PREFERRED STOCK AND WARRANT PURCHASE AGREEMENT
dated as of May 9, 2000
by and among
BPC HOLDING CORPORATION,
CHASE VENTURE CAPITAL ASSOCIATES, LLC,
and
THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY
TABLE OF CONTENTS
PAGE
ARTICLE I DEFINED TERMS 1
Section 1.1. Defined Terms.......................................1
Section 1.2. Additional Terms....................................6
Section 1.3. Construction........................................7
ARTICLE II PURCHASE AND SALE TERMS 7
Section 2.1. Purchase and Sale; Purchase Price...................7
Section 2.2. The Merger..........................................7
Section 2.3. The Closing.........................................7
Section 2.4. Payment and Delivery................................7
Section 2.5. Restrictive Legend..................................8
Section 2.6. Use of Proceeds.....................................8
ARTICLE III CLOSING CONDITIONS 8
Section 3.1. Conditions of the Purchasers and the Company........8
Section 3.1.1. Execution of This Agreement and All Related
Documents.........................................8
Section 3.1.2. Issuance and Purchase of the Units................8
Section 3.1.3. Merger Effective; Amended and Restated
Certificate of Incorporation......................9
Section 3.1.4. Merger Consideration..............................9
Section 3.1.5. No Litigation, etc................................9
Section 3.1.6. Environmental Report..............................9
Section 3.1.7. Approvals, etc....................................9
Section 3.1.10. All Proceedings to be Satisfactory...............9
Section 3.1.11. Reasonable Satisfaction of Parties and Counsel...9
Section 3.2. Conditions of the Purchasers.......................10
Section 3.2.1. Representations and Warranties to be True
and Correct; Certificate of Officer of the Company....10
Section 3.2.2. Supporting Documents.............................10
Section 3.2.3. Legal Opinion from Counsel for the Company.......11
Section 3.2.4. Delivery of SBA Forms............................11
Section 3.2.5. [Intentionally Omitted]..........................11
Section 3.2.6. Credit Facility..................................11
Section 3.2.7. The Merger.......................................11
Section 3.3. Conditions of the Company.........................12
Section 3.3.1. Representations and Warranties to be True and
Correct..........................................12
Section 3.3.2. The Merger.......................................12
Section 3.4. Conditions of Northwestern.........................12
Section 3.4.1. Purchase Permitted By Applicable Law, etc........12
Section 3.4.2. Private Placement Number.........................12
(i)
ARTICLE IV REPRESENTATIONS AND WARRANTIES 12
Section 4.1. Representations and Warranties of the Company......12
Section 4.1.1. Corporate Existence..............................13
Section 4.1.2. Power and Authority..............................13
Section 4.1.3. Enforceability, etc..............................13
Section 4.1.4. Capitalization...................................13
Section 4.1.5. Consents, Approvals and Non-Contravention........14
Section 4.1.6. Pro Forma Balance Sheet..........................15
Section 4.1.7. SEC Reports and Financial Statements.............15
Section 4.1.8. Material Adverse Change..........................15
Section 4.1.9. Events Subsequent to the Date of the Last
Financial Statement..............................15
Section 4.1.10. Absence of Undisclosed Liabilities..............16
Section 4.1.11. Taxes...........................................16
Section 4.1.12. Litigation......................................17
Section 4.1.13. Insurance.......................................17
Section 4.1.14. Conflicts of Interests..........................17
Section 4.1.15. Other Relationships.............................18
Section 4.1.16. Licenses; Compliance with Laws, Other
Agreements, etc.................................18
Section 4.1.17. Intellectual Property Rights and Government
Approvals.......................................18
Section 4.1.18. Investment Company Act..........................19
Section 4.1.19. Brokers, etc....................................19
Section 4.1.20. Private Sale....................................19
Section 4.1.21. Disclosure......................................19
Section 4.1.23. Customers and Suppliers.........................19
Section 4.1.24. Employee Matters and Benefits...................20
Section 4.1.25. Environmental Matters...........................22
Section 4.1.26. Lending Activities..............................23
Section 4.1.27. Title to Properties.............................24
Section 4.1.28. Condition and Sufficiency of Assets.............24
Section 4.1.29. Real Property...................................24
Section 4.2. [Intentionally Omitted]............................25
ARTICLE V REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS 25
Section 5.1. Representations and Warranties of the Purchaser....25
Section 5.1.1. Power and Authority..............................25
Section 5.1.2. Enforceability, etc..............................25
Section 5.1.3. Purchase for Investment..........................26
Section 5.1.4. Financial Matters................................26
Section 5.1.5. Access to Personnel and Materials................26
Section 5.1.6. Brokers, etc.....................................26
ARTICLE VI COVENANTS 26
Section 6.1. [Intentionally Omitted]............................26
Section 6.2. Post-Closing Date Covenants of the Company.........26
Section 6.2.1. Use of Proceeds..................................26
(ii)
Section 6.2.2. Inspection of Property...........................26
Section 6.2.3. Compliance with Agreements.......................27
Section 6.2.4. Affirmative Covenants............................27
Section 6.2.5. SBIC Regulatory Provisions.......................28
Section 6.2.6. Regulatory Compliance Cooperation................28
Section 6.2.7. Further Assurances...............................29
Section 6.2.8. Reservation and Authorization of Common Stock....29
Section 6.2.9. Financial Statements; Information................29
Section 6.2.10. Form 1099.......................................30
ARTICLE VIA REGISTRATION RIGHTS IN RESPECT OF REGISTRABLE
SECURITIES 30
Section 6A.1 Notice.............................................30
Section 6A.2 Proration...........................................30
Section 6A.3 Registration Procedures............................31
Section 6A.4 Holdback on Sales..................................33
Section 6A.5 Expenses...........................................33
ARTICLE VIB [INTENTIONALLY OMITTED] 33
ARTICLE VIC INDEMNIFICATION IN RESPECT OF REGISTRATION RIGHTS 33
Section 6C.1 Indemnification by the Company.....................33
Section 6C.2 Indemnification by the Sellers.....................34
Section 6C.3 Notices of Claims, etc.............................35
Section 6C.4 Contribution.......................................36
ARTICLE VII TERMINATION 36
Section 7.1. Termination........................................36
Section 7.2. Effect of Termination..............................37
ARTICLE VIII MISCELLANEOUS 37
Section 8.1. Payment of Costs and Expenses......................37
Section 8.2. [Intentionally Omitted]............................37
Section 8.3. Brokerage..........................................38
Section 8.4. [Intentionally Omitted]............................38
Section 8.5. Assignment; Parties in Interest....................38
Section 8.6. Notices.............................................38
Section 8.7. No Waiver..........................................38
Section 8.8. Amendment..........................................38
Section 8.9. Survival of Representations, Warranties,
Covenants and Agreements...........................38
Section 8.10. Governing Law.....................................38
Section 8.11. Specific Performance..............................39
Section 8.12. Entire Understanding..............................39
(iii)
Section 8.13. Counterparts......................................39
EXHIBITS
Exhibit A Amended and Restated Certificate of Incorporation of the
Company
Exhibit B Form of Warrant
Exhibit C-1 Form of Merger Agreement
Exhibit C-2 Form of Certificate of Merger
SCHEDULES
Schedule I Purchaser Information
Schedule II Addresses For Notice
Schedule III Capitalization Schedule of the Company
Schedule IV Consents Relating to the Purchasers
PREFERRED STOCK AND WARRANT PURCHASE AGREEMENT
This PREFERRED STOCK AND WARRANT PURCHASE AGREEMENT, dated as of May
9, 2000 (as amended or otherwise modified from time to time, this
"AGREEMENT"), is made by and among BPC HOLDING CORPORATION, a Delaware
corporation (the "COMPANY"), CHASE VENTURE CAPITAL ASSOCIATES, L.P., a
California limited partnership ("CVCA") and THE NORTHWESTERN MUTUAL LIFE
INSURANCE COMPANY ("NORTHWESTERN" and, together with CVCA, the
"PURCHASERS".)
W I T N E S E T H:
WHEREAS, the Company intends to acquire Poly-Seal Corporation in a
merger transaction (the "MERGER"), and has formed a subsidiary, Berry
Plastics Acquisition Corporation, a Delaware corporation ("MERGERCO") in
connection therewith;
WHEREAS, in order to provide a portion of the financing for the
consummation of the Merger, the Company proposes to enter into the
transactions contemplated by this Agreement;
WHEREAS, the Purchasers desire to purchase an aggregate of
(i) 1,000,000 shares of Preferred Stock, and (ii) warrants in the form
attached hereto as EXHIBIT B entitling the holder or holders thereof to
purchase, on certain terms and conditions, an aggregate of 25,997 shares
of Class B Non-Voting Common Stock, at a purchase price of $0.01 per
share, subject to adjustment as provided therein (the "WARRANTS" and,
together with the Preferred Stock, the "PURCHASED SECURITIES"), all on
the terms and subject to the conditions set forth in this Agreement;
WHEREAS, the Company desires to issue and sell the Purchased
Securities to the Purchasers, on the terms and subject to the conditions
set forth in this Agreement;
NOW, THEREFORE, based upon the foregoing and the mutual covenants
and agreements herein contained, and for other good and sufficient
consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto, intending to be legally bound, hereby
agree as follows:
ARTICLE I
DEFINED TERMS
Section 1.1. DEFINED TERMS
. Capitalized terms used but not otherwise defined in this
Agreement shall have the meaning assigned to such terms in the Merger
Agreement. When used in this Agreement, the following terms shall have
the following meanings:
"AFFILIATE" means, with respect to any specified Person, any other
Person which, directly or indirectly, controls, is under common control
with, or is owned or controlled by, such specified Person. For purposes
of this definition, (i) "control" means, with respect to any specified
Person, either (x) the beneficial ownership of more than 30 percent of
any class of equity securities or (y) the power to direct the management
or policies of the specified Person through the ownership of voting
securities, by contract, voting agreement or otherwise, and (ii) the
terms "controlling", "control with" and "controlled by", etc., shall have
meanings correlative to the foregoing.
"AMENDED AND RESTATED CERTIFICATE OF INCORPORATION" means the
Amended and Restated Certificate of Incorporation of the Company in the
form attached hereto as EXHIBIT A and filed in Delaware on the date
hereof, as amended from time to time in accordance with the requirements
hereof.
"AMENDMENT TO STOCKHOLDERS AGREEMENT" means the First Amendment
dated as of May 9, 2000 to the Stockholders Agreement.
"BERRY" means Berry Plastics Corporation, a wholly-owned subsidiary
of the Company.
"BY-LAWS" means the by-laws of the Company, as amended from time to
time in accordance with the requirements hereof and thereof.
"CERTIFICATE OF MERGER" means the Certificate of Merger, dated as of
the Closing Date, by and between Mergerco and Poly-Seal Corporation, in
substantially the form of EXHIBIT C-2 hereto.
"CLASS A COMMON STOCK" means the Company's Class A Voting Common
Stock and Class A Non-Voting Common Stock.
"CLASS A NON-VOTING COMMON STOCK" means the Company's Class A Non-
Voting Common Stock, par value $.01 per share.
"CLASS A VOTING COMMON STOCK" means the Company's Class A Voting
Common Stock, par value $.01 per share.
"CLASS B COMMON STOCK" means the Company's Class B Voting Common
Stock and Class B Non-Voting Common Stock.
"CLASS B NON-VOTING COMMON STOCK" means the Company's Class B Non-
Voting Common Stock, par value $.01 per share.
"CLASS B VOTING COMMON STOCK" means the Company's Class B Voting
Common Stock, par value $.01 per share.
"CLASS C COMMON STOCK" means the Company's non-voting Class C Common
Stock, par value $.01 per share.
"CODE" means the Internal Revenue Code of 1986, as amended.
"COMMON STOCK" means the Class A Common Stock, the Class B Common
Stock and the Class C Common Stock and any other classes of common stock
of the Company hereafter authorized in accordance with the requirements
hereof and of the Stockholders Agreement.
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"CREDIT FACILITY" means the Third Amended and Restated Financing and
Security Agreement by and among Berry Plastics Corporation, NIM Holdings
Limited, Berry Plastics UK Limited, Bank of America, N.A., Fleet Capital
Corporation, General Electric Capital Corporation, Heller Financial,
Inc., PNC Bank, National Association and Bank of America, N.A. dated as
of May 9, 2000, INCLUDING ANY RELATED NOTES, GUARANTEES, COLLATERAL
DOCUMENTS, INSTRUMENTS AND AGREEMENTS EXECUTED IN CONNECTION THEREWITH,
AND IN EACH CASE AS AMENDED, MODIFIED, RENEWED, REFUNDED, REPLACED OR
REFINANCED FROM TIME TO TIME WHICH INCLUDES THE ADDITION, SUBSTITUTION OR
REPLACEMENT OF ANY OR ALL LENDERS THEREUNDER UNDER THE SAME OR ANY
REPLACEMENT AGREEMENT.
"DGCL" means the General Corporation Law of the State of Delaware.
"ENVIRONMENTAL LAW" means any law which relates to or otherwise
imposes liability or standards of conduct concerning discharges,
emissions, releases or threatened releases of noises, odors or any
pollutants, contaminants or hazardous or toxic wastes, substances or
materials, whether as matter or energy, into ambient air, water, or land,
or otherwise relating to the manufacture, processing, generation,
distribution, use, treatment, storage, disposal, cleanup, transport or
handling of pollutants, contaminants, or hazardous or toxic wastes,
substances or materials, including the Comprehensive Environmental
Response, Compensation and Liability Act of 1980 and the Superfund
Amendments and Reauthorization Act of 1986 (together, as amended,
"CERCLA"), the Resource Conservation and Recovery Act of 1976, as
amended, the Toxic Substances Control Act of 1976, as amended, the
Federal Water Pollution Control Act Amendments of 1972, the Clean Water
Act of 1977, as amended, any so-called "Superlien" law, and any other
similar Federal, state or local Law.
"ENVIRONMENTAL PERMIT" means any permit, license, approval, consent
or other authorization required by or pursuant to any applicable
Environmental Law.
"ERISA" means the Employee Retirement Income Security Act of 1974,
as amended, or any successor law thereto.
"EVENT OF NONCOMPLIANCE" has the meaning provided in the
Stockholders Agreement.
"GOVERNMENTAL AUTHORITY" means the government of the United States
or any foreign country or any state or political subdivision thereof and
any entity, body or authority exercising executive, legislative,
judicial, regulatory or administrative functions of or pertaining to
government.
