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Exhibit 10.10
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SECURITIES PURCHASE AGREEMENT
DATED AS OF JULY 16, 2001
AMONG
PLIANT CORPORATION
AND
THE PURCHASERS NAMED HEREIN
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TABLE OF CONTENTS
Article I DEFINED TERMS; RULES OF CONSTRUCTION.................................1
1.1 Defined Terms.........................................................1
1.2 Rules of Construction.................................................7
Article II PURCHASE AND SALE OF SHARES; CLOSING................................7
2.1 Charter Amendment.....................................................7
2.2 Authorization of Issuance of Purchased Securities.....................7
2.3 Sale of Purchased Securities..........................................8
2.4 Closing...............................................................8
2.5 Subsequent Closing....................................................8
2.6 Allocation of Purchase Price..........................................8
2.7 Closing Deliveries....................................................9
2.8 Use of Proceeds.......................................................9
Article III REPRESENTATIONS AND WARRANTIES ABOUT THE COMPANY...................9
3.1 Private Sale..........................................................9
3.2 Organization Etc.....................................................10
3.3 Capitalization.......................................................10
3.4 Authorization, Etc...................................................11
3.5 Execution; Enforceability............................................12
3.6 No Conflict; Consents................................................12
3.7 SEC Documents and Financial Reports, Etc.............................12
3.8 Litigation...........................................................13
3.9 Adverse Actions......................................................13
3.10 No Violation of Charters, Etc........................................14
3.11 Permits..............................................................14
3.12 Taxes................................................................14
3.13 Investment Company; Holding Company..................................14
3.14 Accounting Controls..................................................15
3.15 Insurance............................................................15
3.16 Intellectual Property................................................15
3.17 Title to Assets Etc..................................................15
3.18 Labor Matters........................................................15
3.19 ERISA Matters........................................................16
3.20 Environmental Matters................................................16
3.21 Illegal Payments.....................................................16
3.22 Solvency.............................................................17
3.23 Brokers..............................................................17
3.24 Absence of Changes...................................................17
Article IV REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS...................18
4.1 Authorization of the Documents........................................18
4.2 Investment Representations............................................18
Article V CONDITIONS TO CLOSING...............................................19
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5.1 Conditions to Purchasers' Obligations.................................19
5.2 Conditions to the Company's Obligations...............................20
Article VI TRANSFER OF SECURITIES.............................................20
6.1 Restriction on Transfer...............................................20
6.2 Restrictive Legends...................................................21
6.3 Notice of Transfer....................................................22
6.4 Transfer Pursuant to Rule 144.........................................23
6.5 Minimum Transfer......................................................24
Article VII COVENANTS OF THE COMPANY..........................................24
7.1 Transactions with Affiliates..........................................24
7.2 Information Rights....................................................26
7.3 Books; Inspection Rights..............................................27
7.4 Merger and Consolidation..............................................27
7.5 Payments for Consents.................................................28
7.6 Amendment of Charter..................................................28
Article VIII MISCELLANEOUS....................................................29
8.1 Expenses, Etc.........................................................29
8.2 Further Assurances....................................................30
8.3 Specific Performance; Remedies........................................30
8.4 Successors and Assigns................................................30
8.5 Entire Agreement......................................................30
8.6 Notices...............................................................31
8.7 Amendments, Modifications and Waivers.................................32
8.8 Governing Law.........................................................32
8.9 No Third Party Reliance...............................................32
8.10 Submission to Jurisdiction............................................33
8.11 Severability..........................................................33
8.12 Independence of Agreements, Covenants, Representations and Warranties.33
8.13 Survival of Representation, Warranties, Etc...........................34
8.14 Counterparts; Facsimile Signatures....................................34
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SCHEDULES AND EXHIBITS
SCHEDULES
Schedule I Initial Purchasers and Purchase Price
Schedule II Additional Purchasers and Purchase Price
Schedule 3.3(a)(i) Capitalization
Schedule 3.3(a)(ii) Holders of Series A Preferred Stock
Schedule 3.24 Absence of Changes
EXHIBITS
Exhibit A Form of Amendment No. 1 to Stockholders' Agreement
Exhibit B Form of Amendment No. 1 to Warrant Agreement
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SECURITIES PURCHASE AGREEMENT dated
as of July 16, 2001, among PLIANT
CORPORATION, a Utah corporation (the
"Company"), the Purchasers listed on
Schedule I hereto (collectively, the
"Initial Purchasers"), and the Additional
Purchasers (as defined herein) listed on
Schedule II hereto from time to time.
WHEREAS, the Company is in the business of manufacturing and
distributing value-added films and flexible packaging for food, personal care,
medical, agricultural and industrial applications (the "Business").
WHEREAS, the Company has previously raised preferred equity
financing pursuant to the terms of the Securities Purchase Agreement dated as of
May 31, 2000 (the "Original Purchase Agreement"), among the Company and the
Original Purchasers (as defined herein).
WHEREAS, the Company desires to raise up to an additional
$34,000,000 in preferred equity financing, and the Purchasers, severally and not
jointly, desire to purchase from the Company an aggregate of (i) up to 34,000
shares of Series A Preferred Stock (as defined herein) and (ii) warrants to
purchase up to 34,511 shares of Common Stock (as defined herein), in each case
on the terms and subject to the conditions provided herein;
NOW THEREFORE, in consideration of the foregoing and the covenants,
agreements, representations and warranties contained in this Agreement, and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged by the parties, the parties hereto hereby agree as follows:
ARTICLE I
DEFINED TERMS; RULES OF CONSTRUCTION
1.1 DEFINED TERMS.
Capitalized terms used and not otherwise defined in this Agreement have
the meanings given to them below or in the other locations of this Agreement
specified below (or, if not defined herein, have the meanings ascribed to them
in the Charter (as defined below)):
"2000 Stock Incentive Plan" means the 2000 Stock Incentive Plan
adopted by the Board and the holders of the voting stock of the Company as of
May 31, 2001, as the same may be amended, modified, supplemented or restated
from time to time.
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"Additional Purchasers" has the meaning given to such term in
Section 2.5(a) and any Person succeeding to the rights of an Additional
Purchaser pursuant to the terms hereof.
"Affiliate" of any specified Person means (a) any other Person,
directly or indirectly, controlling or controlled by or under direct or indirect
common control with such specified Person and (b) for purposes of Section 7.1
only, any beneficial owner of shares representing 10% or more of the total
voting power of the Voting Stock (on a fully diluted basis) of the Company or of
rights or warrants to purchase such Voting Stock (whether or not currently
exercisable) and any Person who would be an Affiliate of any such beneficial
owner pursuant to clause (a). For the purposes of this definition, "control"
when used with respect to any Person means the power to direct the management
and policies of such Person, directly or indirectly, whether through the
ownership of voting securities, by contract or otherwise; and the terms
"controlling" and "controlled" have meanings correlative to the foregoing.
"Affiliate Transaction" shall have the meaning given to such term in
Section 7.1(a).
"Agreement" shall have the meaning given to such term in Section
1.2.
"Amendment No. 1 to Stockholders' Agreement" means
Amendment No. 1 and Waiver to the Stockholders' Agreement in the form
of Exhibit A attached hereto.
"Amendment No. 1 to the Warrant Agreement" means Amendment No. 1 to
the Warrant Agreement in the form of Exhibit B attached hereto.
"Board" means the Board of Directors of the Company or any committee
thereof duly authorized to act on behalf of the Board of Directors.
"Business" has the meaning given to it in the recitals to this
Agreement.
"Business Day" means any day that is not (a) Pioneer Day in the
State of Utah; (b) a Saturday, Sunday, or legal holiday or (c) a day on which
banks are not required to be open in New York, New York.
"Capital Stock" of any Person means any and all shares, interests,
rights to purchase, warrants, options, participations or other equivalents of or
interests in (however designated) equity of such Person, including any preferred
stock, but excluding any debt securities convertible into such equity.
"Charter" means the Third Amended and Restated Articles of
Incorporation of the Company, as the same may from time to time be amended,
modified, supplemented or restated.
"Charter Amendment" has the meaning given to it in Section 2.1.
"Closing" has the meaning given to it in Section 2.4.
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"Closing Date" has the meaning given to it in Section 2.4.
"Code" means the Internal Revenue Code of 1986, as amended, and the
rules and regulations promulgated thereunder.
"Commission" means the Securities and Exchange Commission or any
other Federal agency at the time administering the Securities Act.
"Common Stock" means the Company's common stock, no par value.
"Company" has the meaning given to it in the caption to this
Agreement.
"Credit Agreement" shall mean the Credit Agreement dated as of May
31, 2000 among the Company, ASPEN Industrial, S.A. de C.V., the Lenders party
thereto, Bankers Trust Company, as Administrative Agent and Collateral Agent,
The Chase Manhattan Bank, as Syndication Agent and The Bank of Nova Scotia, as
Documentation Agent, as the same has been amended on September 30, 2000 and on
or about the date hereof and as the same may otherwise be amended, modified,
supplemented or restated from time to time.
"Documents" means the Charter, this Agreement, Amendment No. 1 to
the Warrant Agreement, the Warrants, the Stockholders' Agreement, the
Registration Rights Agreement and Amendment No. 1 to the Stockholders'
Agreement.
"ERISA" has the meaning given to such term in Section 3.19.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, and the rules and regulations of the Commission promulgated thereunder,
all as the same shall be in effect from time to time.
"Existing Management Stockholders" means each of Richard P. Durham,
Jack E. Knott and Brian E. Johnson.
"Fundamental Documents" means the documents by which any Person
(other than an individual) establishes its legal existence or which govern its
internal affairs. The Fundamental Documents of the Company as of the date hereof
are the Charter and the by-laws of the Company.
"GAAP" means generally accepted accounting principles in the United
States, as in effect from time to time, consistently applied.
"Indebtedness" has the meaning given to such terms in the New Notes
Indenture.
"Indemnitee" has the meaning given to such term in Section 8.1(b).
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"Initial Purchaser" has the meaning given to it in the caption to
this Agreement and any Person succeeding to the rights of an Initial Purchaser
pursuant to the terms hereof.
"JPMP" means J.P. Morgan Partners, LLC.
"Lien" means any mortgage, pledge, security interest, encumbrance,
restriction, lien or charge of any kind (including any conditional sale or other
title retention agreement or lease in the nature thereof).
"Material Adverse Effect" has the meaning given to such term in
Section 3.2.
"New Notes" means the Company's 13% Senior Subordinated Notes due
2010 issued on May 31, 2000 pursuant to the New Notes Purchase Agreement.
"New Notes Indenture" means the Indenture dated as of May 31, 2000,
among the Company, as Issuer, the Guarantors party thereto and The Bank of New
York, as Trustee.
"New Notes Purchase Agreement" means the Purchase Agreement dated as
of May 25, 2000, among the Company and the purchasers signatory thereto relating
to the New Notes and the Note Warrants.
"Note Warrants" means the warrants to purchase shares of Common
Stock issued in connection with the New Notes Purchase Agreement.
"Original Purchase Agreement" has the meaning given to such term in
the recitals to this Agreement.
"Original Purchaser" means each of SIF, New York Life Capital
Partners, L.P., The Northwestern Mutual Life Insurance Company and First Union
Capital Partners, LLC.
"Permitted Holders" means each of (a) JPMP and its Affiliates, (b)
SIF and its Affiliates, (c) The Christena Karen H. Durham Trust, (d) the
Existing Management Stockholders and their Related Parties and (e) any Person
acting in the capacity of an underwriter in connection with a public or private
offering of the Company's Capital Stock.
