHANGE").
(v) All tax returns required to be filed by Holding, the
Company or any of the Subsidiaries in any jurisdiction have been filed,
other than those filings being contested in good faith, and all material
taxes, including withholding taxes, penalties and interest, assessments,
fees and other charges due or claimed to be due from such entities
14
have been paid, other than those being contested in good faith and for
which adequate reserves have been provided or those currently payable
without penalty or interest.
(w) No authorization, approval or consent or order of, or
filing with, any court or governmental body or agency is necessary in
connection with the transactions contemplated by this Agreement or the
other Operative Documents, except such as may be required by the NASD, the
Trust Indenture Act of 1939, as amended (the "TIA"), or the Act, or have
been obtained and made. No consents or waivers from any person under any
bond, debenture, note, indenture, mortgage, deed of trust or other
agreement or instrument are required to consummate the transactions
contemplated by this Agreement, the Notes, the Note Guarantees, the
Indenture, the Registration Rights Agreement, the Acquisition Agreement
and the Offering Memorandum, except for such consents or waivers which
have been, or will be, obtained prior to the Closing Date or such as which
the failure to obtain would not have a Material Adverse Affect.
(x) (i) Each of Holding, the Company and the Subsidiaries has
all certificates, consents, exemptions, orders, permits, licenses,
authorizations or other approvals (each, an "AUTHORIZATION") of and from,
and has made all declarations and filings with, all federal, state, local
and other governmental authorities, all self-regulatory organizations and
all courts and other tribunals, necessary or required to own, lease,
license and use its properties and assets and to engage in the business
currently conducted by it, except as such are described in the Offering
Memorandum or to the extent that the failure to obtain or file would not,
singly or in the aggregate, have a Material Adverse Effect, (ii) all such
Authorizations are valid and in full force and effect and (iii) Holding,
the Company and the Subsidiaries are in compliance in all material
respects with the terms and conditions of all such Authorizations that
have been obtained thereby and with the rules and regulations of the
regulatory authorities and governing bodies having jurisdiction with
respect thereto. Neither Holding, the Company nor any Subsidiary believes
that any governmental body or agency is considering limiting, suspending
or revoking any such material license, certificate, permit, authorization,
approval, franchise or right.
(y) Neither Holding, the Company nor any of the Subsidiaries
is (a) an "investment company" or a company "controlled" by an investment
company within the meaning of the Investment Company Act of 1940, as
amended, or (b) 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.
(z) No holder of any security of Holding, the Company or any
of the Subsidiaries has or will have any right to require the registration
of such security by virtue of any transaction contemplated by this
Agreement, other than the rights described in the Registration Rights
Agreement.
15
(aa) There are no contracts, agreements or understandings
between Holding, the Company or any of the Subsidiaries and any person
(other than the Initial Purchaser) that would give rise to a valid claim
against Holding, the Company, the Subsidiaries or the Initial Purchasers
for a brokerage commission, finder's fee or like payment in connection
with the issuance, purchase and sale of the Notes.
(bb) Holding, the Company and the Subsidiaries possess all
material patents, patent rights, licenses, inventions, copyrights,
know-how (including trade secrets and other unpatented and/or unpatentable
proprietary or confidential information, systems or procedures),
trademarks, service marks and trade names (collectively, "INTELLECTUAL
PROPERTY") presently employed by them in connection with the businesses
now operated by them, and, except as set forth in the Offering Memorandum,
neither Holding, the Company nor any Subsidiary has received any notice of
infringement of or conflict with asserted rights of others with respect to
the foregoing.
(cc) Holding, the Company and the Subsidiaries each 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 GAAP 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.
(dd) The present fair saleable value of the assets of each of
the Company and the Guarantors exceeds the amount that will be required to
be paid on or in respect of the existing debts and other liabilities
(including contingent liabilities) of each such person as they become
absolute and matured. The assets of each of the Company and the Guarantors
do not constitute unreasonably small capital to carry out their businesses
as conducted or as proposed to be conducted. Neither the Company nor any
of the Guarantors intends to, nor does it believe that it will, incur
debts beyond its ability to pay such debts as they mature. Upon the
issuance of the Series A Notes, the present fair saleable value of the
assets of each of the Company and the Guarantors will exceed the amount
that will be required to be paid on or in respect of the existing debts
and other liabilities (including contingent liabilities) of such person as
they become absolute and matured. The assets of each of the Company and
the Guarantors, upon the issuance of the Series A Notes, will not
constitute unreasonably small capital to carry out their businesses as now
conducted, including the capital needs of each of the Company and the
Guarantors, taking into account the projected capital requirements and
capital availability of each of the Company and the Guarantors.
(ee) None of Holding, the Company, the Subsidiaries or any
agent thereof acting on the behalf of any of them has taken, and none of
them will take, any
16
action that might cause this Agreement, any of the other Operative
Documents or the issuance or sale of the Series A Notes to violate
Regulation G (12 C.F.R. Part 207), Regulation T (12 C.F.R. Part 220),
Regulation U (12 C.F.R. Part 221) or Regulation X (12 C.F.R. Part 224) of
the Board of Governors of the Federal Reserve System.
(ff) Holding, the Company and each Subsidiary maintains
insurance covering their properties, operations, personnel and businesses.
Such insurance insures against such losses and risks as are adequate in
accordance with customary industry practice to protect Holding, the
Company and the Subsidiaries and their businesses. Neither Holding, the
Company nor any Subsidiary has received notice from any insurer or agent
of such insurer that substantial capital improvements or other
expenditures will have to be made in order to continue such insurance. All
such insurance is outstanding and duly in force on the date hereof and
will be outstanding and duly in force on the Closing Date.
(gg) When the Series A Notes and Note Guarantees are issued
and delivered pursuant to this Agreement, neither the Series A Notes nor
the Note Guarantees will be of the same class (within the meaning of Rule
144A under the Act) as securities of the Company or the Guarantors that
are listed on a national securities exchange registered under Section 6 of
the Exchange Act or that are quoted in a United States automated
inter-dealer quotation system.
(hh) Assuming (i) that your representations and warranties in
Section 6 are true, (ii) compliance by you with your covenants set forth
in Section 8 and (iii) that each of the Eligible Purchasers is a QIB or a
Regulation S Purchaser, the purchase and resale of the Series A Notes
pursuant hereto (including pursuant to the Exempt Resales) is exempt from
the registration requirements of the Act.
(ii) No form of general solicitation or general advertising
was used by the Company, the Guarantors or any of their representatives
(other than you, as to whom the Company and the Guarantors make no
representation) in connection with the offer and sale of the Series A
Notes, including, but not limited to, articles, notices or other
communications published in any newspaper, magazine, or similar medium or
broadcast over television or radio, or any seminar or meeting whose
attendees have been invited by any general solicitation or general
advertising. No securities of the same class as the Series A Notes have
been issued and sold by the Company within the six-month period
immediately prior to the date hereof.
(jj) Set forth on Schedule E hereto is a list of each employee
pension or benefit plan with respect to which the Company or any
corporation considered an affiliate of the Company within the meaning of
Section 407(d)(7) of ERISA (an "AFFILIATE") is a party in interest or
disqualified person. The execution and delivery of this Agreement and the
other Operative Documents and the sale of the Series A Notes to be
purchased by the Eligible Purchasers will not involve any prohibited
transaction
17
within the meaning of Section 406 of ERISA or Section 4975 of the Code.
The representation made by the Company and the Guarantors in the preceding
sentence is made in reliance upon and subject to the accuracy of, and
compliance with, the representations and covenants made or deemed made by
the Eligible Purchasers as set forth in the Offering Memorandum under the
Section entitled "Notice to Investors."