"HAZARDOUS MATERIAL" means
(a) any "hazardous substance", as defined by CERCLA;
(b) any "hazardous waste", as defined by the Resource
Conservation and Recovery Act, as amended;
(c) any petroleum product or fractions thereof; or
3
(d) any pollutant or contaminant or hazardous, dangerous or
toxic chemical, material or substance within the meaning of any
other applicable Federal, state or local law, regulation, ordinance
or requirement (including consent decrees and administrative orders)
relating to or imposing liability or standards of conduct concerning
any hazardous, toxic or dangerous waste, substance or material, all
as now or at any time hereafter in effect.
"HOLDER" means any Purchaser or any of its permitted successors and
assigns, other than the Company or any of its Subsidiaries holding any
Preferred Stock.
"INDEBTEDNESS" means, with respect to any Person, any indebtedness
of such Person, whether or not contingent, in respect of borrowed money
or evidenced by bonds, notes, debentures or similar instruments or
letters of credit (or reimbursement agreements in respect thereof) or
representing Capital Lease Obligations (as defined in the Amended and
Restated Certificate of Incorporation) or the balance deferred and unpaid
of the purchase price of any property or representing Hedging Obligations
(as defined in the Amended and Restated Certificate of Incorporation),
except any such balance that constitutes an accrued expense or trade
payable, if and to the extent any of the foregoing indebtedness (other
than letters of credit and Hedging Obligations) would appear as a
liability upon a balance sheet of such Person prepared in accordance with
GAAP, and also includes, to the extent not otherwise included, the
Guarantee (as defined in the Amended and Restated Certificate of
Incorporation) of any Indebtedness of such Person or any other Person.
"INTERESTS" means any evidence of equity ownership of any Person,
whether represented by common stock, preferred stock, securities
convertible into, exchangeable or exercisable for the purchase or other
acquisition of common stock or preferred stock (including convertible or
exchangeable debentures, warrants and options), trust certificates or
general or limited partnership interests.
"INTERNATIONAL" means Atlantic Equity Partners International II,
L.P., a Delaware limited partnership domiciled in the Cayman Islands.
"LIEN" means any mortgage, lien (except for any lien for taxes not
yet due and payable), charge, restriction, pledge, security interest,
option, lease or sublease, claim, right of any third party, easement,
encroachment or encumbrance.
"LOSSES" means all losses, claims, damages, liabilities, costs
(including any costs of investigation and reasonable attorneys' fees) and
expenses.
"MATERIAL ADVERSE EFFECT" means, with respect to any Person, any
fact, event, change, circumstance or effect that has or is reasonably
likely to have a materially adverse effect on the business, financial
condition, results of operations or, to the actual knowledge of such
Person, prospects of such Person and its Subsidiaries, taken as a whole.
"MERGER AGREEMENT" means the Agreement and Plan of Merger, dated as
of May 5, 2000, by and among Mergerco, Berry, Poly-Seal Corporation and
the Shareholder Parties, in substantially the form of EXHIBIT C-1 hereto.
4
"OTHER FINANCING DOCUMENTS" means the Credit Facility and any
agreements and documents related thereto.
"PERSON" means any individual, corporation, general or limited
partnership, joint venture, association, limited liability company, joint
stock company, trust, business trust, bank, trust company, estate
(including any beneficiaries thereof), unincorporated organization,
cooperative, association or governmental branch, authority, agency or
political subdivision thereof.
"PREFERRED STOCK" means the Series A-1 Senior Cumulative Preferred
Stock of the Company, par value $.01 per share.
"PURCHASED SECURITIES" has the meaning specified in the recitals of
this Agreement.
"REGISTRABLE SECURITIES" means the Preferred Stock, the Warrants and
the Warrant Stock, PROVIDED that as to any particular shares of Preferred
Stock, Warrants or Warrant Stock, once issued such securities shall cease
to be Registrable Securities when (i) a registration statement with
respect to the sale of such securities shall have become effective under
the Securities Act and such securities shall have been disposed of in
accordance with such registration statement, (ii) they shall have been
distributed to the public pursuant to Rule 144 or have become eligible
for sale pursuant to paragraph (k) of Rule 144 or (iii) they shall have
ceased to be outstanding.
"RELATED DOCUMENTS" means the Amended and Restated Certificate of
Incorporation, the Warrants, the Merger Agreement, the Certificate of
Merger and the Amendment to Stockholders Agreement.
"RESTATED CERTIFICATE OF INCORPORATION" means the Company's amended
and restated certificate of incorporation filed with the Secretary of
State of the State of Delaware on December 20, 1990 (amending and
restating the certificate of incorporation of the Company filed on
December 11, 1990), as further amended by the amended and restated
certificate of incorporation filed on April 19, 1994, as further amended
by the certificate of amendment filed on May 5, 1995, as further amended
by the certificate of amendment filed June 14, 1996.
"RESTRICTED SECURITIES" means (i) the Preferred Stock, (ii) the
Warrants, (iii) the Warrant Stock and (iv) any securities issued with
respect to the securities specified in the foregoing clauses (i), (ii) or
(iii) by way of a stock dividend or stock split or in connection with a
combination of shares, recapitalization, merger, consolidation or other
reorganization. Any security referred to in the preceding sentence shall
cease to be a Restricted Security when it has (a) been disposed of
pursuant to an effective registration statement under the Securities Act,
(b) become eligible for sale pursuant to paragraph (k) of Rule 144 or (c)
otherwise been transferred and new certificates therefor not bearing the
legend set forth in Section 2.5 have been issued.
"STOCKHOLDERS AGREEMENT" means the Stockholders Agreement, dated as
of June 18, 1996, among the Company, CVCA, International, the
institutional investors named therein, certain members of management of
the Company and CVCA and Northwestern as holders of Preferred Stock with
respect to certain provisions thereof, as amended from time to time
pursuant to its terms.
5
"SUBSIDIARY" or "SUBSIDIARIES" of any Person means any corporation
or other entity of which securities or other ownership interests having
ordinary voting power to elect a majority of the board of directors or
other Persons performing similar functions are at the time directly or
indirectly owned or controlled by such Person or one or more Subsidiaries
of such Person.
"`33 ACT" or "SECURITIES ACT" means the Securities Act of 1933, as
amended, and the rules and regulations issued in respect thereto.
"`34 ACT" or "EXCHANGE ACT" means the Securities Exchange Act of
1934, as amended, and the rules and regulations issued in respect
thereto.
"UNITS" has the meaning specified in Section 2.1 of this Agreement.
"WARRANTS" has the meaning specified in the recitals of this
Agreement.
"WARRANT STOCK" means all shares of Class B Non-Voting Common Stock
issuable from time to time upon exercise of the Warrants.
Section 1.2. ADDITIONAL TERMS
. The following terms shall have the meanings indicated or referred
to in the following Sections of this Agreement:
TERM SECTION
Agreement Preamble
Approval 4.1.5(a)
Balance Sheet 4.1.9
Blue Sky Laws 4.1.4(d)
Capitalization Schedule 3.1.3
CERCLA definition of Environmental Law
Closing 2.3
Closing Date 2.3
Company Preamble
CVCA Preamble
Employee Benefit Plans 4.1.24(b)
Financial Statements 4.1.7(b)
GAAP 4.1.7(b)
Indemnified Seller 6C.1
Intellectual Property 4.1.17
Licenses 4.1.16
Merger 1st Recital
Mergerco 1st Recital
Northwestern Preamble
Proceeding 6C.3
Purchase Price 2.1
Purchasers Preamble
Regulatory Problem 6.2.6(b)
SBA Compliance Document 3.2.4
SBIC Holder 6.2.5(a)
6
SEC 4.1.7(a)
SEC Reports 4.1.7(a)
Seller 6A.1
Seller Notice 6A.1
Section 1.3. CONSTRUCTION.
. When used herein, the masculine form of words includes the
feminine and the neuter and vice versa, and, unless the context otherwise
requires, the singular form of words includes the plural and vice versa.
The words "herein", "hereof", "hereunder" and other words of similar
import when used in this Agreement refer to this Agreement as a whole,
and not to any particular section or subsection.
ARTICLE II
PURCHASE AND SALE TERMS
Section 2.1. PURCHASE AND SALE; PURCHASE PRICE
. Subject to the terms of this Agreement, the Company agrees to
authorize, issue and sell to the Purchasers, and the Purchasers severally
agree to purchase from the Company, (i) an aggregate of 1,000,000 shares
of Preferred Stock and (ii) Warrants to purchase an aggregate of 25,997
shares of Class B Non-Voting Common Stock (subject to adjustment).
Shares of the Preferred Stock and the Warrants shall be issued and sold
to the Purchasers in units (the "UNITS"), each Unit consisting of 1,000
shares of Preferred Stock and Warrants to purchase 25.997 shares of Class
B Non-Voting Common Stock. The purchase price for each Unit shall be
$25,000, for an aggregate purchase price of $25,000,000 (the "PURCHASE
PRICE"), payable in immediately available funds at the Closing in the
manner provided in Section 2.4. Each Purchaser will purchase the number
of Units set forth opposite the name of such Purchaser on SCHEDULE I
hereto.
Section 2.2. THE MERGER
. Subject to the terms of this Agreement, the Company shall effect
the Merger at the Closing in accordance with the terms of the Merger
Agreement.
Section 2.3. THE CLOSING
. The closing of the purchase and sale of the Units and the
consummation of the Merger shall take place at the offices of O'Sullivan,
Graev & Karabell, LLP, located at 30 Rockefeller Plaza, New York, New
York 10112 or at such other location as the Company and the Purchasers
may designate (the "CLOSING"). The Closing shall occur on or before May
9, 2000, or such later date as the Company and the Purchasers may
designate (the "CLOSING DATE"). It is the intention of the parties
hereto that the Closing Date shall occur simultaneously with the issuance
of the Units hereunder.
Section 2.4. PAYMENT AND DELIVERY
. At the Closing, each Purchaser will deliver the portion of the
Purchase Price set forth opposite such Purchaser's name on SCHEDULE I
hereto by wire or interbank transfer in immediately available funds to an
account designated in writing by the Company prior to the Closing Date,
against delivery by the Company to each of the Purchasers of (i) one or
more (as designated by such Purchaser) duly executed stock certificates
evidencing the number of shares of Preferred Stock to be purchased by
such Purchaser (as set forth on SCHEDULE I hereto) and (ii) the duly
executed warrant certificates, in such numbers as may be requested by
each of the Purchasers, evidencing Warrants to purchase the aggregate
number of shares of Class B Non-Voting Common Stock set forth opposite
7
such Purchaser's name on SCHEDULE I hereto, each such certificate to be
dated the Closing Date and registered in the name of such Purchaser or
its nominee.
Section 2.5. RESTRICTIVE LEGEND.
In addition to any legend required by the DGCL, each certificate
evidencing the Preferred Stock and the Warrants issued at the Closing
will bear, and each certificate representing a Restricted Security will
bear, a legend in the following terms:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR
APPLICABLE STATE SECURITIES LAWS, AND ACCORDINGLY, SUCH
SECURITIES MAY NOT BE TRANSFERRED, SOLD OR OTHERWISE DISPOSED
OF EXCEPT IN COMPLIANCE WITH THE REGISTRATION OR QUALIFICATION
PROVISIONS OF APPLICABLE FEDERAL AND STATE SECURITIES LAWS OR
APPLICABLE EXEMPTIONS THEREFROM."
WHENEVER ANY PARTICULAR SECURITY CEASES TO BE A RESTRICTED SECURITY, THE
HOLDER THEREOF SHALL BE ENTITLED TO RECEIVE FROM THE COMPANY, WITHOUT
EXPENSE, NEW SECURITIES OF LIKE TENOR, NOT BEARING THE ABOVE LEGEND.
Section 2.6. USE OF PROCEEDS
. The Company shall use the net cash proceeds received from the
Credit Facility and the sale of the Units solely for purposes of
effecting the Merger, funding the Aggregate Merger Consideration and
paying the costs, expenses and fees incurred in connection therewith.
ARTICLE III
CLOSING CONDITIONS
Section 3.1. CONDITIONS OF THE PURCHASERS AND THE COMPANY
. The obligation of each of the Purchasers to purchase, and the
obligation of the Company to issue and sell, the Units, as applicable,
and the obligation of the Company to effect the Merger on the Closing
Date, shall be subject to satisfaction of the following conditions on or
prior to such date (unless otherwise specified below):
Section 3.1.1. EXECUTION OF THIS AGREEMENT AND ALL RELATED
DOCUMENTS
. The Company, Mergerco, each of the Purchasers, the Shareholder
Parties and all other requisite parties shall have duly authorized and
executed copies of this Agreement, each Related Document, each Other
Financing Document and each other agreement, document or instrument
related hereto or thereto, to which any such Person is a party, required
in connection with the consummation of the transactions contemplated
hereby and thereby. This Agreement, each such Related Document, each
such Other Financing Document and each other related agreement, document
or instrument shall remain in full force and effect.
Section 3.1.2. ISSUANCE AND PURCHASE OF THE UNITS
. The Company shall have duly issued and delivered applicable
certificates to each of the Purchasers representing the number of shares
of Preferred Stock and Warrants purchased by each of the Purchasers as
provided in ARTICLE II hereof and the Purchasers shall have purchased and
8
paid for such Preferred Stock and Warrants of the Company to be purchased
by them pursuant to such ARTICLE II.
Section 3.1.3. MERGER EFFECTIVE; AMENDED AND RESTATED CERTIFICATE
OF INCORPORATION
The Certificate of Merger and the Amended and Restated
Certificate of Incorporation of the Company shall have been filed with
the Secretary of State of Delaware in accordance with Delaware law and be
in effect. Immediately after giving effect to the Closing and the
consummation of the transactions contemplated hereby, the Company's
capitalization shall be as set forth on SCHEDULE III hereto (the
"CAPITALIZATION SCHEDULE").
Section 3.1.4. MERGER CONSIDERATION
Upon the effectiveness of the Merger, the Company shall have paid
the Closing Date Payment Amount to the Shareholder Payments Escrow
Account pursuant to the Merger Agreement and shall have made the escrow
deposits required by the Merger Agreement.
Section 3.1.5. NO LITIGATION, ETC
No litigation, arbitration, governmental investigation or
proceeding shall, as of the Closing Date, be pending or, to the knowledge
of the Company, threatened, which seeks to enjoin or otherwise prevent
the consummation of, or to recover any damages or obtain relief as a
result of, the transactions contemplated by this Agreement, the other
Related Documents, the Other Financing Documents or any other material
agreement related hereto or thereto.