"Person" shall be construed as broadly as possible and shall include
an individual or natural person, a partnership (including a limited liability
partnership), a corporation, an association, a joint stock company, a limited
liability company, a trust, a joint venture, an unincorporated organization and
a governmental authority.
"Purchased Securities" has the meaning given to such term in Section
2.2.
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"Purchaser" means each of the Initial Purchasers and the Additional
Purchasers.
"Preferred Shares" means the shares of Series A Preferred Stock
being purchased pursuant to this Agreement.
"Registration Rights Agreement" means the Registration Rights
Agreement dated as of May 31, 2000 among the Company, the Original Purchasers
and the other stockholders and other securityholders of the Company party
thereto, as the same has been amended on June 13, 2000 and may otherwise be
amended, modified, supplemented or restated from time to time.
"Related Parties" means with respect to a Person (a) that is a
natural person (i) any spouse, parent or lineal descendant (including adopted
children) of such Person or (ii) the estate of such Person during any period in
which such estate holds Capital Stock of the Company for the benefit of any
person referred to in clause (a)(i) and (b) any trust, corporation, partnership,
limited liability company or other entity, the beneficiaries, stockholders,
partners, owners or Persons beneficially owning an interest of more than 50% of
which consist of such Person and/or such other Persons referred to in the
immediately preceding clause (a).
"Requisite Holders" means, as of any date of determination, those
Persons holding Series A Preferred Stock representing at least sixty-five
percent (65%) of the Series A Preferred Stock then issued and then outstanding.
"Restricted Securities" means the Purchased Securities, any
securities issued with respect to the Purchased Securities by way of a stock
dividend or stock split or in connection with a combination of shares,
recapitalization, merger, consolidation or other reorganization, to the extent
such Securities have not been sold to the public pursuant to (a) registration
under the Securities Act or (b) Rule 144 (or similar or successor rule)
promulgated under the Securities Act.
"Restricted Subsidiary" shall have the meaning given to such term in
the New Notes Indenture.
"SEC Documents" has the meaning given to such term in Section 3.7.
"Security" has the meaning given to the term "security" in Section
2(1) of the Securities Act.
"Securities Act" means the Securities Act of 1933, as amended, or
any successor Federal statute, and the rules and regulations of the Commission
promulgated thereunder, all as the same shall be in effect from time to time.
"Series A Preferred Stock" means the Company's Series A Cumulative
Exchangeable Redeemable Preferred Stock, no par value.
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"SIF" means Southwest Industrial Films, LLC f/k/a Chase Domestic
Investments, L.L.C., a Delaware limited liability company.
"Significant Holder" means a Person holding 1,000 or more shares of
Series A Preferred Stock.
"Stockholders' Agreement" means the Stockholders' Agreement dated as
of May 31, 2000 among the Company and the stockholders and other securityholders
of the Company party thereto, as the same has been amended by Amendment No. 1 to
the Stockholders' Agreement and as the same may otherwise be amended, modified,
supplemented or restated from time to time.
"Subsequent Closing" has the meaning given to such term in Section
2.5.
"Subsidiary" or "subsidiary" means, with respect to any Person, any
other Person of which more than fifty percent (50%) of the shares of stock or
other interests entitled to vote in the election of directors or comparable
Persons performing similar functions (excluding shares or other interests
entitled to vote only upon the failure to pay dividends thereon or other
contingencies) are at the time owned or controlled, directly or indirectly
through one or more Subsidiaries, by such Person. Unless the context otherwise
requires, the term "Subsidiary" means a Subsidiary of the Company.
"Successor Company" has the meaning given to such term in Section
7.4.
"Trustee" has the meaning given to it in the New Notes Indenture.
"Uniplast Agreement" means the Stock Purchase Agreement dated as of
June 15, 2001, among the Company, Uniplast Holdings Inc., Perry Acquisition
Partners-2, L.P., and the other Persons signatory thereto, as the same may be
amended, modified, supplemented or restated from time to time.
"Voting Stock" of a Person means all classes of Capital Stock or
other interests (including partnership interests) of such Person then
outstanding and normally entitled (without regard to the occurrence of any
contingency) to vote in the election of directors, managers or trustees thereof.
"Warrant Agreement" means the Warrant Agreement dated as of May 31,
2000, among the Company and the Original Purchasers, as amended by Amendment No.
1 to the Warrant Agreement.
"Warrants" means the warrants to purchase shares of Common Stock
issued pursuant to the Warrant Agreement.
"Warrant Shares" has the meaning given to such term in the Warrant
Agreement.
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1.2 RULES OF CONSTRUCTION.
The term this "Agreement" means this agreement together with all schedules
and exhibits hereto, as the same may from time to time be amended, modified,
supplemented or restated in accordance with the terms hereof. The use in this
Agreement of the term "including" means "including, without limitation." The
words "herein," "hereof," "hereunder" and other words of similar import refer to
this Agreement as a whole, including the schedules and exhibits, as the same may
from time to time be amended, modified, supplemented or restated, and not to any
particular section, subsection, paragraph, subparagraph or clause contained in
this Agreement. All references to sections, schedules and exhibits mean the
sections of this Agreement and the schedules and exhibits attached to this
Agreement, except where otherwise stated. The title of and the section and
paragraph headings in this Agreement are for convenience of reference only and
shall not govern or affect the interpretation of any of the terms or provisions
of this Agreement. The use herein of the masculine, feminine or neuter forms
shall also denote the other forms, as in each case the context may require or
permit. Where specific language is used to clarify by example a general
statement contained herein, such specific language shall not be deemed to
modify, limit or restrict in any manner the construction of the general
statement to which it relates. The language used in this Agreement has been
chosen by the parties to express their mutual intent, and no rule of strict
construction shall be applied against any party. Unless expressly provided
otherwise, the measure of a period of one month or year for purposes of this
Agreement shall be that date of the following month or year corresponding to the
starting date, provided that if no corresponding date exists, the measure shall
be that date of the following month or year corresponding to the next day
following the starting date. For example, one month following February 18 is
March 18, and one month following March 31 is May 1.
ARTICLE II
PURCHASE AND SALE OF SHARES; CLOSING
2.1 CHARTER AMENDMENT.
Prior to the Closing, the Company has filed with the Utah Department of
Commerce, Division of Corporations and Commercial Code an amendment to the
Charter (the "Charter Amendment") increasing the authorized number of Series A
Preferred Stock to 130,000 shares. On or prior to the Subsequent Closing, the
Company will cause the Charter to be further amended to increase such authorized
number to not less than 132,000 shares and not more than 134,000 shares.
2.2 AUTHORIZATION OF ISSUANCE OF PURCHASED SECURITIES.
The Company has authorized the issuance at the Closing of (a) an aggregate
of 29,000 shares of Series A Preferred Stock and (b) Warrants to purchase an
aggregate of 29,436 shares of Common Stock (collectively, the "Purchased
Securities").
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2.3 SALE OF PURCHASED SECURITIES.
At the Closing, subject to the satisfaction or waiver of the conditions
set forth in Article V, the Company shall issue and sell to each Initial
Purchaser, and each Initial Purchaser shall severally purchase from the Company,
the number of Purchased Securities set forth opposite its name on Schedule I for
the aggregate purchase price set forth opposite its name on such Schedule I.
2.4 CLOSING.
The closing (the "Closing") hereunder with respect to the issuance and
sale of the Purchased Securities being purchased by each Initial Purchaser and
the consummation of the related transactions contemplated hereby shall, subject
to the satisfaction or waiver of the applicable conditions set forth in Section
5.1, take place at the offices of O'Sullivan LLP at 30 Rockefeller Plaza, New
York, New York 10112, on July 16, 2001, or at such other time, date or place as
agreed to by the parties (the "Closing Date").
2.5 SUBSEQUENT CLOSING.
(a) At any time prior to September 16, 2001, the Company may issue
additional Purchased Securities to those Persons who are signatories to the
Stockholders' Agreement as of the date hereof or are other management employees
of the Company or any of its Subsidiaries, and have not otherwise purchased any
of the Purchased Securities pursuant to the terms of this Agreement (such
Persons hereinafter referred to as the "Additional Purchasers").
(b) In the event of such issuance and sale, each of the Additional
Purchasers shall execute a counterpart to this Agreement and thereafter be
deemed to be a Purchaser hereunder. The closing of the issuance and sale of the
Purchased Securities being purchased by each Additional Purchaser and the
consummation of the related transactions contemplated thereby is hereinafter
referred to as the "Subsequent Closing." At the Subsequent Closing, if any, each
Additional Purchaser shall severally purchase from the Company, the number of
Purchased Securities set forth opposite its name on Schedule II for the
aggregate purchase price set forth opposite its name on such Schedule II.
(c) The aggregate number of Purchased Securities to be issued at the
Subsequent Closing may not exceed 5,000 shares of Series A Preferred Stock and
warrants to purchase 5,075 shares of Common Stock.
2.6 ALLOCATION OF PURCHASE PRICE.
The Purchasers and the Company hereby acknowledge and agree that the
Preferred Shares are part of an "investment unit" under principles of Section
1273(c)(2) of the Code, which includes the Warrants. Notwithstanding anything to
the contrary contained herein, the Purchasers and the Company hereby further
acknowledge and agree that for United States federal income tax purposes the
"issue price" of each Preferred Share and the Warrants under principles of
Section 1273(b) of the Code (and for purposes
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of comparable state and local income tax laws) shall equal the respective
purchase prices set forth on Schedule I or Schedule II, as applicable, opposite
such Purchaser's name and that the amount of securities purchased by such
Purchaser shall be as set forth on Schedule I or Schedule II, as applicable,
opposite such Purchaser's name. The Purchasers and the Company agree to use the
foregoing issue prices for all income tax purposes with respect to this
transaction.
2.7 CLOSING DELIVERIES.
At the Closing or, with respect to each Additional Purchaser, at the
Subsequent Closing, the Company shall deliver to each Purchaser (a) one or more
stock certificates, registered in such Purchaser's name, representing the
Preferred Shares set forth opposite each such Purchaser's name on Schedule I or
Schedule II, as applicable, and (b) one or more warrant certificates, registered
in such Purchaser's name, representing the Warrants set forth opposite each such
Purchaser's name on Schedule I or Schedule II, as applicable, against receipt by
the Company of a wire transfer of immediately available funds to an account or
accounts designated by the Company, of an aggregate amount equal to the purchase
price for the Purchased Securities being purchased by such Purchaser at the
Closing or Subsequent Closing, as applicable.
2.8 USE OF PROCEEDS.
The proceeds received by the Company from the sale of the Purchased
Securities shall be used by the Company to fund the acquisition of Uniplast
Holdings Inc. in accordance with the terms of the Uniplast Agreement and for
other general corporate purposes. The proceeds received by the Company from the
sale of the Purchased Securities to the Additional Purchasers at the Subsequent
Closing shall be used to repay amounts borrowed by the Company under the Credit
Agreement to fund the acquisition of Uniplast Holdings Inc.
ARTICLE III
REPRESENTATIONS AND WARRANTIES ABOUT THE COMPANY
The Company represents and warrants to, and agrees with, the
Purchasers on and as of the date hereof and the Closing Date that:
3.1 PRIVATE SALE.
Assuming (a) that the Purchased Securities are issued, sold and delivered
under the circumstances contemplated by this Agreement and (b) the accuracy of
the representations and warranties of the Purchasers contained in Article IV and
their compliance with the agreements set forth herein, it is not necessary, in
connection with the issuance and sale of the Purchased Securities to the
Purchasers to register such Securities under the Securities Act.