(kk) Each of the Preliminary Offering Memorandum and the
Offering Memorandum as of its date, and each amendment or supplement
thereto, as of its date, contains the information specified in, and meets
the requirements of Rule 144A(d)(4) of the Act.
(ll) Except as disclosed in the Offering Memorandum, there are
no business relationships or related party transactions required to be
disclosed therein pursuant to Item 404 of Regulation S-K of the Commission
(assuming for purposes of this paragraph 5(ll) that Regulation S-K is
applicable to the Offering Memorandum).
(mm) Prior to the effectiveness of any Registration Statement,
the Indenture is not required to be qualified under the TIA.
(nn) None of the Company, the Guarantors nor any of their
respective affiliates or any person acting on its or their behalf (other
than the Initial Purchasers, as to whom the Company and the Guarantors
make no representation) has engaged or will engage in any directed selling
efforts within the meaning of Regulation S under the Act ("REGULATION S")
with respect to the Series A Notes or the Subsidiary Guarantees.
(oo) The Company, the Guarantors and their respective
affiliates and all persons acting on their behalf (other than the Initial
Purchasers, as to whom the Company and the Guarantors make no
representation) have complied with and will comply with the offering
restrictions requirements of Regulation S in connection with the offering
of the Series A Notes outside the United States and, in connection
therewith, the Offering Memorandum will contain the disclosure required by
Rule 902(g)(2).
(pp) To the best of our knowledge, the Series A Notes offered
and sold in reliance on Regulation S have been and will be offered and
sold in offshore transactions.
(qq) The sale of the Series A Notes pursuant to Regulation S
is not part of a plan or scheme to evade the registration provisions of
the Act.
(rr) The Series A notes sold in reliance on Regulation S will
be represented upon issuance by a temporary global security that may not
be exchanged for definitive securities until the expiration of the 40-day
distribution compliance period referred to in Rule 903(c)(3) of the Act
and only upon certification of beneficial ownership of such Series A Notes
by non-U.S. persons or U.S. persons who purchased
18
such series A Notes in transactions that were exempt from the registration
requirements of the Act.
6. INITIAL PURCHASERS' REPRESENTATIONS AND WARRANTIES. Each of the
Initial Purchasers, severally and not jointly, represents and warrants to the
Company and the Guarantors that:
(a) Such Initial Purchaser is either a QIB or an accredited
investor (as defined in Rule 501(a)(1), (2), (3) or (7) under the Act) (an
"ACCREDITED INSTITUTION"), in either case with such knowledge and
experience in financial and business matters as are necessary in order to
evaluate the merits and risks of an investment in the Series A Notes.
(b) Such Initial Purchaser (i) is not acquiring the Series A
Notes with a view to any distribution thereof or with any present
intention of offering or selling any of the Series A Notes in a
transaction that would violate the Act or the securities laws of any State
of the United States or any other applicable jurisdiction and (ii) will be
reoffering and reselling the Series A Notes only to (A) QIBs in reliance
on the exemption from the registration requirements of the Act provided by
Rule 144A and (B) in offshore transactions in reliance upon Regulation S.
(c) Such Initial Purchaser agrees that no form of general
solicitation or general advertising (within the meaning of Regulation D
under the Securities Act) has been or will be used by such Initial
Purchaser or any of its representatives in connection with the offer and
sale of the Series A Notes pursuant hereto, including, but not limited to,
articles, notices, or other communications published in any newspaper,
magazine or similar medium or broadcast over television or radio, or any
seminar or meeting whose attendees have been invited by any general
solicitation or advertising.
(d) The Initial Purchasers further agree that, in connection
with the Exempt Resales, the Initial Purchasers will solicit offers to buy
the Series A Notes only from, and will offer to sell the Series A Notes
only to, the Eligible Purchasers. Each Initial Purchaser further agrees
that it will offer to sell the Series A Notes only to, and will solicit
offers to buy the Series A Notes only from, persons who in purchasing such
Series A Notes will be deemed to have represented and agreed (1) if such
Eligible Purchaser is a QIB, that they are purchasing the Series A Notes
for their own account or an account with respect to which they exercise
sole investment discretion and that they or such accounts are QIBs, (2)
that such Series A Notes will not have been registered under the Act and
may be resold, pledged or otherwise transferred, only (A) (I) to a person
who the seller reasonably believes is a QIB purchasing for its own account
or for the account of a QIB in a transaction meeting the requirements of
Rule 144A, or in accordance with Rule 144 under the Act, or pursuant to
another exemption from the registration requirements of the Act (and based
upon an opinion of counsel if the Company and the Guarantors so request)
or (II) to the Company, (III) in an offshore transaction (as defined in
Rule 902 under the Act) meeting the requirements of Rule 904 of the Act,
(IV) in a
19
transaction meeting the requirements of Rule 144 under the Act, (V) to an
Accredited Institution that, prior to such transfer, furnishes the Trustee
a signed letter containing certain representations and agreements relating
to the registration of transfer of such Series A Note and, if such
transfer is in respect of an aggregate principal amount of Series A Notes
less than $250,000, an opinion of counsel acceptable to the Company that
such transfer is in compliance with the Act, (VI) in accordance with
another exemption from the registration requirements of the Act (and based
upon an opinion of counsel acceptable to the Company) or (VII) pursuant to
an effective registration statement and (B) in each case, in accordance
with any applicable securities laws of any State of the United States or
any other applicable jurisdiction, (3) that the holder will, and each
subsequent holder is required to, notify any purchaser from it of the
security evidenced thereby of the resale restrictions set forth in (2)
above.
(e) Such Initial Purchaser and its affiliates or any person
acting on its or their behalf have not engaged or will not engage in any
directed selling efforts within the meaning of Regulation S with respect
to the Series A Notes or the Note Guarantees.
(f) The Series A Notes offered and sold by such Initial
Purchaser pursuant hereto in reliance on Regulation S have been and will
be offered and sold only in offshore transactions.
(g) The sale of the Series A Notes offered and sold by such
Initial Purchaser pursuant hereto in reliance on Regulation S is not part
of a plan or scheme to evade the registration provisions of the Act.
(h) Such Initial Purchaser agrees that it has not offered or
sold and will not offer or sell the Series A Notes in the United States or
to, or for the benefit or account of, a U.S. Person (other than a
distributor), in each case, as defined in Rule 902 under the Act (i) as
part of its distribution at any time and (ii) otherwise until 40 days
after the later of the commencement of the offering of the Series A Notes
pursuant hereto and the Closing Date, other than in accordance with
Regulation S of the Act or another exemption from the registration
requirements of the Act. Such Initial Purchaser agrees that, during such
40-day distribution compliance period, it will not cause any advertisement
with respect to the Series A Notes (including any "tombstone"
advertisement) to be published in any newspaper or periodical or posted in
any public place and will not issue any circular relating to the Series A
Notes, except such advertisements as are permitted by and include the
statements required by Regulation S.