Section 3.1.6. ENVIRONMENTAL REPORT
The Purchasers shall have received and reviewed a Phase I and
Phase II environmental assessment for each parcel of real property owned
or leased by Poly-Seal Corporation, each of which environmental
assessment has been performed by a reputable and recognized environmental
consulting firm acceptable to the Purchasers and has revealed no material
Hazardous Materials Contamination (as defined in the Credit Facility) or
material violations of any Environmental Laws, and shall otherwise be in
all respects acceptable to the Purchasers.
Section 3.1.7. APPROVALS, ETC.
All Approvals set forth on ITEM 4.1.5 ("Consents and Approvals")
of the Disclosure Schedule hereto shall have been obtained or otherwise
satisfied, and all applicable waiting or appeal periods with respect
thereto shall have passed, in each case to the satisfaction of each of
the Purchasers.
Section 3.1.8. [Intentionally Omitted]
Section 3.1.9. [Intentionally Omitted]
Section 3.1.10. ALL PROCEEDINGS TO BE SATISFACTORY
(a) All corporate and other proceedings to be taken by the
Company in connection with the transactions contemplated hereby, (b) the
other Related Documents and the Other Financing Documents, and (c) all
documents incident thereto, shall be satisfactory in form and substance
to the Purchasers and their counsel, and the Purchasers and said counsel
shall have received all such counterpart originals or certified or other
copies of such documents as they may reasonably request.
Section 3.1.11. REASONABLE SATISFACTION OF PARTIES AND COUNSEL
All instruments applicable to the issuance and sale of the
Preferred Stock and the Warrants and the other transactions contemplated
9
hereby and by the Credit Facility shall be reasonably satisfactory to the
parties hereto and thereto and their respective counsel.
Section 3.2. CONDITIONS OF THE PURCHASERS
The obligations of each of the Purchasers to purchase the Units
shall be further subject to the satisfaction of the following conditions
on or prior to such date (unless otherwise specified below):
Section 3.2.1. REPRESENTATIONS AND WARRANTIES TO BE TRUE
AND CORRECT; CERTIFICATE OF OFFICER OF THE COMPANY
The representations and warranties contained in ARTICLE IV, as
well as the representations and warranties set forth in Article IV of the
Credit Facility, shall be true and correct in all material respects
(except with respect to any such representation or warranty that contains
an express materiality limitation, in which case such representation or
warranty shall be true and correct in all respects) on and as of the
Closing Date with the same effect as though such representations and
warranties had been made on and as of the Closing Date (except to the
extent that any such representations and warranties specifically apply to
a prior date). The Company shall have delivered to each of the
Purchasers a certificate of its chief executive or chief financial
officer certifying that (i) the representations and warranties set forth
herein and therein are in fact true and correct as stated above, (ii) the
Company has performed or complied with all agreements and conditions
contained herein which are required to be performed or complied with by
it on or before the Closing Date, (iii) Berry has performed or complied
with all agreements and conditions contained in the Credit Facility and
(iv) each of the conditions set forth in SECTIONS 3.1 and 3.2 has been
satisfied.
Section 3.2.2. SUPPORTING DOCUMENTS
On or prior to the Closing Date, the Purchasers and their counsel
shall have received copies of the following supporting documents:
(a) (i) copies of the Company's Amended and Restated Certificate of
Incorporation, certified as of the Closing Date by the Secretary of State
of the State of Delaware, (ii) a certificate of said Secretary of State,
dated as of a recent date, as to the due incorporation and good standing
of the Company and its Subsidiaries and listing all documents of the
Company on file with said Secretary of State, and (iii) a facsimile,
telegram or telex from said Secretary as of the close of business on the
business day preceding the Closing Date as to the continued good standing
of the Company;
(b) [Intentionally Omitted];
(c) a certificate of the Secretary of the Company, dated the
Closing Date and certifying: (i) that attached thereto is a true and
complete copy of the By-laws of the Company as in effect on the date of
such certification; (ii) that attached thereto is a true and complete
copy of resolutions adopted by the Board of Directors of the Company
authorizing the execution, delivery and performance of this Agreement,
each of the Related Documents and each of the Other Financing Documents,
the issuance, sale and delivery of the Preferred Stock and Warrants to
the Purchasers by the Company, and that all such resolutions are still in
full force and effect and are all the resolutions adopted in connection
with the transactions contemplated hereunder and thereunder; (iii) that
the Company's Restated Certificate of Incorporation has not been amended
(other than by the amendment and restatement of the Company's Restated
Certificate of Incorporation by the Amended and Restated Certificate of
Incorporation) since the date of the certificate delivered pursuant to
10
CLAUSE (a)(ii) above; and (iv) the incumbency and specimen signature of
each officer of the Company executing this Agreement, each of the Related
Documents, each of the Other Financing Documents, the stock certificate
or certificates representing the Preferred Stock, Warrants and any
certificate or instrument furnished pursuant hereto or thereto, and a
certification by another officer of the Company as to the incumbency and
signature of the officer signing the certificate referred to in this
CLAUSE (C); and
(d) [Intentionally Omitted];
(e) such additional supporting documents, instruments,
certificates, opinions and other information with respect to the
operations and affairs of the Company as the Purchasers or their counsel
may reasonably request.
All such documents shall be satisfactory in form and substance to
the Purchasers and their counsel.
Section 3.2.3. LEGAL OPINION FROM COUNSEL FOR THE COMPANY
On the Closing Date, each of the Purchasers shall have received
the written opinion of O'Sullivan, Graev & Karabell, LLP, counsel for the
Company, in form and substance satisfactory to each of the Purchasers and
their counsel.
Section 3.2.4. DELIVERY OF SBA FORMS.
In the event that any Purchaser is a licensed Small Business
Investment Company under the Small Business Investment Act of 1958, as
amended, the Company shall have provided such Purchaser with all
information necessary for such Purchaser to prepare the Portfolio
Financing Report on Form 1031 (the "SBA COMPLIANCE DOCUMENT"), and all of
the information set forth in the SBA Compliance Document shall be true
and correct in all respects.
Section 3.2.5. [Intentionally Omitted]
Section 3.2.6. CREDIT FACILITY
The terms of the Credit Facility shall be satisfactory to each of
the Purchasers, the Credit Facility shall be in full force and effect,
the Purchasers shall have received copies of the documents comprising the
Credit Facility and the Company shall have borrowed not more than $70
million thereunder.
Section 3.2.7. THE MERGER.
(a) The Merger shall have been completed and closed prior to or
simultaneously herewith in accordance with the Merger Agreement and
all applicable laws.
(b) The Purchasers shall have received photocopies of all
Merger documents executed, delivered and/or furnished in connection
with the Merger, together with a certificate signed by an Officer of
the Company certifying that the Merger Agreement and the other
Merger documents furnished to the Purchasers are true, correct, in
full force and effect and the provisions thereof have not been in
any way modified, amended or waived, except as otherwise disclosed
11
in writing to and consented to by the Purchasers on or before the
date of this Agreement.
Section 3.3. CONDITIONS OF THE COMPANY
The obligations of the Company to effect the Merger and to sell
Units shall be further subject to satisfaction of the following
conditions on or prior to such date:
Section 3.3.1. REPRESENTATIONS AND WARRANTIES TO BE TRUE AND
CORRECT
The representations and warranties contained in ARTICLE V shall
be true and correct on and as of the Closing Date with the same effect as
though such representations and warranties had been made on and as of
such date (except to the extent that any such representations and
warranties specifically apply to a prior date).
Section 3.3.2. THE MERGER
The Merger shall have been completed and closed prior to or
simultaneously herewith in accordance with the Merger Agreement and all
applicable laws.
Section 3.4. CONDITIONS OF NORTHWESTERN
The obligations of Northwestern to purchase the Units shall be
further subject to the satisfaction of the following conditions on or
prior to the Closing Date (unless otherwise specified below):
Section 3.4.1. PURCHASE PERMITTED BY APPLICABLE LAW, ETC.
On the Closing Date, the purchase of Units by Northwestern shall (i)
be permitted by the laws and regulations of each jurisdiction to which
Northwestern is subject, without recourse to provisions (such as Section
1405(a)(8) of the New York Insurance Law) permitting limited investments
by insurance companies without restriction as to the character of the
particular investment, (ii) not violate any applicable law or regulation
(including, without limitation, Regulation G, T or X of the Board of
Governors of the Federal Reserve System) and (iii) not subject
Northwestern to any tax, penalty or liability under or pursuant to any
applicable law or regulation, which law or regulation was not in effect
on the date hereof.
Section 3.4.2. PRIVATE PLACEMENT NUMBER
A Private Placement number issued by Standard & Poor's CUSIP
Service Bureau (in cooperation with the Securities Valuation Office of
the National Association of Insurance Commissioners) shall have been
requested for the Preferred Stock and Warrants.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
Section 4.1. REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to each of the Purchasers, as
of the date hereof and the Closing Date, after giving effect to the
transactions contemplated to occur thereon (except to the extent any of
the following representations or warranties specifically apply or relate
to a prior date, in which event the Company represents and warrants such
representations and warranties to be true and correct as of such prior
date), as follows:
12
Section 4.1.1. CORPORATE EXISTENCE
Each of the Company and each of its Subsidiaries is a corporation
duly incorporated, validly existing and in good standing under the laws
of the jurisdiction set forth for such corporation on ITEM 4.1.1
("Company and Existing Subsidiaries (Name, Jurisdiction of
Incorporation)") of the Disclosure Schedule hereto, and is duly qualified
to do business as a foreign corporation and is in good standing in each
jurisdiction in which the ownership or use of its assets or properties,
or the conduct or nature of its business, makes such qualification
necessary, except where the failure to so qualify would not constitute a
Material Adverse Effect. The Company has all requisite corporate power
and authority to conduct its business and own its properties as now
conducted and owned. Attached as EXHIBIT A hereto is a true and complete
copy of the Company's Amended and Restated Certificate of Incorporation,
as in effect and as on file with the Secretary of State of the State of
Delaware as of the Closing Date after giving effect to the Merger.
Section 4.1.2. POWER AND AUTHORITY
The Company has all requisite corporate power and authority, and
has taken all required corporate and other action necessary, to execute,
deliver and perform this Agreement, all Related Documents, all Other
Financing Documents to which the Company is a party and to effect the
Merger, each as herein and therein provided. Except as disclosed on ITEM
4.1.2 ("Power and Authority") of the Disclosure Schedule hereto, none of
the foregoing actions will (i) violate any provision of the Company's
By-laws, Restated Certificate of Incorporation prior to the Merger or
Amended and Restated Certificate of Incorporation following the Merger,
(ii) result in the breach of or constitute a default under any contract,
agreement or instrument to which the Company or any of its Subsidiaries
is a party or by which it or any of them is bound, (iii) result in the
creation or imposition of any lien, claim or encumbrance on any asset of
the Company or any of its Subsidiaries (except as contemplated by the
Related Documents or the other Financing Documents), (iv) give any Person
rights to terminate any contracts or agreements with the Company or any
of its Subsidiaries or otherwise to exercise rights against the Company
or any of its Subsidiaries or (v) violate any Approval or any order,
writ, judgment, injunction, decree, statute, rule or regulation of any
court, tribunal or governmental entity applicable to or bearing upon the
Company or any of its Subsidiaries or any of their respective assets or
business, except, in the case of each of clauses (ii), (iii), (iv) and
(v) above, for occurrences that would not in the aggregate constitute a
Material Adverse Effect.
Section 4.1.3. ENFORCEABILITY, ETC.
Each of this Agreement, each of the Related Documents and each of
the Other Financing Documents to which the Company is a party has been
duly executed and delivered by the Company and constitutes the legal,
valid and binding obligation of the Company enforceable against it in
accordance with their respective terms, except as may be limited by
bankruptcy, insolvency, reorganization, fraudulent conveyance or other
similar laws affecting the enforcement of creditors' rights generally and
general equitable principles.
Section 4.1.4. CAPITALIZATION
Assuming that all transactions contemplated hereunder have been
consummated (including the issuance and sale of the Preferred Stock and
the Warrants and consummation of the Merger) as of the Closing Date:
13
(a) the Capitalization Schedule sets forth a true and complete
statement of the capitalization of the Company and each of its
Subsidiaries as of the Closing Date, including a list of all holders of
Interests of or in the Company and its Subsidiaries (and the amount and
type of such Interests);
(b) except as set forth on the Capitalization Schedule, neither the
Company nor any of its Subsidiaries has issued any Interests, nor are any
Interests (or any rights to acquire or purchase any Interests)
outstanding;
(c) [Intentionally Omitted];
(d) The 25,997 shares of Class B Non-Voting Common Stock issuable
upon the exercise of the Warrants will have been duly authorized and
reserved for issuance upon exercise of the Warrants and, when issued upon
such exercise and payment of the exercise price thereof in accordance
with the terms of the Warrants, will have been duly authorized, validly
issued and will be fully paid and nonassessable and will be delivered to
the holder(s) of the Warrants free and clear of any liens, encumbrances,
pre-emptive rights, escrows, options, rights of first refusal or other
agreements, arrangements, commitments, understandings or obligations,
whether written or oral, or any other restrictions affecting rights and
other incidents of record and beneficial ownership, other than (i) as set
forth herein, and (ii) restrictions on transferability imposed generally
under the `33 Act and under the securities laws of the several states and
the rules and regulations issued in respect thereof (such state laws,
rules and regulations, being, collectively, "BLUE SKY LAWS"); and
(e) [Intentionally Omitted].
Except as set forth on ITEM 4.1.1 ("Company and Existing
Subsidiaries (Name, Jurisdiction of Incorporation)") of the Disclosure
Schedule hereto, the Company has no Subsidiaries. The Company owns 100%
of all issued and outstanding shares of capital stock of its
Subsidiaries, and owns no capital stock, other securities or Interests,
or rights or obligations to acquire the same, of any other Person.
Section 4.1.5. CONSENTS, APPROVALS AND NON-CONTRAVENTION
Except as set forth on ITEM 4.1.5 ("Consents and Approvals") of
the Disclosure Schedule hereto, neither the execution, delivery and
performance by the Company of this Agreement, any Related Documents or
any of the Other Financing Documents to which it is a party, nor the
consummation of any transaction related hereto or thereto, nor the
issuance, sale or delivery of the Common Stock issued on exercise of the
Warrants, the Preferred Stock or Warrants will:
(a) require any consent, approval, license, permit, waiver or other
authorization of, filing or taking of any other action with, or notice
to, any Person, including any local, state or federal governmental
agency, authority, branch or instrumentality (collectively, an
"APPROVAL"), except where the failure to obtain an Approval would not in
the aggregate constitute a Material Adverse Effect; or
(b) violate any of the Company's, or any of its Subsidiaries',
Licenses, except where such violation would not in the aggregate
constitute a Material Adverse Effect.