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3.2 ORGANIZATION ETC.
The Company and each of its subsidiaries have been duly incorporated or
formed and are validly existing as corporations or limited liability companies
in good standing under the laws of their respective jurisdictions of
incorporation or formation, are duly qualified to do business and are in good
standing as foreign corporations or limited liability companies in each
jurisdiction in which their respective ownership or lease of property or the
conduct of their respective businesses requires such qualification, and have all
power and authority necessary to own or hold their respective properties and to
conduct the businesses in which they are engaged, except where the failure to so
qualify or have such power or authority would not, singularly or in the
aggregate, have a material adverse effect on the condition (financial or
otherwise), results of operations, business or prospects of the Company and its
subsidiaries taken as a whole (a "Material Adverse Effect").
3.3 CAPITALIZATION.
(a) The authorized capital stock of the Company immediately prior to
the Closing consists of:
(i) 10,000,000 duly authorized shares of Common Stock, of
which (i) 563,921 shares are duly and validly issued and outstanding,
fully paid and nonassessable, with no personal liability attached to the
ownership thereof, all of which are held of record by the Persons and in
the amounts set forth on Schedule 3.3(a)(i), (ii) no shares are held by
the Company as treasury shares, (iii) 8,902 shares are duly and validly
reserved for issuance pursuant to outstanding options issued to Jack E.
Knott pursuant to the Company's 1998 Stock Option Plan, (iv) 24,357 shares
are duly and validly reserved for issuance pursuant to outstanding options
or as restricted shares issued to employees of the Company pursuant to the
Company's 2000 Stock Incentive Plan, (v) 77,753 shares are duly and
validly reserved for issuance pursuant to the Warrants and (vi) 18,532
shares are duly and validly reserved for issuance pursuant to the Note
Warrants.
(ii) 200,000 duly authorized shares of preferred stock,
130,000 of which are designated Series A Preferred Stock and 100,000 of
which are duly and validly issued and outstanding, fully paid and
nonassessable, with no personal liability attached to the ownership
thereof, all of which are held of record by the Persons and in the amounts
set forth on Schedule 3.3(a)(ii), free and clear of all Liens, other than
Liens held by Persons claiming by, through or under the Persons set forth
on Schedule 3.3(a)(ii), Liens imposed by the Documents and restrictions
under federal or state securities laws.
In connection with the Closing and the Subsequent Closing, the
Company will issue up to 34,000 shares of Series A Preferred Stock and Warrants
to purchase up to 34,511 shares of Common Stock pursuant to this Agreement. In
connection with the issuance of shares of Series A Preferred Stock at the
Subsequent Closing, the Company will cause the number of authorized shares of
Series A Preferred Stock to be increased as
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provided in Section 2.1. The Company will issue up to 34,682 shares of Common
Stock pursuant to the Uniplast Agreement.
(b) All Warrant Shares, if and when issued in accordance with the
Warrants, will be duly and validly issued and outstanding, fully paid and
nonassessable, with no personal liability attached to the ownership thereof.
(c) Other than the Warrants, the Note Warrants, the 8,902 options
issued to Jack E. Knott pursuant to the Company's 1998 Stock Option Plan and
24,357 options and restricted shares issued to employees of the Company pursuant
to the Company's 2000 Stock Incentive Plan, there are no outstanding warrants,
options, agreements, convertible securities and other commitments pursuant to
which the Company is or may become obligated to issue, sell or otherwise
transfer any equity Securities of the Company.
(d) Except as contemplated by the Stockholders' Agreement, there are
no preemptive rights, rights of first refusal or other similar rights to
purchase or otherwise acquire shares of capital stock or other equity Securities
of the Company pursuant to any applicable law, any Fundamental Document of the
Company or any agreement to which the Company is a party or may be bound.
(e) Except as contemplated by the Documents and the Fundamental
Documents of the Company, there is no Lien (including any right of first
refusal, right of first offer, proxy, voting trust or voting agreement) with
respect to the sale or voting of any equity Securities of the Company (whether
outstanding or issuable upon the conversion, exchange or exercise of outstanding
Securities).
(f) Other than as required by the Charter or the Stockholders'
Agreement, there are no obligations to redeem, repurchase or otherwise acquire
shares of capital stock or other equity Securities of the Company pursuant to
any applicable law, any Fundamental Documents of the Company or any agreement to
which the Company is a party or may be bound.
(g) Except as contemplated by the Registration Rights Agreement, no
Person has any right to cause the Company to effect the registration under the
Securities Act of any shares of Common Stock or any other equity Securities of
the Company.
3.4 AUTHORIZATION, ETC.
The Company and each of its subsidiaries has full right, power and
authority to execute and deliver this Agreement and the other Documents to which
it is a party and to perform their respective obligations hereunder and
thereunder; and all requisite action required to be taken for the due and proper
authorization, execution and delivery of each of the Documents to which the
Company or any of its subsidiaries is a party and the consummation of the
transactions contemplated thereby have been duly and validly taken.
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3.5 EXECUTION; ENFORCEABILITY.
This Agreement and each of the other Documents has been duly executed and
delivered by the Company and constitutes a valid and legally binding agreement
of the Company, enforceable against the Company in accordance with its terms,
except to the extent that such enforceability may be subject to (a) bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium and other similar
laws affecting creditors' rights generally and (b) general equitable principles
(whether considered in a proceeding in equity or at law).
3.6 NO CONFLICT; CONSENTS.
The execution, delivery and performance by the Company and each of its
subsidiaries of each of the Documents to which such entity is a party and the
consummation of the transactions contemplated by the Documents will not (a)
conflict with or result in a breach or violation of any of the terms or
provisions of, or constitute a default under, or result in the creation or
imposition of any Lien upon any property or assets of the Company or any of its
subsidiaries pursuant to, any material indenture, mortgage, deed of trust, loan
agreement or other material agreement or instrument to which the Company or any
of its subsidiaries is a party or by which the Company or any of its
subsidiaries is bound or to which any of the property or assets of the Company
or any of its subsidiaries is subject, except for such conflict, breach or
violation which would not, singularly or in the aggregate, have a Material
Adverse Effect, (b) result in any violation of the provisions of the charter or
the by-laws of the Company or any of its subsidiaries or (c) result in any
violation of any statute or any judgment, order, decree, rule or regulation of
any court or arbitrator or governmental agency or body having jurisdiction over
the Company or any of its subsidiaries or any of their properties or assets
(assuming compliance by the Purchasers with their representations, warranties
and agreements set forth in Article IV hereof, except for such conflict, breach
or violation which would not, singularly or in the aggregate, have a Material
Adverse Effect); and (d) (assuming compliance by the Purchasers with their
representations, warranties and agreements set forth in Article IV hereof) no
consent, approval, authorization or order of, or filing or registration with,
any such court or arbitrator or governmental agency or body under any such
statute, judgment, order, decree, rule or regulation is required for the
execution, delivery and performance by the Company and each of its subsidiaries
of each of the Documents to which each is a party and the consummation of the
transactions contemplated by the Documents, except for such consents, approvals,
authorizations, filings, registrations or qualifications (i) which shall have
been obtained or made on or prior to the Closing Date, and (ii) as may be
required under state or foreign securities and blue sky laws and the rules and
regulations of the National Association of Securities Dealers, Inc.
3.7 SEC DOCUMENTS AND FINANCIAL REPORTS, ETC.
The Company has timely filed with the Commission all forms, reports,
schedules, statements and other documents required to be filed by it since May
31, 2000 under the Exchange Act or the Securities Act (such documents, as
supplemented and amended
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since the time of filing, collectively, the "SEC Documents"). The SEC Documents,
including, without limitation, any financial statements or schedules included
therein, at the time filed (and, in the case of registration statements, on the
dates of effectiveness) (a) did not contain any untrue statement of a material
fact or omit to state a material fact required to be stated therein or necessary
in order to make the statements therein, in the light of the circumstances under
which they were made, not misleading, and (b) complied in all material respects
with the applicable requirements of the Exchange Act and the Securities Act, as
the case may be. The financial statements of the Company included in the SEC
Documents at the time filed (and, in the case of registration statements, on the
dates of effectiveness) complied as to form in all material respects with
applicable accounting requirements and with the published rules and regulations
of the Commission with respect thereto, were prepared in accordance with GAAP
applied on a consistent basis during the periods involved (except as may be
indicated in the notes thereto or, in the case of unaudited statements, as
permitted by Form 10-Q of the Commission), and fairly present (subject in the
case of unaudited statements to normal, recurring audit adjustments) the
combined financial position of the Company, as of the dates thereof and the
combined results of operations and cash flows for the periods then ended.
3.8 LITIGATION.
There are no legal or governmental proceedings pending to which the
Company or any of its subsidiaries is a party or of which any property or assets
of the Company or any of its subsidiaries is the subject which, (a) singularly
or in the aggregate, if determined adversely to the Company or any of its
subsidiaries, could reasonably be expected to have a Material Adverse Effect or
(b) question the validity or enforceability of any of the Documents or any
action taken or to be taken pursuant thereto; and to the best knowledge of the
Company and each of its subsidiaries, no such proceedings are threatened or
contemplated by governmental authorities or threatened by others.
3.9 ADVERSE ACTIONS.
To the best knowledge of the Company and each of its subsidiaries, (a) no
action has been taken and no statute, rule, regulation or order has been
enacted, adopted or issued by any governmental agency or body which prevents the
issuance of the Purchased Securities or suspends the sale of the Purchased
Securities in any jurisdiction; and (b) no injunction, restraining order or
order of any nature by any federal, state or foreign court of competent
jurisdiction has been issued with respect to the Company or any of its
subsidiaries which would prevent or suspend the issuance or sale of the
Purchased Securities in any jurisdiction; no action, suit or proceeding is
pending against or, to the best knowledge of the Company and each of its
subsidiaries, threatened against or affecting the Company or any of its
subsidiaries before any court or arbitrator or any governmental agency, body or
official, domestic or foreign, which could reasonably be expected to interfere
with or adversely affect the issuance of the Purchased Securities or in any
manner draw into question the validity or enforceability of any of the Documents
or any action taken or to be taken pursuant thereto.
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3.10 NO VIOLATION OF CHARTERS, ETC.
Neither the Company nor any of its subsidiaries, is (a) in violation of
its charter or by-laws (or similar organizational document), (b) in default, and
no event has occurred which, with notice or lapse of time or both, would
constitute such a default, in the due performance or observance of any term,
covenant or condition contained in any material indenture, mortgage, deed of
trust, loan agreement or other material agreement or instrument to which it is a
party or by which it is bound or to which any of its property or assets is
subject or (c) in violation of any law, ordinance, governmental rule, regulation
or court decree to which it or its property or assets may be subject, except in
the case of clauses (b) and (c) for any such default or violation which would
not, singularly or in the aggregate, have a Material Adverse Effect.
3.11 PERMITS.
The Company and each of its subsidiaries possess all material licenses,
certificates, authorizations and permits issued by, and have made all
declarations and filings with, the appropriate federal, state or foreign
regulatory agencies or bodies which are necessary or desirable for the ownership
of their respective properties or the conduct of their respective businesses,
except where the failure to possess or make the same would not, singularly or in
the aggregate, have a Material Adverse Effect, and neither the Company nor any
of its subsidiaries has received notification of any revocation or modification
of any such license, certificate, authorization or permit or has any reason to
believe that any such license, certificate, authorization or permit will not be
renewed in the ordinary course.