(i) Such Initial Purchaser agrees that, at or prior to
confirmation of a sale of Series A Notes by it to any distributor, dealer
or person receiving a selling concession, fee or other remuneration during
the 40-day distribution compliance period referred to in Rule 903(c)(2)
under the Act, it will send to such distributor, dealer or person
receiving a selling concession, fee or other remuneration a confirmation
or notice to substantially the following effect:
20
"The Series A Notes covered hereby have not been registered
under the U.S. Securities Act of 1933, as amended (the "Securities Act"),
and may not be offered and sold within the United States or to, or for the
account or benefit of, U.S. persons (i) as part of your distribution at
any time or (ii) otherwise until 40 days after the later of the
commencement of the offering and the Closing Date, except in either case
in accordance with Regulation S under the Securities Act (or Rule 144A or
to institutional "accredited investors," as defined in Rule 501(a)(1),
(2), (3) or (7) under the Securities Act in transactions that are exempt
from the registration requirements of the Securities Act), and in
connection with any subsequent sale by you of the Series A Notes covered
hereby in reliance on Regulation S during the period referred to above to
any distributor, dealer or person receiving a selling concession, fee or
other remuneration, you must deliver a notice to substantially the
foregoing effect. Terms used above have the meanings assigned to them in
Regulation S."
(j) Such Initial purchaser agrees that the Series A Notes
offered and sold in reliance on Regulation S will be represented upon
issuance by a global security that may not be exchanged for definitive
securities until the expiration of the 40-day distribution compliance
period referred to in Rule 903(c)(3) of the Act and only upon
certification of beneficial ownership of such Series A Notes in
transactions that were exempt from the registration requirements of the
Act.
Such Initial Purchaser also understands that the Company and the
Guarantors and, for purposes of the opinions to be delivered to you
pursuant to Sections 8(f) and 8(g) hereof, each of O'Sullivan Graev &
Karabell, LLP and Latham & Watkins, will rely upon the accuracy and truth
of the foregoing representations and you hereby consent to such reliance.
7. INDEMNIFICATION.
(a) The Company and each Guarantor (the "INDEMNIFYING
Parties") agree to indemnify and hold harmless (i) each Initial Purchaser,
(ii) each person, if any, who controls (within the meaning of Section 15
of the Act or Section 20 of the Exchange Act) any Initial Purchaser (any
of the persons referred to in this clause (ii) being hereinafter referred
to as a "CONTROLLING PERSON"), and (iii) the respective officers,
directors, partners, employees, representatives and agents of each Initial
Purchaser or any controlling person (any person referred to in clause (i),
(ii), or (iii) may hereinafter be referred to as an "INDEMNIFIED PERSON")
to the fullest extent lawful, from and against any and all losses, claims,
damages, liabilities, judgments, actions and expenses (including without
limitation and as incurred, reimbursement of all reasonable costs of
investigating, preparing or defending any claim or action, or any
investigation or proceeding by any governmental agency or body, commenced
or threatened, including the reasonable fees and expenses of counsel to
any Indemnified Person) directly or indirectly (a) caused by, related to,
based upon, arising out of or in connection with any untrue statement or
alleged untrue statement of a material fact contained in the Preliminary
Offering
21
Memorandum or the Offering Memorandum (or any amendment or supplement
thereto), or any omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements
therein not misleading, except insofar as such losses, claims, damages,
liabilities or expenses are caused by an untrue statement or omission or
alleged untrue statement or omission based upon such information relating
to such Initial Purchaser furnished in writing to the Company and the
Guarantors by such Initial Purchaser; PROVIDED, HOWEVER, that the
foregoing indemnity agreement with respect to any Preliminary Offering
Memorandum or the Offering Memorandum shall not inure to the benefit of
any Initial Purchaser from whom the person asserting any such losses,
claims, damages, liabilities, judgments, actions or expenses purchased
Notes, or any controlling person of such Initial Purchaser, if a copy of
the Preliminary Offering Memorandum or the Offering Memorandum (including
any amendment or supplement thereto delivered to such Initial Purchaser
prior to the date such Preliminary Offering Memorandum or the Offering
Memorandum was sent or given to such purchaser, was not sent or given by
or on behalf of such Initial Purchaser to such person at or prior to the
written confirmation of the sale of Notes to such person, and if the
Preliminary Offering Memorandum or the Offering Memorandum (including any
amendment or supplement thereto delivered to such Initial Purchaser prior
to the date such Preliminary Offering Memorandum or the Offering
Memorandum was sent or given to such purchaser) cured the defect giving
rise to such losses, claims, damages, liabilities, judgments, actions or
expenses. The Indemnifying Parties shall notify you promptly of the
institution, threat or assertion of any claim, proceeding (including any
governmental investigation) or litigation in connection with the matters
addressed by this Agreement which involves the Indemnifying Parties or an
Indemnified Person.
(b) In case any action or proceeding (including any
governmental investigation) shall be brought or asserted against any of
the Indemnified Persons with respect to which indemnity may be sought
against the Indemnifying Parties, such Indemnified Person (or the entity
controlled by such controlling person) shall promptly notify the Company
in writing (PROVIDED that the failure to give such notice shall not
relieve the Indemnifying Parties of their obligations pursuant to this
Agreement unless such failure to notify has materially prejudiced the
ability of the Indemnifying Parties to defend any such claim) and the
Indemnifying Parties shall assume the defense thereof, including the
employment of counsel reasonably satisfactory to the Indemnified Parties
and payment of all reasonable fees and expenses. Such Indemnified Person
shall have the right to employ its own counsel in any such action and
participate in the defense thereof, but the fees and expenses of such
counsel shall be at the Indemnified Party's expense unless (i) the
employment of such counsel has been specifically authorized in writing by
the Company, (ii) the Indemnifying Parties have not assumed the defense
and employed counsel reasonably satisfactory to such Indemnified Party
within a reasonable time after notice of commencement of such action or
proceeding or (iii) the named parties to any such action or proceeding
(including any impleaded parties) include both an Indemnified Party and
any Indemnifying Party and any such Indemnified Party shall have been
advised by such counsel that there may be one or more legal defenses
available to it
22
which are different from or additional to those available to the
Indemnifying Parties (in which case the Indemnifying Parties shall not
have the right to assume the defense of such action on behalf of the
Indemnified Parties, it being understood, however, that the Indemnifying
Parties shall not, in connection with any one such action or separate but
substantially similar or related actions in the same jurisdiction arising
out of the same general allegations or circumstances, be liable for the
reasonable fees and expenses of more than one separate firm of attorneys
(in addition to any local counsel) at any time for such Indemnified
Persons, which firm shall be designated by Donaldson, Lufkin & Jenrette
Securities Corporation). The Indemnifying Parties shall be liable for any
settlement of any such action or proceeding effected with the Indemnifying
Parties' prior written consent, which consent will not be unreasonably
withheld, and the Indemnifying Parties agree to indemnify and hold
harmless any Indemnified Person from and against any loss, claim, damage,
liability or expense by reason of any settlement of any action effected
with the written consent of the Indemnifying Parties. If at any time the
Indemnified Person shall have requested the Indemnifying Parties to
reimburse the Indemnified Person for fees and expenses of counsel as
contemplated by the second sentence of this paragraph in connection with
any such action or proceeding, the Indemnifying Parties agree that they
shall be liable for any settlement of any proceeding effected without
their written consent so long as they receive written notice of such
settlement if (i) such settlement is entered into more than ninety
business days after receipt by such Indemnifying Parties of the aforesaid
request and (ii) such Indemnifying Parties shall not have reimbursed the
Indemnified Party in accordance with such request prior to the date of
such settlement. The Indemnifying Parties shall not, without the prior
written consent of each Indemnified Person, which will not be unreasonably
withheld, settle or compromise or consent to the entry of a judgment in or
otherwise seek to terminate any pending or threatened action, claim,
litigation or proceeding in respect of which indemnification or
contribution may be sought hereunder (whether or not any Indemnified
Person is a party thereto), unless such settlement, compromise, consent or
termination includes an unconditional release of each Indemnified Person
from all liability arising out of such action, claim, litigation or
proceeding.