14
Section 4.1.6. PRO FORMA BALANCE SHEET
The pro forma balance sheet set forth on ITEM 4.1.6 ("Pro Forma
Balance Sheet") of the Disclosure Schedule hereto fairly presents in all
material respects the financial condition of the Company and its
Subsidiaries on a consolidated basis as of the date of the Balance Sheet,
giving effect to the consummation of the transactions contemplated hereby
and by the Related Documents and the Other Financing Documents as if such
transactions had been consummated as of such date. ITEM 4.1.6 ("Pro
Forma Balance Sheet") of the Disclosure Schedule also sets forth a pro
forma consolidating balance sheet of each of the Company and its
Subsidiaries.
Section 4.1.7. SEC REPORTS AND FINANCIAL STATEMENTS
(a) The Company has filed all forms, reports and documents
required to be filed with the Securities and Exchange Commission ("SEC")
since December 31, 1994, and has made available to the Purchasers (i) its
Annual Reports on Form 10-K for the 1998 and 1999 fiscal years, (ii) all
other reports, information and registration statements filed by the
Company with the SEC since December 31, 1998 and (iii) all amendments and
supplements to all such reports, information and registration statements
filed by the Company with the SEC (collectively, the "SEC REPORTS"). The
SEC Reports (1) were prepared in accordance with the requirements of the
Securities Act or the Exchange Act, as the case may be, and the rules and
regulations promulgated thereunder and (2) did not at the time they were
filed (or if amended or superseded by a filing prior to the date of this
Agreement, then on the date of such filing) contain any untrue statement
of a material fact or omit to state a material fact required to be stated
therein or necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading.
As of the date of filing of the last SEC Report, there was no contract or
agreement that was required to be filed as an exhibit thereto which had
not been filed as such, and, other than the Related Documents, since such
date there has been no contract or agreement that would have to be
included in any SEC Reports filed thereafter. True and complete copies
of each SEC Report, including all exhibits thereto, have been made
available to the Purchasers.
(b) Except as set forth on Item 4.1.7 ("FINANCIAL STATEMENTS") of
the Disclosure Schedule hereto, each of the consolidated financial
statements (including, in each case, any related notes thereto) (the
"FINANCIAL STATEMENTS") contained in the SEC Reports (i) was prepared in
accordance with generally accepted accounting principles ("GAAP") applied
on a consistent basis throughout the periods involved (except as may be
expressly described in the notes thereto) and (ii) fairly presents the
consolidated financial position of the Company and its Subsidiaries as at
the respective dates thereof and the consolidated results of its
operations and cash flows for the periods indicated, except that the
unaudited interim financial statements included in the Company's Form 10-
Q reports were or are subject to normal and recurring year-end
adjustments.
Section 4.1.8. MATERIAL ADVERSE CHANGE
Except as set forth on ITEM 4.1.8 ("Material Adverse Change") of
the Disclosure Schedule hereto, since the date of the last audited
Financial Statement, (i) there has been no material adverse change in the
assets, liabilities or financial condition of the Company and its
Subsidiaries from that reflected in such audited Financial Statement,
except for changes in the ordinary course of business individually or in
the aggregate and (ii) there has been no event that would result in a
Material Adverse Effect.
Section 4.1.9. EVENTS SUBSEQUENT TO THE DATE OF THE LAST FINANCIAL
STATEMENT
Since the date of the last audited Financial Statements, except
as contemplated by this Agreement or as set forth in the balance sheet
15
included in the Company's Form 10-K for the period ending January 1, 2000
(the "BALANCE SHEET") or ITEM 4.1.9 ("Subsequent Events") of the
Disclosure Schedule hereto, neither the Company nor any of its
Subsidiaries has (i) issued any stock, bond or other corporate security
other than in connection with the exercise of options issued pursuant to
the Company's 1996 Stock Option Plan, (ii) borrowed any amount or
incurred or become subject to any material liability (absolute, accrued
or contingent), except liabilities under the Credit Facility, current
liabilities incurred and liabilities under contracts entered into in the
ordinary course of business, (iii) discharged or satisfied any lien or
encumbrance or incurred or paid any obligation or liability (absolute,
accrued or contingent) other than current liabilities shown on the
Balance Sheet and current liabilities incurred since the date of the
Balance Sheet in the ordinary course of business, (iv) declared or made
any payment or distribution to stockholders or purchased or redeemed any
of its capital stock (other than repurchases from employees permitted
under the Other Financing Documents or any Indenture of the Company),
(v) except in connection with the transactions contemplated by the Credit
Facility, mortgaged, pledged or subjected to any lien or encumbrance any
of its assets, tangible or intangible, other than liens for current real
property taxes not yet due and payable, (vi) sold, assigned or
transferred any of its tangible assets except in the ordinary course of
business, or cancelled any debt or claim owed to the Company or any such
Subsidiary except in the ordinary course of business, (vii) sold,
assigned, transferred or granted any exclusive license with respect to
any patent, trademark, trade name, service mark, copyright, trade secret
or other intangible asset, (viii) suffered any substantial loss of
property or waived any right of substantial value other than in the
ordinary course of business, (ix) made any change in officer compensation
except in the ordinary course of business and consistent with past
practice, (x) made any material change in the manner of business or
operations of the Company and its Subsidiaries taken as a whole,
(xi) entered into any transaction except in the ordinary course of
business or as otherwise contemplated hereby or (xii) entered into any
commitment, obligation, understanding or other arrangement, contingent or
otherwise, to effect, directly or indirectly, any of the foregoing.
Section 4.1.10. ABSENCE OF UNDISCLOSED LIABILITIES
Since the date of the last audited Financial Statement, neither
the Company nor any of its Subsidiaries had any material loss contingency
(as defined in Statement of Financial Accounting Standards No. 5),
whether matured or unmatured, fixed or contingent, which is not fully
reflected or provided for on the Balance Sheet or disclosed in a footnote
thereto, except (i) obligations to perform under commitments or other
obligations incurred in the ordinary course of business, (ii) tax and
related liabilities which have been disclosed pursuant to ITEM 4.1.11
("Taxes") of the Disclosure Schedule hereto and (iii) other liabilities
as set forth on ITEM 4.1.10 ("Liabilities") of the Disclosure Schedule
hereto or in the SEC Reports filed prior to the date hereof.
Section 4.1.11. TAXES
Except as set forth on ITEM 4.1.11 ("Taxes") of the Disclosure
Schedule hereto, the Company has accurately completed and filed or will
file within the time prescribed by law (including extensions of time
approved by the appropriate taxing authority) all tax returns and reports
required to be filed on behalf of the Company and each of its
Subsidiaries with the Internal Revenue Service, the State of Delaware,
any other states or governmental subdivisions and all foreign countries
and has paid all taxes, interest, penalties, assessments or deficiencies
shown to be due (or, to the knowledge of the Company, claimed by such
authority or jurisdiction to be due) on or in respect of such tax returns
and reports. The Company knows of (i) no other federal, state, county,
municipal or foreign taxes (or other liabilities in respect thereof)
16
which are due and payable by the Company or any of its Subsidiaries which
have not been so paid, (ii) no other material federal, state, county,
municipal or foreign tax returns or reports which are required to be
filed which have not been so filed, (iii) no other unpaid assessment for
additional taxes or penalties for any fiscal period or any basis thereof
and (iv) no material tax lien, whether imposed by any Federal, state,
county, municipal or foreign taxing authority, outstanding against the
assets or business of the Company or any of its Subsidiaries. The
federal income tax returns of the Company and its Subsidiaries have been
audited for the Company's 1991, 1992 and 1993 fiscal years and the state
income tax returns of the Company and its Subsidiaries are currently
being audited. Proper and accurate amounts have been withheld by the
Company and its Subsidiaries from their respective employees for all
periods in compliance with the tax, social security and any employment
withholding provisions of applicable federal and state law, and proper
and accurate federal and state returns have been filed by the Company for
all periods for which returns were due with respect to employee income
tax withholding, social security and unemployment taxes for the Company
and its Subsidiaries, and the amounts shown thereon to be due and payable
have been paid in full or provision therefor included on the books of the
Company in accordance with and to the extent required by GAAP. The
Company has not made any election under Section 341(f) of the Code.
Section 4.1.12. LITIGATION
Except as set forth on ITEM 4.1.12 ("Litigation") of the
Disclosure Schedule hereto, there are no actions, suits, proceedings,
orders, investigations or claims pending or, to the knowledge of the
Company, threatened against or affecting the Company or any of its
Subsidiaries, any of their respective assets or businesses or any of
their respective directors or employees, at law or in equity, before any
court, arbitration panel, tribunal or governmental department,
commission, board, bureau, agency or instrumentality which would be
required to be disclosed pursuant to Item 103 of SEC Regulation S-K in an
Annual Report on Form 10-K being filed on the date hereof.
Section 4.1.13. INSURANCE
Except as set forth on ITEM 4.1.13 ("Insurance") of the
Disclosure Schedule hereto, the Company holds valid policies in full
force and effect covering all of the insurance required to be maintained
by it pursuant to SECTION 6.2.4(G) hereof.
Section 4.1.14. CONFLICTS OF INTERESTS
Except as set forth on ITEM 4.1.14 ("Conflict of Interest") of
the Disclosure Schedule hereto, neither the Company, nor any Subsidiary,
nor, to the knowledge of the Company, any of their respective officers,
employees, agents or any other Person acting on behalf of the Company or
any such Subsidiary has, directly or indirectly, given or agreed to give
any money, gift or similar benefit (other than legal price concessions to
customers in the ordinary course of business) to any customer, supplier,
employee or agent of a customer or supplier, or official or employee of
any governmental agency or instrumentality of any government (domestic or
foreign) or other Person who was, is, or may be in a position to help or
hinder the business of the Company or any of its Subsidiaries (or assist
in connection with any actual or proposed transaction) which (i) could
reasonably be expected to subject the Company or any of its Subsidiaries
to any damage or penalty in any civil, criminal or governmental
litigation or proceeding, (ii) if not given in the past, could reasonably
be expected to constitute a Material Adverse Effect, or (iii) if not
continued in the future, could reasonably be expected to constitute a
Material Adverse Effect.
17
Section 4.1.15. OTHER RELATIONSHIPS
Except as set forth on ITEM 4.1.15 ("Other Relationships") of the
Disclosure Schedule hereto, to the knowledge of the Company
(a) the officers of the Company and its Subsidiaries have no
interest (other than as non-controlling holders of securities of a
publicly-traded company), either directly or indirectly, in any Person
(whether as an employee, officer, director, shareholder, agent,
independent contractor, security holder, creditor, consultant or
otherwise) that presently (i) provides any services or designs, produces
or sells any products or product lines, or engages in any activity which
is the same, similar to or competitive with any activity or business in
which the Company or any of its Subsidiaries is now engaged, (ii) is a
supplier of, customer of, creditor of, or has an existing contractual
relationship with, the Company or any of its Subsidiaries, or (iii) has
any direct or indirect interest in any asset or property used by the
Company or any of its Subsidiaries or any property, real or personal,
tangible or intangible, that is necessary or desirable for the conduct of
the business of the Company or any of its Subsidiaries; and
(b) no current or former stockholder, director, officer or employee
of the Company or any of its Subsidiaries, nor any Affiliate of any such
Person, is at present, or has, since January 1, 1998, been, directly or
indirectly through his affiliation with any other Person, a party to any
transaction (other than as an employee) with the Company or any of its
Subsidiaries providing for the furnishing of services by, or rental of
real or personal property from, or otherwise requiring cash payments to
any such person.
Section 4.1.16. LICENSES; COMPLIANCE WITH LAWS, OTHER AGREEMENTS,
ETC.
Except as set forth on ITEM 4.1.16 ("Licenses") of the Disclosure
Schedule hereto, the Company and its Subsidiaries have all franchises,
permits, licenses and other rights, including, without limitation, all
Approvals (governmental and otherwise), which are necessary or required
for the conduct of the business of the Company and its Subsidiaries as
currently conducted and as contemplated to be conducted (pursuant to the
Merger) (collectively, the "LICENSES"), except where the failure to
obtain such Licenses would not in the aggregate constitute a Material
Adverse Effect. The Company knows of no basis upon which the renewal of
any Licenses would be denied in the future. Each such License has been
validly issued and is in full force and effect, and neither the Company
nor any of its Subsidiaries is in violation of any such License, except
where such violations would not in the aggregate constitute a Material
Adverse Effect.
Section 4.1.17. INTELLECTUAL PROPERTY RIGHTS AND GOVERNMENT
APPROVALS
Except as set forth on ITEM 4.1.17(A) ("Intellectual Property
Rights") of the Disclosure Schedule hereto, the Company and its
Subsidiaries have all patents, trademarks, service marks, trade names,
copyrights, rights or licenses to use the same, and any and all
applications therefor (collectively, the "INTELLECTUAL PROPERTY"),
necessary to permit the Company and its Subsidiaries to conduct their
business as currently conducted and as contemplated to be conducted,
except where the failure to own or hold any Intellectual Property would
not in the aggregate constitute a Material Adverse Effect. Except as set
forth on ITEM 4.1.17(A) of the Disclosure Schedule hereto, neither the
Company nor any of its Subsidiaries has received any formal or informal
notice of infringement or other complaint that any of their operations
infringe any rights under any Intellectual Property or any other
proprietary rights of any other Person, nor does the Company or any of
its Subsidiaries have any reason to believe that there has been any such
18
infringement that would constitute a Material Adverse Effect. Except as
set forth on ITEM 4.1.17(B) ("Royalties and Other Fees") of the
Disclosure Schedule hereto, no royalties, honorariums or fees are or will
be payable by the Company or any of its Subsidiaries to any other Person
by reason of the ownership or use by any of them of any Intellectual
Property.
Section 4.1.18. INVESTMENT COMPANY ACT
The Company is not, and immediately after any Closing will not
be, an "investment company" or a company "controlled" by an "investment
company" within the meaning of the Investment Company Act.
Section 4.1.19. BROKERS, ETC.
Except as set forth on ITEM 4.1.19 ("Brokers") of the Disclosure
Schedule hereto, the Company has not dealt with, nor is the Company
obligated to pay any fee or commission in connection with, any broker,
finder or other similar Person in connection with the offer or sale of
the Preferred Stock or the Warrants or any of the transactions
contemplated by this Agreement, any Related Document or any Other
Financing Document.
Section 4.1.20. PRIVATE SALE
In connection with the Merger, the Company has not, either
directly or through any agent, offered any Warrants, Preferred Stock or
any other securities to, or solicited any offers to acquire any Warrants,
Preferred Stock or any other Interests or securities from, or otherwise
approached, negotiated or communicated in respect of any Warrants,
Preferred Stock or any other Interests or securities with, any Person in
such a manner as to require that the offer or sale of any such securities
be registered pursuant to the `33 Act or any Blue Sky Laws.