3.12 TAXES.
The Company and each of its subsidiaries has timely filed or caused to be
filed all federal, state, local and foreign income and franchise tax returns and
reports required to have been filed and has paid or caused to be paid all taxes
required to have been paid by it, except (a) any taxes that are being contested
in good faith by appropriate proceedings and for which the Company or such
subsidiary, as applicable, has set aside on its books adequate reserves or (b)
to the extent that the failure to do so could not reasonably be expected to
result in a Material Adverse Effect.
3.13 INVESTMENT COMPANY; HOLDING COMPANY.
Neither the Company nor any of its subsidiaries is (a) an "investment
company" or a company "controlled by" an investment company within the meaning
of the Investment Company Act of 1940, as amended, and the rules and regulations
of the Commission thereunder or (b) a "holding company" or a "subsidiary
company" of a holding company or an "affiliate" thereof within the meaning of
the Public Utility Holding Company Act of 1935, as amended.
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3.14 ACCOUNTING CONTROLS.
The Company and each of its subsidiaries maintain a system of internal
accounting controls sufficient to provide reasonable assurance that (a)
transactions are executed in accordance with management's general or specific
authorizations; (b) transactions are recorded as necessary to permit preparation
of financial statements in conformity with generally accepted accounting
principles and to maintain asset accountability; (c) access to assets is
permitted only in accordance with management's general or specific
authorization; and (d) the recorded accountability for assets is compared with
the existing assets at reasonable intervals and appropriate action is taken with
respect to any differences.
3.15 INSURANCE.
The Company and each of its subsidiaries maintains insurance covering
their respective properties, operations, personnel and businesses against loss
or damage of the kinds customarily insured against by entities engaged in the
same or similar businesses as the Company and its subsidiaries, and such
insurance is of such type and in such amounts in accordance with customary
industry practice.
3.16 INTELLECTUAL PROPERTY.
The Company and each of its subsidiaries own or possess adequate rights to
use all material patents, patent applications, trademarks, service marks, trade
names, trademark registrations, service mark registrations, copyrights, licenses
and know-how (including trade secrets and other unpatented and/or unpatentable
proprietary or confidential information, systems or procedures) necessary for
the conduct of their respective businesses; and the conduct of their respective
businesses will not conflict with, and the Company and its subsidiaries have not
received any notice of any claim of conflict with, any such rights of others,
except for such conflicts which would not, singularly or in the aggregate, have
a Material Adverse Effect.
3.17 TITLE TO ASSETS ETC.
The Company and each of its subsidiaries have good and marketable title in
fee simple to, or have valid rights to lease or otherwise use, all items of real
and personal property which are material to the business of the Company and its
subsidiaries taken as a whole, in each case free and clear of all Liens, claims
and defects and imperfections of title except (a) for Liens permitted under the
Credit Agreement and (b) such as (i) do not materially interfere with the use
made and proposed to be made of such property by the Company and its
subsidiaries or (ii) could not reasonably be expected to have a Material Adverse
Effect.
3.18 LABOR MATTERS.
No labor disturbance by or dispute with the employees generally of the
Company or any of its subsidiaries exists or, to the best knowledge of the
Company and its subsidiaries, is contemplated or threatened.
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3.19 ERISA MATTERS.
No "prohibited transaction" (as defined in Section 406 of the Employee
Retirement Income Security Act of 1974, as amended, including the regulations
and published interpretations thereunder ("ERISA"), or Section 4975 of the Code)
or "accumulated funding deficiency" (as defined in Section 302 of ERISA) or any
of the events set forth in Section 4043(b) of ERISA (other than events with
respect to which the 30-day notice requirement under Section 4043 of ERISA has
been waived) has occurred with respect to any employee benefit plan of the
Company or any of its subsidiaries which could reasonably be expected to have a
Material Adverse Effect; each such employee benefit plan is in compliance in all
material respects with applicable law, including ERISA and the Code; the Company
and each of its subsidiaries have not incurred and do not expect to incur
material liability under Title IV of ERISA with respect to the termination of,
or withdrawal from, any pension plan for which the Company or any of its
subsidiaries would have any liability; and each such pension plan that is
intended to be qualified under Section 401(a) of the Code is so qualified in all
material respects and nothing has occurred, whether by action or by failure to
act, which could reasonably be expected to cause the loss of such qualification.
3.20 ENVIRONMENTAL MATTERS.
There has been no storage, generation, transportation, handling,
treatment, disposal, discharge, emission or other release of any kind of toxic
or other wastes or other hazardous substances by, due to or caused by the
Company or any of its subsidiaries (or, to the best knowledge of the Company and
its subsidiaries, any other entity (including any predecessor) for whose acts or
omissions the Company or any of its subsidiaries is or could reasonably be
expected to be liable) upon any of the property now or previously owned or
leased by the Company or any of its subsidiaries, or upon any other property, in
violation of any statute or any ordinance, rule, regulation, order, judgment,
decree or permit or which would, under any statute or any ordinance, rule
(including rule of common law), regulation, order, judgment, decree or permit,
give rise to any liability, except for any violation or liability that could not
reasonably be expected to have, singularly or in the aggregate with all such
violations and liabilities, a Material Adverse Effect; and there has been no
disposal, discharge, emission or other release of any kind onto such property or
into the environment surrounding such property of any toxic or other wastes or
other hazardous substances with respect to which the Company or any of its
subsidiaries has knowledge, except for any such disposal, discharge, emission or
other release of any kind which could not reasonably be expected to have,
singularly or in the aggregate with all such discharges and other releases, a
Material Adverse Effect.
3.21 ILLEGAL PAYMENTS.
Neither the Company nor, to the best knowledge of the Company and each of
its subsidiaries, any director, officer, agent, employee or other person
associated with or acting on behalf of the Company or any of its subsidiaries
has (a) used any corporate funds for any unlawful contribution, gift,
entertainment or other unlawful expense relating to political activity; (b) made
any direct or indirect unlawful payment to any
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foreign or domestic government official or employee from corporate funds; (c)
violated or is in violation of any provision of the Foreign Corrupt Practices
Act of 1977; or (d) made any bribe, rebate, payoff, influence payment, kickback
or other unlawful payment.
3.22 SOLVENCY.
On and immediately after the Closing Date, the Company will be Solvent. As
used in this paragraph, the term "Solvent" means, with respect to a particular
date, that on such date (a) the present fair market value (or present fair
saleable value) of the assets of the Company is not less than the total amount
required to pay the probable liabilities of the Company on its total existing
debts and liabilities (including contingent liabilities) as they become absolute
and matured, (b) the Company is able to realize upon its assets and pay its
debts and other liabilities, contingent obligations and commitments as they
mature and become due in the normal course of business, (c) the Company is not
incurring debts or liabilities beyond its ability to pay as such debts and
liabilities mature and (d) the Company is not engaged in any business or
transaction, and is not about to engage in any business or transaction, for
which its property would constitute unreasonably small capital after giving due
consideration to the prevailing practice in the industry in which the Company is
engaged. In computing the amount of such contingent liabilities at any time, it
is intended that such liabilities will be computed at the amount that, in the
light of all the facts and circumstances existing at such time, represents the
amount that can reasonably be expected to become an actual or matured liability.
3.23 BROKERS.
Neither the Company nor any of its subsidiaries is a party to any
contract, agreement or understanding with any person that would give rise to a
valid claim against the Company or the Purchasers for a brokerage commission,
finder's fee or like payment in connection with the offering and sale of the
Preferred Shares and the Warrants.
3.24 ABSENCE OF CHANGES.
Since December 31, 2000, except as set forth on Schedule 3.24, (a) there
has been no material adverse change or any development involving a prospective
material adverse change in the condition, financial or otherwise, or in the
earnings, business affairs, management or business prospects of the Company or
any of its subsidiaries, whether or not arising in the ordinary course of
business, (b) none of the Company or any of its subsidiaries has incurred any
material liability or obligation, direct or contingent, other than in the
ordinary course of business, (c) none of the Company or any of its subsidiaries
has entered into any material transaction other than in the ordinary course of
business and (d) there has not been any material change in the long-term debt of
the Company or any of its subsidiaries, or any dividend or distribution of any
kind declared, paid or made by the Company on any class of its capital stock.
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS
Each Purchaser represents and warrants severally, and not jointly as to
any other Purchaser, as follows:
4.1 AUTHORIZATION OF THE DOCUMENTS.
Such Purchaser has all requisite power and authority to execute, deliver
and perform the Documents to which it is a party and the transactions
contemplated thereby, and the execution, delivery and performance by such
Purchaser of the Documents to which it is a party have been duly authorized by
all requisite action by such Purchaser. This Agreement has been duly executed
and delivered by such Purchaser and this Agreement constitutes and, when
executed and delivered by such Purchaser (assuming the due authorization,
execution and delivery by the other parties thereto), each other Document to
which such Purchaser is a party will constitute, a valid and binding obligation
of such Purchaser, enforceable against such Purchaser in accordance with its
terms, subject to applicable bankruptcy, insolvency, reorganization, fraudulent
conveyance, moratorium or other similar laws and subject to general principles
of equity.
4.2 INVESTMENT REPRESENTATIONS.
Solely for establishing that the sale or issuance of the Purchased
Securities to such Purchaser is exempt from the registration requirements of the
Securities Act and comparable provisions of state blue-sky laws and not in any
way to mitigate the responsibility or liability of the Company for any breach of
the representations and warranties made by it in this Agreement, on which such
Purchaser is relying in full in connection with its decision to invest in the
Company:
(a) Such Purchaser is acquiring the Purchased Securities for its own
account, for investment and not with a view to the distribution thereof in
violation of the Securities Act or applicable state securities laws;
(b) Such Purchaser (i) understands that (A) the Purchased Securities
have not been registered under the Securities Act or applicable state securities
laws by reason of their issuance by the Company in a transaction exempt from the
registration requirements of the Securities Act and applicable state securities
laws and (B) the Purchased Securities and the Warrant Shares must be held by
such Purchaser indefinitely unless a subsequent disposition thereof is
registered under the Securities Act and applicable state securities laws or is
exempt from such registration and (ii) has had the opportunity to ask questions
of, and receive answers from, the Company and its management relating to the
business and financial condition of the Business;
(c) Such Purchaser further understands that the exemption from
registration afforded by Rule 144 (the provisions of which are known to such
Purchaser) promulgated under the Securities Act depends on the satisfaction of
various conditions,
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and that, if applicable, Rule 144 may afford the basis for sales of Purchased
Securities and Warrant Shares in limited amounts;
(d) Such Purchaser has not employed any broker or finder in
connection with the transactions contemplated by this Agreement; and
(e) Such Purchaser is an "accredited investor" (as defined in Rule
501(a) of Regulation D promulgated under the Securities Act). Such Purchaser has
such knowledge and experience in financial and business matters that it is
capable of evaluating the risks and merits of this investment. Such Purchaser's
representations in this subsection shall in no way limit the enforceability of
any representations made by the Company in any of the Documents to which it is a
party.