(c) Each of the Initial Purchasers agrees, severally and not
jointly, to indemnify and hold harmless the Company and the Guarantors,
their respective directors and officers, any person controlling (within
the meaning of Section 15 of the Act or Section 20 of the Exchange Act)
the Company or the Guarantors, and the officers, directors, partners,
employees, representatives and agents of each such person to the same
extent as the foregoing indemnity from the Indemnifying Parties to each of
the Indemnified Persons, but only with respect to claims and actions based
on information relating to such Initial Purchaser furnished in writing by
such Initial Purchaser expressly for use in the Preliminary Offering
Memorandum and the Offering Memorandum.
(d) If the indemnification provided for in this Section 7 is
unavailable to a party entitled to indemnification pursuant to Section
7(b) or (c) in respect of any losses, claims, damages, liabilities or
expenses referred to herein, then each indemnifying
23
party, in lieu of indemnifying such indemnified party, shall contribute to
the amount paid or payable by such indemnified party as a result of such
losses, claims, damages, liabilities, expenses and judgments (i) in such
proportion as is appropriate to reflect the relative benefits received by
the indemnifying party (or parties, as applicable) on the one hand and the
indemnified party (or parties, as applicable) on the other hand from the
offering of the Series A Notes or (ii) if the allocation provided by
clause (i) above is not permitted by applicable law, in such proportion as
is appropriate to reflect not only the relative benefits referred to in
clause (i) above but also the relative fault of the indemnifying party (or
parties, as applicable) and the indemnified party (or parties, as
applicable), as well as any other relevant equitable considerations. The
relative benefits received by the Company and the Guarantors, on the one
hand, and the Initial Purchasers, on the other hand, shall be deemed to be
in the same proportion as the total proceeds from the offering (net of
discounts and commissions but before deducting expenses) received by the
Company and the Guarantors bear to the total discounts and commissions
received by the Initial Purchasers, in each case as set forth in the table
on the cover page of the Offering Memorandum. The relative fault of the
Company and the Guarantors, on the one hand, and the Initial Purchasers,
on the other hand, shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a material fact
or the omission or alleged omission to state a material fact related to
information supplied by the Company or the Guarantors, on the one hand, or
the Initial Purchasers, on the other hand, and the parties' relative
intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission. The indemnity and contribution
obligations of the Company and the Guarantors set forth herein shall be in
addition to any liability or obligation the Company and the Guarantors may
otherwise have to any Indemnified Person.
The Company and the Guarantors and the Initial Purchasers agree that
it would not be just and equitable if contribution pursuant to this
Section 7(d) were determined by pro rata allocation (even if the Initial
Purchasers were treated as one entity for such purpose) or by any other
method of allocation which does not take account of the equitable
considerations referred to in this Section 7(d). The amount paid or
payable by an indemnified party as a result of the losses, claims,
damages, liabilities, expenses or judgments referred to in the immediately
preceding paragraph shall be deemed to include, subject to the limitations
set forth above, any legal or other expenses reasonably incurred by such
indemnified party in connection with investigating or defending any such
action or claim. Notwithstanding the provisions of this Section 7(d), no
Initial Purchaser (and its related Indemnified Persons) shall be required
to contribute, in the aggregate, any amount in excess of the amount by
which the total discount received by such Initial Purchaser applicable to
the Series A Notes purchased by such Initial Purchaser exceeds the amount
of any damages which such Initial Purchaser has otherwise been required to
pay by reason of such untrue or alleged untrue statement or omission or
alleged omission. No person guilty of fraudulent misrepresentation (within
the meaning of Section 11(f) of the Act) shall be entitled to contribution
from any person who was not guilty of such fraudulent misrepresentation.
The Initial Purchasers' obligations to contribute pursuant
24
to this Section 7(d) are several in proportion to the respective principal
amount of Series A Notes purchased by each of the Initial Purchasers
hereunder and not joint.
8. CONDITIONS OF THE INITIAL PURCHASERS' OBLIGATIONS. The
obligations of the Initial Purchasers to purchase the Series A Notes under this
Agreement are subject to the satisfaction of each of the following conditions:
(a) All the representations and warranties of the Company and
the Guarantors contained in this Agreement shall be true and correct in
all material respects (other than those representations and warranties
that are qualified by a reference to materiality, which shall be true and
correct in all respects) on the Closing Date with the same force and
effect as if made on and as of the date hereof and the Closing Date,
respectively. The Company and the Guarantors shall have performed or
complied with in all material respects all of their obligations and
agreements herein contained (other than those obligations and agreements
that are qualified by a reference to materiality, which shall be performed
or complied with in all respects) and required to be performed or complied
with by them at or prior to the Closing Date.
(b) No stop order suspending the sale of the Series A Notes in
any jurisdiction referred to in Section 4(e) shall have been issued and no
proceeding for that purpose shall have been commenced or shall be pending
or threatened.
(c) (i) No action shall have been taken and no statute, rule,
regulation or order shall have been enacted, adopted or issued by any
governmental agency which would, as of the Closing Date, prevent the
issuance of the Series A Notes; (ii) no injunction, restraining order or
order of any nature by a federal or state court of competent jurisdiction
shall have been issued as of the Closing Date which would prevent the
issuance of the Series A Notes; and (iii) on the Closing Date no action,
suit or proceeding shall be pending against or affecting or, to the
knowledge of the Company and the Guarantors, threatened against, Holding,
the Company or any Subsidiary before any court or arbitrator or any
governmental body, agency or official which, if adversely determined,
would prohibit the issuance of the Series A Notes except as disclosed in
the Offering Memorandum.
(d) (i) Since the date hereof or since the dates as of which
information is given in the Offering Memorandum, there shall not have been
any Material Adverse Change, (ii) since the date of the latest balance
sheet included in the Offering Memorandum, there shall not have been any
material change in the capital stock or long-term debt, or material
increase in short-term debt, of Holding, the Company or any of the
Subsidiaries (other than as disclosed in the Offering Memorandum) and
(iii) Holding, the Company and the Subsidiaries shall have no liability or
obligation, direct or contingent, that is material to Holding, the Company
and the Subsidiaries taken as a whole and is required to be disclosed on a
balance sheet in accordance with GAAP and is not disclosed on the latest
balance sheet included in the Offering Memorandum.
25
(e) You shall have received certificates, dated the Closing
Date, signed by (i) the President or any Vice President or any other
executive officer and (ii) a principal financial or accounting officer of
the Company and each of the Guarantors confirming, as of the Closing Date,
the matters set forth in paragraphs (a), (b), (c) and (d) of this Section
8.