Section 4.1.21. DISCLOSURE
Neither this Agreement, any Related Document, any Other Financing
Document nor any of the exhibits, schedules or attachments hereto or
thereto contain any untrue statement of a material fact or omits a
material fact necessary to make each statement contained herein or
therein not misleading; PROVIDED, HOWEVER, that with respect to any of
the financial projections included therein the Company represents and
warrants only that such projections were based upon assumptions
reasonably believed by the Company to be reasonable and fair as of the
date the projections were prepared in the context of the Company's
history and current and reasonably foreseeable business conditions.
Section 4.1.22. CONTRACTS AND COMMITMENTS. Except as described
therein, ITEM 4.1.22 ("Contracts and Commitments") of the Disclosure
Schedule hereto, sets forth a complete and correct list of all
outstanding Indebtedness of the Company and its Subsidiaries as of the
Closing Date. Neither the Company nor any Subsidiary is in default and
no waiver of default is currently in effect, in the payment of any
principal or interest on any Indebtedness of the Company or such
Subsidiary and no event or condition exists with respect to any
Indebtedness of the Company or any Subsidiary the outstanding principal
amount of which exceeds $100,000 that would permit (or that with notice
or the lapses of time, or both, would permit) one or more Persons to
cause such Indebtedness to become due and payable before its stated
maturity or before its regular scheduled dates of payment.
Section 4.1.23. CUSTOMERS AND SUPPLIERS
Set forth on ITEM 4.1.23 ("Customers and Suppliers") of the
Disclosure Schedule hereto is a list of the ten largest customers of the
Company and its Subsidiaries for each of the two most recent fiscal
years, and set forth opposite the name of each such customer is the
percentage of consolidated net sales attributable to such customer. Such
19
Disclosure Schedule also lists any additional current customers which the
Company anticipates may be among the ten largest customers for the
current fiscal year. Since the date of the Balance Sheet, no material
supplier of the Company or any of its Subsidiaries has indicated that it
shall stop, or materially decrease the rate of, supplying materials,
products or services to the Company or any such Subsidiary, and, except
as set forth on ITEM 4.1.23 of the Disclosure Schedule, no customer
listed on the aforementioned Disclosure Schedule has indicated that it
shall stop, or materially decrease the rate of, buying materials,
products or services from the Company or any such Subsidiary.
Section 4.1.24. EMPLOYEE MATTERS AND BENEFITS.
(a) GENERAL. Except as set forth in the SEC Reports filed prior
to the date hereof or on ITEM 4.1.24 ("Employee Benefit Plans") of the
Disclosure Schedule hereto, neither the Company nor any of its
Subsidiaries is a party to, participates in or has any liability
(contingent or otherwise) with respect to:
(i) any "employee welfare benefit plan" or "employee
pension benefit plan" (as those terms are respectively defined
in sections 3(1) and 3(2) of ERISA), other than a
"multiemployer plan" (as defined in section 3(37) of ERISA);
(ii) any retirement or deferred compensation plan,
incentive compensation plan, stock plan, unemployment
compensation plan, vacation pay, severance pay, bonus or
benefit arrangement, insurance or hospitalization program or
any other fringe benefit arrangements for any current or former
employee, director, consultant or agent, whether pursuant to
contract, arrangement, custom or informal understanding, which
does not constitute an employee benefit plan (as defined in
section 3(3) of ERISA); or
(iii) any contract for the employment of any officer,
individual employee or other Person on a full-time, part-time,
consulting or other basis providing annual compensation in
excess of $100,000 per annum.
(b) PLAN DOCUMENTS AND REPORTS. A true and correct copy of each of
the plans, arrangements, and agreements listed on ITEM 4.1.24 ("Employee
Benefit Plans") of the Disclosure Schedule hereto (referred to
hereinafter as "EMPLOYEE BENEFIT PLANS"), and all contracts relating
thereto, or to the funding thereof, including, without limitation, all
trust agreements, insurance contracts, administration contracts,
investment management agreements, subscription and participation
agreements, and recordkeeping agreements, each as in effect on the date
hereof, has been made available to the Purchasers. In the case of any
Employee Benefit Plan which is not in written form, an accurate
description of such Employee Benefit Plan as in effect on the date hereof
has been made available to the Purchasers.
(c) COMPLIANCE WITH LAWS; LIABILITIES. Except as set forth in
ITEM 4.1.24 ("Employee Benefit Plans") of the Disclosure Schedule hereto
and except for cases that would not in the aggregate constitute a
Material Adverse Effect (it being understood that for the purposes of
this Section 4.1.24 only, Material Adverse Effect shall not exclude any
unfunded liabilities under any Employee Benefit Plans), as to all
Employee Benefit Plans:
20
(i) All Employee Benefit Plans comply and have been
administered in form and in operation in all material respects
with all applicable requirements of law, and no event has
occurred which will or could reasonably be expected to cause
any such Employee Benefit Plan to fail to comply with such
requirements and no notice has been issued by any governmental
authority questioning or challenging such compliance.
(ii) All Employee Benefit Plans which are employee pension
benefit plans comply in form and in operation with all
applicable requirements of sections 401(a) and 501(a) of the
Code; there have been no amendments to such plans which are not
the subject of a favorable determination letter issued with
respect thereto by the Internal Revenue Service; and, to the
knowledge of the Company, no event has occurred which will or
could reasonably be expected to give rise to disqualification
of any such plan under such sections or to a tax under section
511 of the Code.
(iii) None of the assets of any Employee Benefit Plan that
is qualified under Sections 401(a) and 501(a) of the Code is
invested in employer securities or employer real property.
(iv) There have been no "prohibited transactions" (as
described in section 406 of ERISA or section 4975 of the Code)
with respect to any Employee Benefit Plan and neither the
Company nor any Subsidiary has engaged in any prohibited
transaction.
(v) There have been no acts or omissions which have given
rise to or could reasonably be expected to give rise to fines,
penalties, taxes or related charges under section 502 of ERISA
or Chapters 43, 47 or 68 of the Code for which the Company or
any Subsidiary may be liable.
(vi) None of the payments contemplated by the Employee
Benefit Plans would, in the aggregate, constitute excess
parachute payments (as defined in section 280G of the Code
(without regard to subsection (b)(4) thereof)).
(vii) There are no actions, suits or claims (other than
routine claims for benefits) pending or, to the Company's
knowledge, threatened involving any Employee Benefit Plan or
the assets thereof and, to the knowledge of the Company, no
facts exist which could reasonably be expected to give rise to
any such actions, suits or claims (other than routine claims
for benefits).
(viii) No Employee Benefit Plan is subject to Title IV of
ERISA.
(ix) Each Employee Benefit Plan which constitutes a "group
health plan" (as defined in section 607(1) of ERISA or section
4980B(g)(2) of the Code), including any plans of current and
former affiliates which must be taken into account under
sections 4980B and 414(t) of the Code or section 601 of ERISA,
has been operated in compliance with applicable law, including
21
coverage requirements of section 4980B of the Code and section
601 of ERISA to the extent such requirements are applicable.
(x) Neither the Company nor any Subsidiary has any
liability or contingent liability for providing, under any
Employee Benefit Plan or otherwise, any post-retirement medical
or life insurance benefits, other than statutory liability for
providing group health plan continuation coverage under Part 6
of Title I of ERISA and section 4980B of the Code.
(xi) Actuarially adequate accruals for all obligations
under the Employee Benefit Plans are reflected in the financial
statements of the Company and such obligations include a pro
rata amount of the contributions and the Pension Benefit
Guaranty Corporation premiums which would otherwise have been
made in accordance with past practices and applicable law for
the plan years which include the Closing Date.
(xii) There has been no act or omission that would impair
the ability of the Company and its Subsidiaries (or any
successor thereto) to unilaterally amend or terminate any
Employee Benefit Plan.
(d) MULTIEMPLOYER PLANS. Neither the Company nor any Subsidiary
contributes to, has contributed to, or has any liability or contingent
liability with respect to a multiemployer plan.
Section 4.1.25. ENVIRONMENTAL MATTERS
. Except as disclosed on ITEM 4.1.25 ("Environmental Matters") of
the Disclosure Schedule hereto and except as would not be required to be
disclosed in an Annual Report on Form 10-K with respect to the Company
filed on the date hereof:
(a) the business, operations and facilities (whether owned or
leased) of the Company and its Subsidiaries, and all existing uses of and
activities on or at any of the properties or facilities (whether owned or
leased) of the Company and its Subsidiaries, are, to the Company's
knowledge, in material compliance with all Environmental Laws in effect
as of the date hereof, and no condition exists or event has occurred
which, with or without notice or the passage of time or both, would
constitute a violation of or give rise to any Lien under any
Environmental Law; provided, however, that, with respect to any property
or facility which is leased by the Company or any of its Subsidiaries, if
the lessor of such leased property or facility has leased a portion
thereof to a Person other than the Company or any of its Subsidiaries,
the Company makes no representation or warranty under this clause (a) as
to such other Person or other leased portion;
(b) the Company and its Subsidiaries are in possession of all
Environmental Permits necessary or desirable for the conduct or operation
of its business (or any part thereof), and are in material compliance
with all of the requirements, conditions and limitations included in such
Environmental Permits;
(c) to the Company's knowledge, there is no, and the Company and
its Subsidiaries have not used or stored any, Hazardous Material in, on,
22
or at any of the properties or facilities now owned or leased by the
Company or its Subsidiaries except for inventories of substances which
are used or are to be used in the ordinary course of business (which
inventories have been stored, used and disposed of in accordance with all
applicable Environmental Laws and Environmental Permits, including all
so-called "Right To Know Laws");
(d) the Company and its Subsidiaries have not received any notice,
whether formal or informal, from any Governmental Authority or any other
Person that any past or present aspect of the business, operations or
facilities (whether owned or leased) of the Company or its Subsidiaries
is in violation of any Environmental Law or Environmental Permit, or that
the Company or its Subsidiaries is responsible or liable (or potentially
responsible or liable) for the investigation, cleanup or remediation of
any Hazardous Materials at any location;
(e) the Company and its Subsidiaries have not at any time deposited
or incorporated any Hazardous Material into, on, beneath, or adjacent to
any property except in compliance in all material respects with all
applicable Environmental Laws and in a manner which does not create any
liability under Environmental Law;
(f) the Company and its Subsidiaries are not the subject of any
litigation or proceedings in any forum, judicial or administrative,
involving a demand for damages, injunctive relief, penalties, or other
potential liability with respect to violations of or liability under any
Environmental Law;
(g) the Company and its Subsidiaries timely filed all reports and
notifications required to be filed with respect to all of their
operations, properties and facilities (whether owned or leased) and have
generated and maintained all required records and data under all
applicable Environmental Laws;
(h) neither the Company, its Subsidiaries nor, to the knowledge of
the Company, any predecessor thereof has transported or arranged for the
transportation of any Hazardous Material to any location which is listed
or proposed for listing on the National Priorities List pursuant to
CERCLA or on any similar state list; and
(i) no condition exists or, to the knowledge of the Company,
existed in the past, or event has occurred, with respect to any property
that is currently or was at any time owned or leased by the Company or
its Subsidiaries, or, to the knowledge of the Company, any predecessor to
the Company or its Subsidiaries that is likely, with or without notice,
passage of time or both, to give rise to any present or future liability
of the Company or its Subsidiaries pursuant to any Environmental Law.
Section 4.1.26. LENDING ACTIVITIES
Except as disclosed on ITEM 4.1.26 ("Lending Activities") of the
Disclosure Schedule, neither the Company nor any of its Subsidiaries
currently or is expected to have a loan facility, credit facility, debt
financing, line of credit or other extension of credit from any
depository institution owned by The Chase Manhattan Corporation.
23
Section 4.1.27. TITLE TO PROPERTIES
Except as disclosed in the SEC Reports filed prior to the date
hereof or on ITEM 4.1.27 ("Title to Properties") of the Disclosure
Schedule hereto, the Company and its Subsidiaries have, and on the
Closing Date will have, good (and, with respect to real property,
marketable) title to, and are, and on the Closing Date will be, the
lawful owner of, (a) all of the tangible and intangible assets,
properties and rights used in connection with the business of the Company
and its Subsidiaries (except for those assets, properties and rights that
the Company leases or otherwise has the right to use or as to which the
failure to own or possess title would not reasonably be expected to have
a Material Adverse Effect) and (b) all of the tangible and intangible
assets, properties and rights reflected as owned by the Company and its
Subsidiaries in the Financial Statements or the SEC Reports filed prior
to the date hereof or ITEM 4.1.28 ("Assets") of the Disclosure Schedule
hereto or ITEM 4.1.29 ("Real Property") of the Disclosure Schedule hereto
(other than assets leased under the leases set forth in ITEM 4.1.28
("Assets") of the Disclosure Schedule hereto or ITEM 4.1.29 ("Real
Property") of the Disclosure Schedule hereto and assets disposed of in
the ordinary course of business since the date of such Financial
Statements or the most recently filed SEC Report).
Section 4.1.28. CONDITION AND SUFFICIENCY OF ASSETS
Except as disclosed on ITEM 4.1.28 ("Assets") of the Disclosure
Schedule hereto, all of the tangible assets and properties of the Company
and its Subsidiaries, whether real or personal, owned or leased, are in
generally good operating condition and repair (with the exception of
normal wear and tear), and are free from defects (other than such minor
defects as do not either interfere with the intended use thereof in the
conduct of normal operations), except where the failure to conform to
such condition would not in the aggregate constitute a Material Adverse
Effect. Immediately after the Closing Date, the Company and its
Subsidiaries shall own or have the right to use all the assets,
properties, rights, know-how, key personnel, processes and ability which
are required for or currently used in connection with the operation of
their business as presently conducted, except where the failure to have a
right to use or own any thereof would not have a Material Adverse Effect.
Section 4.1.29. REAL PROPERTY
ITEM 4.1.29 ("Real Property") of the Disclosure Schedule hereto
contains an accurate and complete list, as of the date of this Agreement,
of all fee interests in real property and buildings and structures of the
Company and its Subsidiaries. The Company and its Subsidiaries have good
and indefeasible title in fee simple to all of the real property and
buildings specified as owned by them in such ITEM 4.1.29 ("Real
Property") of the Disclosure Schedule hereto, and have such title in all
such listed real property and buildings as is required for the conduct of
the business of the Company and its Subsidiaries, as presently conducted,
in each case free and clear of all encumbrances, except:
(A) Liens for taxes, easements or governmental charges or levies if the
same shall not at the time be delinquent or thereafter can be paid
without penalty, or are being contested in good faith by
appropriate proceedings and are not material to the Company or its
Subsidiaries;
(B) such imperfections of title, if any, as do not individually or in the
aggregate materially detract from the value or marketability of
such real property as presently used or materially interfere with
such real property's present, or to the knowledge of the Company,
proposed use, or that in the aggregate would have a Material
Adverse Effect; and
24
(C) Liens under the Other Financing Documents.