ARTICLE V
CONDITIONS TO CLOSING
5.1 CONDITIONS TO PURCHASERS' OBLIGATIONS.
The obligation of each Initial Purchaser to purchase and pay for the
Purchased Securities to be purchased hereunder at the Closing, or with respect
to each Additional Purchaser, at the Subsequent Closing, is subject to the
satisfaction of the following conditions precedent (unless waived by such
Purchaser):
(a) The Company shall have filed the Charter Amendment with and such
filing shall have been accepted by the Utah Department of Commerce, Division of
Corporations and Commercial Code and the Purchasers shall have received
reasonably satisfactory evidence of such filing;
(b) The Company shall have duly issued and delivered to each
Purchaser one or more stock certificates for the Preferred Shares, and one or
more warrant certificates for the Warrants, purchased by such Purchaser
hereunder;
(c) The Company shall have performed its obligations under, and
shall have complied with, all the covenants and agreements set forth in this
Agreement and the other Documents and all representations and warranties
contained in Article III shall be true and correct as of the date hereof and at
and as of the Closing Date with the same effect as if such representations and
warranties had been made at and as of the Closing Date, and each Purchaser shall
have received a certificate to that effect signed by an officer of the Company;
(d) Each Purchaser shall have received an opinion from Stoel Rives
LLP (counsel to the Company) in a form reasonably acceptable to the Purchasers;
(e) Each Purchaser shall have received an opinion from O'Sullivan
LLP, in a form reasonably acceptable to the Purchasers;
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(f) Each Purchaser shall have received a certificate from the
Secretary or an Assistant Secretary of the Company, dated as of the Closing
Date, certifying (i) that true and complete copies of the Fundamental Documents
of the Company as in effect on the Closing Date are attached thereto, (ii) as to
the incumbency and genuineness of the signatures of each Person executing this
Agreement and the other Documents on behalf of the Company and (iii) the
genuineness of the resolutions (attached thereto) of the board of directors or
similar governing body of the Company authorizing the execution, delivery and
performance of this Agreement and the other Documents to which the Company is a
party and the consummation of the transactions contemplated hereby and thereby;
and
(g) Each of the conditions of the Company under the Uniplast
Agreement shall have been satisfied and the Purchasers shall be satisfied that
the closing under the Uniplast Agreement will take place concurrently with the
Closing, or, with respect to the Subsequent Closing, has already occurred.
(h) Each of the Documents shall be in full force and effect and no
term or condition thereof shall have been amended, waived or otherwise modified
without the prior written consent of each Purchaser.
(i) The issuance and sale of the Purchased Securities to the Initial
Purchasers shall have been consummated simultaneously with the Closing or, with
respect to the Additional Purchasers, simultaneously with the Subsequent
Closing.
5.2 CONDITIONS TO THE COMPANY'S OBLIGATIONS.
The obligation of the Company to issue the Purchased Securities at the
Closing, or, with respect to the Additional Purchasers, at the Subsequent
Closing is subject to the satisfaction of the following conditions precedent
(unless waived by the Company):
(a) Each Purchaser shall have delivered to the Company by wire
transfer, of immediately available funds to an account or accounts designated by
the Company, an aggregate amount equal to the purchase price for the Purchased
Securities being purchased by such Purchaser; and
(b) The Company shall be satisfied that the closing under the
Uniplast Agreement shall take place concurrently with the Closing or, with
respect to the Subsequent Closing, has already occurred.
ARTICLE VI
TRANSFER OF SECURITIES
6.1 RESTRICTION ON TRANSFER.
The Restricted Securities shall not be transferable except upon the
conditions specified in this Article VI, which conditions are intended to insure
compliance with the provisions of the Securities Act in respect of the transfer
thereof.
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6.2 RESTRICTIVE LEGENDS.
(a) Each certificate evidencing shares of Series A Preferred Stock
which are Restricted Securities and each certificate for any such securities
issued to subsequent transferees of any such certificate shall (unless otherwise
permitted by the provisions of Section 6.3 hereof) be stamped or otherwise
imprinted with a legend in substantially the following form:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR
INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933 OR ANY STATE SECURITIES OR BLUE SKY LAWS. THESE SECURITIES MAY NOT
BE SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN
EXEMPTION THEREFROM UNDER SAID ACT OR APPLICABLE STATE SECURITIES OR
BLUE SKY LAWS.
ADDITIONALLY, THE TRANSFER OF THESE SECURITIES IS SUBJECT TO THE
CONDITIONS SPECIFIED IN THE SECURITIES PURCHASE AGREEMENT DATED AS OF
JULY 16, 2001, AMONG THE ISSUER HEREOF AND CERTAIN OTHER SIGNATORIES
THERETO. THE TERMS OF SUCH SECURITIES PURCHASE AGREEMENT INCLUDE, AMONG
OTHER THINGS, RESTRICTIONS ON TRANSFER. A COPY OF THE SECURITIES
PURCHASE AGREEMENT WILL BE FURNISHED WITHOUT CHARGE BY THE ISSUER
HEREOF TO THE HOLDER OF RECORD OF THIS CERTIFICATE UPON WRITTEN
REQUEST.
THE CORPORATION IS AUTHORIZED TO ISSUE DIFFERENT CLASSES OF SHARES. IN
ACCORDANCE WITH SECTION 16-10a-625 OF THE UTAH REVISED BUSINESS
CORPORATION ACT, UPON WRITTEN REQUEST BY THE SHAREHOLDER, THE
CORPORATION WILL FURNISH, WITHOUT CHARGE, A SUMMARY OF THE
DESIGNATIONS, PREFERENCES, LIMITATIONS AND RELATIVE RIGHTS APPLICABLE
TO EACH CLASS OF SHARES."
(b) Each certificate evidencing Warrants which are Restricted
Securities and each certificate for any such securities issued to subsequent
transferees of any such certificate shall (unless otherwise permitted by the
provisions of Section 6.3 hereof) be stamped or otherwise imprinted with a
legend in substantially the following form:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR
INVESTMENT AND HAVE
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NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 OR ANY STATE
SECURITIES OR BLUE SKY LAWS. THESE SECURITIES MAY NOT BE SOLD OR
TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN EXEMPTION
THEREFROM UNDER SAID ACT OR APPLICABLE STATE SECURITIES OR BLUE SKY
LAWS.
ADDITIONALLY, THE TRANSFER OF THESE SECURITIES IS SUBJECT TO THE
CONDITIONS SPECIFIED IN THE SECURITIES PURCHASE AGREEMENT DATED AS OF
JULY 16, 2001 AND A STOCKHOLDERS' AGREEMENT DATED AS OF MAY 31, 2000,
AMONG THE ISSUER HEREOF AND CERTAIN OTHER SIGNATORIES THERETO, AS
AMENDED, MODIFIED OR OTHERWISE RESTATED FROM TIME TO TIME. THE TERMS OF
SUCH SECURITIES PURCHASE AGREEMENT AND STOCKHOLDERS' AGREEMENT INCLUDE,
AMONG OTHER THINGS, RESTRICTIONS ON TRANSFER. A COPY OF THE SECURITIES
PURCHASE AGREEMENT AND STOCKHOLDERS' AGREEMENT WILL BE FURNISHED
WITHOUT CHARGE BY THE ISSUER HEREOF TO THE HOLDER OF RECORD OF THIS
CERTIFICATE UPON WRITTEN REQUEST.
THE CORPORATION IS AUTHORIZED TO ISSUE DIFFERENT CLASSES OF SHARES. IN
ACCORDANCE WITH SECTION 16-10a-625 OF THE UTAH REVISED BUSINESS
CORPORATION ACT, UPON WRITTEN REQUEST BY THE SHAREHOLDER, THE
CORPORATION WILL FURNISH, WITHOUT CHARGE, A SUMMARY OF THE
DESIGNATIONS, PREFERENCES, LIMITATIONS AND RELATIVE RIGHTS APPLICABLE
TO EACH CLASS OF SHARES."
6.3 NOTICE OF TRANSFER.
(a) The holder of any Restricted Securities, by acceptance thereof
agrees, prior to any transfer of any Restricted Securities, to give written
notice to the Company of such holder's intention to effect such transfer and to
comply in all other respects with the provisions of this Section 6.3. Each such
notice shall describe the manner and circumstances of the proposed transfer and
shall be accompanied, if reasonably requested by the Company, by the written
opinion, addressed to the Company, of counsel for the holder of Restricted
Securities, as to whether in the opinion of such counsel (which opinion and
counsel shall be reasonably satisfactory to the Company and which counsel may be
the in-house counsel of such holder) such proposed transfer involves a
transaction requiring registration of such Restricted Securities under the
Securities Act; provided,
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however, that (i) in the case of a holder of Restricted Securities which is a
partnership or a limited liability company, no such opinion of counsel shall be
necessary for a transfer by such holder of Restricted Securities to a partner or
member of such holder of Restricted Securities, or a retired partner or member
of such holder who retires after the date hereof, or the estate of any such
partner or member or retired partner or member, if in each case the transferee
agrees in writing to be subject to the terms of this Article VI to the same
extent as if such transferee were originally a signatory to this Agreement, (ii)
in the case of a holder of Restricted Securities which is a corporation or a
limited liability company, no such opinion of counsel shall be necessary for a
transfer by such holder of Restricted Securities to an Affiliate, officer,
director, member or manager of such entity if in each case the transferee agrees
in writing to be subject to the terms of this Article VI to the same extent as
if such transferee were originally a signatory to this Agreement and (iii) no
such opinion shall be required in connection with a transfer pursuant to Rule
144 (as amended from time to time) promulgated under the Securities Act (or
successor rule thereto), provided, that the Company, shall be provided with
customary written representations relating to such transaction.
(b) If in the opinion of such counsel (if such opinion is required
hereunder) the proposed transfer of Restricted Securities may be effected
without registration under the Securities Act, the holder of Restricted
Securities shall thereupon be entitled to transfer Restricted Securities in
accordance with the terms of the notice delivered by it to the Company.
(c) Each certificate or other instrument evidencing the securities
issued upon the transfer of any Restricted Securities (and each certificate or
other instrument evidencing any untransferred balance of such securities) shall
bear the legend set forth in Section 6.2 hereof unless (i) in the opinion of
such counsel registration of future transfer is not required by the applicable
provisions of the Securities Act or (ii) the Company shall have waived the
requirement of such legends; provided, however, that such legend shall not be
required on any certificate or other instrument evidencing the securities issued
upon such transfer in the event such transfer shall be made in compliance with
the requirements of Rule 144 (as amended from time to time) promulgated under
the Securities Act (or successor rule thereto).
6.4 TRANSFER PURSUANT TO RULE 144.
The Company agrees to make publicly available the current information with
respect to the Company that is required by Rule 144(c) under the Securities Act
and otherwise to take any other action or to execute any certificates necessary
to permit a transfer by any holder of Restricted Securities to qualify for the
exemption set forth in Rule 144. Without limiting the foregoing, if such
information is not publicly available, then, upon a holder's request, the
Company will provide such information to such holder or any prospective
purchaser designated by such holder.
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6.5 MINIMUM TRANSFER
If the provisions of this Article VI have been complied with, any
Purchaser may transfer Series A Preferred Stock subject to a minimum transfer
amount of 4,000 shares (subject to adjustment for splits, reverse splits and
other like events) until such time as the Purchaser holds less than 4,000
shares, in which case the Purchaser shall not transfer less than all the shares
it holds. Notwithstanding the foregoing, any Purchaser may transfer fewer than
4,000 shares (subject to adjustment for splits, reverse splits and other like
events) to a transferee that is an investment fund under common control, or
having a common investment manager or advisor, with the transferor (a "Related
Fund"), provided that in determining the number of shares constituting all the
shares held by any Purchaser for purposes of the immediately preceding sentence,
such determination shall be made on an aggregate basis including all shares held
by the Purchaser and all its Related Funds.