(f) On the Closing Date, you shall have received an opinion
(satisfactory to you and your counsel), dated the Closing Date, of
O'Sullivan Graev & Karabell, LLP, counsel for the Company and the
Guarantors, to the effect that:
(i) Holding, the Company and each of the U.S. Guarantors
is a duly organized and validly existing corporation in good
standing under the laws of its jurisdiction of incorporation, has
the requisite corporate power and authority to own, lease and
operate its properties and to conduct its business as it is
currently being conducted and described in the Offering Memorandum,
and is duly qualified as a foreign corporation and is in good
standing in each jurisdiction listed on a schedule attached to the
opinion;
(ii) Each of the Company and each of the U.S. Guarantors
has all necessary corporate power and authority to execute and
deliver this Agreement, the Series A Notes, the Note Guarantees, the
Indenture, the Registration Rights Agreement and the Acquisition
Agreement, as applicable, and to perform its obligations under this
Agreement, the Indenture, the Registration Rights Agreement and the
Acquisition Agreement, and to authorize, issue, sell and deliver the
Series A Notes and the Note Guarantees, as applicable, as
contemplated by this Agreement;
(iii) Each of this Agreement, the Series A Notes, the
Note Guarantees, the Registration Rights Agreement, the Indenture
and the Acquisition Agreement has been duly authorized, executed and
delivered by the Company and the U.S. Guarantors, as applicable;
(iv) When authenticated in accordance with the terms of
the Indenture and delivered to and paid for by you in accordance
with the terms of this Agreement, the Series A Notes will constitute
valid and legally binding obligations of the Company, enforceable
against the Company in accordance with their terms and entitled to
the benefits of the Indenture, subject to applicable bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium and
similar laws affecting creditors' rights and remedies generally and
to general principles of equity (regardless of whether enforcement
is sought at law or in equity);
(v) When the Series A Notes are executed and
authenticated in accordance with the terms of the Indenture, each of
the Note Guarantees of the
26
Guarantors endorsed thereon will constitute valid and legally
binding obligations of the respective Guarantor, enforceable against
each such Guarantor in accordance with its terms and entitled to the
benefits of the Indenture, subject to applicable bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium and
similar laws affecting creditors' rights and remedies generally and
to general principles of equity (regardless of whether enforcement
is sought at law or in equity).
(vi) The Series B Notes and the note guarantees to be
endorsed thereon by the U.S. Guarantors have been duly authorized by
the Company and each of the U.S. Guarantors, as the case may be.
(vii) The Indenture, assuming due authorization,
execution and delivery thereof by the Trustee, constitutes a valid
and legally binding agreement of the Company and each of the
Guarantors, enforceable against each of them in accordance with its
terms, subject to applicable bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium and similar laws affecting
creditors' rights and remedies generally and to general principles
of equity (regardless of whether enforcement is sought at law or in
equity);
(viii) The Notes, the Note Guarantees, the Indenture and
the Registration Rights Agreement conform to the descriptions
thereof contained in the Offering Memorandum in all material
respects;
(ix) All of the issued and outstanding shares of capital
stock of, or other ownership interests in, each U.S. Guarantor have
been duly and validly authorized and issued and are fully paid and
nonassessable. All of the shares of capital stock of, or other
ownership interests in, each U.S. Guarantor are owned, directly or
through U.S. Guarantors, by the Company;
(x) To the knowledge of such counsel, there are no
outstanding subscriptions, rights, warrants, options, calls,
convertible securities, commitments of sale or Liens related to or
entitling any person to purchase or otherwise to acquire any shares
of the capital stock of, or other ownership interest in, any U.S.
Guarantor (other than those Liens created pursuant to the Credit
Facility (as defined in the Offering Memorandum));
(xi) Neither Holding, the Company nor any of the
Guarantors is (a) an "investment company" or a company "controlled"
by an investment company within the meaning of the Investment
Company Act of 1940, as amended, or (b) 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;
27
(xii) The descriptions in the Offering Memorandum of
statutes, legal and governmental proceedings, and contracts and
other documents are accurate in all material respects; it being
understood that such counsel need express no opinion as to the
financial statements, notes or schedules or other financial or
statistical data included therein or omitted therefrom;
(xiii) To the knowledge of such counsel: (a) no action
has been taken and no statute, rule or regulation or order has been
enacted, adopted or issued by any governmental agency or body which
prevents the issuance of the Series A Notes or the Notes Guarantees,
and such counsel has received no notice which suspends the sale of
the Series A Notes or the Notes Guarantees; (b) no injunction,
restraining order or order of any nature by a federal or state court
of competent jurisdiction has been issued with respect to Holding,
the Company or any of the Guarantors which would prevent or suspend
the issuance or sale of the Series A Notes or the Notes Guarantees,
and such counsel has not received notice which prevents or suspends
the use of the Offering Memorandum in any jurisdiction referred to
in Section 4(e) hereof; and (c) no action, suit or proceeding is
pending against or threatened against or affecting Holding, the
Company or any of the Guarantors before any court or arbitrator or
any governmental body, agency or official, domestic or foreign,
which, if adversely determined, would prevent the issuance of the
Series A Notes or the Notes Guarantees;
(xiv) Except as may be required under state securities
or "Blue Sky" laws or regulations or by the NASD, as to which such
counsel expresses no opinion, no authorization, approval, consent or
order of, or filing with, any court or governmental body or agency
is required for the consummation of the transactions contemplated by
this Agreement or the other Operative Documents, except such as have
been obtained and made; no consents or waivers from any person under
any bond, debenture, note, indenture, mortgage, deed of trust or
other agreement or instrument that is listed on a schedule to the
opinion are required to consummate the transactions contemplated by
this Agreement or the other Operative Documents, except for any
consent or waiver which has been obtained on or prior to the Closing
Date;
(xv) On the Closing Date, the Offering Memorandum
(except for financial statements, the notes thereto and related
schedules and other financial data included therein, or omitted
therefrom, as to which no opinion need be expressed) complied as to
form in all material respects with Rule 144A(d)(4) of the Act;
(xvi) To the best knowledge of such counsel, other than
as set forth on Schedule C to this Agreement, neither Holding, the
Company nor any of the Guarantors is in violation of its respective
charter or bylaws or in default in the performance of any
obligation, agreement or condition contained in any
28
agreement or instrument listed on a schedule to the opinion; to the
best knowledge of such counsel, there exists no condition which,
with notice, the passage of time or otherwise, would constitute a
default under any such document or instrument;
(xvii) The execution and delivery of this Agreement and
the other Operative Documents, the issuance and sale of the Series A
Notes and the Note Guarantees, the performance of this Agreement and
the other Operative Documents, compliance by the Company and the
Guarantors with the provisions hereof and thereof and of the Series
A Notes and the Note Guarantees, the consummation of the
transactions contemplated hereby and thereby and the payments
described in the Offering Memorandum under the caption "Use of
Proceeds," in each case, as applicable, will not result in a breach
or violation of any of the respective charters or bylaws of Holding,
the Company or any of the U.S. Guarantors or any of the terms or
provisions of, or constitute a default or cause an acceleration of
any obligation under, or result in the imposition or creation of (or
the obligation to create or impose) a Lien with respect to, any
agreement or instrument listed on a schedule to the opinion, or, to
the knowledge of such counsel, contravene any order of any court or
governmental agency or body having jurisdiction over Holding, the
Company or any of the U.S. Guarantors or any of their properties, or
violate any statute, rule or regulation or administrative or court
decree applicable to Holding, the Company or any of the U.S.