EXCEPT AS SET FORTH IN ITEM 4.1.29 ("Real Property") of the Disclosure
Schedule hereto, all of the buildings and structures to the extent owned
by the Company or its Subsidiaries are in good operating condition and
repair, suitable for the purposes for which they are being used and each
has adequate rights of ingress and egress for the operation of the
business of the Company and its Subsidiaries in the ordinary course of
business. To the Company's knowledge, no building or structure to the
extent owned by the Company or its Subsidiaries, or any appurtenance
thereto or equipment therein, or the operation or maintenance thereof,
violates any restrictive covenants or any provisions of any federal,
state, local or foreign law, ordinance or zoning regulation, or
encroaches on any property owned by others, except to the extent any such
violation or encroachment would not (i) materially interfere with the use
or adversely affect the value of such building, structure or appurtenance
or (ii) have a Material Adverse Effect. No condemnation proceeding is
pending or, to the knowledge of the Company, threatened with respect to
any of the real property listed in ITEM 4.1.29 ("Real Property") of the
Disclosure Schedule hereto nor to the knowledge of the Company, is any
change in any of the foregoing laws, ordinances or regulations pending or
threatened, which proceeding or change could reasonably be expected to
materially interfere with the use or materially adversely affect the
value of any of the real property listed in ITEM 4.1.29 ("Real Property")
of the Disclosure Schedule hereto.
Section 4.2. [Intentionally Omitted]
ARTICLE V
REPRESENTATIONS AND
WARRANTIES OF THE PURCHASERS
Section 5.1. REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
Each of the Purchasers, severally, but not jointly, represents
and warrants to the Company, as of the date hereof and the Closing Date,
as follows:
Section 5.1.1. POWER AND AUTHORITY
Such Purchaser has full power and authority and has taken all
required corporate action necessary to permit it to execute and deliver
this Agreement and any Related Documents, Other Financing Documents and
other documents or instruments related hereto or thereto that such
Purchaser is a party to, and to carry out the terms hereof and thereof.
None of the foregoing actions will (i) violate any provision of such
Purchaser's by-laws, charter or other similar corporate documents, if
applicable, (ii) result in the breach of or constitute a default under
any contract, agreement or instrument to which such Purchaser is a party
or by which it is bound or (iii) violate any order, writ, judgment,
injunction, decree, statute, rule or regulation of any court, tribunal or
governmental entity or authority applicable to or bearing upon such
Purchaser or any of its assets or business, except for any such
occurrences that would not constitute a Material Adverse Effect.
Section 5.1.2. ENFORCEABILITY, ETC.
This Agreement and each of the Related Documents to which such
Purchaser is a party has been duly executed and delivered by the
Purchaser and constitutes the legal, valid and binding obligation of such
Purchaser enforceable against it in accordance with their respective
terms, except as may be limited by bankruptcy, insolvency,
25
reorganization, fraudulent conveyance or other similar laws affecting the
enforcement of creditors' rights generally and general equitable
principles.
Section 5.1.3. PURCHASE FOR INVESTMENT
Such Purchaser is purchasing the Purchased Securities for its own
account and with no intention of distributing or reselling said Purchased
Securities or any part thereof in any transaction that would be in
violation of the securities laws of the United States of America or any
state thereof.
Section 5.1.4. FINANCIAL MATTERS
Such Purchaser represents and warrants to the Company that it
understands that the purchase of the Purchased Securities involves
substantial risk and that such Purchaser's financial condition and
investments are such that it is in a financial position to hold the Units
and any Common Stock issued upon exercise of the Warrants for an
indefinite period of time and to bear the economic risk of, and withstand
a complete loss of, its investment in the Units and any Common Stock
issued upon exercise of the Warrants. Such Purchaser represents that it
is an "accredited investor" as that term is defined in Regulation D
promulgated under the Securities Act, and that such Purchaser is a
sophisticated investor, capable of evaluating the merits and risks of
investing in the Company.
Section 5.1.5. ACCESS TO PERSONNEL AND MATERIALS
During the negotiation of the transactions contemplated herein,
such Purchaser and its representatives have been afforded access to the
Company's financial statements and records, have been afforded an
opportunity to ask such questions of the Company's officers and employees
concerning the Company's business, operations, financial condition,
assets, liabilities and other relevant matters, and have been given all
such information as has been requested, in order to evaluate the merits
and risks of the prospective investment contemplated herein.
Section 5.1.6. BROKERS, ETC.
Such Purchaser has not dealt with any broker, finder or other
similar Person in connection with the offer or sale of the Purchased
Securities or any of the transactions contemplated by this Agreement as a
result of which the Company would be obligated to pay any fee or
commission.
ARTICLE VI
COVENANTS
Section 6.1. [Intentionally Omitted]
Section 6.2. POST-CLOSING DATE COVENANTS OF THE COMPANY
The Company covenants and agrees that, at all times from and
after the Closing Date, it shall perform, observe and comply with the
covenants set forth in this SECTION 6.2.
Section 6.2.1. USE OF PROCEEDS
The Company shall use the proceeds of the sale of the Preferred
Stock and Warrants only for the purposes described in SECTION 2.6 hereof.
Section 6.2.2. INSPECTION OF PROPERTY
Provided such Persons having access shall maintain the
confidentiality of the information to which they have access, the Company
shall permit any representatives designated by the Purchasers upon
reasonable notice and during normal business hours, to (i) visit and
26
inspect any of the properties of the Company and its Subsidiaries,
(ii) examine the corporate and financial records of the Company and its
Subsidiaries and make copies thereof or extracts therefrom and
(iii) discuss the affairs, finances and accounts of the Company and its
Subsidiaries with the officers, key employees and independent accountants
of the Company and its Subsidiaries.
Section 6.2.3. COMPLIANCE WITH AGREEMENTS
The Company shall perform, observe and comply, in all material
respects, with all agreements, covenants and other obligations set forth
herein, in the Related Documents, the Other Financing Documents, the
Amended and Restated Certificate of Incorporation, By-laws and each other
agreement, document or instrument related thereto by which the Company is
bound.
Section 6.2.4. AFFIRMATIVE COVENANTS
The Company shall, and shall cause each Subsidiary to:
(a) use all commercially reasonable efforts to cause to be done all
things necessary to maintain, preserve and renew its corporate existence,
all material Licenses, Approvals, authorizations and permits necessary to
the conduct of its business, except where the failure to do so will not
have a Material Adverse Effect;
(b) maintain and keep its properties in good repair, working order
and condition, and from time to time make all necessary repairs, renewals
and replacements, so that its businesses may be properly conducted at all
times;
(c) pay and discharge when payable all taxes, assessments and
governmental charges imposed upon its properties or upon the income or
profits therefrom (in each case before the same becomes delinquent and
before penalties accrue thereon) and all claims for labor, materials or
supplies to the extent to which the failure to pay or discharge such
obligations would reasonably be expected to have a material adverse
effect upon the financial condition of the Company and its Subsidiaries,
taken as a whole, unless and to the extent that the same are being
contested in good faith and by appropriate proceedings and adequate
reserves (as determined in accordance with GAAP, consistently applied)
have been established on its books with respect thereto;
(d) comply with all other material obligations which it incurs
pursuant to any contract or agreement as such obligations become due to
the extent to which the failure to so comply would reasonably be expected
to have a material adverse effect upon the financial condition of the
Company and its Subsidiaries, taken as a whole, unless and to the extent
that the same are being contested in good faith and by appropriate
proceedings and adequate reserves (as determined in accordance with GAAP,
consistently applied) have been established on its books with respect
thereto;
(e) comply in all material respects with all applicable laws, rules
and regulations of all governmental authorities, the violation of which
would reasonably be expected to have a material adverse effect upon the
financial condition of the Company and its Subsidiaries taken as a whole;
27
(f) maintain proper books of record and account which fairly
present its financial condition and results of operations and make
provisions on its financial statements for all such proper reserves as in
each case are required in accordance with GAAP, consistently applied; and
(g) maintain in full force and effect a policy or policies of
standard comprehensive general liability insurance underwritten by a U.S.
insurance company insuring its properties and business against such
losses and risks, and in such amounts, as are adequate for its business
and as are customarily carried by entities of similar size engaged in the
same or similar business (such policies shall include property loss
insurance policies, with extended coverage, sufficient in amount to allow
the replacement of any of its tangible properties which might be damaged
or destroyed by the risks or perils normally covered by such policies).
Section 6.2.5. SBIC REGULATORY PROVISIONS.
(a) The Company shall notify each Holder which is a SBIC (a "SBIC
HOLDER") as soon as practicable (and, in any event, not later than 15 days)
prior to taking any action after which the number of record holders of the
Company's voting stock would be increased from fewer than 50 to 50 or more, and
the Company shall notify each SBIC Holder of any other action or occurrence
after which the number of record holders of the Company's voting stock was
increased (or would increase) from fewer than 50 to 50 or more, as soon as
practicable after the Company becomes aware that such other action or
occurrence has occurred or is proposed to occur.
(b) The Company shall give CVCA thirty (30) days prior notice
before taking any affirmative steps which would cause the representations
in SECTION 4.1.26 to be untrue, and the Company shall use its best
efforts to notify CVCA promptly at any time in which the Company
reasonably believes the representations contained in SECTION 4.1.26 to be
untrue, whether as a result of the Company's affirmative actions or
otherwise.
Section 6.2.6. REGULATORY COMPLIANCE COOPERATION.
(a) In the event that any SBIC Holder determines that it has a
Regulatory Problem (as defined below), to the extent reasonably necessary, such
SBIC Holder shall have the right to transfer its Warrants, Common Stock issued
upon exercise of the Warrants and/or Preferred Stock to any (x) Affiliate or
(y) to the extent an Event of Non-Compliance has not occurred and is not then
continuing, with the consent of the Company (which consent shall not be
unreasonably delayed or withheld), an unaffiliated third party without regard
to any restrictions on transfer set forth in this Agreement or the Related
Documents other than federal and state securities law restrictions (provided
that the transferee agrees to acquire and assume the rights and obligations of
such SBIC Holder under this Agreement), and the Company shall take all such
actions as are reasonably requested by such SBIC Holder in order to
(i) effectuate and facilitate such transfer by such SBIC Holder of any
securities of the Company then held by such SBIC Holder to such Person,
(ii) permit such SBIC Holder (or any of its Affiliates) to exchange all or any
portion of voting Common Stock then held by it on a share-for-share basis for
shares of a class of nonvoting Common Stock of the Company, which nonvoting
Common Stock shall be identical in all respects to such voting Common Stock,
except that such non-voting Common Stock shall be nonvoting and shall be
convertible into voting Common Stock on such terms as are requested by such
SBIC Holder in light of regulatory considerations then prevailing,
(iii) continue and preserve the respective allocation of the voting interests
28
with respect to the Company arising out of the SBIC's ownership of voting
securities and/or provided for in the Stockholders Agreement before the
transfers and amendments referred to above (including entering into such
additional agreements as are reasonably requested by such SBIC Holder to permit
any Person(s) designated by such SBIC Holder to exercise any voting power which
is relinquished by such SBIC Holder, and (iv) amend this Agreement, the Amended
and Restated Certificate of Incorporation, and any other related documents,
agreements or instruments to effectuate and reflect the foregoing.
(b) For purposes of this Agreement, a "REGULATORY PROBLEM" means any set
of facts or circumstances wherein it has been asserted by any governmental
regulatory agency (or any SBIC Holder reasonably believes in good faith that
there is a substantial risk of such assertion) that such SBIC Holder and its
Affiliates are not entitled to hold, or exercise any significant right with
respect to, any securities issued by the Company.
Section 6.2.7. FURTHER ASSURANCES
The Company will use its commercially reasonable efforts to cure
promptly any defects in the creation and issuance of the Preferred Stock,
Warrants and Common Stock issued upon exercise of Warrants, and in the
execution and delivery of this Agreement. The Company, at its expense,
will promptly execute and deliver to the Purchasers upon reasonable
request all such other and further documents, agreements and instruments
in compliance with or pursuant to its covenants and agreements herein,
and will make any recordings, file any notices, and obtain any consents
as may be reasonably necessary or appropriate in connection therewith.
Section 6.2.8. RESERVATION AND AUTHORIZATION OF COMMON STOCK
(a) The Company shall at all times reserve and keep available for
issue upon the exercise or conversion of Warrants such number of its
authorized but unissued shares of Common Stock as will be sufficient to
permit the exercise in full of all outstanding Warrants.
(b) Before taking any action which would result in an adjustment in
the number of shares of Common Stock comprising a Stock Unit (as defined
in the Warrants) or which would cause an adjustment reducing the Exercise
Price (as defined in the Warrants) per share of Common Stock below the
then par value, if any, of the shares of Common Stock issuable upon
exercise of the Warrants, the Company shall take any corporate action
which is necessary in order that the Company may validly and legally
issue fully paid and nonassessable shares of Common Stock free and clear
of any liens upon the exercise of all the Warrants immediately after the
taking of such action.
(c) The Company will list on each national securities exchange
(including Nasdaq) on which any Common Stock may at any time be listed,
subject to official notice of issuance upon exercise of the Warrants, and
will maintain such listing of, all shares of Common Stock from time to
time issuable upon the exercise of the Warrants.
SECTION 6.2.9. FINANCIAL STATEMENTS; INFORMATION
(a) The Company shall provide the Purchasers with all financial
statements and information pursuant to Section 2.4 of the Stockholders
Agreement as if each Purchaser was a "Qualified Holder" as defined
thereunder.
29
(b) The Company shall provide the Purchasers with all financial
statements and other information provided to the lenders pursuant to the
Credit Facility.
Section 6.2.10. FORM 1099
After having made due inquiry, the Company will not take the
position in any respect for federal, state or local income tax purposes
that there is any actual or constructive dividend paid to any holder of
Preferred Stock based on the terms thereof (other than in connection with
distributions in respect of, or redemptions of, Preferred Stock paid in
cash), unless advised by counsel or the Company's independent accountants
in writing that there is no reasonable basis for the Company to take the
position adopted in this Section 6.1.10.