ARTICLE VII
COVENANTS OF THE COMPANY
7.1 TRANSACTIONS WITH AFFILIATES.
(a) The Company will not and will not permit any Restricted
Subsidiary to, directly or indirectly, enter into or conduct any transaction
(including the purchase, sale, lease or exchange of any property or the
rendering of any service) with any Affiliate of the Company (an "Affiliate
Transaction") unless such transaction is on terms:
(i) that are no less favorable to the Company or such
Restricted Subsidiary, as the case may be, than those that could be
obtained at the time of such transaction in arm's-length dealings with a
Person who is not such an Affiliate,
(ii) that, in the event such Affiliate Transaction involves an
aggregate amount in excess of five million dollars ($5,000,000), (A) are
set forth in writing, and (B) except as provided in clause (a)(iii) below,
have been approved by a majority of the members of the Board having no
personal stake in such Affiliate Transaction (if any such members exist),
and
(iii) that, in the event (A) such Affiliate Transaction
involves an amount in excess of ten million dollars ($10,000,000) or (B)
if there are no members of the Board having no personal stake in such
Affiliate Transaction and such Affiliate Transaction involves an aggregate
amount in excess of five million dollars ($5,000,000), have been
determined by a nationally recognized appraisal, accounting or investment
banking firm to be fair, from a financial standpoint, to the Company and
its Restricted Subsidiaries.
(b) The provisions of the foregoing paragraph (a) will not prohibit:
(i) any payment or distribution permitted to be paid pursuant
to Section 3.3(b)(i) of the Charter,
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(ii) any issuance of securities, or other payments, awards or
grants in cash, securities or otherwise pursuant to, or the funding of,
employment arrangements, options to purchase Capital Stock of the Company
and equity ownership, restricted stock plans, long-term incentive plans,
stock appreciation rights plans, participation plans or similar employee
benefits plans approved by the Board,
(iii) the grant of options (and the exercise thereof) to
purchase Capital Stock of the Company or similar rights to employees and
directors of the Company pursuant to plans approved by the Board;
(iv) loans or advances to officers, directors or employees in
the ordinary course of business, but in any event not to exceed two
million dollars ($2,000,000) in the aggregate outstanding at any one time,
(v) the payment of reasonable fees to directors of the Company
and its Subsidiaries who are not employees of the Company or its
Subsidiaries and other reasonable fees, compensation, benefits and
indemnities paid or entered into by the Company or its Restricted
Subsidiaries in the ordinary course of business to or with the officers,
directors or employees of the Company and its Restricted Subsidiaries,
(vi) any transaction between the Company and a Restricted
Subsidiary or between Restricted Subsidiaries,
(vii) the provision by Persons who may be deemed Affiliates or
stockholders of the Company (other than JPMP and Persons controlled by
JPMP) of investment banking, commercial banking, trust, lending or
financing, investment, underwriting, placement agent, financial advisory
or similar services to the Company or its Subsidiaries performed after the
Closing Date, provided that the terms are no less favorable to the Company
or such Restricted Subsidiary, as the case may be, than those that could
be obtained at the time of such transaction in arm's-length dealings with
a Person who is not such an Affiliate (as determined in good faith by a
majority of the members of the Board who do not have a material direct or
indirect financial interest in or with respect to the transaction being
considered),
(viii) sales of Capital Stock to Permitted Holders approved by
a majority of the members of the Board who do not have a material direct
or indirect financial interest in or with respect to the transaction being
considered, or
(ix) the existence or performance by the Company or any
Restricted Subsidiary under any agreement as in effect as of the Closing
Date or replacement agreement therefor or any transaction contemplated
thereby (including pursuant to any amendment thereto or replacement
agreement therefor) so long as such amendment or replacement is not more
disadvantageous to the Purchasers in any material respect than the
original agreement as in effect on the Closing Date.
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7.2 INFORMATION RIGHTS.
The Company will furnish to each Significant Holder:
(a) within 90 days after the end of each fiscal year of the Company,
its audited consolidated balance sheet and related statements of operations,
stockholders' equity and cash flows as of the end of and for such year, setting
forth in each case in comparative form the figures for the previous fiscal year,
all reported on by Arthur Andersen LLP or other independent public accountants
of recognized national standing (without a "going concern" or like qualification
or exception and without any qualification or exception as to the scope of such
audit other than as to Unrestricted Subsidiaries (as defined in the Credit
Agreement)) to the effect that such consolidated financial statements present
fairly in all material respects the financial condition and results of
operations of the Company and its consolidated Subsidiaries on a consolidated
basis in accordance with GAAP consistently applied;
(b) within 45 days after the end of each of the first three fiscal
quarters of each fiscal year of the Company, its consolidated balance sheet and
related statements of operations, stockholders' equity and cash flows as of the
end of and for such fiscal quarter and the then elapsed portion of the fiscal
year, setting forth in each case in comparative form the figures for the
corresponding period or periods of (or, in the case of the balance sheet, as of
the end of) the previous fiscal year, all certified by one of its financial
officers as presenting fairly in all material respects the financial condition
and results of operations of the Company and its consolidated Subsidiaries on a
consolidated basis in accordance with GAAP consistently applied, subject to
normal year-end audit adjustments and the absence of footnotes;
(c) concurrently with any delivery of financial statements under
clause (a) or (b) above, a certificate of a financial officer of the Company (i)
certifying as to whether an Event of Non-Compliance (as defined in the Charter)
has occurred, or a default or event of default has occurred under the New Notes
Indenture or the Credit Agreement and, if an Event of Non-Compliance or a
default or event of default has occurred, specifying the details thereof and any
action taken or proposed to be taken with respect thereto and (ii) stating
whether any change in GAAP or in the application thereof has occurred since
December 31, 2000 that has not been otherwise disclosed in a prior certificate
and, if any such change has occurred, specifying the effect of such change on
the financial statements accompanying such certificate;
(d) at least 30 days prior to the commencement of each fiscal year
of the Borrower, a consolidated budget for such fiscal year (in the form
provided to the Lenders (as defined in the Credit Agreement), including a
projected consolidated balance sheet and related statements of projected
operations and cash flow as of the end of and for such fiscal year) and,
promptly when available, any significant revisions of such budget;
(e) promptly after the same become publicly available, copies of all
periodic and other reports, proxy statements and other materials filed by the
Company or
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any Subsidiary with the Commission or with any national securities exchange, as
the case may be;
(f) promptly following the commencement thereof, notice and
description in reasonable detail of any litigation or proceeding to which the
Company or any of its Subsidiaries is a party, except for any litigation or
proceeding which could not reasonably be expected to result in a Material
Adverse Effect;
(g) promptly following the occurrence thereof, notice and a
description in reasonable detail of any Material Adverse Effect;
(h) as promptly as practicable (but in any event no earlier than
required under the Credit Agreement or New Notes Indenture, as the case may be),
notice of any Default (as defined in the Credit Agreement) under the Credit
Agreement or an Event of Default (as defined in the New Notes Indenture) under
the New Notes Indenture; and
(i) promptly following any request therefor, such other information
regarding the operations, business affairs and financial condition of the
Company or any Subsidiary, or compliance with the terms of any Document, as or
any Significant Holder may reasonably request.
7.3 BOOKS; INSPECTION RIGHTS
The Company will, and will cause each of its Subsidiaries to, keep proper
books of record and account in which full, true and correct entries are made in
all material respects of all dealings and transactions in relation to its
business and activities. The Company will, and will cause each of its
Subsidiaries to, permit any representatives designated by any Significant
Holder, upon reasonable prior notice, to visit and inspect its properties, to
examine and make extracts from its books and records, and to discuss its
affairs, finances and condition with its officers and independent accountants
(and the Company shall be provided the opportunity to participate in any such
discussions with such independent accountants), all at such reasonable times and
as often as reasonably requested.
7.4 MERGER AND CONSOLIDATION
(a) The Company will not consolidate or consummate a share exchange
with, or merge with or into, or convey, transfer or lease all or substantially
all its assets to, any Person, unless, on or prior to the consummation of such
transaction, all the shares of Series A Preferred Stock are redeemed in
accordance with the Charter, or unless:
(i) the resulting, surviving or transferee Person (the
"Successor Company") will be a corporation organized and existing under
the laws of the United States of America, any State thereof or the
District of Columbia;
(ii) (x) the Successor Company (if not the Company) shall
expressly assume, by an amendment to this Agreement in form and substance
satisfactory to the Requisite Holders, all the obligations of the Company
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hereunder and (y) the Series A Preferred Stock shall be converted or
exchanged for and shall become shares of such Successor Company, having in
respect of such Successor Company the same powers, preferences and
relative participating, optional or other special rights, and the
qualifications, limitations or restrictions thereto, that the Series A
Preferred Stock had immediately prior to such transaction;
(iii) immediately after giving effect to such transaction (and
treating any indebtedness which becomes an obligation of the Successor
Company or any Restricted Subsidiary as a result of such transaction as
having been incurred by the Successor Company or such Restricted
Subsidiary at the time of such transaction), no default or event of
default shall have occurred and be continuing under the Credit Agreement
or the New Notes Indenture and no Event of Non-Compliance shall have
occurred and be continuing;
(iv) immediately after giving effect to such transaction, the
Successor Company would be able to incur an additional $1.00 of
Indebtedness under Section 4.03(a) of the New Notes Indenture as in effect
on the date hereof; and
(v) the Company shall have delivered to the holders of the
Series A Preferred Stock an Officers' Certificate stating that such
consolidation, share exchange, merger, transfer or lease comply with this
Section 7.4.
(b) The Successor Company shall succeed to, and be substituted for,
and may exercise every right and power of, the Company to the extent set forth
in this Agreement, but in the case of a lease of all or substantially all its
assets, the Company shall not be released from its obligations with respect to
the Series A Preferred Stock. Notwithstanding clauses (iii) and (iv) above, (A)
any Subsidiary of the Company may consolidate or consummate a share exchange
with, merge into or transfer all or part of its properties and assets to the
Company and (B) the Company may merge with an Affiliate incorporated solely for
the purpose of reincorporating the Company in another jurisdiction to realize
tax or other benefits.
7.5 PAYMENTS FOR CONSENTS.
If the Company agrees to make any payment to any Purchaser in exchange for
the granting of any waiver or consent under, or the entering into of any
amendment to, the Charter or this Agreement or the Warrant Agreement, the
Company shall offer to all Purchasers to make payments, ratably based on the
number of Preferred Shares or Warrants, as applicable, held, to all Purchasers
who agree so such waiver, consent or amendment.
7.6 AMENDMENT OF CHARTER.
The Company shall not amend Section 3.3(b)(vii)(B)(4) of the Charter
without the affirmative written consent or approval of holders of record of the
Series A Preferred
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Stock holding not less than 90% of the then outstanding shares of Series A
Preferred Stock.
ARTICLE VIII
MISCELLANEOUS
8.1 EXPENSES, ETC.
(a) The Company shall pay (i) all reasonable out-of-pocket expenses
incurred by SIF, including the reasonable fees, charges and disbursements of
counsel for SIF, in connection with the preparation of the Documents or any
amendments, modifications or waivers of the provisions thereof (whether or not
the transactions contemplated hereby or thereby shall be consummated), (ii) any
stamp or similar taxes which may be determined to be payable in connection with
the execution, delivery or performance of the Documents or any modification,
amendment or alteration of the terms or provisions of the Documents and any
issue taxes in respect of the issuance of any Purchased Securities to the
Purchasers and (iii) all out-of-pocket expenses incurred by the Purchasers
including the fees, charges and disbursements of any counsel for the Purchasers,
in connection with the enforcement or protection of its rights in connection
with the Documents, including its rights under this Section, or in connection
with the Purchased Securities, including all such out-of-pocket expenses
incurred during any workout, restructuring or negotiations in respect of such
Securities.