Guarantors, or any of their respective properties;
(xviii) The Registration Rights Agreement constitutes a
valid and legally binding agreement of the Company and each
Guarantor, enforceable against each of them in accordance with its
terms, subject to applicable bankruptcy, insolvency, reorganization,
moratorium and other similar laws relating to or affecting
creditors' rights generally, and to general equitable principles
(regardless of whether considered in a proceeding in equity or at
law) and, to the extent the Registration Rights Agreement provides
for rights of indemnification and contribution, subject to the
limitations of applicable law;
(xix) The Acquisition Agreement constitutes a valid and
legally binding agreement of the Company and the Guarantors that are
party thereto, enforceable against the Company and such Guarantors
in accordance with its terms, subject to applicable bankruptcy,
insolvency, reorganization, moratorium and other similar laws
relating to creditors' rights generally, and to equitable principles
(regardless of whether considered in a proceeding in equity or at
law) and to the extent the Acquisition Agreement provides for rights
of indemnification and contribution, subject to the limitations of
applicable law;
(xx) When the Series A Notes are issued and delivered
pursuant to the Purchase Agreement, such Series A Notes will not be
of the same class (within the meaning of Rule 144A under the Act) as
securities of the Company
29
that are listed on a national securities exchange registered under
Section 6 of the Exchange Act or that are quoted in a United States
automated inter-dealer quotation system;
(xxi) Assuming, without independent investigation, (i)
that the Series A Notes and the Note Guarantees are sold to the
Initial Purchasers, and initially resold by the Initial Purchasers,
in accordance with the terms of, and in the manner contemplated by,
the Purchase Agreement and the Offering Memorandum, (ii) the
accuracy of the representations, warranties and covenants of the
Company and the Guarantors set forth in this Agreement and in
certain certificates (other than the representation and warranty in
Section 5(hh) of this Agreement but including the assumptions in
Section 5(hh) of this Agreement), (iii) the accuracy of the Initial
Purchasers' representations and warranties set forth in this
Agreement, (iv) the due performance by the Company and the
Guarantors of the covenants and agreements set forth in this
Agreement and the due performance by the Initial Purchasers of the
covenants and agreements set forth in this Agreement, (v) the
Initial Purchasers' compliance with the offering and transfer
procedures and restrictions described in the Offering Memorandum,
(vi) the accuracy of the representations and warranties made in
accordance with the Offering Memorandum by each purchaser to whom
the Initial Purchasers initially resell the Series A Notes and the
Note Guarantees and (vii) that each purchaser to whom the Initial
Purchasers initially resell Series A Notes and the Note Guarantees
receives a copy of the Offering Memorandum if requested by such
purchaser prior to such sale, the offer, issuance, sale and delivery
of the Series A Notes to the Initial Purchasers, and the initial
reoffer, resale and delivery of the Series A Notes to the Initial
Purchasers, as contemplated by this Agreement and the Offering
Memorandum, do not require registration under the Act, it being
understood that no opinion is expressed as to any subsequent resale
of the Series A Notes and Note Guarantees or any resale of Series A
Notes and Note Guarantees by any person other than the Initial
Purchasers;
(xxii) Prior to the Exchange Offer or the effectiveness
of the Shelf Registration Statement, the Indenture is not required
to be qualified under the TIA; and
(xxiii) The Offering Memorandum, as of its date, and
each amendment or supplement thereto, as of its date, contained the
information specified in, and meets the requirements of Rule
144A(d)(4) of the Act.
The opinions set forth in paragraphs (ix) and (x) will be based
solely on a review of stock records and other specified corporate record
books of Holding, the Company and its Subsidiaries and applicable law. As
to matters of Ohio, Kansas and South Carolina law, O'Sullivan Graev &
Karabell, LLP is entitled to rely on the opinion of Lathrop &
30
Gage L.C., Kansas counsel, Nexsen Pruet Jacobs & Pollard, LLP, South
Carolina counsel and Squire, Sanders & Dempsey L.P.P., Ohio counsel.
The opinion of O'Sullivan Graev & Karabell, LLP shall be rendered to
you at the request of the Company and the Guarantors and shall so state
therein.
In giving their opinion required by this subsection 8(f), O'Sullivan
Graev & Karabell, LLP shall additionally state that such counsel has
participated in conferences with officers and other representatives of the
Company and the Guarantors, representatives of the independent public
accountants for the Company and the Guarantors, your representatives and
your counsel in connection with the preparation of the Preliminary
Offering Memorandum and the Offering Memorandum, although such counsel has
not independently verified the accuracy, completeness or fairness of such
statements (except as indicated above); and such counsel advises you that,
on the basis of the foregoing, no facts came to such counsel's attention
that caused such counsel to believe that the Offering Memorandum (as
amended or supplemented), as of its date and the Closing Date, contained
an untrue statement of a material fact or omitted to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading (it being
understood that such counsel need express no opinion nor express any
statement or belief with respect to the financial statements and schedules
and other financial and statistical data included in, or omitted from, the
Preliminary Offering Memorandum or the Offering Memorandum or any
supplement or amendment thereto).
(g) On the Closing Date, you shall have received an opinion
(satisfactory to you and your counsel), dated the Closing Date, of Edwin
Coe, English counsel for the U.K. Guarantors, to the effect that:
(i) Each of NIM Holdings Limited, Norwich Injection
Moulders Limited and Norwich Acquisition Limited is duly
incorporated with limited liability and validly existing under the
laws of England and Wales and is not in liquidation and has the
requisite corporate power to own, lease and operate its properties
and to conduct its business as it is currently being conducted;
(ii) Each of NIM Holdings Limited, Norwich Injection
Moulders Limited and Norwich Acquisition Limited has all necessary
corporate power and authority to execute and deliver this Agreement,
the Registration Rights Agreement, the Indenture and the Note
Guarantees and to perform its obligations under each of this
Agreement, the Registration Rights Agreement, the Indenture and the
Note Guarantees and to authorize, issue and deliver the Note
Guarantees, as contemplated by this Agreement;
(iii) This Agreement, the Registration Rights Agreement,
the Indenture and the Note Guarantees have been duly authorized,
executed and
31
delivered by NIM Holdings Limited, Norwich Injection Moulders
Limited and Norwich Acquisition Limited;
(iv) Each of the obligations expressed to be assumed by
NIM Holdings Limited, Norwich Injection Moulders Limited and Norwich
Acquiition under the Note Guarantees constitutes a valid and legally
binding obligation that is enforceable in accordance with its terms
on NIM Holdings Limited, Norwich Injection Moulders Limited and
Norwich Acquisition Limited;
(v) The Indenture constitutes a valid and legally
binding agreement of each of NIM Holdings Limited, Norwich Injection
Moulders Limited and Norwich Acquisition Limited, enforceable
against each of them in accordance with its terms;
(vi) The execution and delivery by NIM Holdings Limited,
Norwich Injection Moulders Limited and Norwich Acquisition Limited
of this Agreement, the Registration Rights Agreement, the Indenture
and the Note Guarantees, the issuance of the Note Guarantees, the
performance of this Agreement, the Registration Rights Agreement,
the Indenture and the Note Guarantees by NIM Holdings Limited,
Norwich Injection Moulders Limited and Norwich Acquisition Limited,
compliance by NIM Holdings Limited, Norwich Injection Moulders
Limited and Norwich Acquisition Limited with the provisions thereof
and of the Note Guarantees, the consummation of the transactions
contemplated thereby and the payments described in the Offering
Memorandum under the caption "Use of Proceeds", does not violate the
memorandum of association or articles of association of NIM holdings
Limited, Norwich Injection Moulders Limited and Norwich Acquisition
Limited or any of the terms or provisions of or constitute a default
or cause an acceleration of any obligation under, or result in the
imposition or creation of (or obligation to create or impose) a Lien
with respect to, any material agreement or instrument, or, to such
counsel's knowledge, contravene any order of any court or
governmental agency or body having jurisdiction over either of NIM
Holdings Limited, Norwich Injection Moulders Limited or Norwich
Acquisition Limited or any of their properties, or violate any
state, rule or regulation or administrative or court decree
applicable to either NIM Holdings Limited, Norwich Injection
Moulders Limited or Norwich Acquisition Limited;
(vii) All of the issued shares of NIM Holdings Limited,
Norwich Injection Moulders Limited and Norwich Acquisition Limited
have been validly authorized, issued and are fully paid. All of the
issued share capital of Norwich Injection Moulders Limited is owned
by NIM Holdings Limited, all of the issued share capital of NIM
Holdings Limited is owned by the Company and all of the issued share
capital of Norwich Acquisition Limited is owned by Norwich Injection
Moulders Limited;
32
(viii) Except for the equitable charge over the issued
share capital of NIM Holdings Limited dated July 2, 1998 in favor of
NationsBank NA and the debentures dated July 2, 1998 given by each
of NIM Holdings Limited and Norwich Injection Moulders Limited in
favor of NationsBank, to the best of our knowledge there are no
outstanding rights, warrants, options, convertible securities, Liens
or other security relating to or entitling any person to purchase or
otherwise acquire any shares in either of NIM Holdings Limited,
Norwich Injection Moulders Limited or Norwich Acquisition Limited;
(ix) The Registration Rights Agreement constitutes a
valid and legally binding agreement of NIM Holdings Limited, Norwich
Injection Moulders Limited and Norwich Acquisition Limited
enforceable against each of them in accordance with its terms; and
(x) A judgment obtained in the State of New York of a
court of the State of New York or a Federal Court sitting in the
State of New York which is final and conclusive arising out of or
relating to the obligations of NIM Holdings Limited and Norwich
Injection Moulders Limited under this Agreement, the Registration
Rights Agreement, the Indenture and the Note Guarantees for a debt
or definite sum of money may be enforced against NIM Holdings
Limited, Norwich Injection Moulders Limited or Norwich Acquisition
Limited by an action in the English Courts for the amount due under
it.