ARTICLE VIA
REGISTRATION RIGHTS IN RESPECT OF REGISTRABLE SECURITIES
Section 6A.1 NOTICE
If at any time on or after the Closing Date, the Company proposes
to effect the registration of all or any part of any equity securities of
the Company, whether as a primary registration or as a registration of
securities requested by a stockholder, under the Securities Act, the
Company shall promptly, and in any event at least 30 days prior to the
effective date of the proposed registration statement, give written
notice of such proposed registration to all holders of Registrable
Securities. Each holder of Registrable Securities that wishes to
register any of its Registrable Securities (each, a "SELLER") shall,
within 20 days after receipt of such notice from the Company, deliver to
the Company a notice (a "SELLER NOTICE") stating that such Seller wishes
to participate in such offering and setting forth the number of shares of
Registrable Securities that such Seller desires to include in such
offering. The Company thereupon shall as expeditiously as possible use
its best efforts (or in the case of the Company's initial registered
public offering of equity securities under the Securities Act, reasonable
efforts) to effect the registration under the Securities Act of such
shares of Registrable Securities, subject in all cases to a determination
by the managing underwriter, or financial adviser, as the case may be,
that the registration of such Registrable Securities will not jeopardize
the success of the proposed offering.
Section 6A.2 PRORATION
If the underwriter (or, if the offering is not underwritten, an
independent financial advisor to the Company) determines that marketing
factors require a limitation on the number of securities to be offered
and sold in the offering, including securities requested to be offered
and sold by Sellers, there shall be included in the offering only that
number of securities that the underwriter, or financial advisor, as the
case may be, believes will not jeopardize the success of the offering.
Any reduction in the number of securities to be so offered shall be
pro-rata among the Sellers and all other Persons (other than the Company
or securityholders who are exercising "demand" registration rights),
proposing to sell securities pursuant to such offering, based on the
number of securities originally proposed to be sold by each such person.
NOTHING CONTAINED HEREIN SHALL BE CONSTRUED TO LIMIT IN ANY WAY THE
COMPANY'S RIGHT, IN ITS SOLE DISCRETION, TO WITHDRAW ANY REGISTRATION
STATEMENT BEFORE SUCH REGISTRATION STATEMENT BECOMES EFFECTIVE OR TO
POSTPONE THE OFFERING OF SECURITIES CONTEMPLATED BY ANY SUCH REGISTRATION
STATEMENT.
30
SECTION 6A.3 REGISTRATION PROCEDURES
If and whenever the Company is required by the provisions of
Section 6A.1 hereof to use its best efforts, or reasonable efforts, as
the case may be, to effect the registration of any Registrable Securities
under the Securities Act, the Company shall, as expeditiously as
possible,
(i) prepare and file with the SEC a registration statement with
respect to such securities and use its best efforts (or reasonable
efforts, as applicable) to cause such registration statement to
become and remain effective for a period of not less than 120 days
in the case of the Company's initial registration of equity
securities under the Securities Act and 90 days in the case of any
subsequent registration, or such shorter period as is necessary to
permit the sale of such securities in accordance with the plan of
distribution chosen by the Seller or Sellers and the underwriter;
(ii) prepare and file with the SEC such amendments and
supplements to such registration statement and the prospectus used
in connection therewith as may be necessary to keep such
registration statement effective and to comply with the provisions
of the Securities Act with respect to the sale or other disposition
of all securities covered by such registration statement;
(iii) furnish to each Seller such numbers of copies of a
prospectus, including a preliminary prospectus, in conformity with
the requirements of the Securities Act, and such other documents, as
such Seller may reasonably request in order to facilitate the public
sale or other disposition of the Registrable Securities owned by
such Seller;
(iv) use its best efforts to register or qualify the securities
covered by such registration statement under such other securities
or blue sky laws of such jurisdictions within the United States as
each Seller shall reasonably request, and do such other reasonable
acts and things as may be requested of it to enable such Seller to
consummate the public sale or other disposition in such
jurisdictions of the securities owned by such Seller, except that
the Company shall not for any such purpose be required to (i)
qualify to do business as a foreign corporation in any jurisdiction
wherein it is not so qualified, (ii) subject itself to taxation in
any jurisdiction solely by reason of such registration or
qualification or (iii) consent to general service of process in any
jurisdiction;
(v) use its best efforts to cause the securities covered by
such registration statement to be registered with or approved by
such other governmental agencies or authorities as may be necessary
to enable the Seller or Sellers thereof to consummate the
disposition of such securities, except that the Company shall not
for any such purpose be required to (i) qualify to do business as a
foreign corporation in any jurisdiction wherein it is not so
qualified, (ii) subject itself to taxation in any jurisdiction
solely by reason of such registration or qualification or (iii)
consent to general service of process in any jurisdiction;
(vi) notify each Seller of any securities covered by such
registration statement, at any time when a prospectus relating
thereto is required to be delivered under the Securities Act, of the
Company's becoming aware that the prospectus included in such
registration statement, as then in effect, includes an untrue
statement of a material fact or omits to state any material fact
31
required to be stated therein or necessary to make the statements
therein not misleading in the light of the circumstances then
existing (upon receipt of which each Seller agrees to forthwith
cease making offers and sales of such securities pursuant to such
prospectus and to deliver to the Company any copies of such
prospectus then in the possession of such Seller), and at the
request of any such Seller promptly prepare and furnish to such
Seller a reasonable number of copies of a prospectus supplemented or
amended so that, as thereafter delivered to the purchasers of such
securities, such prospectus shall not include an untrue statement of
a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein not
misleading in the light of the circumstances then existing;
(vii) make available to its security holders, as soon as
reasonably practicable, an earnings statement covering the period of
at least twelve months, but not more than eighteen months, beginning
with the first full calendar month after the effective date of the
registration statement, which earnings statement shall satisfy the
provisions of Section 11(a) of the Securities Act and Rule 158
promulgated thereunder (or any successor provision);
(viii) otherwise use its best efforts to comply with all
applicable rules and regulations of the SEC;
(ix) use its best efforts to list such securities on any
securities exchange on which similar securities then issued by the
Company are then listed, or, if not so listed, on a national
securities exchange (including the Nasdaq stock market), if the
listing of such securities is then permitted under the rules of such
exchange;
(x) provide a transfer agent and registrar for all the
securities covered by such registration statement not later than the
effective date of such registration statement;
(xi) enter into such agreements (including an underwriting
agreement in customary form containing without limitation customary
indemnity and contribution provisions for the benefit of the
underwriter or underwriters and the Seller or Sellers) and take such
other actions as the Seller or Sellers shall reasonably request in
order to expedite or facilitate the disposition of such securities;
(xii) make available for inspection by any Seller of securities
covered by such registration statement, by any underwriter
participating in any disposition to be effected pursuant to such
registration statement and by any attorney, accountant or other
agent retained by any such Seller or any such underwriter, all
pertinent financial and other records, pertinent corporate documents
and properties of the Company, and cause all of the Company's
officers, directors and employees to supply all information
reasonably requested by any such Seller, underwriter, attorney,
accountant or agent in connection with such registration statement;
and
(xiii) permit any Seller of securities covered by such
registration statement to require the insertion therein of material,
furnished to the Company in writing, which in the reasonable
judgment of such Seller should be included.
32
IF ANY SUCH REGISTRATION OR COMPARABLE STATEMENT REFERS TO ANY SELLER BY
NAME OR OTHERWISE AS THE HOLDER OF ANY SECURITIES OF THE COMPANY, THEN
SUCH SELLER SHALL HAVE THE RIGHT TO REQUIRE (A) THE INSERTION THEREIN OF
LANGUAGE, IN FORM AND SUBSTANCE SATISFACTORY TO SUCH SELLER, TO THE
EFFECT THAT THE HOLDING BY SUCH SELLER OF SUCH SECURITIES IS NOT TO BE
CONSTRUED AS A RECOMMENDATION BY SUCH SELLER OF THE INVESTMENT QUALITY OF
THE COMPANY'S SECURITIES COVERED THEREBY AND THAT SUCH HOLDING DOES NOT
IMPLY THAT SUCH SELLER WILL ASSIST IN MEETING ANY FUTURE FINANCIAL
REQUIREMENTS OF THE COMPANY, OR (B) IN THE EVENT THAT SUCH REFERENCE TO
SUCH SELLER BY NAME OR OTHERWISE IS NOT REQUIRED BY THE SECURITIES ACT,
THE DELETION OF THE REFERENCE TO SUCH SELLER.
The Company may require each holder of Registrable Securities to,
and each such holder, as a condition to including Registrable Securities
in such registration, shall, furnish the Company with such information
and affidavits regarding such holder and the distribution of such
securities as the Company may from time to time reasonably request in
writing in connection with such registration. If so required, each
holder of Registrable Securities participating in an underwritten public
offering shall enter into and perform its obligations under an
underwriting agreement, as well as a custody agreement and power of
attorney, all in usual and customary form.
Section 6A.4 HOLDBACK ON SALES
The Company and the Purchasers hereby agree on and after the
Closing Date not to effect any public sale or distribution of any
securities similar to those registered in accordance with Section 6A.3
hereof during the 14 day period prior to, and during the 180 day period
beginning on, the effective date of any registration statement (except as
part of such registration statement).
Section 6A.5 EXPENSES
All expenses incurred in complying with this Article VIA,
including, without limitation, all registration, filing, securities
exchange listing fees and fees of any applicable stock exchange, all
registration, filing, qualification and other fees and expenses of
complying with securities or blue sky laws of any jurisdiction, all word
processing, duplicating and printing expenses, messenger and delivery
expenses, and the fees and disbursements of counsel and accountants for
the Company, the reasonable fees and disbursements of one counsel for the
Seller or the Sellers (to be chosen by the Seller or by the Sellers
holding a majority of the Preferred Stock to be included by Sellers in a
registration statement), expenses of any special audits incident to or
required by any such registration, shall be paid by the Company;
provided, that in no event shall the Company be required to pay any
underwriting discounts, commissions or fees attributable to the sale of
Registrable Securities by a Seller hereunder.
ARTICLE VIB
[INTENTIONALLY OMITTED]
ARTICLE VIC
INDEMNIFICATION IN RESPECT OF REGISTRATION RIGHTS
SECTION 6C.1 INDEMNIFICATION BY THE COMPANY
In the event of any registration by the Company of any of its
Registrable Securities pursuant to Article 6A, the Company shall, and
33
hereby agrees to, to the full extent permitted by applicable law,
indemnify and hold harmless each seller of Registrable Securities
pursuant to Article 6A ("each, an INDEMNIFIED SELLER"), and their
respective general or limited partners, directors, officers, employees
and each other Person, if any, who controls such Indemnified Seller
within the meaning of the Securities Act, against any Losses to which any
such Indemnified Seller or any such other Person may become subject under
the Securities Act or otherwise, insofar as such Losses (or actions or
proceedings, whether commenced or threatened, in respect thereof) arise
out of or are based upon any untrue statement or alleged untrue statement
of any material fact contained in the applicable registration statement,
any preliminary prospectus, final prospectus or summary prospectus
contained therein, 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 (in the
case of a prospectus, in the light of the circumstances under which they
were made) not misleading, and the Company will reimburse the Indemnified
Sellers and each such other Person for any legal or any other expenses
reasonably incurred by them in connection with investigating or defending
any such Loss (or action or proceeding in respect thereof); PROVIDED that
the Company shall not be liable in any such case to the extent that any
such Loss (or action or proceeding in respect thereof) arises out of or
is based upon an untrue statement or alleged untrue statement or omission
or alleged omission made in such registration statement, preliminary
prospectus, final prospectus, summary prospectus, amendment or supplement
in reliance upon and in conformity with written information furnished to
the Company by the Indemnified Seller specifically for use in the
preparation thereof; PROVIDED FURTHER, however that with respect to any
untrue statement or omission or alleged untrue statement or omission made
in any preliminary prospectus, the indemnity agreement contained in this
paragraph shall not apply to the extent that any such Loss results from
the fact that a current copy of the prospectus was not sent or given to
the person asserting any such Loss at or prior to the written
confirmation of the sale of the securities concerned to such person if
the Company had prior thereto given the Indemnified Seller the notice
referred to in Section 6A.3(vi) and provided to such Indemnified Seller a
supplemented or amended prospectus as contemplated by Section 6A.3(vi)
and such current copy of the prospectus would have cured the defect
giving rise to such Loss. Such indemnity shall remain in full force and
effect regardless of any investigation made by or on behalf of such
seller or any such other Person, and shall survive the transfer of such
securities by such seller. The Company shall also indemnify each other
Person who participates (including as an underwriter) in the offering or
sale of Registrable Securities, their partners, officers, directors,
employees and each other Person, if any, who controls any such
participating Person within the meaning of the Securities Act to the same
extent as provided above with respect to Indemnified Sellers.
SECTION 6C.2 INDEMNIFICATION BY THE SELLERS
Each Indemnified Seller, as a condition to including its
securities in the applicable registration statement, shall, to the full
extent permitted by law, indemnify and hold harmless the Company, its
directors, officers, employees, agents and each other Person, if any, who
controls the Company within the meaning of the Securities Act, against
any Losses to which the Company or any such other Person may become
subject under the Securities Act or otherwise, insofar as such Losses (or
actions or proceedings, whether commenced or threatened, in respect
thereof) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in such registration
statement, any preliminary prospectus, final prospectus or summary
prospectus contained therein, 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
34
(in the case of a prospectus, in the light of the circumstances under
which they were made) not misleading, if such untrue statement or alleged
untrue statement or omission or alleged omission was made in reliance
upon and in conformity with written information furnished to the Company
by such Indemnified Seller specifically for use in the preparation
thereof; PROVIDED, HOWEVER, that the obligation to provide
indemnification pursuant to this Section 6C.2 shall be several, and not
joint and several, among each of the Indemnified Sellers on the basis of
the number of securities included by each in the applicable registration
statement and the aggregate amount which may be recovered from any holder
of securities pursuant to the indemnification provided for in this
Section 6C.2 in connection with any sale of Registrable Securities shall
be limited to the total proceeds received by such holder from the sale of
such securities. Such indemnity shall remain in full force and effect
regardless of any investigation made by or on behalf of the Company or
any such other Person and shall survive the transfer of such securities
by an Indemnified Seller.
SECTION 6C.3 NOTICES OF CLAIMS, ETC.
Promptly after receipt by a party entitled to indemnity under this
Article 6C of notice of the commencement of any action or proceeding
(including a governmental action or proceeding) involving a claim
referred to in Section 6C.1. or 6C.2 (a "PROCEEDING"), such indemnified
party will, if a claim in respect thereof is to be made against a person
obligated to provide indemnity under this Article 6C pursuant to such
provisions, give written notice to the latter (in the manner provided in
Section 8.6 hereof) of the commencement of such Proceeding; but the
omission so to notify the indemnifying party will not relieve the
indemnifying party from any liability which the indemnifying party may
have to any party entitled to indemnity under this Article 6C except to
the extent that the indemnifying party is materially prejudiced thereby.