(b) The Company shall indemnify the Purchasers and each of their
respective Affiliates (each such Person being called an "Indemnitee") against,
and hold each Indemnitee harmless from, any and all losses, claims, damages,
liabilities and related expenses (including, without limitation and as incurred,
reasonable costs of investigating, preparing or defending any such claim or
action, whether or not such Indemnitee is a party thereto), including the
reasonable fees, charges and disbursements of any counsel for any Indemnitee,
incurred by or asserted against any Indemnitee arising out of, in connection
with, or as a result of (i) the Company's execution, delivery or performance of
any Document or the consummation of the transactions contemplated hereby, or
(ii) any actual or prospective claim, litigation, investigation or proceeding
relating to any of the foregoing, whether based on contract, tort or any other
theory and regardless of whether any Indemnitee is a party thereto; provided
that such indemnity shall not, as to any Indemnitee, be available to the extent
that such losses, claims, damages, liabilities or related expenses resulted from
the gross negligence or willful misconduct of such Indemnitee or any Affiliate
of such Indemnitee (or of any officer, director, employee, advisor or agent of
such Indemnitee or any such Indemnitee's Affiliates) or to the extent such
damages constitute special, indirect or consequential damages (as opposed to
direct or actual damages); and provided further that, for the purposes of the
foregoing proviso, the Company and its Subsidiaries shall be deemed not to be
Affiliates of any Purchaser.
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(c) To the extent permitted by applicable law, the Company shall not
assert, and it hereby waives, any claim against any Indemnitee, on any theory of
liability, for special, indirect, consequential or punitive damages (as opposed
to direct or actual damages) arising out of, in connection with, or as a result
of, this Agreement or any other Document, the transactions contemplated hereby
or the use of the proceeds of the Purchased Securities
(d) All amounts due under this Section shall be payable promptly
after written demand therefor.
8.2 FURTHER ASSURANCES.
The Company shall duly execute and deliver, or cause to be duly executed
and delivered, at its own cost and expense, such further instruments and
documents and to take all such action, in each case as may be necessary or
proper in the reasonable judgment of the Purchasers to carry out the provisions
and purposes of the Agreement and the other Documents.
8.3 SPECIFIC PERFORMANCE; REMEDIES.
Damages in the event of breach of this Agreement or any other Document by
the Company would be difficult, if not impossible, to ascertain, and it is
therefore agreed that the Purchasers, in addition to and without limiting any
other remedy or right it may have (other than the limitations on remedies
specified in Section 3.3(b)(viii) of the Charter), will have the right to an
injunction or other equitable relief in any court of competent jurisdiction,
enjoining any such breach, and enforcing specifically the terms and provisions
hereof and thereof, and the Company hereby waives any and all defenses it may
have on the ground of lack of jurisdiction or competence of the court to grant
such an injunction or other equitable relief. Subject to the limitations set
forth in Section 3.3(b)(viii) of the Charter, the existence of this right to
specific performance will not preclude the Purchasers from pursuing any other
rights and remedies at law or in equity which the Purchasers may have.
8.4 SUCCESSORS AND ASSIGNS.
This Agreement shall bind and inure to the benefit of the Company and the
Purchasers and their respective successors, permitted assigns, heirs and
personal representatives. Upon the transfer of any Purchased Securities in
accordance with the terms of this Agreement, the transferee shall be bound by,
and entitled to the benefits of, this Agreement with respect to such transferred
Purchased Securities in the same manner as the transferring Purchaser.
8.5 ENTIRE AGREEMENT.
This Agreement and the other writings referred to herein or delivered
pursuant hereto which form a part hereof contain the entire agreement among the
parties with respect to the subject matter hereof and thereof and supersede all
prior and contemporaneous arrangements or understandings with respect thereto.
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35
8.6 NOTICES.
(a) All notices, claims, requests, demands or other communications
which are required or otherwise delivered hereunder shall be deemed to be
sufficient and duly given if contained in a written instrument (i) personally
delivered or sent by telecopier, (ii) sent by nationally-recognized overnight
courier guaranteeing next Business Day delivery or (iii) sent by first class,
registered or certified mail, postage prepaid, return receipt requested,
addressed as follows:
(i) if to the Company, to:
Pliant Corporation
1515 Woodfield Road, Suite 600
Schaumburg, Illinois 60173
Attention: Jack E. Knott
Telephone No.: (847) 969-3330
Telecopier No.: (847) 969-3338
with copies to:
Southwest Industrial Films, LLC
c/o J.P. Morgan Partners, LLC
1221 Avenue of the Americas, 40th Floor
New York, New York 10020-1080
Attention: Timothy J. Walsh
Telephone No.: (212) 899-3400
Telecopier No.: (212) 899-3401
and to:
Stoel Rives LLP
One Utah Center
201 S. Main Street, Suite 1100
Salt Lake City, Utah 84111-4904
Attention: Ronald G. Moffitt
Telephone No.: (818) 578-6966
Telecopier No.: (801) 578-6999
(ii) if to any Initial Purchaser, to such Initial Purchaser's
address as set forth on Schedule I hereto; and
(iii) if to any Additional Purchaser, to such Additional
Purchaser's address as set forth on Schedule II hereto.
(b) Any notice, demand or request so delivered shall constitute
valid notice under this Agreement and shall be deemed to have been received (i)
on the day of actual delivery in the case of personal delivery, if delivered on
a Business Day (otherwise on the next Business Day), (ii) on the next Business
Day after the date when sent in the
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case of delivery by nationally-recognized overnight courier, (iii) on the fifth
Business Day after the date of deposit in the U.S. mail in the case of mailing
or (iv) upon receipt in the case of a facsimile transmission if received on a
Business Day (otherwise on the next Business Day). Any party hereto may from
time to time by notice in writing served upon the other as aforesaid designate a
different mailing address or a different Person to which all such notices,
demands or requests thereafter are to be addressed.
8.7 AMENDMENTS, MODIFICATIONS AND WAIVERS.
(a) The terms and provisions of this Agreement may not be modified
or amended, nor may any of the provisions hereof be waived, temporarily or
permanently, except pursuant to a written instrument executed by the Company and
the Requisite Holders; provided however that any such amendment, modification or
waiver that would adversely affect the rights hereunder of any Purchaser, in its
capacity as a Purchaser, without similarly affecting the rights hereunder of all
Purchasers, in their capacities as Purchasers, shall not be effective as to such
Purchaser without its prior written consent. Notwithstanding anything to the
contrary contained herein, Schedule II attached hereto may be amended to add
Additional Purchasers in accordance with the terms hereof without the consent of
the Requisite Holders.
(b) In the event of any amendment, modification or waiver of any
provision of the Original Purchase Agreement made in accordance with the terms
and conditions thereof, a corresponding amendment, modification or waiver shall
automatically be made to this Agreement without further action of the Company or
the Requisite Holders.
(c) No waiver by any party shall operate or be construed as a waiver
of any subsequent breach by any other party.
8.8 GOVERNING LAW.
THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF NEW YORK (WITHOUT GIVING EFFECT TO PRINCIPLES OF CONFLICTS
OF LAWS EXCEPT TO THE EXTENT THAT THE NEW YORK CONFLICTS OF LAWS PRINCIPLES
WOULD APPLY THE APPLICABLE LAWS OF THE STATE OF THE COMPANY'S ORGANIZATION TO
INTERNAL MATTERS RELATING TO ENTITIES SUCH AS THE COMPANY ORGANIZED THEREUNDER).
8.9 NO THIRD PARTY RELIANCE.
Anything contained herein to the contrary notwithstanding, the
representations and warranties of the Company contained in this Agreement (a)
are being given by the Company as an inducement to the Purchasers to enter into
this Agreement and the other Documents (and the Company acknowledges that the
Purchasers have expressly relied thereon) and (b) are solely for the benefit of
the Purchasers and their respective successors and assigns. Accordingly, no
third party (including, without limitation, any holder of capital stock of the
Company) or anyone acting on behalf of any thereof other
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37
than the Purchasers, and each of them and their respective successors and
assigns, shall be a third party or other beneficiary of such representations and
warranties and no such third party shall have any rights of contribution against
the Purchasers or the Company with respect to such representations or warranties
or any matter subject to or resulting in indemnification under this Agreement or
otherwise.
8.10 SUBMISSION TO JURISDICTION.
Any legal action or proceeding with respect to this Agreement may be
brought in the courts of the State of New York and the United States of America
for the Southern District of New York and, by execution and delivery of this
Agreement, the Company hereby accepts for itself and in respect of its property,
generally and unconditionally, the jurisdiction of the aforesaid courts. The
Company hereby irrevocably waives, in connection with any such action or
proceeding, any objection, including, without limitation, any objection to the
venue or based on the grounds of forum non conveniens, which it may now or
hereafter have to the bringing of any such action or proceeding in such
respective jurisdictions. The Company hereby irrevocably consents to the service
of process of any of the aforementioned courts in any such action or proceeding
by the mailing of copies thereof by registered or certified mail, postage
prepaid, to it at its address as set forth herein. Nothing herein shall affect
the right of the Purchasers to serve process in any other manner permitted by
law or to commence legal proceedings or otherwise proceed against the Company in
any other jurisdiction.
8.11 SEVERABILITY.
It is the desire and intent of the parties that the provisions of this
Agreement be enforced to the fullest extent permissible under the law and public
policies applied in each jurisdiction in which enforcement is sought.
Accordingly, in the event that any provision of this Agreement would be held in
any jurisdiction to be invalid, prohibited or unenforceable for any reason, such
provision, as to such jurisdiction, shall be ineffective, without invalidating
the remaining provisions of this Agreement or affecting the validity or
enforceability of such provision in any jurisdiction. Notwithstanding the
foregoing, if such provision could be more narrowly drawn so as not be invalid,
prohibited or unenforceable in such jurisdiction, it shall, as to such
jurisdiction, be so narrowly drawn, without invalidating the remaining
provisions of this Agreement or affecting the validity or enforceability of such
provision in any other jurisdiction.
8.12 INDEPENDENCE OF AGREEMENTS, COVENANTS, REPRESENTATIONS AND
WARRANTIES.
All agreements and covenants hereunder shall be given independent effect
so that if a certain action or condition constitutes a default under a certain
agreement or covenant, the fact that such action or condition is permitted by
another agreement or covenant shall not affect the occurrence of such default,
unless expressly permitted under an exception to such initial covenant. In
addition, all representations and warranties hereunder shall be given
independent effect so that if a particular representation or warranty proves to
be incorrect or is breached, the fact that another representation or
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warranty concerning the same or similar subject matter is correct or is not
breached will not affect the incorrectness of or a breach of a representation
and warranty hereunder.
8.13 SURVIVAL OF REPRESENTATION, WARRANTIES, ETC.
The representations, warranties, covenants and agreements contained in
this Agreement or any other instrument delivered pursuant to this Agreement
shall survive the Closing hereunder.
8.14 COUNTERPARTS; FACSIMILE SIGNATURES.
This Agreement may be executed in any number of counterparts, and each
such counterpart hereof shall be deemed to be an original instrument, but all
such counterparts together shall constitute but one agreement. Facsimile
counterpart signatures to this Agreement shall be acceptable and binding.
* * * *
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IN WITNESS WHEREOF, the parties hereto have executed this Securities
Purchase Agreement as of the date first above written.