The opinion of Edwin Coe shall be rendered to you at the request of
the Company and the Guarantors and shall so state therein.
(h) You shall have received an opinion, dated the Closing
Date, of Latham & Watkins, counsel for the Initial Purchasers, in form and
substance reasonably satisfactory to you.
(i) You shall have received letters on and as of the date
hereof as well as on and as of the Closing Date (in the latter case
constituting an affirmation of the statements set forth in the former), in
form and substance satisfactory to you, from (A) Ernst & Young, LLP,
independent auditors, with respect to the financial statements and certain
financial information contained in the Offering Memorandum relating to
Holding, the Company and the Subsidiaries and (B) Deloitte & Touche LLP,
independent auditors, with respect to the financial statements and certain
financial information contained in the Offering Memorandum relating to CPI
and its subsidiaries.
(j) Latham & Watkins shall have been furnished with such
documents and opinions, in addition to those set forth above, as they may
reasonably require for the purpose of enabling them to review or pass upon
the matters referred to in this Section 8 and in order to evidence the
accuracy, completeness or satisfaction in all material respects of any of
the representations, warranties or conditions herein contained.
33
(k) Prior to the Closing Date, the Company and the Guarantors
shall have furnished to you such further information, certificates and
documents as you may reasonably request.
(l) The Company, the Guarantors and the Trustee shall have
entered into the Indenture and you shall have received counterparts,
conformed as executed, thereof.
(m) The Company, the Guarantors and you shall have entered
into the Registration Rights Agreement, and you shall have received
counterparts, conformed as executed thereof.
(n) The Acquisition shall be consummated prior to, or
simultaneously with, the closing of the Offering on substantially the
terms described in the Offering Memorandum and the Initial Purchasers
shall have received counterparts, conformed as executed, of the
Acquisition Agreement and such other documentation as they deem necessary
to evidence the consummation thereof.
(o) The Offering Memorandum shall have been distributed to you
not later than 10:00 A.M., New York City time, on July 1, 1999, or at such
later date and time as you may approve in writing.
(p) CPI and Cardinal Packaging shall have become parties to
this Agreement immediately after the consummation of the Acquisition.
All opinions, certificates, letters and other documents required by
this Section 8 to be delivered by the Company and the Guarantors will be in
compliance with the provisions hereof only if they are reasonably satisfactory
in form and substance to you. The Company and the Guarantors will furnish the
Initial Purchasers with such conformed copies of such opinions, certificates,
letters and other documents as it shall reasonably request.
9. EFFECTIVE DATE OF AGREEMENT AND TERMINATION.
(a) This Agreement shall become effective upon the execution and
delivery of this Agreement by the parties hereto.
(b) This Agreement may be terminated at any time on or prior to the
Closing Date by you by notice to the Company if any of the following has
occurred: (i) subsequent to the date of the Offering Memorandum or of this
Agreement, any Material Adverse Change which, in the judgment of the Initial
Purchasers, materially impairs the investment quality of the Series A Notes;
(ii) any outbreak or escalation of hostilities or other national or
international calamity or crisis or material adverse change in the financial
markets of the United States or elsewhere, or any other substantial national or
international calamity or emergency if the effect of such outbreak, escalation,
calamity, crisis or emergency would, in the judgment of the Initial Purchasers,
make it impracticable or inadvisable to market the Series A Notes or to enforce
34
contracts for the sale of the Series A Notes; (iii) any suspension or limitation
of trading generally in securities on the New York Stock Exchange, the American
Stock Exchange or in the over-the-counter markets or any setting of minimum
prices for trading on such exchange or markets; (iv) any declaration of a
general banking moratorium by either federal or New York authorities; (v) the
taking of any action by any federal, state or local government or agency in
respect of its monetary or fiscal affairs that, in the judgment of the Initial
Purchasers, has a material adverse effect on the financial markets in the United
States and would, in the judgment of the Initial Purchasers, make it
impracticable or inadvisable to market the Series A Notes or to enforce
contracts for the sale of the Series A Notes; or (vi) the enactment,
publication, decree, or other promulgation of any federal or state statute,
regulation, rule or order of any court or other governmental authority which, in
your judgment, materially and adversely affect, or will materially and adversely
affect, the business or operations of the Company and the Guarantors.
(c) The indemnities and contribution provisions and other
agreements, representations and warranties of the Company and the Guarantors,
their respective officers and directors and of the Initial Purchasers set forth
in or made pursuant to this Agreement shall remain operative and in full force
and effect, and will survive delivery of and payment for the Series A Notes,
regardless of (i) any investigation, or statement as to the results thereof,
made by or on behalf of the Initial Purchasers or by or on behalf of the Company
and the Guarantors, the officers or directors of the Company and the Guarantors
or any controlling person of the Company and the Guarantors, (ii) acceptance of
the Series A Notes and payment for them hereunder and (iii) termination of this
Agreement.
(d) If this Agreement shall be terminated by the Initial Purchasers
pursuant to clause (i) of paragraph (b) of this Section 9 or because of the
failure or refusal on the part of the Company or any Guarantors to comply with
the terms or to fulfill any of the conditions of this Agreement, the Company and
each of the Guarantors agree to reimburse you for all out-of-pocket expenses
(including the fees and disbursements of counsel) incurred by you.
Notwithstanding any termination of this Agreement, the Company and each of the
Guarantors shall be liable for all expenses which it has agreed to pay pursuant
to Section 4(f) hereof.
(e) Except as otherwise provided, this Agreement has been and is
made solely for the benefit of and shall be binding upon the Company, the
Guarantors, the Initial Purchasers, any Indemnified Person referred to herein
and their respective successors and assigns, all as and to the extent provided
in this Agreement, and no other person shall acquire or have any right under or
by virtue of this Agreement. The terms "successors and assigns" shall not
include a purchaser of any of the Notes from the Initial Purchasers merely
because of such purchase.