The indemnifying party shall have the right, exercisable by giving
written notice to an indemnified party promptly after the receipt of
written notice from such indemnified party of such Proceeding, to assume,
at its expense, the defense of any such Proceeding with counsel
reasonably satisfactory to such indemnified party; PROVIDED, HOWEVER,
that an indemnified party shall have the right to employ separate counsel
in any such Proceeding and to participate in the defense thereof, but the
fees and expenses of such counsel shall be at the expense of such
indemnified party unless (1) the indemnifying party agrees to pay such
fees and expenses, (2) the indemnifying party fails to assume promptly
the defense of such Proceeding or fails to employ counsel reasonably
satisfactory to such indemnified party or (3) the indemnified party shall
have been advised by counsel, in its reasonable judgment, that there is
reasonably likely to be a conflict between the positions of such
indemnified party and any other party represented by such counsel in such
Proceeding which makes it improper, under generally acceptable standards
of professional conduct, for the same counsel to represent both the
indemnified party and such other party; PROVIDED that the indemnifying
party shall not, in connection with any one such Proceeding or separate
but substantially similar or related Proceedings, be liable for the fees
and expenses of more than one separate firm of attorneys for all such
indemnified parties. The indemnifying party will not be subject to any
liability for any settlement made without its consent (which will not be
unreasonably delayed or withheld); PROVIDED that, if such Proceeding is
settled with its written consent or if there shall be a final judgment
for the claimant or plaintiff in such Proceeding, the indemnifying party
shall indemnify and hold harmless the indemnified party from and against
any Losses by reason of such settlement or judgment for which such
indemnified party would be entitled to indemnification hereunder. The
indemnifying party shall not, without the consent of an indemnified
party, consent to entry of any judgment or enter into any settlement that
does not include as an unconditional term thereof the giving by the
claimant or plaintiff to such indemnified party of a release, in form and
35
substance satisfactory to such indemnified party, from all liability in
respect of such Proceeding for which such indemnified party would be
entitled to indemnification hereunder.
Section 6C.4 CONTRIBUTION
If the indemnification provided for in this Article 6C is
unenforceable although available to an indemnified party in respect of
any Losses referred to therein or is insufficient to hold an indemnified
party harmless for any Losses in respect of which the provisions of
Section 6C.1 and/or 6C.2 would otherwise apply by their terms, then the
indemnifying party shall contribute to the aggregate amount paid or
payable by the indemnified party as a result of such Losses in such
proportion as is appropriate to reflect the relative fault of the
indemnifying party on the one hand and the indemnified party on the other
hand in connection with statements or omissions which resulted in such
Losses, as well as any other relevant equitable considerations. The
relative fault shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to
information supplied by the indemnifying party or the indemnified party
and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such untrue statement or omission. The
amount paid by an indemnified party as a result of the Losses referred to
above shall be deemed to include any legal and other expenses reasonably
incurred by such indemnified party in connection with investigating or
defending any Loss which is the subject of this paragraph.
The parties hereto agree that it would not be just and equitable if
contribution pursuant to this Section 6C.4 were to be determined by pro
rata allocation or by any other method of allocation which does not take
account of the equitable considerations referred to in the immediately
preceding paragraph. No Person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Securities Act) shall be
entitled to contribution from any Person who was not guilty of such
fraudulent misrepresentation.
ARTICLE VII
TERMINATION
Section 7.1. TERMINATION
(a) This Agreement may be terminated at any time prior to the
Closing:
(i) by mutual consent of the Company and the Purchasers;
(ii) by either the Company or the Purchasers if the Closing
shall not have occurred by May 31, 2000; PROVIDED, HOWEVER, that the
failure to consummate the transactions contemplated hereby is not a
result of the failure by the party so electing to terminate this
Agreement to perform any of its obligations hereunder;
(iii) by either the Company or the Purchasers if a material
breach of any provision of this Agreement has been committed by a
party other than the party so electing and such breach has not been
satisfied, cured or waived; or
36
(iv) by the Company or the Purchasers, if any of the respective
conditions to such Person's performance set forth in SECTION 3.1,
3.2 or 3.3 hereof, as applicable, have not been satisfied or waived
as of the Closing Date or if satisfaction of any such a condition is
or becomes impossible (other than through the failure of the Person
seeking to terminate this Agreement pursuant to this CLAUSE (IV) to
comply with any of its respective obligations under this Agreement).
(b) If the Closing has not occurred on or prior to May 31, 2000,
this Agreement shall automatically terminate unless the parties hereto
unanimously agree, in writing on or prior to such date, to postpone such
termination.
Section 7.2. EFFECT OF TERMINATION
If this Agreement shall be validly terminated pursuant to SECTION
7.1, all obligations, representations and warranties of the parties
hereto under this Agreement shall terminate and there shall be no
liability of any party to another party, except as otherwise expressly
provided herein.
ARTICLE VIII
MISCELLANEOUS
Section 8.1. PAYMENT OF COSTS AND EXPENSES
If the Closing occurs, the Company agrees to pay on demand all
reasonable expenses of each of the Purchasers (including the reasonable
fees and out-of-pocket expenses of Milbank, Tweed, Hadley & McCloy,
special counsel to the Purchasers) in connection with:
(a) the evaluation of the transactions contemplated hereunder; the
review, negotiation, preparation, execution and delivery of this
Agreement and the Related Documents and the review of the Other Financing
Documents, in each case including schedules and exhibits, and any other
documents, agreements or instruments related hereto or thereto; the
evaluation of the transactions thereunder; and any amendments, waivers,
consents, supplements or other modifications hereto or thereto as may
from time to time hereafter be required, whether or not the transactions
contemplated hereby are consummated; and
(b) the preparation and/or review of the form of any document or
instrument relevant to the transactions contemplated hereby, by the
Related Documents, the Other Financing Documents or any other document or
instrument related hereto or thereto.
THE COMPANY FURTHER AGREES TO PAY, AND TO SAVE THE PURCHASERS HARMLESS
FROM ALL LIABILITY FOR, ANY STAMP OR OTHER SIMILAR TAXES WHICH MAY BE
PAYABLE IN CONNECTION WITH THE EXECUTION OR DELIVERY OF THIS AGREEMENT,
THE ISSUANCE AND SALE OF PREFERRED STOCK OR WARRANTS OR THE COMMON STOCK
ISSUABLE UPON EXERCISE OF THE WARRANTS. THE COMPANY ALSO AGREES TO
REIMBURSE EACH PURCHASER UPON DEMAND FOR ALL REASONABLE OUT-OF-POCKET
EXPENSES (INCLUDING ATTORNEYS' FEES AND LEGAL EXPENSES) INCURRED BY SUCH
PURCHASER IN CONNECTION WITH SUCH PURCHASER'S ENFORCEMENT OF THE
COMPANY'S OBLIGATIONS HEREUNDER OR UNDER THE RELATED DOCUMENTS.
Section 8.2. [Intentionally Omitted]
37
Section 8.3. BROKERAGE
Each party hereto will indemnify and hold harmless the others
against and in respect of any claim for brokerage or other commission
relative to this Agreement or to the transaction contemplated hereby,
based in any way on agreements, arrangements or understandings made or
claimed to have been made by such party with any third party.
Section 8.4. [Intentionally Omitted]
Section 8.5. ASSIGNMENT; PARTIES IN INTEREST
Neither this Agreement nor any right, interest or obligation
hereunder may be assigned by the Company, without the prior written
consent of the Purchasers (which consent shall not be unreasonably
withheld), and any attempt to do so will be void. Except as set forth in
the preceding sentence, all covenants, agreements, rights and obligations
contained in or arising out of this Agreement by or on behalf of any of
the parties hereto shall bind and inure to the benefit of the respective
legal representatives, successors and assigns of the parties hereto
whether so expressed or not.
Section 8.6. NOTICES
All notices, demands or other communications to be given or
delivered under or by reason of the provisions of this Agreement or any
Related Document shall be in writing and shall be deemed to have been
given when delivered personally to the recipient, sent to the recipient
by reputable express courier service (charges prepaid), mailed to the
recipient by certified or registered mail, return receipt requested and
postage prepaid, or sent by telecommunications facsimile. Such notices,
demands and other communications shall be sent to the Company and the
Purchasers at the addresses (or facsimile numbers) set forth below their
respective names on SCHEDULE II hereto or to such other address (or
facsimile number) or to the attention of such other Person as the
recipient party has specified by prior written notice to the sending
party.
Section 8.7. NO WAIVER
No failure to exercise and no delay in exercising any right,
power or privilege granted under this Agreement shall operate as a waiver
of such right, power or privilege. No single or partial exercise of any
right, power or privilege granted under this Agreement shall preclude any
other or further exercise thereof or the exercise of any other right,
power or privilege. The rights and remedies provided in this Agreement
are cumulative and are not exclusive of any rights or remedies provided
by law.
Section 8.8. AMENDMENT
This Agreement may be modified or amended only by a writing
signed by or on behalf of the Company and the Purchasers.
SECTION 8.9. SURVIVAL OF REPRESENTATIONS, WARRANTIES, COVENANTS AND
AGREEMENTS
The representations, warranties, covenants and agreements
contained in this Agreement or any other instrument delivered pursuant to
this Agreement shall survive the Closing hereunder.
Section 8.10. GOVERNING LAW
The corporate law of Delaware shall govern all issues concerning
the relative rights of the Company and its shareholders. All other
issues hereunder shall be governed by and construed in accordance with
the procedural and substantive laws of the State of New York without
regard for its conflicts of laws rules. The Company agrees that it may
be served with process in the State of New York and any action for breach
of this Agreement may be prosecuted against it in the courts of that
State.
38
SECTION 8.11. SPECIFIC PERFORMANCE
Damages in the event of breach of this Agreement by either the
Company or the Purchasers would be difficult, if not impossible, to
ascertain, and it is therefore agreed that the Company and the
Purchasers, in addition to and without limiting any other remedy or right
it may have, will have the right to an injunction or other equitable
relief in any court of competent jurisdiction, enjoining any such breach,
and enforcing specifically the terms and provisions hereof, and the
Company and the Purchasers hereby waive any and all defenses it may have
on the ground of lack of jurisdiction or competence of the court to grant
such an injunction or other equitable relief. The existence of this
right will not preclude the Company or the Purchasers from pursuing any
other rights and remedies at law or in equity which the Company or the
Purchasers may have.
SECTION 8.12. ENTIRE UNDERSTANDING
This Agreement expresses the entire understanding of the parties
and supersedes all other prior and contemporaneous agreements and
undertakings of the parties with respect to the subject matter of this
Agreement.
Section 8.13. COUNTERPARTS
This Agreement may be executed in one or more counterparts, each
of which shall be deemed to be an original but all of which taken
together shall constitute one agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement under
seal as of the date first above written.
BPC HOLDING CORPORATION
By: /S/ JAMES M. KRATOCHVIL
Name: James M. Kratochvil
Title: Executive Vice President,
Chief Financial Officer,
Treasurer and Secretary
CHASE VENTURE CAPITAL ASSOCIATES, LLC
By: Chase Capital Partners,
its Investment Manager
By: /S/ RICK WATERS
Name: Rick Waters
Title: General Partner - Mezzanine
THE NORTHWESTERN MUTUAL LIFE INSURANCE
COMPANY
By: /S/ RICHARD A. STRAIT
Name: Richard A. Strait
Title: Its Authorized Representative
DISCLOSURE SCHEDULE
ITEM 4.1.1 Company and Existing Subsidiaries (Name, Jurisdiction
of Incorporation)
ITEM 4.1.2 Power and Authority
ITEM 4.1.5 Consents and Approvals
ITEM 4.1.6 Pro Forma Balance Sheet
ITEM 4.1.7 Financial Statements
ITEM 4.1.8 Material Adverse Change
ITEM 4.1.9 Subsequent Events
ITEM 4.1.10 Liabilities
ITEM 4.1.11 Taxes
ITEM 4.1.12 Litigation
ITEM 4.1.13 Insurance
ITEM 4.1.14 Conflict of Interest
ITEM 4.1.15 Other Relationships
ITEM 4.1.16 Licenses
ITEM 4.1.17(a) Intellectual Property Rights
ITEM 4.1.17(b) Royalties and Other Fees
ITEM 4.1.19 Brokers
ITEM 4.1.22 Contracts and Commitments
ITEM 4.1.23 Customers and Suppliers
ITEM 4.1.24 Employee Benefit Plans
ITEM 4.1.25 Environmental Matters
ITEM 4.1.26 Lending Activities
ITEM 4.1.27 Title to Properties
ITEM 4.1.28 Assets
ITEM 4.1.29 Real Property
SCHEDULE I
PURCHASER INFORMATION
INVESTOR UNITS SERIES A-1 NON-VOTING WARRANT PURCHASE PRICE
PREFERRED STOCK ($)
SHARES
Chase Venture Capital 600 600,000 15,599 15,000,000
Associates, LLC
The Northwestern 400 400,000 10,398 10,000,000
Mutual Life Insurance Company
SCHEDULE II
ADDRESSES
If to the Company:
BPC Holding Corporation
101 Oakley Street
P.O. Box 959
Evansville, IN 47706-0959
Telecopier: (812) 421-9604
Attention: Mr. Martin R. Imbler
with copies to:
First Atlantic Capital, Ltd. O'Sullivan, Graev & Karabell, LLP
135 East 57th Street 30 Rockefeller Plaza
29th Floor 41st Floor
New York, NY 10022 New York, NY 10112
Telecopier: (212) 750-0954 Telecopier: (212) 408-2420
Attention: Mr. Roberto Buaron Attention: Michael J. O'Brien, Esq.
If to Chase Venture Capital Associates,
LLC:
Chase Venture Capital Associates, LLC
380 Madison Avenue
12th Floor
New York, New York 10017
Telecopier: (212) 622-3950
Attention: John M.B. O'Connor
with copies to:
Milbank, Tweed, Hadley & McCloy LLP
One Chase Manhattan Plaza
New York, New York 10005
Telecopier: (212) 530-0219
Attention: John T. O'Connor, Esq.
If to Northwestern:
The Northwestern Mutual Life Insurance Company
720 East Wisconsin Avenue
Milwaukee, Wisconsin 53202
Telecopier: (414) 299-7124
Attention: Securities Department
SCHEDULE III
CAPITALIZATION SCHEDULE OF THE COMPANY
SCHEDULE IV
CONSENTS RELATING TO THE PURCHASERS
None.