PLIANT CORPORATION
By: /s/ Richard P. Durham
-----------------------------------
Name: Richard P. Durham
Title: Chief Executive Officer
PURCHASERS
SOUTHWEST INDUSTRIAL
FILMS, LLC
By: J.P. Morgan Partners (BHCA),
L.P., its Member
By: JPMP Master Fund Manager, L.P.,
its General Partner
By: JPMP Capital Corp.,
its General Partner
By: /s/ John M.B. O'Connor
-----------------------------------
Name: John M.B. O'Connor
Title: Executive Partner
NEW YORK LIFE CAPITAL
PARTNERS, L.P.
By: NYLCAP Manager LLC,
its Investment Manager
By: /s/ Steven Benevento
-----------------------------------
Name: Steven Benevento
Title: Vice President
40
THE NORTHWESTERN MUTUAL
LIFE INSURANCE COMPANY
By: /s/ David A. Barras
-----------------------------------
Name: David A. Barras
Title: Its Authorized Representative
FIRST UNION CAPITAL PARTNERS 2001, LLC
By: /s/ Robert G. Calton, Jr.
-----------------------------------
Name: Robert G. Calton, Jr.
Title: Partner
PERRY ACQUISITION PARTNERS-3, L.P.
By: Perry Investors-3, LLC, its General
Partner
By: Perry Capital, LLC, its Managing Member
By: Perry Corp., its Managing Member
By: /s/ William J. Vernon
-----------------------------------
Name: William J. Vernon
Title: Managing Director and Chief
Financial Officer
41
SCHEDULE I
- -----------------------------------------------------------------------------------------------------------------------------
NUMBER OF AGGREGATE NUMBER OF AGGREGATE
NAME AND ADDRESS PREFERRED SHARES PURCHASE PRICE WARRANT SHARES PURCHASE PRICE
FOR THE FOR THE WARRANT
PREFERRED SHARES SHARES
- -----------------------------------------------------------------------------------------------------------------------------
Southwest Industrial Films, LLC 22,000 $13,180,096.60 22,330 $8,819,903.40
c/o J.P. Morgan Partners, LLC
1221 Avenue of the Americas, 40th Floor
New York, New York 10020-1080
Attention: Richard D. Waters
Telephone No.: (212) 899-3400
Telecopier No.: (212) 899-3401
with a copy to:
O'Sullivan LLP
30 Rockefeller Plaza, 24th Floor
New York, New York 10112
Attention: Frederick M. Bachman
Telephone No.: (212) 408-2400
Telecopier No.: (212) 728-5950
- -----------------------------------------------------------------------------------------------------------------------------
42
- -----------------------------------------------------------------------------------------------------------------------------
NUMBER OF AGGREGATE NUMBER OF AGGREGATE
NAME AND ADDRESS PREFERRED SHARES PURCHASE PRICE WARRANT SHARES PURCHASE PRICE
FOR THE FOR THE WARRANT
PREFERRED SHARES SHARES
- -----------------------------------------------------------------------------------------------------------------------------
New York Life Capital Partners, L.P.
51 Madison Avenue 1,000 $599,095.30 1,015 $400,904.70
Suite 3009
New York, New York 10010
Attention: Steve Benevento
Telephone No.: (212) 576-7699
Telecopier No.: (212) 576-5591
With a copy to:
Akin, Gump, Strauss, Hauer & Feld, LLP
590 Madison Avenue
22nd Floor
New York, New York 10022
Attention: Edward D. Sopher, Esq.
Telephone No.: (212) 872-1026
Telecopier No.: (212) 872-1002
and to:
Office of the General Counsel
New York Life Insurance Company
51 Madison Avenue
Suite 1104
New York, New York 10010
Telephone No.: (212) 576-7000
Telecopier No.: (212) 576-8340
- -----------------------------------------------------------------------------------------------------------------------------
43
- -----------------------------------------------------------------------------------------------------------------------------
NUMBER OF AGGREGATE NUMBER OF AGGREGATE
NAME AND ADDRESS PREFERRED SHARES PURCHASE PRICE WARRANT SHARES PURCHASE PRICE
FOR THE FOR THE WARRANT
PREFERRED SHARES SHARES
- -----------------------------------------------------------------------------------------------------------------------------
The Northwestern Mutual Life
Insurance Company 1,500 $898,445.46 1,523 $601,554.54
720 East Wisconsin Avenue
Milwaukee, Wisconsin 53202
Attention: Dave Barras
Telephone No.: (414) 299-1618
Telecopier No.: (414) 299-7124
With a copy to:
Akin, Gump, Strauss, Hauer & Feld, LLP
590 Madison Avenue
22nd Floor
New York, New York 10022
Attention: Edward D. Sopher, Esq.
Telephone No.: (212) 872-1026
Telecopier No.: (212) 872-1002
- -----------------------------------------------------------------------------------------------------------------------------
44
- -----------------------------------------------------------------------------------------------------------------------------
NUMBER OF AGGREGATE NUMBER OF AGGREGATE
NAME AND ADDRESS PREFERRED SHARES PURCHASE PRICE WARRANT SHARES PURCHASE PRICE
FOR THE FOR THE WARRANT
PREFERRED SHARES SHARES
- -----------------------------------------------------------------------------------------------------------------------------
First Union Capital Partners 2001, LLC
301 South College Street 500 $299,350.16 508 $200,649.84
One First Union Center, 5th Floor
Charlotte, North Carolina 28288-0732
Attention: Robert G. Calton III
Telephone No.: (704) 715-1481
Telecopier No.: (704) 374-6711
With a copy to:
Kennedy Covington Lobdell & Hickman, L.L.P.
Bank of America Corporate Center, Suite 4200
100 North Tryon Street
Charlotte, North Carolina 28202-4006
Attention: J. Norfleet Pruden, III
Telephone No.: (704) 331-7442
Telecopier No.: (704) 331-7598
- -----------------------------------------------------------------------------------------------------------------------------
45
- -----------------------------------------------------------------------------------------------------------------------------
NUMBER OF AGGREGATE NUMBER OF AGGREGATE
NAME AND ADDRESS PREFERRED SHARES PURCHASE PRICE WARRANT SHARES PURCHASE PRICE
FOR THE FOR THE WARRANT
PREFERRED SHARES SHARES
- -----------------------------------------------------------------------------------------------------------------------------
Perry Acquisition Partners-3, L.P. 4,000 $ 2,396,381.20 4,060 $ 1,603,618.80
599 Lexington Avenue, 36th Floor
New York, New York 10002
Attention: Peter Schweinfurth
Telephone No.: (212) 583-4000
Telecopier No.: (212) 583-4140
With a copy to:
Roberts Sheridan & Kotel,
The New York Practice of Dickstein
Shapiro's Corporate & Finance Group
1177 Avenue of the Americas
New York, New York 10036
Attention: Kevin Sheridan
Telephone No.: (212) 835-1400
Facsimile No.: (212) 997-9880
- -----------------------------------------------------------------------------------------------------------------------------
TOTAL 29,000 $17,373,368.72 29,436 $11,626,631.28
- -----------------------------------------------------------------------------------------------------------------------------
46
SCHEDULE II
- ------------------------------------------------------------------------------------------------------------------------------------
NUMBER OF AGGREGATE PURCHASE NUMBER OF WARRANT AGGREGATE PURCHASE
NAME AND ADDRESS PREFERRED SHARES PRICE FOR THE PREFERRED SHARES PRICE FOR THE WARRANT
SHARES SHARES
- ------------------------------------------------------------------------------------------------------------------------------------
Richard P. Durham
Pliant Corporation 1,231 $737,669.98 1,249 $493,330.02
2755 E. Cottonwood Parkway, Suite 400
Salt Lake City, Utah 84121
Telephone No.: (801) 993-8221
Telecopier No.: (801) 993-8210
With a copy to:
Winston and Strawn
35 West Wacker Drive
Chicago, Illinois 60601
Attention: John MacCarthy
Telephone No.: (312) 558-5600
Telecopier No.: (312) 558-5700
- ------------------------------------------------------------------------------------------------------------------------------------
47
- ------------------------------------------------------------------------------------------------------------------------------------
NUMBER OF AGGREGATE PURCHASE NUMBER OF WARRANT AGGREGATE PURCHASE
NAME AND ADDRESS PREFERRED SHARES PRICE FOR THE PREFERRED SHARES PRICE FOR THE WARRANT
SHARES SHARES
- ------------------------------------------------------------------------------------------------------------------------------------
Jack E. Knott
Pliant Corporation 51 $30,461.04 52 $20,538.96
1515 Woodfield Road, Suite 600
Schaumburg, Illinois 60173
Telephone No.: (847) 969-3330
Telecopier No.: (847) 993-8221
With a copy to:
Winston and Strawn
35 West Wacker Drive
Chicago, Illinois 60601
Attention: John MacCarthy
Telephone No.: (312) 558-5600
Telecopier No.: (312) 558-5700
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL
- ------------------------------------------------------------------------------------------------------------------------------------
48
SCHEDULE 3.3(a)(i)
CAPITALIZATION
NUMBER OF SHARES
NAME OF HOLDER COMMON STOCK
-------------- ------------
Southwest Industrial Films, LLC 317,306
New York Life Capital Partners, L.P. 12,419
The Northwestern Mutual Life Insurance 6,210
Company
First Union Capital Partners, LLC 6,210
Durham Capital, Ltd. 28,289
Sorensen Capital, LLC 7,423
Ronald G. Moffitt IRA 1,700
Moffitt Capital, LLC 1,132
Richard P. Durham 14,500
Jack E. Knott 7,750
Ronald G. Moffitt 625
The Christena Karen H. Durham Trust 158,917
Douglas W. Bengtson 200
Stanley B. Bikulege 150
Dale A. Brockman 30
Daren G. Cottle 90
William A. DeVilling 50
Greg E. Gard 120
Glenn R. Harsh 70
David L. King 200
Robert J. Maltarich 80
Kyle E. Rossler 50
Elise Scroggs 80
Kenneth J. Swanson 30
James B. Underwood 170
Coleman R. Wooldridge 100
Paul R. Frantz 20
TOTAL 563,921
49
SCHEDULE 3.3(a)(ii)
HOLDERS OF SERIES A PREFERRED STOCK
NUMBER OF SHARES OF SERIES A
NAME OF HOLDER PREFERRED STOCK
-------------- ---------------
Flexible Films LLC 52,000
New York Life Capital Partners 24,000
The Northwestern Mutual Life Insurance Co. 12,000
First Union Capital Partners, LLC 12,000
TOTAL 100,000
50
SCHEDULE 3.24
ABSENCE OF CHANGES
1. Board Vacancy. Pursuant to the Stockholders' Agreement, the Board
consists of seven members, four of whom are to be designated by the Requisite
Investor Holders (as defined in the Stockholders' Agreement), two of whom are to
be designated by the Requisite Trust Holders (as defined in the Stockholders'
Agreement), and one of whom is to be designated by the Board. On February 16,
2001, Scott K. Sorensen, a Requisite Trust Holders designee to the Board,
resigned as a director. Because the Requisite Trust Holders have not appointed a
new designee, the Board has one vacancy.
2. Senior Management. In connection with the Company's decision to
relocate its principal executive offices from Salt Lake City, Utah to
Schaumburg, Illinois, Scott K. Sorensen, Executive Vice President, Chief
Financial Officer and Treasurer of the Company, and Ronald G. Moffitt, Executive
Vice President, General Counsel and Secretary of the Company, each resigned from
the Company effective as of February 28, 2001. Following Mr. Sorensen's and Mr.
Moffitt's resignations, the Board of Directors appointed Brian E. Johnson as
Senior Vice President and Chief Financial Officer, Larry E. Shepler as
Secretary, and Kurt D. Ogden as Vice President and Treasurer.