(f) If on the Closing Date either Initial Purchaser shall fail or
refuse to purchase the Series A Notes and the aggregate principal amount of the
Series A Notes with respect to which such default occurs is more than one-tenth
of the aggregate principal amount of the Series A Notes to be purchased by the
Initial Purchasers and arrangements satisfactory to the Initial Purchasers and
the Company for purchase of such Series A Notes are not made within 48 hours
after such default, this Agreement will terminate without liability on the part
of any non-
35
defaulting Initial Purchaser and the Company. In any such case which
does not result in termination of this Agreement, either you or the Company
shall have the right to postpone the Closing Date, but in no event for longer
than seven days, in order that the required changes, if any, in the Offering
Memorandum or any other documents or arrangements may be effected. Any action
taken under this paragraph shall not relieve any defaulting Initial Purchaser
from liability in respect of any default of any such Initial Purchaser under
this Agreement.
10. NOTICES. Notices given pursuant to any provision of this
Agreement shall be addressed as follows: (a) if to the Company or any Guarantor,
to Berry Plastics Corporation, 101 Oakley Street, P.O. Box 959, Evansville,
Indiana 47710-0959, Attention: James M. Kratochvil, with a copy to O'Sullivan
Graev & Karabell, LLP, 30 Rockefeller Plaza, New York, New York 10112,
Attention: Michael Joseph O'Brien, and (b) if to the Initial Purchasers, to
Donaldson, Lufkin & Jenrette Securities Corporation and Chase Securities Inc.,
c/o Donaldson, Lufkin & Jenrette Securities Corporation, 277 Park Avenue, New
York, New York 10172, Attention: Glenn Tongue, with a copy to Latham & Watkins,
885 Third Avenue, New York, New York 10022, Attention: Philip E. Coviello, or in
any case to such other address as the person to be notified may have requested
in writing.
11. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK AS APPLIED TO
CONTRACTS MADE AND PERFORMED ENTIRELY WITHIN THE STATE OF NEW YORK.
12. SUCCESSORS. This Agreement will inure to the benefit of and be
binding upon the parties hereto and their respective successors (by merger or
otherwise) and the officers and directors and other persons referred to in
Section 5, and no other person will have any right or obligation hereunder.
[signature page follows]
36
This Agreement may be signed in various counterparts which together
shall constitute one and the same instrument. Please confirm that the foregoing
correctly sets forth the agreement among the Company, the Guarantors and you.
Very truly yours,
BERRY PLASTICS CORPORATION
By:_________________________________
Name:
Title:
BPC HOLDING CORPORATION
By:_________________________________
Name:
Title:
BERRY PLASTICS ACQUISITION CORPORATION
By:_________________________________
Name:
Title:
BERRY IOWA CORPORATION
By:_________________________________
Name:
Title:
37
BERRY STERLING CORPORATION
By:_________________________________
Name:
Title:
BERRY TRI-PLAS CORPORATION
By:_________________________________
Name:
Title:
AEROCON, INC.
By:_________________________________
Name:
Title:
PACKERWARE CORPORATION, a Kansas corporation
By:_________________________________
Name:
Title:
PACKERWARE CORPORATION, a Delaware
corporation
By:_________________________________
Name:
Title:
38
BERRY PLASTICS DESIGN CORPORATION
By:_________________________________
Name:
Title:
VENTURE PACKAGING, INC.
By:_________________________________
Name:
Title:
VENTURE PACKAGING MIDWEST, INC., an Ohio
corporation
By:_________________________________
Name:
Title:
VENTURE PACKAGING MIDWEST, INC., a Delaware
corporation
By:_________________________________
Name:
Title:
VENTURE PACKAGING SOUTHEAST, INC., a South
Carolina corporation
By:_________________________________
Name:
Title:
39
VENTURE PACKAGING SOUTHEAST, INC., a
Delaware corporation
By:_________________________________
Name:
Title:
NIM HOLDINGS LIMITED
By:_________________________________
Name:
Title:
NORWICH INJECTION MOULDERS LIMITED
By:_________________________________
Name:
Title:
NORWICH ACQUISITION LIMITED
By:_________________________________
Name:
Title:
KNIGHT PLASTICS, INC.
By:_________________________________
Name:
Title:
40
The foregoing Purchase Agreement
is hereby confirmed and accepted
as of the date first above written.
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
CHASE SECURITIES INC.
By: Donaldson, Lufkin & Jenrette
Securities Corporation
By:_________________________________
Name:
Title:
41
The foregoing Purchase Agreement
is hereby confirmed and accepted
as of July 6, 1999.
CPI HOLDING CORPORATION
By:_________________________________
Name:
Title:
CARDINAL PACKAGING, INC.
By:_________________________________
Name:
Title:
42
SCHEDULE
A
PRINCIPAL AMOUNT
INITIAL PURCHASER OF NOTES
----------------- ----------------
Donaldson, Lufkin & Jenrette
Securities Corporation ............................... $ 48,750,000
Chase Securities Inc. ...................................... $ 26,250,000
----------------
Total ...................................................... $ 75,000,000
================
A-1
SCHEDULE
B
SUBSIDIARIES
- ------------
Berry Plastics Acquisition Corporation
Berry Iowa Corporation
Berry Tri-Plas Corporation
Berry Sterling Corporation
AeroCon, Inc.
PackerWare Corporation, a Kansas corporation
PackerWare Corporation, a Delaware corporation
Berry Plastics Design Corporation
Venture Packaging, Inc.
Venture Packaging Midwest, Inc., an Ohio corporation
Venture Packaging Midwest, Inc., a Delaware corporation
Venture Packaging Southeast, Inc., a South Carolina corporation
Venture Packaging Southeast, Inc., a Delaware corporation
NIM Holdings Limited
Norwich Injection Moulders Limited
Norwich Acquisition Limited
Knight Plastics, Inc.
CPI Holding Corporation
Cardinal Packaging, Inc.
B-1
SCHEDULE
C
Pursuant to the terms of the Underwriting Agreement dated April 14,
1994 among the Company, Holding, Berry Iowa Corporation, Berry Tri-Plas
Corporation (formerly known as Berry-CPI Plastics Corp.) and Donaldson, Lufkin &
Jenrette Securities Corporation, the Company was obligated to use the proceeds
of the offering of the Units (as defined in the Underwriting Agreement) to,
among other things, purchase the assets of CPI-Plastics, Inc. and its affiliates
(the "CPI TRANSACTION") or, in the alternative, to pay down certain industrial
revenue bonds. The Company utilized a portion of such proceeds to consummate
other acquisitions, rather than the CPI transaction or the repayment of such
debt, and for other capital expenditures related to such consummated
acquisitions.
The Company and certain of the Guarantors are in default (registered
exchange offer was not made effective within 150 days of the closing date) of
the Registration Rights Agreement dated as of August 24, 1998 by and among the
Company, Holding, Berry Iowa Corporation, Berry Sterling Corporation, Berry
Tri-Plas Corporation, AeroCon, Inc., PackerWare Corporation, Berry Plastics
Design Corporation, Venture Packaging, Inc., Venture Packaging Midwest, Inc.,
Venture Packaging Southeast, Inc., NIM Holdings Limited, Norwich Injection
Moulders Limited and Donaldson, Lufkin & Jenrette Securities Corporation.
C-1
SCHEDULE
D
With respect to the valuation of the outstanding employee stock
options, the Financial Statements contained in the 10-QA filed by Holding as of
May 13, 1996, were not prepared on a consistent basis with Financial Statements
in previously filed SEC Reports.
D-1
SCHEDULE
E
1. Berry Plastics Corporation Employees 401(k) Retirement Plan.
2. Berry Plastics Health and Welfare Plan, which includes the following
benefits: (a) long term disability income (salaried employees); (b) long term
disability income (hourly employees); (c) short term disability; (d) group
life insurance; (e) vision; and (f) dental.
3. Berry Plastics Corporation Section 125 Plan.
E-1